e-discovery 2.0

We’ve all heard the phrase that “everything is bigger in Texas” and the little “mini-conference” held in Dallas, TX last Friday was no exception.  The Discovery Subcommittee held a small, one-day conference to tackle some big issues related to preservation and sanctions that could ultimately lead to amendments to the Federal Rules of Civil Procedure (Rules).

The Subcommittee’s primary purpose was to discuss “preservation and sanctions issues” by using the following topics as guidelines:

• The nature and scope of the current “problem”
• The role of technology
• Possible solutions to the problem

Counsel from large companies like Google, General Electric, and Exxon Mobil participated side by side with outside counsel from both plaintiffs’ and defense bar to discuss what some characterized as a lack of clear direction in the current Rules.  Government lawyers, academics, and federal judges including Judges David Campbell (D. Az.), Shira Scheindlin (S.D.N.Y.), Paul Grimm (D. Md.), John Facciola (D.D.C.), Lee Rosenthal (S.D. Tx.), Michael Mosman (D. Ore.), and Nan Nolan (N. D. Ill.) helped round out the field to make for a lively discussion with multiple perspectives represented.  The following summary highlights some of the key viewpoints and areas of contention debated throughout the day.[1]

The nature and scope of the problem

An underlying theme throughout the day was whether or not preservation and sanctions challenges warrant amending the Rules.  Not surprisingly, counsel for large organizations that commonly bear the brunt of large and frequent document requests lobbied for rule amendments that provide more certainty around when the duty to preserve evidence is triggered, the scope of that duty, and how sanctions are applied.

In support of this position, some corporate attorneys argued that the lack of certainty in the current Rules unfairly requires organizations to err on the side of preserving evidence early and broadly to avoid the risk of sanctions.  Since preserving evidence can be extremely expensive and the duty may be triggered before litigation even begins, they argue that changes to the Rules are necessary.  One corporate attorney framed the issue by providing specific details about costs associated with preserving data for different cases.  He explained that in one situation, his organization has spent more than $5 million to locate, collect, preserve, and maintain data for an ongoing matter even though a complaint has never been filed.  He went on to explain the dilemma by stating: “not preserving asks us to take a chance with our reputation.”

In response, a few attendees questioned how preservation related expenses could spiral so high even before attorney review.  Others pointed out that if the current Rules were better utilized, specifically the meet-and-confer provisions of Rule 26(f), then many preservation challenges could be minimized.  Supporters of better Rule 26(f) engagement complained that counsel for large organizations often refuse to discuss preservation related issues and thereby fuel problems related to the scope of preservation themselves.   Others suggested that if organizations enforced better information management policies instead of keeping “everything forever”, then the magnitude of the problem could be reduced.

Technology

The Subcommittee members generally agreed that the evolution of technology has led to massive data growth which creates new electronic data challenges.  Electronically stored information (ESI) is often duplicative, typically resides in many different technology systems, and can be difficult to locate on a case by case basis.  There was some thoughtful discussion about how data archiving and cloud computing technology are important tools for helping organizations manage these information problems more effectively.  Another commentator acknowledged that although “predictive coding” may be helpful for “reviewing” data, it requires significant human involvement and simply does not solve the problem at hand.

Surprisingly, aside from the comments above, the technology discussion focused mainly on the issue of what constitutes “possession, custody or control” under Rule 34 in today’s environment of social media, cloud computing, and mobile devices.  Unfortunately, there was no discussion of either the role legal technology solutions play in minimizing risk and cost or of the impact the current Rules have on public policy.  For example, the Subcommittee did not address whether organizations that invest in technology in order to automate their internal data management and electronic discovery process should be afforded more protection under Rule 26(b)(2)(B) (“not reasonably accessible because of undue burden or cost”) than organizations that choose not to invest in technology.  If an organization’s technology investment (or lack thereof) is not a factor, does Rule 26(b)(2)(B) have the unintended effect of stifling meaningful legal technology investment by some organizations?  Similarly, do advancements in legal technology diminish the need for a Rule amendment that, at its core, is geared toward reducing costs?  In my opinion, the manner in which organizations are using technology today is an important factor that warrants deeper discussion and a subject I intend to address in a future publication soon.  Stay tuned.

Possible solutions

Discussion about possible solutions to the problem revealed more about the contrasting viewpoints in the room.  Notably, the Department of Justice representatives and those typically aligned with the plaintiffs’ bar tended to lobby for better adherence to the framework contained in the existing Rules in lieu of drafting new Rules.  These folks generally appeared to fall into the “No New Rule” or “Not Yet” camp, and cited the relative newness of the 2006 Rule Amendments and the fact that only about one percent of federal cases involve sanctions in support of their position that Rule amendments are premature or not needed.  Along the same lines, many called for further study and evaluation of the issues through organizations such as The Sedona Conference and the 7th Circuit Electronic Discovery Pilot Program.  Others referenced the importance of looking to evolving case law for more guidance before moving forward with Rule amendments.

In stark contrast, those on the other side of the aisle that typically represent large organizations, lobbied for bright line rules or at least “guideposts” to provide more certainty regarding preservation.  For example, one participant suggested that the duty to preserve evidence should begin when a complaint is served.  Another suggested that the duty should be triggered when a potential litigant is “reasonably certain to be a party to litigation” – a standard that is arguably narrower than the commonly applied “reasonably anticipates litigation” standard articulated in Judge Scheindlin’s frequently cited Zubulake v. UBS Warburg line of decisions.

Those calling for more certainty regarding triggering events also provided recommendations for addressing the scope of the preservation duty and the application of sanctions.  A suggestion to incorporate language that presumptively limits the number of custodians (10) and documents (by age) met resistance on the grounds that trying to apply a one-size-fits-all rule fails to acknowledge that the facts and circumstances of every case are different and so too are the litigants.  Similarly, recommendations to limit sanctions for evidence spoliation to situations where a litigant’s conduct is “intentional” or “willful” were met with a chilly reception by those favoring better adherence to the current Rules.

Conclusion

Time did not permit comprehensive discussion and analysis of every perspective, but the mini-conference highlighted the complexity surrounding preservation and sanctions issues and revealed some polarized viewpoints about how to solve those issues.  Perhaps one glimmer of consensus was the acknowledgement that “pre-litigation” obligations to preserve evidence before service of a complaint is often challenging for large organizations.  However, whether this and other issues should be addressed through better education, more stringent enforcement of existing rules, or by modifying the existing rules to include more “guideposts” remains unsettled.

What do you think?  Please respond to the poll, above right, to let us know whether you think amending the Federal Rules of Civil Procedure (FRCP) is necessary to address some of the preservation and sanctions issues discussed above.

To join the conversation and receive automatic updates when new information is posted to this blog, please subscribe to e-discovery 2.0.

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[1] A more exhaustive list of participants and sample questions was incorporated into the Federal Rules Advisory Committee’s June 29, 2011 memorandum announcing the mini-conference.  Similarly, the events leading up to the mini-conference are described in more detail as part of my previous postings on the same subject.

Surprisingly, a large percentage of the population has been captivated by what many characterize as a public melt down by Two and a Half Men star, Charlie Sheen. Following his well-publicized split with the show’s executive producer, Chuck Lorre, Sheen’s media interviews have been harder to avoid than cowboy hats at a Kenny Rogers concert. Regardless of whether or not you’re a pop-media junkie, fan of Two and a Half Men, or completely disinterested in the entire saga, it’s clear that many of Mr. Sheen’s ramblings have stirred controversy.

What do all Mr. Sheen’s seemingly random musings mean? Has he lost his mind? Is he pulling the wool over the eyes of the media by flawlessly executing the biggest Hollywood hoax in history? Maybe, just maybe, Mr. Sheen is a stealth e-discovery expert, secretly providing the legal community with a guide for handling litigation. Don’t agree? Well, maybe you’ll be a believer after reading my interpretation of how some of Mr. Sheen’s most popular quotes can serve as an e-discovery 101 guidebook.

“It was so gnarly I can’t remember.”

It’s hard to remember that the first Zubulake decision was penned by Judge Scheindlin long ago in 2003, but the gnarly $29.2 million jury verdict against UBS Warburg by a single plaintiff, in a fairly routine employment lawsuit, is one that most legal departments in Corporate America won’t soon forget.[1] Many industry experts feel the jury’s massive verdict could have been avoided if it wasn’t for repeated electronic discovery errors that resulted in the jury receiving an adverse jury instruction about UBS Warburg’s failure to produce emails. Eight years later, the incredible growth of electronic information continues to present e-discovery challenges for organizations, even though clearer guidelines have evolved.

“Sorry man, didn’t make the rules.”

Prior to Zubulake, the Federal Rules of Civil Procedure (FRCP) did not squarely address the unique challenges of electronic evidence. Although she didn’t actually make the rules, Judge Scheindlin served as a member of the committee that helped draft the 2006 amendments to the FRCP. The amendments address many electronic evidence challenges faced by legal departments, and topics such as data sampling, proportionality, and data accessibility that were tackled in Zubulake, ultimately made their way into the notes or text of the amendments.

The amendments seek to minimize discovery disputes and provide clarity by, among other things, requiring parties to “discuss any issues about preserving discoverable information” and by outlining a protocol for dealing with electronically stored information (ESI) characterized as “not reasonably accessible because of undue burden or cost.”[2] Despite these guidelines, the rules are not always bright line instructions so the conduct of the parties is typically evaluated based on “reasonableness” standards when a discovery dispute arises. Some are lobbying for further clarification regarding issues such as when the duty to preserve electronic evidence is triggered and there seems to be a movement afoot that could lead to additional Rule amendments as evidenced by last year’s Civil Litigation Review Conference at Duke University.[3]

“Your perimeter’s been breached.  You got work to do bro.”

No lawyer wants to be responsible for having the organization’s perimeter breached as a result of data spoliation. However, failing to take proper data preservation steps continues to be the number one reason organization’s face e-discovery sanctions.[4] In Zubulake IV, Judge Scheindlin explained that an organization has work to do when it “reasonably anticipates” litigation since the anticipation of litigation is enough to trigger counsel’s duty to issue a litigation hold notice to employees.[5] The duty is easy to understand, but determining the “triggering” event and the best approach for preserving data can be challenging. To minimize the risk of spoliation, many organizations are moving away from using email notifications and spreadsheets to track when, who, how, and why employees are notified of a litigation hold in favor of more automated solutions and repeatable workflows. Automated solutions allow notices, reminders, and surveys to be created with easy-to-use templates and the “reasonableness” of the entire litigation hold process can be illustrated since reports can be automatically generated with the click of a button.

“I’ve got tiger blood and Adonis DNA”

Although the line between “reasonable” and “unreasonable” conduct can be very blurry in some cases, in other situations the offending party simply chooses to flagrantly disregard the rules as if they have tiger blood and Adonis DNA. For example, in Daylight, LLC v. Mobilight Inc., the Utah Appellate court upheld the lower court’s entry of a default judgment after defendants threw a laptop off a building, ran it over with a vehicle and stated: “if this gets us into trouble, I hope we’re prison buddies.”[6] Uh, sorry Charlie….

Typically, most parties are not so cavalier about disregarding their legal obligations and the judge’s decision to issue sanctions when evidence is lost or deleted is not a slam dunk. One challenge is that the 2006 FRCP Amendments allow litigants to request any “Electronically Stored Information” stored in “any medium” that is reasonably calculated to lead to the discovery of admissible evidence.[7] That means the scope of the duty to preserve, collect, and produce information as part of litigation may be very broad and very complicated, even though data growth continues to increase exponentially and corporate information technology systems continue to become increasingly complex.

To meet these burdens, many organizations are demanding technology solutions that do more than manage the legal hold process because they also need to collect, analyze, and review ESI to evaluate the case. The holy grail of e-discovery is being able to leverage a single technology solution to manage all these tasks as well as the litigation hold process. The value is twofold. First, automating e-discovery steps related to preservation and collection that have traditionally been managed manually minimizes the risk of human error and makes it easier to demonstrate a repeatable process that is defensible. Second, using the same technology solution to filter, analyze, and review key documents faster results in significant cost savings and strategic advantages.

“You make a choice to win, and you win”

Despite the fact that organizations continue to make e-discovery mistakes, smart organizations choose to leverage a combination of repeatable workflows and legal technology solutions to help them win. Although the new technological era we live in has created new discovery challenges, legal technology can be used to streamline data preservation, collection, processing, and review. Legal technology can also be used to quickly find important documentary evidence earlier in the case, thereby resulting in strategic advantages so smart organizations can “just keep winning.”

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[1] Zubulake v. UBS Warburg, LLC, 217 F.R.D. 309 (S.D.N.Y. 2003)

[2] See Fed. R. Civ. P. 26(f)(2) and Fed. R. Civ. P. 26(b)(2)

[3] John G. Koeltl, 2010 Civil Litigation Review Conference Introduction: Progress in the Spirit of Rule 1, 60 Duke L.J. 537 (2010).

[4] See Dan H. Willoughby, Jr., Rose Hunter Jones, and Gregory R. Antine, SANCTIONS FOR E-DISCOVERY VIOLATIONS: BY THE NUMBERS, 60 Duke L.J. 789 (2010), at 803 stating (“FAILURE TO PRESERVE ESI IS THE MOST PREVALENT SANCTIONABLE CONDUCT”

[5] Zubulake v. UBS Warburg LLC, 220 F.R.D. 212, 218 (S.D.N.Y. 2003)

[6] Daylight, LLC v. Mobilight Inc., 2011 UT App. 28 (2011)

[7] Fed. R. Civ. P. 34(a)(1)(A).

It seems like just yesterday that I wrote a post discussing Judge Scheindlin’s latest electronic discovery opinion in Nat. Day Laborer Org. Network v. United States Immigration and Customs Enforcement Agency (“NDLON”).  One of the issues that jumped out at me when I read the original opinion was Judge Scheindlin’s application of FRCP principles, rejecting the government’s claim  that “if the requirements of FOIA and the requirements of the Rules conflict, FOIA must trump the Rules.”  Needless to say, she didn’t buy the “trump” argument:

“[T]here is no need to decide this question because FOIA does not conflict with the Rules. FOIA is silent with respect to form of production, requiring only that the record be provided in ‘any form or format requested by the person if the record is readily reproducible by the agency in that form or format.’… Defendants’ productions to date have failed to comply with Rule 34or with FOIA.”

Now that the government has appealed Judge Scheindlin’s ruling I thought I’d consult with a legal guru (in the form of Ralph Losey) to see how he thinks the chips will fall on both the request for a stay and the appeal.  Here’s what started as an impromptu email exchange, which is now paraphrased for your reading enjoyment:

Dean:  ”Ralph, how likely is the government to get stay in the first place?  After all, if they have to produce the metadata (as ordered) winning a downstream appeal won’t help much in the NDLON case?”

Ralph:  ”An interlocutory appeal to the Circuit Court on a discovery issue is always a long shot. Appeals courts usually do not accept appeals of non-final discovery orders. The appellant has to show irreparable harm. Still, this is an unusual case as production of documents goes to the merits of the case itself. They may well take it. I really don’t know. I might depend on someone’s breakfast.”

Dean:  “So, maybe the government loses this initial battle, but my guess would be that they’re still keenly interested in winning the war, since Judge Scheindlin’s metadata production standards will have far reaching affects across any entity responding to FOIA requests.  As an aside, a given agency may handle a multitude of FOIA requests ranging from dozens on the low end to thousands on the high end – so a change in any production protocol is guaranteed to have a material and long lasting impact.”

Ralph:  “Could be, but then again, maybe some agencies are already producing metadata. If they give actual native copies, then they certainly are. I don’t have statistics on that. Certainly, they should have seen this coming. The states that have looked at this all require reasonable metadata production. I probably don’t appreciate the governments real problems here, since in my world, metadata is produced between private parties all of the time without a fuss. Do the feds really have state secrets stashed away in metadata? I seriously doubt it. In my experience, searching for secrets in metadata is usually a big waste of time. It is a fear based on myth, not fact.”

Dean:  “The Supremes issued a ruling recently in Milner v. Dept. of Navy which effectively reigned in an expansionist construction of FOIA Exemption 2.  Aside from containing my new, favorite quote [“Our construction of the statutory language simply makes clear that Low 2 is all of 2 (and that High 2 is not 2 at all).”] do you think this ruling will have any impact on the NDLON outcome?”

Ralph:  “Honestly I don’t know. I consider myself somewhat educated about metadata and production of various metadata fields in load files, but not meta-foia, and I mean that literally, not “metafoicaly” <ouch!>”

Dean:  “Finally, do you think that the Plaintiff’s argument in NDLON that these very agencies ask producing parties for metadata (sometimes in more onerous fashion) will hamper their cause?  Or, is FOIA a different enough creature to throw out the ’good for the goose’ argument?”

Ralph:  “I am reminded of one of my favorite old sayings, ’hoisted by his own petard.’ Certainly many, if not most federal agencies require metadata production to them in e-discovery. Why should the federal government be any different?”

Just as when Judge Scheindlin penned Pension Committee, her latest opinion is already garnering a ton of buzz.  In Nat. Day Laborer Org. Network v. United States Immigration and Customs Enforcement Agency (“NDLON”), 2011 WL 381625 (S.D.N.Y. Feb. 7, 2011) Judge Scheindlin boldly takes on four governmental agencies (ICE, the Department of Homeland Security, the Federal Bureau of Investigation, and the Office of Legal Counsel) over metadata production in response to FOIA demands.

In NDLON Plaintiffs submitted identical twenty-one page FOIA requests to each of the four defendant agencies.  And, after some initial missed deadlines and judicial intervention, Plaintiffs sent the defendants a proposed protocol that requested a specific format for the production of electronic records.  Significantly, the proposed protocol was based on the “format demands routinely made by two government entities-the Securities and Exchange Commission and the Department of Justice Criminal Division” (invoking the old “good for the goose” argument).

Before ruling on the protocol, Judge Scheindlin examined the parties’ efforts to cooperate and she was uniformly underwhelmed:

“As far as I can tell from the record submitted by the parties, the equivalent of a Rule 26(f) conference, at which the parties are required to discuss form of production, was not held and no agreement regarding form of production was ever reached. Nor was a dispute regarding form of production brought to the Court for resolution.”

In evaluating controlling law, the fact that “[n]o federal court has yet recognized that metadata is part of a public record as defined in FOIA” didn’t stop Judge Scheindlin from looking to both state law and the FRCP for guidance.  Next, she relied on Aguilar, which noted that the Sedona Conference abandoned an earlier presumption against the production of metadata in recognition of “‘the need to produce reasonably accessible metadata that will enable the receiving party to have the same ability to access, search, and display the information as the producing party ….’”  She then foreshadowed her subsequent ruling by concluding: “[b]y now, it is well accepted, if not indisputable, that metadata is generally considered to be an integral part of an electronic record.”

The Government, not surprisingly didn’t go down without a fight, arguing that “metadata is substantive information that must be explicitly requested and then reviewed by an agency for possible exemptions.”  In concert they also claimed that “if the requirements of FOIA and the requirements of the Rules conflict, FOIA must trump the Rules.”  Judge Scheindlin wasn’t persuaded, holding that:

“[T]here is no need to decide this question because FOIA does not conflict with the Rules. FOIA is silent with respect to form of production, requiring only that the record be provided in ‘any form or format requested by the person if the record is readily reproducible by the agency in that form or format.’… Defendants’ productions to date have failed to comply with Rule 34or with FOIA.”

In terms of the remedy for the government’s failure, she did cut them some slack:  “Because no metadata was specifically requested in Plaintiffs’ July 23 e-mail, and because this is an issue of first impression, I will not require Defendants to re-produce all of the records with metadata.”  But for future productions she held that the bulk of the ESI be produced in “TIFF image format but with corresponding load files, Bates stamping, and the preservation of “parent-child” relationships (i.e. the association between an attachment and its parent record)” citing the metadata list below for non-email files.

1. Identifier
2. File Name
3. Custodian
4. Source Device
5. Source Path
6. Production Path
7. Modified Date
8. Modified Time
9. Time Offset Value

So, here’s the rub.  The legal populous, not surprisingly, likes bright line rules.  So, when Judge Scheindlin writes (in Footnote 41):  “[w]hile not necessary to the holding in this case, I believe that these are the minimum fields of metadata that should accompany any production of a significant collection of ESI” it’s easy to see how the above nine fields may become a blunt instrument wielded haphazardly by requesting parties.   Not surprisingly, Judge Scheindlin is aware of her mantle and further tries to caveat her holding (in footnote 44):

“To be clear, my Order requiring the use of this Proposed Protocol for future productions-as amended by the specific metadata fields I have required and by the options I have offered the parties regarding the form of production for spreadsheets-is limited to this case. I am certainly not suggesting that the Proposed Protocol should be used as a standard production protocol in all cases. The production of individual static images on a small scale, where no automated review platform is likely to be used, may be perfectly reasonable depending on the scope and nature of the litigation.

The impact of footnote 44 was top of mind when I recently spoke to Fmr. Judge Ron Hedges who chimed in:

“Attorneys must confer with regard to production requirements, as they should before bringing any dispute before a federal court. Moreover, attorneys should recognize that, as Judge Scheindlin said in footnote 44, that the selection of metadata fields to request are case-dependent.  Any attempt to arrive at a ‘universal’ or ‘bright line’ standard for production of metadata ignores the text of Rule 34(b) and the bargaining that occurs in meets-and-confers, and the unique aspects of individual civil actions.”

Despite agreeing with Judge Hedges’ sentiment, the main question in my mind will be whether footnote 44 is given its due weight going forward.  My concern is that, as is oft discussed with her Pension Committee decision, parties may hone in on the bright line test and miss the nuances.  While it’s easy to argue against the folly of this thinking, it may not stop it from happening in the near term.

Finally, in another shout out to the Cooperation Proclamation, Judge Scheindlin takes a swipe at counsel, who forced her to rule on an “e-discovery issue that could have been avoided had the parties had the good sense to ‘meet and confer,’ ‘cooperate’ and generally make every effort to ‘communicate’ as to the form in which ESI would be produced.”

“The quoted words are found in opinion after opinion and yet lawyers fail to take the necessary steps to fulfill their obligations to each other and to the court. While certainly not rising to the level of a breach of an ethical obligation, such conduct certainly shows that all lawyers-even highly respected private lawyers, Government lawyers, and professors of law-need to make greater efforts to comply with the expectations that courts now demand of counsel with respect to expensive and time-consuming document production. Lawyers are all too ready to point the finger at the courts and the Rules for increasing the expense of litigation, but that expense could be greatly diminished if lawyers met their own obligations to ensure that document production is handled as expeditiously and inexpensively as possible. This can only be achieved through cooperation and communication.”

In the end, NDLON will continue to generate a ton of discussion (as did Zubulake and Pension Committee).  While this decision won’t single-handedly end the metadata discussion it will hopefully serve as a launching point for more clarity down the road.  For this, practitioners on both sides of the debate should be thankful.

When it comes to e-discovery projects, the debate about how to improve the Identification and Collection steps are often at the forefront. Why so? There are several factors – the gap between legal and IT, the desire to cut costs by using manual processes, and just not being aware of the risks involved. My colleague Dean Gonsowski’s recent post Manual Collections of ESI in Electronic Discovery Come under Fire discusses manual collections at lengthand what counsel needs to supplement it. The alternative is obviously to enable automated collections, which organizations may balk at, citing large technology and IT costs. In this post, I would like to examine the critical considerations and advantages of automating the collection process within an enterprise.

It is generally the case that with automation, you achieve a certain level of repeatability and quality control, which leads to better management of risks. In Ford Motor Co. v. Edgewood Properties Inc., 257 F.R.D. 418 (D.N.J. 2009), the opinion suggests that manual collections are permissible. However, is that a wise decision, considering the exposure that offered the plaintiffs in the case? A counter point is the Judge Shira Scheindlin’s Zubulake Revisited, Pension Comm. of the Univ. of Montre­al Pension Plan v. Banc of America Sec. opinion that certain plaintiffs’ collection efforts warranted a sanction for spoliation of evidence because, among other defects, the plaintiffs relied solely on their employees to search and select what they believed to be responsive information without adequate attorney direction and supervision.

So, what are the critical elements and advantages of automating the collection process within an enterprise? Most important is closing the gap between legal and IT teams that are involved in the matter. The legal team is often involved at the start of an e-discovery project and hasthe insight into possible custodians who are potentialtargets of ESI collections. However, they have very little visibility into the information assets that actually belong to the named custodians. A key step in automation is identifying the custodians and their ESI. This is where legal teams and IT teams need to collaborate. Once this is completed, you now have the need to specify collection parameters and apply them methodically for all custodians in the context of a matter.

Specifying what to collect from a large IT infrastructure of a typical organization can be a daunting task. This is where automation steps need to account for variability in collection targets. Flexible specification of collection parameters is essential for consistent collections from varied data sources. As an example, desktops store documents in special folders that are unique for the type of desktop, and being able to specify collections of potentially relevant ESI from all systems and devices regardless of the type of device is very important.

An aspect of interest is the scope of collections for e-discovery purposes.While required for a small percentage of cases, typically criminal cases, the traditional approach of always using forensic tools to image disks is often too heavy handed. At the same time, applying keyword-level culling at the point of collection is also too granular. Keyword based filtering at the point of collection requires deep analysis of every possible file type, and such analysis would add large processing load on the system being collected. Moreover, such coarse level culling introduces significant risk of accidentally excluding relevant content. It is preferable to apply defensible filters such as well-known operating system files and application programs (such as from the NIST files), as well as date ranges and file types. Anything beyond that adds risk to your collections.

Another requirement during collections is securely transporting the collected ESI from one or more custodians into a preservation area for further analysis as well as for implementing a preservation hold. Again, given that collections are performed over a wide swath of systems, desktops, archives and message stores, some form of automation is critical, especially if you wish to maintain and prove defensibility. One challenge is collections from offsite laptops and fileshares in remote offices. You need flexible options to either collect to a local portable drive, or, if there is network connectivity, push the collection to a secure store, usually a remote file share.

A final step in the process is to accurately document who actually performed the collections, what was collected, and more importantly, what was not collected. By automating these steps, and by providing visibility and defensibility, one can increase collaboration between legal and IT teams with the end goal of successful collections. Automation, while decreasing costs will also reduce risk by making the process much more defensible. This is especially so if manual collections require supervision by experts for it to be defensible. Imagine the costs of sending your legal e-discovery expert with your IT staff for every collection station as suggested by Judge Scheindlin in Pension.

Judge Shira Scheindlin is famous for a number of things in her electronic data discovery opinions, but one notable aspect is her use of quotes to set the tone for her landmark decisions.  In Zubulake she quoted Cool Hand Luke (“What we’ve got here is a failure to communicate.”) and in her latest opinion she quotes George Santayana (“[t]hose who cannot remember the past are condemned to repeat it.”).

Pension Committee of the Univ. of Montreal Pension Plan, et al., v. Banc of America Securities, LLC, et al. (“Pension Committee”) is generating a lot of buzz and reminds me of the Yogi Berra quote: “this is like déjà vu all over again” … particularly when thinking back to her landmark Zubulake decisions.  In this opinion, Judge Scheindlin of the Southern District of New York pens another potential electronic discovery classic, while simultaneously paying homage to her past opus.

Before we get into the “how” and “what” of the 85 page opinion, it’s probably reasonable to posit the “why” question, particularly when Judge Scheindlin and her team spent 300 hours on the mammoth undertaking.

“I, together with two of my law clerks, have spent an inordinate amount of time on this motion. We estimate that collectively we have spent close to three hundred hours resolving this motion. I note, in passing, that our blended hourly rate is approximately thirty dollars per hour (!) well below that of the most inexperienced paralegal, let alone lawyer, appearing in this case. My point is only that sanctions motions, and the behavior that caused them to be made, divert court time from other important duties-namely deciding cases on the merits.”

So, why was this fact pattern worthy of the inordinate amount of briefing time (regardless of the inconceivably low $9,000 fee)?  A skeptic might postulate that Judge Scheindlin has been out of the limelight lately, often being eclipsed by Judges Peck and Grimm.  It’s also been a year since her Securities and Exchange Commission v. Collins & Aikman Corp., opinion and it’s likely that she wanted to hearken back to the good ole Zubulake days, where she had the ear of the entire electronic discovery world.  Her tribute is less than subtle, as she even subtitles Pension Committee: “Zubulake Revisited: Six Years Later.”

Less skeptically, however, she likely sees a host of matters rife with electronic data discovery disputes caused by the bar’s lack of e-discovery savvy.  It seems plausible that Pension Committee is a way for her to coalesce leanings from Zubulake (and beyond) into one, clear expression of legal duties.

Given the length of her opus, we won’t dissect the entire opinion as Ralph Losey did (chockablock with flying gerbils), but will instead focus in on the enduring and potentially controversial sections.  As way of background, the dispute at hand focused on claims by a group of investors who brought an action to recover losses of 550 million dollars stemming from the liquidation of two British Virgin Islands based hedge funds.  Unlike many typical e-discovery disputes, this instant action focused on the conduct of the plaintiffs as they attempted to deal with the often murky landscape of ESI preservation, collection and production.  Fortunately, Judge Scheindlin provided much needed foreshadowing to both readers and bloggers alike in her opening comments:

“Because this is a long and complicated opinion, it may be helpful to provide a brief summary up front. I begin with a discussion of how to define negligence, gross negligence, and willfulness in the discovery context and what conduct falls in each of these categories. I then review the law governing the imposition of sanctions for a party’s failure to produce relevant information during discovery. This is followed by factual summaries regarding the discovery efforts–or lack thereof–undertaken by each of the thirteen plaintiffs against whom sanctions are sought, and then by an application of the law to those facts. Based on my review of the evidence, I conclude that all of these plaintiffs were either negligent or grossly negligent in meeting their discovery obligations. As a result, sanctions are required.”

The finding of sanctions aside, Judge Scheindlin goes out of her way to crystallize duties and identify the type of conduct can cause an e-discovery breach.  Despite significant caveats about the fact intensive nature of each discovery dispute, she nevertheless proffers the following synthesis, which has caused no shortage of consternation amongst electronic discovery practitioners and commentators:

“After a discovery duty is well established, the failure to adhere to contemporary standards can be considered gross negligence. Thus, after the final relevant Zubulake opinion in July, 2004, the following failures support a finding of gross negligence, when the duty to preserve has attached:

• to issue a written litigation hold;
• to identify all of the key players and to ensure that their electronic and paper records are preserved;
• to cease the deletion of email or to preserve the records of former employees that are in a party’s possession, custody, or control;
• and to preserve backup tapes when they are the sole source of relevant information or when they relate to key players, if the relevant information maintained by those players is not obtainable from readily accessible sources.

[bullets added]

Assuming Pension Committee is followed beyond the bounds of the Southern District of New York, which is still speculative at this stage, it certainly means sleepless nights for corporate legal departments with litigation hold and preservation processes that are less than “contemporary.” While it’s hard to argue with the theoretical appropriateness of the above items, it’s questionable how practical these steps are, particularly for large enterprises that may have dozens (or hundreds) of litigation holds in place at any one point in time.  Multiply the numbers of holds times the disparate types of ESI and the complexities of the IT infrastructures and Judge Scheindlin’s seemly innocuous mandate can quickly become a tactical minefield, rife with sanctions possibilities.  Unfortunately, with the rapid proliferation of social media usage and cloud computing, this already complex paradigm is only going to become more vexing in the near term.

Given that the number of struggling enterprises is legion, it does certainly beg the question whether more folks than not can live up to this new “reasonableness” standard.  If not, this articulation may materially raise the bar and result in a demonstrable increase in spoliation motions, if that were possible.  Already, spoliation charges are often referred to as a “case within the case” by many, something which Judge Scheindlin reluctantly acknowledges.

“Finally, I note the risk that sanctions motions, which are very, very time consuming, distracting, and expensive for the parties and the court, will be increasingly sought by litigants. This, too, is not a good thing. For this reason alone, the most careful consideration should be given before a court finds that a party has violated its duty to comply with discovery obligations and deserves to be sanctioned. Likewise, parties need to anticipate and undertake document preservation with the most serious and thorough care, if for no other reason than to avoid the detour of sanctions.”

[Footnotes omitted]

Perhaps ratcheting up of the e-discovery standard of care can be rationalized as aspiration in nature.  Yet, it is hard to see how it reflects the actual business practices of many in corporate legal departments, particularly when the actions/inactions occurred (as in this case) several years ago when nascent notions about best practices were still evolving.

“The age of this case requires a dual analysis of culpability–plaintiffs’ conduct before and after 2005. The Citco Defendants contend that plaintiffs acted willfully or with reckless disregard, such that the sanction of dismissal is warranted.  Plaintiffs admit that they failed to institute written litigation holds until 2007 when they returned their attention to discovery after a four year hiatus. Plaintiffs should have done so no later than 2005, when the action was transferred to this District. This requirement was clearly established in this District by mid2004, after the last relevant Zubulake opinion was issued. Thus, the failure to do so as of that date was, at a minimum, grossly negligent.”

[Footnotes omitted]

Perhaps my biggest issue with this decision is that it (perhaps myopically) places an inordinate level of importance and awareness of the Zubulake decisions, particularly for those outside Judge Scheindlin’s district.  This lawsuit was initially brought in Florida and “[w]hile a duty to preserve existed in the Southern District of Florida at the time this action was filed, no court in the Eleventh Circuit articulated a ‘litigation hold’ requirement until 2007.”  In my mind, it hardly seems fair to retroactively imbue the Plaintiffs with this type of comprehension and duty.

At the end of the day, and despite quibbling with the equities involved, Judge Scheindlin has largely succeeded in moving the e-discovery ball forward.  The opinion will likely be one of the most widely read cases in 2010 and deservedly so since it describes with precision and clarity the burdens and penalties in the evolving area of ESI spoliation.  The main question will be to what extent will other jurisdictions adopt the same culpability framework and extend the reach of Pension Committee just as happened with the Zubulake line of cases.

Certainly, it could be “déjà vu all over again.”

Learn More On Litigation Support Software & Ediscovery Litigation.

As Tiger Woods is to golf, the honorable Shira A. Scheindlin is to electronic discovery.  She has unquestionably been the most dominant/visible/outspoken jurist in the electronic discovery realm over the past decade, penning amongst others, the Zubulake opinion, which is commonly referred to as the gold standard in electronic discovery.

But, like Woods, who recently took a sabbatical to mend his surgically repaired knee, Judge Scheindlin has recently been eclipsed by several other notable electronic discovery jurists, namely Judge Grimm (of Victor Stanley and Mancia fame) and Judge Facciola (aka “the Italian Stallion“) both of whom made numerous “best of the year” electronic discovery case law lists.

With Securities and Exchange Commission v. Collins & Aikman Corp., 2009 WL 94311 (S.D.N.Y., Jan. 13, 2009) Judge Scheindlin serves notice that the sheriff is back in town.  She not only tackles a number of thorny electronic discovery topics, but ambitiously takes on the US government in the process.  It’s fairly lengthy opinion, well worth the read, so I’ll just excerpt out a few of the notable takeaways.

As a bit of background…  the Collins case centered around a securities fraud complaint brought by the SEC against the Collins & Aikman Corp. and its former CEO David A. Stockman.  The crux of the dispute surrounded questions concerning the government’s discovery obligations in civil discovery (versus in a purely SEC investigation per se).

There were four distinct but interrelated disputes, namely:

“(1) Whether identifying responsive documents that have been organized by the producing party invades the protection accorded to attorney work-product and how a government agency-acting in its investigative capacity-must respond to a request for the production of documents. (2) Whether a government agency may unilaterally restrict the scope of its search based on an assertion of an “undue burden” on limited public resources. (3) How much information the Government must disclose in order to allow an adversary-and the court-to assess an objection based on the deliberative process privilege. (4) Whether a government agency may unilaterally exclude its own e-mail from document production on the ground that most-but not all-will be privileged.”

Addressing the work product claims, the court found against the government, again reinforcing several recent opinions about electronic discovery search:

“The SEC contends that Stockman can search through the ten million pages and find substantially the same documents identified by the SEC without impinging on the thought processes of the SEC attorneys. Indeed-at significant expense and delay-Stockman could search the document databases using appropriate search terms, but the inaccuracy of such searches is by now relatively well known.  A page-by-page manual review of ten million pages of records is strikingly expensive in both monetary and human terms and constitutes “undue hardship” by any definition.” [Citing, George L. Paul and Jason R. Baron's article: Information Inflation: Can the Legal System Adapt?

After losing the first battle, the SEC argued that even if the compilations were not protected as work product, it could produce the "complete, unfiltered, and unorganized investigatory file" since this was how the documents were "maintained in the usual course of its business."  This second attempt was similarly unpersuasive as Judge Scheindlin held that the "usual course of business" exemption did not apply:

"[C]onducting an investigation-which is by its very nature not routine or repetitive-cannot fall within the scope of the “usual course of business.” While the SEC routinely collects and maintains regulatory submissions such 10-K reports, in its investigative capacity the agency conducts tailored probes of a company or an industry, requiring the gathering of records from diverse sources. Many if not most of the 1.7 million documents in the SEC production here were likely collected in the agency’s investigatory role. Thus it is no surprise that the complete collection is maintained as it was collected-in large disorderly databases. The documents can only be provided in a useful manner if the agency organizes or labels them to correspond to each demand.”

Next, Judge Scheindlin addressed the SEC’s decision to “unilaterally” limit its search to “centralized compilations” which ultimately “turned up nothing.”  She found that the SEC’s “blanket refusal to negotiate a workable search protocol” was “patently unreasonable” citing both Mancia and the Sedona Conference’s Cooperation Proclamation:

“Rule 26(f) requires the parties to hold a conference and prepare a discovery plan. … Had this been accomplished, the Court might not now be required to intervene in this particular dispute. I also draw the parties’ attention to the recently issued Sedona Conference Cooperation Proclamation, which urges parties to work in a cooperative rather than an adversarial manner to resolve discovery issues in order to stem the ‘rising monetary costs’ of discovery disputes.”

As the coup de gras, Judge Scheindlin addressed and rejected out of hand the SEC’s most untenable claim that it would not produce e-mail “generated or received by the Commission itself” because “nearly all responsive e-mails will be privileged, protected, or non-substantive.”

“Because e-mails are inherently searchable, the SEC’s blanket refusal to produce any in-coming or outgoing e-mails is unacceptable. Without even an attempt to negotiate search terms that would weed out privileged, protected, or irrelevant e-mails, the SEC cannot reasonably assert that a routine aspect of modern discovery-search and review of a party’s e-mail-is beyond its capability. Essentially, the SEC’s position is that the cost of such a search is simply too high, but it has made no effort to document the cost or the likelihood that it would produce relevant, nonprivileged material. The concept of sampling to test both the cost and the yield is now part of the mainstream approach to electronic discovery.”

At the end of the day, the Collins opinion seems to make statement the Judge Scheindlin is back with a vengeance and she’s serving notice that the government isn’t above the law:

“Like any ordinary litigant, the Government must abide by the Federal Rules of Civil Procedure.”

Besides knocking the government down a peg, Judge Scheindlin throws her judicial weight behind a number of important but nascent trends, including the Sedona Cooperation Proclamation, the related need to meet & confer, the use of sampling and the challenges of electronic discovery search. While none of these notions are groundbreaking, her substantial backing means increasing clarity for lawyers and litigation support practitioners everywhere.  And, that’s certainly welcome.