ACADEMIC AFFAIRS COUNCIL AGENDA ITEM: 8.D DATE: March 15, 2007 ****************************************************************************** SUBJECT: Electronic Records Discovery Electronic records management is developing into one of the more complex and more convoluted legal issues facing colleges and universities. The attached article from a recent edition of the Chronicle provides some perspective. In addition to the requirements to maintain records, it should be recognized that the use of electronic media of communication to develop preliminary ideas gives them a permanence of expression that is much greater than the written or spoken word. Dr. Shekleton will review this issue with the Council. ****************************************************************************** RECOMMENDED ACTION Discussion.
The New Legal Advice: Don't Press 'Delete' By DOUGLAS F. SEAVER As much as 90 percent of all documents and correspondence are created and maintained in electronic formats, according to information experts. So it is not surprising that the focus of many lawsuits is shifting to electronically stored information: how to preserve it, how to search vast quantities of it for relevant evidence, and how to produce it in discovery. Amendments to federal rules involving civil procedures that went into effect in December will require organizations involved in litigation, including higher-education institutions, to provide much more electronic information to their opponents in court. The rules formally recognize that such information is discoverable, and that, at the very beginning of a lawsuit, the two sides will have to meet and discuss what electronic data they have that might serve as evidence, as well as the protocols for producing it. The sheer volume and dynamic nature of electronically stored information make the discovery process far more complicated than with traditional hard-copy documents. But failure to appropriately preserve, protect, and produce such information that is relevant to litigation can be disastrous, as two recent legal cases demonstrate. In Zubulake v. UBS Warburg LLC, a woman was hired for a position on a sales desk and told that she would be considered for the desk manager's position if it became vacant. When the position opened and she was, in fact, not considered, she brought suit. After two years of discovery, the judge found that the company's employees had intentionally deleted e-mail messages, lost a number of backup tapes, and failed to produce files as requested. As a sanction, she issued an "adverse inference" instruction to the jury, in essence telling them that they could assume that any documents not produced would have been harmful to the company's case. The jury ultimately awarded the woman $29.3-million in damages. In Coleman Holdings Inc. v. Morgan Stanley & Co., Coleman Holdings sued the investment bank Morgan Stanley for alleged conspiracy and fraudulent representation of Sunbeam Corporation, a Morgan Stanley client for which the plaintiff had sold its interest in Coleman Company for cash and stock. Although it hired a large, wellrespected law firm, Morgan Stanley failed to meet its obligations for electronic discovery of relevant e-mail messages and documents. It produced more than 1,300 pages of e- mail messages, for example, but failed to reveal in a timely fashion the existence of 1,423 backup tapes. As a result, that court, too, issued an "adverse inference" instruction, indicating that Morgan Stanley would have to bear the burden of proving that it lacked knowledge of the fraud and had not aided or conspired with the client. The jury found in favor of the plaintiff and awarded damages in the amount of $1.6-billion. Morgan Stanley also had to pay the U.S. Securities and Exchange Commission $15-million in fines for failure to comply with discovery requirements in a related commission investigation.
Such cases demonstrate that the courts have broad discretion in imposing sanctions on institutions that fail to meet requirements involving electronically stored information. Colleges must take those sanctions seriously. In at least three other recent cases, courts have dismissed claims for job discrimination and wrongful discharge in which plaintiffs have destroyed key evidence stored on their computers. Courts historically have been reluctant to dismiss such claims, on the grounds that plaintiffs deserve to have "their day in court." If judges are willing to dismiss plaintiffs' claims for e-discovery abuse, they will certainly be willing to enforce the rules against colleges. Thus, administrators must become knowledgeable in the new methodologies, protocols, and strategies regarding e-discovery. They should: Establish a litigation team to handle e-discovery issues. Team members might include a representative of the IT department, legal counsel, risk-management experts, human-resources personnel, and any outside vendors who might be used in the discovery process. Preserve all relevant evidence. While Zubulake was a decision of the U.S. District Court for the Southern District of New York, many state and federal courts have adopted the case's rulings. According to those rulings, when an organization reasonably anticipates that litigation will occur, it must suspend its routine policy for retaining and destroying documents and put in place a "litigation hold" to make sure that certain documents are preserved. Moreover, as Magistrate Judge Andrew J. Peck, of that same federal district court, has said, the suspension must be "immediate." A letter describing the litigation hold must go to all personnel who might have relevant hard-copy documentation or electronically stored information. And at least one court has held that alerting employees to the litigation hold in an e-mail message is not sufficient notice. This step is especially important because plaintiffs' lawyers, having become sophisticated in their knowledge of e-discovery-abuse sanctions, now regularly issue litigation-hold-demand letters to defendants even before a lawsuit begins. Tactically they are attempting to create a situation in which they can claim discovery abuses and seek an "adverse inference" instruction at the time of trial. Be inclusive in identifying information that should be captured. An institution has a duty to try to anticipate what information the opposing party will need for its case and to preserve that information, as well as information that is helpful to its own case. The scope of information will depend on the type of claims that are at issue. A simple contract claim may involve little more than the contract and correspondence surrounding its negotiations and application. In a class-action Equal Pay Act claim, however, the universe of relevant information could be immense. Colleges should not underestimate the amount of material that may need to be preserved and searched for relevant evidence. They should be prepared to gather information maintained on network servers; desktop hard drives; removable storage media like tapes, disks, and cards; PDA's; flash drives; laptop computers; voice mail; and home computers if used for the business of the institution.
Outsource information-gathering, if necessary. Literally millions of e-mail messages and other electronic documents may contain evidence. In penalizing Morgan Stanley, Judge Elizabeth T. Maass noted that the company "gave no thought to using an outside contractor to expedite the process of completing the discovery, though it had certified completion months earlier; it lacked the technological capacity to upload and search the data at that time, and would not attain that capacity for months." Consulting outside vendors in advance will inform college administrators not only of the efforts they may need to make in the discovery process but also of the potential cost of complying with discovery requests. Vendors can help institutions create effective and cost-efficient strategies for collecting, analyzing, and processing the data. Train other staff members about e-discovery. Colleges should make IT staff members aware of the institution's obligations concerning e-discovery. Likewise, IT staff members can educate members of the litigation team on the institution's hardware and software; policies for retaining and destroying information; location of backup tapes; and the processes, costs, and staffing required for substantial e-discovery demands. Colleges should also consider preparing an IT staff member to testify at depositions and accompany institutional lawyers to conferences to discuss e-discovery issues with opposing counsel. Support-staff members will also need training about how to search databases for information in response to discovery requests, maintain a decision log throughout the project, and document the steps taken to protect, preserve, and produce electronically stored information. Colleges should also inform all staff and faculty members generally on their obligations to comply with discovery requests in litigation, their responsibility to preserve relevant information that exists either in hard copy or electronically, and the potential serious consequences to the institution, and possibly to individuals, if relevant evidence is destroyed or lost. Adopt a clear e-discovery computer-use policy. That policy should establish the institution's right to inspect and retain information stored on its equipment and should dispel any expectations of privacy on the part of faculty and staff members. If professors and administrators regularly work remotely from home, the policy should also describe the college's right, when needed, to inspect their home computers for electronically stored information related to the work of the institution. Preserve attorney-client privileges. To help establish claims that certain information is legally privileged, each college should adopt a written policy that addresses attorneyclient communications. Over the long haul, the general counsel's office may want to move its e-mail messages and documents to a separate server or files, making it easier to isolate privileged communications. The regular use of "privileged" banners on correspondence or in the subject line of e-mail messages will assist screening of privileged documents when key-word searches are used to obtain relevant information once discovery begins.
Establish an e-discovery plan. Such a plan would include protocols and processes for maintaining an accurate inventory of data-processing and data-storage devices, developing a litigation-hold letter, identifying the key people involved in litigation, creating electronic copies of the information maintained on storage devices when the litigation hold is put in place, and assigning key personnel to reissue litigation holds during discovery and to monitor discovery. The plan should also deal with the electronic format to be followed in producing documents, the litigation-support software to be used, and the methods for estimating the cost of compliance with e-discovery demands. An advisory committee that commented on the amended federal rules for civil procedures did recognize the need for parties to balance the need to obtain relevant information with the burdens of e-discovery: "The parties can develop a discovery plan that takes into account the capabilities of their computer systems." One of the amended rules creates a distinction between "accessible" electronically stored information and that which is "not reasonably accessible," and it indicates that a party need not provide e-discovery from sources that it identifies as not reasonably accessible because of "undue burden or cost." While it is uncertain what will be included in that category, it will very likely include backup tapes that contain disaster-recovery data, legacy data from obsolete systems, and deleted data. When a plaintiff asks a college for electronically stored information, the institution will have to identify by category or type the sources that it has decided are too difficult to obtain. The court will then determine whether the burden of producing the information is outweighed by the need for that information. What is clear is that all legal counsel involved in litigation will now have to become familiar with their clients' computer systems and programs, policies for document retention and destruction, computer processes for harvesting relevant data from vast stores of electronically stored information, and ways to negotiate the means and methods of producing electronically stored information with opposing counsel. As Magistrate Judge Peck said at a recent American Bar Association seminar, "Lawyers can no longer afford to be computer-illiterate." Indeed, his admonition applies to all of the people who work on the campus. They should understand that their electronic documents may become evidence in litigation, and that, as a result, they should be judicious in the information that they create, receive, retain, or send. They must also be ready to preserve and protect electronically stored information once they learn that litigation against the institution is likely or has begun. Douglas F. Seaver is a partner at Hinkley, Allen, and Snyder, a law firm in Boston. http://chronicle.com Section: The Chronicle Review Volume 53, Issue 24, Page B12