UNIVERSITY OF HOUSTON

1
First Responses Pitfalls and Practical Tips

• UNIVERSITY OF HOUSTON
• Summer III 2010 5297 E-Discovery

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Overview of The Week

• Building on The Duty of Preserve
• Zubulake v. UBS Warburg
• Coleman Holdings v. Morgan Stanley
• Other cases
• Litigation Holds
• Current state
• Best Practices
• A word on project management

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United Medical Supply Co. v. United States (2007)

• Aside perhaps from perjury, no act serves to
  threaten the integrity of the judicial process
  more than the spoliation of evidence.
• Our adversarial process is designed to tolerate
  human failings -erring judges can be reversed,
  uncooperative counsel can be shepherded, and
  recalcitrant witnesses compelled to testify. But,
  when critical documents go missing, judges and
  litigants alike descend into a world of ad hocery
  and half measures--and our civil justice system
  suffers.

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Electronic Discovery Life Cycle
Cost Containment
Risk Management
Processing
Identification
Collection
Review
Production
Presentation
Preservation
Analysis
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Zubulake v. UBS Warburg

• A total of six decisions.
• Zubulake V
• counsel must take affirmative steps to monitor
  compliance so that all sources of discoverable
  information are identified and searched.
• Attorneys are obligated to ensure all relevant
  documents are discovered, retained, and produced.
  
• Litigators must guarantee that identified
  relevant documents are preserved by placing a
  "litigation hold" on the documents, communicating
  the need to preserve them, and arranging for
  safeguarding of relevant archival media.

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A Thought
In other words, in the electronic era in which we
find ourselves, actions can have long range
unintended effects. Case in point Coleman v.
Morgan Stanley.

• E-Mail is evil in the
• same way that Bert is evil.

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Morgan Stanley Timeline 1

• February 20, 1998 Morgan Stanley pitches the
  success story of Sunbeam.
• February 27, 1998 Merger agreement signed.
• March 18, 1998 Morgan Stanley receives comfort
  letter about Sunbeam detailing expected profits
  for the first quarter.
• March 19, 1998 Morgan Stanley helps write press
  releases about those expected profits.
• March 30, 1998 Sunbeam and Coleman merge.

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Morgan Stanley Timeline 1, cont.

• Heres the problem
• March 18, 1998 Morgan Stanley receives comfort
  letter about Sunbeam detailing expected profits
  for the first quarter.
• March 19, 1998 Morgan Stanley helps write press
  releases about those expected profits.
• These two contain VERY different information.

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Morgan Stanley Timeline 1, cont.

• By the end of April 1998, Sunbeam stock is in
  freefall.
• By the end of November 1998, the stock is
  worthless.

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The Challenge for Coleman

• To prove Morgan Stanley was liable for fraud,
  Coleman needed to show
• Sunbeam had defrauded, and
• Morgan Stanley participated in that fraud.
• Not so easy but

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The 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.
• And the interest was still accruing
• And you may ask yourself
• Well, how did I get here?

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Morgan Stanley Timeline 2

• March 2003 Morgan Stanley tells the court it
  has no emails to produce.
• September 2003 Morgan Stanley acknowledges it
  has not searched its backup tapes.
• December 2003 Coleman files a Motion to Compel.
• April 2004 Court enters an Agreed Order and
  Morgan Stanley produces about 1300 pages.
• June 2004 Morgan Stanley signs a Certificate of
  Compliance and submits to the Court.
• November 2004 Morgan Stanley sends a letter to
  Coleman noting that the previous production was
  not complete.

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Morgan Stanley Timeline 2, cont.

• Coleman is unhappy. So is the Court.
• February 2005
• The Court conducts a series of hearings about
  what documents are available, when they became
  available, and where those documents are.
• Morgan Stanley provides multiple contradictory
  statements from the same people with a weeks
  time.
• Some of these statements are to the Court (in
  hearings and depositions). Some are to the SEC.
• The Court remains unhappy. Really unhappy.

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Morgan Stanley Timeline 2, cont.

• March 1, 2005 Court enters adverse inference
  order against Morgan Stanley.
• (March 10, 2005 Even more recently discovered
  documents produced. Morgan Stanley has now
  identified almost 7000 additional backup tapes to
  be searched.)
• March 23, 2005 Court enters default order
  against Morgan Stanley.
• Late March 2005 Morgan Stanley fires its law
  firm and asks for a continuance to right its
  ship. The Court remains unhappy.

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Pension Committee v. Banc of America

• 2010 WL 184312 (S.D.N.Y.) (January 15, 2010)
• The subtitle Zubulake Revisited Six Years
  Later.
• By now, it should be abundantly clear that the
  duty to preserve means what it says and that a
  failure to preserve records-paper or
  electronic-and to search in the right places for
  those records, will inevitably result in the
  spoliation of evidence.
• Important points
• The case looks at preservation and spoliation
  from the perspective of the plaintiff
• The issue when information that should have been
  preserved by the plaintiffs after the lawsuit was
  filed but was not.

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Pension Committee v. Banc of America

• Discusses/defines levels of culpability --
  negligence, gross negligence, and willfulness in
  the electronic discovery context, identifying
  failures
• the failure to issue a written litigation hold
  (gross negligence)
• the failure to collect information from key
  players (gross negligence or willfulness)
• the destruction of email or backup tapes after
  the duty to preserve has attached (gross
  negligence or willfulness)
• the failure to obtain records from all employees
  (some of whom may have had only a passing
  encounter with the issues in the litigation), as
  opposed to key players (negligence)

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Pension Committee v. Banc of America

• Discusses/defines levels of culpability --
  negligence, gross negligence, and willfulness in
  the electronic discovery context, identifying
  failures
• the failure to take all appropriate measures to
  preserve ESI (negligence).
• the failure to collect information from the files
  of former employees that remain in a party's
  possession, custody, or control after the duty to
  preserve has attached (gross negligence) and
• the failure to assess the accuracy and validity
  of selected search terms (negligence).

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Pension Committee v. Banc of America

• Discusses who should bear the burden of
  establishing the relevance of evidence that is
  lost and who should be required to prove that the
  absence of the missing material has caused
  prejudice to the innocent party.
• Suggests a burden-shifting test in dealing with
  burden of proof and severity of the sanction
  requested.
• Provides guidance on preservation of backup
  tapes.

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Rimkus Consulting v. Cammarata

• 2010 U.S. Dist. LEXIS 14573 (S.D. Tex. Feb. 19,
  2010).
• Judge Rosenthal praised the careful analysis in
  the Pension Committee, but she also noted the
  important differences in viewing claims of
  alleged negligence versus claims of intentional
  destruction of evidence.
• Notable difference Rimkus permitted a jury
  instruction about whether to decide the
  defendants had acted in bad faith, and, even if
  they did, whether to draw adverse inferences.
  Pension Committee had issued a jury instruction
  that required the jury to accept the courts
  finding that the plaintiffs were grossly
  negligent.

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Rimkus Consulting v. Cammarata

• The acts included
• Deleting emails directly relevant to impending
  litigation
• Failing to undertake steps to preserve ESI
  following the commencement of litigation
• Conducting only a superficial search, even
  after numerous discovery requests and court
  orders
• Giving away or destroying laptops that contained
  ESI
• Making no effort to identify alternate sources of
  ESI
• Providing inconsistent testimony regarding
  preservation and spoliation of ESI
• Producing ESI years after applicable requests
• Producing a key email in a format that left no
  indication that six documents had been attached
  and were not produced

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And on May 28, 2010

• Old sentence
• By contrast, the failure to obtain records from
  all employees (some of whom may only have a
  passing encounter with the issues in the
  litigation), as opposed to key players, likely
  constitutes gross negligence as opposed to a
  higher degree of culpability.
• New sentence
• By contrast, the failure to obtain records from
  all those employees who had any involvement with
  the issues raised in the litigation or
  anticipated litigation, as opposed to just key
  players, could constitute negligence.

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And now for some nuts and bolts
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Documenting preservation effort

• Org charts, past and present.
• Interview questionnaires.
• Treat documents as privileged, but prepare
  someone to testify about them.
• Document any actual collection that occurs
  think chain of custody. This issue may be
  critical at the time of trial.

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Basics of a Litigation Hold

• The basics of a litigation hold include
• issuing a hold notice,
• identifying the right custodians (or key
  players),
• coordinating data identification and
  preservation,
• monitoring the implementation of the hold, and
• then releasing the hold.

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Key player interviews

• Interviewers knowledge of the company people
  and products and specific matter.
• Be substantive
• Who do you work for?
• Who did you work for?
• Where are they now?
• Be an active listener learn about the next
  interview.

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Practice Tips

• Memorialize each step of the collection and
  production process to bolster reliability.
• Use every opportunity during discovery to
  authenticate potential evidence.
• For pretrial disclosures under F.R.C.P. 26(a),
  you have 14 days to file objections or possible
  waiver
• Documents produced by opposing party are presumed
  to be authentic burden shifts
• Requests for Admissions
• Request stipulation of authenticity from opposing
  counsel

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Practice Tips

• Be ready to provide with enough information to
  understand the technology issues as they relate
  to the reliability of the evidence at hand.
• Consider case management tools that might assist
  in addressing evidentiary problems concerning
  some of the more complex issues (such as
  dynamic data in a database or what is a true
  and accurate copy of ESI).
• Keep your audience in mind.

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Turn to Hypothetical on p. 109

• Which facts change your opinion on the need to
  preserve?
• When do you start?

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Turn to Hypothetical on p. 110

• Which facts change your opinion on the need to
  preserve?
• When do you start?

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The E-Discovery Process-Overview
PHASE 1 COLLECTION SCOPE
Preservation
Collection
Analysis
Meet Confer
Rule 16 Scheduling Conference
PHASE 2 PLANNING NEGOTIATING
Discovery Plan
PHASE 3 EXECUTION
ESI Processing
Legal Review
Production
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PHASE 1 Actions Decisions
Preservation
Collection
Analysis

• Generate ESI Collection Inventory Report
• Identify File Types of Interest
• Identify Files where Native is Necessary
• Identify non-standard File Types
• Non-Indexable
• Non-Commercially usable
• Internal Proprietary

• Identify Key Players
• Publish Lit Hold
• Interview Key Players
• Determine Relevant ESI Locations with Data Map
• Identify Vulnerable ESI
• Determine Privacy or Confidentiality Issues
• Determine Need for Forensics
• Notify Opposing Counsel?

1. Collect
2. Coordinate with Custodians
3. Maintain Chain of Custody Records

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Preservation Cost Mgmt Opportunities
Consider tiered KP list with different less
rigorous search criteria for lower tiers.
Preservation

• Identify Key Players
• Publish Lit Hold
• Interview Key Players
• Determine Relevant ESI Locations with Data Map
• Identify Vulnerable ESI
• Determine Privacy or Confidentiality Issues
• Determine Need for Forensics
• Notify Opposing Counsel?

Technology tools exist to automate much of this
process.
Use of questionnaires in advance of personal
interviews
Develop a detailed Data Map internally which can
be edited for each matter
If forensic collections are deemed appropriate,
consider whether outside collectors are needed.
If you intend to exclude any significant ESI from
preservation, consider notifying OSC to limit
later spoliation risk.
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Collection Cost Mgmt Opportunities
Collection
Decide if making collection as a means for
preservation is cost-effective.

1. Collect
2. Coordinate with Custodians
3. Maintain Chain of Custody Records

Establish protocol for collections from PCs
which is subject to interruption and can be very
time-consuming. Consider whether to do this over
the network or locally in users offices.
Consider internal collections. Will necessitate
software, hardware, and people.
Perform collections internally with enterprise
applications that track CoC automatically.
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Analysis Cost Mgmt Opportunities
Analysis
Confirm the availability of applications or
resources that can generate these reports
quickly. These can be desktop apps, or provided
by ED vendors.

• Generate ESI Collection Inventory Report
• Identify File Types of Interest
• Identify Files where Native is Necessary
• Identify non-standard File Types
• Non-Indexable
• Non-Commercially usable
• Internal Proprietary

Consider using inclusive rather than
exclusive approach. Identify hi-qty file types
that can be excluded e.g. html
Quantity of these file types can present
significant cost challenges
Non-indexable file types cannot be electronically
searched, so special process e.g. OCR, or
costly human review is necessary
Consider the means to produce these in
reasonably usable forms.
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First Responses Pitfalls and Practical Tips

• UNIVERSITY OF HOUSTON
• Summer III 2010 5297 E-Discovery