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Preservation

eDiscovery Best Practices: You May Need to Collect from Custodians Who Aren’t There
 

A little over a week ago, we talked about how critical the first seven to ten days are in the case once litigation hits.  Key activities to get a jump on the case include creating a list of key employees most likely to have documents relevant to the litigation and interviewing those key employees, as well as key department representatives, such as IT for information about retention and destruction policies.  These steps are especially important as they may shed light on custodians you might not think about – the ones who aren’t there.

No, I’m not talking about the Coen brothers’ movie The Man Who Wasn’t There, starring Billy Bob Thornton, I’m talking about custodians who are no longer with the organization.

Let’s face it, when key employees depart an organization, many of those organizations have a policy in place to preserve their data for a period of time to ensure that any data in their possession that might be critical to company operations is still available if needed.  Preserving that data may occur in a number of ways, including:

  • Saving the employee’s hard drive, either by keeping the drive itself or by backing it up to some other media before wiping it for re-use;
  • Keeping any data in their network store (i.e., folder on the network dedicated to the employee’s files) by backing up that folder or even (in some cases) simply leaving it there for access if needed;
  • Storage and/or archival of eMail from the eMail system;
  • Retention of any portable media in the employee’s possession (including DVDs, portable hard drives, PDAs, cell phones, etc.).

As part of the early fact finding, it’s essential to determine the organization’s retention policy (and practices, especially if there’s no formal policy) for retaining data (such as the examples listed above) of departed employees.  You need to find out if the organization keeps that data, where they keep it, in what format, and for how long.

When interviewing key employees, one of the typical questions to ask is “Do you know of any other employees that may have responsive data to this litigation?”  The first several interviews with employees often identify other employees that need to be interviewed, so the interview list will often grow to locate potentially responsive electronically stored information (ESI).  It’s important to broaden that question to include employees that are no longer with the organization to identify any that also may have had responsive data and try to gather as much information about each departed employee as possible, including the department in which they worked, who their immediate supervisor was and how long they worked at the company.  Often, this information may need to be gathered from Human Resources.

Once you’ve determined which departed employees might have had responsive data and whether the organization may still be retaining any of that data, you can work with IT or whoever has possession of that data to preserve and collect it for litigation purposes.  Just because they aren’t there doesn’t mean they’re not important.

So, what do you think?  Does your approach for identifying and collecting from custodians include those who aren’t there?  Please share any comments you might have or if you’d like to know more about a particular topic.

Disclaimer: The views represented herein are exclusively the views of the author, and do not necessarily represent the views held by CloudNine Discovery. eDiscoveryDaily is made available by CloudNine Discovery solely for educational purposes to provide general information about general eDiscovery principles and not to provide specific legal advice applicable to any particular circumstance. eDiscoveryDaily should not be used as a substitute for competent legal advice from a lawyer you have retained and who has agreed to represent you.

eDiscovery Best Practices: When Litigation Hits, The First 7 to 10 Days is Critical

When a case is filed, several activities must be completed within a short period of time (often as soon as the first seven to ten days after filing) to enable you to assess the scope of the case, where the key electronically stored information (ESI) is located and whether to proceed with the case or attempt to settle with opposing counsel.  Here are several of the key early activities that can assist in deciding whether to litigate or settle the case.

Activities:

  • Create List of Key Employees Most Likely to have Documents Relevant to the Litigation: To estimate the scope of the case, it’s important to begin to prepare the list of key employees that may have potentially responsive data.  Information such as name, title, eMail address, phone number, office location and where information for each is stored on the network is important to be able to proceed quickly when issuing hold notices and collecting their data.
  • Issue Litigation Hold Notice and Track Results: The duty to preserve begins when you anticipate litigation; however, if litigation could not be anticipated prior to the filing of the case, it is certainly clear once the case if filed that the duty to preserve has begun.  Hold notices must be issued ASAP to all parties that may have potentially responsive data.  Once the hold is issued, you need to track and follow up to ensure compliance.  Here are a couple of recent posts regarding issuing hold notices and tracking responses.
  • Interview Key Employees: As quickly as possible, interview key employees to identify potential locations of responsive data in their possession as well as other individuals they can identify that may also have responsive data so that those individuals can receive the hold notice and be interviewed.
  • Interview Key Department Representatives: Certain departments, such as IT, Records or Human Resources, may have specific data responsive to the case.  They may also have certain processes in place for regular destruction of “expired” data, so it’s important to interview them to identify potentially responsive sources of data and stop routine destruction of data subject to litigation hold.
  • Inventory Sources and Volume of Potentially Relevant Documents: Potentially responsive data can be located in a variety of sources, including: shared servers, eMail servers, employee workstations, employee home computers, employee mobile devices, portable storage media (including CDs, DVDs and portable hard drives), active paper files, archived paper files and third-party sources (consultants and contractors, including cloud storage providers).  Hopefully, the organization already has created a data map before litigation to identify the location of sources of information to facilitate that process.  It’s important to get a high level sense of the total population to begin to estimate the effort required for discovery.
  • Plan Data Collection Methodology: Determining how each source of data is to be collected also affects the cost of the litigation.  Are you using internal resources, outside counsel or a litigation support vendor?  Will the data be collected via an automated collection system or manually?  Will employees “self-collect” any of their own data?  Answers to these questions will impact the scope and cost of not only the collection effort, but the entire discovery effort.

These activities can result in creating a data map of potentially responsive information and a “probable cost of discovery” spreadsheet (based on initial estimated scope compared to past cases at the same stage) that will help in determining whether to proceed to litigate the case or attempt to settle with the other side.

So, what do you think?  How quickly do you decide whether to litigate or settle?  Please share any comments you might have or if you’d like to know more about a particular topic.

Disclaimer: The views represented herein are exclusively the views of the author, and do not necessarily represent the views held by CloudNine Discovery. eDiscoveryDaily is made available by CloudNine Discovery solely for educational purposes to provide general information about general eDiscovery principles and not to provide specific legal advice applicable to any particular circumstance. eDiscoveryDaily should not be used as a substitute for competent legal advice from a lawyer you have retained and who has agreed to represent you.

eDiscovery Case Law: “Naked” Assertions of Spoliation Are Not Enough to Grant Spoliation Claims
 

In Grabenstein v. Arrow Electronics, Inc., No. 10-cv-02348-MSK-KLM, 2012 U.S. Dist. LEXIS 56204 (D. Colo. Apr.23, 2012), Colorado Magistrate Judge Kristen L. Mix denied the plaintiff’s motion for sanctions, finding that their claims of spoliation were based on “naked” assertions that relevant eMails must exist even though the plaintiff could not demonstrate that such other eMails do or did exist.  The motion was also denied because the plaintiff could not establish when the defendant had deleted certain eMail messages, thereby failing to prove claims that the defendant violated its duty to preserve electronic evidence. Judge Mix noted that sanctions are not justified when documents are destroyed in good faith pursuant to a reasonable records-retention policy, if that’s prior to the duty to preserve such documents.

In this employment discrimination case, the plaintiff filed a motion for sanctions, claiming that the defendant failed to retain all eMail messages exchanged internally as well as between the defendant and the plaintiff’s insurer, MetLife, regarding the plaintiff’s short-term disability leave.

Defining the requirement for a finding of spoliation, Judge Mix stated, “A spoliation sanction is proper where (1) a party has a duty to preserve evidence because it knew, or should have known, that litigation was imminent, and (2) the adverse party was prejudiced by the destruction of the evidence.”

Here, Judge Mix found the plaintiff’s contentions that relevant eMails were missing to be “fatally unclear” since neither the plaintiff nor the defendant knew whether other such eMails existed. The plaintiff was also unable to provide any verification that MetLife’s log of relevant eMails exchanged with the defendant was incomplete or had been altered. As a result, Judge Mix was “unable to find that the e-mails produced by MetLife are incomplete and that Defendant destroyed the only complete versions of those e-mails”.

There were some eMails which the defendant admittedly did not preserve.  As to whether those eMails had been deleted after the duty to preserve them had arisen, Judge Mix discussed the standard under the spoliation doctrine: “‘[I]n most cases, the duty to preserve evidence is triggered by the filing of a lawsuit. However, the obligation to preserve evidence may arise even earlier if a party has notice that future litigation is likely.’” Here, Judge Mix found that the plaintiff had not produced any evidence that the defendant should have anticipated litigation prior to receiving actual notice of the filing of the lawsuit. The plaintiff was also unable to show any evidence at all when the defendant had destroyed the eMails that would rebut the defendant’s attorney’s statement that the eMails were deleted prior to the start of litigation. As a result, the plaintiff did not meet its burden of establishing that the defendant had violated its duty to preserve.

While finding that the defendants had violated a records retention policy regulation applicable to the Equal Employment Opportunity Commission when it deleted the eMails, Judge Mix found that it had not done so in bad faith, and it had been simply following its own eMail retention policy in the normal course of business. Accordingly, the plaintiff’s motion for sanctions was denied.

So, what do you think?  Was the ruling fair or should the defendants have been sanctioned for the deleted eMails?  Please share any comments you might have or if you’d like to know more about a particular topic.

Disclaimer: The views represented herein are exclusively the views of the author, and do not necessarily represent the views held by CloudNine Discovery. eDiscoveryDaily is made available by CloudNine Discovery solely for educational purposes to provide general information about general eDiscovery principles and not to provide specific legal advice applicable to any particular circumstance. eDiscoveryDaily should not be used as a substitute for competent legal advice from a lawyer you have retained and who has agreed to represent you.

eDiscovery Best Practices: Documentation is Key to a Successful Discovery Effort
 

We like to point out good articles about eDiscovery on this blog to keep our readers aware of trends and best practices.  I recently read an article on InsideCounsel titled E-discovery: Memorializing the e-discovery process, written by Alvin Lindsay, which had some good specific examples of where good documentation is important to prevent sanctions and save litigation costs.

Litigation Holds

The author notes that, since the Zubulake opinions issued by Judge Shira Scheindlin in 2003 and 2004, 1) most jurisdictions have come to expect that parties must issue a litigation hold “as soon as litigation becomes reasonably foreseeable”, and 2) “oral” litigation holds are unlikely to be sufficient since the same Judge Scheindlin noted in Pension Committee that failure to issue a “written” litigation hold constitutes “gross negligence”.  His advice: “make sure the litigation hold is in writing, and includes at minimum the date of issue, the recipients and the scope of preservation”.  IT personnel responsible for deleting “expired” data (outside of retention policies) also need to receive litigation hold documentation; in fact, “it can be a good idea to provide a separate written notice order just for them”.  Re-issuing the hold notices periodically is important because, well, people forget if they’re not reminded.  For previous posts on the subject of litigation holds, click here and here.

Retention Policies and Data Maps

Among the considerations for documentation here are the actual retention and destruction policies, system-wide backup procedures and “actual (as opposed to theoretical) implementation of the firm’s recycle policy”, as well as documentation of discussions with any personnel regarding same.  A data map provides a guide for legal and IT to the location of data throughout the company and important information about that data, such as the business units, processes and technology responsible for maintaining the data, as well as retention periods for that data.  The author notes that many organizations “don’t keep data maps in the ordinary course of business, so outside counsel may have to create one to truly understand their client’s data retention architecture.”  Creating a data map is impossible for outside counsel without involvement and assistance at several levels within the organization, so it’s truly a group effort and best done before litigation strikes.  For previous posts on the subject of data maps, click here and here.

Conferences with Opposing Counsel

The author discusses the importance of documenting the nature and scope of preservation and production and sums up the importance quite effectively by stating: “If opposing parties who are made aware of limitations early on do not object in a timely fashion to what a producing party says it will do, courts will be more likely to invoke the doctrines of waiver and estoppel when those same parties come to complain of supposed production infirmities on the eve of trial.”  So, the benefits of documenting those limitations early on are clear.

Collecting, Culling and Sampling

Chain of custody documentation (as well as a through written explanation of the collection process) is important to demonstrating integrity of the data being collected.  If you collect at a broad level (as many do), then you need to cull through effective searching to identify potentially responsive ESI.  Documenting the approach for searching as well as the searches themselves is key to a defensible searching and culling process (it helps when you use an application, like FirstPass®, powered by Venio FPR™, that keeps a history of all searches performed).  As we’ve noted before, sampling enables effective testing and refinement of searches and aids in the defense of the overall search approach.

Quality Control

And, of course, documenting all materials and mechanisms used to provide quality assurance and control (such as “materials provided to and used to train the document reviewers, as well as the results of QC checks for each reviewer”) make it easier to defend your approach and even “clawback” privileged documents if you can show that your approach was sound.  Mistakes happen, even with the best of approaches.

So, what do you think?  These are some examples of important documentation of the eDiscovery process – can you think of others?  Please share any comments you might have or if you’d like to know more about a particular topic.

Disclaimer: The views represented herein are exclusively the views of the author, and do not necessarily represent the views held by CloudNine Discovery. eDiscoveryDaily is made available by CloudNine Discovery solely for educational purposes to provide general information about general eDiscovery principles and not to provide specific legal advice applicable to any particular circumstance. eDiscoveryDaily should not be used as a substitute for competent legal advice from a lawyer you have retained and who has agreed to represent you.

eDiscovery Case Law: Plaintiff Compelled to Produce Mirror Image of Drives Despite Defendant’s Initial Failure to Request Metadata
 

In Commercial Law Corp., P.C. v. FDIC, No. 10-13275, 2012 U.S. Dist. LEXIS 51437 (E.D. Mich. Apr. 12, 2012), Michigan District Judge Sean F. Cox ruled that a party can be compelled to produce a mirror image of its computer drives using a neutral third-party expert where metadata is relevant and the circumstances dictate it, even though the requesting party initially failed to request that metadata and specify the format of documents in its first discovery request.

The plaintiff was an attorney who sought to recover fees from the FDIC for services in its capacity as receiver for a bank. The plaintiff claimed that it held valid liens on properties of the bank, and provided an eMail to the bank as evidence. The FDIC disputed the plaintiff’s claim, contended that she was lying and sought to compel her to produce a mirror image of her computer drives to examine relevant data pertaining to the lien documents. Magistrate Judge R. Steven Whalen ordered the plaintiff to compel, and the plaintiff objected.

Judge Cox ruled that there was a proper basis for ordering an exact copy of her drives to be created and also agreed that it was appropriate to be performed by a neutral third-party expert, finding:

  • That such an examination would reveal relevant information pursuant to Rule 26 because “[t]he date Plaintiff executed the security lien is clearly relevant to a defense against Plaintiff’s attorney lien claim”;
  • That there were a number of factors that gave the defendant “sufficient cause for concern” as to the authenticity of the lien documents, shooting down the plaintiff’s claim that the court was simply following a “hunch”;
  • That a third-party expert is an appropriate way to execute the examination.

Despite the fact that the defendant did not request metadata nor specify the format of the documents in its initial discovery request, Judge Cox permitted an expert to obtain relevant metadata. Judge Cox noted:

“It is clear from the parties’ pleadings that Defendant’s concern regarding the legitimacy of the lien documents intensified during the course of discovery. Specifically, Defendant did not obtain the January 18, 2010 email [claiming the lien documents were attached] until it deposed Karl Haiser in August of 2011, well after it submitted its first discovery requests to Plaintiff. “

As a result, the plaintiff’s objections to the Magistrate Judge Whalen’s order were overruled.

So, what do you think?  Should the defendant have been granted another opportunity at the metadata or should the plaintiff’s objections have been granted?  Please share any comments you might have or if you’d like to know more about a particular topic.

Disclaimer: The views represented herein are exclusively the views of the author, and do not necessarily represent the views held by CloudNine Discovery. eDiscoveryDaily is made available by CloudNine Discovery solely for educational purposes to provide general information about general eDiscovery principles and not to provide specific legal advice applicable to any particular circumstance. eDiscoveryDaily should not be used as a substitute for competent legal advice from a lawyer you have retained and who has agreed to represent you.

eDiscovery Trends: Where Does the Money Go? RAND Provides Some Answers
 

The RAND Corporation, a nonprofit research and analysis institution recently published a new 159 page report related to understanding eDiscovery costs entitled Where the Money Goes: Understanding Litigant Expenditures for Producing Electronic Discovery by Nicholas M. Pace and Laura Zakaras that has some interesting findings and recommendations.  To obtain either a paperback copy or download a free eBook of the report, click here.

For the study, the authors requested case-study data from eight Fortune 200 companies and obtained data for 57 large-volume eDiscovery productions (from both traditional lawsuits and regulatory investigations) as well as information from extensive interviews with key legal personnel from the participating companies.  Here are some of the key findings from the research:

  • Review Makes Up the Largest Percentage of eDiscovery Production Costs: By a whopping amount, the major cost component in their cases was the review of documents for relevance, responsiveness, and privilege (typically about 73 percent). Collection, on the other hand, only constituted about 8 percent of expenditures for the cases in the study, while processing costs constituted about 19 percent in the cases.  It costs about $14,000 to review each gigabyte and $20,000 in total production costs for each gigabyte (click here for a previous study on per gigabyte costs).  Review costs would have to be reduced by about 75% in order to make those costs comparable to processing, the next highest component.
  • Outside Counsel Makes Up the Largest Percentage of eDiscovery Expenditures: Again, by a whopping amount, the major cost component was expenditures for outside counsel services, which constituted about 70 percent of total eDiscovery production costs.  Vendor expenditures were around 26 percent.  Internal expenditures, even with adjustments made for underreporting, were generally around 4 percent of the total.  So, almost all eDiscovery expenditures are outsourced in one way or another.
  • If Conducted in the Traditional Manner, Review Costs Are Difficult to Reduce Significantly: Rates currently paid to “project attorneys during large-scale reviews in the US may well have bottomed out” and foreign review teams are often not a viable option due to “issues related to information security, oversight, maintaining attorney-client privilege, and logistics”.  Increasing the rate of review is also limited as, “[g]iven the trade-off between reading speed and comprehension…it is unrealistic to expect much room for improvement in the rates of unassisted human review”.  The study also notes that techniques for grouping documents, such as near-duplicate detection and clustering, while helpful, are “not the answer”.
  • Computer-Categorized Document Review Techniques May Be a Solution: Techniques such as predictive coding have the potential of reducing the review hours by about 75% with about the same level of consistency, resulting in review costs of less than $2,000 and total production costs of less than $7,000.  However, “lack of clear signals from the bench” that the techniques are defensible and lack of confidence by litigants that the techniques are reliable enough to reliably identify the majority of responsive documents and privileged documents are barriers to wide-scale adoption.

Not surprisingly, the recommendations included taking “the bold step of using, publicly and transparently, computer-categorized document review techniques” for large-scale eDiscovery efforts.

So, what do you think?  Are you surprised by the cost numbers?  Please share any comments you might have or if you’d like to know more about a particular topic.

Disclaimer: The views represented herein are exclusively the views of the author, and do not necessarily represent the views held by CloudNine Discovery. eDiscoveryDaily is made available by CloudNine Discovery solely for educational purposes to provide general information about general eDiscovery principles and not to provide specific legal advice applicable to any particular circumstance. eDiscoveryDaily should not be used as a substitute for competent legal advice from a lawyer you have retained and who has agreed to represent you.

eDiscovery Case Law: Court Allows Third Party Discovery Because Defendant is an “Unreliable Source”
 

Repeatedly referring to the defendant’s unreliability and untrustworthiness in discovery and “desire to suppress the truth,” Nebraska Magistrate Judge Cheryl R. Zwart found, in Peter Kiewit Sons’, Inc. v. Wall Street Equity Group, Inc., No. 8:10CV365, (D. Neb. May 18, 2012), that the defendant avoided responding substantively to the plaintiff’s discovery requests through a pattern of destruction and misrepresentation and therefore monetary sanctions and an adverse jury instruction at trial were appropriate. 

In this trademark action, Judge Zwart awarded sanctions of extensive discovery costs against a defendant that destroyed discoverable electronic evidence, failed to search for and locate other electronically stored information (ESI), and made false representations in affidavits and in court regarding its efforts to search for this evidence. In addition, she allowed the plaintiff to conduct discovery by contacting directly the defendant’s current and former clients, despite the court’s acknowledgment that such contact could harm the defendant’s business. Finally, Judge Zwart recommended an adverse jury instruction be given at trial.

Throughout a lengthy and contentious discovery process, the defendant claimed that its failure to produce any electronic documents containing the plaintiff’s mark demonstrated that there simply were no such documents. What the court ultimately discovered, however, was that no documents were produced for very different reasons: (1) the defendant appeared to have a virtually nonexistent records retention policy; (2) the defendant recovered its external hard drives from its landlord just before the landlord received a subpoena for the hard drives, leading the landlord to claim he did not possess the files; (3) to “comply” with discovery requests, the defendant had an employee who is not a computer expert conduct a keyword search consisting of one word (“Kiewit”) of the defendant’s files (from her own workstation) for the name of the plaintiff’s mark and recovered only two nonresponsive documents; and (4) the defendant discarded what it claimed was a non-functioning server the same month that it received notice of the plaintiff’s discovery requests.

The court ordered a forensic examination of the defendants’ computer systems that revealed thousands of documents containing the keyword “Kiewit” on its face as well as in its metadata. It also revealed at least one document that had been previously produced was missing from the electronic files, contributing to the evidence of spoliation. In ruling, the court pointed out that “considering Defendant’s very liberal policy of not keeping documents, consolidating their records in one location, or organizing their files, their efforts to locate relevant electronic files were woefully inadequate.”

As a consequence of the defendants’ “obstreperous” conduct, Judge Zwart found sanctions were appropriate, including monetary awards and an adverse jury instruction. She granted sanctions pursuant to its “authority to sanction the misconduct of parties and their attorneys . . . derived from the Federal Rules of Civil Procedure and the inherent power of the court,” as well as its “power to shape the appropriate remedy including default judgment, striking pleadings, an adverse jury instruction, and an award of attorney’s fees and costs” derived from precedent. Judge Zwart noted, “The most severe sanctions are reserved for those litigants demonstrating ‘blatant disregard of the Court’s orders and discovery rules’ [and] engaging in a pattern of deceit by presenting false and misleading answers and testimony under oath in order to prevent their opponent from fairly presenting its case.’”

Furthermore, Judge Zwart found the defendants’ conduct dictated that the plaintiff should be permitted to conduct third-party discovery. The plaintiff argued that it needed to contact the defendants’ clients in an effort to determine whether and how the defendants used the plaintiff’s trademark, whereas the defendants argued that they would suffer “irreparable harm” should the plaintiff reach out to their current and former clients. Despite courts’ general reluctance to allow direct contact with litigants’ clients in intellectual property cases, Judge Zwart here found that the plaintiff showed the clients’ information was “relevant and necessary”; moreover, because “Defendants are simply not a reliable source of information” and they “continue to attempt to use client confidentiality as a means of preventing Plaintiff from discovering relevant information,” the plaintiff’s contact with the clients would be proper.

So, what do you think?  Did the court’s sanctions go far enough or should they have been even tougher?  Please share any comments you might have or if you’d like to know more about a particular topic.

Case Summary Source: Applied Discovery (free subscription required).  For eDiscovery news and best practices, check out the Applied Discovery Blog here.

Disclaimer: The views represented herein are exclusively the views of the author, and do not necessarily represent the views held by CloudNine Discovery. eDiscoveryDaily is made available by CloudNine Discovery solely for educational purposes to provide general information about general eDiscovery principles and not to provide specific legal advice applicable to any particular circumstance. eDiscoveryDaily should not be used as a substitute for competent legal advice from a lawyer you have retained and who has agreed to represent you.

eDiscovery Case Law: Spoliation of Data Can Lead to Your Case Being Dismissed
 

In 915 Broadway Associates LLC v. Paul, Hastings, Janofsky & Walker, LLP, 34 Misc. 3d 1229A (N.Y. Sup. Ct. 2012), the New York Supreme Court imposed the severest of sanctions against the plaintiffs for spoliation of evidence – dismissal of their $20 million case.

In this case, the plaintiffs, 915 Broadway, sued its former counsel, Paul Hastings LLP, for legal malpractice. The plaintiffs were initially a party to a separate action involving a failed real estate deal, as a result of which a litigation hold letter was issued in April 2008.  When that action was settled, the plaintiffs brought this malpractice suit against its former attorneys in August of 2008, alleging that the defendants failed to adequately instruct them during contract negotiations with a third party to draw on a $20 million line of credit before it expired.

Even though the litigation hold letter from April 2008 was sent to the primary custodians, at least one principal was determined to have actively deleted relevant emails. Additionally, the plaintiffs made no effort to suspend the automatic destruction policy of emails, so emails that were deleted could not be recovered.  Ultimately, the court found that 9 of 14 key custodians had deleted relevant documents. After the defendants raised its spoliation concerns with the court, the plaintiffs continued to delete relevant information, including decommissioning and discarding an email served without preserving any of the relevant ESI.

Citing Zubulake, the court held that “once a party reasonably anticipates litigation, it must suspend its routine document retention/destruction policy and put in place a litigation hold” as the standard for adequate preservation. To implement a sufficient legal hold, a party must also ensure that affirmative steps are taken identify and preserve potentially relevant ESI and oversee organizational compliance with the legal hold.

To establish sanctions, the court noted: “[T]he party seeking sanctions must establish that (1) the party with control over the evidence had an obligation to preserve it at the time it was destroyed; (2) the records were destroyed with a "culpable state of mind"; and (3) the destroyed evidence was "relevant" to the moving party's claim or defense”.

In this case, the court found that:

  1. Joel Poretsky (the principal Australian representative of TRAK Associates, LLC (TRAK), an entity that owns more than 31% of 915 Broadway), “actively” deleted electronic documents related to the transaction “by his own admission”;
  2. The documents were destroyed with a "culpable state of mind" because “they were deleted intentionally and then permanently destroyed beyond any possible recovery either intentionally, or as the result of gross negligence”; and
  3. The evidence destroyed by Poretsky was “likely relevant to Paul Hastings' claims that (1) 915 Broadway and its managing members bore some, if not all, of the responsibility for monitoring the Letter of Credit's expiration date…and (2) 915 Broadway failed to mitigate its damages and voluntarily broke the chain of causation by settling with Normandy for nothing without any investigation”.

As a result, the court granted the defendants’ motion to dismiss the case and also awarded reimbursement of its attorney's fees and costs incurred in filing the motion.

So, what do you think?  Was case dismissal appropriate or was it too harsh a sanction?  Please share any comments you might have or if you’d like to know more about a particular topic.

Disclaimer: The views represented herein are exclusively the views of the author, and do not necessarily represent the views held by CloudNine Discovery. eDiscoveryDaily is made available by CloudNine Discovery solely for educational purposes to provide general information about general eDiscovery principles and not to provide specific legal advice applicable to any particular circumstance. eDiscoveryDaily should not be used as a substitute for competent legal advice from a lawyer you have retained and who has agreed to represent you.

eDiscovery Trends: Wednesday LTWC 2012 Sessions
 

As noted yesterday, LegalTech West Coast 2012 (LTWC) is happening this week and eDiscoveryDaily is here to report about the latest eDiscovery trends being discussed at the show.  There’s still time to check out the show if you’re in the Los Angeles area with a number of sessions (both paid and free) available and 69 exhibitors providing information on their products and services, including (shameless plug warning!) my company, CloudNine Discovery, which just announced yesterday release of Version 11 of our linear review application, OnDemand®, and will be exhibiting at booth #216 along with our partners, First Digital Solutions.  Come by and say hi!

Perform a “find” on today’s LTNY conference schedule for “discovery” and you’ll get 21 hits.  More eDiscovery sessions happening!  Here are some of the sessions in the main conference tracks:

10:30 – 12:00 AM:

Information Governance and Information Management

With the volume of electronically stored information (ESI) growing exponentially and the challenges surrounding managing it, protecting it, and developing effective policies are essential. Social media, email, IMs, web pages, mobile devices and the cloud have made a big job even bigger. How much or how little should you collect? How aggressive should you be? How can you be certain your approach and results are defensible?

Speakers are: Richard E. Davis, JD, e-Discovery Solutions Architect & Founder, Litigation Logistics, LLC; Jack Halprin, Head of eDiscovery, Google; Dawson Horn, III, Senior Litigation Counsel, Tyco International and David Yerich, Director, eDiscovery, UHG Legal Department, United Health Group.

The GARP® Principles and eDiscovery

Attendees will hear from experts on the GARP Principles and eDiscovery as well as:

  • Understand the importance of proactive records management through the eight GARP® Principles
  • Revisit the GARP® Principles and learn how their role is magnified by recent case law
  • Learn what to do before eDiscovery: how GARP® precedes and complements the EDRM

Speakers are: Gordon J. Calhoun, Esq., Lewis Brisbois Bisgaard &, Smith LLP; Lorrie DeCoursey, Former Law Firm Administrator and John J. Isaza, Esq., Partner, Rimon P.C.  Moderator: David Baskin, Vice President of Product Management, Recommind.

1:30 – 3:00 PM:

Practical Handbook for Conducting International eDiscovery – Tips and Tricks

This session will present a truly international view on how to conduct global eDiscovery from a practical perspective, including developing proactive global document retention policies and assuring multi-jurisdictional compliance, best practices of global data preservation and collection, successful data migration across jurisdictions, navigating unique cultural and procedural challenges in various global regions, handling multi-lingual data sets as well as strategic positioning of hosting data centers.

Speakers are: Monique Altheim, Esq., CIPP, The Law Office of Monique Altheim; George I. Rudoy, Founder & CEO, Integrated Legal Technology, LLC and David Yerich, Director, eDiscovery, UHG Legal Department, United Health Group.

Litigation Preparedness Through Effective Data Governance

Be prepared. This panel will go through the benefits of data governance in your litigation preparedness and discuss benefits such as:

  • Auto-classification of legacy and newly created content
  • What is email management and is it ready for prime-time?
  • Review the court's findings on the complexities of ESI, including metadata, native formats, back-up tapes, mobile devices, and legacy technology
  • Key questions to ask before outsourcing ESI to the cloud

Speakers are: Lorrie DeCoursey, Former Law Firm Administrator; John J. Isaza, Esq., Partner, Rimon P.C. and Ayelette Robinson, Director – Knowledge Technology, Littler Mendelson.  Moderator: Derek Schueren, GM, Information Access and Governance, Recommind.

3:30 – 5:00 PM:

Managed and Accelerated Review

As costs for review soar and volumes of data multiply at an almost exponential rate, traditional linear review seems to be giving way to new technologies that will enable faster, better, more defensible eDiscovery results. How can you be assured that this new approach will catch everything that needs to be captured? Will human review become obsolete? What do you need to ask when considering this new technology? How should it be incorporated into your overall litigation strategy?

Speakers are: Matthew Miller, Manager, Fraud Investigation & Dispute Services, Ernst & Young; Robert Miller, Founder, Rise Advisory Group, LLC; Former Discovery Counsel, BP; David Sun, Discovery Project Manager, Google.

eDiscovery Circa 2015: Will Aggressive Preservation/Collection and Predictive Coding be Commonplace?

Who's holding back on Predictive Coding, clients or outside counsel? This session will discuss if aggressive preservation/collection of predictive coding will become commonplace as well as:

  • How aggressive should clients be with preservation/collection?
  • How to use effective searching, sampling, and targeting tools and techniques to not over-collect

Speakers are: Gordon J. Calhoun, Esq., Lewis Brisbois Bisgaard &, Smith LLP; Lorrie DeCoursey, Former Law Firm Administrator and Greg Chan, Senior Regional Litigation Technology Manager, Bingham McCutchen LLP.  Moderator: David Baskin, Vice President of Product Management, Recommind.

In addition to these, there are other eDiscovery-related sessions today.  For a complete description for all sessions today, click here.

So, what do you think?  Are you planning to attend LTWC this year?  Please share any comments you might have or if you’d like to know more about a particular topic.

Disclaimer: The views represented herein are exclusively the views of the author, and do not necessarily represent the views held by CloudNine Discovery. eDiscoveryDaily is made available by CloudNine Discovery solely for educational purposes to provide general information about general eDiscovery principles and not to provide specific legal advice applicable to any particular circumstance. eDiscoveryDaily should not be used as a substitute for competent legal advice from a lawyer you have retained and who has agreed to represent you.

eDiscovery Case Law: Court Grants Plaintiff’s Motion to Compel Mirror-Imaging of Defendant’s Computers
 

In approving a motion for expedited discovery in United Factory Furniture Corp. v. Alterwitz, No. 2:12-cv-00059-KJD-VCF, (D. Nev. Apr. 6, 2012), Magistrate Judge Cam Ferenbach granted the plaintiff’s motion for a mirror-imaging order after determining the benefit outweighed the burden of the discovery, and it denied as unnecessary the plaintiff’s motion for an order to preserve evidence and a preliminary injunction from spoliation of evidence.

The plaintiff filed this motion after discovering that the defendants appeared to be tampering with the plaintiff’s computers. One of the defendants previously had been an employee of the company where he was responsible for the plaintiff company’s computer server and network services. The plaintiff alleged that he had created a “back door” to the company server that allowed him to access and alter confidential company information, such as business plans and financial, customer, and trade secret information. The other defendant, also the plaintiff’s former employee, appeared to have in her possession confidential information, as she stated she knew what the plaintiff company was writing in e-mails about her and she had—in a prior lawsuit—produced company e-mails that were neither to nor from her.

Judge Ferenbach considered the plaintiff’s motion for expedited discovery under the applicable rule that although pursuant to the Federal Rule of Civil Procedure 26(d), generally a party may not seek discovery from any source before the parties have held a Rule 26(f) conference, a court may permit expedited discovery upon a showing of good cause. Judge Ferenbach found good cause here “based on plaintiff’s allegations that defendants have access to plaintiff’s computer server, defendants have been deleting files and relevant evidence, and that evidence of their conduct, which is central to the litigation, will be erased through normal use of defendants’ computer . . . .”

In reviewing the plaintiff’s request that the court enter a mirror-imaging order, Judge Ferenbach pointed out that all information stored on a computer is discoverable, except where the request for production imposes an undue burden and expense and/or constitutes an invasion of privileged or private matter. Judge Ferenbach found no such undue burden or invasion would occur by applying and analyzing the facts against a five-pronged test:

(1) “The needs of the case” prong was met because information on the defendants’ computers was directly relevant and had to remain unaltered for the case to be litigated fairly.

(2) “The amount in controversy” prong was satisfied because the plaintiff had alleged it had suffered at least $75,000 in damages.

(3) “The importance of the issues at stake” prong was satisfied because the plaintiff had alleged the case involved the defendants’ accessing information involving business strategy, confidential customer information, and trade secrets, and the court acknowledged it had a responsibility to protect against the dissemination and misuse of such information.

(4) “The potential for finding relevant material” prong was met because the contents of the defendants’ computers were at the center of the case.

(5) “The importance of the proposed discovery in resolving the issues” prong was met because the documents and information at issue could not be produced another way.

Furthermore, the court noted, ordering mirror imaging would not result in undue expense to the defendants as the plaintiffs were paying the costs. The court additionally took measures to protect the defendants’ privacy and privilege interests by structuring the order so that a neutral computer expert would perform the mirror imaging, the expert would serve as an officer of the court, and the mirror image would be held in a sealed envelope in the clerk of court’s office until the conclusion of litigation, unless the plaintiff had reason to believe spoliation of evidence had occurred. At that time, the plaintiff could move the court for access to the mirror image.

Judge Ferenbach declined to enter a preservation order or issue a temporary injunction. He found a preservation order unnecessary because a duty existed to preserve evidence because “litigants owe an ‘uncompromising duty to preserve’ what they know or reasonably should know will be relevant evidence in a pending lawsuit,” and the complaint against the defendants and the information contained on the defendants’ computers was directly relevant to the suit against them. Judge Ferenbach found the preliminary injunction unnecessary because it ordered mirror imaging.

So, what do you think?  Were the mirror-images warranted?  Please share any comments you might have or if you’d like to know more about a particular topic.

Case Summary Source: Applied Discovery (free subscription required).

Disclaimer: The views represented herein are exclusively the views of the author, and do not necessarily represent the views held by CloudNine Discovery. eDiscoveryDaily is made available by CloudNine Discovery solely for educational purposes to provide general information about general eDiscovery principles and not to provide specific legal advice applicable to any particular circumstance. eDiscoveryDaily should not be used as a substitute for competent legal advice from a lawyer you have retained and who has agreed to represent you.