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Legal Logistics Nuts & Bolts Best Practices Series: Litigation Hold – Sorting Through Record Preservation Issues

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Title: Legal Logistics Nuts & Bolts Best Practices Series: Litigation Hold – Sorting Through Record Preservation Issues


1
Legal Logistics Nuts Bolts Best Practices
Series Litigation Hold Sorting Through
Record Preservation Issues
  • eDiscovery Best Practices Stephanie A. Tess
    Blair Director, Morgan Lewis Resources Legal
    Logistics

www.morganlewisresources.com
2
Talking Points for Todays Discussion
  • Defining eDiscovery
  • Current state of the law
  • Zubulake post mortem
  • trigger of obligation to preserve
  • scope of preservation
  • Proposed amendments to FRCP
  • The litigation hold
  • Beyond the hold counsels ongoing obligations
  • Getting it wrong sanctions
  • Getting it right MLB Best practices

3
Defining eDiscovery
4
eDiscovery can involve production of electronic
files and data compilations of all sorts,
including
  • email and attachments
  • text files, such as Word, Excel, Powerpoint,
    Access
  • transmissions and data stored on blackberries and
    PDAs
  • backup tapes
  • proprietary applications and databases
  • internet cache files, cookies, favorites
  • instant and text messages
  • voicemail
  • videotape
  • data stored on cellphones

5
eDiscovery Data Measurements
6
The eDiscovery problem
  • eDiscovery, by it very nature, is easier to get
    wrong than it is to get right
  • Review of this volume of data is beyond human
    capability and growing exponentially
  • Cost and disruption to normal business operations
    can be enormous, thus some companies are
    reluctant to cooperate
  • BUT Counsel has affirmative obligations beyond
    issuing a litigation hold

7
The Morgan Lewis solution
  • Firmwide Best practices that emphasize
  • DEFENSIBILITY
  • COST EFFECTIVENESS

8
The Current State of the Law
9
Zubulake Post Mortem
  • Single plaintiff gender discrimination and
    retaliation case
  • Request 28 All documents concerning any
    communication by or between UBS employees
    concerning plaintiff
  • UBS produced 100 pages of email BUT plaintiff
    produced 450 pages of UBS documents including a
    smoking gun email

10
Zubulake - UBS Efforts
  • UBS issued oral litigation hold after EEOC Charge
    in August 2001
  • UBS claimed that it had collected and produced
    all existing responsive email sent or received
    between 1999 and 2001
  • BUT UBS did not preserve back up tapes until
    August 2002

11
Zubulake Key Holdings
  • Trigger Obligation to preserve is triggered upon
    notice of anticipated litigation
  • Testimony indicated that UBS anticipated
    litigation at least as early as April 2001, 4
    months before the EEOC charge
  • Scope of Preservation UBS had an obligation to
    preserve back up tapes to capture deleted email

12
Zubulake Nut Shells
  • Zubulake I
  • Scope of preservation obligation
  • Active online data - yes
  • Near line data -yes
  • Offline storage/archives -yes
  • Backup tapes - possibly
  • Erased fragmented or damaged data - rarely
  • Cost Shifting - 7 factor test

13
Zubulake Key Holdings
  • Zubulake III Cost Shifting
  • No cost shifting for accessible data
  • Application of 7 factor test for restoration of
    inaccessible data
  • No cost shifting for review and production

14
Zubulake Key Holdings
  • Zubulake IV Duty to Preserve
  • Trigger
  • notice of anticipated litigation
  • testimony and evidence may be used to establish
    trigger date
  • Scope
  • General Rule no obligation to preserve
    inaccessible data
  • Exception inaccessible data must be preserved if
    information is not otherwise available, such as
    when potentially relevant records may have been
    deleted

15
Zubulake V counsels ongoing obligations
  • A lawyers obligations go beyond the drafting and
    issuance of a litigation hold
  • An attorneys obligations continue throughout the
    holding period

16
Zubulake V counsels ongoing obligations
  • Counsel has a duty to effectively communicate to
    the client its discovery obligations so that all
    relevant information is discovered, retained and
    produced.
  • Once the duty to preserve attaches, counsel must
    identify sources of discoverable information,
    such as
  • Key players
  • IT personnel

17
Zubulake V counsels ongoing obligations
  • When the duty to preserve attaches, counsel must
    put in place a litigation hold and make the fact
    of the hold known to all relevant employees.
  • The instructions must be reiterated regularly.
  • Compliance with the instructions must be
    monitored and, when needed, corrective action
    taken.

18
Zubulake V counsels ongoing obligations
  • In addition, when it comes to electronic media
  • Counsel must also call for employees to produce
    copies of relevant electronic evidence.
  • Counsel must arrange for the segregation and
    safeguarding of any archival media that the party
    has a duty to preserve.

19
Zubulake V The Result
  • Held
  • UBS failed to preserve all potentially
    discoverable data
  • Counsel failed to communicate litigation hold to
    all key players
  • Counsel failed to understand key players
    document management habits
  • Employees defied preservation obligation
  • Result Adverse Inference Instruction and costs

20
Trigger of the Obligation to Preserve
21
Trigger
  • The obligation to preserve evidence arises when
    the party has notice that the evidence is
    relevant to litigation or when a party should
    have known that the evidence may be relevant to
    future litigation. Zubulake IV, infra.

22
Trigger
  • The duty to preserve exists as of the time the
    party knows or reasonably should know litigation
    is foreseeable. Mosaid Tech., Inc.

23
Trigger
  • Duty applies to all potential litigants
  • See Rambus, Inc. v. Infineon Techs. AG, 220
    F.R.D. 264, 286-87 (E.D. Va. 2004) (plaintiff,
    knowing that it was likely to commence patent
    litigation, could not institute systematic
    destruction of records during so-called Shred
    Day)
  • See Institute for Motivational Living, Inc., et
    al. v. Doulos Inst. For Strategic Consulting,
    Inc., 2004 WL 2241745 (3d. Cir. 2004)(pro se
    litigant)

24
Trigger
  • Duty exists in the absence of preservation order
    or discovery request.
  • Keir v. Unumprovident Corp., 2003 WL 21997747
    (S.D.N.Y. Aug. 22, 2003)(observing that parties
    have obligation to preserve even while
    negotiating preservation orders and scope of
    discovery)
  • Capricorn Power Co. v. Siemens Westinghouse Power
    Corp., 220 F.R.D. 429 (W.D. Pa. 2004)(denying
    cross motions for preservation order).

25
Scope of Preservation
26
Scope of Preservation
  • The rules of discovery have not changed only the
    level of effort it takes to comply has changed.

27
F.R.C.P. 26 (b)
  • (b) Discovery Scope and Limits.
  • Unless otherwise limited by order of the court in
    accordance with these rules, the scope of
    discovery is as follows
  • (1) In General.
  • Parties may obtain discovery regarding any
    matter, not privileged, that is relevant to the
    claim or defense of any party, including the
    existence, description, nature, custody,
    condition, and location of any books, documents,
    or other tangible things and the identity and
    location of persons having knowledge of any
    discoverable matter.  For good cause, the court
    may order discovery of any matter relevant to the
    subject matter involved in the action.   Relevant
    information need not be admissible at the trial
    if the discovery appears reasonably calculated to
    lead to the discovery of admissible evidence. 
    All discovery is subject to the limitations
    imposed by Rule 26(b)(2)(i), (ii), and (iii).
  • (2) Limitations.
  • By order, the court may alter the limits in these
    rules on the number of depositions and
    interrogatories or the length of depositions
    under Rule 30. By order or local rule, the court
    may also limit the number of requests under Rule
    36.  The frequency or extent of use of the
    discovery methods otherwise permitted under these
    rules and by any local rule shall be limited by
    the court if it determines that   (i) the
    discovery sought is unreasonably cumulative or
    duplicative, or is obtainable from some other
    source that is more convenient, less burdensome,
    or less expensive (ii) the party seeking
    discovery has had ample opportunity by discovery
    in the action to obtain the information sought
    or (iii) the burden or expense of the proposed
    discovery outweighs its likely benefit, taking
    into account the needs of the case, the amount in
    controversy, the parties' resources, the
    importance of the issues at stake in the
    litigation, and the importance of the proposed
    discovery in resolving the issues.  The court may
    act upon its own initiative after reasonable
    notice or pursuant to a motion under Rule 26(c).


Parties may obtain discovery regarding any
matter, not privileged, that is relevant to the
claim or defense of any party . . .
28
Scope of Preservation
  • While a litigant is under no duty to keep or
    retain every document in its possession . . . it
    is under a duty to preserve what it knows, or
    reasonably should know, is relevant in the
    action, is reasonably calculated to lead to the
    discovery of admissible evidence, is reasonably
    likely to be requested during discovery and/or is
    the subject of a pending discovery request.
    (Zubulake IV).

29
The Proposed Amendments to the Federal Rules of
Civil Procedure
30
Proposed Amendments
  • Rule 16 conferences to include early meet and
    confer on electronic discovery
  • Rule 26 disclosures to include electronic
    discovery and custodian of records
  • Rule 37 Safe Harbor protection from sanctions
    for destruction of edata where failure resulted
    from routine operation of partys IT system.

31
The Litigation Hold
32
The Litigation Hold
  • Design your litigation hold with the following
    questions in mind
  • Whose documents must be retained?
  • Who are the key players?
  • Which business units, locations, departments have
    information relevant to the claims or defenses of
    any party?

33
The Litigation Hold
  • What time period is implicated by the hold?
  • Documents extant at the time the obligation is
    triggered
  • Newly created materials

34
The Litigation Hold
  • What kind of information is likely to be
    implicated?
  • Hard-copy documents?
  • Computerized or other digital data?
  • Voice, video data?
  • Is this data accessible?

35
The Litigation Hold
  • Key Components
  • Subject
  • Directive regarding preservation of potential
    discovery materials and electronic data
  • Description of Scope
  • Define potentially relevant information
  • Explain breadth of definition
  • Caution re underinclusive v. overinclusive
  • Definition of Document
  • Expansive meaning includes hard-copy paper,
    electronic data, email and attachments,
    databases, drafts, notes, calendars, etc.

36
The Litigation Hold
  • Specific Instructions to Halt routine destruction
    of each document type as appropriate paper,
    email, text tiles, databases, etc.
  • Instructions highly contingent on
  • Sophistication of clients IT infrastructure
  • Clients IT resources
  • volume of implicated data
  • amount at stake in litigation
  • likelihood of discovery dispute
  • agreement of parties

37
The Litigation Hold
  • Distribution list
  • all key players
  • others with potentially relevant records
  • Sender someone with corporate heft
  • GC or in-house counsel
  • Companys compliance officer
  • Other
  • Identify who the employees can call for help
  • In-house contact
  • Morgan Lewis contact

38
Beyond the hold counsels ongoing obligations
39
Beyond the Hold Counsels Affirmative Obligations
  • Counsel no longer has the right to rely on the
    client to comply with proper instructions and
    advice.
  • Counsel has a duty to communicate effectively to
    the client its discovery obligations so that all
    relevant information is discovered and retained,
    and that all relevant, non-privileged information
    is produced.
  • Once the duty to preserve arises counsel must
    identify sources of discoverable information,
    such as that in the possession of key company
    personnel or in the possession of IT staff.

40
Beyond the Hold Counsels Affirmative Obligations
  • When the duty to preserve attaches, counsel must
    put in place a litigation hold and make the fact
    of the hold known to all relevant employees.
  • Counsel must reiterate the hold instructions on a
    regular basis.
  • Counsel must actively monitor the instructions
    and, when needed, corrective action must be taken
    to ensure continued compliance.

41
Beyond the Hold Counsels Affirmative Obligations
  • When dealing with electronic media, counsel must
    communicate to all relevant persons that the
    obligation to preserve information includes
    electronic data.
  • Counsel must arrange for the segregation and
    safeguarding of any archival media that the party
    has a duty to preserve.

42
Getting it Wrong Sanctions
43
Sanctions
  • Factors
  • culpability
  • prejudice
  • Frequency
  • Defendants 4x as often as plaintiffs
  • For destruction of edata - 84 of the time

44
Recent Sanctions Cases Preclusion
  • Defendant precluded from introducing 80K emails
    into evidence, even to refresh witness
    recollection, for failure to produce until after
    discovery cutoff plaintiff permitted to use
    records on direct and cross. Thompson v. United
    States Dept. of Housing and Urban Development,
    219 F.R.D. 93 (D. Md. 2003)
  • Alleged patent infringer precluded from offering
    any evidence of invalidity or unenforceability
    where found to have used Evidence Eliminator to
    destroy requested records. Kucala, Enter., Ltd
    v. Auto Wax Co., Inc., 2003 WL 22433095 (N.D.
    Ill. May 27, 2003)

45
Recent Sanctions Cases Default
  • Default judgment entered where defendant
    reformatted hard drive before production to
    plaintiff. QZO, Inc. v. Moyer, 594 S.E.2d. 541
    (S.C. Ct. App. 2004)
  • Default judgment entered where defendant engaged
    in systematic discovery abuse, including refusal
    to produce and making outlandish excuses, such as
    earthquake. Computer Task Group, Inc. v. Brotby,
    364 F.3d 1112 (9th Cir. 2004)
  • Dismissal with prejudice for systematic discovery
    abuse, including violation of three discovery
    orders and late production on eve of
    depositions. Mariner Health Care, Inc. v.
    PricewaterhouseCoopers LLP, No. 02VS037631-F,
    slip op. (Ga. Fulton Cty. Nov. 9, 2004)

46
Recent Sanctions Cases Default
  • A default judgment was entered against a
    defendant corporation when its counsel (1) failed
    to give adequate instructions to the client about
    clients overall discovery obligations (2)
    failed to implement a systematic procedure for
    the retention of documents, knowing that the
    client had no document retention plan in place
    and (3) delegated the document production tasks
    to a lay person who lacked an understanding of
    how broadly the term document was defined by
    the document request. Metropolitan Opera Assn,
    Inc. v. Local 100 Hotel Employees Restaurant
    Employess Intl Union, 212 F.R.D. 178 (S.D.N.Y.
    2003), motion for reconsideration denied, 2004 WL
    1923760 (S.D.N.Y. Aug. 27, 2004) (court
    criticizes counsel and client for their
    parallel know-nothing, do-nothing,
    head-in-the-sand behavior in an effort
    consciously to avoid knowledge of or
    responsibility for their discovery obligations. .
    . .)

47
Recent Sanctions Cases Fees Costs
  • The failure to take reasonable steps to preserve
    data at the outset of discovery resulted in a
    personal fine levied against the defendants CEO.
    Danis v. USN Communications, 53 Fed. R. Serv. 3d
    828 (N.D. Ill. 2000)
  • Defendant fined 2.5M for destroying email and
    barred from presenting key witnesses at trial who
    failed to follow litigation hold. U.S. v. Philip
    Morris, Inc. No. 99-2496 (D.D.C. July 21, 2004)
  • Prudential fined 1M for failure to prevent
    unauthorized destruction of discovery materials.
    In Re Prudential Insurance Co. of America Sales
    Practice Litigation, 169 F.R.D. 598 (D. N.J. 1997)

48
Recent Sanctions Cases Adverse Inference
  • Jury allowed to infer that evidence UBS failed to
    produce would have been unfavorable. Zubulake V,
    2004 WL 1620866 (S.D.N.Y. July 20, 2004)(also
    awarding fees and costs)
  • Similar adverse instruction given for failure to
    issue litigation hold resulting in non-production
    of any email. Mosaid Tech., Inc. v. Samsung
    Elec. Co., 224 F.R.D. 595 (D.N.J. 2004)(also
    issuing monetary sanction).

49
Getting it Right MLB Best Practices
50
A Good Record Management Plan . . .
  • Is defensible
  • Satisfies current and future discovery
    obligations
  • Minimizes business disruption
  • Is Efficient
  • Is Cost effective

51
Formulating an eDiscovery Strategy The Big
Picture
  • Be proactive ask questions of your client
  • Be firm about preservation
  • Assess the potential size of the matter
  • Estimate the volume of data
  • Identify your goal
  • Explore your options

52
Formulating an eDiscovery Strategy Questions
and Considerations
  • Who has the data you need?
  • What is the relevant timeframe?
  • Is an record retention policy in place for
    electronic files and email?
  • Do users save documents locally or on network
    servers, or both?
  • Is there a document management system in place?
  • What formats/applications are implicated?

53
Formulating an eDiscovery Strategy Questions
and Considerations
  • Are backup tapes available and will they need to
    be preserved?
  • Will an image of servers and local hard drives
    (ghosting) be needed?
  • Can the data be culled?
  • Should the data be converted for review?

54
Discovery Management Plan Best Practices
  • Define
  • Identify
  • Preserve
  • Interview
  • Harvest
  • Process
  • Review
  • Produce

55
Discovery Management Plan Best Practices
  • Define
  • scope of requests
  • timeframe
  • Identify
  • custodians
  • business units
  • departments
  • archives

56
Discovery Management Plan Best Practices
  • Preserve
  • issue the litigation hold
  • disable or modify retention practices
  • Interview
  • IT Personnel
  • Key Players
  • Periodically reissue litigation hold
  • regular intervals
  • new personnel as appropriate

57
Discovery Management Plan Best Practices
  • Harvest
  • Emails and attachments, electronic documents,
    spreadsheets, presentations, databases,
    blackberries, pdas, home computers, backup tapes,
    internet cache files, cookies, favorites. . .
  • Process
  • Deduplication
  • Timeframe Limits
  • Linguistic Tools

58
Discovery Management Plan Best Practices
  • Review
  • Native v. .tiff et al.
  • Review Platform
  • Review Team
  • Quality Control
  • Produce
  • Format - paper or plastic?
  • Accessories - produce OCR, coding?

59
Legal Logistics Nuts Bolts Best Practices
Series Litigation Hold Sorting Through
Record Preservation Issues
  • eDiscovery Best Practices Stephanie A. Tess
    Blair Director, Morgan Lewis Resources Legal
    Logistics

www.morganlewisresources.com
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