Litigation
MARCH 2004
Preparing for E-Discovery — Top 10 Rules
To a company striving to compete and succeed in the
modern marketplace, the ability to communicate
electronically is inherent in doing business. Should
that company later be sued, however, discovery of the
company’s electronic business practices suddenly
becomes invaluable to the plaintiff. Internal e-mails,
external e-mails, electronic reports, Power Point
presentations, and Internet backup files are all
popular targets of increasingly aggressive efforts
aimed at discovering what is commonly referred to as
“e-evidence.” Because such e-evidence, e-mail in
particular, is frequently generated more quickly and
with less circumspection than written paper
communications, e-evidence has become a “high
value” litigation target. From a defendant’s
perspective, the horror stories abound:
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The family of a woman who died after taking two
drugs sued the manufacturers, claiming that the
drugs, when taken in combination, caused the
woman to develop a deadly lung disorder.
Plaintiffs’ computer forensic experts recovered an
e-mail from one of the defendant’s employees,
wondering “Do I have to look forward to spending
my waning years writing checks to fat people
worried about a silly lung problem?”
In a breach of contract claim, plaintiffs sought emails from over 700 of the defendants’ employees
contained on backup tapes (which the defendant,
by failing to follow its own document retention
policy, had failed to recycle). Restoration of the emails was estimated to take 6 months and cost
over $6.2 million.
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A large insurance company was sanctioned $1
million for its “haphazard and uncoordinated
approach to document destruction.” While there
was no proof that the company intentionally
sought to frustrate discovery, its “gentle”
reminders to employees to preserve data were held
to be so ineffective as to be sanctionable.
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A plaintiff’s expert was granted hands-on access
to a retail giant’s computer system after
defendant’s counsel, relying on information
provided by a senior company executive,
represented in court that the company did not keep
the kind of records sought. Years later, during
deposition of the company’s VP in the MIS
department, it surfaced that such records were
kept.
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The EPA was recently held in contempt and
sanctioned legal fees and costs when its attorneys
failed to notify the information systems (“IS”) and
information technology (“IT”) staff responsible
for backing up the agency’s e-mails that routine
backup had to be ceased in accordance with a
court-issued preservation order, and e-mails were
inadvertently destroyed.
In addressing “e-discovery” issues, it is necessary to
define some basic vocabulary. The “e-glossary” below
defines six common types of discoverable e-data.
E-GLOSSARY
Active data: Readily available data accessible
through garden-variety file manager programs and
software (i.e., the “work in process”).
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Embedded data: Also known as metadata or “data
about data.” Information contained in an electronic
version of a document but not apparent on-screen
and/or in printed versions (such as data identifying
the author, editor, or distribution record of a
document).
Replicant data: Copies of electronically generated
data automatically made and stored in the computer’s
hard drive (for example, when a user is creating a
Word document, the computer automatically backs
up drafts at given intervals; these copies are replicant
data).
Residual data: Data contained in deleted files that
have been removed and “de-indexed” but have not
yet been overwritten. When a file is deleted, the
computer makes available the space taken up by the
old file, but the old file remains until the space is
used. Deleted files, as they wait to be overwritten,
can be retrieved.
Backup data: Information copied to removable
media (floppy disks, tapes), which is retained in the
event of a system failure, and typically stored in a
compressed form at a central location. Backup tapes
often take a snapshot of an entire system at a given
time, but tend to be unorganized, making it hard to
retrieve specific information or documents.
Legacy data: Information stored on outmoded media
that can no longer be accessed or organized in a
format using current software.
There are many sources of e-data, including
desktops, laptops, PDA’s (personal digital assistants),
floppy disks, hard drives, CD-roms, thumb or “jump”
drives, magnetic backup tapes, Internet backup files,
e-mail and e-mail servers, program files, and
voicemail. This non-exhaustive list promises to
expand as new forms of data and data storage are
created, and as litigants and courts better understand
the technology involved.
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TOP 10 RULES FOR E-DISCOVERY
With e-discovery fast becoming a required tool of the
modern litigator, any company should prepare in
advance by following these Top 10 Rules:
Rule No. 1 - Conduct Preemptory Due Diligence.
Before you encounter litigation involving
e-discovery, learn all you can about how your
computer and/or electronic systems are structured and
how they actually operate. (If you are technophobic,
seek help!) Identify the individuals and/or
organizations responsible for your systems and
understand their chain of command so you can quickly
and effectively disseminate information pertinent to
discovery when necessary. Additionally, familiarize
yourself with document retention and e-mail policies.
Where such policies do not yet exist, propose their
immediate creation; where such policies do exist,
consider hiring outside counsel to conduct a “due
diligence” review before trouble arises.
Rule No. 2 - Limit the Creation of E-Data. Now is
also the time to brainstorm ways to limit the creation
of e-data. These efforts can save time and money
while also reducing the volume of data later subject
to discovery. E-mail is a good first target since, in
2001, businesses in North America sent an estimated
2.5 trillion e-mail messages, and people tend to write
and disseminate things in e-mail that they would
never say in person. Consider creating an e-mail
policy limiting use to business purposes and educate
all personnel about the dangers of overuse, informal
use, and misuse of e-mail. If you follow Rule No. 1,
and engage IS/IT personnel, they probably can
identify other measures to limit the creation of e-data
tailor-made to the system that you use.
Rule No. 3 - Identify and Protect Confidentiality.
Because of the sheer volume of e-data created,
maintained, and distributed, it is inevitable that ediscovery often prompts thorny issues of
confidentiality. By taking steps now to identify and
protect confidentiality, you or your client can avoid
future problems and expense. You might require that
documents are appropriately labeled in their
electronic version and educate staff on how to
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identify e-data as, among other things, confidential,
proprietary, privileged, work-product or related to
settlement. Or you might create an automatic prompt
asking users if they want to add an appropriate label
to an e-mail before it is sent.
Rule No. 4 - Preserve Potential Evidence. Whether
potential evidence has been preserved has emerged as
one of the primary focuses of e-discovery.
Organizations must create and consistently follow a
document retention policy. A sound document
retention policy (1) complies with any statutory and/
or regulatory obligations governing the different
types of documents to be retained, (2) specifies the
length of time each type of document will be
retained, (3) establishes a destruction schedule and
method of destruction, and (4) provides a detailed
protocol for halting the routine destruction of
documents in the event of anticipated or actual
litigation (i.e., a “litigation hold” or “freeze”). While
appropriate management of e-records is beyond the
scope of this primer, it is a topic worthy of careful
consideration.
In light of these preservation issues, it is important to
ensure that your client’s IS/IT staff are actually
implementing the document/data retention policies
that have been adopted. Additionally, in
implementing those policies, IS/IT staff should use
delete programs that periodically “scrub” or
overwrite deleted areas of disks and tapes. Finally,
given the current emphasis on obtaining discovery
from disaster recovery backup tapes, it is wise to
determine the difficulty of restoring data from any
such systems currently in use and, if appropriate, to
alter those systems accordingly.
Rule No. 5 - Anticipate Written Discovery. It is
black-letter law that computerized data is
discoverable if relevant or likely to lead to relevant
evidence. As litigants’ counsel become more
educated about the potential evidence that may exist
in the realm of e-data, they are making certain that
their discovery requests are crafted fully to
encompass that realm. For instance, a typical
document request defines “document” in the
following, extremely broad manner:
Some parameters of the obligation to preserve e-data
recently were set forth in Zubulake v. UBS Warburg,
2003 U.S. Dist. LEXIS 18771, at *16 (S.D.N.Y.
Oct. 22, 2003): “Once a party reasonably anticipates
litigation, it must suspend its routine document
retention/destruction policy and put in place a
‘litigation hold’ to ensure the preservation of relevant
documents.” The obligation to preserve e-data also
can be triggered by statutory and regulatory
obligations (including the Sarbanes-Oxley Act),
court-issued preservation orders, and “preservation
letters” sent by litigants to their opponents.
Courts have sanctioned litigants who have engaged in
intentional, or even innocent, spoliation of e-data by
imposing, among other things, monetary sanctions
(including the costs and attorneys’ fees associated
with discovery motions), preclusion sanctions (i.e.,
precluding the offer of certain evidence), adverse
inferences, default judgments, and so-called
“rummaging” (i.e., giving the discovering party
“hands-on” access to the respondents’ computer
system).
MARCH 2004
Any writing, drawing, graphic material, or data
compilations, including without limiting the
generality of the foregoing, agreements, contracts,
notes, work papers, or memoranda, whether stored
in tangible, electronic, mechanical, or electric
form or representation of any kind (including (i)
materials on or in computer tapes, disks, and
memory, and (ii) backup copies and “deleted” files
on a computer or computer storage device or
media) whether located on-site or off-site. All
drafts, copies, or preliminary material that are
different in any way from the executed or final
document shall be considered to be additional
documents as that term is used herein.
A typical set of interrogatories asks:
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What specific type of e-mail system and
wordprocessing software are used?
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Who are the individuals responsible for
maintaining the systems?
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How are files stored, protected, and accessed?
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What kind of backup system is used?
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What are the company’s document retention and
e-mail policies?
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What files are archived? How and where?
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What access or security utilities are used?
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Which outside vendors are used and for what?
Gone are the days of answering document requests
simply by producing paper from file drawers,
cabinets, shelves, and storage rooms. Litigants must
be prepared for intrusive inquiries into their “eworld,” and it is important to note that e-discovery
tends to be retaliatory, with one side responding to ediscovery requests with their own such requests.
Defendants should think twice before initiating ediscovery, but once served with e-discovery, should
not delay in initiating reciprocal e-discovery as
agreements concerning the scope and obligations of
e-discovery tend to be easier to negotiate when both
sides are facing similar issues.
Rule No. 6 - Anticipate Depositions. Deposition
requests will likely be directed to key IS/IT
personnel, including Chief Information Officers, IS
and IT Directors, Network System Administrators,
Office Administrators, outside IS/IT Vendors, and
records custodians. These individuals can anticipate
the same line of questioning identified above in
conjunction with anticipated interrogatories, as well
as questions pertaining to specific technical issues.
Non-IS/IT employees may also be deposed regarding
their daily use of an employer’s electronic systems.
Rule No. 7 - Understand the Costs. E-discovery
differs from traditional paper discovery because edata tends to be more voluminous, harder to retrieve
and frequently in need of translation. These
characteristics can render e-discovery vastly more
expensive than paper discovery and increase the risk
that discovery will be used offensively.
While it is generally presumed that the responding
party bears the costs, where a litigant has requested
data that is not readily “accessible,” some courts have
been willing to shift or allocate the costs. In Zubulake
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v. UBS Warburg, 217 F.R.D. 309 (S.D.N.Y. May 13,
2003), the court created a seven-factor test that can
authorize cost shifting when “inaccessible” data is
sought. In Zubulake, the plaintiff, suing her former
employer for gender discrimination, sought e-mail
preserved on disaster recovery backup tapes. The
fact-intensive test asks, in order of importance: (1)
the extent to which the request is specifically tailored
to discover relevant information; (2) the availability
of such information from other sources; (3) the total
cost of production, compared to the amount in
controversy; (4) the total cost of production,
compared to the resources available to each party; (5)
the relative ability of each party to control costs and
its incentive to do so; (6) the importance of the issues
at stake in the litigation; and (7) the relative benefit to
the parties of obtaining the information. Id. at 322.
Absent a record to assess the factors, the court
ordered the employer to restore and produce
responsive documents from a sample of tapes chosen
by the plaintiff and to document results and expenses.
See K&L Alert “Federal Court Adopts New Test That
May Limit Cost-Shifting for E-Discovery” (June
2003). The plaintiff was later ordered to pay 25% of
the costs of restoration, and the employer to bear
75% of restoration costs plus all additional costs,
including that for privilege review. 216 F.R.D. 280
(S.D.N.Y. July 24, 2003).
Rule No. 8 - Find Experts. Computer forensics
experts can aid in setting up computer systems,
creating and implementing document retention and email policies, searching, collecting and producing edata in response to discovery requests, explaining
technical issues to staff, counsel and, if necessary, to
a judge, and in protecting the integrity and stability of
a client’s computer system during a hands-on search
by an adverse litigant. Consider obtaining bids from
multiple e-discovery vendors since capabilities and
prices vary widely.
Rule No. 9 - Keep Current. As the rules for
e-discovery are in transition in some jurisdictions, it
is critical to monitor legal developments. Five federal
district courts and the legislatures and/or courts of
KIRKPATRICK & LOCKHART LLP LITIGATION ALERT
four states have already amended their procedural
rules to address e-discovery. See D.N.J. Rule 26.1;
E.D. and W.D. Ark. Rule 26.1; D. Wyo. Rule
26.1(d)(3); M.D. Fla. L.R. 3.03(f); Ill. Supreme Court
Rules 201(b)(1) and 214; Md. R. Civ. P. 2-504.3; Ca.
Code Civ. P. § 2017; and Texas R.D.P. 196.4 (1999).
Additionally, amendments to the Federal Rules of
Civil Procedure may be forthcoming. In 2003, the
Discovery Subcommittee drafted and recommended
proposals in seven areas of concern that were
discussed by the full Advisory Committee at a
February 2004 conference. The Advisory Committee,
however, is still contemplating whether e-discovery is
so unique as to warrant separate treatment in the
rules.
Rule No. 10 - Be Proactive, Not Reactive. Avoid
your own horror story by taking steps now to prepare
for e-discovery. Kirkpatrick & Lockhart LLP can
help you assess and/or create appropriate e-data
policies and, where litigation is threatened or pending,
provide sophisticated legal counsel in dealing with ediscovery and technology-related issues.
THOMAS J. SMITH
tsmith@kl.com
412.355.6758
JULIA M. GLENCER
jglencer@kl.com
412.355.6318
If you would like to discuss this topic in greater detail, or any
other litigation matter, please contact the authors of this article,
or any one of the following Litigation Group lawyers:
Numerous private organizations, including the
American Bar Association and The Sedona
Conference (a nonprofit research and educational
institute dedicated to the advanced study of law and
policy), are studying the pros and cons of rule
amendments related to e-discovery and/or proposing
their own standards. See ABA Civil Discovery
Standards Rules 29 and 30 (1999); Proposed
Amendments to the ABA Civil Discovery Standards
(released for public comment in Nov. 2003); “The
Sedona Principles: Best Practices, Recommendations,
and Principles for Addressing Electronic Document
Production” (Jan. 2004); The Sedona Principles II:
Records Management: Principles and Best Practices
for Addressing the Management of Information and
Records in a Digital World (anticipated publication in
2004).
Boston
Mark E. Haddad
Dallas
Robert Everett Wolin
Harrisburg
Carleton O. Strouss
Los Angeles
Paul W. Sweeney, Jr.
Miami
Daniel A. Casey
Newark
Anthony P. La Rocco
New York
Warren H. Colodner
Pittsburgh
Thomas Smith
Julia M. Glencer
David R. Cohen
San Francisco
Edward P. Sangster
Washington
David T. Case
Jeffrey B. Ritter
617.261.3116
mhaddad@kl.com
214.939.4909
rwolin@kl.com
717.231.4503
cstrouss@kl.com
310.552.5055
psweeney@kl.com
305.539.3324
dcasey@kl.com
973.848.4014
alarocco@kl.com
212.536.3912
wcolodner@kl.com
412.355.6758 tsmith@kl.com
412.355.6318 jglencer@kl.com
412.355.8682 dcohen@kl.com
415.249.1028
esangster@kl.com
202.778.9084 dcase@kl.com
202.778.9396 jritter@kl.com
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This bulletin is for informational purposes and does not contain or convey legal advice. The information herein
should not be used or relied upon in regard to any particular facts or circumstances without first consulting a lawyer.
MARCH 2004
© 2004 KIRKPATRICK & LOCKHART LLP.
ALL RIGHTS RESERVED.
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