ELECTRONICALLY STORED INFORMATION eDocs and Forensics in the New eDiscovery Era

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ELECTRONICALLY STORED INFORMATION e-Docs and
Forensics in the New e-Discovery Era
ESI
www.aplf.org
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FRAMEWORK

• Overview of the Rule Changes
• Pre-Litigation Planning
• IT Audit
• Document Retention Policies
• Planning Discovery
• Conducting Discovery
• Costs
• Privilege

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OVERVIEW

• Changes go into effect December 1, 2006
• Rules changes deal with a new category of
  information electronically stored information
  (ESI)
• ESI is distinct from documents or things
• Focus is on accessible ESI
• Attempt to balance need for information versus
  cost and time of discovery
• Safe harbor provisions for inadvertent production
  of privilege

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HAS ANYTHING REALLY CHANGED?

• ESI has been the focus of much discovery in
  previous years
• Numerous state and federal jurisdictions already
  have specific rules in place to address
  e-discovery or have begun to work on such rules
• BUT, official recognition of both importance of
  ESI and difficulties in dealing with it

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JURISDICTIONS IMPLEMENTING SPECIFIC RULES
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RULE CHANGES

• Rule 16/Form 35
• Rule 26
• Rule 33
• Rule 34
• Rule 37

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RULE 16(b) CASE MANAGEMENT

• (b) .The scheduling order also may include
• (5) provisions for disclosure or discovery of
  electronically stored information
• (6) any agreements the parties reach for
  asserting claims of privilege or of protection as
  trial preparation material after production
• Form 35 also provides specific provisions for
  addressing ESI

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RULE 26(a)(1)(B) DISCOVERY IN GENERAL

• Required Disclosures Methods to Discover
• Additional Matter.
• (1) Initial Disclosures. Except in categories of
  proceedings specified in Rule 26(a)(1)(E), or to
  the extent otherwise stipulated or directed by
  order, a party must, without awaiting a discovery
  request, provide to other parties
• .
• (B) a copy of, or a description by category and
  location of, all documents, electronically stored
  information, and tangible things that are in the
  possession, custody, or control of the party and
  that the disclosing party may use to support its
  claims or defenses, unless solely for impeachment

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RULE 26(b)(2)(B) LIMITATIONS

• (b) Discovery Scope and Limits. Unless otherwise
  limited by order of the court in accordance with
  these rules, the scope of discovery is as
  follows
• .
• (2) Limitations.
• .
• (B) A party need not provide discovery of
  electronically stored information from sources
  that the party identifies as not reasonably
  accessible because of undue burden or cost. On
  motion to compel discovery or for a protective
  order, the party from whom discovery is sought
  must show that the information is not reasonably
  accessible because of undue burden or cost. If
  that showing is made, the court may nonetheless
  order discovery from such sources if the
  requesting party shows good cause, considering
  the limitations of Rule 26(b)(2)(C). The court
  may specify conditions for the discovery.

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RULE 26(b)(5)(B) - PRIVILEGE

• (5) Claims of Privilege or Protection of
  Trial-Preparation Materials.
• .
• (B) Information Produced. If information is
  produced in discovery that is subject to a claim
  of privilege or of protection as
  trial-preparation material, the party making the
  claim may notify any party that received the
  information of the claim and the basis for it.
  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 the 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.

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RULE 26(f) CASE MANAGEMENT

• (f) Conference of Parties Planning for
  Discovery. T he parties mustconferto develop
  a proposed discovery plan that indicates the
  parties views and proposals concerning
• .
• (3) any issues relating to disclosure or
  discovery of electronically stored information,
  including the form or forms in which it should be
  produced
• (4) any issues relating to claims of privilege
  or of protection as trial-preparation material,
  including if the parties agree on a procedure to
  assert such claims after production whether to
  ask the court to include their agreement in an
  order.

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RULE 33(d) - INTERROGATORIES

• (d) Option to Produce Business Records. Where
  the answer to an interrogatory may be derived or
  ascertained from the business records, including
  electronically stored information, of the party
  upon whom the interrogatory has been served or
  from an examination, audit or inspection of such
  business records, including a compilation,
  abstract or summary thereof, and the burden of
  deriving or ascertaining the answer is
  substantially the same for the party serving the
  interrogatory as for the party served, it is a
  sufficient answer to such interrogatory to
  specify the records from which the answer may be
  derived or ascertained and to afford to the party
  serving the interrogatory reasonable opportunity
  to examine, audit or inspect such records and to
  make copies, compilations, abstracts, or
  summaries. A specification shall be in sufficient
  detail to permit the interrogating party to
  locate and to identify, as readily as can the
  party served, the records from which the answer
  may be ascertained.

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RULE 34(a) ESI PRODUCTION

• (a) Scope. Any party may serve on any other
  party a request (1) to produce and permit the
  party making the request, or someone acting on
  the requestors behalf, to inspect, copy, test,
  or sample any designated documents or
  electronically stored information including
  writings, drawings, graphs, charts, photographs,
  sound recordings, images, and other data or data
  compilations stored in any medium from which
  information can be obtained translated, if
  necessary, by the respondent into reasonably
  usable form, or to inspect, copy, test, or sample
  any designated tangible things which constitute
  or contain matters within the scope of Rule 26(b)
  and which are in the possession, custody or
  control of the party upon whom the request is
  served or (2) to permit entry upon designated
  land or other property in the possession or
  control of the party upon whom the request is
  served for the purpose of inspection and
  measuring, surveying, photographing, testing, or
  sampling the property or any designated object or
  operation thereon, within the scope of Rule 26(b).

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RULE 34(b) FORM OF ESI PRODUCTION

• (b) Procedure. .The request may specify the
  form or forms in which electronically stored
  information is to be produced.The response shall
  state, with respect to each item or category,
  that inspection and related activities will be
  permitted as requested, unless the request is
  objected to, including an objection to the
  requested form or forms for producing
  electronically stored information, stating the
  reasons for the objection.If objection is made
  to the requested form or forms for producing
  electronically stored information or if no form
  was specified in the request the responding
  party must state the form or forms it intends to
  use.
• Unless the parties otherwise agree, or the court
  otherwise orders
• (i) a party who produces documents for
  inspection shall produce them as they are kept in
  the usual course of business or shall organize
  and label them to correspond with the categories
  in the request
• (ii) if a request does not specify the form or
  forms for producing electronically stored
  information, a responding party must produce the
  information in a form or forms in which it is
  ordinarily maintained or in a form or forms that
  are reasonably usable and
• (iii) a party need not produce the same
  electronically stored information in more than
  one form.

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RULE 37(f) - SANCTIONS

• (f) 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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DO THE NEW RULES CLARIFY MY OBLIGATIONS?
NO!

• Reasonably accessible
• Undue burden or cost
• Good cause
• Routine operation
• Good faith

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WHAT IS ESI?
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WHY DISTINGUISH ESI?

• Exponentially greater volume
• Do you know your terabytes?

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SHOULD IT BE CALLED A TERROR-BYTE?
Varies by type of document, but if e-mail, then
roughly 40,000 boxes
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WHY DISTINGUISH ESI?

• Exponentially greater volume
• Do you know your terabytes?
• Dynamic nature of ESI
• Are you improperly altering metadata?
• ESI may be incomprehensible when separated from
  the system that created it
• Native format or hard copy?
• - Advisory Committee Report at 18

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ADDITIONAL CONSIDERATIONS WITH ESI

• Need to collect from more numerous locations
• Redundancy/Duplicability
• Disposal
• Obsolescence
• Cost
• Privilege

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FRAMEWORK

• Overview of the Rule Changes
• Pre-Litigation Planning
• IT Audit
• Document Retention Policies
• Planning Discovery
• Conducting Discovery
• Costs
• Privilege

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PRE-LITIGATION PLANNING

• In-house counsel Conduct an IT Autopsy NOW
• Why now instead of when litigation is imminent?
• Outside counsel Learn your clients systems NOW
• How do I justify this to the client?
• Document retention/destruction policy NOW
• Create or revise

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WHY SHOULD I GO TO ALL THIS TROUBLE?
Severity of sanction
Monetary sanctions
Exclusion of evidence
Adverse instruction
Dismissal
Severity of misconduct
SANCTIONS
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CONGRATULATIONS YOURE NOW AN IT PROFESSIONAL
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CONGRATULATIONS YOURE NOW AN IT PROFESSIONAL
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DOCUMENT RETENTION/DESTRUCTION POLICY

• Destruction of documents does not equate to
  spoliation
• Do I really have to have one?
• YES!
• Having one may be evidence of good faith, so long
  as it is entered for the right reasons and is
  reasonable
• Cant you just give me a form policy?
• NO!
• No such thing as one size fits all
• Individual industries and regulations have a
  significant impact

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DOCUMENT RETENTION/DESTRUCTION POLICY

• Considerations
• What should be covered?
• How long?
• Who is in charge?
• Policing?
• Suspend for litigation hold?

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WHAT DO I DO ABOUT TAPE BACKUPS?

• Remember, key is routine good faith operation
  of the system
• Consider good faith alternatives
• E.g., If you keep a copy of the backups existing
  at the time the litigation hold commences, can
  you then continue the recycling program
  afterwards and still assure that not relevant
  documents will be lost?
• The only completely safe solution is to end
  recycling when litigation hold commences

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WHY IS THIS QUESTION SO DIFFICULT?

• The case law, committee notes and commentaries
  are singularly unhelpful

There is CONSIDERABLE UNCERTAINTY as to whether a
party particularly a party that produces large
amounts of information NONETHELESS HAS TO
INTERRUPT THE OPERATION OF THE ELECTRONIC
INFORMATION SYSTEMS it is using to avoid any loss
of information because of the possibility that it
might be sought in discovery, OR RISK SEVERE
SANCTIONS - Advisory Committee Report at 83
It can be difficult to interrupt the routine
operation of computer systems to isolate and
preserve discrete parts of the information they
overwrite, delete, or update on an ongoing basis,
without creating problems for the larger
system - Advisory Committee Report at 83
It is unrealistic to expect parties to stop such
routine operation of their computer systems as
soon as they anticipate litigation. It is also
undesirable the result would be even greater
accumulation of duplicative and irrelevant data
that must be reviewed, making discovery more
expensive and time consuming - Advisory
Committee Report at 83
The proposed rule also recognizes that
suspending or interrupting automatic deletion
features can be prohibitively expensive and
burdensome, again in ways that have no
counterpart to managing hard copy
information. - Advisory Committee Report at 83

• Must a corporation, upon recognizing the threat
  of litigation, preserve every shred of paper,
  every e-mail or electronic document, and every
  backup tape? The answer is clearly no. Such a
  rule would cripple large corporationsthat are
  almost always involved in litigation.
• Zubulake v.UBS Warburg LLC
• 220 F.R.D. 212, 217 (S.D.N.Y. 2003)

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FRAMEWORK

• Overview of the Rule Changes
• Pre-Litigation Planning
• IT Audit
• Document Retention Policies
• Planning Discovery
• Conducting Discovery
• Costs
• Privilege

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RULE 26(F) CONFERENCE

• Must balance need for information against need to
  minimize disruption of routine operations
  critical to ongoing activities.
• - Advisory Committee Report at 34
• Seek agreement regarding
• Form of Production of Documents
• Native format?
• Duty of preservation
• Accessible and inaccessible information
• Search Terms
• Privilege Issues
• Cost sharing

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THE RULE 16 CONFERENCE

• A complete and thorough Rule 26(f) conference is
  key
• The easier you make it for the court, the more
  likely the court is to adopt your plan
• Consider previewing the likely points of dispute
• Definitely address limitations, especially with
  respect to inaccessible data

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FRAMEWORK

• Overview of the Rule Changes
• Pre-Litigation Planning
• IT Audit
• Document Retention Policies
• Planning Discovery
• Conducting Discovery
• Costs
• Privilege

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CONDUCTING DISCOVERY UNDER REVISED RULES

• Preservation of Information
• Requesting Responding to Discovery
• Form of Production
• Cost Shifting
• Privilege Issues
• Sanctions/Safe Harbor

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DUTY TO PRESERVE

• Duty to preserve documents arises as soon as
  party knows or should know about litigation, or
  if litigation is reasonably anticipated in the
  future.
• Duty varies district-by-district

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HOW DO I COMPLY WITH MY DUTY TO PRESERVE?

• Counsel should issue Litigation Hold to employees
  as soon as litigation begins--ASAP
• Only those with litigation holds will likely be
  able to seek protection from sanctions under Rule
  37(f)s new safe harbor provisionsmore later
• Periodically reissue Litigation Hold to all
  employees so that new employees are also aware of
  it

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ASSESS THE SCOPE OF THE DUTY

• Make direct contact with key players
• Interview
• Importance of preservation
• Consider imaging hard drives
• Contact IT personnel
• Importance of preservation
• IT infrastructure
• Accessibility of Information
• Can it be found elsewhere?
• May need to preserve inaccessible, potentially
  relevant information
• Organize team of point persons in each department

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COMMUNICATION IS KEY

• Contact opposing counsel immediately
• Scope of preservation
• Form of production
• Preservation letter?
• Seek guidance from Court

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INITIAL DISCLOSURES

• Rule 26(a)(1)(B) substitutes Electronically
  Stored Information (ESI) for data compilations
• Must disclose description by category and
  location of documents ESI relevant to claim or
  defense
• Should search available electronic systems for
  relevant information
• Disclose existence of documents in paper
  electronic form
• Consider disclosing IT personnel or 30(b)(6)
  witness

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DRAFTING/RESPONDING TO DISCOVERY REQUESTS

• New Rule 26(b)(2)(B) Limitations.
• A party need not provide discovery of ESI from
  sources that the party identifies as not
  reasonably accessible because of undue burden or
  cost.
• Responding party bears burden of showing ESI is
  not reasonably accessible because of undue burden
  or cost
• Information may still be ordered produced if
  Requesting Party shows good cause
• - Committee Notes to Proposed Amendments at 14

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DRAFTING/RESPONDING TO DISCOVERY REQUESTS

• New Rule 26(b)(2)(B) Limitations.
• Court may set conditions (cost-shifting)
• Committee Notes The responding party must also
  identify, by category or type, the sources
  containing potentially responsive information
  that it is neither searching nor producing.
• Detailed enough so that others can evaluate
  burdens, costs, likelihood of relevance
• May still need to preserve inaccessible ESI
• - Committee Notes to Proposed Amendments at 14

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ACCESSIBILITY OF DATA

• Examples of data identified in the Committee
  Report as presenting particular problems in
  terms of accessibility
• Back up tapes intended for disaster recovery
  purposes that are often not indexed, organized or
  susceptible to electronic searching
• Legacy data remaining from obsolete systems,
  which is unintelligible to current systems
• Deleted data (including fragmentary data) that
  requires forensics for recovery
• Databases designed to create information in
  certain ways that cannot readily create that
  information in other ways
• - Advisory Committee Report at 42

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ACCESSIBILITY OF INFORMATION
More accessible Less accessible
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REVISED RULES FOR DISCOVERY REQUESTS

• Rule 34Document Requests
• Adds Electronically Stored Information (ESI) as
  category of information may be produced
• Rule 33(d)Interrogatories Relying on Business
  Records
• Adds ESI (replaced data compilation)
• ESI is proper type of information to rely upon in
  interrogatory answers
• May have to provide additional information to
  make equally accessible to requesting party
• Rule 45 (Subpoenas) revised to include ESI as
  appropriate information to seek

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FORM OF PRODUCTION

• Entitled to specify form of production (paper vs.
  pdf, etc.)
• If not specified, responding party may produce in
  any form that is reasonably usable OR in that
  which ESI is ordinarily maintained Rule
  34(b)(ii)
• If form specified, responding party must state
  whether they object to that form what form they
  intend to produce
• Also must disclose if other forms available, even
  if requester only asks for one form. In re
  Bristol-Myers Squibb Sec. Litig., 2005 F.R.D. 437
  (D. N.J. 2002) Storch v. IPCO Safety Products,
  Inc., 1997 U.S. Dist. LEXIS 10118 (E.D. Pa. Jul.
  16, 1997).
• Only need produce one form for documents
• Rule 34(b)(iii)

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DOCUMENT REQUEST DRAFTING/RESPONDING

• Broad requests in Broad production out
• Consider narrowing to specific persons files and
  date ranges
• More productive, more likely to stand up
• If object to searching or producing ESI because
  unduly burdensome, must disclose what is not
  being searched and where it is
• Communicate with counsel
• Metadata?
• Quick Peek/Clawback

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HOW DO I RESOLVE DISPUTES ABOUT THE SCOPE OF MY
SEARCH?

• Requesting party should evaluate information from
  accessible sources before asking responding party
  to search and produce information from not
  reasonably accessible sources.
• If they still want you to search, parties should
  confer regarding burdens and costs of
  accessing/retrieving information, needs to
  support good cause showing, and limitations that
  should be imposed.
• If still in dispute
• Motion to Compel
• Motion for Protective Order
• Committee Notes to Proposed Amendments at 14-15.

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HOW WILL COURTS RESOLVE DISPUTES REGARDING SCOPE
OF SEARCH?

• Court balances burden and costs against
  particular circumstances in case. Committee
  notes cite these considerations
• Specificity of discovery request
• Quantity of information available from other and
  more easily accessed sources
• Failure to produce relevant information that
  seems likely to have existed but is no longer
  available on more easily accessed sources
• Likelihood of finding relevant, responsive
  information that cannot be obtained from other,
  more easily accessed sources
• Predictions as to the importance and usefulness
  of information
• Importance of issues at stake in litigation
• Parties resources
• - Committee Notes to Proposed Amendments at 17

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HOW WILL COURTS RESOLVE DISPUTES REGARDING SCOPE
OF SEARCH?

• If dispute regarding accessibility, Court may
  order sampling of offline data to determine
  relevance
• Zubulake I, 217 F.R.D. 309, 324 (S.D.N.Y. 2003)
  (ordered defendant to search and produce five
  backup tapes out of ninety-four backup tapes to
  determine whether relevant information existed on
  the backup tapes that was not present elsewhere)
• Delta Financial Corp. v. Morrison, 2006 N.Y.
  Misc. LEXIS 2232 (S. Ct. N.Y. August 17, 2006)
  (ordered plaintiff to do sample searches to
  determine whether relevant information existed on
  backup tapes cost-shifted entire test run,
  including review, to defendant)

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COST SHIFTING
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COST SHIFTING

• Zubulake factors Hierarchy of importance
• Extent to which request specifically tailored to
  discover relevant information
• Availability of such information from other
  sources
• Total cost of production, compared to the amount
  in controversy
• Total cost of production, compared to the
  resources available to each party
• Relative ability of each party to control costs
  and incentives to do so
• Importance of the issues at stake in the
  litigation
• Relative benefits to the parties of obtaining the
  information
• - Zubulake v. UBS, 217 F.R.D. 309, 322 (S.D.N.Y.
  2003)

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COST SHIFTING

• Zubulake factors followed by
• ND Illinois (Wigington, additional factor
  importance of the requested discovery in
  resolving the issues in the litigation)
• ED Wisconsin (Hagemeyer)
• ND California (OpenTV)
• Zubulake not followed in these jurisdictions
• ND Texas
• Supreme Court of NY, Nassau County

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ACCESS TO DOCUMENTS

• Rule 34(a) includes inspection, copying, testing
• Could permit court to allow direct access to ESI
• In practice, access only permitted if bad faith
  (noncompliance with discovery)
• Rule 33(d)
• Direct access only if that is necessary to
  afford requesting party an adequate opportunity
  to derive or ascertain an answer to the
  interrogatory Committee Notes to Proposed
  Amendments at 28.

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PRIVILEGE ISSUES

• New Rules 26(b)(5) 45(d)(2)(B) establish
  procedure only for addressing inadvertent
  disclosure of privileged materials
• Does not change substantive privilege law (i.e.
  whether production results in waiver)

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PRIVILEGE ISSUES

• New Procedure (Rule 26(b)(5)) for retrieving
  inadvertently-produced material protected by
  privilege or work product
• Privilege holder notifies receiving party
  immediately upon becoming aware of disclosure
• After being notified, receiving party must
  return, sequester, or destroy
• Receiving party cannot use or disclose
  information (if already used or disclosed, must
  take reasonable steps to retrieve)
• Receiving party may promptly present information
  to court under seal for determination of claim
• Whether material privileged still substantive law
  issue

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PRIVILEGE ISSUES

• Proposed FRE 502Formalize subject matter
  waiver of AC/WP privilege for voluntary
  disclosure, exception inadvertent disclosure
• 502(a) Subject Matter WaiverRequires production
  of similar information
• 502(b) Exception Inadvertent disclosureif
  holder of privilege/WP took reasonable
  precautions to prevent disclosure, AND took
  reasonably prompt measures to rectify the error
  (pursuant to F.R.C.P. 25(b)(5)(B).
• Comment period ending Feb. 2007.

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SANCTIONSRULE 37

• Situations that may warrant sanctions
• willful destruction of evidence
• failure to preserve information on backup tapes
• unreasonably or inconsistently enforced document
  retention policy
• negligence in production
• purposeful sluggishness in production
• incomplete inaccurate Rule 26 disclosures

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SANCTIONSRULE 37

• Modified to add safe harbor provision37(f)
  Absent exceptional circumstances, a court may
  not impose sanctions under these rules on a party
  for failing to provide ESI lost as a result of
  routine, good-faith operation of an electronic
  information system.
• Good faith requires litigation hold. If no hold,
  probably no safe harbor for inadvertent deletion.
• Intervention with deletion may be required
  consider availability elsewhere, potential
  relevance
• Committee Notes ordinary computer use results in
  routine alteration deletion of information for
  reasons unrelated to litigation

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WHAT DOES IT ALL MEAN?

• Learn what systems and types of information you
  will be dealing with as soon as possible
• Put guidelines in place now to streamline
  production issues in the future a little extra
  work on the front end may significantly reduce
  costs later
• Be prepared to address all e-discovery issues
  very early in the litigation process have plans
  for your preferred methods of dealing with
  production issues
• Until further case law develops, err on the side
  of retention
• Always remember that demonstrable good faith is
  extremely important

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SELECTED RESOURCES

• Amendments to the Federal Rules of Civil
  Procedure, available at www.uscourts.gov/rules/EDi
  scovery_w_Notes.pdf
• Report of the Advisory Committee on the Federal
  Rules of Civil Procedure to the Committee on
  Rules of Practice and Procedure of the Judicial
  Conference of the United States (May 2005),
  available at www.uscousts.gov/rules/reports.htm
• www.applieddiscovery.com
• www.thesedonaconference.org

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QUESTIONS?
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THANK YOU
64
S. Richard Carden (carden_at_mbhb.com)Jennifer M.
Kurcz (kurcz_at_mbhb.com) MBHB 300 South Wacker
DriveChicago, Illinois 60606-6709312 913 0001
phone [phone] fax www.mbhb.com
www.aplf.org