Evidence

eDiscovery Best Practices: Could This Be the Most Expensive eDiscovery Mistake Ever?

 

Many of you have Android phones.  I do, as well.  As you may know, Android is Google’s operating system for phones and Android phones have become extraordinarily popular.

However, as noted in this Computerworld UK article, it may be a failure in searching that ironically may cost Google big time in its litigation with Oracle over the Android operating system.

Google is currently involved in a lawsuit with Oracle over license fees associated with Java.  Oracle acquired Java when it purchased Sun Microsystems and many companies license Java.  Java forms a critical part of Google’s Android operating system and Google has leveraged free Android to drive mobile phone users to their ecosystem and extremely profitable searches and advertising.  Android has been so successful for Google that a loss to Oracle could result in billions of dollars in damages.

To cull down a typically large ESI population, Google turned to search technology to help identify potentially responsive and potentially privileged files.  Unfortunately for Google, a key email was produced that could prove damaging to their case.  The email was written by Google engineer Tim Lindholm a few weeks before Oracle filed suit against Google. With Oracle having threatened to sue Google for billions of dollars, Lindholm was instructed by Google executives to identify alternatives to Java for use in Android, presumably to strengthen their negotiating position.

"What we've actually been asked to do (by Larry and Sergey) is to investigate what technical alternatives exist to Java for Android and Chrome," the email reads in part, referring to Google co-founders Larry Page and Sergey Brin. "We've been over a bunch of these, and think they all suck. We conclude that we need to negotiate a license for Java under the terms we need."

Lindholm added the words “Attorney Work Product” and sent the email to Andy Rubin (Google’s top Android executive) and Google in-house attorney Ben Lee.  Unfortunately, Lindholm’s computer saved nine drafts of the email while he was writing it – before he added the words and addressed the email to Lee.  Because Lee's name and the words "attorney work product" weren't on the earlier drafts, they weren't picked up by the eDiscovery software as privileged documents, and they were sent off to Oracle's lawyers.

Oracle's lawyers read from the email at two hearings over the summer and Judge William Alsup of the U.S. District Court in Oakland, California, indicated to Google's lawyers that it might suggest willful infringement of Oracle's patents.  Google filed a motion to "clawback" the email on the grounds it was "unintentionally produced privileged material." Naturally, Oracle objected, and after a three-month legal battle, Alsup refused last month to exclude the document at trial.

How did Google let such a crucial email slip through production?  It’s difficult to say without fully knowing their methodology.  Did they rely too much on technology to identify files for production without providing a full manual review of all files being produced?  Or, did manual review (which can be far from perfect) let the email slip through as well?  Conceivably, organizing the documents into clusters, based on similar content, might have grouped the unsent drafts with the identified “attorney work product” final version and helped to ensure that the drafts were classified as intended.

So, what do you think?  Could this mistake cost Google billions?  Please share any comments you might have or if you’d like to know more about a particular topic.

 

eDiscovery Trends: Madoff Ponzi Scheme Case Documents May Be Turned Over to eData Rooms and Special Masters

 

The trustee responsible for coordinating the recovery of assets and data involved in Bernard L. (“Bernie”) Madoff's $65 billion Ponzi fraud investigation is presently seeking to secure special masters and create an "eData room" to ensure that the enormous volume of data accumulated during this worldwide investigation is collected and retained.  For more on the increasing use of special masters to facilitate eDiscovery cases, click here).

Almost three years after Madoff's arrest in December 2008, the massive fraud investigation has now spawned roughly 900 lawsuits worldwide involving 16,000 parties in 30 countries. The number of files and documents related to Madoff's Ponzi scheme is equally astronomical – and as perhaps the most significant fraud case of the decade – or even the century – these documents and lawsuits contain information vital as precedent for future criminal cases.

As a result, trustee Irving Picard has determined to collect all of the ESI related to these cases in a single eData room with the help of special masters that would be appointed by US bankruptcy Judge Burton Lifland.  eData rooms are web-based review platforms that can support centralized access of the ESI in question for all approved parties.

As the use of technology becomes more of a key issue in fraud cases, discovery of ESI associated with that technology is becoming ever more important in the practice of law, making a historic case like Madoff's vital as precedent. In November 2010, Picard created the first "e-discovery room", but the new "eData room" would be a much bigger project, containing all the ESI related in any way to Madoff's Ponzi scheme and making it available through a web-based platform for access and review. This new eData room, proposed in January 2011, would be limited to roughly 100,000 potentially responsive documents from 77 parties associated with a related case in which the defendant (J. Ezra Merkin) demanded production of every subpoenaed document in the initial bankruptcy proceeding as well as depositions in other proceedings.

The prospect of this eData room necessitates a complex series of discovery requests and confidentiality agreements, but Irving has already secured the tacit approval of all but 15 of the 16,000 parties, (large financial institutions, including UBS, Bank of America, Merrill Lynch International, Bank of New York Mellon and Sterling Equities, the investment group chaired by New York Mets owner Fred Wilpon) who objected to the prospect of pooling confidential documents where they could be accessed by thousands of parties including their business competitors. To address those concerns, Picard submitted a revised proposed order in September to exclude certain types of documents as confidential and give producing parties 60 days to object to the inclusion of “highly sensitive commercial information” in the eData room.  It will be interesting to see if the revisions pave the way for full acceptance to implement the eData room.

So, what do you think? Are eData rooms going to become commonplace in complex cases involving eDiscovery? Please share any comments you might have or if you'd like to know more about a particular topic.

eDiscovery Trends: SEC Orders Its Staff to Cease Document Destruction Pending Policy Review

 

The U.S. Securities and Exchange Commission ("SEC") recently ordered all of its enforcement staff attorneys to cease the destruction of documents from investigative files after criticism that the SEC wrongfully destroyed thousands of documents associated with high profile enforcement matters, including investigations into Wall Street banks.  The National Archives and Records Administration (NARA) and the SEC's inspector general are currently examining whether the organization's document destruction policy requires revision. This cease order comes in the wake of information provided by a SEC whistleblower, indicating that the SEC wrongfully destroyed thousands of documents from preliminary investigations referred to as “MUIs” (Matters Under Inquiry).

  • In the past, the SEC would destroy documents pertaining to “MUIs” that had been closed, including cases that never developed into formal investigations as well as those that had been decided.
  • Some of these destroyed documents pertained, either directly or peripherally, to what would later become high profile cases. Among them were documents relevant to the Madoff Ponzi scheme and several Wall Street bank fraud investigations.
  • Although private companies routinely destroy documents and files that are closed or no longer in use, the SEC is subject to federal laws and regulations that require federal agencies to retain more records than a private firm. The SEC has been criticized by members of Congress of violating these laws and avoiding its legal compliance burden, especially where destroyed documents could have proven crucial in later legal cases.
  • As a result, the present controversy has forced the SEC to work with NARA to reconsider its document retention policies and to suspend, for now, destruction of files and documents. Parties are still arguing whether a requirement to retain all documentation distracts resources from the SEC's main objective of preventing, discovering and penalizing those involved in securities fraud.

So, what do you think? Has the SEC failed in a serious way to meet compliance standards, or is this controversy placing undue emphasis on documents that are unlikely to ever be needed? Please share any comments you might have or if you'd like to know more about a particular topic.

eDiscovery Horrors! Does This Scare You?

 

Today is Halloween.  While we could try to “scare” you with the traditional “frights”, we’re an eDiscovery blog, so it seems appropriate to try to “scare” you in a different way.  Does this scare you?

Although the court declined to re-open the case, it found that defendant had committed discovery abuses, including failing to disclose relevant evidence and failing to issue a litigation hold; therefore, the court ordered the defendant to pay plaintiff an additional $250,000 over the previously agreed settlement amount.  The court further ordered that defendant had thirty days to furnish a copy of the court’s Memorandum Opinion and Order “to every Plaintiff in every lawsuit it has had proceeding against it, or is currently proceeding against it, for the past two years” and issued an additional $500,000 sanction to be “extinguished” upon a showing of compliance.

What about this?

Even though many (but not all) of the documents were recovered (most from backup tape), the court rejected the defendant’s argument that “there can be no spoliation finding because many documents were recovered” and eventually produced, stating: "The fact that technology permits the undoing of spoliation does not change at all the fact that spoliation has occurred."

Or this?

Then, in January of this year, Judge Grimm entered an order awarding a total of $1,049,850.04 in “attorney’s fees and costs associated with all discovery that would not have been un[der]taken but for Defendants' spoliation, as well as the briefings and hearings regarding Plaintiff’s Motion for Sanctions.”

How about this?

The court concluded based on case history that “emails and text messages are documents and subject to the same requirements for authenticity as non-electronic documents generally” and found that the evidence that the defendant had authored these text messages was absent.

Scary, huh?  If the possibility of sanctions and changing court requirements keep you awake at night, then the folks at eDiscovery Daily will do our best to provide useful information and best practices to enable you to relax and sleep soundly, even on Halloween!

Of course, if you really want to get into the spirit of Halloween, click here.  This will really terrify you!

What do you think?  Is there a particular eDiscovery issue that scares you?  Please share your comments and let us know if you’d like more information on a particular topic.

Happy Halloween!

eDiscovery Case Law: Court Rules 'Circumstantial Evidence' Must Support Authorship of Text Messages for Admissibility

When are text messages admissible in court? Which text messages qualify as evidence, and what does it take to prove authorship of a text message?

A recent opinion from the Pennsylvania Superior Court, Commonwealth v. Koch, No. 1669-MDA-2010, 2011 Pa. Super. LEXIS 2716 (Sept. 16, 2011), addresses these very issues in an old yet new way, perhaps setting the precedent for future cases and opening what seems to be a potential Pandora’s Box of obstacles to the use of text messages as legal evidence.

  • In Commonwealth v. Koch, a transcript of thirteen SMS text messages were submitted by the prosecution and admitted into evidence. Although these text messages had been sent from a cell phone owned by the defendant, defense objected to their admission on the grounds that no evidence substantiated the defendant’s authorship of the text messages in question.
  • In fact, witnesses had testified that other people had been seen using the cell phone. Several of the thirteen text messages referred to the defendant in the third person, which substantiated the defendant’s claim that she had not written or sent the text messages.
  • The court concluded based on case history that “emails and text messages are documents and subject to the same requirements for authenticity as non-electronic documents generally” and found that the evidence that the defendant had authored these text messages was absent.
  • Ruling that the defendant’s ownership of the cell phone was not enough to prove that she had sent the messages in question, the court declared that parties seeking to introduce electronic materials, such as cell phone text messages and email, must be prepared to substantiate their claim of authorship with “circumstantial evidence” that corroborates the sender’s identity. That evidence may come in the form of testimony from the sender or recipient, testimony of witnesses to the creation of the correspondence, or even “contextual clues” in the message itself.

Where written correspondence may be subjected to questioning (e.g., signatures can be forged or letterhead copied), eDiscovery materials that clearly come from a given email account or cell phone source have been historically less open to scrutiny.  However, since cell phones and even email accounts may be shared (or hacked), this could leave room for argument, as in this case, that the correspondence in question did not originate with the party who appears to have sent it.

In one respect, applying the old standard of evidence to new ESI materials, such as text messages might make sense. On the other hand, doing so also opens the door for defense attorneys to use the same tactic to remove text messages and email correspondence from evidence – whether or not they are legitimately relevant in court – based on the extreme challenge of proving the issue of authorship.

So, what do you think? Was the court right in ruling against the admission of these text messages as evidence? Does this decision create more eDiscovery problems than it solves? Please share any comments you might have or if you’d like to know more about a particular topic.

eDiscovery Case Law: Defendant Sanctioned for Abandonment and Sale of Server; Defendants' Counsel Unaware of Spoliation

An Illinois District Court ordered heavy sanctions against the defense for spoliation “willfully and in bad faith” of documents stored on a server, in a case revolving around damages sought for breach of loan agreements.

In United Cent. Bank v. Kanan Fashions, Inc., No. 10 C 331, 2011 WL 4396856 (N.D. Ill. Sept. 21, 2011), the defendants were found to have hidden and sold (or fabricated the sale of) a server which was subject to discovery. The defendants also misled their own counsel about their discovery procedures with regard to its preservation obligations and the sale of this crucial server. Accordingly, a magistrate judge ruled in favor of sanctions against the defendants based almost entirely on recommendations made in United Cent. Bank v. Kanan Fashions, Inc., No. 10 CV 331, 2011 WL 4396912 (N.D. Ill. Mar. 31, 2011):

  • Although the defendants’ counsel reminded them several times of their obligation to preserve evidence, and the defendants claimed at all times that they were taking the necessary steps to ensure a smooth and correct discovery process, they misled their own attorneys. In fact, the defendants proceeded to sell a server that contained information relevant to the suit.
  • The circumstances associated with the sale were extensive, involving the defendants defaulting on a loan on the warehouse in which the server was stored. When they made plans for foreclosure on the warehouse, they also made arrangements that the bank would purchase the lease on the server, originally held by a different lender, without informing their defense lawyers.
  • When defense counsel learned of the foreclosure and these arrangements, the defendants maintained that they could get access to the server as needed for discovery.
  • Several months later, the court ordered the defendants to retrieve either the server or a forensic copy of its contents for discovery. It was only a few days later that the defendants informed their counsel and the court that the server had been sold by the bank to a business in Dubai.
  • All of the above took place after the defendants had been repeatedly informed of the need to preserve evidence for discovery, and of their obligations with regard to ESI.
  • The circumstances of the sale of the server were so unusual that the court concluded that the defendants had, themselves, had a hand in the sale of the server to Dubai and the removal of the server from the court’s reach.
  • The magistrate judge found that defendants were solely responsible for the spoliation, having deliberately misled the court, the plaintiffs, and the defendant’s own counsel.
  • Defendants were ordered to pay sanctions that include reimbursement of the plaintiff for all costs related to the Motion for Sanctions. Defendants are also “barred from introducing any evidence regarding the data on the warehouse server”. The jury is to be “informed of the Defendants’ abandoning of the server” and instructed that the spoliation of the server “may be considered evidence that the server contained evidence unfavorable to Defendants’ position.”
  • The plaintiff’s request for sanctions against the defense counsel was dismissed by the magistrate judge.

So, what do you think? Have you ever been involved in a case where a similar instance of spoliation took place? Please share any comments you might have or if you’d like to know more about a particular topic.

eDiscovery Strategy: "Command" Model of eDiscovery Must Make Way for Collaboration

Last week’s article on Law Technology News summarizes the message put forward by several speakers at the fifth annual Colorado Association of Litigation Support Professionals E-Discovery Summit, held on October 7, 2011. In her article E-Discovery ‘Command’ Culture Must Collapse, Monica Bay discusses the old “command” style of eDiscovery, with a senior partner leading his “troops” like General George Patton – a model that summit speakers agree is “doomed to failure” – and reports on the findings put forward by judges and litigators that the time has come for true collaboration.

The highlights of the summit as far as a collaborative model of eDiscovery include thoughts by U.S. Magistrate Judge Michael Hegarty and Florida attorney William Hamilton, who say the time has come for adversarial, command-style eDiscovery to be replaced by a collaborative model, even with opponents, to result in a more effective discovery process.

Here is a brief summary of their opinions on the future of eDiscovery.

U.S. Magistrate Judge Michael Hegarty: Negotiation and Early Presentation of ESI are Key

Judge Michael Hegarty, of the U.S. District Court (Colorado), believes that minimal court intervention in discovery is best, but that mistakes are often made early on that cause discovery problems with respect to ESI.

  • He remarked on how common it is for litigators to neglect to mention discovery of electronic materials in early conferences, and how “detrimental” that can be to cases.
  • Judge Hegarty noted that a great deal of eDiscovery is unduly complicated because lawyers don’t understand the scope of what it is possible to do with electronic materials. “It’s easy for a party to say, ‘We can’t do that,'” he said, “but it’s hard to imagine that something can’t be done.” He noted the lack of understanding as a key source of friction, and finds that he often has to wade in and order parties to purchase software that will make it possible for them to conduct complete discovery.
  • The bottom line, according to Hegarty, is that the vast majority of cases never go to trial – surprisingly less than one percent of Colorado cases ever see a courtroom – and that’s the way it should be. “We can’t have discovery disputes sit around for months,” he said. It’s important to facilitate a communication process that includes ESI where appropriate in order to settle cases and move them along.

William Hamilton: Support Staff Make Like Possible for Attorneys

William Hamilton is a partner at Quarles and Brady in Tampa, Florida. He is also a professor at the University of Florida’s law school, Levin College, where he teaches “Electronic Discovery and Digital Evidence”. Hamilton is also dean of an online graduate certificate program in eDiscovery at Bryan University, and chair of the advisory board of the Association of Certified E-Discovery Specialists (ACEDS).

  • Hamilton’s speech focused heavily on the role of support staff, the people who “make life possible for attorneys”. He says paralegals and technology staff have a larger role to play in discovery than ever before, but must be careful not to cross over into unauthorized legal practice as they assist litigators.
  • He pointed out a need for change in the very culture of legal practice, where “[h]ierarchy culture disenfranchises everybody”. Bad decision making results from choices made by: “1) habit, 2) reputation, 3) haste, and 4) ‘pure command decisions”, he noted.
  • “Only 10 percent of lawyers ‘get’ e-discovery,” says Hamilton. It’s time for that to change, he says, as a new paradigm for discovery of electronic materials is born.

Learn more about the Colorado Association of Litigation Support Professionals E-Discovery Summit on the Association’s website or read the complete article on Hamilton and Hegarty’s presentations at Law Technology News.

So, what do you think? Is a top-down approach to eDiscovery still viable, or is there a real need for the process to change to a more collaborative and communicative one? Please share any comments you might have or if you’d like to know more about a particular topic.

eDiscovery Case Law: Court Says Lack of eDiscovery Rules for Criminal Cases is a Crime

A New York district court recently ordered the United States Government to reproduce thousands of pages of electronic discovery materials in a criminal case involving the distribution of cocaine.

In United States v. Briggs, No. 10CR184S, 2011 WL 4017886 (W.D.N.Y. Sept. 8, 2011), the Government produced thousands of pages of electronic documents and a number of audio recordings, none of which were text searchable. The court ultimately decided that the onus of producing searchable materials for eDiscovery fell on the Government itself.

  • Defendants requested that the Government reproduce the discovery materials in a searchable format, but the Government refused, stating that it had used a program “routinely used” in criminal cases and would not bear the storage burden or cost of reproducing the documents.
  • The defense argued that the volume of production was virtually impossible to navigate without the ability to sort or search the documents, and that the materials presented for discovery lacked some relevant information. The court later made the comparison that a paper equivalent to this discovery situation “would be if the Government took photographs of thousands of pages… put them in boxes, and invited inspection by defense counsel.”
  • In light of the absence of a rule or standard for discovery of electronic materials in criminal cases such as this one, the court referred to other criminal cases in which the same issues were discussed, including United States v. Warshak, 631 F.3d 266 (6th Cir. 2010) and United States v. O’Keefe, 537 F. Supp. 2d 14 (D.D.C. 2008). Both of these cases dealt at some point with similar debates over document format and extensive discovery production, with different findings of whether the producing party was required to produce in the requested format.
  • The court decided that, in light of the absence of a clear standard, the Government was the party “better able to bear the burden of organizing these records for over twenty defendants in a manner useful to all” and ordered the Government to produce the files in searchable PDF or native format.
  • Finally, the court expressed its hope that the Advisory Committee on Criminal Rules would soon establish rules addressing the production of ESI in criminal cases.

So, what do you think? Was the court fair to put the onus of searchable text production on the Government? Should there be similar rules governing eDiscovery issues in the Federal Rules of Criminal Procedure as there are in the Federal Rules of Civil Procedure? Please share any comments you might have or if you’d like to know more about a particular topic.

eDiscovery Case Law: Are Attachments Part of the Email Or Are They Separate?

A Special Master recently investigated the legal standard concerning whether or not attachments must be produced with the emails to which they were attached in discovery proceedings, and determined that there is no certain answer to be found in case law precedent.

In Abu Dhabi Commercial Bank v. Morgan Stanley & Co, Inc., No. 08 Vic. 7508(SAS), 2011 WL 3738979 (S.D.N.Y. Aug. 18, 2011), the defendants argued that SEI Investments (“SEI”) was at fault for neglecting to produce certain attachments to emails as part of discovery, and that SEI was obligated to produce these attachments and explain their absence. This request ultimately delved into issues of precedent and legal standard:

  • SEI stated that it had already produced the documents that were relevant and were not protected by privilege, and argued that it was not obligated to produce the attachments in question because they were non-responsive to discovery.
  • A Special Master was convened to consider the issue and to establish the legal standard for this type of discovery question.
  • The Special Master found a number of conflicting examples: In some cases, the obligation to produce attachments with the relevant emails was implied, but most of these instances assumed that attachments were required to be produced and focused solely on the format of production. In a number of cases, producing attachments with their emails has been the norm; however, in other cases, emails and attachments were treated as separate in terms of privilege determination.
  • The Special Master concluded that “conceptually” the two could be viewed separately, or they could be seen as a single unit for the purpose of discovery, and advised that the decision should generally be made by the parties involved in advance, during pretrial discovery talks.
  • In this case, the Special Master questioned SEI’s argument for not producing the attachments in question, and at the same time, argued against the probably unnecessary expense of forcing SEI to produce all attachments to all emails previously included in discovery.
  • Therefore, the Special Master made a series of recommendations that were adopted by District Court Judge Shira Scheindlin. These included: a) Production of the non-privileged attachments to the 126 emails previously identified by the defendants, as well as a complete list of any such documents that it proves unable to produce; b) permission for the defendants to request further such attachments as deemed relevant and necessary to this case; and, c) a meeting between all parties to discuss this issue and reach an agreement on policy regarding the production or withholding of email attachments and their format.

So, what do you think? Do you believe that email attachments should generally be produced as a matter of course with the emails to which they were attached, or that they should be considered as separate documents for the purpose of discovery? Please share any comments you might have or if you’d like to know more about a particular topic.

eDiscovery Trends: Social Media Lessons Learned Through Football

 

The NFL Football season begins tonight with the kick-off game pitting the last two Super Bowl winners – the New Orleans Saints and the Green Bay Packers – against each other to start the season.

An incident associated with my team – the Houston Texans – recently illustrated the issues associated with employees’ use of social media sites, which are being faced by every organization these days and can have eDiscovery impact as social media content has been ruled discoverable in many cases across the country.

Last year’s NFL rushing leader, Arian Foster, recently “tweeted” a picture of the MRI image showing his injured hamstring to all of his followers on Twitter. The “tweet” provided an explanation of where his hamstring was specifically damaged.

The problem is that NFL teams guard specific injury information regarding their players as if they were trade secrets and in a sport where sidelining your opponents’ best players is a competitive advantage, telling those opponents where your injury is located is not a wise move (what was he thinking?).  Also, there are strict guidelines within the NFL regarding the disclosure of injury information because (big surprise!) it can impact betting on the games.

Foster, who subsequently “tweeted” that he was just joking around, provided yet the latest reminder that former congressman Anthony Weiner and many others have provided before: think before you hit send.

But, as bad as the consequences can be to individuals who post content on social media sites unwisely, it can be just as bad (or worse) for organizations that employ those individuals.

Postings on social media sites by employees can range from simply embarrassing for an organization from a public relations standpoint to downright damaging to the organization in the form of disclosure of confidential information.  The risk is clear.  Yet, in the socially technological world in which we live today, it is impractical for organizations to “ban” use of social media sites by their employees.  It’s going to happen and companies have to be prepared to address it.

The best way to address it is to implement a sound social governance policy that provides guidelines for acceptable and unacceptable behavior on social media sites and the consequences for the unacceptable behavior.  Implementation includes education with training examples that clarify any ambiguities.  This blog post from last year illustrates factors to address in a good social governance policy.  Hopefully, someone from the Texans is explaining these concepts to Arian Foster.

So, what do you think? Does your organization have a social governance policy?  Does it train employees on the use of that policy? Please share any comments you might have or if you'd like to know more about a particular topic.