ELECTRONIC DISCOVERY. Not Just for Mega-Clients: Why You and Your Smaller Clients Need to be Concerned with Electronically Stored Information

Transcription

1 ELECTRONIC DISCOVERY Nt Just fr Mega-Clients: Why Yu and Yur Smaller Clients Need t be Cncerned with Electrnically Stred Infrmatin By Rex B. Strattn JUNE 2005 STRATTON BALLEW PLLC rd Ave, SW, Suite 102 Vashn Island, WA strattn@strattnballew.cm REX B. STRATTON has ver thirty years f experience representing U.S. and freign clients in business law and management, litigatin, crprate finance and secured transactins, as well as an extensive backgrund in bth litigatin and transactinal matters invlving patent, trademark, cpyright and trade secrets. He was Law Clerk t the Hnrable William J. Jamesn (D. Mnt.); he is past president f the Washingtn State Patent Law Assciatin; member f the Bard f Directrs f the American Intellectual Prperty Law Assciatin ( ); a member f the AIPLA Fellws and a Trustee f the American Intellectual Prperty Law Educatin Fundatin (2000 t date). 1

2 One Fish - Tw Fish -- Big Fish - Little Fish These rules apply t yu A. E-Discvery is Nt Just fr the Big Guys Zubulake v. UBS Warburg LLC did nt limit its hlding t nly the Big Fish. Frm the perspective f a small law firm r sl attrney, tw f the Zubulake cst shifting cases are wrth nting carefully. These tw cases are gd guidelines fr discvery cmpliance in the cntext f what e-data is and hw it is retained. Zubulake v. UBS Warburg LLC, 217 F.R.D. 309 (S.D.N.Y. 2003) ( Zubulake I ) sets frth a seven-factr test fr determining whether t shift the cst f discvery. (1) is request is tailred t discver relevant infrmatin; (2) is the infrmatin frm ther surces; (3) the prductin csts cmpared t the amunt in cntrversy; (4) the ttal cst f prductin cmpared t the resurces available t each party; (5) the relative ability f each party t cntrl csts and its incentive t d s; (6) the imprtance f the issues at stake in the litigatin; and (7) the relative benefits t the parties f btaining the infrmatin. The first tw factrs are entitled t the greatest weight. Zubulake curt cncludes that cst-shifting shuld be cnsidered nly when electrnic data is relatively inaccessible. Zubulake v. UBS Warburg LLC, 216 F.R.D. 280 (S.D.N.Y. 2003) ( Zubulake III ) After receiving evidence f the csts and results f the initial test sample, the Curt rdered restratin f the remaining back-up tapes and applying the seven-pint test and rdered that plaintiff pay 25% f the cst f restring the data and cnducting wrd searches fr the relevant names and subjects. But the Curt hlds that defendant s csts fr attrneys t review the restred data fr relevancy and privilege wuld nt be shared. Zubulake I (Zubulake v. UBS Warburg LLC, 217 F.R.D. 309 (S.D.N.Y. 2003)) manifests that if e- data is accessible it must be prduced at the expense f the respnding party. If e-data is inaccessible (nt readily usable) then the cst shifting analysis cmes in t play. Hwever, the inherent cst f satellite mtin practice t reach inaccessible data may, in the first instance, be prhibitive fr Little Fish. 1 T, Little Fish maybe be required t prduce inaccessible e-data withut the benefit f cst shifting if it did nt preserve the e-data as and when it was suppsed t. 1 Curts must remember that cst-shifting may effectively end discvery, especially when private parties are engaged in litigatin with large crpratins. Zubulake I, 217 F.R.D. at

3 While Rule 26(b) (2) prvides a prprtinality test, it des nt exempt Little Fish frm the Rules. Rule 26(c) is nt a safe harbr fr Little Fish that d nt preserve evidence. Frm the perspective f the small cmpany r individual party, even having t share in 25% f the cst f e-discvery culd be prhibitive. Fr Little Fish e-discvery is nt a clever game just t be played. Little Fish are best prtected by careful bservance and thughtful, well crafted discvery. If a Little Fish asks a Big Fish t prduce all s that refer, reflect r relate t a claim r defense, the request may cst mre than the Little Fish thinks and the results may be verwhelming. The flip side is a Little Fish may be cmpelled t prduce inaccessible e-data withut cst shifting t the Big Fish. B. Rules f the Rad fr Little Fish: Lk t prving yur case frm yur client s files and recrds t the greatest extent pssible. Make sure that yur client retains it s recrds: yu need all the data yu can mine frm yur client, and even Little Fish plaintiffs have t respnd t e-discvery. Carefully craft discvery t elicit nly the infrmatin and evidence that yu really need t prve yur case. Overly aggressive discvery can be cstly t Little Fish in pursuing r defending satellite discvery practice. Hardball tactics have nt disappeared: the mre yu lk t the ther side s files and recrds t prve yur case, the mre yu expse yurself and yur client t having t play hardball with the ther side, and the wrse shape yur clients e-data is in, the mre yu expse yur client t hardball tactics t btain e-data r assert spliatin against yur client s claims r defenses. But, remember, e-data can be a wnderfully fertile area f discvery, if yu knw hw t get at it, distill it and analyze it. Even Little Fish, with the right tls, can be successful in e-discvery. Small Firm Caveat: If yu are nt an expert n e-data strage and recvery, find an Infrmatin Technlgy (IT)expert nw and keep the relatinship strng yu will need Infrmatin Technlgy assistance in the new era f e-discvery litigatin regardless f which side yur client may be n. 3

4 C. Use Rule 26(a) (1) and the Rule 26(f) Cnference t Yur Advantage The Prpsed rules prvide that as sn as practicable after a lawsuit is filed, the parties must meet t discuss any issues relating t the preservatin f electrnically stred infrmatin and t develp a discvery plan cncerning any issues relating t disclsure r discvery f electrnically stred infrmatin, including the frm r frms in which it shuld be prduced and any issues relating t claims f privilege r prtectin f trial preparatin materials. A reprt utlining hw the discvery f electrnically stred infrmatin shuld be handled must be submitted t the curt within furteen days f the meeting. The parties must then prvide t the ther parties a cpy r descriptin f all electrnically stred infrmatin that the disclsing party may use. 2 But, why wait t get started? In fact, d nt wait until the Rule 26(f) cnference t begin building yur client s case fr prductin f e-discvery. A Rule 26(f) cnference letter can be effectively used t set the stage fr e-discvery and fr data yu expect the ther side will be disclsing under Rule 26(a)(1). (See Appendix A fr an example.). A Rule 26(f) cnference letter: Puts the ther side n ntice f what areas f discvery, especially e-data yu are lking t have vluntarily prduced. Permits better use f Interrgatries and requests fr prductin f dcuments t fcus n discvery nt prduced pursuant t Rule 26(a)(1). Permits the argument that the ther side failed t meet the initial disclsure requirements f Rule 26 when seeking t drill dwn in btaining relevant dcuments, including e-data. D. Duty t Preserve Can Little Fish Affrd Big Fish Requirements Fr the attrney wh represents smaller clients, the bservatins f Judge Scheindlin in Zubulake IV 3 n the duty t preserve evidence need careful review. In Zubulake V 4 Judge Scheindlin asks this rhetrical questin, which she then answers fr the bar: 2 Prpsed FRCP 26(a)(1)(B), FRCP 26(f), FRCP 26(f)(3), FRCP 26(f)(4), FRCP 26(f)(7) and Frm Zubulake v. UBS Warburg LLC, 229 F.R.D. 212 (S.D.N.Y. 2003) 4 Zubulake v. UBS Warburg LLC, 229 F.R.D. 422, (S.D.N.Y. 2004) 4

5 What must a lawyer d t make certain that relevant infrmatin especially electrnic infrmatin is being retained? *** First, cunsel must issue a litigatin hld at the utset f litigatin r whenever litigatin is reasnably anticipated. 5 The litigatin hld shuld be peridically re-issued s that new emplyees are aware f it, and s that it is fresh in the minds f all emplyees. Secnd, cunsel shuld cmmunicate directly with the key players in the litigatin, i.e., the peple identified in a party s initial disclsure and any subsequent supplementatin theret. Because these key players are the emplyees likely t have relevant infrmatin, it is particularly imprtant that the preservatin duty be cmmunicated clearly t them. As with the litigatin hld, the key players shuld be peridically reminded that the preservatin duty is still in place. Finally, cunsel shuld instruct all emplyees t prduce electrnic cpies f their relevant active files. Cunsel must als make sure that all backup media which the party is required t retain is identified and stred in a safe place. Little Fish may nt have sphisticatin as t e-data. The lawyer wh advises a Little Fish as t e-discvery matters take n far greater respnsibility than that f the lawyer advising a Big Fish that has IT persnnel and sphisticated systems. Litigatin Hld. A Little Fish may nt understand what it is required t d with its e-data t satisfy a litigatin hld r even hw t d it. Simply telling the client what the law requires may nt suffice. Cunsel fr a Little Fish shuld nt rely n the client s sphisticatin. Althugh the respnsibility ultimately rests with the client, lawyers still have an bligatin t assure that dcuments are being preserved and that the client understands the ramificatins if evidence is lst r destryed. If neither Little Fish nr its cunsel has the sphisticatin t guide the client, then btaining expertise is mandatry. Little Fish may nt have the resurces in place t effect prper e-dcument retentin prgram. Client csts becme an issue: directin and supervisin by legal cunsel, acquisitin f additinal r new technlgy, bth sftware and hardware, may be required, and engagement f IT prfessinals may be required t assure cmpliance. 5 Curts usually require the suspensin f rutine dcument retentin/destructin plicies, which is smetimes referred t as a litigatin hld. This includes the recycling f backup tapes and ther backup media. See Zubulake IV, 220 FRD at

6 Cmmunicate directly with the key players. Little Fish may nt have key players ther than the fficers f the cmpany r the client itself. But in cmmunicating with key players, cunsel must be assured that the key players are knwledgeable abut the requirements t preserve e-data and hw t d it. Little Fish may nt have an IT department r even an IT persn, therefre: client must be able t preserve e-data; that is knw hw t retain the infrmatin n the client s cmputers; if nt, hire an utside cnsultant and client must have the apprpriate hardware and sftware t permit preservatin. Bth Client and Cunsel must have discussed all f the varius equipment and lcatins where e-data can be fund: persnal/hme cmputers, prtable cmputers, PDA, cellular telephnes, and ther strage cmmunicatin devices, and stred media: flash cards, USB cards, Memry Sticks. Little Fish may be mre expsed t e-data prliferatin as many small businesses and individuals have n rules gverning the use f cmpany and/r persnal cmputers. Relevant e-data may reside almst anywhere; hence relevant, accessible data will mst ften be disbursed acrss all types f media and lcatins that wuld therwise be cntrlled by a Big Fish. This makes preservatin ver relevant infrmatin mre difficult and places greater respnsibility n cunsel t make sure that the client has preserved all f the e-data that exists. D nt hesitate t call in a cnsultant that is knwledgeable abut cmputers and e-data strage. Lss f e-data is cmmn and can ccur easily. The cst t the client will ut weigh the risk f making a mistake during e-discvery. Discvery errrs that lead t sanctins against the client culd als lead t claims f malpractice against the lawyer. As t what must be retained, Judge Scheindlin cmments in Zubulake IV 6 : A party r anticipated party must retain all relevant dcuments (but nt multiple identical cpies) in existence at the time the duty t preserve attaches, and any relevant dcuments created thereafter. In recgnitin f the fact that there are many ways t manage electrnic data, litigants are F.R.D. at 218 6

7 free t chse hw this task is accmplished. Fr example, a litigant culd chse t retain all then-existing backup tapes fr the relevant persnnel (if such tapes stre data by individual r the cntents can be identified in gd faith and thrugh reasnable effrt), and t catalg any later-created dcuments in a separate electrnic file. That, alng with a mirrr-image f the cmputer system taken at the time the duty t preserve attaches (t preserve dcuments in the state they existed at that time), creates a cmplete set f relevant dcuments. Presumably there are a multitude f ther ways t achieve the same result. (Emphasis supplied) Caveat: Unless yu are abslutely certain that the client has sequestered all relevant e-data and has it fully backed up, making a mirrr image f the client s cmputers is essential at the time the duty t preserve arises. Imprtant, t, is t make abslutely sure that the back up systems exist and are wrking and in gd rder t avid the subsequent lss f e-data. New r additinal hardware and sftware may have t be acquired by the client t achieve assurance that e-data will nt be lst. The client must be fully versed in preserving e-data, hwever it is kept and wherever it maybe stred Fr example: s n AOL r Outlk are autmatically archived n mst cmputers. Can the be recvered and will the attachments still be attached. Leaving s n a server can result in autmatic destructin withut any ill intentin simply because they were archived. Little Fish are unlikely t have sphisticated systems in place t stre s and ther infrmatin, relying, mre likely, n esp. prviders t prvide archival services. Hard drives crash withut warning and recvery f data will be expensive and may be made impssible fr certain types f databases. (QuickBks is a gd example f a difficult data base t restre.) A mirrr image f the client s cmputer system is essential in prtecting lss f e-data. Back up tapes r ther back up media can be written ver easily and critical back up f relevant e-data lst. Little Fish may believe that the back up system is wrking and back up prcedures are being fllwed nly t learn when a back up is t be restred that the system failed due t human errr. Prduce electrnic cpies f their relevant active files. Sunds easy but is it? Cunsel may be required t prduce e-data in its native frmat with all f the Meta-infrmatin intact. If either yu r yur client are fully cmpetent t capture and reprduce e-data, and have the equipment and the sftware t d it, dn t. Well meaning but unskillful effrts can result in the lss f e-data, r critical aspects f it, and that will be hard t explain t the Curt in respnse t a mtin t cmpel. E. Will Rule 37(f) Offer Safe Harbr t Little Fish that Make a Mistake? N I D Nt Think S Prpsed FRCP 37(f) addresses the rutine alteratin and deletin f electrnically stred infrmatin that can ccur autmatically withut an peratr s directin r knwledge. These autmatic alteratin and deletin features arguably may result in an inncent party lsing 7

8 ptentially discverable infrmatin; hwever, nce the duty t preserve attaches t yur client s e-data, there is really n inncent failure t preserve as all rutine cnduct is suspended under a litigatin hld requirement: Once a party reasnably anticipates litigatin, it must suspend its rutine dcument retentin/destructin plicy and put in place a "litigatin hld" t ensure the preservatin f relevant dcuments. Zubulake IV, 220 F.R.D. at 218. Little Fish may nt be trubled by rutine dcument retentin/destructin plicies as it may have nne. Therefre, any lss f e-data may fall utside f a safe harbr. The lss f e-data frm human errr under the findings f Judge Scheindlin in Zubulake V (229 F.R.D. at 435) are nt frgiving f missteps, particularly n the part f lawyers: On the ther hand, UBS's cunsel are nt entirely blameless. "While, f curse, it is true that cunsel need nt supervise every step f the dcument prductin prcess and may rely n their clients in sme respects," [ftnte eliminated] cunsel is respnsible fr crdinating her client's discvery effrts. In this case, cunsel failed t prperly versee UBS in a number f imprtant ways, bth in terms f its duty t lcate relevant infrmatin and its duty t preserve and timely prduce that infrmatin. The risk t the lawyer representing a Little Fish is that in making the cmmunicatin, the gap f understanding and sphisticatin is sufficiently large that the client fails t understand the gravity f the duties t preserve and prduce e-data. An adverse inference against a client pints a finger at the lawyer t. CONCLUSION All f the rules regarding the preservatin and prductin f e-data apply t Little Fish. Hwever, the risks, f e-data lss is ften much greater fr Little Fish as they lack the sphisticatin, internal cntrls and infrastructure t prtect themselves frm the requirements f the Rules f Civil Prcedure that will apply t e-discvery. 8