2004 E-Discovery Developments: Year in Review

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1 2004 E-Discovery Developments: Year in Review Sean Foley, Esq., Legal Consultant Michele C.S. Lange, Esq., Staff Attorney, Legal Technologies January 20, 2005 Presenters Sean Foley, Esq., Legal Consultant Provides legal expertise and consulting services to assist attorneys and corporate clients with their discovery and investigative needs involving electronically stored data and s. Helps attorneys avoid the common pitfalls they may encounter during this still-evolving period for electronic discovery. Presenters Michele Lange, Esq., Staff Attorney, Legal Technologies Tracks the evolving common and statutory law in the areas of electronic discovery and computer forensics. Helps practicing attorneys integrate electronic discovery into their case strategy. Co-author of Electronic Evidence & Discovery: What Every Lawyer Should Know, published by the American Bar Association. 1

2 Agenda Introduction Notable cases from 2004 Rule revision efforts Cutting-edge technology developments Conclusion Questions & Answers 2004 Highlights 2004 Highlights Unprecedented focus on electronic evidence issues by the courts Major proposed revisions to the FRCP Biggest spoliation sanctions to date E-discovery technology explosion 2

3 Recent Case Law Developments Zubulake V Defendant Sanctioned for Destruction of Evidence An employee moved for sanctions against the employer for failing to produce backup tapes containing relevant s in a timely manner. Determining that the employer had willfully deleted relevant s despite contrary court orders, the court granted the motion for sanctions and also ordered the employer to pay costs. The court further noted that defense counsel was partly to blame for the document destruction because it had failed in its duty to locate relevant information, to preserve that information, and to timely produce that information. Zubulake v. UBS Warburg, 2004 WL (S.D.N.Y. July 20, 2004) Zubulake V: New Duties For Practitioners Duty to Locate, Preserve, & Produce E-Data Addressing the role of counsel, Judge Scheindlin declared it is not sufficient to notify all employees of a litigation hold and expect that the party will retain and produce all relevant information. Counsel must take affirmative steps to monitor compliance so that all sources of discoverable information are identified and searched. Counsel has met its discovery obligations when: Issues a litigation hold Communicates to key players Produces all potentially relevant documents to opposing counsel 3

4 Cost Allocation Cases Court used sampling approach articulated in Zubulake to evaluate if recovery cost from backup tapes proportionate to the likely benefit. Hagemeyer North American, Inc. v. Gateway Data Sciences Corp., 222 F.R.D. 594 (E.D.Wis. 2004) Plaintiff pays half of the costs, despite requesting only accessible data. Court asserted, requiring the parties to evenly shoulder the expense is the most effective resolution because it balances the benefit of the discovery for [the plaintiff] and provides [the defendant] with incentive to manage the costs it incurs in answering [the plaintiff s] interrogatories. Multitechnology Servs. v. Verizon Southwest, 2004 WL (N.D. Tex. July 12, 2004) Cost Allocation Cases (continued) Court analyzed who should bear costs of 94 inaccessible backup tapes and added an eighth factor to the Zubulake test: the importance of the requested discovery in resolving the issues at stake in the litigation. Wiginton v. CB Richard Ellis, Inc., 2004 WL (N.D.Ill. Aug. 10, 2004) Court requires database production conditioned on the city paying the plaintiffs for half of the costs associated with compiling the database. Portis v. City of Chicago, 2004 WL (N.D. Ill. July 7, 2004) Zubulake Departure: California Demanding Party Pays for Backup Tape Discovery If Reasonable and Necessary The trial court granted Lexar s production request and required Toshiba to produce backup tapes spanning an 8-year period and to bear the costs of retrieving data from the tapes. The defendants objected on the grounds that it would cost between $1.5 to $1.9 million to produce the data because some of the tapes were obsolete. Toshiba v. The Sup. Ct. of Santa Clara Co., 21 Cal. Rptr. 3d. 532 (Cal. Ct. App. 2004) 4

5 Zubulake Departure: California (continued) Demanding Party Pays for Backup Tape Discovery If Reasonable and Necessary On appeal, the appellate court determined the California Code of Civil Procedure 2031 requires the demanding party to pay only its reasonable expense for a necessary translation. The court noted [r]easonableness and necessity are purely factual issues (undoubtedly there are others), which, when disputed, are properly submitted to the discretion of the trial court. Toshiba v. The Sup. Ct. of Santa Clara Co., 21 Cal. Rptr. 3d. 532 (Cal. Ct. App. 2004) Sanctions: Destruction Court Severely Sanctions Philip Morris for Destroying Relevant s Despite a contrary court order, the defendants continued to delete when it became sixty days old, on a monthly system-wide basis for a period of two years after the court order. The court declared that it is astounding that employees at the highest corporate level in Philip Morris, with significant responsibilities pertaining to issues in this lawsuit, failed to follow [the] Order which, if followed, would have ensured the preservation of those s which have been irretrievably lost. The court ordered the defendants to pay costs relating to the spoliation as well as $2,750,000 in monetary sanctions. The court also precluded key employees associated with the deleted data from testifying at trial. United States v. Philip Morris USA Inc., 327 F.Supp.2d 21 (D.D.C. 2004) Sanctions: Data Wiping Adverse Inference Granted for E-Evidence Destruction Order for plaintiff to produce a copy of all documents/files relevant to this litigation that exist on Ms. Anderson's personal computer as well as those that have been deleted or otherwise adulterated." Defendants computer forensic expert discovered that a data wiping software application had been installed after the plaintiff had agreed not to delete any existing documents in a deposition. The plaintiff claimed that she did not use the software program to destroy evidence, but that she used it routinely to protect her computer files. The court issued an adverse inference jury instruction because the plaintiff intentionally destroyed evidence and attempted to suppress the truth. Anderson v. Crossroads Capital Partners, L.L.C., 2004 WL (D.Minn. Feb. 10, 2004) 5

6 Sanctions: Preservation & Production Samsung Sanctioned for Failure to Preserve and Produce In a patent infringement suit, Mosaid moved for discovery sanctions, alleging Samsung failed to preserve and disclose discoverable evidence. Samsung pointed out that their own discovery request expressly included s and claimed Mosaid did not specifically include in its definition of document during discovery. The court stated that Samsung knew, or should have known, those e- mails were discoverable, given their heavy reliance on s obtained from plaintiff during discovery, not to mention the obvious realities of modern litigation the fact that no technical s were preserved demonstrates, at the least, extremely reckless behavior. The court awarded $566,838 in sanctions against Samsung as well as an adverse inference instruction for spoliation of evidence. Mosaid Techs. Inc. v. Samsung Elecs. Co., No. 01-CV-4340 (WJM) (D.N.J. July 7, 2004); Mosaid Techs. Inc. v. Samsung Elecs. Co., No. 01-CV-4340 (WJM) (D.N.J. Sept. 1, 2004) Rule Revision Efforts Emerging Local Rules U.S. Federal District Court of Delaware. Requires parties to discuss the parameters of their anticipated e-discovery and exchange a list of custodians of relevant electronic materials, a list and general description of each relevant system, the name of the individual responsible for that party s electronic document retention policies, and a general description of the party s electronic document retention policies. Proposed California Rule of Court, C.R.C. Rule 332 Facilitation of E- Discovery. Discusses meet and confer conferences, production format, the role of e-discovery liaisons, costs, searching protocols, and privilege. Ninth Circuit. Proposed a draft e-discovery local rule covering the parties duty to investigate, duty to notify, duty to meet and confer, and efforts to agree on the scope of electronic data preservation. 6

7 Overview Early Discussion of E-Discovery Issues: Rule 16(b), Rule 26(f), Form 35 Option to Produce Electronically Stored Information in Response to Interrogatories: Rule 33(d) Definition of Electronically Stored Information: Rule 34(a) Form of Production: Rule 34(b) Reasonably Accessible Information: Rule 26(b)(2) Safe Harbor on Sanctions: Rule 37(f) Belated Assertion of Privilege: Rule 26(b)(5)(B) Subpoena for Electronically Stored Information: Rule 45 Early Discussion of E-Discovery Issues: Rule 16(b), Rule 26(f), Form 35 Rule 16: Pretrial Conferences, Scheduling, Management Rule 16(b) Scheduling and Planning; The scheduling order may also include: (5) provisions for disclosure or discovery of electronically stored information; (6) adoption of the parties agreement for protection against waiving privilege; Early Discussion of E-Discovery Issues: Rule 16(b), Rule 26(f), Form 35 Rule 26(f): Conference of the Parties; Planning for Discovery [Parties must confer] to discuss any issues relating to preserving discoverable information, and to develop a proposed discovery plan that indicates the parties views and proposals concerning: (3) any issues relating to disclosure or discovery of electronically stored information, including the form in which it should be produced; (4) whether, on agreement of the parties, the court should enter an order protecting the right to assert privilege after production of privileged information; 7

8 Reasonably Accessible Information: Rule 26(b)(2) Rule 26. Duty to Disclose; General Provisions Governing Discovery (b)(2) Discovery Scope and Limits... A party need not provide discovery of electronically stored information that the party identifies as not reasonably accessible. On motion by the requesting party, the responding party must show that the information sought is not reasonably accessible. If that showing is made, the court may order discovery of the information for good cause and may specify terms and conditions for such discovery. Safe Harbor on Sanctions: Rule 37(f) Rule 37. Failure to Make Disclosures or to Cooperate in Discovery; Sanctions (f) Electronically stored information. Unless a party violated an order in the action requiring it to preserve electronically stored information, a court may not impose sanctions on the party for failing to provide such information if: (1) the party took reasonable steps to preserve the information after it knew or should have known the information to be discoverable in the action; and (2) the failure resulted from loss of the information because of the routine operation of the party s electronic information system. Cutting-Edge Technology 8

9 Native Review Native documents appear the same way they did when they were originally created on a computer, complete with metadata, embedded data, and other salient elements. Benefits of Native Review: Document appear exactly as created See formulas in spreadsheets or databases Hidden data, embedded text, and tracked changes are visible in the native format Reduced document processing costs Native Review Counsel should consider: Size and make-up of document set Need to redact large volumes of documents Production form Timeframes for review and production Native review logistics and technology platform Native Production When faced with large volume electronic discovery disputes, the judiciary has suggested a preference for electronic document productions as searchable native files. A magistrate judge stated a tiff document production was insufficient and ordered defendants to produce documents in a searchable electronic format such as a native.pst format that included metadata. The district court judge backed this argument and declared the Rules required [defendants] to produce responsive electronic documents in their native.pst format if that is how they were stored in Defendants usual course of business. In re Verisign, Inc. Sec. Litig., 2004 WL (N.D. Cal. Mar. 10, 2004) 9

10 Native Production Discuss production with opposing counsel EARLY IN THE PROCESS Know your production options: Native Hardcopy TIFF or PDF Database Electronic and Paper Integration Advantages: Integrating paper and e-documents will help you see the big picture of the case more quickly. A single, specialized expert offering e-discovery and paper discovery services provides administrative advantages. Reviewing in an online repository saves time and money because reviewers can search, categorize and produce documents in an electronic format. 10

11 How Do I Stay Current? Free monthly newsletter Latest cases & legislation Distributed via January 31 to February 2, 2005 LegalTech New York New York, NY Upcoming Events Selecting the Best Litigation Support Review Option for Your Case Hypothetical Case Studies: What Would You Do? The Post-Zubulake Legal Climate March 3 & 4, 2005 E-Discovery Certification Course Eden Prairie, MN For a complete listing of events, please visit Questions? Sean Foley, Esq. sfoley@krollontrack.com (800) Michele C.S. Lange, Esq. mlange@krollontrack.com (800)