The Sedona Conference Guidelines and Practical Precedents for E-Discovery

The Sedona Conference Guidelines and Practical Precedents for E-Discovery Litigating in the Cloud Tanisha G. Tulloch 416 777 5359 ttulloch@totkinmanes.com LEXPERT Cloud Computing Conference 2013 November 28, 2013, Toronto

‘Cloud Computing’ In The Litigation Context • Discovery, preservation and production of documents are familiar aspects of litigation practice. • By some estimates, more than 90% of all information is created in electronic format. • A party’s duty to produce and preserve electronic documents (e-documents) relevant to a litigation arises in the same way as for paper documents. • The trend towards document storage in the Cloud poses new problems and complications for litigants, their counsel and the judiciary.

Electronically Stored Information (ESI) Is Discoverable • In Canada, the rules for documentary discovery are codified by the rules of court for each Province. • For example, Rule 30.01 of the Ontario Rules of Civil Procedure defines ‘document’ for the purposes of discovery as “a sound recording, videotape, film, photograph, chart, graph, map, plan, survey, book of account and data information in electronic form.” • Canadian courts have also repeatedly held that electronically stored information is producible and compellable in discovery [See Cholakis v. Cholakis(2000), 44 C.P.C. (4th) 162; Reichmann v. Toronto Life Publishing Co, (1988), 66 O.R. (2d) 65; Northwest Mettech Corp. v. Metcon Service Ltd. 1996 CanLII 1056)].

Concerns Arising From Cloud Computing • Authenticity and Integrity • Metadata • Data Ownership and Control • Data Intrusion

1. Authenticity and Integrity Of ESI Ontario Evidence Act • Section 34.1(4) Authenticity: • Person seeking to introduce an electronic record has the burden of proving authenticity by evidence capable of supporting a finding that the electronic record is what it is claimed to be. • Section 34.1(6) Best Evidence Rule: • Where the Best Evidence Rule is applicable in respect of an electronic record, it is satisfied on proof of the integrity of the electronic record. • Section 34.1(7) Presumption of Integrity: • The integrity of the electronic records system by or in which an electronic record is recorded or stored is proved for the purposes of the Best Evidence Rule where: • Computer system is operating properly; • Electronic record is stored by adverse party; or • Recorded in usual and ordinary course of business.

Determining Authenticity and Integrity of Cloud ESI • Litigants adducing Cloud ESI must demonstrate: • Information is relevant, authentic and stems from a reliable system (Note: consider chain of custody); • Probative value outweighs prejudice; • Information is not precluded as hearsay; and • Information conforms with the best evidence rule.

2. Metadata • The Cloud model has the potential to create a huge collection of new data, and to expose that new data to the infomediary/Cloud Provider. • When the infomediary has the ability to see what is happening with every click, this creates a rich stream of data. • Although this data stream may not be relevant to the original Cloud operation, there is a risk that it will be used either by the organization or the cloud infomediary for purposes beyond those for which consent was originally given, or may be discoverable. “Digital cameras typically record the time and date when the photograph was taken. Some cameras capture the camera’s GPS co-ordinates as well. These data are known as metadata. These data are relevant to a matter in issue in this lawsuit because they may provide information from which the camera user’s tolerance for physical activity from day to day or over several other days may be inferred.” - Justice Rogers, Abougoush v. Sauve[2011] B.C.J. No. 1243

3. Data Ownership and Control • The creation of new data streams may raise concerns about ownership of data. • Who has power, possession and control of Cloud ESI? • The remove that is created between data and holder by the Cloud infrastructure increases the ambiguity concerning lawful access to stored data for both the Cloud Provider and the original owner of the data. • Determining what happens to the data held by the Cloud provider at the end of the contract.

4. Data Intrusion • Individuals give up a level of control when they interact with the Cloud infrastructure. As a result: • Cloud service providers or Cloud-based application may be able to access, mine, or otherwise commoditize the data they hold; • Government and/or private exercise of power may result in management or shut down of particular sites or discourses; and • Private actors may intrude upon databases. • The individual’s data in the Cloud is at risk and the individual may never be aware of the intrusion. • New Tort: Intrusion Upon Seclusion • Jones v. Tsige[2012] O.J. No. 148. • Common law tort for the invasion of privacy. • “The internet and digital technology have brought an enormous change in the way we communicate and in our capacity to capture, store and retrieve information. As the facts of this case indicate, routinely kept electronic data bases render our most personal financial information vulnerable.”

The Sedona Principles: Discovery Obligations in the Cloud • The Sedona Principles • Preservation • Production • Proportionality

The Sedona Canada Principles Addressing Electronic Discovery • Differences between electronically stored information (ESI) and paper documents make e-document discovery, production and preservation a very different process as with paper documents. • The Rules and case law to date provide little clear guidance to parties and their counsel on how to fulfill electronic discovery, production and preservation requirements. • The Sedona Principles seek to provide a set of e-discovery standards and best-practice recommendations to parties, counsel and the judiciary.

1. Preservation Requirements When does the preservation requirement arise? • Arises when a proceeding is filed (common law jurisdictions). • Also when it is reasonable to expect that evidence may be relevant to future litigation. • Preservation obligation extends to metadata associated with electronic records. • Given the dynamic nature of Cloud-stored ESI, delay may increase the danger of claims that relevant evidence was destroyed. • Upon determining that litigation has triggered a preservation obligation, the party should communicate to affected persons the need to preserve relevant information in both paper and electronic form. This includes: • Employees reasonably likely to maintain documents potentially relevant to the litigation • Persons responsible for maintaining and operating computer systems or files.

1. Preservation Requirements What is the scope of preservation for Cloud information? • The general obligation to preserve evidence extends to ESI, but must be balanced against a party’s right to continue to manage its electronic information in an economically reasonable manner, including routinely overwriting ESI in appropriate cases. • It is unreasonable to expect organizations to take every conceivable step to preserve all ESI that may be potentially relevant. • A reasonable inquiry based on good faith to identify and preserve active and archival data should be sufficient. • A party’s preservation obligation does not require freezing of all ESI, but rather the appropriate subset of ESI that is relevant to the issues in the action. • Generally, parties are not required to preserve short-term disaster recovery backup media created in the ordinary course of business. • A party is not required, absent agreement or a Court Order based on demonstrated needs and relevance, to search for or collect deleted or residual ESI.

1. Preservation Requirements Preservation Orders • In some cases, it may be appropriate to seek the intervention of the Court to ensure that ESI is preserved. • Anton Piller Orders, which allow one party to copy or take custody of evidence in the possession of another party, have been widely used in most Canadian Provinces when one party is concerned that the opposing party will destroy relevant ESI. • Parties may also want to enter into a preservation Order on consent. • Avoids the necessity for an Anton Piller order. • In CIBC World Markets Inc. v. Genuity Capital Markets, [2005] O.J. No. 616, the plaintiff brought a motion for the preservation of electronic evidence stored in the defendant’s computer system. The defendant voluntarily undertook to preserve the electronic evidence.

1. Preservation Requirements Shared Data • A party’s networks or intranet may contain shared areas (such as public folders, discussion databases and shared network folders) that are not regarded as belonging to any specific employee. • Some of this shared data is potentially relevant to the litigation and should be preserved.

2. Production Requirements Reasonably Accessible • The primary sources of ESI in discovery should be those that are reasonably accessible. • Certain forms of ESI cannot reasonably be produced. • i.e. Old backup tapes, data for which applications no longer exist • Courts have taken the concept of “marginal utility” into consideration when denying further productions (See Andersen v. St. Jude’s Medical Inc. [2008] O.J. No. 430). • In refusing to make further production, the producing party must provide evidence that the cost, burden and disruption of retrieving and processing the ESI from sources other than those accessed in the normal course of business are not justified.

2. Production Requirements Methodology of Production • Parties should agree on a methodology of production that: • Preserves metadata and allows it to be produced when relevant; • Communicates content accurately; • Protects the integrity of the information; • Allows for the creation of a version that can be redacted; • Assigns a unique production identification number to each data item; and • Can be readily imported into any industry-standard litigation review application.

2. Production Requirements Format for Production • Production of electronic documents and data should be made only in electronic format, unless the recipient is somehow disadvantaged and cannot effectively make use of a computer, or the volume of documents to be produced is minimal and metadata is known to be irrelevant. “There is no good reason to require the defendant to produce paper copies of the documents if the copies on the CDs are legible, complete and printable. I have inspected the documents on CD. There may be some illegible copies but that same problem can occur with photocopies. If any of the copies on the CD are not readable or are badly copied, a better copy on paper or on CD may be requested and shall be provided. Health Canada need not produce all of its documents both on paper and on CD.” Logan v. Harper, 2003 CanLII 15592

2. Production Requirements Process of Production • A party may satisfy production obligations using electronic tools and processes: • Large electronic data processing systems contain vast amounts of information, much of which is likely to be irrelevant. • Parties may agree on targeted selection criteria to extract high-value discovery data from large collections. • Techniques to Reduce Volume • Filtering • Eliminating Duplicates • Sampling of Computer Data

3. Proportionality and Cost Control The Proportionality Rule • In any proceeding, the parties should ensure that steps taken in the discovery process are proportionate, taking into account: • The nature and scope of the litigation, including the importance and complexity of the issues, interests and amounts and stake; • The relevance of the available ESI; • Its importance to the Court’s adjudication in a given case; and • The costs, burden and delay that may be imposed on the parties to deal with ESI. • Courts must balance the cost of discovery with the objective of securing a just, speedy and inexpensive resolution of a dispute on the merits. • Courts have declined to order the production of documents where parties have demonstrated that the cost of producing a document outweighs the likely probative value of the document.

3. Proportionality and Cost Control • Early experiences in Canada with e-discovery have been marked by very expensive and time-consuming burdens in preserving and producing ESI. • E-discovery may involve significant internal client costs as well as counsel fees and disbursements for out-sources services: • Direct Costs – data preservation and retrieval by internal or third-party computer technicians; lawyer review. • Indirect Costs – interruption of routine business processes while employees search for relevant information; risk to organization of disclosure of confidential information and privileged legal communications; risk of failing to preserve relevant ESI that could lead to adverse judgments and sanctions.

3. Proportionality and Cost Control • The reasonable costs of preserving, collecting and reviewing ESI will generally be borne by the party producing it. • In limited circumstances, it may be appropriate for the parties to arrive at a different allocation of costs on an interim basis, by either agreement or Court Order. • Cost-shifting for e-discovery may be justified after consideration of the following factors: • The specificity of the discovery request; • The quantity of information available from other and more easily accessible sources; • The failure to produce relevant information that seems likely to have existed but is no longer available from more easily accessible sources; • The likelihood of finding relevant information that cannot be obtained from other sources; • Predictions as to the importance and usefulness of the information; • The importance of the issues at stake in the litigation; and • The parties’ resources.

Practical Precedents For E-discovery • Identification of Data • Preservation of Data • Collection of Data • Data Processing • Review • Production • Containing Costs

1. Identification • Sources of potential information must be identified early. • Begin immediately upon the reasonable anticipation of litigation. • Make an early assessment of the issues which will be in dispute. • Determine relevant time period for information search. • Develop a list of likely or potential custodians of documentation (including Cloud Providers).

2. Preservation • Send a preservation letter to the client to inform of the duty to preserve. • Determine whether any extraordinary preservation measures may be required. • A preservation letter should also be sent to adverse parties putting them on notice of their duty to preserve electronic information and to suspend any ordinary course document destruction policies.

3. Collection • What is the manner in which documentation will be collected from clients? • Particular protocols must be followed in collecting electronic information from clients’ computers/servers/electronic devices. • It is vital to reducing the overall cost of e-discovery that the collection stage proceed in an orderly and strategic fashion. • Be careful not to inadvertently delete or alter data.

4. Processing • Consider whether the processing of harvested documents should be done in-house or by a third party service provider. • Processing will involve data entry, or the generation of the relevant fields in connection with the productions. • In conventional discovery terms, the processing of documents would equate to the organization of documents into chronological order, tabbing those documents and generating the applicable Schedules to an Affidavit of Documents. • However, in the electronic context, this is more involved as documents must be ‘coded’, scanned and run through software filters.

5. Review • Once documents have been processed, the database should be reviewed for privileged and irrelevant documents. • During this review, consider also identifying documents based on which disputed issue the document relates to, or marking the documents by importance. • Reviewing documents in this way can dramatically reduce the size and difficulty of the discovery process.

6. Production • Meet and confer with opposing counsel re: • Scope of production; • Format of production; • Use of a common third party service provider; • Privilege issues; and • Costs. • Note: In order to obtain evidence under Rules 30-35, a Discovery Plan in accordance with Rule 29.1.03 of the Ontario Rules of Civil Procedure is required, which includes, inter alia, the intended scope of the documentary discovery, deadlines for service of affidavits of documents and information regarding timing, costs and the manner of the production of documents.

7. Containing Costs • At the pleadings stage, focus on what information is needed to resolve the dispute. • Dialogue with opposing counsel from the beginning. • Narrow the scope of collection – limit the search to key sources and time frames. • Use the Rules - Courts are willing to restrict burdensome discovery in the name of proportionality unless it is essential to a determination on the merits. • Adopt “best practices” around lawyer review. • Use automated tools where appropriate. • Improve document retention/destruction policies.

Questions? Thank You! Tanisha G. Tulloch 416 777 5359 ttulloch@torkinmanes.com

The Sedona Conference Guidelines and Practical Precedents for E-Discovery