UNIVERSITY OF HOUSTON SUMMER 2010 LAW 5297 – SELECTED TOPICS E-Disovery

UNIVERSITY OF HOUSTONSUMMER 2010

LAW 5297 – SELECTED TOPICS

E-Disovery



E-Discovery

Summer III 2010 – 5297 E-Discovery

Instructor: David A. Chaumette

Phone: (713) 395-0991 (office)(713) 443-8700 (cell)

Office: De la Rosa & Chaumette1330 Post Oak Blvd. Suite 2250Houston, Texas 77056

E-mail: [email protected]

Webpage:http://delchaum.com/pages/e-discovery_class_2010_125.asp

Course Outline

What are the underlying rules of e-discovery.

What happens when bad things happen to good people.

What you are up against.How to get ready for a future that is

already here.

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StronglyAgree

SomewhatAgree

SomewhatDisagree

StronglyDisagree

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Many companies destroy documents hoping to avoid taking responsibility for things that they have done.

48%

30%

12% 10%

DQ/MCCA Telephone Survey, Q19September 2002 ©2008 De la Rosa & Chaumette 5

Electronic Information Locations

Personal computer (including home computers)

CellphonesPDAsOther subordinates’ computersThe mainframe….the list goes on…

©2010 De la Rosa & Chaumette 7

Casino Royale…the new beginning

• Zubulake v. UBS Warburg, LLC2004 WL 1620866 (S.D.N.Y. July 20, 2004).

• Zubulake v. UBS Warburg, LLCVerdict, April 6, 2005.

• Coleman v. Morgan StanleyNo. CA 03-5045 AI (Fla. Cir. Ct. Mar. 23, 2005).

• United States v. Arthur Andersen544 US 696 (2005).

• Rimkus Consulting Group, Inc. v. Cammarata, 2010 WL 645253 (S.D. Tex. Feb. 19, 2010).

• Zubulake v. UBS Warburg, LLC2004 WL 1620866 (S.D.N.Y. July 20, 2004).

• Zubulake v. UBS Warburg, LLCVerdict, April 6, 2005.

• Coleman v. Morgan StanleyNo. CA 03-5045 AI (Fla. Cir. Ct. Mar. 23, 2005).

• United States v. Arthur Andersen544 US 696 (2005).

• Rimkus Consulting Group, Inc. v. Cammarata, 2010 WL 645253 (S.D. Tex. Feb. 19, 2010). ©2008 De la Rosa & Chaumette 8

Casino Royale

The Morgan Stanley Verdict:

At trial, Coleman was awarded:$605,000,000.00 in compensatory

damages;$805,000,000.00 in punitive damages.$208,000,000.00 in interest.


Casino Royale Lessons

Don’t write checks your client can’t cash.

Morgan Stanley made representations that did not match the facts. Representations to the Court, Representations to the SEC, and Representations to the opposing counsel.

It’s real important to do your homework first.



The World is Not Enough

“Discovery on Discovery Better Than Real Discovery.”

“[There] may be more advantage for the requester in the inability of the respondent to produce discoverable data than disadvantage arising from the failure to obtain potentially relevant material.”

-- “The Homesteader and the Gunslinger: Plaintiff’s Counsel in Discovery,” Robert Alan Eisenberg, January 15, 2003.

“Discovery on Discovery Better Than Real Discovery.”

“[There] may be more advantage for the requester in the inability of the respondent to produce discoverable data than disadvantage arising from the failure to obtain potentially relevant material.”

-- “The Homesteader and the Gunslinger: Plaintiff’s Counsel in Discovery,” Robert Alan Eisenberg, January 15, 2003.


In Focus

Why Rosenthal had to turn over email

Thursday, January 31, 2008 | 5:59 AM By Ted Oberg

HOUSTON (KTRK) (KTRK) -- Thursday could be Harris County District Attorney Chuck Rosenthal's worst day since this email scandal started.

He was already forced out of the re-election race and is under state investigation, but now is facing fines or jail.

It's not over the emails we've seen, but the ones we haven't. Rosenthal admits to erasing thousands of emails after a federal judge told him to turn them over.

By now you probably know about Chuck Rosenthal's scandalous emails, but do you have any idea why he had to turn them over and even more importantly why he has to answer to a federal judge?



On Her Majesty’s Secret Service

• Governmental requests will be an important driver to movement in this area, but prepared companies will be able to respond.

• There are numerous sources for these requirements:– EPA

– Sarbanes-Oxley

– SEC

– Parallel State agencies.

• Governmental requests will be an important driver to movement in this area, but prepared companies will be able to respond.

• There are numerous sources for these requirements:– EPA

– Sarbanes-Oxley

– SEC

– Parallel State agencies.



Initial Steps on Preservation

Once you are aware that litigation might occur (don’t wait until it is filed or document requests are received), you will need to take steps to protect data from accidentally being destroyed.

Don’t rely solely on the IT staff. Less awareness about litigation and litigation costs. Completely different job function.

Interview the IT staff early to determine the scope of the electronic issues.


Initial Steps on Preservation

Send a “hold” letter, even to your own people.

Calendar regular reminders of this (avoid special reminders, if possible).

Be sensitive to departing employees and the systems they use.


Assembling the Response (and Pre-Response) Team

Multi-Disciplinary Records Information Management Governance Team to Guide an Enterprise-Wide Records program.


Assembling the Team, Part 1.

You need Cyborg. Someone from IT and

records, someone in touch with technology.

But, remember IT often has a different job function.

That said, it is also important to automate this process to the extent possible, but avoid the black box.


You need Starfire. An alien (outsider)

Legal expertise IT expertise

It is often helpful to bring this part of the team in early, even before the litigation begins.

This will hopefully keep the costs – and potential for sanctions down.



You need Beast Boy. A chameleon, who adapts

to the environment. This should be someone

inside the organization who knows how each part ticks.

Different parts of the companies will have different requirements and needs – particularly in the use of technology.



You need Raven. A mystic, or at least someone

who can tell the future. This function is for someone

to predict how the standards of the future will be applied to corporate actions today.

Could be legal. Could be more business related. IM for example.



Lastly, you need Robin. A Boy Wonder to pull it all

together. A project of this scope

and importance needs buy-in at the highest level from the earliest point.

It also helps to have someone who has ownership in the ENTIRE project, not just a piece – like a specific piece of litigation.



Never Say Never Again

The new 26(f) meeting

Steps taken to preserve evidence Schedule, to the extent possible Form of production Privilege issues


Never Say Never Again

Simple Words Can Lead to Practical Nightmare:

“… 3. Any documents available in an electronic format shall be so provided in that format, i.e., in an identical, usable electronic format….”

Case Management Order dated March 25, 2004.



For Your Eyes Only …Handling Privilege

Privilege protection must be a topic for the 26(f) conference between the parties.

Plan for inadvertent production of privilege materials, using “Clawback” and “Quick Peek.”

The list of lawyers must be complete! Consider delaying production until

issues are resolved. Different sets of rules apply depending

on the jurisdiction…


Rule 502

A voluntary disclosure would not be a waiver if the disclosure is inadvertent and is made during discovery in federal or state litigation or administrative proceedings, so long as the holder of the privilege

took reasonable precautions to prevent disclosure and took reasonably prompt measures, once the holder

knew or should have known of the disclosure, to rectify the error.


Rule 26(b)(5)(B)

If privileged information has been produced, the party claiming privilege gives notice of the claim (in writing) and the basis for it as soon as possible.

After being notified, a party must promptly return, sequester, or destroy the specified information and any copies it has and may not use or disclose the information until the claim is resolved.

A receiving party may promptly present the information to the court under seal for a determination of the claim.

If receiving party disclosed the information before being notified, it must take reasonable steps to retrieve it.

The producing party must preserve the information until the claim is resolved.


For Your Eyes Only … Common Threads

“Reasonable efforts” is case by case, but: make meaningful efforts to determine the names of

attorneys who may be authors or recipients; confirm the search terms being used; electronically search or manually review a

substantial portion of the documents; and some form of quality control before anything

meaningful is transferred to the adverse party.



Live and Let Die … Format of Production

Requesting party may specify format (i.e. native format, tiff or in an online repository).

When not specified or if the responding party objects, the responding party must state its preferred format.

Default production format either form in which the information is “ordinarily maintained”

or in a “reasonably usable” form.

And, in the last 12 months, the Texas Supreme Court has spoken… In re Weekley Homes…


“Reasonably Accessible”

What is “reasonably accessible?” Not disaster-recovery backups Not necessarily “legacy” data Not deleted data

The test: Undue burden or cost.Requesting party must show good cause, and

that is determined by proportionality test.



And now for some practice tips…

What follows are some more cost saving tips.


Tip No. 1.

Recognize when you need a Cadillac and when you need a Yugo.

There are cases that require full forensic copies of everything and then there are other cases which really do not. Know what you have.

Full forensic information might be needed for some employment cases, trade secret cases, but individual evaluation is important.


Tip No. 2.

Recognize that this process will be – and should be – iterative. Remember the joke about the elephant and the spoon.

Focus on the main players, Analyze what you have, Come back for more.


Tip No. 3.

Recognize that parties will have to work together and with the Court.

Today, parties must discuss these issues early:

Steps taken to preserve evidence Schedule, to the extent possible Form of production Privilege issues

Remember that judges will probably like e-discovery battles as much as they like other discovery fights.

Tip No. 4.

Be proactive if you can.

Help your clients manage their assets today. For example, ask these questions:

Where can people save their documents? Do you allow instant messaging? How do you use backup tapes?

Consider special situations: mergers, exit interviews, old employees with new companies.

Explain that everything is permanent.


Tip No. 5.

Be proactive if you can, even after the litigation starts.

Manage the electronic components from the very beginning.

This means:

Litigation holds. Personal personnel interviews with key players and the

records/IT people. Getting ready for the depositions.

Document what you are doing.©2008 De la Rosa & Chaumette

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Cost Savings Tip No. 5.

Manage production by always considering four major cost considerations:

The time frame The media The people The search terms

Increasing complexity


UNIVERSITY OF HOUSTONSUMMER 2010 – 5297 E-DISCOVERY

The Not-So New Rules

Why were these new rules needed?

New computers, new technology.Outdated language in the Rules – look at the

old list in Rule 34.Concerns about the cost of litigation.Concerns about the failure to preserve and

produce the proper information. (“The era of the ostrich..”)

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Retention versus Preservation

Document retention policies and statutory law define the obligation to RETAIN documents The period is generally fixed from some event

(e.g., creation of the document, completion of a contraction, disposition of an asset)

Destruction is required at the end of the period The rules and case law define the obligation to

PRESERVE documents The obligation to preserve arises when, e.g.,

there is a reasonable anticipation of litigation Destruction is prohibited until the cause of

action is resolved

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The Duty to Preserve – Texas law

Trevino v. Ortega (Texas Supreme Court 1998)

Party is on notice of potential litigation when that party either actually anticipated litigation or would have anticipated litigation. Ortega, 969 S.W.2d at 956 (citing National Tank Co. v. Brotherton, 851 S.W.2d 193, 204-07 (Tex. 1993)). However, no independent tort of spoliation. Ortega, 969 S.W.2d at 951.

The Court held that the best remedy for spoliation is within the lawsuit affected by the spoliation. Id.

The Duty to Preserve – Texas law

Duty to preserve documents can arise from pending, threatened, or reasonably foreseeable litigation; or other sources (for example, contract, statute, or regulation).

Critical to analyze choice of law. Generally, whether the duty to preserve evidence exists is a question of law.

Additional Texas Cases: Wal-Mart Stores, Inc. v. Johnson, 106 S.W.3d 718 (Tex. 2003) Roytberg v. Wal-Mart Stores, Inc., 111 S.W.3d 843 (Tex. App.

—Dallas 2003, no pet.). The reindeer and a swivel chair.

Revisions to FRCP

Early Discussion of E-Discovery Issues: Rule 16(b), Rule 26(f), Form 35

Option to Produce Electronically Stored Information in Response to Interrogatories: Rule 33(d)

Definition of Electronically Stored Information: Rule 34

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Revisions to FRCP

Form of Production: Rule 34(b)Reasonably Accessible Information: Rule

26(b)(2)(C) Belated Assertion of Privilege: Rule 26(b)

(5)(B)“Safe Harbor” on Sanctions: Rule 37(f)Subpoena for Electronically Stored

Information: Rule 45

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And, like before, we need a theme…

So here it is…

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First, a word on document retention…First, a word on document retention…

Kindergarten concepts:

– Wash your hands before you eat.

– Flush. Judge Scheindlin in Zubulake stated that counsel

must, among other things:

– call for employees to produce copies of relevant electronic evidence and arrange for the segregation and safeguarding of any archival media (e.g., back-up tapes) that the[client] has a duty to preserve.

In January 2005, Judge Scheindlin published an article on sanctions for e-discovery abuse (See 11 Mich. Telecomm. Tech. L. Rev. 71 (2004)).g).)


– Wash your hands before you eat.

– Flush. Judge Scheindlin in Zubulake stated that counsel

must, among other things:

– call for employees to produce copies of relevant electronic evidence and arrange for the segregation and safeguarding of any archival media (e.g., back-up tapes) that the[client] has a duty to preserve.

In January 2005, Judge Scheindlin published an article on sanctions for e-discovery abuse (See 11 Mich. Telecomm. Tech. L. Rev. 71 (2004)).g).)

Important Revisions to FRCP




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Meeting and Conferring … Early

Kindergarten concepts: When you go out in the world, watch out for traffic,

hold hands and stick together.

Early Discussion of Electronic Discovery Issues. Rule 16(b), Rule 26(f), and Form 35 direct counsel to discuss early on how to handle e-discovery issues, including decisions relating to privilege claims.

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Rule 26(f)

Rule 26(f)(3) & (4): General Provisions Governing Discovery; Duty of Disclosure; Conference of Parties; Planning for Discovery. Meet and confer re: ESI now must be done early

“As soon as practicable, and at least 21 days before the Rule 16 scheduling conference, the parties must confer … [regarding] the form or forms in which [discovery] should be produced….”

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Rule 26(f) meetings…

Rule 26(f)(3) & (4): General Provisions Governing Discovery; Duty of Disclosure; Conference of Parties; Planning for Discovery.

Amended to require parties to discuss issues relating preserving discoverable information – and to put in the discovery plan the parties views and proposals for disclosing and discovering electronically stored information, including the form of production, and issues relating to claims of privilege or work product. (N.B.: requires knowing about ESI before Rule 26 conference.)

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Rule 26(a) disclosures…

Rule 26(a)(1)(B): General Provisions Governing Discovery; Duty of Disclosure; Required Disclosures; Methods to Discover Additional Matter.

Amended to expressly point out that the initial disclosures must include identification of materials that are electronically stored.

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A teaser: the Meet and Confer

What should you know before you meet and confer?

The types of software and native files your client uses

The way the data is stored The client’s search capabilities Inventory of existing backups

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Rule 16(b)

Rule 16(b)(5)& (6): Pretrial Conferences, Scheduling Management.

Amended to permit court to provide for disclosure and discovery of ESI, and “clawbacks” in pretrial order.

It’s the first meeting with the judge…but not the only one.

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Defining “Document”

Kindergarten concept: Clean up your own mess.

Under this Rule, however, routine and direct access to the opposing party’s system is not guaranteed, although such access might be appropriate in some circumstances.

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Defining “Document,” part 2

Kindergarten concepts: Share everything.

Producing Electronically Stored Information in Response to Interrogatories. Under the new version of Rule 33(d), the responding party is allowed to produce electronic data when responding to interrogatories.

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Defining “Document,” part 2

Kindergarten concepts: Share everything.

Producing Electronically Stored Information in Response to Interrogatories. If direct access to the responding party’s system is the only option a requesting party has for locating and identifying the information, the responding party may choose to derive or ascertain the answer itself.

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Electronically Stored Information

The amendment adds a new term to the Rules: electronically stored information (or “ESI”).

But, there is no definition for ESI … !

Defining “Document”

Kindergarten concept: Clean up your own mess.

Definition of Electronically Stored Information. In addition to clarifying that electronically stored information is subject to production and discovery, the new Rule 34(a) establishes the requesting party’s right to test and sample electronic data.

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Format of Production

Kindergarten concept: Play fair.

Production Format. Rule 34(b) allows the requesting party to specify production format for electronic documents (i.e. native format, tiff or in an online repository). When the production format is not specified or if the responding party objects to the requested format, the responding party must state its preferred production format.

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Format of Production

Kindergarten concept: Play fair.

According to the Rule, the default production format may be either a form (or forms) in which the information is “ordinarily maintained” or in a “reasonably usable” form. In other words, if you request native format, you should get native

format? Or, if you don’t request native format, you may get something

“reasonably usable” - Paper? PDF? TIFF?

The rule goes on to say: “a party need not produce the same [ESI] in more than one form.”

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Kindergarten Concept: And then remember the Dick-and-Jane books and the

first word you learned - the biggest word of all - LOOK.

Production of Reasonably Accessible Information. Draft Rule 26(b)(2)(B) mandates that a party does not have to produce electronic information that is “not reasonably accessible.”

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Kindergarten Concept: And then remember the Dick-and-Jane books and the

first word you learned - the biggest word of all - LOOK.

After much public commentary on this amendment, the Committees amended the Rule to include a test for reasonable accessibility based on the “undue burden or cost” of producing the information.

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Rule 26(b)(2)

Rule 26(b)(2)(B): Inaccessible data

Rule 26(b)(2)(B) protects information identified as “not reasonably accessible because of undue burden or cost.”

Be sure you “identify” the data collections if you want to advantage of this exception.

The rule still permits your opponent to seek the information

The exception relieves your client of the burden of searching and producing …

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Rule 26(b)(2)

Rule 26(b)(2)(B): Committee Note

Note: The new rules do “not relieve the party of its common-law or statutory duties to preserve evidence…. It is often useful for the parties to discuss this issue early in discovery.”

In other words, telling your opponent what you won’t search doesn’t relieve you of the obligation to preserve!

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Rule 26(b)(2)

Rule 26(b)(2)(B): Effective use:

If you are requesting, have focused (narrow) requests. If you are producing party, preserve broadly to be able to

respond in case the court orders further production. Inaccessibility should be raised and negotiated at the

Rule 26(f) meeting and the Rule 16 scheduling conference if issues are already apparent.

Best strategy in symmetric litigation, make an agreement!

Accessible ESI should usually be reviewed before challenging inaccessibility

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The “Two tier” approach

The tiers: Party must produce “accessible” relevant,

non-privileged information Party must produce “inaccessible”

information upon showing of good cause“Proportionality” considerations… same as

found in FRE 403.

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What is “reasonably accessible?”

Not disaster-recovery backups Not necessarily “legacy” data Not deleted data

The real answer is that “reasonably accessible” is a term that will be litigated.

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Privilege and Waiver

Kindergarten concepts: Don’t take things that aren’t yours. Put things back where you found them. Say you’re sorry when you hurt somebody.

Belated Assertion of Privilege. Rule 26(b)(5)(B) addresses inadvertent production of privileged or trial preparation information.

Essentially, receiving party may not use the data until the waiver claim has been resolved.

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The Not-so-“Safe” Harbor…

Kindergarten concepts: Don't hit people. Goldfish and hamsters and white mice and even

the little seed in the Styrofoam cup - they all die. So do we.

Applies to information lost as a result of the

“routine, good-faith operation of an electronic information system.”

Under the new revision, even if parties act in good-

faith, sanctions still may be permitted in “exceptional circumstances.”

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Rule 37(f)

Rule 37(f): Failure to Make Disclosures of Cooperate in Discovery Sanctions; Electronically Stored Information.

“Absent exceptional circumstances, a court may not impose sanctions under these rules on a party for failing to provide electronically stored information lost as a result of the routine, good faith operation of an electronic information system.”

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Rule 37(f)

Rule 37(f): Routine Operation

Does the safe harbor mean that all routine operations and management of the computer system are covered?

The committee suggests that the new rule focuses on “steps essential to computer operation” that may destroy information for reasons unrelated to litigation.

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Rule 37(f)

Rule 37(f): Good Faith

Is it good faith to allow routine operations to continue after a preservation duty arises?

The committee thinks not: “Good faith in the routine operation of an information system may involve a party’s intervention to modify or suspend … that routine operation to prevent the loss of information, if the information is subject to a preservation obligation.”

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Rule 37(f)

Rule 37(f): Backup Tapes

Is overwriting backup tapes part of the routine good faith operation of a computer system?

It is not likely that leaving backup tapes in rotation that may contain relevant data will be shielded by the safe harbor.

BUT what actions are?

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Rule 37(f)

Rule 37(f): Sanctions

Safe harbor only bars sanctions “under these rules,” not under common law, statute or ethical rules.

Safe harbor prevents only “sanctions,” and not “adjustment” or management orders such as providing for alternative discovery to compensate for lost information.

May not protect failure to prevent loss of inaccessible data.

Consider that the safe harbor applies to the information under the control of a third party with whom a party has contracted for the processing or storage of information.

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Similar Changes to Subpoenas

Kindergarten Concept: Be aware of wonder. Remember the little seed in the

Styrofoam cup: the roots go down and the plant goes up and nobody really knows how or why, but we are all like that.

Subpoena for Electronically Stored Information. Finally, the rule changes would include an amendment to Rule 45 that would allow parties to subpoena electronically stored information pursuant to the changes in the rest of the amended Rules.

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Questions remain… (i.e. more teasers)

What about privileged documents?

How do you handle unusual documents? (e.g. proprietary software)

How do you integrate with paper document production?

What do you do when you haven’t done what you knew to do when you should have done it?

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Wrapping up today…


Warm cookies and cold milk are good for you.

Live a balanced life – learn some and think some and draw and paint and sing and dance and play and work every day some.

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So, Chaumette, how do I look smart?

Think long term in discovery. Pick your battles. Document your steps.

Focus on volume reduction… Limit preservation … or limit collection … or limit review …

or limit production.

Plan for failures. Have contingency plans in place. Admit errors quickly.

So, Chaumette, how do I look smart?

Involve others in the process. IT, in house lawyers, records people, vendors.

Know the rules well enough And understand what their ultimate purpose is.



E-Discovery

Documents

UNIVERSITY OF HOUSTON SUMMER 2010 LAW 5297 – SELECTED TOPICS E-Disovery