P re s e n te d b y Ja s o n A . C o p l e y a n d G e o rg e E . Pa l l a s

Who's Afraid

of

E-Discovery

What is E-Discovery?

Electronic discovery (E-discovery) refers to any

process in which electronic data is sought,

located, secured, and searched with the intent of

using it as evidence in a civil or criminal legal

case.

In general, E-discovery involves gathering,

managing, preserving and presenting electronic

evidence.

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Why is E Discovery Important?

E-discovery is important to owners, contractors,

construction managers, and consultants

because:

More and more communications are being done

electronically and are therefore stored on a computer

or database

These communications are all part of the project

record and, as with any other documentation, can

mean the difference in the outcome of a dispute or

litigation

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Electronic Data Discovery

EDD — electronic data discovery

99% of all documents are created and stored

electronically

70% of an organization’s documents exist solely as

electronically stored information

84% of organizations have been required to produce

ESI in the last two years

96% of companies are not prepared for an ESI

request

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The text, images, calendar files, databases, spreadsheets, audio

files, animation, Web sites and computer programs, Email, all

email attachments, deleted messages, business contacts,

metadata, flash video, tape backups, smart phones and PDAs,

digital signatures and time stamps on record, system generated

reports, scanned images, digital photograph, .WAV files, flash

drives, faxes, PDF files, web browser cache, digitally stored voice

mail, MS Word document and PowerPoint presentation, memo.

Types of Electronic Records Typically Sought/Produced in Discovery

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Boxes of BytesPutting It All in Perspective

Assumptions:Average banker’s box holds 2,500 sheets of paper

1 page of information on average = (.02 megabytes)

Megabytes1 2,500 50

FileSizes

= =

Typical PC Hard DiskTypical Server

Hard Disk

Terabytes

Gigabytes

10 25,000 500

20 50,000 1

100 250,000 5

200 500,000 10

300 750,000 15

400 1,000,000 20

500 1,250,000 25

1,000 2,500,000 50

2,000 5,000,000 100

5,000 12,500,000 250

10,000 25,000,000 500

20,000 50,000,000 1

40,000 100,000,000 2

60,000 150,000,000 3 6

Metadata

“Data About The Data”

Varies by type of document

Some is hidden from the user

Hidden codes within application

Internet “cookies” / search tags

Examples: Microsoft Word: document author, date of last access, last

save, last print, track changes or redlines

Microsoft Excel: formulas, hidden rows, columns, worksheets

Digital Photos: Date, camera brand and type, resolution, focal length, aperture, GPS location of photo

Digital music: album, artist, song name, sampling rate

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Reasonably Accessible ESI

Under the Federal Rules of Civil Procedure, and some state court rules, you need not produce ESI that is not reasonably accessible

Accessibility of ESI is determined on a case-by-case basis.

Address this ahead of time and you can better understand the scope of the production

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Accessibility?

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Federal Rules

Rules relating to e-discovery have been around since 2006

Most states follow these rules in creating their own rules

They did change the process of discovery significantly

Most attorneys do not follow these rules even though they are almost 5 years old

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Why E-Discovery is Different: Paper vs. Electronic Documents

Nature & Content of E-mail

Organization

Metadata

“Delete” is not the same as “Shred”

Search-ability

Environment Dependence

Quantity of Materials

E-Discovery Functionality as a Standard Business Practice

Establish and enforce Document Retention Policies

Good business practice

Supports development of E-Discovery process

Obtain email and file search functionality (via software)

Use for disaster recovery purposes

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Litigation Hold – What Is It?

Companies involved in litigation are required to preserve documents that may be relevant to a dispute

A “Litigation Hold” must be implemented to retain documents a company reasonably believes to be relevant to the dispute once a company is on notice of pending litigation.

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The Litigation Hold

Determine the point at which it is necessary to implement a litigation hold

Has a subpoena been issued or a lawsuit filed?

Is litigation anticipated? Is a claim enough?

Using as strategic tool

Balancing the risks & weighing the burdens Avoid false alarms where there are only rumors or

vague threats of litigation; threats made by a discredited plaintiff, or where the threats lack credibility.

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Litigation Hold & Zubulake

“The obligation to preserve evidence arises when the partyhas notice that the evidence is relevant to litigation or when aparty should have known that the evidence may be relevantto future litigation.” Zubulake v. UBS Warburg LLC, 220F.R.D. 212, 216 (S.D. N.Y. 2003) (Zubulake IV).

“Once a party reasonably anticipates litigation, it mustsuspend its routine document retention/destruction policy andput in place a ‘litigation hold’ to ensure the preservation ofrelevant documents.” Id. at 218.

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Litigation Hold – Who Cares?

“[T]he failure to issue a written litigation hold constitutes gross negligence because that failure is likely to result in the destruction of relevant information.” -

The Pension Committee of the University of Montreal Pension Plan v. Banc of America Securities, LLC, 685 F. Supp. 456 (S.D. N.Y. 2010).

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What Should It Cover?

The hold must direct employees (“key players”) to preserve all relevant records, paper and electronic

Determine the scope

Cover all potential document storage: laptops, PDA’s, smartphones, home computers, thumb drives, etc.

Create a mechanism for collecting preserved records

Cannot place total reliance on the employees without supervision of counsel

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Litigation Hold – The Paper Trail

It is important to document every step of the litigation hold process. Date and rationale for instituting a hold

Names and titles of the key decision-makers or custodians

Scope of the hold and how the parameters were determined

A copy of the hold notice

Dates hold notices were sent

Who received the hold notices

Date and rationale for releasing the hold

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Litigation Holds & Clients

What IT systems, software & policies regardingdocument retention does the client have?

What are the budget & costs considerations?

What impact does the hold have on the business?

What resources does the client have, can theymanage it in-house or does it need to be outsourced?

What is your client’s risk tolerance?

Failure to Comply with E-Discovery

If you are unable to produce requested evidence, the Court may allow jurors to presume that the lost evidence would have supported the other side’s claims, e.g. Coleman v. Morgan Stanley case.

If you refuse to produce, the other party can request sanctions against you and your client from the court.

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Destruction of Evidence

In SonoMedica, Inc. v. Mohler, two individual's computers were subpoenaed for examination and the Court ordered the parties to turn over their home computer "without it being touched except to turn it off." A forensic expert discovered that before turning over the computer "22,603 files/folders had been affected and that 556 were deleted manually. The court ordered a penalty of $108,212.15 in fees and costs against the third parties and referred the case for criminal proceedings.

In a wrongful termination case, Zubulake v. UBS Warburg, a $29 million verdict was returned against UBS because the company had destroyed email messages that were requested during discovery in the case.

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Spoliation

Destruction or significant and material alteration of a document or instrument

Requires destruction, as opposed to concealment of evidence

Much easier to do with Electronically Stored Information because of ease of deletion and portability of data

Obviously tied to preservation obligations of the parties in the action

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Consequences of Spoliation

Left to the Discretion of the Court

Client Sanctions ($$$$)

Dismissal of claim

Entry of default judgment against spoliatingclient

Adverse inference/leveling mechanism

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Preservation is not a cost-free operation

Preservation is not a foolproof operation

Preservation could be crippling

Communicating those facts to the Court

More Challenges in Litigation

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Questions from the floor

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