Electronic Discovery in Civil Litigation. Stanley D. Ference III Ference & Associates

Transcription

1 Electronic Discovery in Civil Litigation Stanley D. Ference III Ference & Associates

2 Topics to be Covered Types of Electronic Information Significant Differences Between Traditional and Electronic Discovery Should You Pursue Electronic Discovery? Preservation Issues and Orders Discovery Process Privilege Issues 2

3 Types of Electronic Information Active Data Program and operating system files User created data - messages, word processing documents, spreadsheets, databases, electronic calendars, etc. System generated copies of user data - temporary files created by operating system, copies of files saved as revised documents, auto created archives, etc. Meta-data - information about other data 3

4 Types of Electronic Information (Cont d( Cont d) Residual Data - includes deleted files that may still exist on a drive surface Backup Data - information copied to portable media (usually tape) to provide users with access to their data in the event of a system failure 4

5 Significant Differences between Traditional and Electronic Discovery Electronic information is easily altered/manipulated/intercepted Almost impossible to completely destroy or eliminate Storage and retrieval methods for electronic information more complex 5

6 Significant Differences between Traditional and Electronic Discovery (Cont d) Electronic communications are less formal and thus may yield more candid information Electronic communications tend to be more widely distributed More information is available about electronic information (i.e, meta-data) than what exists on a tangible document 6

7 7 Importance of

8 8 Importance of (Cont d( Cont d)

9 9 Importance of (Cont d( Cont d)

10 Importance of (Cont d( Cont d) Sarbanes-Oxley Act, 15 U.S.C Compels public companies, corporate counsel, and accounting and auditing professionals to consider the impact of electronic evidence in relation to certain records Sections 802 and 1102 compel mandatory document retention (including electronic documents) for certain accounting records Criminal penalties for individuals who destroy or alter documents relating to certain official proceedings 10

11 11 Meta Data - Microsoft Word

12 Meta Data - Microsoft Word (Cont d( Cont d) 12

13 13 Comments - Microsoft Word

14 14 Meta Data / Comments

15 Should You Pursue Electronic Discovery? Is there a benefit to be gained? Preliminary discovery may be required to decide May have to share in costs could be very expensive for little of probative value If you want to go through opponent s files, they will want to go through yours May be worth waiving i.e., agreeing with other side Admissibility of electronic evidence by no means guaranteed 15

16 Preservation Issues and Orders Parties have affirmative duty to preserve relevant evidence But notify your opponent that you will be seeking electronic information and request that they preserve such information Parties should seek to reach agreement on the scope of electronic preservation (e.g., third parties) 16

17 Preservation Issues and Orders (Cont d( Cont d) Parties should seek court intervention if agreement cannot be reached Rule 16(c) Pretrial Conference Agenda Subjects for consideration include such other matters as may facilitate the just, speedy, and inexpensive disposition of the action Rule 26(a)(1) Initial Disclosures a party must, without awaiting a discovery request, provide to other parties a copy of, or a description by category and location of, all documents, data compilations, and tangible things that are in the possession, custody, or control of the party and that the disclosing party may use to support its claims or defenses 17

18 Policing the Preservation Attorney letter to employees Role of IT staff and outside experts Employee affirmative responses Audit Retention policies Disclosure of breaches Preservation of terminated employee records 18

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26 Sanctions Spoliation Exclusion of evidence Monetary Dismissal/default Possible obstruction Tort 26

27 Sanctions (cont d( cont d) Metropolitan Opera v. Local 100, 212 F.R.D. 178 (S.D.N.Y. 2003) Defendant failed to conduct reasonable investigation to respond to discovery requests. Allowed computers subject to discovery to be replaced with new computers shortly before scheduled on-site inspection. Court found that the defendant s behavior constituted a combination of outrages and ordered judgment against the defendant with attorneys fees. 27

28 Sanctions (cont d( cont d) Anderson v. Crossroads Capital Partners, 2004 WL (D. Minn.). Sexual harassment and whistleblower suit in which defendant requested and obtained access to the plaintiff s personal computer. Defendant s examining expert reported that the hard drive found in the plaintiff s computer had been manufactured more than two years after the alleged events and that the plaintiff had recently installed and used a file wiping program called CyberScrub. Plaintiff, in response, claimed that she had been using the same computer for throughout the litigation despite changing the hard drive and disclaimed any intent to use Cyber-Scrub to destroy potential evidence. The judge found the while plaintiff s exceedingly tedious and disingenuous claim of naïveté... defies the bounds of reason, her behavior was not egregious enough to warrant dismissal. The court instead would give the jury and adverse inference instruction during trial. 28

29 Sanctions (cont d( cont d) Keir v. UnumProvident, 2003 WL (S.D.N.Y. Aug. 22, 2003). 29 ERISA class action suit in which parties agreed to a data preservation order after several conferences. Order very narrowly drawn and concentrated on preserving six days of records which were contained on the defendant's backup tapes and hard drives. Defendant's upper management did not communicate the order to its IT staff for nearly two weeks and most of its data management functions had been outsourced to IBM, which failed to implement the required preservation. While the court found that the defendant's failure to preserve was unintentional, it criticized the defendant's poor compliance with the preservation order. The court recommended that further action be taken to determine the feasibility of retrieving the lost data and the extent of prejudice to the plaintiffs in order for the court to fashion a remedy.

30 Sanctions (cont d( cont d) 30 Renda Marine, Inc. v. United States, 58 Fed. Cl. 57 (2003) Contract dispute filed by a marine dredging contractor against the US Army Corps of Engineers. Plaintiff moved to compel production of backup tapes and for permission to make a bitstream image of contracting officer s hard drive, based on admissions by the Corps that it did not search hard drives or backup tapes to answer previous discovery requests, and by the contracting officer that he routinely deleted s before and after suit was filed. Plaintiff also requested that, as a sanction for spoliation, the Corps be ordered to pay costs associated with recovery of deleted s from the backup tapes and hard drive. Corps countered that spoliation could not be found where the Corps followed its records management program, did not act in bad faith, and where there was no showing that evidence relevant and material to the defendant s case had been destroyed. Court found that the Corps records management program was inconsistent with its obligations to preserve evidence when litigation is reasonably anticipated, which in this case was two years before suit was filed. The Corps was ordered to produce the backup tapes at its own expense and to allow creation of the bitstream image of the hard drive.

31 Sanctions (cont d( cont d) 31 Procter & Gamble Co. v. Haugen, 2003 WL (D. Utah) (Aug. 19, 2003) P&G sued several independent distributors of rival Amway products, claiming unfair trade practices for allegedly distributing associating P&G with Satanism. P&G immediately informed the defendants of their duty to preserve computer evidence crucial to the case, but neglected to impose a similar duty upon itself, resulting in the destruction of records of five key P&G employees. Without citing Rule 37, the court granted the defendant s motion to dismiss the case on three grounds, each of which the court stated were sufficient alone to grant dismissal. (1) that the plaintiff failed to preserve evidence it knew was critical to the case (2) the plaintiff s actions rendered an effective defense basically impossible (3) the plaintiff destroyed the very evidence it would need to support its proposed ex-pert testimony on damages, rendering the testimony inadmissible on Daubert grounds.

32 Sanctions (cont d( cont d) Theofel v. Farey Jones, 2003 WL (9th Cir.) In a commercial lawsuit, the defendant issued a subpoena to the plaintiff s Internet Service Provider (ISP) requesting all copies of sent or received by anyone at the plaintiff, with no limitations of time or scope. The ISP, which was unrepresented by counsel, complied, producing many privileged and irrelevant messages. The plaintiff moved to have the subpoena quashed and for sanctions for discovery abuse, which the Magistrate Judge granted. Individual employees of the plaintiff also filed civil suits against the defendant under the Stored Communications Act, Wiretap Act, and Computer Fraud and Abuse Act, which the district court dismissed. The appellate court reversed the dismissal of the claims under the Stored Communications Act and Computer Fraud and Abuse Act, stating that the subpoena, although purporting to be a valid request under Fed. R. Civ. P. 45, so transparently and egregiously violated that standards of Rule 45 that the de-fendants acted in bad faith and with gross negligence in drafting and deploying it, negating any argument that the ISP knowingly consented to the request. By remanding the statutory claims to the district court, the appellate court left open the possibility of civil penalties against the defendant. 32

33 Sources Often Overlooked PDA/Palm top Contact manager files Zip and Jazz drives CD ROMs Floppy disks Laptops & personal (home) PCs Tape backups and restored data Active computer files Undeleted (recovered) files Browser cache and bookmarks Internet postings External hard disk drives Web-based storage Free Drive Minicomputer files Mainframe computer files Network server files Recipient messages Firewall logs server files Web-based (e.g. Hot Mail ) Building access control system CCTV security systems PBX/CDR reports Voice mail messages Dictation: audio tape, rom cards 33

34 Governing Rules Federal Rule of Civil Procedure Rules 26 and 34(a) Scope includes electronic information Reasonably available in the ordinary course of business Electronic versions of documents may be discoverable even if the hard copy documents are produced 34

35 On Site Inspections Gates Rubber Co. v. Bando Chemical Indus., Ltd, 167 F.R.D. 90 (D. Colo. 1996) a botched on-site inspection resulted in the loss of possibly critical data by the party seeking discovery. To examine one particularly important computer, the expert used a program that erased, at random, 7 to 8 per cent of the information that might otherwise have been available. The expert also failed to obtain and preserve the creation dates of essential files and failed to use accepted computer evidence preservation procedures. 35

36 Favored Inspection Procedure 36 Parties agree on a neutral, third-party expert who will actually carry out the inspection as an officer of the court. Parties, with expert assistance, agree on the scope of the inspection, including target computers or servers; target individuals, departments, or data collections; date ranges; search terms; or other scope scopedefining criteria. They also agree upon the form of eventual production. Expert creates a "mirror image" of the computer data using accepted computer forensic procedures that preserve the integrity of the original evidence.

37 Favored Inspection Procedure (Cont d( Cont d) Expert executes the search on the "mirror image" and identifies relevant data according to the agreedupon specifications. Expert turns over the responsive data to the respondent's counsel. Respondent's counsel reviews the responsive data for relevance and privilege. Respondent's counsel produces relevant, nonprivileged data to the requesting party in the form agreed upon by the parties. 37

38 Favored Inspection Procedure (Cont d( Cont d) Rowe Entertainment, Inc. v. William Morris Agency, Inc., 205 F.R.D. 421 (S.D.N.Y. 2002) Simon Property Group, L.P. v. MySimon, Inc., 194 F.R.D. 639 (S.D. Ind. 2000) Playboy Enterprises, Inc. v. Welles, 60 F. Supp.2d 1050, 1054 (S.D. Cal. 1999) 38

39 Proportionalty Limit discovery if the burden or expense of the proposed discovery outweighs its likely benefits under Rule 26(b)(2) 39

40 Proportionalty (Cont d) Parties - Kaufman v. Kinko s Inc., Civ. Action No NC (Del. Ch. Apr. 16, 2002) Granted motion to compel production of messages retrievable from backups Upon installing a data storage system, it must be assumed that at some point in the future one may need to retreive the information previously stored. That there may be deficiencies in the retrieval system cannot be sufficient to defeat an otherwise good faith request to examine relevant information 40

41 Proportionalty (Cont d) 41 Non-Parties - Braxton v. Farmers Insurance Group, 2002 WL (N.D. Ala.Sept. 13, 2002) Plaintiff subpoenaed from non-party insurance agents. Defendant objected, claiming agents subjected to undue burden Nonparty agents not required to comb through their files and other records in search of the documents sought by plaintiff. Defendant required to locate and produce relevant e- mail, newsletters, and other electronic correspondence sent to agents

42 Cost Shifting Responding party has traditionally assumed expense of complying with a discovery request Courts have power to shift some or all of the cost of production to requesting party 42

43 Cost Shifting (Cont d( Cont d) Rowe Entertainment, Inc. v. William Morris Agency, Inc., 205 F.R.D. 421 (S.D.N.Y. 2002) In denying defendant s motion to shift costs of responding to discovery to plaintiff, court adopted eight factor balancing test. 43

44 Cost Shifting (Cont d( Cont d) 44 Rowe balancing test the availability of data from other sources; the parties financial resources; the specificity of the request; the likelihood of of success in retrieving the information; the reason the data was retained; the relative benefit from the process of production; total cost; and the ability and incentive to control costs

45 Cost Shifting (Cont d( Cont d) Byers v. Illinois State Police, 2002 WL N.D. Ill. June 3, 2002) applied Rowe in narrowing request and allocating cost of data restoration to requesting party 45

46 Cost Shifting (Cont d( Cont d) Murphy Oil USA v. Flour Daniel, 2002 WL (E.D. La. 2002) followed Rowe analysis in determination of who should bear costs of producing 46

47 Cost Shifting (Cont d( Cont d) Computer Associates Int l. v. Quest Software, Inc., 2003 WL (N.D. Ill. 2003) Plaintiffs in software copyright and trade secret infringement case requested that the defendants image the hard drives of six key employees. After the imaging, the defendant spent between $28,000 and $40,000 to remove privileged s from the backups and create a privilege log. Defendants then filed a motion to require the plaintiffs to pay these preparation costs. Court reviewed the eight Rowe factors, and determined that none of them favored cost shifting, analogizing these preparation costs to costs for attorney review. 47

48 Cost Shifting (Cont d( Cont d) Zubulake v. UBS Warburg LLC, 217 F.R.D. 309 (S.D.N.Y. 2003) ( Zubulake I, Opinion dated May 13, 2003) Sex discrimination suit against a financial services company and plaintiff requested beyond the approximately 100 pages produced by the defendants. Plaintiff presented substantial evidence that more responsive existed, most likely on backup tapes and optical storage media created and maintained to meet SEC records retention requirements. Defendants objected to producing from these sources, which they estimated would cost $175,000 exclusive of attorney review time. 48

49 Cost Shifting (Cont d( Cont d) Zubulake v. UBS Warburg LLC, 217 F.R.D. 309 (S.D.N.Y. 2003) ( Zubulake I, Opinion dated May 13, 2003) Court held that plaintiff's request was clearly relevant to her claims, but both parties raised the question of who would pay for the discovery and urged the court to apply the Rowe factors. The court held that for data kept in an accessible format, the usual rules of discovery apply: the responding party should pay the costs of producing responsive data. A court should consider cost-shifting only when electronic data is relatively inaccessible, such as in backup tapes. Further, requiring the responding party to restore and produce responsive documents from a small sample of the requested backup tapes is a sensible approach in most cases. 49

50 Cost Shifting (Cont d( Cont d) Zubulake v. UBS Warburg LLC, 217 F.R.D. 309 (S.D.N.Y. 2003) ( Zubulake I, dated May 13, 2003) Rejected Rowe factors and substituted a seven factor test: 1. The extent to which the request is tailored to discover relevant data. 2. The availability of that data from other sources. 3. The total cost of production, relative to the amount in controversy. 4. The total cost of production, relative to the resources available to each party. 5. The relative ability and incentive for each party to control its own costs. 6. The importance of the issues at stake in the litigation. 7. The relative benefits to the parties in obtaining that data. 50

51 Cost Shifting (Cont d( Cont d) Zubulake v. UBS Warburg LLC, 216 F.R.D. 280 (S.D.N.Y. 2003) ("Zubulake III," dated July 24, 2003) Defendants restored and reviewed five backup tapes selected by the plaintiff at a cost slightly over $19, messages were deemed to be responsive to the plaintiff's discovery request. Defendant estimated that the cost for production of the entire 77-tape collection would be $165, for restoration and $107, for review. Court determined that the balance tipped slightly against cost shifting, and that requiring the defendant to bear 75% of the costs would be fair. None of the costs for attorney review of the data, once it had been made accessible, should be borne by the requesting party. 51

52 Privilege Issues Inadvertent Disclosure Production Protocols Document Databases 52

53 53 Privilege Issues

54 Privilege Issues (Cont d( Cont d) Does Use of Experts Waive Privilege? appointment of a computer expert and subsequent review of all retrieved documents by the producing party's attorney prior to production would insure that privileged documents were not produced. Rowe Entertainment v. William Morris Agency, Inc., 205 F.R.D. 421, 433 (S.D.N.Y. 2002); Playboy Enterprises, Inc. v. Welles, 60 F.Supp.2d 1050, 1054 (S.D. Cal. 1999) 54

55 Privilege Issues (Cont d( Cont d) Does Use of Experts Waive Privilege? "[Al protective order is an inadequate surrogate for the privilege. If an adverse party is provided access to privileged material, then a pertinent aspect of confidentiality will be lost. In re Dow Corning Corp., 261 F.3d 280, 284 (2d Cir. 2001) 55

56 Privilege Issues (Cont d( Cont d) Document Databases In re Diet Drugs Prods. Liab. Litig., No. 1203, 1999 U.S. Dist. LEXIS 1797 (E.D. Pa. Feb. 10, 1999) plaintiffs in any actions eligible for state-federal coordination shall be entitled to receive upon payment of the actual cost of providing copies CD- ROMs reflecting searchable images of the key documents a bibliographic database providing a coded index of such key documents abstracts and subjective analyses of the depositions timelines and reports of generic experts... 56

57 Privilege Issues (Cont d( Cont d) 57 Document Databases Skebo v. Ford Motor Co., No. 92VS67182E (Ga. State Ct. Oct. 22, 1993) Plaintiff entitled to discovery of information contained in defendant s databases Ford ordered to provide plaintiff with conference room, computer, and knowledgeable operator to identify and conduct searches of Ford s databases Documents found to be reviewed by Ford and instant decisions made regarding privileged nature of documents; non-privileged documents to be immediately produced privilege claims limited to attorney-client privilege and work product doctrine

58 Electronic Discovery Process Use of experts Identification of electronic sources likely to contain relevant information Implement steps to preserve electronic information Identify relevant electronic information Extraction of information (computer forensics) 58

59 Electronic Discovery Process (Cont d( Cont d) Issue of duplicates Privilege and proprietary determinations Form of production Direct access 59

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61 Electronic Discovery in Civil Litigation Stanley D. Ference III Ference & Associates