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E-Discovery and Forensics: Effectively Preserving Evidence

E-Discovery and Forensics: Effectively Preserving Evidence. Presented by: Ronald I. Raether, Jr. Faruki Ireland & Cox P.L.L. June 19, 2007. Electronic Document Discovery. Why all the Fuss Old Rules/New Tricks Practice Tips. Why all the Fuss.

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E-Discovery and Forensics: Effectively Preserving Evidence

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  1. E-Discovery and Forensics: Effectively Preserving Evidence Presented by: Ronald I. Raether, Jr. Faruki Ireland & Cox P.L.L. June 19, 2007

  2. Electronic Document Discovery • Why all the Fuss • Old Rules/New Tricks • Practice Tips

  3. Why all the Fuss “The jury found [Anderson] guilty on the basis [of this statement]” Houston Chronicle – June 25, 2002

  4. Why all the Fuss • $604m Compensatory Damages • $850m Punitive Damages • “Morgan Stanley executives had clearly misled the court and the plaintiffs as to the existence of e-mails. “ • Fourth District Reverses Based on Measurement of Damages

  5. ELECTRONIC DISCOVERY • 93% of Corporate documents created electronically • 70% of those NEVER migrate to paper • corporations are expected to generate 17.5 trillion electronic documents annually • Office workers exchange est. 2.8 billion e-mails per day

  6. ELECTRONIC DISCOVERY • Floppy Diskette • 100 pages or ½ inch stack • CD • 52,500 pages or 16 boxes • DVD • 350,000 pages or about 117 boxes • 1 Terabyte • 100,000,000 pages or about 30,000 boxes

  7. Law Develops Printing data insufficient (Armstrong v. Executive Office of the President) Request for “documents” includes deleted emails (Playboy) 1972 1993 1995 1999 2000 FRCP adds “data compilations Computerized data includes voice mail, email, back up files, data files, program files, system files, web site log files and more (Kleiner) Electronic Discoverable; paper not substitute (Anti-Monopoly)

  8. Law Develops Counsel has affirmative obligation to become familiar with client systems and data retention policies (Zubalake V) Landscape Shifts for Lawyers 2002 2003 2004 2005 Negligence sufficient to impose adverse inference (Residential Funding) Adverse Inference and burden shifting for multiple violations (Morgan Stanley) Counsel must explain preservation obligation (Metropolitan Opera)

  9. Old Rules-New TricksDiscoverability Amendments to Discovery Rules Five Year Project • What are the differences between paper and electronic documents? • Do these differences create problems that can or should be addressed by changes to the FRCP? • If there are problems that rulemaking can address, what rules can be crafted to suit that purpose?

  10. Old Rules-New TricksDiscoverability Amendments to Discovery Rules Timeline • 2000: Mini-conference (Hastings and Brooklyn Law School) • 2001: FJC studies electronic discovery disputes • 2002/2003: Input solicited • Feb. 20-21, 2004: Formal Conference at Fordham • May 2004 – Feb 2005: Public Comment • Effective December 1, 2006

  11. Old Rules-New Tricks • Discoverability • Spoliation • Admissibility

  12. Old Rules-New TricksDiscoverability "Rules 26(b) and 34 for the Federal Rules of Civil Procedure instruct that computer-stored information is discoverable under the same rules that pertain to tangible, written materials.“ Rowe Entm't, Inc. v. The William Morris Agency (S.D.N.Y. May 9, 2002).

  13. Old Rules-New TricksDiscoverability Amendments to Discovery Rules • Rule 16 – Early Meet and Confer • Modification of disclosure timing • Disclosure or discovery of electronically stored information • Preservation • Permits agreements regarding privilege • Format

  14. Old Rules-New TricksDiscoverability Amendments to Discovery Rules • O’Bar v. Lowe’s Home Centers, Inc (W.D.N.C. May 2, 2007) Adopts “Suggested Protocol for Discovery of ESI,” Maryland U.S.D.C. • Scope of Requests • Meta-Data • Methods of Production • Preservation • In re Seroquel Prods. Liab. Litig. (M.D. Fla. Jan. 26, 2007), MDL Case Management Order addresses e-Discovery

  15. Old Rules-New TricksDiscoverability Amendments to Discovery Rules • Rule 26 • Includes “electronically stored information” • Identify (but not produce) electronically stored information not “reasonably accessible because of undue burden or expense” • Rule 45 – includes electronically stored information

  16. Old Rules-New TricksDiscoverability • Fed. R. Civ. P. 34 requires a party to produce documents "as they are kept in the usual course of business." • "electronic documents [must be produced] in the native electronic format (or a mutually agreeable format)." United States v. First Data, 287 F. Supp. 2d 69 (D.D.C. 2003). • Exceptions – Delaware does not require Native Format or Metadata. Wyeth v. Impax Labs., Inc. (D. Del. Oct. 26, 2006)

  17. Old Rules-New TricksDiscoverability Amendments to Discovery Rules • Rules 33 and 34 • Can produce electronically stored information as response • May be required to explain how to access data • Can request information to be produced in specific format • Form normally maintained • Reasonably usable • Only one form

  18. Discoverability "The law is clear that data in computerized form is discoverable even if paper 'hard copies' of the information have been produced . . . . [T]oday it is black letter law that computerized data is discoverable if relevant." Anti-Monopoly, Inc. v. Hasbro, Inc., No. 94 Civ. 2120, 1995 WL 649934, 1995 U.S. Dist. LEXIS 16355, at *1 (S.D.N.Y. Nov. 3, 1995).

  19. Discoverability • Rule 26(b)(2)(ii) – whether the “burden or expense of the proposed discovery outweighs its likely benefit.” • Amended Rule: Identify electronically stored information not “reasonably accessible because of undue burden or expense”

  20. Discoverability “(1) The extent to which the request is specifically tailored to discover relevant information; (2) The availability of such information from other sources; (3) The total cost of production, compared to the amount in controversy; (4) The total cost of production, compared to the resources available to each party; (5) The relative ability of each party to control costs and its incentive to do so; (6) The importance of the issues at stake in the litigation; and (7) The relative benefits to the parties of obtaining the information." Zubulake v. UBS Warburg, 217 F.R.D. 309, 320 (S.D.N.Y. 2003).

  21. Discoverability • Trolling for impeachment evidence in home computer denied. Hedenburg v. Aramark Am. Food Servs. (W.D. Wash. Jan 17, 2007) • Fishing Expedition seeking access to hard drives denied. Balfour Beatty Rail, Inc. v. Vaccarello (M.D. Fla. Jan. 18, 2007) • Undue Burden requires narrowing of discovery requests. Ameriwood Industries, Inc. v. Liberman (E.D. Mo. Feb. 13, 2007)

  22. Discoverability Cost Shifting Plaintiff ordered to convert a simulation program and data on a nine-track magnetic tape if the defendant agreed to "pay all the reasonable and necessary costs that may be associated with the manufacture of the computer-readable tape." In re Air Crash Disaster at Detroit Metro. Airport on Aug. 16, 1987, 130 F.R.D. 634, 636 (E.D. Mich. 1989).

  23. Discoverability Cost Shifting • Accessible Data must be produced at cost of producing party. Peskoff v. Faber (D.D.C. 2007). • Marginal Utility Test used to deny motion to compel. Oxford House, Inc. v. City of Topeka (D. Kan. Apr. 27, 2007). • Conclusory statements about costs insufficient. Best Buy Stores, L.P. v. Developers Diversified Realty Corp. (D. Minn. Feb. 1, 2007) • Production of back-ups ordered; cost-shifting determined later. In re Veeco Instruments, Inc. Sec. Litig. (S.D.N.Y. Apr. 2, 2007).

  24. Discoverability Cost Shifting Comments to 26(b)(2)(B) • Sampling, inspection or depositions appropriate to test accessibility, and nature and volume of electronically stored information • Developed sampling protocol. Zurich Am. Ins. Co. v. Ace Am. Reinsurance Co. (S.D.N.Y. Dec. 22, 2006) • Developed imaging, recovery and disclosure protocols. Cenveo Corp. v. Slater (E.D. Pa. Jan. 31, 2007)

  25. DiscoverabilityRule 16 Conference • Identify Sources • Technical Meet and Confer • Experts • Complexity • Internal Resources

  26. DiscoverabilityLocating Electronic Documents • I.T. – 30(b)(6) • Interrogatories • On-Site Inspections

  27. DiscoverabilityLocating Electronic Documents • Numbers, Types and Locations • Operating Systems/Application SW • File Naming/Saving Conventions • Disk /Tape Labeling Conventions

  28. DiscoverabilityLocating Electronic Documents • Retention Policies/Procedures • Employee Policies/Procedures • Identity of Key Employees • Backup/Archiving Schedule/Procedures

  29. DiscoverabilityDocument Requests • E-Mail (Local and Exchange) • Document Files – Directory • Internet Browsing Records (E.g., Cookies) • Proprietary Files • Site Inspection

  30. DiscoverabilityInterrogatories • Persons Assisted in Collection • Steps Taken • System Architecture • Knowledgeable Persons

  31. DiscoverabilityTestifying Experts • Computer data and calculations discoverable. City of Cleveland v. Cleveland Electronic Illuminating Co. (N.D. Ohio 1980). • Final and draft computerized accident simulations discoverable. Bartley v. Isuzu Motors Ltd. (D. Colo. 1993). • Expert ordered to preserve evidence. In re Zyprexa Prods. Liab. Litig. (E.D.N.Y. Dec. 28, 2006) • No sanctions for failing to retain drafts or preserve email. Univ. of Pittsburg v. Townsend (E.D. Tenn. Mar. 30, 2007).

  32. DiscoverabilityNon-Testifying Experts • Non-testifying expert computer program discoverable when necessary to depose testifying expert. Pearl Brewing Co. v. Jos. Schlitz Brewing Co. (S.D. Texas 1976). • Methods used by Non-testifying expert used to generate tables discoverable. Derrickson v. Circuit City Stores (D. Md. 1999).

  33. DiscoverabilityPrivilege • Rule 26(b)(5)(B) • safe harbor for inadvertent production • Evid. Rule 502 • Safe harbor if • Inadvertent production • Reasonable precautions to prevent disclosure • Production in government investigation not general waiver

  34. DiscoverabilityPrivilege • Solution One: “Claw back” agreement • Parties agree inadvertent production does not constitute waiver • Protocol in place for identification and return of privileged information • Solution Two: “Quick peek” agreement • Requesting party given access to unreviewed documents to designate responsive material • Privilege claims made as to designated material

  35. DiscoverabilityPrivilege – Inadvertent Waiver • Reasonableness of Precautions • Amount of Time to Correct Error • Scope of Production • Extent of Inadvertent Disclosure • Overriding Interest of Fairness and Justice

  36. DiscoverabilityPrivilege • Waiver found with inadvertent production – attached to proposed counterclaim. Marrero Hernandez v. Esso Standard Oil Co. (D. Puerto Rico July 11, 2006). • No selective waiver when producing documents to federal agency during investigation. In re Qwest Communications Int’l, Inc. (10th Cir. June 19, 2006). • Privilege not waived with inadvertent production of spreadsheet. Williams v. Sprint/United Mgmt. Co. (D. Kan. July 1, 2006). • Conflict where ex-employee used company computer • Kaufman v. SunGard Inv. Sys. (E.D.N.Y. May 15, 2006) – waiver. • Curto v. Med. World Communications, Inc. (E.D.N.Y. May 15, 2006) – no waiver.

  37. Old Rules-New Tricks • Discoverability • Spoliation • Admissibility

  38. Old Rules-New TricksSpoliation All parties “are obligated to take appropriate measures to preserve documents and information . . . reasonably calculated to lead to the discovery of admissible evidence and likely to be requested during discovery.” • Amended Rule 37(f) – routine and good faith operation of system not sanctionable.

  39. Old Rules-New TricksSpoliation • Preserve backup tapes for key employees or others with relevant information • Retain both current and archived backup tapes identified as potentially relevant • Catalog documents created after the duty attaches in a separate file for easy collection and review • Take mirror images of computer hard drives. Zubulake v. UBS Warburg LLC, 220 F.R.D. 212, 217 (S.D.N.Y. 2003)

  40. Spoliation Retention Policy “[D]ocument retention policies . . . do not trump the Federal Rules of Civil Procedure or requests by opposing counsel . . . . [E]xecution of a document retention policy that is at odds with the rules governing the conduct of litigation does not protect [the party] from a finding of intentional destruction.“ Trigon Ins. Co. v. United States, 204 F.R.D. 277, 289 (E.D. Va. 2001).

  41. Obligation Arises • Prior Litigation • Notice of Complaint • Service of Discovery • Court Orders • Statutes/Rules of Procedure • Preservation Letter

  42. Preservation Letter • Litigation Hold Notices Protected from Discovery • Capitano v. Ford Motor Co., (N.Y. Sup. Ct. 2007) • Gibson v. Ford Motor Co. (N.D. Ga. Jan. 4, 2007). • Describe Subject • Describe Relevant Data • Generic Listing of Locations • Retention Policy • System Architecture

  43. Spoliation Suggested Actions • Suspend routine document destruction or alteration required under document retention policy. • Involve counsel in determining both issues relevant to the cause and that may lead to relevant discovery. • Send an order, with periodic reminders thereafter, to the appropriate employees, including those in information technology, to preserve all documentation relevant to the litigation. The order should include the issues involved in the litigation and remind the employees that the data retention policy no longer applies to these issues.

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