e-DISCOVERY

UPDATE

Thomas R. Nolasco

ESI is Nearly Everywhere

Desktop PC Smart phones Thumb drives

Laptop USB Storage devices Portable hard drives

Tablet Digital cameras iPods/MP3 players

Network file servers Digital video recorders Xbox/Game Consoles

E-mail servers Digital video cameras Automotive EDRs

Legacy systems Paging devices Digital copy machines

Routine back-up tapes Digital audio recorders Cloud computing

Disaster recovery tapes Voicemail Social media sites

Security cameras Medical devices Home appliances

95% of Business Data is Created by ESI

ESI DataPaper Data

Check Your ESI I.Q.Do you Know These Terms?

Native format TIFF

Sedona Principles De-NIST

Metadata Load file

Parent-child relation FRE 502

Quick peek Claw back

Litigation hold Predictive Coding

TAR Zubulake

Unallocated space Not reasonably accessible

Educating the Client About its e-Discovery Obligations

• There is a steep learning curve;• Expect some pushback:o Different, more complex vs paper discovery;

“Why do you need to know/have that?”o More Employees may be involved;

IT personnel, anyone who sends, receives or maintains relevant ESI

“Why do you need to bother them?”o Added expenses and stress for the client;

“Why does it cost so much more than before?”

Help the Client to Understand

• e-Discovery is the “new normal”;o Rules have been in place since 2006

• Courts will impose sanctions on those who resist or ignore e-Discovery rules;

• e-Discovery can become “weaponized”, much to your client’s disadvantage.

Assess Your Client’s Capabilities for e-Discovery

• Before the Rule 16/26 conferences, you need to know what you can commit your client to do!o Timing of ESI disclosures, scope of production, form of

production, privilege, privacy, trade secret issueso Consider how e-Discovery can become “weaponized”

due to asymmetrical ESI volumes or e-Discovery expertise between the parties

Preservation Policies

• Does client have a document retention policy?o Does the policy account for ESI? (If not, time to update!)o Has it been followed:

• Has the client executed a litigation hold before?o How did that work out?o Was the IT staff included

• Does client understand its preservation duty?

Are You Your Client’s Keeper?

• Courts will hold lawyers and clients jointly accountable for e-Discovery failures

• Lawyers are expected to:o Speak with client’s IT staff and “key players” who

created, received, sent and store ESIo Understand the client’s system architecture, and o Monitor and confirm their client’s compliance with e-

Discovery duties

Are You Your Client’s Keeper?

“…counsel must become fully familiar with her client’s document retention policies, as well as the client’s data retention architecture. This will invariably involve speaking with information technology personnel, who can explain system-wide backup procedures and the actual (as opposed to theoretical) implementation of the firm’s recycling policy. It will also involve communicating with the “key players” in the litigation, in order to understand how they stored information.”

Zubulake v. UBS, 229 F.R.D. 422 (S.D.N.Y. 2004)

Locate and Interview ESI Key Players

• Employees, contractors, consultants controlled by the client who created, received or stored ESIo Anyone who holds relevant, company-controlled ESI

Including current and former personnel

• Determine what ESI was created, sent, received and stored, including locations and recipientso Be thorough, and document your findings

• Expand the litigation hold, as needed

Verify the Litigation Hold

• Must be done. Part of counsel’s duty

• Obtain written acknowledgements from key players and IT staff and store for later use.

• Schedule and implement regular reminders through the life of the case.o To remind existing employeeso To inform new employees

Rule 502 – Privilege Issues• Evidence Rule 502 responds to the complaint that litigation

costs necessary to protect against waiver of attorney-client privilege or work product have become prohibitive due to the concern that any disclosure (however innocent or minimal) will operate as a subject matter waiver of all protected communications or information.

• This concern is especially troubling in cases involving electronic discovery. See, e.g. Hospon v. City of Baltimore, 232 F.R.D. 228, 244 (D. Md. 2005)

Privilege Considerations

• Evidence Rule 502o All e-Discovery plans/agreements should reference it;

malpractice otherwise???o Applies when there is a disclosure of a communication or

information covered by attorney-client privilege or work-product protection;

o May limit a privilege waiver, if not avoid it altogether;

Privilege Considerations

• Evidence Rule 502(e):

• Allows parties to agree that there is no waivero Agreement alone is binding only on the parties

• Incorporating the agreement into a Court order makes it effective as to 3rd parties beyond the agreemento “Clawback” Agreementso “Quick Peek”/”Data Dump” Agreements

Why Bother With e-Discovery Issues at the Rule 16 Conference?

• Rule 16 scheduling conferences require a discussion of e-Discovery;o Courts expect substantive discussions at ESI issues

between counsel;

• You Need to prepare for e-Discovery anywayo Rule 26 disclosures (federal)

Why Bother With ESI at Conference?

• Possible e-Discovery topics to discuss at the Rule 16 conference:o Limitations on ESI Production?

Concept of “proportionality”o Format of ESI production? Timetable?o Scope of e-Discovery? Privilege issues?o Shared vendor? Search terms?o How many custodians? Cost sharing?o Protective Order? Rolling productions?

Prepare for e-Discovery Topics at the Rule 16/26 Conference

• Assess the client’s ESI situation:o Its prior experience with e-Discovery

Novice? Sophisticated? Good? Bad? Sanctions?

o What kind of ESI does it keep? How much?

o How many custodians may be involved?

o How much time will we need to collect, sort and produce it? Will we need to retain an e-Discovery vendor?

Prepare for e-Discovery Topics at the Rule 16/26 Conference

• If you’re unprepared re ESI, you may:o Unwittingly commit your client to obligations it cannot

meet; Possible discovery sanctions…unhappy client;

o Cause the “weaponization” of e-Discovery against our client: You may create the appearance of vulnerability; Invite more aggressive e-Discovery tactics; Leading to sanctions, a “coercive” settlement outcome, or

worse…

Clawback Agreement

• Permits the producing party(s) to forego a privilege review altogether in favor of an agreement to return (“clawback”) inadvertently produced privileged material with no waiver of privilege.

• In large volume of ESI cases, it can expedite production and avoid the high cost of a privilege review by the producing party

Quick Peek/Data Dump Agreement

• Allows a party to “pre-produce” documents or ESI prior to reviewing them for privilege without waiving its right to assert applicable privileges.

• The requesting party then performs a preliminary relevance review of the produced material, allowing it to tailor its discovery requests.

• Producing party can then assert privilege over materials within what was requested. No waiver.

What Happens if Not Implemented?

• (Old) Minority view: Failure to send a timely legal hold letter is “gross negligence per se”; evidence spoliation is presumed.o Negative inference jury instructions given + possible

monetary sanctions + more.

• (Current) Majority View: It depends. Sanctions warranted if evidence loss is proven due to lack of a timely legal hold.

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Sanctions for Failures

• Common e-Discovery sanctions involve:o Litigation hold shortcomingso Inadequate ESI searches, preservation and collectiono Lack of supervision by counsel to confirm complianceo Lack of cooperation between the parties.o Intentional spoilation of evidence

Sanctions for Failures

• Litigation hold shortcomings:o Failure to issue one at allo Failure to issue one in writingo Failure to issue one in a timely mannero Failure to issue one to the IT departmento Failure to issue one to all key playerso Failure to issue one to all custodians of relevant ESIo Failure to verify receipt and compliance by recipients o Failure to issue reminders during the course of the case

Sanctionable Misconduct:Even Big Companies Made Mistakes

Apple, Inc. v. Samsung Elec. Cos, Ltd., (N.D. Cal. July 25, 2012)

• Patent infringement case re smart phones;• Both sides failed to timely implement proper legal

hold procedures, resulting in spoliation of evidence;o Didn’t implement legal holds soon enougho Didn’t include all the key playerso Didn’t notify the IT department to stop automatically

deleting emails

• Both sides were sanctions by the Court• Apple won the trial - $900 million verdict

Ad-Hoc Document Retention PolicyDoes Not Excuse Failure to Preserve ESI

Northington v. H & M International(N.D. Ill, January 12, 2011)

• Discrimination claims against employer; employer failed to produce relevant documents and e-mails;

• Employer’s HR VP only collected documents that were sent to her; ESI data collection was done ad hoc

• Court: Employer was “reckless” and “grossly negligent” in failing to initiate legal hold to preserve relevant ESI;

• Sanction: Adverse inference jury instruction at trial + attorneys’ fees and costs

Sanctionable Misconduct in ArizonaScience Care, Inc. v. Donna Goyette

Maricopa County, Arizona, CV 2009-032397 (March 7, 2011)

• Intentional deletion of ESI from laptops by Defendanto “Disk wiping” software used to try to hide deletionso Plaintiff’s computer expert found evidence of wiping

software

• Court ruling: “Defendant’s conduct cannot, by any stretch of the imagination be characterized as innocent or unintentional.”

• Sanctions Imposed: Default Judgmento No sufficient monetary sanctions or adverse inference to cure

the prejudice caused by ESI deletion

Questions?

Thomas R. NolascoEngelman Berger, P.C.

(602) 271-9090trn@eblawyers.com