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E-Discovery in Employment LitigationCost-Saving Strategies for Preserving, Obtaining and

Protecting Electronically Stored Informationpresents

Today's panel features:Paul D. Weiner, Shareholder, Littler Mendelson, Philadelphia

James F. Glunt, Shareholder, Buchanan Ingersoll & Rooney, PittsburghScott Milner, Morgan Lewis, Philadelphia

Tuesday, October 13, 2009

The conference begins at:1 pm Eastern12 pm Central

11 am Mountain10 am Pacific

The audio portion of this conference will be accessible by telephone only. Please refer to the dial in instructions emailed to registrants to access the audio portion of the conference.

A Live 90-Minute Teleconference/Webinar with Interactive Q&A

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Paul D. WeinerNational E-Discovery Counsel

Best Practices to Avoid Sanctions and Penalties

October 13, 2009

E-Discovery in Employment Litigation

© 2009

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Statistics

Information in the 21st Century

10% Hard Copy

93% Electronic Media

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In 2009, daily e-mail traffic estimated at247 billion messages/day � that

number is expected to doubleto 507 billion by 2013

20092013

247 Billion

247 Billion

507 Billion

507 Billion

Statistics

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Statistics

� In 2004, the volume of e-mail messages sent by businesses worldwide exceeded 1 Exabyte (1 billion gigabytes) for the first time

� Beyond e-mail, a standard desktop computer today can store the equivalent of 40,000,000 typewritten pages of information

� 1 Terabyte hard drive now costs ~$100 and can store 76 million typewritten pages of information

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According to a recent Workplace E-mail and Instant Messaging Survey of 840 U.S. companies from American Management and The ePolicy Institute:

�1 in 5 employers have had employee e-mail and instant messages subpoenaed in the course of a lawsuit or regulatory investigation

�13% have had lawsuits triggered by employee e-mail

Statistics

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� The typical 21-year-old graduate has

– exchanged 250,000 e-mails and instant messages

– spent 10,000 hours on mobile phones

– spent 3,500 hours surfing the internet

� Facebook users represent the fourth largest country on earth

� 3 million daily tweets

Statistics

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2006 Amendments to theFederal Rules of Civil ProcedureAddressing Electronic Discovery

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Rule 34: Production of Documents, Electronically

Stored Information and Things . . .

– Specifically covers electronically stored information

�No precise definition; expansive

�Other references to “electronically stored information” invoke Rule 34

– Produce, inspect, copy, test or sample

�Not meant to create routine right of direct access to a party’s electronic information system

�Courts should guard against intrusiveness

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Rule 34: Production of Documents, Electronically

Stored Information and Things . . . (cont.)

– Translated if necessary into reasonably usable form

�May need to provide some amount of technical support, information on application software or other assistance

– Requesting party may specify/responding party may object to form

– Unless otherwise agreed or dictated

� responding party must produce information in a form in which it is usually maintained or a form that is reasonably usable

�Need not produce the same electronically stored information in more than one form

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ESI Likely to be Requested Through Discovery in a Labor and Employment Case

� Payroll Databases

� HR Databases

� E-mail

� Proprietary Systems

� Phones

� Computers/Home Computers

� PDAs

� Calendars

� Back-up media

� Third-party/Vendor-hosted systems

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Emerging Sources – Recent Cases

� Yahoo account/Chat room communications

� GPS

� E-mail hyperlinks

� SIM cards

� Unified Messaging

� Text and Instant Messages

� Cache files

� Random Access Memory (“RAM”)

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– Easton Sports, Inc. v. Warrior Lacrosse, Inc., 2006 WL 2811261 (E.D.Mich. Sept. 28, 2006) (termination of personal Yahoo e-mail account immediately after receiving notice of lawsuit constituted spoliation warranting negative inference instruction)

– Morgan v. U.S. Xpress, Inc., 2006 WL 1548029 (M.D.Ga. June 2, 2006) (holding that defendant had a duty to preserve satellite positioning data maintained on its internal computer system, and that conflicts surrounding the availability of the data on the defendant’s computer system after fourteen days, the retention of such data on back up tapes, and defendant’s motivation in destroying those tapes after notice of the litigation, were factual matters that must be resolved by a juryat trial)

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– Malletier v. Dooney & Bourke, Inc., 2006 WL 3851151 (S.D.N.Y. Dec. 22, 2006) (no duty to preserve communications from customer relations chat room because technology that it utilized did not provide a ready means for retaining such communications; “[Plaintiff’s claim that defendant should have preserved this data] is more akin to a demand that a party to a litigation install a system to monitor and record phone calls coming into its offices on the hypothesis that some of them may contain relevant information. There is no such requirement . . .”)

– Philips v. Netblue, Inc., 2007 WL 174459 (N.D.Cal. Jan. 22, 2007) (no duty to preserve hyperlinks contained in e-mails)

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– Convolve, Inc. v. Compaq Computer Corp., 223 F.R.D. 162 (S.D.N.Y. 2004) (holding that defendant did not have to preserve intermediate wave forms or trajectory data generated by tuning engineer and displayed on oscilloscope, because such data was “ephemeral. They exist only until the tuning engineer makes the next adjustment, and then the document changes. No business purpose ever dictated that they be retained, even briefly.” NOTE: Discussion about IM, but refusing to offer opinion on the circumstances under which the failure to preserve IM would be considered spoliation.)

– SEC 17a-4; NASD 3010 (require broker-dealers to store Instant Messages for 2 years/on-line; 3 years/near-line)

– Columbia Pictures, Inc. v. Bunnell , 245 F.R.D. 443 (C.D.Cal.) (2007) (data stored in RAM, however, temporarily, is electronically stored information subject to discovery under the circumstances of the case)

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Emerging Sources:It’s a Two-Way Street . . .

� Focus is often on the Defendant(s)

� Qualcomm = Plaintiff

� Even in a single plaintiff case, the parties should not lose sight of the fact that both parties have duties and responsibilities with respect to e-discovery, and that a failure to abide by them can have serious consequences. See e.g.,

– Leon v. IDX Sys. Corp. (9th Cir. 2006) (affirming spoliation sanction and dismissal of plaintiff’s ADA/discrimination lawsuit, because plaintiff wiped the unallocated space on his laptop’s hard drive before turning it over to defendant’s expert for examination)

– Kvitka v. Puffin Co., LLC (M.D.Pa. 2009) (dismissing plaintiff’s lawsuit because plaintiff threw away “old” laptop that was having technical problems – although it may have contained recoverable relevant e-mails – upon purchasing a new one, after the duty to preserve had been triggered)

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Smith v. Café Asia (D.D.C. Oct. 2, 2007)

It’s a Two-Way Street:Image on a Cell Phone

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Beye v. Horizon Blue Cross Blue Shield ofNew Jersey (U.S.D.C.D.NJ July 31, 2008)

It’s a Two-Way Street:Social Networking Sites

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It’s a Two-Way Street:

� “Twitter gets you fired in 140 characters or less: The ‘it’ social networking tool of the hour streamlines your humiliation”

� "Aggie basketball game is about to start on espn2 for those of you that aren't going to bother watching Pelosi smirk for the next hour”

– Rep. Joe Barton (R-Texas) “tweets” during President Obama’s State of the Union Address

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It’s a Two-Way Street:Text Messages

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Form of Production – Recent Cases

� Paper/Hard Copy

� Native

� .tiff

� Preservation of “parent-child” relationship

� Forensic or mirror images

� Metadata

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Form of Production –Electronic vs. Hard Copy

– Lawson v. Sun Microsystems, Inc., 2007 WL 2572170 (S.D.Ind. Sep. 4, 2007) (because plaintiff specifically requested production of ESI in native format pursuant to amended Rule 34(b)(ii), defendant ordered to reproduce in electronic format substantial amounts of documents originally produced in hard copy form)

– 3M Company v. Kanbar, 2007 WL 1725448 (N.D.Cal. June 14, 2007)(ordering plaintiff to re-produce all previously produced responsive ESI in an electronically and reasonably usable format, including over 170+ boxes of previously-produced paper documents)

– DE Technologies, Inc. v. Dell, Inc ., 2007 W.L. 128966 (W.D.Va. Jan. 12, 2007) (production of documents in a searchable format, but without native “live user interface/electronic directory” satisfied Rule 34’s requirement to produce documents as they are kept in the “ordinary course of business,” instructing that “. . . Rule 34 does not necessarily require that documents be produced in an identicalformat.” ( emphasis in original)

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Form of Production –Attachments/Mirror Images

– PSEG Power New York, Inc. v. Alberici Constructors, 2007 U.S.Dist. LEXIS 66767 (N.D.N.Y. Sept. 7, 2007) (ordering plaintiff to re-produce over 3,000 e-mails and their corresponding attachments co-joined, and to solely bear the significant expense of doing so, instructing, “[T]he discovery quagmire [whereby emails were “divorced” from their attachments caused by limitations in downloading software] created by [plaintiff’s] vendor falls woefully short of comporting with the spirit of Rule 34.”)

– Powers v. Thomas M. Cooley Law School, 2006 WL 2711512 (W.D.Mich. Sept. 21, 2006) (“[D]irect inspection of an opponent’s computer should be the exception not the rule.”)

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Form of Production –Metadata

Metadata has become “the new black,” with parties increasingly seeking its production in every case, regardless of the size or complexity.Augular v. Immigration and Customs Enforcement (S.D.N.Y. 2008) (civil

rights class action)

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Metadata –Does It Need to be Produced?

Wyeth v. ImPax Laboratories, Inc. (D.Del. Oct. 26, 2006)

“ Emerging standards of electronic discovery appear to articulate a general presumption against the production of metadata . . . unless the requesting party can demonstrate a particularized need for the metadata or database production it has requested.”

Kingsway Financial v. PwC (S.D.N.Y. Dec. 31, 2008)

“ In the absence of an issue concerning the authenticity of a document or the process by which it was created, most metadata has no evidentiary value . . . Plaintiffs do not identify the types of metadata they seek nor do they explain why metadata is relevant in this matter. In addition, plaintiffs do not raise any questions about the authenticity of any documents produced by PwC nor do they claim that any document has been improperly ‘doctored’ or modified. . . . In light of the dubious value of metadata and plaintiffs’ total failure to explain its relevance to the claims and defenses in this action, plaintiffs’ application to compel its production is denied.”

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New Federal Rule of Evidence 502

PUBLIC LAW NO. 110-322. Limits the circumstances under which inadvertent disclosure of information results in waiver of the attorney-client privilege or work product protection.

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New Federal Rule of Evidence 502 –What is covered

� Federal � Federal and Federal � State (?)

� Inadvertent Waiver and Subject Matter Disclosure

� Inadvertent Waiver: middle ground approach � reasonable steps to prevent disclosure and to rectify error (conflicts over “careless”vs. “intentional” vs. “any” inadvertent disclosure constitutes waiver)

� Subject Matter Disclosure: limits “subject matter waiver” unless other material on the same subject “ought in fairness” to be considered

� Makes clear that a confidentiality order provides protection outside of the litigation in which the order was entered (“quick peak” and “clawback” agreement protection against Third Parties if entered as a Court Order)

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New Federal Rule of Evidence 502 –What is not covered

� State � State (strong objection by Conference of State Chief Judges)

� Does not alter federal or state law on whether communication is protected by the attorney-client privilege or work product doctrine in the first instance

� Does not address other types of waivers, including “selective waivers”

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New Federal Rule of Evidence 502 –Practical Problems

� Open constitutional issue: Federal � State (applicability of Federal Rule of Evidence in State Court proceeding)

� “reasonable steps” not defined

� “ought in fairness” and “same subject matter” not defined

� “produce now assert later” � can’t un-ring the bell

� Flawed premise: current law on waiver of privilege primarily responsible for rising costs of e-discovery � too limited a view

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Keyword Searches

This Opinion should serve as a wake-up call . . . about the need for careful thought, quality control, testing, and cooperation with opposing counsel in designing search terms or “keywords” to be used to produce emails or other electronically stored information.Gross Construction v. American Manufacturers Mutual Ins. Co. (S.D.N.Y. March 19, 2009)

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Keyword Searches –Experts

U.S. v. Michael John O’Keefe , 2008 WL 449729 (D.D.C. February 18, 2008) (expert testimony may be needed for e-discovery keyword searches) (Facciola, J.):

"Whether search terms or 'keywords' will yield the information sought is a complicated question involving the interplay, at least, of the sciences of computer technology, statistics and linguistics . . . Given this complexity, for lawyers and judges to dare opine that a certain search term or terms would be more likely to produce information than the terms that were used is truly to go where angels fear to tread. This topic is clearly beyond the ken of a layman and requires that any such conclusion be based on evidence that, for example, meets the criteria of Rule 702 of the Federal Rules of Evidence."

Equity Analytics, LLC. V. Lundin, 2248 F.R.D. 331 (D.D.C. March 7, 2008) (applying O’Keefe to a civil case) (Facciola, J.):

“I recently commented that lawyers express as facts what are actually highly debatable propositions as to the efficacy of various methods used to search electronically stored information. . . . I am going to require [the expert to submit a detailed affidavit as to the search methodology].”

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Keyword Searches –Controls for Reliability

Victor Stanley, Inc. v. Creative Pipe, Inc., 2008 WL 2221841 (D.Md. May 29, 2008) (defendants waived privilege with respect to documentsproduced using a keyword search methodology) (Grimm, J.):

“[W]hile it is universally acknowledged that keyword searches areuseful tools for search and retrieval of ESI, all keyword searches are not created equal; and there is a growing body of literature that highlights the risks associated with conducting an unreliable orinadequate keyword search or relying exclusively on such searches for privilege review. . . . Common sense suggests that even a properly designed and executed keyword search may prove to be over-inclusive or under-inclusive, resulting in the identification of documents as privileged which are not, and non-privileged which, in fact, are. The only prudent way to test the reliability of the keyword search is to perform some appropriate sampling of the documents determined to be privileged and those determined not to be in order to arrive at a comfort level that the categories are neither over-inclusive nor under-inclusive."

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Cooperation, Cooperation, Cooperation

– Rule 26(f) Duty to meet and confer

• Specifically covers “any issues relating to . . . discovery of electronically stored information, including the form or forms in which it should be produced”

– Mancia v. Mayflower Textile Servs. Co, 2008 WL 4595175 (D.Md. Oct. 15, 2008) (Grimm, J.)

• The discovery rules specifically oblige all parties to engage in good faith efforts to resolve e-discovery issues

– The Sedona Conference Cooperation Proclamation 1 (2008)

• Cooperation in Discovery is Consistent with Zealous Advocacy

• Cooperative Discovery is Required by the Rules of Civil Procedure

• Publicly endorsed by over 40 federal and state judges

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� Berkshire Life Insurance Company of America , 2007 WL 347376 (D.Colo. Nov.13, 2007) (technical incompetence, mistake or ignorance of counsel is not a good faith defense to motion to compel: “Unfortunately, Plaintiff’s counsel does not employ a full time computer technician, [sic] occasionally a technology issues [sic] arises which exceeds Plaintiff's computer expertise.”)

� Martin v. Northwestern Mutual Life Insurance Company , 2006 WL 148991 (M.D.Fla. Jan. 19, 2006) (Claim that counsel is computer illiterate and therefore incapable of retrieving e-mails “is frankly ludicrous” and does not serve as a good faith defense to sanctions motion)

Technical Ignorance is not a Defense

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Lack of Counsel’s Skill Cited

� Court ordered a prevailing party’s attorneys fees for time spent on discovery to be reduced after finding that her

“inhibited ability to participate meaningfully in electronic discovery” was indicative of “novice skills in this area” and not “experienced counsel.”

Chen v. Dougherty , 2009 WL 1938961 (W.D. Wash. July 7, 2009)

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“Courts Unsympathetic to eDiscovery

Ignorance or Misconduct”

� 138 reported eDiscovery opinions issued from January 1, 2008 to October 31, 2008:

– 25% addressed court-ordered sanctions

– 20% addressed data production

– 13% addressed preservation/spoliation issues

– 12% addressed forensic protocols and experts

– 11% addressed discoverability/admissibility issues

– 7% addressed privilege considerations and waivers

– 7% addressed various procedural issues

– 6% addressed cost considerations

58%58%

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Paul D. WeinerNational E-Discovery Counsel

THANK YOU


MAKING A CASE FOR TEAMWORK

E‐Discovery in Employment Litigation

Cost‐Saving Strategies for Preserving, Obtaining and Protecting Electronically Stored

Information

James F. Glunt, ShareholderT: 412 562 8449 F: 412 562 1041

[email protected]

October 13, 2009

2© Copyright 2009 Buchanan Ingersoll & Rooney

What Makes E-Discovery Different?

► Staggering quantity of information.► Often destroyed or modified in

ordinary course.► In the search for the truth, electronic

information might prove you wrong.


Creating a Pre-Litigation Plan

Trigger: “Reasonable Anticipation” Case Law Examples

• Computer Assoc. Int’l, Inc. v. Am Fundware, 133 F.R.D. 168 (D. Colo. 1990)

• Capitol Chevrolet v. S. Medly, 614 SO.2d 439 (Ala. 1993)

• Maguire v. Acufex Microsurgical, Inc., 175 F.R.D. 149 (D. Mass 1997)

• Scott v. IBM Corp., 196 F.R.D. 233 (D.N.J. 2000)• Zubalake v. UBS Warburg, 220 F.R.D. 212

(S.D.N.Y. 2003)


Leading Case

Zubulake v. UBS Warburg• Employment discrimination case.• Court found UBS willfully deleted relevant e-mails

and failed to locate, preserve, and produce relevant electronic information.

• Employer was sanctioned through adverse inference instruction to the jury at trial.

• Jury found for plaintiff -- $29 million verdict.• Leading case for principle that attorneys must take

affirmative steps to comply with and monitor preservation obligations as to ESI.


When does the duty to preserve arise?

Zubulake v. UBS Warburg

April 27, 2001 -- Zubulake’s coworkers sent emails titled “attorney client priviladge” [sic] to her supervisor, calling for her termination.

August 16, 2001 -- Zubulake (current employee at the time) filed EEOC charge.

August 29-30, 2001 -- USB in-house counsel told “everyone” that “nothing gets deleted.”

February 14, 2002 -- Zubulake filed federal court lawsuit.

August 2002 -- USB in-house counsel directed IT to stop recycling back-up tapes.



► At the time when litigation was reasonably anticipated – April 2001.

► Why April 2001?» As of April 2001 “almost everyone associated

with Zubulake recognized the possibility that she might sue.”

» Emails were titled “Attorney Client Privileged.”» Supervisor testified the thought that Zubulake

might sue was “in the back of my head” in April 2001.



The duty to preserve attaches when a party knows or reasonably should know that evidence (including ESI) may be relevant to anticipated, threatened, or pending litigation.


Triggering Events► Pre-Litigation Potential Triggering Events

- Rejected applicant- Workplace injury- Internal complaints- Denial of promotion or transfer- EEOC charge- Termination of employment- Refusal to sign a release agreement- Claim or demand letter

► Filing of Complaint in State or Federal Court


Relationship to Work Product Doctrine

► Reasonable anticipation of litigation = duty to preserve.

► Attorney work product doctrine protects the mental impressions and opinions of legal counsel when there is reasonable anticipation of litigation.

► Same trigger.


The Sedona Conference

► Commentary on Legal Holds: The Trigger and the Process

► Eleven Guidelines• Guideline 1 and illustrations.• Guideline 3 and illustrations.• Guideline 4 and factors.


Guideline 1

Reasonable anticipation of litigation arises when an organization is on notice of a credible threat it will become involved in litigation or anticipates taking action to initiate litigation.


Guideline 1 (Illustrations)

Letter claims new employees stole trade secrets. Investigation reveals information asserted as a trade secret was publicly known for years. Company making threat has done so in the past without initiating litigation.



Company receives a cease-and-desist letter regarding a particular business practice, and moving forward complies with the demand, without notifying the sender.


Guideline 3

The adoption of a process for the reporting of a threat of litigation to a responsible decision maker is a factor that demonstrates reasonableness and good faith.



► Large company – internal website (intranet) provides a place for employees to report threats of litigation.

► Small company – agenda for daily staff meetings includes whether anyone knows of a threat of litigation.


Guideline 4

The determination of whether litigation is reasonably anticipated should be based on a good faith and reasonable evaluation of relevant facts and circumstances.


Guideline 4 Factors

► Nature and specificity of threat► Party making threat► Business relationship► Whether party is known to be litigious► Strength of threatened claim► Experience in the industry► Likelihood data will be destroyed



ScopeKnow your IT/MIS SystemsKnow your Document and ESI Retention PoliciesKnow who the key players are

Employment Records Covered – What Many Employers Miss



Litigation Response Planning

Importance of Rule 502

Importance of Rule 26(f) Conference

“Cooperation Proclamation”


Creating a Pre-Litigation PlanBest Practice Tips

Do not permit legal counsel to routinely mark email or other documents as protected by work-product doctrine unless you are prepared to accept a preservation obligation based on reasonableanticipation of litigation. Limit legends, when used on correspondence and memos, to “Confidential.”Develop a simple procedure for reporting potential litigation to a central function. Follow an objective and deliberative process for assessing whether reported issues constitute reasonable anticipation of litigation, and memorialize the analysis, particularly when the conclusion is that litigation is not reasonably anticipated.Customize the pre-litigation hold process for the particular organization, matter, custodians, type(s) of ESI to be preservedand relevant time frame. If customized appropriately, well-drafted pre-litigation hold orders will demonstrate good faith and reasonableness in light of facts known at the time.

Our clients face electronically stored information (ESI) management and e-discovery challenges every day. The pre-litigation duty to preserve is one issue we are increasingly partnering with our clients to address. If appropriate preservation efforts are not made before a state or federal court complaint is filed, relevant ESI may be gone, or may no longer be reasonably accessible, when the complaint is filed and discovery ensues. The absence of relevant ESI may be a good thing in litigation, at least in terms of cost control. But that is true only if there was no duty to preserve ESI. Otherwise, the absence of relevant ESI is a significant problem, with great potential to directly affect the result of the litigation (through settlement or on the merits).

This paper addresses some of the challenges we have recently teamed with our clients to address. We note that recognizing the pre-litigation duty to preserve is dependent, in part, on the potential claims to be prosecuted or defended against.

1. When does the pre-litigation duty to preserve arise? This is probably the most challenging question we address with our clients, and the most important. The lawyerly answer comes from case law, and varies a bit from state to state and circuit to circuit, but is typically stated something like this:

The duty to preserve attaches when a party knows or reasonably should know that evidence (including ESI) may be relevant to anticipated, threatened or pending litigation.

Thus, the pre-litigation trigger is often framed as "reasonable anticipation of litigation." Note the similarity to application of the work-product doctrine, which does not (despite some common misperceptions) attach to every document created directly or indirectly by an attorney. Rather, the work-product doctrine, which generallyprotects the mental impressions and opinions of counsel, attaches when there is reasonable anticipation of litigation. Conceptually this is the same trigger as the pre-litigation duty to preserve. We have, at times, been ableto exploit some intellectual sloppiness on the part of opposing counsel when assertions are made on a privilege log regarding application of the work-product doctrine that are inconsistent with positions taken with respect to the pre-litigation duty to preserve. In other words, assertion of the work-product doctrine had better coincide temporally with the implementation of preservation efforts.

ESI MANAGEMENT AND E-DISCOVERY APPROACHES: THE PRE-LITIGATION DUTY TO PRESERVEbe

st practices

Jayson R. Wolfgang is a shareholder in the Litigation section at Buchanan Ingersoll & Rooney's Harrisburg office. His civil litigation practice includes commercial, tort, insurance, healthcare, procurement, patent and other litigation for corporations, financial institutions, health care entities, small to mid-size businesses, municipalities and individuals. You can reach him at [email protected] or by calling 717 237 4852.

James (Jay) F. Glunt is an associate in the Labor and Employmentsection at Buchanan's Pittsburgh office. His practice involves helpingclients avoid litigation through counseling regarding policies andprocedures, work/family balance issues and government regulations.He also handles employment litigation in state and federal courtsand before administrative agencies. You can reach him [email protected] or by calling 412 562 8449.

Jayson R. Wolfgang James (Jay) F. Glunt

Best Practice Tip: Do not permit inside or outside legal counsel to routinely mark email or other documents as protected by the work-product doctrine unless you are prepared to accept a preservationobligation based on reasonable anticipation of litigation. Instead, limit legends, when used on ordinarycorrespondence and memos, to "confidential."

2. What are some examples of situations where a pre-litigation duty to preserve has arisen? This is a fact-specific analysis, not amenable to a one-size-fits-all or checklist approach. Some situations are unambiguous —there is a pre-litigation duty to preserve when opposing counsel sends a detailed and specific claim letter, andwhen a current or former employee files a charge of employment discrimination, and when a governmentagency issues a subpoena. (Note that the duty to preserve attaches to both sides of an anticipated adversarialprocess.) The central factors as to whether litigation should be anticipated are reasonableness and good faith;therefore, documenting the analysis might be helpful if there is a future dispute. Some examples from courtsaround the country:

• Pre-litigation meeting. The parties to a contract held a meeting to discuss one party's belief that the contracthad been breached. The meeting was unsuccessful in resolving the dispute. A federal court complaint wasserved three weeks later.

• Internal correspondence. Supervisors and co-workers exchanged emails anticipating that an employee mightsue for discrimination. Some of the emails were marked "attorney client privilege." An EEOC charge was filedfour months later.

• Intentional destruction. The owner of equipment substantially destroyed in a fire hired an appraisal firm to evaluate the damage. The owner then disposed of the equipment to avoid excessive storage costs. Elevenmonths later, the owner filed a civil action against the party apparently responsible for the fire.

The courts in all of these cases held that the duty to preserve arose before the complaint (or charge) was filed.

Best Practice Tip: Develop a simple procedure for reporting potential litigation to a central function (such as in-house counsel or a compliance officer). Follow an objective and deliberative process for assessing whether reported issues constitute reasonable anticipation of litigation, and memorialize the analysis, particularly when the conclusion is that litigation is not reasonably anticipated. With aprocess in place, the absence of a report will help show good faith when ESI is not preserved.

3. How should the pre-litigation hold process be implemented? Again, this is very much a case-by-case assessment. A reasonable litigation (here, pre-litigation) hold process will vary from organization to organization,and within an organization from matter to matter, and within a matter from custodian to custodian. This is one area where we are often called on to partner with our clients — to help determine the boundaries of reasonable preservation efforts when litigation is reasonably anticipated, but has not yet commenced. We note that generally speaking, we tend to find that our assessment of reasonable efforts takes a middle ground between what our clients initially intended to do, and what e-discovery consultants will likely advise based on their assessment of worst-case scenario court opinions.

We usually discuss the following questions with our clients:

• What specific claims and defenses are anticipated? This aspect of the analysis is not terribly different fromissue-spotting on a law school exam, and is instrumental in ensuring that all potentially relevant ESI is preserved.For example, if defense of a claim of employment discrimination is anticipated, ESI related to the claimant mustbe preserved, of course. But it will also be critical to preserve ESI and other evidence related to comparator employees, to demonstrate consistent application of legitimate, nondiscriminatory policies regardless of protected status.

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• Who are the likely custodians of ESI? The custodians will include the "key players" — those individuals withfirst-hand knowledge of the facts relative to likely claims and defenses — and also those individuals responsiblefor the functions where relevant ESI may reside (for example, HR or IT departments). We are often askedwhether ESI custodians include contractors, suppliers or consultants to our client. The prudent answer is yes if our client has "possession, custody, or control" over ESI maintained by these third parties. As a practical matter, when working on matters in a pre-litigation phase, we try to identify these third-party custodians and,where appropriate, frame a written request to preserve (as opposed to an order to preserve, unless an orderwould be appropriate under the circumstances).

• What are the relevant time frames? This assessment can be critical for keeping costs under control, and has to include an analysis of the limitations period applicable to the anticipated claims or defenses. In a pre-litigationassessment, we typically recommend a time frame for preservation that slightly exceeds the likely limitations period, which may later be expanded if litigation results and relevant discovery include earlier time periods.

• What are the types of ESI to be preserved? All sources of ESI must be considered. This will almost always include email. The more challenging issues often relate to identifying potentially relevant ESI other than email— things like ESI stored in document management systems, "loose" data and ESI stored on laptop computers,portable devices, storage devices, backup tapes and legacy systems all have to be discussed.

• How will preservation be effectuated? We can't imagine a situation where we would not suggest issuance ofa written preservation notice to the identified custodians of potentially relevant ESI. This has to be specificallytailored, however, to the client, matter, custodians, type(s) of ESI to be preserved and relevant time frame. Otherwise, there is a risk of inadvertently directing preservation of too much ESI, in light of what can and willactually happen. In other words, when helping a client with pre-litigation preservation efforts, we want to make sure that there is a match between what the written hold directs and what is, in fact, done. For that to happen, we as outside counsel need to be very actively involved in the follow-up efforts, as acknowledgedand required by nearly every recent court to address an e-discovery battle. To prevent claims of spoliation related to preservation efforts, we will often engage a vendor to assist with pre-litigation preservation and/orlimited collection and instruct the vendor to be prepared as a potential witness to explain its process anddemonstrate chain of custody.

Best Practice Tip: The pre-litigation hold process must be customized for the particular organization, matter, custodians, type(s) of ESI to be preserved and relevant time frame. By its very nature, the process is one where litigation is anticipated, and thus the work-product doctrine may protect information about the preservation efforts from discovery, particularly where hold memos and the like would reveal an attorney's mental impressions about the anticipated litigation. Nonetheless, hold orders should be drafted on the assumption they will be discoverable. If customized appropriately, well-drafted pre-litigation hold orders will demonstrate good faith and reasonableness in light of factsknown at the time.

We hope this short paper has helped to identify some best practices related to the pre-litigation duty to preserve.Feel free to contact us with comments and questions.

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Jayson R. WolfgangOne South Market Square213 Market Street, 3rd FloorHarrisburg, PA 17101-2121

T 717 237 4852 :: F 717 233 [email protected]

James (Jay) F. GluntOne Oxford Centre

301 Grant Street, 20th FloorPittsburgh, PA 15219-1410

T 412 562 8449 :: F 412 562 [email protected]

www.buchananingersoll.com

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James (Jay) F. Glunt Buchanan Ingersoll & Rooney PC One Oxford Centre 301 Grant Street, 20th Floor Pittsburgh, PA 15219-1410 T 412-562-8449 F 412-562-1041 [email protected]

James (Jay) F. Glunt is a shareholder with Buchanan Ingersoll & Rooney PC, practicing in its Labor and Employment Group. Jay's practice involves counseling employers regarding policies and procedures, executive compensation, employment contracts, post-employment restrictive covenants, employee benefit programs, and government regulations. Jay is often called upon to assist the firm's transactional lawyers as to labor and employment issues raised in mergers, acquisitions, and other transactions. Jay also handles employment litigation in state and federal courts and before administrative agencies. He has spoken at many continuing education programs, and he is an annual co-author of the Pennsylvania Chapter of MLRC's "Survey of Employment Privacy Law." Jay is vice chair of the firm's working group on matters relating to electronically stored information, and regularly advises clients regarding the pre-litigation duty to preserve ESI.

A. Trigger: "Reasonable Anticipation" 1. Examples from Case Law

WHEN A PRE‐LITIGATION DUTY TO PRESERVE ATTACHES

DESCRIPTION CITATION

1 When parties have held prelitigation meetings but failed to resolve a dispute

Computer Assoc. Int'l, Inc. v. Am Fundware, 133 F.R.D. 168 (D. Colo. 1990)

2 When communications are circulated among various levels of supervisors and co‐workers in which threats of a lawsuit are considered

Zubalake v. UBS Warburg, 220 F.R.D. 212 (S.D.N.Y 2003)

3 When an administrative proceeding occurs on Maguire v. Acufex Microsurgical, Inc.,

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the same issue 175 F.R.D. 149 (D. Mass 1997)

4 In a company layoff, where company managers knew that one of the employees had made previous claims of racial discrimination

Scott v. IBM Corp., 196 F.R.D. 233 (D. N.J. 2000)

5 Where a party anticipates filing a lawsuit or has sent its own investigators to gather information on an event or accident.

Capitol Chevrolet v. S. Medly, 614 SO.2d 439 (Ala. 1993)

2. Relationship to Attorney Work Product When does the pre-litigation duty to preserve arise? This is probably the most challenging ESI question we address with our clients, and the most important. The lawyerly answer comes from case law, and varies a bit from state to state and circuit to circuit, but is typically stated something like this: The duty to preserve attaches when a party knows or reasonably should know that evidence (including ESI) may be relevant to anticipated, threatened, or pending litigation. Thus, the pre-litigation trigger is often framed as "reasonable anticipation of litigation." Note the similarity to application of the work-product doctrine, which does not (despite some common misperceptions) attach to every document created directly or indirectly by an attorney. Rather, the work-product doctrine, which generally protects the mental impressions and opinions of counsel, attaches when there is reasonable anticipation of litigation, the same conceptual trigger as the pre-litigation duty to preserve. We have, at times, been able to exploit some intellectual sloppiness on the part of opposing counsel when assertions are made on a privilege log regarding application of the work-product doctrine that are not consistent with positions taken with respect to the pre-litigation duty to preserve. In other words, assertion of the work-product doctrine better coincide temporally with the implementation of preservation efforts. 3. Sedona Conference Commentary a. Eleven guidelines. b. Guideline 1 and illustrations. c. Guideline 3 and illustrations. d. Guideline 4 and illustrations.

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B. Scope 1. Know your IT/MIS systems.

• Active servers and drives • How/where emails are stored. • Document management systems. • HR, payroll, benefits systems. • All details on backup systems.

2. Know your document and ESI retention policies.

• Issue hold directives where appropriate to stop ordinary course of conduct.

• Is hold directive enough, or is collection required? 3. Know who the key players are.

• People with knowledge of claims/defenses/comparators, and their assistants. • Where is the ESI? • Issue hold directives. • Copies, mirror images, and collection. • Metadata.

Typical Metadata Fields Judges Require to be Produced

• ParentID • AttachID • Page Count • Custodian • Author/To • Recipient/From • CC • BCC • Subject • Title • Comments • Date Created • Last Modified Date • Last Access Date • Date Sent • Date Received • Directory Path

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C. Employment Records Covered - What Many Employers Miss 1. Analyze the potential claim. 2. Preserve ESI regarding the potential claimant. 3. Preserve ESI regarding the potential comparators. 4. Preserve ESI regarding your defenses. D. Litigation Response Planning 1. Importance of Rule 502

The following provisions apply, in the circumstances set out, to disclosure of a communication or information covered by the attorney-client privilege or work-product protection. (a) Disclosure made in a Federal proceeding or to a Federal office or agency; scope of a waiver.--When the disclosure is made in a Federal proceeding or to a Federal office or agency and waives the attorney-client privilege or work-product protection, the waiver extends to an undisclosed communication or information in a Federal or State proceeding only if: (1) the waiver is intentional; (2) the disclosed and undisclosed communications or information concern the same subject matter; and (3) they ought in fairness to be considered together. (b) Inadvertent disclosure.--When made in a Federal proceeding or to a Federal office or agency, the disclosure does not operate as a waiver in a Federal or State proceeding if: (1) the disclosure is inadvertent; (2) the holder of the privilege or protection took reasonable steps to prevent disclosure; and (3) the holder promptly took reasonable steps to rectify the error, including (if applicable) following Federal Rule of Civil Procedure 26(b)(5)(B). (c) Disclosure made in a State proceeding.--When the disclosure

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is made in a State proceeding and is not the subject of a State-court order concerning waiver, the disclosure does not operate as a waiver in a Federal proceeding if the disclosure: (1) would not be a waiver under this rule if it had been made in a Federal proceeding; or (2) is not a waiver under the law of the State where the disclosure occurred. (d) Controlling effect of a court order.--A Federal court may order that the privilege or protection is not waived by disclosure connected with the litigation pending before the court--in which event the disclosure is also not a waiver in any other Federal or State proceeding. (e) Controlling effect of a party agreement.--An agreement on the effect of disclosure in a Federal proceeding is binding only on the parties to the agreement, unless it is incorporated into a court order. (f) Controlling effect of this rule.--Notwithstanding Rules 101 and 1101, this rule applies to State proceedings and to Federal court-annexed and Federal court-mandated arbitration proceedings, in the circumstances set out in the rule. And notwithstanding Rule 501, this rule applies even if State law provides the rule of decision. (g) Definitions.--In this rule: (1) “attorney-client privilege” means the protection that applicable law provides for confidential attorney-client communications; and (2) “work-product protection” means the protection that applicable law provides for tangible material (or its intangible equivalent) prepared in anticipation of litigation or for trial.

2. Importance of Rule 26(f) Conference 3. Sedona Conference "Cooperation Proclamation"

Reconciling Disparate Data and Retention Policies

Scott A. MilnerMorgan, Lewis & Bockius LLP

Introduction

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Record management in a perfect world

• An organization will retain 3 buckets of records: – Legal Requirements (statutes, regs)– Business Need– Legal Hold

• Memorialized in a Retention Policy and Schedule• Policy addresses electronically stored

information• Appropriate technology has been deployed to

manage data retention• Program includes compliance audits

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Record management in a perfect world

• Record/Data Policies include: – Record retention policy and schedule– Legal Hold Policy– Data Storage Policy– Acceptable Use Policy– Disaster Recovery Policy– Information Security Policy

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Reality is not so perfect

• Close to half of all US companies surveyed do not have a record retention policy

• Those that do report that the policy does not address electronically stored information

Source: 2007 Cohasset ARMA AIIM Electronic Records Management Survey

• Estimates suggest that 95% of the information stored by US companies is junk

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Yet . . .

• When failure to produce records in litigation is result of comprehensive and consistently enforced record retention program, program becomes a defense to claims of spoliation– United States v. Arthur Andersen, 125 S. Ct. 2129

(2005)– Park v. City of Chicago, 297 F.3d 606 (7th Cir. 2002)– Lewy v. Remington Arms Co., Inc., 836 F.2d 1104 (8th

Cir. 1988)– Cf. Testa v. Wal-Mart Stores, Inc., 144 F.3d 173 (1st

Cir. 1998)

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But . . .

• Failure to have a retention policy can provide evidence of spoliation– New Case: Adams v. Dell, Inc., 2009 WL 910801 (D.

Utah, March 30, 2009)– "An organization should have reasonable policies and

procedures for managing its information and records…. The absence of a coherent document retention policy is a pertinent factor to consider when evaluating sanctions …. Information management policies are not a dark or novel art. Numerous authoritative organizations have long promulgated policy guidelines for document retention and destruction.”

Proactive Record Management

A Holistic Approach

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Creation Retention Destruction

Lifecycle of a Record


Record Creation

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• Employee Training is Key• Training program should include:

– Litigation Primer– Best Practices– Record Retention Program Implementation

Creation

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• Litigation Primer• Employees should know:

– Litigants are generally entitled to all non-privileged potentially relevant records of the other party

– Records include email and other electronically stored information

– Organizations are obligated to produce records within the company’s “possession, custody or control”

– Such records include all records received, created or stored by employees including personal communications from corporate computers and corporate communications from personal computers

• Note to Multinationals: the above is US only. EU Data Protection law requires distinct policies for non-US operations

Creation

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• Best Practices Training Highlights:• Be scrupulously accurate• Create documents that memorialize resolution of

issues rather than debate or argue points• Always include context for communication• Limit preparation of critical evaluations to

employees with responsibility for the function being evaluated

• Avoid editorial comment, rhetoric, conjecture, speculation, gratuitous characterizations

• Do not distribute documents indiscriminantly• Treat email as you would treat any other medium of

business communication• Do not use email for privileged or confidential

communications

Creation

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• Record Retention Program Implementation• Employees should know:

– Importance of program– Distinction between “business records” and “records of

transitory value”– How to store and discard business records in

accordance with program– Consequences of failure to properly retain records

• Sarbanes-Oxley Act of 2002• Title 18 Obstruction of Justice• Civil Penalties including adverse inference

Creation


Record Retention

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• All retention should be policy driven• Policy should be designed to meet

business needs and legal obligations• Policy should be comprehensive, yet

simple– Must address both electronic data and paper– Clearly state rationale for policy– Include retention/destruction schedules– Include an exception for litigation hold

Retention

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• Best Practices– Create Taxonomy of “Records”– Organize by functional area

• Tax, HR, Finance

– Interview representatives of each functional area

• Current business practices• Nomenclature• Rational deviations from statutory/legal minimum

retention periods

– Memorialize in Schedule

Retention

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• Best Practices– Research laws and regulations applicable to

each record type– Develop retention/destruction schedules for

each type– Describe retention method

• Beware of “off the shelf” policies and schedules

Retention

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• Caution:– Do not use format to determine retention

period• ie. Delete all email after 45 days

– A policy ignored is worse than no policy at all

• Develop a mechanism for auditing and compliance

Retention

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• Ensure regulatory compliance– Records laws change slowly– It is more likely that business practices will

change• Complete review of business lines

– New lines of business have new requirements

– Older lines of business may be beyond retention periods

Retention


Record Destruction

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• Documents must be destroyed “in the ordinary course of business” to be legally defensible

• One time destruction should be avoided • Destruction must be suspended for

anticipated or pending litigation or investigation

Destruction

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• Destruction Methods should minimize risk of:– Loss of confidential/trade secret information– HIPAA violations– Consumer protection/privacy violations– Identity Theft

Destruction

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• Hard Copy:– Sensitive business and HR records should

be destroyed by professionals– Destruction should be certified– Day to day destruction of business records

should be done with shredders• Electronic Records:

– Recycling and reformatting is preferred method for tapes and drives

– But it is virtually impossible to guarantee destruction

Destruction


Litigation Hold

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• Suspend Retention Policy– Reasonable anticipation of litigation

• Credible threat• More likely than not

– Release the hold and apply retention schedule

• Certain that dispute is resolved

Litigation Hold

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• Design your “litigation hold” with the following questions in mind:– Whose documents must be retained?

• Who are the key players? • Which business units, locations, departments have

information relevant to the claims or defenses of any party?

– What time period is implicated by the hold?• Documents extant at the time the obligation is

triggered• Newly created materials

Litigation Hold

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• Design your “litigation hold” with the following questions in mind:– What kind of information is likely to be

implicated?• Hard-copy documents?• Computerized or other digital data?• Voice, video data?• Is this data accessible?

Litigation Hold

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• Key Components of a Litigation Hold:– Subject

• Directive regarding preservation of potential discovery materials and electronic data

– Description of Scope • Define potentially relevant information • Explain breadth of definition• Caution re: underinclusive v. overinclusive

– Definition of “Document”• Expansive meaning includes hard-copy paper, electronic

data, email and attachments, databases, drafts, notes, calendars, etc.

Litigation Hold

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• Key Components of a Litigation Hold:– Distribution list:

• All “key players”• Others with potentially relevant records• “Super” custodians

– Sender – someone with “corporate heft”• GC or in-house counsel• Company’s compliance officer• Other

– Identify who the employees can call for help

Litigation Hold

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• Key Components of a Litigation Hold:– Specific instructions to halt routine destruction of each

document type as appropriate: paper, email, text tiles, databases, etc.

– Instructions highly contingent on: • Sophistication of client’s IT infrastructure• Client’s IT resources• Volume of implicated data• Amount at stake in litigation• Likelihood of discovery dispute• Agreement of parties

Litigation Hold

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Reconciling Disparate Data and Retention Policies

Scott A. MilnerMorgan, Lewis & Bockius LLP