FEDERATION OF DEFENSE AND CORPORATE COUNSEL

Transcription

1 FEDERATION OF DEFENSE AND CORPORATE COUNSEL Outline for Corporate Counsel Symposium Electronic Discovery Panel Presentation Andrea Morano Quercia General Counsel ITT Space Systems Rochester, N.Y. Marc A. Polk Associate General Counsel Covidien Mansfield, MA Eric M. Natel Senior Systems Administration Engineer & Forensic Specialist, World-Wide Information Systems Eastman Kodak Company Rochester, N.Y. Kelly B. Van Veldhuizen Post Attorney Law Department Deere & Company Moline, IL William E. Vita Partner Westerman Ball Ederer Miller & Sharfstein, LLP Mineola, N.Y. {Fed. of Def. & Corp. Counsel (Outline) / DOC /}

2 BIOGRAPHIES Eric M. Natel Eric Natel is currently a consultant to the Legal Department at Eastman Kodak Company, responsible for oversight of electronic collections and data recovery for litigation. He also provides guidance on information technologies infrastructure planning essential to data preservation, and collection. Eric holds a B.S. from the State University College at Oneonta, (1997) and has sixteen years experience in server administration and architecture, concentrating on large data-sets and data protection. Marc A. Polk, Esq. Marc Polk is Associate General Counsel/Litigation for Covidien (formerly Tyco Healthcare Group), in Mansfield, Massachusetts, where he manages all products liability matters for the Company. He also manages commercial, intellectual property, and other litigation. Previously, Marc was a Partner at Nutter, McClennen & Fish LLP in Boston, MA where his practice focused on products liability, commercial litigation and insurance coverage. Marc received a B.A. from Franklin & Marshall College in 1988 and a J.D. from Cornell Law School in Kelly B. Van Veldhuizen Post, Esq. Kelly is an attorney in the Special Litigation group of the Deere & Company Law Department headquartered in Moline, Illinois. She is responsible for legal matters related to privacy, corporate compliance and records management for the company. She is a member of the leadership for the e-discovery team at Deere, which includes Legal, IT and Compliance. She is a graduate of the University of Iowa College of Law, where she served as a note editor on the Journal of Corporation Law. Previous to her current position, she worked in the Commercial Law group of Deere & Company on supply management contracts and employment law issues. Kelly is a member of the Illinois bar, the American Bar Association, the Association of Corporate Counsel and the International Association of Privacy Professionals. Andrea Morano Quercia, Esq. Andrea Morano Quercia is General Counsel of ITT Space Systems. Prior to joining ITT, Ms. Quercia was Senior Counsel at Eastman Kodak Company, responsible for corporate compliance with electronic discovery and document management initiatives. {Fed. of Def. & Corp. Counsel (Outline) / DOC /}2

3 She has spoken at national and international conferences on electronic discovery and employee compliance. In addition, she teaches a Legal Academy course on Records Management and Electronic Discovery. Ms. Quercia practiced law with Nixon Hargrave Devans and Doyle, now Nixon Peabody, prior to joining Kodak. She received her B.S. in Economics summa cum laude from Saint Bonaventure University and her J.D. cum laude from Albany Law School of Union University. William E. Vita, Esq. William E. Vita is a partner in a law firm of Westerman Ball Ederer Miller & Sharfstein, LLP, in Mineola, New York. He concentrates his practice in product liability, commercial litigation and business torts. Mr. Vita is the Chair the Federation of Defense and Corporate Counsel s Management, Economics and Technology Section. He is also a member of the Defense Research Institute s Product Liability Committee and is the Chair of the Hand and Power Tools Specialized Litigation Group. He is a graduate of the University of Notre Dame and a cum laude graduate of Boston College Law School. {Fed. of Def. & Corp. Counsel (Outline) / DOC /}3

4 FEDERATION OF DEFENSE AND CORPORATE COUNSEL Corporate Counsel Symposium Electronic Discovery Panel Presentation I. The Problem A. Billions of s exchanged and stored daily. B. A typical desktop personal computer can store the equivalent of million pages of information (versus roughly 30,000 pages in a filing cabinet). C. Unsent documents, drafts, even unsaved information may be stored. D. Hidden metadata. E. Many different locations for documents: 1. Home offices; 2. Laptops; 3. Blackberry/TREO; 4. Back-up tapes; 5. File servers; 6. Printer servers; 7. Flash drives, thumb drives, etc. F. This all means that countless millions of pages of corporate information may be stored in innumerable locations. II. The Law A. The Duty 1. Spoliation is the destruction or significant alteration of evidence, or the failure to preserve property for another s use as evidence in pending or reasonably foreseeable litigation. West v. Goodyear Tire & Rubber Co., 167 F.3d 776 (2d Cir. 1999); 2. Duty of a Party: to preserve evidence (1) relevant to current litigation or (2) which it reasonably should know... may be relevant to anticipated litigation. Silvestri v. GMC, 271 F.3d 583 (4 th Cir. 2001); 3. Duty of Counsel: to effectively communicate to her client its discovery obligations so that all relevant information is discovered, retained, and {Fed. of Def. & Corp. Counsel (Outline) / DOC /}4

5 B. The Consequences produced. Zubulake v UBS Warburg LLC, 229 F.R.D. 422, 439 (S.D.N.Y. 2004) (Scheindlin, J.); 1. Preclusion of evidence; 2. Sanctions; 3. Adverse inference; 4. Adverse judgment; 5. Criminal prosecution; 6. Independent suit. C. Recent Case Law 1. Zubulake v. UBS Warberg (S.D.N.Y.) (a) (c) (d) Gender discrimination claim; 5 decisions on e-discovery leading to adverse inference sanction; Eventually: $29M verdict for plaintiff ($20M in punitives); Procedural history shows that UBS: (1) Deleted relevant s after litigation hold; (2) Failed to produce relevant s; (3) Destroyed or lost back-up tapes. 2. Zubulake Holdings (217 F.R.D. 309 and 229 F.R.D. 422) (a) (c) Relevance retained: electronic data is discoverable as long as it is relevant, regardless of the form in which it is stored. Cost shifting: may be appropriate where there is undue burden or expense generally for inaccessible data. Court considered seven factors for cost shifting: (1) Extent to which the request is tailored to relevant information; (2) Availability from other sources; (3) Cost vs. amount in controversy; (4) Cost vs. resources of each party; (5) Ability and incentive of each party to control cost; (6) Importance of the issues at stake to the case; (7) Relative benefits of obtaining the information. (d) Cost shifting applies only to retrieval/conversion costs. {Fed. of Def. & Corp. Counsel (Outline) / DOC /}5

6 (e) Counsel s obligations: Counsel has a duty to communicate discovery obligations to the client so all relevant information is retained and produced. 3. Other Decisions (1) Identify sources of information; (2) Talk with key employees, I.T. personnel; be creative; (3) Litigation hold must be affirmatively enforced and monitored; (4) Produce relevant active files; (5) Required backup media must be segregated. (a) Many federal courts considering e-discovery issues have adopted Zubulake: (1) Wiginton v. CB Richard Ellis, 229 F.R.D. 568 (N.D. Ill. 2004); (2) Hagemeyer North Amer. v. Gateway Data Sciences, 222 F.R.D. 594 (E.D.Wis. 2004); (3) Multitechnology Services, LP v. Verizon, No. Civ. A. 4:02- CV-702-Y, 2004 WL at *1 (N.D. Tex. July 12, 2004); (c) Intent: There must be an actual suppression or withholding of evidence. No unfavorable inference arises when the circumstances indicate the document... has been lost or accidentally destroyed, or where the failure to produce it is otherwise properly accounted for. Brewer v. Quaker State Oil Ref. Corp., 72 F.3d 326 (3d Cir. 1995). Routine deletion of active files may be considered actual suppression. (1) Mosaid Tech. Inc. v. Samsung Electronics Co., 348 F.Supp.2d 332 (D.N.J. 2004); (2) No hold on automatic rolling deletion; (3) Excuse: it was routine/didn t know s were documents ; (4) Holding: failure to halt routine deletion is intentional spoliation; (5) $550,000 fine; adverse inference. (c) Reasonable Anticipation: {Fed. of Def. & Corp. Counsel (Outline) / DOC /}6

7 (1) Stevenson v. Union Pacific R.R. 354 F.3d 739 (8 th Cir. 2004); (2) Pre-litigation audio tapes of dispatch communications and maintenance records destroyed pursuant to retention policy. (3) Adverse inference sanction upheld concerning tapes but reversed as to maintenance records: (1) defendant had general knowledge that tapes were important to frequent accident litigation; (2) tapes were the only record; (3) tapes had been preserved in other cases where beneficial. (d) Monetary Sanctions: (1) In re Prudential Ins. Co. Sales Practices Litigation, 169 F.R.D. 598 (D.N.J. 1997); (2) No willful action found, but $1million fine (plus fees); (3) Failure to disseminate hold to all employees; (4) s failed to mention pending litigation; (5) No uniform guidelines employed; (6) Procedures to report/cure were slow; (7) Failures of management. (e) Personal Liability: (1) U.S. v. Philip Morris USA, Inc., 327 F.Supp.2d 21 (D.D.C. 2004); (2) RICO action; (3) Defendant continued monthly deletion of s over 60 days old for two years after court preservation order; (4) Sat on the problem for 5 months after become aware; (5) 11 senior officials failed to follow the order; (6) Each sanctioned $250,000, precluded from testifying. (f) Misrepresentations: (1) Coleman (Parent) Holdings, Inc. v. Morgan Stanley & Co., 2005 WL (Fla. Cir. Ct. March 23, 2005), rev d on other grounds, 955 So.2d 1124 (Fla. App. 4 Dist. 2007); (2) Dispute over sale of company. (3) Court found that defendant produced few s; misrepresented scope and cost of compliance; and hid investigation into retention practices; (4) Court imposed these sanctions: (1) reversed burden of proof; (2) jury instructed to accept fraud allegations as true; (3) statement read to jury about defendant s efforts to hide electronic data and relevance to guilt and punitive damages. (5) Verdict: $1.45 billion. {Fed. of Def. & Corp. Counsel (Outline) / DOC /}7

8 D. Federal Rules Changes (effective 12/1/06) 1. Two-tiered approach: electronic information is presumptively discoverable if it is (1) relevant; and (2) reasonably accessible: (a) relevancy unchanged; no production of electronic data which is not reasonably accessible absent good cause. 2. Rule 26 General Duty to Disclose (a) Rule 26(2) electronically stored information that is not reasonably accessible need not be produced unless a court orders production on a showing of good cause. Responding party has burden to identify data and show inaccessibility. Rule 26(5) procedure for inadvertent production of claimed privileged information. 3. Initial Scheduling: Rules 16 and 26(f) call for early discussion of discovery regarding electronically stored information (and privilege); results to be reported to court and may be in scheduling order. 4. Interrogatories: Rule 33(d) interrogatory answers can refer requesting party to electronically stored information provided the burden of ascertaining the answer is substantially the same for both parties and requesting party is given an opportunity to examine the electronic data. 5. Document Requests: (a) Rule 34(a) definition of documents expressly includes electronic data and the requesting party may inspect, copy, test, or sample any designated documents or electronically stored information. Rule 34 request can specify form for production of e-data; responding party can object. If not specified, production is to be made in a form or forms in which it is ordinarily maintained, or in a form or forms that are reasonably usable. Further, a party need not produce the same electronically stored information in more than one form. 6. Rule 37(f) Sanctions {Fed. of Def. & Corp. Counsel (Outline) / DOC /}8

9 (a) Creates a limited safe harbor for electronic information unavailable because of routine, good-faith operation of an electronic information system. Text of Rule 37(f): Absent exceptional circumstances, a court may not impose sanctions under these rules on a party for failing to provide electronically stored information lost as a result of the routine, good-faith operation of an electronic information system. 7. Rule 45 Subpoenas (a) (c) (d) (e) Language expressly includes electronically stored information to be sought by subpoena; Testing, or sampling as well as production; Subpoena can designate form for production of e-data; Served party can object to the requested form; If not specified in the subpoena, production must be in a form or forms in which the person ordinarily maintains it or in a form or forms that are reasonably usable. E. Common sense and reasonableness govern:... the duty is only to preserve relevant information. The best that can be done is to be sure that every employee is notified of that duty, that the issues in the case are defined and that instructions are given to preserve all active, archived, or legacy data. It might also be necessary to preserve targeted back-up material. After that... business must continue as usual. Interview of Judge Shira A. Scheindlin, March 24, 2004, at (Emphasis added.) F. For electronic data to be discoverable, it must be relevant. G. Where there is actual or reasonably anticipated litigation, a litigation hold is required as to relevant information. The hold must be comprehensive and affirmatively enforced. H. For electronic data, the hold applies generally/absent court order to all accessible information. 1. Back-up tapes for disaster recovery are generally inaccessible ; 2. Back-up tapes for information retrievable or searchable are generally accessible ; {Fed. of Def. & Corp. Counsel (Outline) / DOC /}9

10 3. Exception: where particular employee documents can be identified and located on back-up tapes, those tapes containing document of key players should be preserved if not otherwise available. I. Generally, the responding party pays to produce electronic information which is reasonably accessible. If data is inaccessible, cost-shifting may come into play where undue burden exists. J. Spoliation/sanctions usually require some indication of an intent to destroy the evidence for the purpose of obstructing or suppressing the truth. Stevenson v. Union Pacific RR, 354 F.3d 739 (8 th Cir. 2004). K. Get a protocol in place and follow it A company should discard or recycle one backup tape once it has a more recent backup tape. If companies scrupulously followed that protocol, chances are that the contents of the backup tape would closely mirror the... active files... The problem is that companies don t follow their own protocols. Interview of Judge Shira A. Scheindlin, March 24, 2004, at L. Maintaining uniformity and consistency is key. M. Timing is essential. III. IV. The challenge for companies dragged into modern litigation is locating where discoverable information and data may be stored and safeguarding that data. Courts look for: A. Reasonableness; B. Credibility; C. Consistency; D. And courts place a premium on proof of good records management; E. Insure that everyone understands retention policies and follows them. F. Communication -- avoid making assumptions about whether or where data exists. G. Litigation hold practices: follow-up procedure and document steps taken. V. Substantial Cost {Fed. of Def. & Corp. Counsel (Outline) / DOC /}10

11 A. The cost of identifying and safeguarding relevant electronic information may be enormous. B. In many cases, the litigants must ask themselves if the discovery of the information is worth the time and effort? 1. Who should pay for this discovery; 2. Try to convince the court that the party seeking the electronic discovery should pay for the cost. VI. When should a company realize that litigation may ensue and therefore the information should safeguarded? A. Should a corporation wait for service of a Summons and Complaint? B. Are mere threats of a lawsuit sufficient to trigger the duty to safeguard? VII. Have a policy in place before your corporation is sued. A. Implement and observe a reasonable record retention policy. B. Have a well-thought-out records retention policy in place for business purposes. C. Understand when that policy needs to be put on hold; D. Understand the systems and infrastructure; E. Understand your own documents; F. Implement and observe a reasonable litigation hold policy: 1. Identify key people; 2. Prepare and issue D.R.A.; 3. Meet with key people; 4. Issue periodic updates. G. Have a consistent, comprehensive litigation hold notice; H. Set up a responsive team (or person) for each litigation-based need to preserve data; I. Coordinate with I.T. personnel; identify a liaison; J. Coordinate with outside counsel on e-discovery strategy; {Fed. of Def. & Corp. Counsel (Outline) / DOC /}11

12 K. Some courts have held that merely issuing the litigation hold, without counsel s active follow-up is insufficient. Cache La Poudre Feeds, LLC v. Land O Lakes, Inc., No. 04-CV WYD-CBS, 2007 WL (D. Colo. March 2, 2007). L. Some courts have held that automated word searches are not obligatory. (Id.) VIII. What to do when you determine that your corporation may be embroiled in litigation: A. Send out a litigation hold notice or hold letter; B. Determine who is responsible for organizing and supervising the preservation of data; C. Determine who gets noticed to preserve the data; D. Determine who will follow up to insure that data is preserved and decide how the follow-up will occur; E. Stop automatic delete procedures in your computer systems; F. Clone and safeguard information on employees laptops/blackberries/treos; G. Secure and prevent automatic deletion of backup tapes; H. Know the law of the State that will control the discovery (i.e., New York has a bright line test in which the obligation to secure information starts with the service of the Complaint. However, California has a foreseeability test). I. Do not ignore letters from plaintiffs, pre-suit, which demand the safeguarding of information. Respond to these letters and inform plaintiffs counsel why their request can or cannot be honored. J. Meet with your I.T. people and identify relevant employees who may have relevant knowledge about the impending litigation. IX. Federal Rule 26 Meet-and-Confer Conference. A. Prior to the conference, both in-house counsel and outside counsel must thoroughly familiarize themselves with the client s I.T. systems, devices and structures. B. Consider bringing an I.T. expert to the meet-and-confer conference to describe what can and what cannot be produced by the corporation and, hopefully, head off impossible requests. {Fed. of Def. & Corp. Counsel (Outline) / DOC /}12

13 C. Create a short description of your company s I.T. systems and processes, along with a list of not reasonably accessible data, to use at every meet-and-confer discovery conference. D. Plaintiffs may seek: 1. Indexes to archives; 2. storage methods; 3. Data compression methods; 4. Be prepared to understand and respond to such requests. E. Consider seeking a protective order, if you believe your adversary s requests are unreasonable. F. Request that the court include a claw-back provision in the initial discovery order, allowing a corporation to recall documents which are privileged and which were inadvertently disclosed. Court cannot order a claw-back provision without the consent of all parties. See, Advisory Committee Notes for 2006 Amendment to Rule 26 (5). X. Identify an appropriate information technology employee with sufficient knowledge to serve as a Rule 30(6) witness. XI. Complying with discovery orders: A. Determine what form to produce the data in; B. Determine how to produce the data; C. Determine whether outside vendors will be brought in to produce the data or whether in-house vendors are more appropriate; D. Determine what to do about requests for instant messages; E. Determine what to do about requests for voic . XII. Counterattack. A. Consider what electronic data your adversary may have which would be useful and relevant to your case. {Fed. of Def. & Corp. Counsel (Outline) / DOC /}13