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E-Discovery: Approaching the Problems Head On

E-Discovery: Approaching the Problems Head On. Laurence Z. Shiekman Pepper Hamilton LLP January 5, 2009. Why Are We Here?. E-Discovery amendments became effective December 1, 2006 Affected Federal Rules: Rule 16, Rule 26, Rule 33, Rule 34, Rule 37, Rule 45 and Form 35. Why Are We Here?.

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E-Discovery: Approaching the Problems Head On

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  1. E-Discovery: Approaching the Problems Head On Laurence Z. Shiekman Pepper Hamilton LLP January 5, 2009

  2. Why Are We Here? • E-Discovery amendments became effective December 1, 2006 • Affected Federal Rules: • Rule 16, Rule 26, Rule 33, Rule 34, Rule 37, Rule 45 and Form 35

  3. Why Are We Here? • What did the 2006 Amendments actually change? • Not Much • Institutionalized and defined the role of ESI in the discovery process • Provided a mechanism for the Court to approve clawback agreements

  4. Why Are We Here • But why discuss electronic discovery? • The growth of Electronically Stored Information has caused dramatic changes in the discovery process • Corporate email users send and receive an average of 133 email messages per day • Mail, telephone, faxes

  5. Why Are We Here • In 2006, the world created 161 exabytes of information: • 12 stacks of paper stretching from the earth to the sun • Between 2002 and 2006, there was an 800% annual growth in the amount of ESI produced in the world • 25% of all e-discovery opinions involved sanctions

  6. Overview • The Rule Changes • The Litigation Hold • The Duty to Preserve ESI • The Production of ESI • Special Issues With Privileged Material • What’s the Deal With Metadata? • The Admissibility of E-evidence

  7. Rule Changes-Rule 26(a) Fed. R. Civ. P. Rule 26(a)(1)(B): Initial Disclosures • Except in categories of proceedings specified in Rule 26(a)(1)(E), or the extent otherwise stipulated or directed by order, a party must, without awaiting a discovery request, provide to other parties: • (B) a copy of, or a description by category and location of, all documents, electronically stored information, and tangible things that are in the possession, custody, or control of the party and that the disclosing party may use to supports its claims or defenses, unless solely for impeachment…

  8. Rule Changes-Rule 34(a) • (a) Scope • Any party may serve on any other party a request (1) to produce … electronically stored information – (including writings, drawings, graphs, charts, photographs, sound recordings, images, and other data or data compilations stored in any medium from which information can be obtained ….

  9. Rule Changes-Rule 26(b)(2) • 26(b)(2) Discovery Scope and Limits • A party need not provide discovery of ESI if not reasonably accessible because of undue burden or cost • Good cause exception

  10. Rule Changes-Rule 34(b) • Rule 34(b) • The request may specify the form or forms in which electronically stored information is to be produced • Native format • Web-based production • PDF, TIFF, JPEG • Tagged Image File Format

  11. Rule Changes-Rule 34(b) • Rule 34(b)(ii) • If a request does not specify the form or forms for producing electronically stored information, a responding party must produce the information in a form or forms in which it is ordinarily maintained or in a form or forms that are reasonably usable.

  12. Rule Changes-Rule 26(b)(5)(B) • If information is produced in discovery that is subject to a claim of privilege or of protection as trial-preparation material, the party making the claim may notify any party that received the information of the claim and the basis for it. After being notified, a party must promptly return, sequester, or destroy the specified information and any copies it has and may not use or disclose the information until the claim is resolved.

  13. The Litigation Hold • “Once a party reasonably anticipates litigation, it must suspend its routine document retention/destruction policy and put in place a ‘litigation hold’ to ensure the preservation of relevant documents.” Zubalake v. UBS Warburg LLC, 220 F.R.D. 212, 218 (S.D.N.Y. 2003)(“Zubulake IV”)

  14. When Must the Hold Begin? • No clear definition for “reasonably anticipated” • Can’t always wait for a complaint to be filed • Mere knowledge may be enough • Doe v. Norwalk Community College, 2007 U.S. Dist. LEXIS 51084 (D. Conn. July 16, 2007)

  15. Scope of the Litigation Hold • “Corporations are not obligated, ‘upon recognizing the threat of litigation,’ to ‘preserve every shred of paper, every e-mail or electronic document . . . .” • “. . . It is under a duty to preserve what it knows, or reasonably should know, is relevant in the action, [or] is reasonably calculated to lead to the discovery of admissible evidence . . . .” • Samsung Electronics Co. v. Rambus, 439 F. Supp. 2d 524, 542-543 (E.D. Va. 2006)

  16. Scope of the Litigation Hold • Ever-increasing list of discoverable data-types • Data in RAM is electronically stored information under Rule 34 • Rule 34 read expansively to cover future developments in computer technology • Columbia Pictures Industries v. Bunnell, 2007 WL 2702062 (C.D. Cal. Aug. 24, 2007)

  17. Duty to Preserve ESI • “Must a corporation, upon recognizing the threat of litigation, preserve every shred of paper, every email or electronic document, and every backup tape? The answer is clearly ‘no.’ Such a rule would cripple large corporations, like UBS, that are almost always involved in litigation.” Zubulake IV, 220 F.R.D. 212, 217 (S.D.N.Y. 2003)

  18. Duty to Preserve ESI • Rule 26(a) limited to documents that “are in the possession, custody, or control of the party” • “Control comprehends not only possession, but also the right, authority, or ability to obtain the documents” • Tomlinson v. El Paso Corp., 2007 U.S. Dist. LEXIS 64783 (D. Colo. Aug. 31, 2007)

  19. Duty to Preserve ESI • “[A] party and her counsel must make certain that all sources of potentially relevant information are identified and placed ‘on hold,’ . . . To do this, counsel must become fully familiar with her client’s document retention policies as well as the client’s data retention architecture.” • Zubulake v. UBS Warburg LLC, 229 F.R.D. 422, 432 (S.D.N.Y. 2004) (“Zubulake V”)

  20. Duty to Preserve ESI • “[C]ounsel should communicate directly with the ‘key players’ in the litigation, i.e., the people identified in a party’s initial disclosure and any subsequent supplementation thereto. Because these ‘key players’ are the ‘employees likely to have the relevant information,’ it is particularly important that the preservation duty be communicated clearly to them.” • Zubulake V, 229 F.R.D. at 433-34 (S.D.N.Y. 2004)

  21. Duty to Preserve ESI • “A party’s discovery obligations do not end with the implementation of a ‘litigation hold’ – to the contrary, that’s only the beginning. Counsel must oversee compliance with the litigation hold, monitoring the party’s efforts to retain and produce the relevant documents.” • Zubulake V, 229 F.R.D. at 432 (S.D.N.Y. 2004)

  22. Duty to Preserve ESI • “Finally, counsel should instruct all employees to produce electronic copies of their relevant active files. Counsel must also make sure that all backup media which the party is required to retain is identified and stored in a safe place.” • Zubulake V, 229 F.R.D. at 434 (S.D.N.Y. 2004)

  23. Duty to Preserve ESI • Failure to properly preserve ESI can have severe consequences for both client and counsel • As noted, 25% of reported e-discovery decisions involved sanctions for mishandling and lack of document retention policies

  24. The Consequences of a Failed Litigation Hold • “A spoliation sanction is proper where: • (1) a party has a duty to preserve evidence because it knew, or should have known, that litigation was imminent, and • (2) the adverse party was prejudiced by the destruction of the evidence.” Ernest v. Lockheed Martin Corp., 2008 U.S. Dist. LEXIS 59985, at *3 (D. Colo. July 28, 2008) • Some states recognize spoliation of evidence as an independent tort • See, e.g., Hadi v. State Farm Ins. Co., 2008 U.S. Dist. LEXIS 28177, at *6 (S.D. Ohio Mar. 11, 2008)

  25. Duty to Preserve ESI • Possible penalties • Default Judgment • Krumwiede v. Brighton Assoc., 2006 U.S. Dist. LEXIS 31669 (N.D. Ill. May 8, 2006) • Monetary sanctions against both client and counsel • In re September 11th Liab. Ins. Coverage Cases, 234 F.R.D. 114 (S.D.N.Y. 2007)

  26. The Collection of ESI • Involve opposing counsel in creating “keyword” searches to identify responsive documents • “Identifying relevant records and working out technical methods for their production is a cooperative undertaking, not part of the adversarial give and take.” In re Seroquel Prods. Liab. Litig., 244 F.R.D. 650, 660 (M.D. Fla. 2007)

  27. The Collection of ESI • Courts are reluctant to second guess a party’s well-reasoned “keyword” searches • “…interplay, at least, of the sciences of computer technology, statistics and linguistics….” • United States v. O’Keefe, 537 F. Supp. 2d 14, 24 (D.D.C. 2008)

  28. The Production of ESI • Court can limit discovery of ESI where it would place an undue burden on the producing party • Burden of proof is on the party attempting to prevent production

  29. The Production of ESI • Is the ESI Reasonably Accessible? • Three factors the Court will weigh: • (i) Less burdensome and less expensive alternative sources • (ii) Previous opportunity to obtain the information through discovery • (iii) Does the burden or expense outweigh the likely benefit

  30. The Production of ESI • No clear standard for “reasonably accessible” • Reproduction of e-mails at a cost of $37,500 was reasonably accessible • PSEG Power N.Y., Inc. v. Alberici Constructors, Inc., 2007 U.S. Dist. LEXIS 66767 (N.D.N.Y. Sept. 7, 2007) • Production that would cost $80,000 not reasonably accessible • W.E. Aubuchon Co. v. Benefirst, 2007 U.S. Dist. LEXI 44574 (D. Mass. Feb. 6, 2007)

  31. The Production of ESI • “[I]t is not a valid ground for objection that relevant, non-privileged, electronic data can be produced in paper form, when the requesting party has specified production in an electronic format.” • Auto Club Family Ins. v. Ahner, 2007 U.S. Dist. LEXIS 63809, at *10 (E.D. La. Aug. 29, 2007)

  32. The Production of ESI • Must show diligence in producing ESI • Failure to institute a litigation hold can force a party to undertake time-consuming and expensive multiple productions • Be careful when selecting an e-discovery vendor

  33. The Production of ESI • Court will not look kindly upon mishandled productions • Qualcomm, Inc. v. Broadcom Corp. (Fed Cir. Dec. 12, 2008) • E-discovery not produced until trial; counsel fees assessed • Counsel referred to disciplinary board • Disability Rights Council of Greater Washington v. Washington Metro. Transit Auth., 242 F.R.D. 139, 147 (D. D.C. 2007)

  34. Special Issues Regarding Privileged Material • The problem of inadvertent disclosure of privileged material • Use of clawback agreements sanctioned by Rules 16(b)(5) and 26(f) • Procedure provided by Rule 26(b)(5)

  35. Special Issues With Privileged Material • Sheer volume of electronic discovery may result in inadvertent disclosures • “inadvertent disclosure of privileged information does not automatically result in waiver of the privilege.” • Pinnacle Pizza Co. v. Little Caesar’s Enter., Inc., 2007 U.S. Dist. LEXIS 48845 (D. S.D. July 3, 2007)

  36. Inadvertent Disclosure Balancing Test • Most courts use a five factor balancing test to determine whether the privilege has been waived: • The reasonableness of the precautions taken • The number of inadvertent disclosures • The extent of the disclosures • The promptness of measures taken to remedy the problem • Whether justice is served by relieving the party of its error

  37. Special Issues With Privileged Material-FRE 502 • Inadvertent disclosures do not constitute a waiver if: • The disclosure was inadvertent; • The holder of the privilege or protection took reasonable steps to prevent disclosure; and • The holder promptly took reasonable steps to rectify the error • Rhoads Industries v. Building Materials Corp, No. 07-4756 (ED Pa, November 14, 2008) • A Federal court’s determination that a privilege has not been waived is binding on all other Federal and State courts

  38. Clawback Agreements • Authorized by: • Rule 26(f)(4) • Requiring parties to confer to “discuss any issues relating to preserving discoverable information” • Rule 16(b) • Scheduling order may include clawback agreements and provisions for ESI

  39. Clawback Agreements • Prior agreement between the parties over procedures following inadvertent disclosures • Can take many forms

  40. Clawback Agreements • Problems: • Cannot unring the bell • Even if the document is returned, other party has still seen it • Problem of governmental agencies and other authorities

  41. Clawback Agreements • Problems: • “[E]ven if [clawback agreements] are enforceable as between the parties that enter into them, it is questionable whether they are effective against third-parties.” • Hopson v. Mayor and City Council of Baltimore, 232 F.R.D. 228, 235 (D. Md. 2005)

  42. Clawback Agreements • Problems: • Advisory Committee Notes states that courts do not have the authority to require a clawback agreement • But, the court is free to enter a discovery schedule that without a clawback agreement would be impossible to meet

  43. What’s the Matter with Metadata? • “Metadata, commonly described as ‘data about data,’ is defined as ‘information describing the history, tracking, or management of an electronic document.’” • Williams v. Sprint/United Management, 230 F.R.D. 640, 646 (D. Kan. 2005) (quoting Amendment to F.R.C.P. Rule 26(f))

  44. What’s the Matter with Metadata? • Rule 34(a)(1) states that ESI “includ[es] writings, drawings, graphs, charts, photographs, sound recordings, images, phonorecords, and other data or data compilations stored in any medium from which information can be obtained. . . .” • The Committee Note states that “Rule 34(a)(1) is expansive and includes any type of information that is stored electronically.”

  45. What’s the Matter with Metadata? • “[T]he producing party should produce the electronic documents with their metadata intact, unless that party timely objects to production of metadata, the parties agree that the metadata should not be produced, or the producing party requests a protective order.” • Williams v. Sprint/United Management Co., 230 F.R.D. 640, 652 (D. Kan. 2005)

  46. What’s the Matter with Metadata? • “[E]merging trends of electronic discovery appear to articulate a general presumption against the production of metadata.” • Kentucky Speedway, LLC v. Nat’l Assoc. of Stock Car Auto Racing, 2006 U.S. Dist. LEXIS 92028 (E.D. Ky. Dec. 18, 2006)

  47. It Can’t Hurt to Ask • Courts are unlikely to require the production of metadata where it has not been specifically requested initially • “Ordinarily, courts will not compel the production of metadata when a party did not make that part of its request.” • Autotech Techs. Ltd. P’ship v. Automationdirect.com, Inc., 248 F.R.D. 556, 559 (N.D. Ill. 2008)

  48. What’s the Matter with Metadata? • However, more recent cases have held that metadata must be produced when it is relevant • In re Payment Card Interchange Fee & Merchant Discount Trust Litig., 2007 U.S. Dist. LEXIS 2650 (E.D.N.Y. Jan. 12, 2007)

  49. What’s the Matter with Metadata? • TIFF (tagged image file format) documents do not satisfy discovery requests because they lack metadata • Hagenbuch v. 3B6 Sistemi Elettronici Industrali, 2006 U.S. Dist. LEXIS 10838 (N.D. Ill. Mar. 8, 2006)

  50. The Emerging Issue of E-evidence • “Very little has been written, however, about what is required to insure that ESI obtained during the discovery is admissible into evidence at trial.” • Lorraine v. Markel Am. Ins. Co., 241 F.R.D. 534, 537 (D. Md. 2007)

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