How Technology Continues to
Change (Drive) Discovery
Presentation to the Litigation and Intellectual Property Sections
of the Idaho State Bar
Sun Valley, Idaho
Kelly A. Cameron
October 29, 2010
"There's nothing out there?"
2
The Rules – Federal and State
 Federal Rules of Civil Procedure
 26(f)(3)(C) – Discovery Plan/ESI
 34(a)(1)(A) – Generally
 34(b)(1)(C) – Request/Form
 34(b)(2)(D) & (E) – Response/Form
 Idaho Rules of Civil Procedure
 34(a) – ESI = "Document" but
 34(b) – "specifically request"
3
 Survey of 5,000 Lawyers finds:
 98% report that 'digital evidence' had been "vital to the success
of legal matters" with past 24 months
 60% "struggled" with volume of data
 51% admit to "problems identifying and recovering" ESI
 29% complain of lacking time to "conduct thorough
investigations"
 24% admit lacking "sufficiently sophisticated e-discovery
technology to fulfill requests effectively"
Source: Secure Business Intelligence Magazine, "Difficulties Producing 'Digital Evidence' Cause Lawyers to Lose Cases" (9/7/10)
http://www.scmagazineuk.com/difficulties-producing-digital-evidence-cause-lawyers-to-lose-cases/article/178333/
4
The Big Picture:
Five Considerations for Today
5
(1) Identification
Know Your Custodians and Sources of ESI

Identify Document Custodians
 Review Complaint, demand letters, etc.
 Talk to key stakeholders
 Review organizational charts

Schedule Interviews of Document Custodians
 In-person is always best (if possible)
 Don't forget to interview IT department

Common Sources of Documents and ESI:








Corporate and personal email systems
Desktop or laptop computers
External or networked ("shared") drives
Instant Messaging Systems (including text messaging)
Internet and Social Networking sites
Cloud Computing sites
Backup Systems, media, and applications
Traditional hard copy/paper files
6
(2) Preservation
Send Hold Notices and Track Compliance



Issue Written Document Hold Notices
 Describe litigation and claims
 Make clear relevant documents and ESI must be retained
 Ask custodians to acknowledge receipt, understanding, and commitment to full
compliance
 Custodians to notify HR or legal if they are departing the company, transferring,
or changing jobs
Consider Suspending Routine Data Management Policies and Processes
 Automatic email deletion
 Backup recycling procedures – this may be the sole source of relevant
information from key players whose data not otherwise readily accessible
 Document retention policies and archiving
Manage Document Hold Notices
 Send periodic reminders
 Actively monitor compliance
 Coordinate with HR regarding departures, transfers, or job changes
 Consider engaging third party/e-Discovery vendors, tools, and/or software
7
(3) Collection
Collect ESI Promptly and Correctly


Once Relevant Custodians are Identified, Noticed & Interviewed . . .
 Collect documents and ESI quickly
 Usually includes personal interviews with custodians
 Involve yourself in the process – treat this as a non-delegable duty
 Document and monitor all preservation efforts, decisions, chain of custody, etc.
Collection Options
 Guided Collection
 Active Data Collection
 Forensic Collection
 An aside re: "End User-Based eDiscovery" – Avoid it if you can

Be Wary of Metadata
 "Data about Data"
 Includes everything from header information in email to revision history for
documents
 Collection method can alter certain metadata (e.g., last opened date or last
modified date)
 Encourage use of third party for collection (ultimately cost-effective and safer)
8
(4) Processing and Review
Early Case Assessment is Key

Processing Considerations
 What file types will be excluded?
 What search terms will be used?
 Cooperative, iterative, discovering party, or responding party? Be careful.
 Expert (subject matter or technical) help required?
 What other exclusions will apply (ACP, date, and custodian restrictions, etc.)?
 Vertical or horizontal de-duplication, or both?
 Highlighting for substance, privilege, work product, privacy, "Hot Docs," etc.
 Exception reports (corrupted, password protected, encrypted, foreign language,
etc.) – automated or manual?

Review Considerations
 Linear Review Platforms (Concordance/FYI)
 Strategic Review Platforms (Attenex, Clearwell, Relativity)
 Large Firms with "Review Centers" (80 plus attorneys, "firm within the firm")
9
(5) Production
Seek Agreement When Possible




Rule 26(f) requires parties to discuss (among other things) the "disclosure or
discovery of [ESI], including the form or forms in which it should be produced."
Volumes of data are so large, and the cost of review and production are so great,
that parties must discuss production issues in advance.
Common Topics for Rule 26(f) Conference
 Identity of custodians
 Privilege issues (including Clawback Agreements)
 Potential and anticipated volume of data
 Search strategies to reduce data for review (agreement on search terms, etc.)
 Realistic timeline for production
 Production format
 Native
 Static TIFF or PDF Images
 Combination thereof for different types of documents
Common "Reasonably Usable" Production Format
 Static TIFF or PDF Images
 Load File containing negotiated metadata in agreed-to format/software
 Extracted or OCR text (for keyword searching capability)
10

Single most informative (authoritative?) resource for ESI issues, best practices,
overviews, and current state-of-the art and law

Developed "Working Group Series" ("WGS ") in 2002
SM

Transitory and focused think-tanks to develop principles, guidelines & best practices in
targeted areas "ripe" for development

Regular Season Conferences serve to both launch Working Groups and
comment on output

WG1 – Electronic Document Retention & Production






Organized in mid-2002
Goal is to advance the reasoned and just development of the law
Built on breadth and depth of experience of invitees (participants) & observers
Designed around the dialogue model of achieving consensus
Evolving, not static; address "tipping points"
Life span based on need, goals & objectives as determined by the Working Group
11
Glossary
 55 pages
 Updated September
2010
 www.thesedonaconference.org
12
Principles of
Cooperation
[A] national drive to promote open
and forthright information sharing,
dialogue (internal and external),
training and the development of
practical tools to facilitate
cooperative, collaborative,
transparent discovery. This
Proclamation challenges the bar
to achieve one's goals and refocus
litigation toward the substantive
resolution of legal disputes.


The Sedona Conference Cooperation Proclamation
at 1 (2008).
www.thesedonaconference.org
13
Principles of
Cooperation – cont'd
Cooperation vs. Zealous
Advocacy – a False Choice
Over-contentious discovery is
a cost that has outstripped any
advantage in the face of ESI
and the data deluge. It is not
in anyone's interest to waste
resources on unnecessary
disputes, and the legal system
is strained by 'gamesmanship'
or 'hiding the ball,' to no
practical effect.


The Sedona Conference Cooperation
Proclamation at 1 (2008).
www.thesedonaconference.org
14
Principles of
Proportionality
1. The burdens and costs of
preservation of potentially relevant
information should be weighed
against the potential value and
uniqueness of the information
when determining the appropriate
scope of preservation.


The Sedona Conference WG1, Commentary on
Proportionality in Electronic Discovery, 11 The
Sedona Conference J. 289, 291 (Fall 2010).
www.thesedonaconference.org
15
Principles of
Proportionality – cont'd
2. Discovery should generally be
obtained from the most
convenient, least burdensome,
and least expensive sources.


The Sedona Conference WG1, Commentary on
Proportionality in Electronic Discovery, 11 The
Sedona Conference J. 289, 291 (Fall 2010).
www.thesedonaconference.org
16
Principles of
Proportionality – cont'd
3. Undue burden, expense, or delay
resulting from a party's action or
inaction should be weighed
against that party.


The Sedona Conference WG1, Commentary on
Proportionality in Electronic Discovery, 11 The
Sedona Conference J. 289, 291 (Fall 2010).
www.thesedonaconference.org
17
Principles of
Proportionality – cont'd
4. Extrinsic information and sampling
may assist in the analysis of
whether requested discovery is
sufficiently important to warrant
the potential burden or expense of
its production.


The Sedona Conference WG1, Commentary on
Proportionality in Electronic Discovery, 11 The
Sedona Conference J. 289, 291 (Fall 2010).
www.thesedonaconference.org
18
Principles of
Proportionality – cont'd
5. Nonmonetary factors should be
considered when evaluating the
burdens and benefits of discovery.


The Sedona Conference WG1, Commentary on
Proportionality in Electronic Discovery, 11 The
Sedona Conference J. 289, 291 (Fall 2010).
www.thesedonaconference.org
19
Principles of
Proportionality – cont'd
6. Technologies to reduce cost and
burden should be considered in
the proportionality analysis.


The Sedona Conference WG1, Commentary on
Proportionality in Electronic Discovery, 11 The
Sedona Conference J. 289, 291 (Fall 2010).
www.thesedonaconference.org
20
Legal Hold Commentary
and Guidelines
Guideline 1
A reasonable anticipation of
litigation arises when an
organization is on notice of a
credible probability that it will
become involved in litigation,
seriously contemplates initiating
litigation, or when it takes specific
actions to commence litigation.


The Sedona Conference WG1, Commentary on
Legal Holds: The Trigger & The Process, 11 The
Sedona Conference J. 265, 2269 (Fall 2010).
www.thesedonaconference.org
21
Legal Hold Commentary
and Guidelines – cont'd
Guideline 5
Evaluating an organization's
preservation decisions should be
based on the good faith and
reasonableness of the decisions
undertaken (including whether a
legal hold is necessary and how it
should be executed) at the time
they were made.


The Sedona Conference WG1, Commentary on
Legal Holds: The Trigger & The Process, 11 The
Sedona Conference J. 265, 2269 (Fall 2010).
www.thesedonaconference.org
22
Legal Hold Commentary
and Guidelines – cont'd
Guideline 6
The duty to preserve involves
reasonable and good faith efforts,
taken as soon as is practicable
and applied proportionately, to
identify and, as necessary, notify
persons likely to have relevant
information to preserve the
information.


The Sedona Conference WG1, Commentary on
Legal Holds: The Trigger & The Process, 11 The
Sedona Conference J. 265, 2269 (Fall 2010).
www.thesedonaconference.org
23
Legal Issues in Recent Federal Case Law
 Privilege and Inadvertent Disclosure
 Legal Holds
 Failure to Implement and/or Monitor
 Spoliation
 Data Destruction
 Culpability – Negligent, Gross Negligent
24
Privilege and Clawback
25
Privilege and Inadvertent Disclosure
Mt. Hawley Ins. Co. v. Felman Production, Inc.,
2010 WL 1990555 (S.D. W. Va. May 18, 2010)
 Facts: You are in Federal Court and have produced
over 1 million pages of data. 377 privileged emails
slipped through and were produced to the opposing
party. Fortunately, you have a clawback agreement.
 You used keywords to find responsive documents, tested
the search terms (for spelling variants) but you did not
sample for relevancy, or over- or under-inclusiveness
and did not have "eyes on" responsive non-privileged
documents.
 Holding: Privilege waived.
26
Inadvertent Disclosure –
Federal Rule of Evidence 502(b)
 Disclosure is not a waiver if:
(1) disclosure is inadvertent;
(2) the holder of the privilege took reasonable
steps to prevent disclosure; and
(3) the holder promptly took reasonable steps
to rectify the error, including (if applicable)
following Fed. R. Civ. P. 26(b)(5)(B).
27
Inadvertent Disclosure:
What are reasonable steps to prevent disclosure?
Fed. R. Evid. 502(b)(2)
 Sampling to test the reliability of keyword searches of
documents determined NOT to contain privileged
information.
 "Eyes-on" review of potentially privileged documents.
 Consistency between privilege log and production.
 When on notice that some privileged documents were
produced, establish QC protocol to find others.
 What appears to have bothered the Court the most in
Mt. Hawley was the document/data "dump" without
review or sampling resulting in an overproduction of
more than 30% and fact that counsel was well aware of
rules, factors, and consequences.
28
Inadvertent Disclosure under Idaho Rule
of Civil Procedure 26(b)(5)(B)
 No intent to waive
 Notification of inadvertent disclosure with a
"reasonable time"
 Prepare or add it to the Privilege Log required
under Rule 26(b)(5)(a)
 Recipient must promptly "return, sequester, or
destroy" the specified information and any
copies
 Producing party must preserve pending ruling by
the court
29
Legal Holds and Spoliation
"Spoliation is 'the destruction or significant
alteration of evidence, or the failure to
preserve property for another's use as
evidence in pending or reasonably
foreseeable litigation.'"
Zubulake v. UBS Warburg ("Zubulake IV")
220 F.R.D. 212, 216 (S.D.N.Y. 2003)
30
First Step . . . Initiate Hold Notices
Remember Sedona Guideline 1:
Reasonable anticipation of litigation arises
when an organization is on notice of a
credible threat it will become involved in
litigation or anticipates taking action to
initiate litigation.
31
Initiating Hold Notices (cont'd)
 Reasonably anticipated, threatened or pending litigation
or investigation
 Applies to the initiator and target of litigation
 Arises from:
 Common law duty to avoid spoliation evidence
 Inherent power of the courts
 Rules governing sanctions (e.g., Rule 37)
 Necessary to avoid "collateral litigation"
 Duty may be ambiguous but can count on it being
second-guessed/scrutinized
 Based on good faith and reasonable evaluation of facts
as known at time
32
Pension Committee (Zubulake Revisited): Highlights
Pension Committee of Univ. of Montreal Pension Plan v. Banc of America Securities, Inc.,
2010 WL 184312 (S.D.N.Y. Jan. 15, 2010)
 Analytical framework for determining whether
sanctions for spoliation are warranted:
 Level of culpability – negligent, grossly negligent or
willful;
 Interplay between the duty to preserve and spoliation;
 Burden of proof – who has the burden of proving that
evidence has been lost or destroyed and the
consequences resulting from that loss; and
 Appropriate remedy for the harm caused by the
spoliation.
33
Pension Committee:
Missteps that Led to Opinion
 Some of the plaintiffs anticipated filing suit in
2003; hold notices not issued, nor ESI collected,
until 2007
 Before 2007, total reliance on plaintiffs'
employees to select responsive records, without
oversight by counsel (beware of "End-User
Based e-Discovery")
 Initial declarations served by plaintiffs explaining
conduct were materially incorrect – having to
serve amended declarations didn't help their
case – credibility key?
34
Lessons from Pension Committee
 "Courts cannot …expect that any party can meet
the standard of perfection." But…
 "A failure to preserve evidence resulting in the
loss or destruction of relevant information is
surely negligent and …may be grossly negligent
or willful." So remember…
 What is negligent or worse will be considered in
hindsight with your opponent complaining that
we can never know for sure which critical
documents and evidence were lost.
35
Specific Guidance re: Culpability from
Pension Committee

Negligence:
 Failure to execute a comprehensive search for documents or to monitor
document collection (at least negligent);
 Failure to assess accuracy and validity of search terms;
 Failure to obtain records from all employees, including those tangentially related
(likely negligent).

Gross Negligence (when duty to preserve attaches):
 Failure to issue a written legal hold (legal hold triggers);
 Failure to identify key players and ensure that their electronic and paper records
are preserved;
 Failure to cease the deletion of email;
 Failure to preserve records of former employees in a party's possession, custody
or control;
 Failure 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.
36
Pension Committee:
Sanctions Available





Further discovery
Cost shifting
Adverse inference instructions
Preclusion of issues/evidence
Terminating Sanctions (e.g, default or
dismissal)
Note: The appropriate sanction is inherently
subjective and discretionary.
37
Pension Committee:
Practice Tips
 Preserve data by issuing written hold
notices
 Interview document custodians
 Consider suspending data management
 Collect ESI promptly and correctly
 Know the Rules of the Road and seek
expert guidance
38
ALAS Newsletter on Pension Committee
 Strongly recommends that ALAS firms confirm in
writing their communications with clients
regarding the responsibilities that client and
counsel have agreed to undertake.
 Pension Committee suggests that counsel may
have to involve themselves in the client's internal
preservation efforts or risk being held
responsible for conduct over which they had no
control.
39
ALAS Newsletter (cont'd)
Litigators should reach a clear understanding with the client about
who will be responsible for the following steps:
 Prompt issuance of a written litigation hold notice once litigation is
"reasonably anticipated;"
 Review of complaint or anticipated claims to identify potentially relevant
subjects and key personnel with possible knowledge of documents and
sources;
 Discussion with key employees and others to identify possible sources
and locations of relevant records, and to emphasize the employees'
duty to comply with any litigation hold;
 Discussion with client's IT personnel to confirm possible sources of
relevant ESI; and
 Monitoring compliance with document preservation instructions and
issuing periodic litigation hold reminders.
40
Victor Stanley II
Victor Stanley, Inc. v. Creative Pipe, Inc.,
2010 WL 3703696 (D. Md. Sep. 9, 2010) (Grimm, Mag.)
41
Victor Stanley II: Bad Facts
 Defendants deleted or instructed others to delete
thousands of files.
 Defendants failed to implement a legal hold.
 Defendants knowingly "wiped" and overwrote hard drives
and other files during the discovery period and in
violation of specific court orders.
 Judge Grimm: Collectively Defendants' conduct
constitutes the single most egregious example of
spoliation that he has encountered in 14 years on the
bench and in all of the spoliation cases he reviewed.
 Don’t Miss: Judge Grimm's table of decisions.
42
Victor Stanley II: Sanctions
 Defendant "consented" to default judgment on the main
claim of copyright infringement.
 Defendant must pay all of Plaintiff's attorneys' fees
incurred relating to all of the discovery abuses.
 Court ordered that individual Defendant's conduct be
treated as contempt of the court "and that as a sanction,
he be imprisoned for a period not to exceed two years,
unless and until he pays to Plaintiff the attorneys' fees
and costs awarded" after the itemized accounting.
 Epilogue: Fees submitted are over $1 million – 66% of
total fees incurred by Plaintiff in the litigation.
43
Victor Stanley II: Lessons Learned
 Legal hold, Legal hold, Legal hold.
 Monitor and be knowledgeable about what
your client is doing.
 Hire qualified and competent forensic
consultants.
 Do not let discovery issues fester and
grow.
44
Conclusions
 Cooperation may be your best, most costeffective discovery tool and tactic.
 Prophylactic and proactive management
by counsel of the entire e-discovery
process is paramount to avoid "discovery
about discovery" and possible sanctions.
 The first (and perhaps most important) tool
– the Litigation Hold Notice.
45
Final Advice
 If your case involves (or may involve) ESI, become familiar with The
Sedona Conference commentaries and the leading cases (Zubulake
cases, Pension Committee, Rimkus, Victor Stanley decisions, etc.)
and buckle up.
46
Questions and Discussion
47