e -DISCOVERY UPDATE Thomas R. Nolasco - PowerPoint Presentation

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e-DISCOVERYUPDATE

Thomas R. Nolasco

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ESI is Nearly Everywhere

Desktop PCSmart phonesThumb drivesLaptopUSB Storage devicesPortable hard drivesTabletDigital camerasiPods/MP3 playersNetwork file serversDigital video recordersXbox/Game ConsolesE-mail serversDigital video camerasAutomotive EDRsLegacy systemsPaging devicesDigital copy machinesRoutine back-up tapesDigital audio recordersCloud computingDisaster recovery tapesVoicemailSocial media sitesSecurity camerasMedical devicesHome appliances

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95% of Business Data is Created by ESI

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

Native formatTIFFSedona PrinciplesDe-NISTMetadataLoad fileParent-child relationFRE 502Quick peekClaw backLitigation holdPredictive CodingTARZubulakeUnallocated spaceNot reasonably accessible

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Educating the Client About its e-Discovery Obligations

There is a steep learning curve;Expect some pushback:Different, more complex vs paper discovery;“Why do you need to know/have that?”More Employees may be involved;IT personnel, anyone who sends, receives or maintains relevant ESI“Why do you need to bother them?”Added expenses and stress for the client;“Why does it cost so much more than before?”

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Help the Client to Understand

e-Discovery is the “new normal”;Rules have been in place since 2006Courts will impose sanctions on those who resist or ignore e-Discovery rules;e-Discovery can become “weaponized”, much to your client’s disadvantage.

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Assess Your Client’s Capabilities for e-Discovery

Before the Rule 16/26 conferences, you need to know what you can commit your client to do!Timing of ESI disclosures, scope of production, form of production, privilege, privacy, trade secret issuesConsider how e-Discovery can become “weaponized” due to asymmetrical ESI volumes or e-Discovery expertise between the parties

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Preservation Policies

Does client have a document retention policy?Does the policy account for ESI? (If not, time to update!)Has it been followed:Has the client executed a litigation hold before?How did that work out?Was the IT staff includedDoes client understand its preservation duty?

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Are You Your Client’s Keeper?

Courts will hold lawyers and clients jointly accountable for e-Discovery failuresLawyers are expected to:Speak with client’s IT staff and “key players” who created, received, sent and store ESIUnderstand the client’s system architecture, and Monitor and confirm their client’s compliance with e-Discovery duties

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Are You Your Client’s Keeper?

“…counsel must become fully familiar with her client’s document retention policies, as well as the client’s data retention architecture. This will invariably involve speaking with information technology personnel, who can explain system-wide backup procedures and the actual (as opposed to theoretical) implementation of the firm’s recycling policy. It will also involve communicating with the “key players” in the litigation, in order to understand how they stored information.”Zubulake v. UBS, 229 F.R.D. 422 (S.D.N.Y. 2004)

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Locate and Interview ESI Key Players

Employees, contractors, consultants controlled by the client who created, received or stored ESIAnyone who holds relevant, company-controlled ESIIncluding current and former personnelDetermine what ESI was created, sent, received and stored, including locations and recipientsBe thorough, and document your findingsExpand the litigation hold, as needed

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Verify the Litigation Hold

Must be done. Part of counsel’s dutyObtain written acknowledgements from key players and IT staff and store for later use.Schedule and implement regular reminders through the life of the case.To remind existing employeesTo inform new employees

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Rule 502 – Privilege Issues

Evidence Rule 502 responds to the complaint that litigation costs necessary to protect against waiver of attorney-client privilege or work product have become prohibitive due to the concern that any disclosure (however innocent or minimal) will operate as a subject matter waiver of all protected communications or information.This concern is especially troubling in cases involving electronic discovery. See, e.g. Hospon v. City of Baltimore, 232 F.R.D. 228, 244 (D. Md. 2005)

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Privilege Considerations

Evidence Rule 502All e-Discovery plans/agreements should reference it; malpractice otherwise???Applies when there is a disclosure of a communication or information covered by attorney-client privilege or work-product protection;May limit a privilege waiver, if not avoid it altogether;

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Privilege Considerations

Evidence Rule 502(e):Allows parties to agree that there is no waiverAgreement alone is binding only on the partiesIncorporating the agreement into a Court order makes it effective as to 3rd parties beyond the agreement“Clawback” Agreements“Quick Peek”/”Data Dump” Agreements

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

Rule 16 scheduling conferences require a discussion of e-Discovery;Courts expect substantive discussions at ESI issues between counsel;You Need to prepare for e-Discovery anywayRule 26 disclosures (federal)

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Why Bother With ESI at Conference?

Possible e-Discovery topics to discuss at the Rule 16 conference:Limitations on ESI Production?Concept of “proportionality”Format of ESI production? Timetable?Scope of e-Discovery? Privilege issues?Shared vendor? Search terms?How many custodians? Cost sharing?Protective Order? Rolling productions?

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

Assess the client’s ESI situation:Its prior experience with e-DiscoveryNovice? Sophisticated?Good? Bad? Sanctions?What kind of ESI does it keep? How much?How many custodians may be involved?How much time will we need to collect, sort and produce it?Will we need to retain an e-Discovery vendor?

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

If you’re unprepared re ESI, you may:Unwittingly commit your client to obligations it cannot meet;Possible discovery sanctions…unhappy client;Cause the “weaponization” of e-Discovery against our client:You may create the appearance of vulnerability;Invite more aggressive e-Discovery tactics;Leading to sanctions, a “coercive” settlement outcome, or worse…

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Clawback Agreement

Permits the producing party(s) to forego a privilege review altogether in favor of an agreement to return (“clawback”) inadvertently produced privileged material with no waiver of privilege.In large volume of ESI cases, it can expedite production and avoid the high cost of a privilege review by the producing party

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Quick Peek/Data Dump Agreement

Allows a party to “pre-produce” documents or ESI prior to reviewing them for privilege without waiving its right to assert applicable privileges.The requesting party then performs a preliminary relevance review of the produced material, allowing it to tailor its discovery requests.Producing party can then assert privilege over materials within what was requested. No waiver.

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What Happens if Not Implemented?

(Old) Minority view: Failure to send a timely legal hold letter is “gross negligence per se”; evidence spoliation is presumed.Negative inference jury instructions given + possible monetary sanctions + more.(Current) Majority View: It depends. Sanctions warranted if evidence loss is proven due to lack of a timely legal hold.

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Sanctions

Sanctions Awarded in e-Discovery Cases 2012

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Sanctions for Failures

Common e-Discovery sanctions involve:Litigation hold shortcomingsInadequate ESI searches, preservation and collectionLack of supervision by counsel to confirm complianceLack of cooperation between the parties.Intentional spoilation of evidence

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Sanctions for Failures

Litigation hold shortcomings:Failure to issue one at allFailure to issue one in writingFailure to issue one in a timely mannerFailure to issue one to the IT departmentFailure to issue one to all key playersFailure to issue one to all custodians of relevant ESIFailure to verify receipt and compliance by recipients Failure to issue reminders during the course of the case

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Sanctionable Misconduct:Even Big Companies Made Mistakes

Apple, Inc. v. Samsung Elec. Cos, Ltd., (N.D. Cal. July 25, 2012)Patent infringement case re smart phones;Both sides failed to timely implement proper legal hold procedures, resulting in spoliation of evidence;Didn’t implement legal holds soon enoughDidn’t include all the key playersDidn’t notify the IT department to stop automatically deleting emailsBoth sides were sanctions by the CourtApple won the trial - $900 million verdict

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

Northington v. H & M International(N.D. Ill, January 12, 2011)Discrimination claims against employer; employer failed to produce relevant documents and e-mails;Employer’s HR VP only collected documents that were sent to her; ESI data collection was done ad hocCourt: Employer was “reckless” and “grossly negligent” in failing to initiate legal hold to preserve relevant ESI;Sanction: Adverse inference jury instruction at trial + attorneys’ fees and costs

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Sanctionable Misconduct in Arizona

Science Care, Inc. v. Donna GoyetteMaricopa County, Arizona, CV 2009-032397 (March 7, 2011)Intentional deletion of ESI from laptops by Defendant“Disk wiping” software used to try to hide deletionsPlaintiff’s computer expert found evidence of wiping softwareCourt ruling: “Defendant’s conduct cannot, by any stretch of the imagination be characterized as innocent or unintentional.”Sanctions Imposed: Default JudgmentNo sufficient monetary sanctions or adverse inference to cure the prejudice caused by ESI deletion

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Questions?

Thomas R. NolascoEngelman Berger, P.C.(602) 271-9090trn@eblawyers.com