By: Francis G.X. Pileggi and Bernard G. Conaway
Much has been written about recent developments in electronic discovery, and the topic easily lends itself to a law review article as opposed to a short essay such as this. Nonetheless, the narrow scope of this article will be to highlight a few recent developments that should be of great importance to any litigator. For example, the United States District Court for the District of Delaware recently developed non-binding electronic discovery guidelines. As of this writing, neither the Delaware Chancery Court nor the Delaware Superior Court have formally adopted any amendments to their rules of civil procedure that specifically relate to electronic discovery issues similar to the new guidelines promulgated by Chief Judge Robinson of the District Court.
At the recent Annual Meeting of the American Bar Association, in August of 2004, the Section of Litigation adopted amendments to their “Civil Discovery Standards” that specifically address practical aspects of electronic discovery not fully covered by existing rules of evidence or procedure. See www.abanet.org/litigation/taskforces/electronic/home.html.
For example, extensive guidance is given in the very recent ABA standards cited above, regarding factors to use in analyzing the basis for motions to compel electronic evidence, including data considered to have been “deleted” (separate from the spoliation issue), in light of the recognition that electronic data is rarely ever “completely deleted.” The real issue is often: How much does one want to spend in order to try to retrieve allegedly deleted data, and who will pay for it. See, e.g., Amendments to ABA Civil Discovery Standards (August 2004) Comment to Standard 29(b)(iii), citing Federal Judicial Center, Manual for Complex Litigation ¨Ŗ11.446 (4th ed. 2004); 7 Moore’s Federal Practice ¨Ŗ 37a. 30-33 (3d ed. 2004) (other citations omitted).
Other major efforts have been made in this area as well. A comprehensive and scholarly analysis of electronic discovery issues has also been prepared by a group known as The Sedona Conference, which has proposed The Sedona Principles for electronic document production. See www.thesedonaconference.org. See also new local Rule 26.1(d) of the U.S. District Court for the District of New Jersey addressing new duties of attorneys relating to electronic discovery.
One might wonder why specific rules of court or guidelines are needed to address e-discovery issues in light of the existing Federal Rule of Civil Procedure 34 already including an expansive definition of “data compilation.” The Sedona Conference formed a Working Group on Electronic Document Production that recently prepared a white paper that attempted to describe “best practices” for electronic discovery and also explained why e-discovery poses new challenges not present in “old-fashioned paper-only discovery.” The Working Group summarized six categories of differences why producing electronic data is qualitatively and quantitatively different from discovery that only involves producing paper documents:
(1) Volume and Duplicability. (It is estimated that in the year 2003, about 1.5 billion e-mails per day were sent in the U.S. alone – – about the same number of pieces of mail that the U.S. Postal Service processes in one year. Also, most e-mails are copied to others, and stored in several locations after being sent.) (2) Persistence. (Unlike the irretrievable nature of shredded paper; electronic data that is “deleted” can often be recovered.) (3) Dynamic, Changeable Content. (Unlike paper; computer data can change automatically without human intervention. For example, e-mail systems often automatically move or delete data.) (4) Metadata. (Details about electronic data such as the date of creation and changes to an electronic document; often not apparent on a hard copy.) (5) Environment-Dependence and Obsolescence. (Data that may require certain software or equipment to be accessed may not be readily available.) (6) Dispersion of Searchability. (Data may not be limited to one location or system. For example, discoverable data may be in a BlackBerry; cell phone, server, laptop, voicemail system and home computer.) See The Sedona Principles: Best Practices, Recommendations and Principles for Addressing Electronic Document Discovery 3-5 (Sedona Conference Working Group Series 2004).
E-discovery will likely increase the cost of discovery as well. The National Law Journal in a front page article in its August 2, 2004 edition estimates expenditures for e-discovery preservation, collection, and production in U.S. commercial litigation for 2004 will total about $700 million and by 2006 that number is estimated to increase to $1.8 billion.
Chief Judge Robinson of the U.S. District Court for the District of Delaware has addressed these issues by developing guidelines, based on the work of a committee of local lawyers and others from around the country. The Default Standard for Discovery of Electronic Discovery developed by the committee draws heavily upon the Federal Rules of Civil Procedure and past judicial experience. In doing so the Default Standard also sets expectations for counsel and litigants regarding the electronic discovery process. These expectations are important as they represent an acknowledgement that “e-discovery” is no longer an extraordinary event.
The Default Standard does not overtly modify the FRCP or Local Rules and is not binding. The Default Standard is simply that – a default standard. It applies only in the absence of any other agreement between counsel and prior to the initial Rule 16 scheduling conference at least for cases before Chief Judge Robinson. At the Rule 16 conference, case specific e-discovery guidelines may be imposed. From this perspective the Default Standard furthers the Court’s long held and well-balanced objective of promoting expeditious, responsible and cost efficient litigation.
The guidelines highlight that parties are expected to discuss e-discovery issues at the “private” FRCP 26(f) conference between counsel. That discussion should address:
1.A list of the most likely “document custodians” of electronic information including a brief description of each person’s title and responsibilities;
2.A list of each relevant electronic system that has been in place at all relevant times and a general description of each system, including the nature, scope, character, organization, and formats employed in each system;
3.The name of the individual responsible for that party’s electronic document retention policies as well as a general description of the party’s electronic document retention policies for the systems identified above;
4.The identity of the party’s e-discovery “liaison;” and,
5.Provide notice of any problems reasonably anticipated to arise in connection with e-discovery.
These are, again, default standards. Nothing precludes counsel from raising other e-discovery issues at the Rule 26(f) conference. For example, the parties can discuss relevant search terms, time frame and/or “file type” limitations. If the state of the pleadings does not permit meaningful discussion within the timeframe provided under Rule 26(f), then counsel can either agree on another date for discussion or refer the e-discovery issues to the court at the Rule 16 scheduling conference.
The requirement of an “e-discovery liaison” is noteworthy for several reasons. First, it reflects judicial acknowledgement that e-discovery is potentially complex, requiring more than a passing familiarity with data systems, organization, retrieval and storage. That potential complexity is directly tied into the claims and defenses of the litigation. Second, the “e-discovery liaison” is charged with specific responsibility including: “the e-discovery liaisons shall be responsible for organizing each party’s e-discovery efforts to ensure consistency and thoroughness and, generally, to facilitate the e-discovery process.” This responsibility, however, does not relieve counsel’s own responsibility for discovery compliance as imposed by the FRCP. Third, the “e-discovery liaison” can be an attorney (in-house or outside counsel), a third-party consultant, or an employee of the party. Whoever is designated as e-discovery liaison that person must, at a minimum be:
-Familiar with the party’s electronic systems and capabilities in order to explain these systems and answer relevant questions.
-Knowledgeable about the technical aspects of e-discovery, including electronic document storage, organization, and format issues.
-Prepared to participate in e-discovery dispute resolutions.
E-discovery proceeds as any other discovery under the FRCP. Discovery requests are served and the receiving party is then obligated to search their documents. Under the Default Standard, however, this search does not, at least initially, require a responding party to search through what are described as limited accessibility electronic documents. Electronic documents of limited accessibility may include those documents that were created, stored or used by electronic media that is no longer in use, maintained in redundant electronic storage media, or for which retrieval involves substantial cost. Requests for information expected to be found in limited accessibility documents must be narrowly focused with some basis in fact supporting the request. Additionally, on-site inspections of electronic media under FRCP 34(b) are not permitted absent exceptional circumstances and only where good cause and specific need are demonstrated.
If a party intends to employ an electronic search to locate relevant electronic documents, that party must disclose any restrictions as to scope and method of that search that might affect their ability to conduct a complete electronic search of their electronic documents. In this context the Default Standard expects that the parties will confer and agree upon such limitations, as well as confer and agree upon relevant search terms and search parameters.
The Default Standard likewise expects that the parties will agree upon the format of production. If the parties cannot agree to the format for document production, electronic documents shall be produced as image files (e.g., PDF or TIFF). If an image file is produced, the Default Standard declares that the producing party must preserve the integrity of the electronic document’s contents, i.e., the original formatting of the document, its metadata and, where applicable, its revision history. If a party wants documents produced in their native format, i.e., spreadsheet, database, etc., after initial document production in image file format is complete that party must demonstrate particularized need for production of electronic documents in native format.
The Default Standard addresses two vexing issues that have bedeviled e-discovery from the outset: document retention and inadvertent production of privileged material. The Default Standard expects that the parties will promptly agree on protection and retention of relevant electronic evidence. This responsibility is assigned to a “retention coordinator”. That coordinator must: (i) Take steps to ensure that e-mail of identified custodians shall not be permanently deleted in the ordinary course of business and that electronic documents maintained by the individual custodians shall not be altered; (ii) Provide notice as to the criteria used for spam and/or virus filtering of e-mail and attachments; e-mails and attachments filtered out by such systems shall be deemed non-responsive so long as the criteria underlying the filtering are reasonable. Within seven (7) days of identifying the relevant document custodians, the Retention Coordinator(s) is required to implement their responsibility and, each party’s counsel shall file a statement of compliance with the court. The Default Standard suggests that a 30(b)(6) deposition of the Retention Coordinator may be useful to resolve questions of retention and related compliance at the earliest stage of discovery.
On the question of inadvertent production, the Default Standard states that electronic documents that contain privileged information or attorney work product shall be immediately returned if the documents appear on their face to have been inadvertently produced or if there is notice of the inadvertent production within thirty (30) days after production. Whether this claw-back provision preserves privilege of inadvertently disclosed documents outside of the immediate litigation is unclear. The actual Default Guidelines are printed verbatim following this article.
The ABA/BNA Lawyers’ Manual on Professional Conduct now has frequent updates on specific duties imposed on lawyers in connection with e-discovery based on court decisions that have also assessed penalties on clients for the failure of lawyers to obtain compliance from their clients to these new e-discovery developments. We are well beyond the stage where it was possible (perhaps as it was 20 years ago), for a client to go to the filing cabinet and simply instruct an assistant to make copies of the relevant documents in a particular file labeled for a particular matter. Basic facts about “knowledge management” today indicate why there has been a sea-change in this area.
Approximately 90% of all information is now created electronically, such as through computers and related systems, and only a very small percentage of that information is ever printed in hard copy. E-mails are the best example. Acknowledging that state of affairs, some courts are now routinely requiring businesses to allow a “mirror image” copy to be made of computer systems of a party. Some litigators are now initially requesting electronic data before they even consider seeking hard copies of documents. In recent cases, failure of the duty to preserve evidence, such as the deletion of e-mails by litigants has been the cause of significant penalties.
For example, in United States v. Philip Morris USA, Inc., 2004 WL 1627252 (D.D.C.), United States District Judge Gladys Kessler, from the District of Columbia, fined Philip Morris USA and its parent company, Altria Group, Inc., $2.7 million for deleting e-mails that may have been relevant in the government’s civil racketeering lawsuit against the cigarette industry. Phillip Morris employees deleted e-mails that were 60 days old on a monthly basis for at least two years in violation of a court order requiring the preservation of “all documents and other records containing information which could be potentially relevant to the subject matter” of the litigation. The employees who deleted the e-mails included high level officials of Phillip Morris to include the Director of Corporate Responsibility, the Senior Principal Scientist in Research Development and the Engineering and the Senior Vice President of Corporate Affairs. Particularly, the employees disregarded the company’s “print and retain” policies which would have ensured the preservation of the e-mails. Although Judge Kessler denied the government’s motion for an adverse instruction regarding the missing evidence against Phillip Morris, the court imposed a $2.7 million dollar fine against Phillip Morris and precluded any employees who did not follow the company’s document retention policies from testifying.
In addition to the imposition of significant fines, the destruction of e-mails relevant to the litigation may result in the court allowing the fact of the destruction of the evidence to operate as a negative inference against the offending party. In Mastercard International, Inc. v. Moulton, 2004 WL 1393992 (S.D.N.Y.), Federal Magistrate Judge Dolinger imposed sanctions against the defendants for not producing e-mails that were responsive to Plaintiff’s production request. Plaintiff MasterCard International commenced a lawsuit against Defendants Kevin Moulton and KTM Media asserting a copyright infringement claim for Defendants’ maintenance of a website that displayed pornographic material in conjunction with a Mastercard trademark. During the course of discovery, Plaintiff sought all e-mails received by Defendants that concerned the website. Defendants failed to produce the e-mails and the e-mails had been routinely deleted from the company server in the ordinary course of the Defendants’ business even after the litigation had commenced. Although the court did not permit a conclusive negative inference against the Defendants for the deletion of the e-mails, noting that MasterCard did not make a compelling case that the missing e-mails would have been significant assistance to it, the court did permit the jury to consider the destruction of the e-mails as a negative inference, although not conclusive, that the deleted emails likely contained information supporting Plaintiff’s claim.
Similarly, in Zubulake v. UBS Warburg LLC, 2004 WL 1620866 (S.D.N.Y.), Southern District Judge Scheindlin imposed sanctions against Defendant UBS Warburg for deleting back-up e-mail messages that were requested as part of Plaintiff Zubulake’s discovery requests. Zubulake, an equities trader employed by Defendant, filed a sex discrimination suit against UBS after being fired. Immediately after suit was filed, in-house counsel for UBS Warburg instructed its employees not to destroy documents relevant to the litigation, including both electronic and hard-copy files. Despite the warning, the company back-up tapes were routinely recycled in the ordinary course of UBS’s business. Upon Plaintiff’s motion, Judge Scheindlin ordered UBS to bear the cost of the restoration of the back-up tapes. The restoration process revealed that certain back-up tapes were destroyed and that a number of e-mails on the back-up tapes were missing from UBS’s active files, indicating that UBS employees were deleting e-mails relevant to the litigation. Because some of the back-tapes were lost altogether, Judge Scheindlin ordered UBS to pay for the re-deposition of several key UBS employees to allow Plaintiff to inquire about the missing tapes and the deleted e-mails.
Notably, in Zubulake, Judge Scheindlin made a point of observing that counsel is not only obligated to inform his or her clients of their discovery obligations, but counsel is also affirmatively obligated to monitor the party’s efforts to retain and produce all relevant discovery. See generally G. Dickenson, Frontiers of E-Discovery and Cost-Shifting, Commercial and Business Litigation, ABA Section of Litigation publication (Spring 2004). Judge Scheindlin has written several other opinions in the Zubulake case on e-discovery issues that have established new benchmarks in this area.
E-discovery is an area that all litigators will need to monitor as new caselaw and court rules develop in what can be described in many ways as unchartered territory. The Default Standards promulgated by Chief Judge Robinson follow verbatim:
Default Standard for Discovery of
Electronic Documents (“E-Discovery”)
1. Introduction. It is expected that parties to a case will cooperatively reach agreement on how to conduct e-discovery. In the event that such agreement has not been reached by the Fed. R. Civ. P. 16 scheduling conference, however, the following default standards shall apply until such time, if ever, the parties conduct e-discovery on a consensual basis.
2. Discovery conference. Parties shall discuss the parameters of their anticipated e-discovery at the Fed. R. Civ. P. 26(f) conference, as well as at the Fed. R. Civ. P. 16 scheduling conference with the court, consistent with the concerns outlined below. More specifically, prior to the Rule 26(f) conference, the parties shall exchange the following information:
– A list of the most likely custodians of relevant electronic materials, including a brief description of each person’s title and responsibilities (see ¨? 6).
– A list of each relevant electronic system that has been in place at all relevant times and a general description of each system, including the nature, scope, character, organization, and formats employed in each system. The parties should also include other pertinent information about their electronic documents and whether those electronic documents are of limited accessibility. Electronic documents of limited accessibility may include those created or used by electronic media no longer in use, maintained in redundant electronic storage media, or for which retrieval involves substantial cost.
– The name of the individual responsible for that party’s electronic document retention policies (“the retention coordinator”), as well as a general description of the party’s electronic document retention policies for the systems identified above (see ¨? 6).
– The name of the individual who shall serve as that party’s “e-discovery liaison” (see ¨? 2).
– Provide notice of any problems reasonably anticipated to arise in connection with e-discovery.
To the extent that the state of the pleadings does not permit a meaningful discussion of the above by the time of the Rule 26(f) conference, the parties shall either agree on a date by which this information will be mutually exchanged or submit the issue for resolution by the court at the Rule 16 scheduling conference.
3. E-discovery liaison. In order to promote communication and cooperation between the parties, each party to a case shall designate a single individual through which all e-discovery requests and responses are made (“the e-discovery liaison”). Regardless of whether the e-discovery liaison is an attorney (in-house or outside counsel), a third party consultant, or an employee of the party, he or she must be:
– Familiar with the party’s electronic systems and capabilities in order to explain these systems and answer relevant questions.
– Knowledgeable about the technical aspects of e-discovery, including electronic document storage, organization, and format issues.
– Prepared to participate in e-discovery dispute resolutions.
The court notes that, at all times, the attorneys of record shall be responsible for compliance with e-discovery requests. However, the e-discovery liaisons shall be responsible for organizing each party’s e-discovery efforts to insure consistency and thoroughness and, generally, to facilitate the e-discovery process.
4. Timing of e-discovery. Discovery of electronic documents shall proceed in a sequenced fashion.
– After receiving requests for document production, the parties shall search their documents, other than those identified as limited accessibility electronic documents, and produce responsive electronic documents in accordance with Fed. R. Civ. P. 26(b)(2).
– Electronic searches of documents identified as of limited accessibility shall not be conducted until the initial electronic document search has been completed. Requests for information expected to be found in limited accessibility documents must be narrowly focused with some basis in fact supporting the request.
– On-site inspections of electronic media under Fed. R. Civ. P. 34(b) shall not be permitted absent exceptional circumstances, where good cause and specific need have been demonstrated.
5. Search methodology. If the parties intend to employ an electronic search to locate relevant electronic documents, the parties shall disclose any restrictions as to scope and method which might affect their ability to conduct a complete electronic search of the electronic documents. The parties shall reach agreement as to the method of searching, and the words, terms, and phrases to be searched with the assistance of the respective e-discovery liaisons, who are charged with familiarity with the parties’ respective systems. The parties also shall reach agreement as to the timing and conditions of any additional searches which may become necessary in the normal course of discovery. To minimize the expense, the parties may consider limiting the scope of the electronic search (e.g., time frames, fields, document types).
6. Format. If, during the course of the Rule 26(f) conference, the parties cannot agree to the format for document production, electronic documents shall be produced to the requesting party as image files (e.g., PDF or TIFF). When the image file is produced, the producing party must preserve the integrity of the electronic document’s contents, i.e., the original formatting of the document, its metadata and, where applicable, its revision history. After initial production in image file format is complete, a party must demonstrate particularized need for production of electronic documents in their native format.
7. Retention. Within the first thirty (30) days of discovery, the parties should work towards an agreement (akin to the standard protective order) that outlines the steps each party shall take to segregate and preserve the integrity of all relevant electronic documents. In order to avoid later accusations of spoliation, a Fed. R. Civ. P. 30(b)(6) deposition of each party’s retention coordinator may be appropriate.
The retention coordinators shall:
– Take steps to ensure that e-mail of identified custodians shall not be permanently deleted in the ordinary course of business and that electronic documents maintained by the individual custodians shall not be altered.
– Provide notice as to the criteria used for spam and/or virus filtering of e-mail and attachments; e-mails and attachments filtered out by such systems shall be deemed non- responsive so long as the criteria underlying the filtering are reasonable.
Within seven (7) days of identifying the relevant document custodians, the retention coordinators shall implement the above procedures and each party’s counsel shall file a statement of compliance as such with the court.
8. Privilege. Electronic documents that contain privileged information or attorney work product shall be immediately returned if the documents appear on their face to have been inadvertently produced or if there is notice of the inadvertent production within thirty (30) days of such.
9. Costs. Generally, the costs of discovery shall be borne by each party. However, the court will apportion the costs of electronic discovery upon a showing of good cause.
10. Discovery disputes and trial presentation. At this time, discovery disputes shall be resolved and trial presentations shall be conducted consistent with each individual judge’s guidelines.