e-discovery 2.0

The Chinese philosopher, Lao-tzu, once said “a journey of a thousand miles begins with a single step.”  This truism has been applied in a myriad of ways over the years, but it applies with equal measure to the process of taming the multifaceted challenge that is electronic discovery.  Simply put, conquering e-discovery is always a journey.  And for enterprises like The Home Depot, they know first hand that you can’t simply look at the end result and wish for the journey to be complete.  Instead, it’s paramount to embrace all the steps along the path and develop good habits that work both for the first and the last mile.

Many enterprises clearly understand the benefits of in-house discovery that include lower processing and review costs, earlier access to case facts, better control over the processes, etc.  But some struggle with how to begin their journey, for any number of reasons (lack of knowledgeable staff, failure to get executive buy-in, inability to build a compelling business case, etc.).  Fortunately, the folks at Home Depot have recently completed their journey and have offered to share secrets they leveraged throughout the process.

In a similar fashion to best selling author’s Stephen R. Covey’s “The 7 Habits of Highly Effective People” David Steel, Sr. Counsel and Barbara Squires, Paralegal at The Home Depot will host a web seminar to walk us through the some of the e-discovery habits that helped them successfully navigate their way through the process.  The web seminar is titled “5 Habits to Create a Highly Effective In-House E-Discovery Process” and it’s free to attend. Since we don’t want to steal their thunder, we won’t divulge their habits now, but suffice it to say that every company can learn from their experiences.  And, after the web seminar I’ll devote more blog time to further expansion of each habit.

Since it’s our raison d’être to help companies complete their e-discovery journey, we’re excited to have The Home Depot on to share stories from their journey, all in the hope that others, just embarking on their own expedition, can be just as successful.

Much of the business and personal productivity that comes in the digital world  is from email and its unique abilities. Email allows us to communicate in a way that helps us associate context to our discussions, namely in its ability to be chained into a sequential thread when email users reply to or forward emails they previously received. This accomplishes two important tasks: 1) it allows the person sending the reply or forward to get an understanding of the issues so he/she can craft a meaningful response, and 2) it allows the person receiving the response to understand that response in the context of other on-going discussions. Email programs such as Microsoft Outlook, Eudora, and Gmail help by automatically including content from prior emails, thus producing a long chain of reference.

It is no coincidence that emails thus constitute key evidentiary value in the context of litigation. The inherent value captured in emails is what makes email productions central to pre-trial disclosures and the electronic discovery that precedes it. Courts have long recognized that emails are a business record and subject to discovery. Establishing who said what in the context of a matter in dispute is greatly facilitated by examining the thread of emails recorded in email repositories. With respect to electronic discovery, however, email threading presents several unique challenges. The area of greatest confusion and uncertainty has been the determination of privilege when emails are exchanged with in-house counsel and attorneys and whether such emails are protected by attorney-client privilege or not. A central issue is the composition of privilege logs under these circumstances.

There are several legal opinions on the matter of intermingling privileged and non-privileged communications in an email chain. These opinions have left the matter with little clarity, especially regarding whether the entire email thread is privileged or whether individual emails must be separated out and classified as privileged, with a privilege log listing them. Typically, the most recent email in a thread contains all other emails in that thread. Separating out individual emails (i.e., the contained emails) from the containing email would allow for treatment of just the portions of the email thread that may have privilege. When such separation is permitted, some contained emails may be assessed as privileged while others may not. However, it is entirely possible that the contained email is also present as an independent email under possession of the same custodian or another custodian. When it is present, one could argue that the contained email can just be ignored, and if the corresponding email is responsive, one can ignore the contained email. But rarely does a collection include a complete set of custodians, so the question of whether the privilege log should include the contained item in question still remains. In terms of management of review, and for constructing a privilege log, treating the most recent email and all its contained emails as a single entity is less expensive and cleaner than separating and determining privilege status of each contained email.

Another complicating factor is simply a determination of privilege. Does the mere fact that an attorney was listed as a courtesy CC recipient make the entire email privileged? And, when such emails are then forwarded only to an attorney involved in the case, with a legal strategy discussed in the containing email, is only the new content added to the containing email privileged, or does the privilege determination extend to the other contained emails?  Let’s examine a few opinions for guidance.

With respect to privilege there is a significant body of opinions that would suggest that only communications that explicitly seek legal advice are privileged.

“With respect to internal communications involving in-house counsel, a party “must make a ‘clear showing’ that the ‘speaker’ made the communications for the express purpose of obtaining or providing legal advice”, Chevron Texaco Corp., 241 F. supp 2d) at 1076 (quoting In Re Sealed Case, 737 F.2d 94 (D.C. Cir. 1984)). If the legal and business advice are inextricably intertwined, “the legal advice must predominate over the business advice, and not be merely incidental, for the communications to be protected under attorney client privilege.” Evidently, attempts to include an incidental attorney in a thread would not offer privilege protections. However, the issue is complicated if the most recent containing email is indeed a genuine attempt to seek such guidance. Here again, there are two opinions. In United States v. Chevron Texaco Corp., 241 F. supp. 2d 1065, 1074 n.6 (N.D. Cal. 2002), we note that:

“With respect to each series of emails for which Chevron asserts protection under privilege, Chevron breaks the series into each discrete message. In our view, such a representation of the document is misleading. Each email/communication consists of the text of the sender’s message as well as all of the prior emails attached to it. Therefore, Chevron’s assertion that each separate email stands as an independent communication is inaccurate.”The above would have you prepare a single entity with the most recent containing email and all other quoted emails treated as a single unit. On the other hand, we see the opposite opinion in Universal Service Fund Telephone Billing Practices Litigation, 232 F.R.D. 669, 674 (D. Kan. 2005) where “the court strongly encourages counsel, in the preparation of future privilege logs, to list each email within a strand as a separate entry”. In a related ruling, the court notes: “Obviously, a sufficient (i.e., reasonably detailed) privilege log is vital if litigants and judges are to determine whether documents have been properly withheld from discovery.” As mentioned earlier, this can be much more expensive from a review and production standpoint.

In Chemtech Royalty Assoc., L.P. v. United States, Nos. 05-cv-00944, 06-cv-00258, 07-cv-00405, at (M.D. La. Mar. 30, 2009), we get another perspective: “Asserting privilege for an entire email thread in the privilege log, but only describing the last message in the thread is deficient.”

In Baxter Healthcare Corp. v. Fresenius Med. Care Holding, Inc., No. 07-cv-01359, 2008 BL 229777 at (N.D. Cal. Oct 10, 2008), the defendants are ordered to produce a privilege log that “separately identifies the author, recipient(s), copyee(s), and blind carbon copyee(s) for each logged email communication regardless of whether the communication is part of an email string”. The court directive is: “Each email is a separate communication, for which a privilege may or may not be applicable. Defendants cannot justify aggregating authors and recipients for all emails in a string and then claiming privilege for the aggregated emails.”

Thus, the contained emails must be treated as separate privilege log entries.

In Vioxx Products Liability Litigation, 501 F. Supp. 2d 789, 812 (E.D. La 2007) the court notes:

“Email threads in which attorneys are ultimately involved were usually listed on the privilege log as one message.”  Further, “Simply because technology has made it possible to physically link these separate communications (which in the past would have been separate memoranda) does not justify treating them as one communication and denying party a fair opportunity to evaluate privilege claims raised by the producing party.”

Again, the preference has been to separate out individual contained emails as independent emails with corresponding privilege log.

In C.T.  v.  Liberal School District, Nos. 06-cv-02093, 06-cv-02360, 06-cv-02359, 2007 BL 21826 at (D. Kan. May 24, 2007), the court orders the plaintiff to submit an amended privilege log that listed email in a string as a separate entry.

In Se. Pa. Transport Authority v. Caremark PCS Health, L.P., 254 F.R.D., 253, 264-65 (E.D., Pa 2008) court recommends “analyzing emails in chain separately to rule on defendant’s privilege claims”.

Another significant opinion is found in Muro v. Target Corp., 250 F.R.D. 350 (N.D. Ill. 2007). In addition to at least four motions, an in camera review  was requested for identifying the privilege status of eighty nine documents. Here, the court ruled that FRCP Rule 26(b)(5)(A)  does not require that all contained emails be separated out. However, the court sustains Target’s objection to the Magistrate Judge’s ruling that its privilege log was inadequate for failure to separately itemize each individual email quoted in an email string. In Muro, though, you are allowed to treat an entire email as a single entity only if the non-privileged communications in that chain are otherwise disclosed. Hence, if you wish to treat an email as a single unit, you are required to either disclose the individual contained emails from other custodians, or to list them as Derived Emails (see below).

Another important case is the Rhoads Industries Inc. v. Building Materials Corp. of America et al 2008, WL 5082993 (E.D. Pa Nov. 26, 2008), where the court rendered the opposite opinion:

“Each version of an email string (i.e., a forward or reply of a previous email message) must be considered a separate, unique document, and therefore each message of the string which is privileged must be separately logged in order to claim privilege in that particular document.”

Of course, the context of the Rhoades opinion is the statement: “In the world of electronic communications, a series of email messages, among people employed by the client, but working in different locations, can replace the meeting with an attorney and subsequent letter.” However, this opinion is very debatable.

An entirely different approach is suggested in Apsley v. Boeing Co., No. 05-cv-01368, 2008 BL 12035 at (D. Kan. Jan 22, 2008), with the opinion “Although Boeing listed on its privilege log entire email strings, it redacted only the portion of the string that contained legal communications.” While this seems to be a perfectly reasonable approach, wouldn’t this compromise case strategy since the very fact that certain portions of the non-privileged, unredacted emails were being exchanged with in-house counsel and is therefore part of an attorney communication can be damaging?

Suffice it to say, the courts differ in their opinions on how to handle email threads and their privileged logs. It is in this context that the Clearwell E-Discovery Platform’s treatment of email threads is extremely helpful for preparing your litigation response. In fact, Clearwell has received two patents related to email threading, one for constructing email threads and its ranking and another for determining derived emails from other containing emails and de-duplication in the context of original emails. Clearwell has advanced email meta-data and content analytics to piece together all emails of a thread. Furthermore, its Derived Email feature separates out contained emails as complete emails, which are then de-duplicated against other emails that are not derived from a contained email. In situations where such a duplicate is not identified, the derived email is maintained in a special state. Also, the containing email’s thread is separated out in such a way that each individual email’s privilege status can be determined. One can apply either a single- or multiple-record policy satisfying whatever the prevailing opinion is from the bench. Also, Clearwell’s redaction capabilities and its ability to produce the same set of documents for multiple parties allow the case team to provide a quick turnaround if there is a motion to produce either a privilege log or the non-privileged snippets of emails. Such technology can be a lifesaver when it comes to meeting electronic discovery obligations.

While not quite rising to the level of the Tiger Woods affair, the 2008 Qualcomm v. Broadcom brouhaha was the leading electronic  discovery scandal for two years.  Finally, the other shoe has dropped and despite all the handwringing and speculation, nobody will be disbarred.  Even so, there are many lessons to be learned from this case, but first a quick summary of the latest ruling.

On appeal, United States Magistrate Judge Barbara Major provided a quick summary for those who haven’t been following the trials and tribulations closely.  During the initial hearings, Judge Major found that Qualcomm “intentionally withheld tens of thousands of documents” during discovery.  In reaching this conclusion she also stressed the “quantity of suppressed documents, the ease with which Qualcomm ultimately was able to locate the documents, the simplicity and relevancy of the search terms and search locations that led to the discovery of the documents, and the lack of evidence indicating that Qualcomm had engaged in any meaningful oversight of its document production.”

As to finding the scapegoats, and levying $8.5M in sanctions, Judge Major held that six attorneys assisted Qualcomm in withholding the critical documents by “failing to conduct a reasonable inquiry into the adequacy of Qualcomm’s document production.”  She specifically identified several inadequacies in Qualcomm’s document search, including “the failure to search the computers belonging to, or used by, deponents and trial witnesses, the failure to adequately investigate when significant, relevant, and unproduced documents were discovered, and the failure to ensure there was a legitimate factual basis for the legal arguments made to the Court before making them.”

After her initial sanctions order was set aside, on remand Judge Major provided the responding attorneys with “an almost unlimited opportunity to conduct discovery,” and during fifteen months, the parties undertook a massive discovery effort – including searching and reviewing over 1.6 million documents.  In resolving the Order to Show Cause, Judge Major reversed tracks despite concluding “this massive discovery failure resulted from significant mistakes, oversights, and miscommunication on the part of both outside counsel and Qualcomm employees.”  Yet, the testimony “also revealed that the Responding Attorneys made significant efforts to comply with their discovery obligations,” causing the Court to ultimately decline to sanction any of the Responding Attorneys.

Judge Major, in an effort to better educate the bar, goes on to detail some of the many electronic data discovery abuses. This provides a set of important lessons that for anyone in the practice of e-discovery:

1. “The fundamental problem in this case was an incredible breakdown in communication. The lack of meaningful communication permeated all of the relationships (amongst Qualcomm employees (including between Qualcomm engineers and in-house legal staff), between Qualcomm employees and outside legal counsel, and amongst outside counsel) and contributed to all of the other failures.” The communication issue has been raised by many including Judge Scheindlin (who quoted Cool Hand Luke) and is one of the many reasons that Sedona had pushed for more cooperation in the discovery process.  I cannot stress the important of transparent communication in the e-discovery process.  Not only is it mandated, it’s simply a wise practice.
2. “Moreover, outside counsel did not obtain sufficient information from any source to understand how Qualcomm’s computer system is organized: where emails are stored, how often and to what location laptops and personal computers are backed up, whether, when and under what circumstances data from laptops are copied into repositories, what type of information is contained within the various databases and repositories, what records are maintained regarding the search for, and collection of, documents for litigation, etc.” This failure too, first widely articulated in Zubulake V (and followed by Phoenix Four, Inc.,) requires counsel to discover all sources of relevant information involving substantial communicating with information technology personnel and key players in the litigation to understand how electronic information is stored.  Failure here (even absent spoliation) is grounds for sanctions.  See, In re A&M Fla. Props. II, LLC, 2010 WL 1418861 (Bankr. S.D.N.Y. Apr. 7, 2010)
3. “Finally, no attorney took supervisory responsibility for verifying that the necessary discovery had been conducted (including ensuring that all of the correct locations, servers, databases, repositories, and computers were correctly searched for potentially relevant documents) and that the resulting discovery supported the important legal arguments, claims, and defenses being presented to the court.” Where does the buck stop? It’s clear that a supervisory role with the proper experience in e-discovery is a critical component to an efficient and defensible e-discovery process.
4. Another factor that contributed to the discovery failure was a lack of agreement amongst the participants regarding responsibility for document collection and production. See previous comments about the importance of cooperation and communication.

So despite all those blunders Judge Major wasn’t able to find any evidence that the involved attorneys acted in bad faith, which allowed her to rationalize her change of heart.  But, if I were counsel reading the opinion I wouldn’t take this reversal as a license to conduct shoddy legal discovery because the bar (pun intended) is quickly rising such that missteps occurring two years ago probably won’t be tolerated today (see Judge Scheindlin’s latest opinion – Pension Committee).

Qualcomm is still a wake-up call, but just one that (fortunately for the involved attorneys) won’t end up an enduring disaster.

Recently, I moderated a panel at the Masters Conference with John Loveland, Sonya Thornton, and Bruce Markowitz entitled: How Defensible is Your E-Discovery Process? (Click here to read a summary of the panel.) It was well attended, and I think that the draw (aside from the esteemed panel) was that this topic still remains very vexing for most practitioners.

Initially, we started at ground zero with the notion that defensibility is in most instances equated with the “reasonableness” standard, which is pervasive across many areas of the EDRM spectrum… from preservation to production.  Instances include:

• Preservation — “[a]s soon as a potential claim is . . . identified, a party is under a duty to preserve evidence which it knows, or reasonably should know, is relevant to the future litigation.”
• FRE 502 (b) – the disclosure does not operate as a waiver in a Federal or State proceeding if the (2) the holder of the privilege or protection took reasonable steps to prevent disclosure;
• General Privilege Waiver — In SEC v. Badian, 2009 WL 222783 (S.D.N.Y. Jan. 26, 2009)(link), “there is no basis … to conclude that there were precautions [to prevent the disclosure], let alone whether they were reasonable.”
• FRCP 37(e) — Absent exceptional circumstances, a court may not impose sanctions under these rules on a party for failing to provide electronically stored information lost as a result of the routine, good-faith operation of an electronic information system.

While the foregoing isn’t exhaustive it does highlight the persistent nature of the reasonableness standard as practitioners seek a defensibility sanctuary.  The good news is that the law doesn’t require perfection and there are also a number of ways to obtain reasonable defensibility:

• Demonstrable acceptance by the opposition – here the notion is that collaboration with the opposition allows the parties to comfortably move ahead with their discovery process and even if it’s not objectively reasonable, the parties consent to the protocol will in most instances carry an imprimatur of reasonableness.
• Auditing / process transparency.  Similar to the first bullet, auditing the process and giving the opposition visibility into the process steps will often make it hard for them to lodge successful downstream challenges.
• Adherence to Local Rules (See 7th Circuit Pilot Program) or judicial order.  Another avenue than can provide some degree of safety is compliance with a discovery protocol mandated by local rules, although that compliance may ultimately be challenged.
• Statistical confidence intervals / sampling – the use of statistics as a way to bolster process defensibility is starting to come to maturity and in the future I think that detailed precision, recall and other statistical indicates will play a large role in e-discovery defensibility.

None of these steps can be guaranteed to really get you off the hook from a rapid opposing party calling foul, but using them in a “belt and suspenders” fashion will certainly help buttress any discovery process.

For more illumination on the topic please see the following video of my interview with John Loveland, who’s waxing poetically about discovery defensibility.

We’ve devoted a number of posts to the topic of ECA, ranging from a quest to define the acronym, all the way to the cost savings benefits of the ECA approach.  And, while there seems to be relative unanimity around the beneficial aspects of ECA, there still seem to be a number of myths and misconceptions.  So, ala the Mythbusters, we’ll run these myths through the gauntlet to see which survive scrutiny.

Myth #1: ECA Is Only Valuable if Performed “Early”

Certainly, ECA is best leveraged and will be most valuable when performed at the outset of litigation.  As has been stated before, it has value on two primary fronts, the first being the ability to scope electronic discovery (both in terms of cost and timelines).  The next is the more traditional value proposition where ECA is used to get an understanding of the case facts to enable the strategic decision making process.

As such, there are scenarios where an ECA methodology would still generate value even if performed “later” in the mater.  For instance, with bifurcated, class action litigation initial discovery about the class may occur months before discovery on the merits.  In this instance using a later ECA approach would still make sense since discovery about the case facts may not have been possible earlier on.  Similarly, “late” ECA may still hold value when new parties or claims are added to an existing lawsuit, or when there’s a substantial change in case direction, data, or custodians.

Myth #2: ECA Is Only Performed With Technology

Sure, enterprise grade ECA products  are an important part of the mix, but the products won’t perform an ECA by themselves.  There’s just too much subjective decision making involved in the assessment process.   Therefore, the right people are critically important — not only in terms of experience performing this analytical work, but also in their ability to capably testify about the underlying decision making process.  It’s also important to be able to follow a repeatable and defensible processes to show that the “recipe” used was aligned with industry best practices and wasn’t ginned up for a particular engagement.

Myth #3: ECA Only Works With Large ESI Volumes

Yes, ECA methodologies makes a lot of sense for large, bet-the-company matters because even modest savings when processing, analyzing and reviewing terabytes will easily approach six to seven figures.  However, smaller matters will still benefit from better budgetary insights that facilitate informed matter management.  And, in a way there’s almost more benefit from being able to quickly evaluate (fight/settle) smaller suits since the transactional costs are so high relative to the amount in controversy.  In both scenarios it’s important to view objective case data to prepare for meet & confer conferences.

Myth #4: Clients Don’t Want To Pay for ECAs

Many end clients (corporate counsel typically) have a similar litigation mindset:  i.e., the desire to avoid costs for as long as possible.  While avoiding early costs makes some sense on its face, the fact is that spending a small amount of money early on (for budgetary and case assessment purposes) will in most instances reduce the overall litigation budget.  It’s the classic, “you can pay me now, or pay me later” situation.

Counsel must understand that while some costs are incurred early in the process the benefits are crystal clear: i.e., determining customized case strategies early in the matter to decide whether to fight or settle.  Similarly, corporate clients must recognize that the benefits outweigh the costs and require their litigation counsel to include this process in every significant matter.

This illustration highlights how an initial ECA investment actually pays for itself over the life of the litigation.

Myth #5: ECAs Begin when the Complaint is Filed

Many newbie ECA practitioners may think that the timing for an ECA approach would start when the complaint is filed.  And, while this isn’t patently ridiculous, I think the better approach is to begin the clock at the time litigation becomes “reasonably likely” — versus later dates such as when the complaint is filed or when discovery is propounded.  This trigger is also the same for trigger preservation obligations and a host of interrelated activities such as ESI “identification,” which makes the matter kick-off more synchronized.

For more information about ECA, watch a recording of our recent webinar — E-Discovery MythBusters: Debunking Common Myths About Early Case Assessment.