Document Retention Policies Intersect Electronic Discovery Obligations - by Michael Shimokaji

MINORITY CORPORATE COUNSEL ASSOC.

DOCUMENT RETENTION
POLICIES INTERSECT
ELECTRONIC DISCOVERY
OBLIGATIONS

Michael A. Shimokaji

© SHIMOKAJI & ASSOCIATES, P.C. 2004
1

OVERVIEW

• BREADTH OF THE INTERSECTION
• ENTITLEMENT TO ELECTRONIC
DISCOVERY
• DOCUMENT RETENTION POLICY AS A
SAFE HARBOR
• SATISFYING THE PRESERVATION DUTY
• RISKS OF DESTRUCTION
• WHERE DO YOU GO FROM HERE?

2

BREADTH OF THE INTERSECTION

• Can You Get Your Arms Around It?

 90 percent of all business records are originated
in electronic form
 30 percent of corporate records are kept only in
electronic form
 average office worker sends and receives
between 60 and 200 email messages each day

3


• Is it Simply a Matter of Paper v Electronic?

 electronic document is more susceptible to
alteration and destruction
 electronic files can be 1) active, 2) replicant, 3)
residual, 4) archival
 electronic document is never really deleted
 electronic document may have meta data

4


• Can You Afford the Truth?

 “The more information there is to discover, the
more expensive it is to discover all the relevant
information until, in the end, ‘discovery is not just
about uncovering the truth, but also about how
much of the truth the parties can afford to
disinter.’” Zubulake v. USB Warburg

5

ARE YOU AUTOMATICALLY ENTITLED
TO ELECTRONIC DISCOVERY?

• Not Always

6


• Suspicion of less than full and complete
production does not justify compelled
inspection

 Fennell v. First Step Design, Ltd (must show
"particularized likelihood of discovering
appropriate information")
 Bethea v. Comcast (sought inspection of
computer “just to see if the defendants are going
to say that there are no documents that exist”)


 Stallings-Daniel v. The No. Trust Co (allegation
that producing party had redacted documents in
a prior, unrelated lawsuit without identifying
them as redacted)

8


• Duplicative Discovery May Not Warrant
Electronic Discovery

 Williams v. Owens-Illinois, Inc. (all information
contained on computer tapes was included in
wage cards which party already discovered)
 Lawyers Title Ins. Co. v. U.S.F. & G. (must show
conventional discovery methods failed to
produce the information needed to litigate their
case)
9


 But see In re Honeywell Int’l Securities.
Litigation (63,500 documents not produced in
the usual course of business - electronic form)
 But see Anti-Monopoly, Inc. v. Hasbro, Inc.
(party argued that it printed out the “important e-
mail communications” so there was no need to
produce e-mail on backup tapes)

10


• Less Burdensome Alternative Must First Be
Pursued

 Medtronic Sofamor Danek, Inc. v. Michelson
(996 backup tapes and 300 gigabytes of other
data sought)

11


• Volume and Proprietary Nature of
Information Can Preclude Production

 Symantec Corp. v. McAfee Associates (all
source code for all of responding party’s
products back to 1995)
 But see Open TV v. Libertate Technologies (100
additional versions of source code for various
products )

12

IS YOUR DOCUMENT RETENTION
POLICY A SAFE HARBOR?

• Not Usually

 In fact, the opposite exists - the destruction of
documents is more likely than not to be
considered suspect.

13


• It could be a safe harbor – at least initially

 Kormendi v. Computer Assoc. Intern’l (no
method to locate and reconstruct e-mails
mentioning plaintiff for the listed period, and its
document retention policy called for employees
to retain e-mails for a period of only thirty days)
 Willard v. Caterpillar (document destruction
began more than 10 years before plaintiff was
injured)
14


• Duty to Preserve Evidence Extends Beyond
Your Retention Policy

 letter requesting preservation of evidence
 knowledge by “key” or “relevant” personnel who
reasonably anticipate litigation
 discovery request
 court protective order or injunction

15

HOW CAN YOU SATISFY YOUR
PRESERVATION DUTY?

• Notice to Employees (and Others) to
Preserve

 Keir v. UnumProvident Corp. (instruction to
employees was far too vague to effect any
process directed at saving the email)
 National Ass'n of Radiation Survivors v. Turnage
(no defense to destruction that particular
employees were not on notice of discovery
obligations)
16

PRESERVATION DUTY?

• Suspension of Document Retention Policy

 Zubulake (once a party reasonably anticipates
litigation, it must suspend its routine document
retention/destruction policy to ensure the
preservation of relevant documents)
 Wigington v. CB Richard Ellis (failure to change
document retention policy, knowing that relevant
documents would be destroyed, is evidence of
bad faith)
17

PRESERVATION DUTY?

• What Should Be Saved

 Zubulake (must not destroy unique, relevant
evidence that might be useful to an adversary)
 Wigington v. CB Richard Ellis (no duty to
preserve “every single scrap of paper” in the
business)

18

PRESERVATION DUTY?

• Monitor During Litigation

 Thompson v. United States (rejected argument
of failing to preserve electronic records during
the case because plaintiffs failed to seek a
preservation order)

19

WHAT ARE MY RISKS FOR
DESTRUCTION?

• Authority to Impose Sanctions

 Diersen v. Walker (FRCP 37 and court’s
inherent power to punish conduct that abuses
the judicial process)

20

DESTRUCTION?

• Monetary Sanctions

 Zubulake IV (award of costs for re-deposing
people on missing tapes and emails )
 RKI, Inc. v. Grimes (on day of court ordered
computer inspection, defendant defragmented
his home computer)

21

DESTRUCTION?

 Prudential Ins. Co. of America Sales Practices
Litigation ($1 million sanctions, even though no
willful destruction when 9,000 files “cleansed”
and 80 folders of documents destroyed)
 Lombardo v. Broadway Stores, Inc. ($31K
sanction for destroying computerized payroll
data after notice to preserve such evidence)

22

DESTRUCTION?

• Evidence Sanctions

 Thompson v. United States (defendants located
80,000 e-mail records 90 days prior to trial;
defendants precluded from using e-mails to
prepare their witnesses for trial; defendants
precluded from refreshing the recollection of
their witnesses by using e-mails)

23

DESTRUCTION?

• Adverse Inference Sanction

 Zubulake (must show: (1) party had an
obligation to preserve it; (2) “culpable state of
mind;” and (3) evidence was “relevant” to the
claims or defenses of the party that sought the
discovery, to the extent that a reasonable fact
finder could conclude that the lost evidence
would have supported the claims or defenses)
24

DESTRUCTION?


 Stevenson v. Union Pac. Ry (“where a routine
document retention policy has been
followed, . . . there must be some indication of
an intent to destroy the evidence for the purpose
of obstructing or suppressing the truth”)

25

DESTRUCTION?


 Minnesota Mining & Mfg. v. Pribyl (defendant
downloaded six gigabytes of music onto his
computer the night before he was to turn over
his computer pursuant to a discovery request)

26

DESTRUCTION?


 United States v. Koch Industries Inc. (negative
evidentiary inference NOT warranted even
though defendants had no document retention
policy, no procedure for notifying employees of
pending litigation)

27

DESTRUCTION?

• Terminating Sanction

 Metropolitan Opera Association, Inc. v. Local
100, Hotel Employees and Restaurant
Employees International Union (1) counsel
represented that documents produced when no
thorough search conducted, 2) counsel knew
party did not have document retention policy, 3)
party replaced computers upon request to
examine computers for emails)
28

DESTRUCTION?


 Procter & Gamble v. Haugen (“basically
impossible” for defendant to defend the case
without the destroyed electronic data)
 Kucala Enters. Ltd. v. Auto Wax Co. (default
judgment DENIED where party used Evidence
Eliminator software to destroy data before
production required)

29

DESTRUCTION?


 Cabinetware Inc. v. Sullivan (defendant’s
“explanation that he destroyed the evidence by
writing over the floppy disks because he needed
more disks and did not want to bother to go out
and buy additional disks simply cannot be
credited”)

30

DESTRUCTION?


 Computer Assoc. Intern'l. v American Fundware
Inc. (in copyright infringement case, defendant
continued its document retention policy to only
retain current source code)
 R.S. Creative Inc. v. Creative Cotton Ltd.
(deliberate destruction of evidence on PC
pertinent to exposing fact of forged document)

31

WERE DO YOU GO FROM HERE?

• Possible Steps

 adopt reasonable document retention policy that
is based on business rationale, not litigation
rationale
 enforce document retention policy

32

WERE DO YOU GO FROM HERE?

 provide for full/partial suspension of document
retention policy when litigation is reasonably
anticipated
 if, during discovery, relevant evidence is lost or
destroyed, investigate the circumstances of the
loss or destruction and consider notifying the
opposing party as soon as practical

33

QUESTIONS?

34

Document Retention Policies Intersect Electronic Discovery Obligations - by Michael Shimokaji

Recommended

Recommended

More Related Content

What's hot

What's hot (20)

Similar to Document Retention Policies Intersect Electronic Discovery Obligations - by Michael Shimokaji

Similar to Document Retention Policies Intersect Electronic Discovery Obligations - by Michael Shimokaji (20)

More from SHIMOKAJI IP

More from SHIMOKAJI IP (20)

Recently uploaded

Recently uploaded (20)

Document Retention Policies Intersect Electronic Discovery Obligations - by Michael Shimokaji