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Preservation

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.

eDiscovery Best Practices: After Production, Your eDiscovery Obligations Are Not Necessarily Over
 

While a number of attorneys have yet to still embrace and fully understand eDiscovery best practices, most at least understand that there are (since 2006) Federal Rules of Civil Procedure that address discovery of electronically stored information (ESI) and (for most, but not all) similar rules at the state level.  More are learning to conduct an initial discovery conference (a.k.a., “meet and confer”) with opposing counsel to address eDiscovery requirements at the beginning of a case and more now not only understand the requirements to preserve potentially responsive data once it is clear that litigation is imminent but also how to conduct the review and production in a defensible manner.  However, as noted in this Texas Lawyer article, How to Prepare for E-Discovery Supplementation Obligations (written by Ross Cunningham and published in Law Technology News), an attorney’s eDiscovery obligations are not necessarily over after production.

As the author notes, “six months to a year into the process, most lawyers forget a key obligation. Under Texas and federal rules, all parties have an ongoing duty to supplement discovery responses.”  Failure to meet ongoing obligations to continue to preserve data and periodically update searches to retrieve new information could – like any other failure to meet obligations – result in sanctions.

The author has created a clever acronym to address a party’s supplementation obligations: PREPARE.  Here are the components of that acronym:

  • Preserve: It’s not just important to issue the hold correctly, but also to periodically follow up on hold notices to keep custodians on notice of their obligation to continue to preserve the data in question until they are instructed that they can release it (which is also very important to ensure that information no longer subject to hold doesn’t continue to be preserved outside of the organization’s document retention policies).  Sometimes, the hold may need to be expanded to additional custodians as they case continues.
  • Research: The more the attorney knows about the case and the client, the better he/she will be able to assess whether custodians are continuing to create discoverable information throughout the case and manage supplementary eDiscovery obligations accordingly.
  • Execute: As the author notes, “[t]his means drafting an e-discovery plan — and sticking to it.”  Up front planning to meet with the client to identify all sources of ESI will help ensure a complete preservation and collection process and also create a “road map” for supplemental discovery.  However, it’s also important to periodically re-assess the plan and update it where appropriate as new custodians may be identified (or even hired).
  • Proactive: Educating the client on what goes into an eDiscovery plan and best practices for conducting that plan, along with education on the consequences for failing to comply (including sanctions) will help ensure a smooth eDiscovery process.  After all, the client knows their data better than the attorney ever will.
  • Ally: By allying with trusted providers who are involved from the planning stages, that provider should be reliable to support the supplemental eDiscovery process.
  • Recalibrate: No matter how prepared you are, you cannot always anticipate every situation, so you need to be prepared to adjust (“recalibrate”) the plan when unforeseen occurrences happen.  When you have a well thought out eDiscovery plan that is executed well, courts tend to be more forgiving of anomalies.
  • Expectations: Setting expectations with opposing counsel during the initial discovery conference will help determine whether discoverable information will continue to be created over the course of discovery and hopefully obtain agreement as to how often supplemental searches will be performed.

Of course, the order of these items might not fit the actual order of execution.  Research, Execute, Proactive, Expectations, Ally, Preserve, Recalibrate might be more appropriate.  But, REPEAPR doesn’t make nearly as catchy an algorithm!

So, what do you think?  Have you dealt with supplementary eDiscovery in any of your cases?  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 Orders eDiscovery Evidentiary Hearing When Parties Are Unable to Cooperate
 

A month ago, in Chura v. Delmar Gardens of Lenexa, Inc., No. 11-2090-CM-DJW, 2012 U.S. Dist. LEXIS 36893 (D. Kan. Mar. 20, 2012), Magistrate Judge David J. Waxse ordered an evidentiary hearing to discuss the sufficiency of the defendant’s search for ESI and format of production in response to the plaintiff’s motion to compel additional searching and production.

The case involved an employment dispute with claims of sexual harassment, hostile work environment and other employment-based causes of action.  At a status conference, the parties had agreed to create a list of search terms in an attempt to resolve outstanding eDiscovery issues. However, the parties were unable to reach a consensus, and the plaintiffs filed a motion to compel the defendant to search for and produce ESI.

The plaintiffs’ Request for Production 1 requested the defendant to produce information from 10 individuals identified by the defendants with knowledge of the facts concerning the allegations in the complaint or answer; however, the defendants’ reply merely referred the plaintiffs to the complaints and personnel files of the plaintiffs.  In their motion to compel, the plaintiffs asserted that the defendant “failed to produce their written complaints, any emails or phone logs, the investigation files, and their personnel files”.  The plaintiffs also claimed that the defendant also “failed to produce responsive documents that one would expect to find in this type of litigation”, such as:

  • “emails between Defendant’s managers and witnesses regarding Plaintiffs’ allegations or Defendant’s defenses”;
  • “notes by the human resource director from the investigation she conducted as a result of Plaintiffs’ complaints about the alleged harasser and the environment at the nursing facility where Plaintiffs worked”; and
  • “reports and emails to the corporate office regarding the complaints”.

The plaintiffs noted that, “It does not make any sense that in response to numerous complaints from employees about the work environment that a corporate human resources manager would be sent to investigate and not create a single document reporting her findings to Defendant’s corporate managers.”  They also suggested that the defendant had searched for the agreed-upon search terms in Microsoft Outlook on the alleged harasser’s computer only and argued that the defendant should run a forensically sound search of “all computers used by employees of the facility and corporate office who participated in or were involved in Defendant’s investigation of the allegations”.

While noting that it “cannot determine whether Defendant met its duty to both preserve relevant evidence” (based upon the limited information provided in the parties’ briefing), the Court found that “Defendant’s failure to produce any ESI, such as emails, attachments, exhibits, and word processing documents, raises justifiable concerns that Defendant may have 1) failed to preserve relevant evidence, or 2) failed to conduct a reasonable search for ESI responsive to Plaintiffs’ discovery requests.”  Therefore, the court set an evidentiary hearing for April 30, at which the defendant was instructed “to be prepared to present evidence on the following topics”:

  1. At the time of the initial charge of discrimination, what did Defendant’s system of creating and storing ESI consist of;
  2. When and how a litigation hold was instituted;
  3. What employees were notified of the litigation hold;
  4. What efforts were made to preserve ESI;
  5. What or whose computers or components of the computer systems were searched for responsive ESI;
  6. How the computers of computer information systems were searched (e.g., keyword searches, manual review, computer-assisted coding); and
  7. Who performed the searches.

So, what do you think?  Was the evidentiary hearing an appropriate next step?  Should more cases conduct eDiscovery evidentiary hearings when there are disputes?  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: Rules Changes for Spoliation Could Come as Soon as 2013
 

With cases related to preservation and spoliation issues continuing to be prevalent, as well as continued greater emphasis on proportionality in eDiscovery, the Advisory Committee on the Federal Rules of Civil Procedure has requested comments on possible changes to the federal rules relating to preservation and spoliation of evidence.  Much of the framework for the proposed rules was derived from Judge Shira Scheindlin's opinions on eDiscovery, particularly those in the Zubulake case.  These changes could be finalized as soon as December 2013.

As there are currently no rules governing preservation, courts have set their own guidelines – not always consistently from court to court. The hope is that establishment of rules regulating preservation and spoliation will clarify expectations and standardize practices.  Invited by the advisory committee to provide suggestions, the special committee has proposed new Rule 26(h), which specifies that the duty to preserve ESI arises when a subpoena is received by a non-party, or when a person becomes aware of facts that would lead a reasonable person to expect to become a party to an action. That duty remains in effect for all existing and subsequently created documents or ESI until the termination of the involvement of the party or non-party, or until a person becomes aware of facts that would lead a reasonable person to believe that he or she will not become a party to an action.

A person whose duty to preserve has been triggered must take steps to preserve discoverable documents and ESI, and must consider several factors, including:

  • Importance of the information;
  • Amount in controversy; and
  • Burden and expense to preserve in a form as close to (if not identical to) their original condition as possible.

In addition, new Rule 37(g) has been proposed which identifies a variety of penalties to be imposed, depending on the level of culpability of the spoliating party and the remedial requirements necessary to the case, taking into account the importance of the information lost to the party seeking its discovery.

While the advisory committee decided not to pursue any rule change dealing with preservation back in November, they have continued to pursue those dealing with penalties for spoliation.  However, during the discussion process for preservation rules, standard expectations for preservation of evidence included the issuance of a written litigation hold to key players in an organization most likely to possess documents or ESI that will be important in a case, with the hold to be periodically reviewed and renewed.  Eventual rules for preservation would be expected to include such provisions.

As for spoliation, the advisory committee considered the proposed new rule regarding penalties for spoliation at its meeting on March 22.

The advisory committee has also drafted proposed amendments to Rule 45 concerning serving of subpoenas. Proposed changes include abolishing the requirement that a discovery subpoena be issued in the same court where compliance of the subpoena is expected. Instead, nationwide service of process will be implemented, so, for example a discovery subpoena for a case pending in the Eastern District of Texas would be valid in the Southern District of New York. The subpoenaed party can choose the subpoena to be enforced in the district where compliance is to be made or in the trial court.  Out-of-state parties (or an officer of those parties) can be compelled to travel more than 100 miles to testify at trial if good cause is shown for them to do so. Changes are also proposed requiring that all parties receive notice on the service of a subpoena to a non-party.

The advisory committee decided on revisions to Rule 45 back on March 22. By May 1, the advisory committee will submit its recommendations regarding spoliation and Rule 45 to the federal Standing Committee. The federal Standing Committee is expected to approve the recommendations in June and submit them to the federal Judicial Conference. Assuming the Judicial Conference approves the proposal at its September 2012 meeting, they will transmit it to the US Supreme Court, which will have until May 1 of next year to transmit the proposal to Congress. If Congress does not act, the proposal would become rule on December 1, 2013.

So, what do you think?  Will these rules changes benefit the eDiscovery process?  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: Tips for Saving Money in Litigation
 

A recent article on The National Law Journal (entitled Top 12 tips for saving money in litigation, authored by Damon W.D. Wright) had some good tips for – you guessed it – saving money during litigation.  I thought it would be worth discussing some of these, especially those that relate to eDiscovery cost savings practices.

  1. Conduct targeted preservation and collection: As the author notes, the duty to preserve is “not supposed to cause business operations to grind to a halt” and “the focus should be on the specific subject matter, evidence and likely witnesses in the case”.  If you promptly investigate and quickly identify those likely custodians and act to preserve their data, you’re probably satisfying your duty to preserve.  Just don’t lose sight of organization-wide processes that affect those likely witnesses, such as automated deletion policies, and suspend them for those witnesses, at least.  Don’t make the same mistake that EchoStar did.
  2. Calibrate the budget to the amount and importance of the case:  Ralph Losey, in his interview with eDiscovery Daily, spoke about bottom line proportional review and the idea of setting a budget based on the size and potential exposure of each case.  It simply doesn’t make sense to spend the same amount of effort in routine cases as it does for the “bet your company on the outcome” cases.
  3. File in a fast-moving court: Or pursue transfer if you’re the defendant.  Certainly, the longer a case drags out, the more expensive it is, and that includes for eDiscovery.
  4. Know the court: The author addresses this from a general perspective, but it could be important from an eDiscovery perspective, as a part of that.  Enough case law related to eDiscovery exists now that many judges have started to establish at least some track record with regard to issues such as spoliation, proportionality and sharing of eDiscovery costs.  It’s important to know how your judge views those issues.
  5. Have a key client liaison: Nobody knows the client better than the client themselves, so identifying the right person to serve as a liaison between the client and counsel can not only improve communications, but also streamline process and save costs.  As the author noted, the ideal client liaison will “know the organization well and have the authority, perseverance and communication skill needed to get the attention of others.”
  6. Select vendors and experts with care: The author notes that “you should always obtain price estimates (comparing ‘apples to apples’)” when considering eDiscovery vendors.  As a part of that, it’s important to make sure those comparisons are truly “apples to apples” and comprehensive.  Are per GB processing charges for the original (compressed) GB size or expanded?  Do hosting charges include per user fees or other ancillary charges or are they strictly per GB?  It’s important to make sure those distinctions are clear when comparing. 
  7. Try to get along with opposing counsel: While some are easier to get along with than others, the ability to cooperate with opposing counsel and discuss various discovery issues in the Fed.R.Civ.P. 26(f) conference (such as limits to discovery, form of production, privilege, etc.) will save considerable costs up front if the parties can agree.
  8. Allow opposing counsel to inspect and copy documents at their expense: Although most collections are predominantly in electronic form, there are still paper documents to be addressed and if you can make a non-privileged collection available for them to go through and select and copy the documents they want, that saves on your production costs.
  9. Limit e-mail production by custodians, search terms and date range: As the author noted and eDiscovery Daily previously noted, it’s not only a good idea for producing parties to limit production scope, but model orders to limit scope in patent cases are now being adopted in various jurisdictions, including Texas.
  10. Seek agreement on a narrowed privilege log and a no-waiver order: If you’re successful in #7 above, this should be part of what you try to negotiate.  It helps if both parties have similar concerns regarding the effort and cost to determine privilege and prepare a privilege log.
  11. Pursue cost-shifting for discovery: As yesterday’s post reflects, courts are more often expecting requesting parties to share in the discovery costs when the requests for information result in an undue burden or cost for the producing party.  And, as the author noted, the model order establishes specific parameters for patent cases and the expectation for requesting parties to pay for additional discovery.
  12. Stipulate to facts not in dispute: Why conduct discovery on facts not in dispute?  The author’s recommendation for early stipulations is a great idea for eliminating discovery in areas where it’s not necessary.

So, what do you think?  Did you get some good ideas?  Please share any comments you might have or if you’d like to know more about a particular topic.

eDiscovery Daily will resume with new posts on Tuesday after the Easter holiday.  Have an eggs-cellent weekend!

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: Delaware Has a New Standard for eDiscovery
 

On Dec. 8 of last year, the U.S. District Court for the District of Delaware revised the "Default Standard for Discovery, Including Discovery of Electronically Stored Information (ESI)" for the third time to reflect recent changes in technology and to address concerns of attorneys regarding the discovery of ESI.  The new Default Standard expects the parties to reach agreements cooperatively on how to conduct discovery under Fed. R. Civ. P. 26-36. If the parties are unable to agree on the parameters and/or timing of discovery, the default standards will apply until further order of the Court or the parties reach agreement (which is why it’s a default standard).

The Revised Default Standard addresses several provisions for conducting discovery of ESI, including:

  • Proportionality: Parties are expected to preserve, identify and produce relevant information in a proportional manner.
  • Preservation: Each party’s normal policies and procedures in place for the preservation and backup of information will not be altered unless the party requesting the information provides good cause and that information current when the request is made must be preserved by the producing party. The preservation requirement doesn’t extend to data only discoverable by forensics, voice mails, information stored on mobile devices, RAM, and data from obsolete systems.
  • Privilege: The parties are expected to confer on the nature and scope of privilege logs for the case, including whether categories of information may be excluded from any logging requirements and whether alternatives to document-by-document logs can be exchanged.
  • Initial Discovery Conference: The new Default Standard provides guidelines for the timing (before the "Rule 16 Conference”) and content (issues, sources of potentially relevant ESI, production formats, handling of privileged information, categories of ESI to preserve, etc.) of the Initial Discovery Conference.
  • Initial Disclosures: Within 30 days after the Rule 16 Conference, each party is required to disclose a ranked list of the 10 custodians most likely to have discoverable information in their possession, a ranked list of the non-custodial data sources that are most likely to contain non-duplicative discoverable information and any issues related to ESI, third-party discovery under Fed. R. Civ. P. 45 and production of information subject to privacy protections.
  • Patent Litigation Discovery Requirements: The timing, starting within 30 days after the Rule 16 Conference, for the plaintiff and defendant obligations are detailed.  In patent litigation proceedings, discovery is limited to 6 years before the complaint unless the information in question relates to the conception of the invention in question.
  • On-Site Inspection of Electronic Media:  Not permitted without good cause.
  • Search Methodology: Producing parties must disclose their search terms to the requesting party and the requesting party may request no more than ten additional terms which must not be overbroad (e.g., product and company names).
  • Format: ESI and non-ESI should be produced to the requesting party as text searchable image files (e.g., PDF or TIFF) unless they are not easily converted to image files (e.g., Excel and Access files).
  • Metadata Fields: The only fields required to be produced (if available) are – Custodian, File Path, Email Subject, Conversation Index, From, To, CC, BCC, Date Sent, Time Sent, Date Received, Time Received, Filename, Author, Date Created, Date Modified, MD5 Hash, File Size, File Extension, Control Number Begin, Control Number End, Attachment Range, Attachment Begin, and Attachment End (or the equivalent thereof).

So, what do you think?  How do these standards compare to those in your state?  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.