E-Discovery Practice Tips Presented by J. Steven Justice, Esq. Partner Taft Stettinius & Hollister LLP 937 -641 -1720 / justice@taftlaw. com
Overview of the Electronic Discovery Process 2
Judicial Impatience with E-Discovery Failures is Growing • 2008 Sanctions were issued in 25% of reported e-discovery cases • 2009 Sanctions were issued in 39% of reported e-discovery cases 2008 2009 • In 2009, the failure to preserve or collect relevant ESI accounted for two-thirds of the reported e-discovery cases in which sanctions were issued. 3
Preservation/ Culpability/Sanctions Pension Committee Rimkus
Preservation/Culpability/Sanctions Pension Committee of the University of Montreal Pension Plan v. Bank of America Securities, LLC, No. 05 Civ. 9016 (SAS), 2010 WL 184312 (S. D. N. Y. Jan. 15, 2010) (Amended Order) issued by Judge Shira A. Scheindlin, which she entitled “Zubulake Revisited: Six Years Later. ” Judge Scheindlin was the author of the five Zubulake decisions that pre-dated the e-discovery amendments to the Federal Rules of Civil Procedure and that influenced their development and adoption. 5
Preservation/Culpability/Sanctions • • • 6 Thirteen Plaintiff investors joined a lawsuit attempting to recover an alleged half-billion dollars in losses resulting from the liquidation of two hedge funds based in the British Virgin Islands. • The opinion focuses on the failure of • the plaintiffs to capture and preserve relevant ESI in their possession or control. The Court essentially established a “standard of care” for e-discovery by assigning to certain acts or omissions various levels of culpability ranging from negligence, through gross negligence, to willfulness. Seven of the Plaintiffs were found to have acted with negligence, and six of the Plaintiffs were found to have acted with gross negligence. Their actions resulted in the probable loss or destruction of relevant ESI. The Court ordered further discovery, monetary sanctions, and a spoliation of evidence instruction for the jury. The sanctions were serious even though the Court stated at the outset that the “case did not present any egregious examples of litigants purposefully destroying evidence. ”
Preservation/Culpability/Sanctions What we learn from Pension Committee: Issue written, not oral litigation hold letters. • Issue them widely to employees that may have received or generated ESI relevant to the dispute. • For prospective plaintiffs, they should be issued no later than when outside counsel is retained. For defendants, they should be issued when litigation is reasonably anticipated. 7 • Litigation holds must instruct employees and other potential custodians not to destroy relevant ESI. • Failure to issue a written litigation hold constitutes “gross negligence. ”
Preservation/Culpability/Sanctions What we learn from Pension Committee: Search broadly in your preservation/collection efforts, both in terms of custodians and forms of ESI. • Must preserve/collect potentially relevant ESI from employees who were key players in the dispute. • Even the failure to preserve/collect the potentially relevant ESI of employees with minor or redundant roles could be negligent. 8 • Failure to preserve/collect potentially relevant ESI of former employees or employees who may have changed positions in the company can also lead to Court scrutiny. • Keep in mind the variety of forms of ESI and collect all forms of potentially relevant ESI.
Preservation/Culpability/Sanctions What we learn from Pension Committee: Preservation/collection must be adequately supervised. • Only persons who are trained in preservation and collection of ESI for purposes of discovery should control these activities. Outside counsel or in-house counsel with such training should control the preservation/collection activities. • Delegating these responsibilities to unsupervised, inexperienced assistants or paralegals, or allowing employees to decide what should be preserved and produced can result in sanctions if errors are made. 9
Preservation/Culpability/Sanctions What we learn from Pension Committee: Make a written record of the preservation/collection activities. • This is the who, what, when, where, how, and why of preservation and collection. – – – When was it necessary to preserve potentially relevant information? What was preserved? Who collected the information? How was it collected? From whom was the information collected and why? Why were other potential custodians excluded? • All of this information will be invaluable if there is a later challenge to the preservation/collection process. 10
Preservation/Culpability/Sanctions What we learn from Pension Committee: • Potentially relevant ESI must be collected and preserved even if there is a discovery stay. • Do not oversell the reliability of your preservation/ collection efforts. – You should assume that given the volume of ESI, some oversights will occur. Beware of the Affidavit overselling the accuracy of the preservation/collection efforts because it damages credibility with the Court. 11
Preservation/Culpability/Sanctions What we learn from Pension Committee: • Preservation/Collection of potentially responsive ESI must occur early and be taken seriously. 12
Preservation/Culpability/Sanctions What we learn from Pension Committee: Judge Scheindlin stated that parties should “anticipate and undertake document preservation with the most serious and thorough care, if for no other reason to avoid the detour of sanctions. ” Such failures become mini-trials in themselves consuming enormous time and monetary resources, and they can be avoided with appropriate care and effort. 13
Preservation/Culpability/Sanctions Keep in mind that a “gross negligence” or “intentional/willful” culpability determination could affect insurance coverage depending on the type of coverage and the level of culpability necessary to trigger coverage. 14
Preservation/Culpability/Sanctions (Rimkus) • Rimkus Consulting Group, Inc. v. Cammarata, et al. , No. H-07 -0405, 2010 WL 645253 (S. D. Tex. , Feb. 19, 2010). – This decision was issued by Judge Lee H. Rosenthal, who is the Chair of the Standing Committee on Rules of Practice and Procedure and the Advisory Committee on Civil Rules of the Judicial Conference of the United States. – Unlike Pension Committee, this case involved allegations that the defendants had intentionally spoliated or destroyed evidence by destroying emails, attachments, and other ESI at a time when they knew the ESI was relevant to anticipated or pending litigation. The defendants also allegedly concealed and delayed providing information in discovery that would have revealed their spoliation. 15
Preservation/Culpability/Sanctions (Rimkus) – Judge Rosenthal decided that there was sufficient evidence from which a jury could find that the ESI was intentionally deleted to prevent its use in anticipated or pending litigation. – Ultimately, however, Judge Rosenthal decided not to impose the severest of sanctions, e. g. , entering judgment for the Plaintiff, striking pleadings or imposing issue preclusion, because the prejudice was mitigated to some extent when some of the destroyed ESI was obtained through third-party subpoenas. – Instead, she decided that the appropriate sanction was to allow the jury to hear the evidence of the defendants’ misconduct and to give the jury an adverse inference instruction that would inform the jury that if it found that the defendants intentionally deleted evidence to prevent its use in anticipated or pending litigation, the jury could, but was not required to, infer that the lost evidence would have been unfavorable to the defendants. 16
Preservation/Culpability/Sanctions (Rimkus) – Judge Rosenthal also awarded the plaintiff its attorneys’ fees and costs it incurred in identifying and revealing the spoliation and in litigating the consequences of it. – In the Second Circuit, where Pension Committee was decided, (also in the First, Fourth, and Ninth Circuits) severe sanctions have been imposed for the mere negligent destruction of evidence if there is significant prejudice to the opposing party. – In the Fifth Circuit (also in the Seventh, Eighth, Tenth, Eleventh, and D. C. Circuits) intentional or “bad faith” destruction of evidence is necessary for the issuance of such severe sanctions, including an adverse jury inference. 17
Preservation/Culpability/Sanctions (Rimkus) – In essence, Rimkus has a tempering effect on the culpability and sanctions analysis in Pension Committee. Both Courts issued adverse jury inference instructions and made the spoliating parties pay for attorneys’ fees and costs of the opposing parties. However, the adverse jury inference instruction in Rimkus, where the misconduct was intentional, was less punitive than the adverse jury inference instruction in Pension Committee, where the misconduct was only negligent or grossly negligent. 18
Preservation/Culpability/Sanctions Take Away If you make mistakes in collection or preservation of relevant ESI, you need to be aware of the culpability and sanctions paradigm in the Circuit where you are located, and you need to be prepared to show the prejudice can be mitigated. 19
Privacy/ Attorney-Client Privilege Quon Stengart Alamar
Privacy/Attorney-Client Privilege (Quon) • Quon v. Arch Wireless Operating Co. , Inc. , et al. , 529 F. 3 d 892 (9 th Cir. 2008) (cert. granted sub nom. City of Ontario v. Quon) – Oral Argument was held before the U. S. Supreme Court on April 19, 2010. We are awaiting the decision. – A few police officers who were members of the City of Ontario, California’s SWAT team and the wife of one of the officers sued the City of Ontario and Arch Wireless—a pager service provider --claiming that their Fourth Amendment rights had been violated when the police department obtained from Arch Wireless, and read, transcripts of their text messages that had been sent over police department-issued pagers. The plaintiffs also claimed that Arch Wireless’ provision of the text messages to the police department violated the federal Stored Communications Act. Apparently, some of the text messages were sexually explicit and did not appear to be work related. 21
Privacy/Attorney-Client Privilege (Quon) – The police department had a general, written “Computer Usage, Internet, and Email Policy” applicable to all employees, but it did not expressly cover text messages sent by pagers. The policy informed the employees that they “should have no expectation of privacy or confidentiality” when using such departmental resources because they would be periodically reviewed by the City. The officers received this policy and signed an acknowledgement form. Later, when the officers were issued pagers, they were told by the police department that pager messages were considered as email and would fall under the department’s written policy. 22 – The department also had an informal policy regarding pager use that seemed to conflict with the written policy. Under the contract with Arch Wireless, each pager was allotted 25, 000 characters, after which the City had to pay overage charges. If there were overage charges, the practice was that the employee would pay the overage charges. Specifically, the Commanding Officer in charge of the pagers told Officer Quon that if Quon paid the overage charges the department would not read the text messages to find out how many were business and how many were personal. So, Quon paid the overage charges expecting that the police department would not inspect or read them.
Privacy/Attorney-Client Privilege (Quon) – Later, in the face of continued overages, the Commanding Officer got tired of being a bill collector, so the police department decided to audit the text messages sent by pager to determine how many were work related and how many were personal. – The police department obtained the transcripts of the text messages from Arch Wireless and after determining that a number of them were sexually explicit, the matter was turned over to internal affairs to determine if Officer Quon and the other plaintiff officers with pager overages were wasting City time. – Under these facts, the Ninth Circuit held that the search of Officer Quon’s text messages by the police department violated the Fourth Amendment. 23
Privacy/Attorney-Client Privilege (Quon) • The Court held that: – Users of text messaging services such as those provided by Arch Wireless have a reasonable expectation of privacy in the text messages stored on the service provider’s network. – The search was unreasonable because there were less intrusive ways to verify the efficacy of the 25, 000 character limit without violating the plaintiffs’ Fourth Amendment Rights. – Arch Wireless was liable under the federal Stored Communications Act, 18 U. S. C. § 2702(a)(1), because it knowingly turned over the text message transcripts to the City, which was not an “addressee or an intended recipient” of the communication. 24
Privacy/Attorney-Client Privilege (Stengart) • Stengart v. Loving Care Agency, Inc. , 990 A. 2 d 650 (N. J. March 30, 2010) – In anticipation of discovery, Loving – This case presented novel Care Agency hired a computer forensic questions about the extent to expert to recover all files stored on the which an employee can expect laptop computer including the webprivacy and confidentiality in based emails. personal emails with her attorney, – Loving Care’s attorneys then reviewed which the employee sent and the emails and used the information received using a personal, obtained from them in the course of password-protected, web-based discovery. email account through a computer belonging to the employer. – Stengart’s attorney demanded the – Ms. Stengart filed an employment discrimination lawsuit against her employer and others. 25 return of all of the emails exchanged with Stengart using the Yahoo account on the grounds of attorney-client privilege.
Privacy/Attorney-Client Privilege (Stengart) – Loving Care alleged that the attorney-client privilege was waived because its electronic communications policy stated that emails and other internet use and communications were company business records. – The trial court agreed with Loving Care that in light of the company’s written policy on electronic communications, Stengart waived the attorney-client privilege by sending the emails on a company computer. 26 – The intermediate Appellate Court reversed. It balanced the enforceability of the company’s policy with the attorney-client privilege and determined that the policy must give way. It concluded the emails were privileged, and it also ruled that Loving Care’s counsel violated the Rules of Professional Conduct by reading and using the privileged documents.
Privacy/Attorney-Client Privilege (Stengart) – The New Jersey Supreme Court affirmed the Appellate Court and held that Stengart could reasonably expect that email communications with her lawyer through her personal email account would remain private, and that sending and receiving them via a company laptop did not eliminate the attorney-client privilege that protected them. The Court also held that by reading emails that were at least arguably privileged and by failing to notify opposing counsel promptly about them, Loving Care’s attorney breached the Rules of Professional Conduct. 27
Privacy/Attorney-Client Privilege (Stengart) – The Court found Stengart’s subjective expectation of privacy to be reasonable because she used her personal email account instead of the company email account, and she did not save her personal email account password on the laptop computer. – The Court also found her expectation of privacy to be objectively reasonable because the company’s written policy did not expressly address the use of personal, web-based email accounts accessed through company equipment, and it did not warn employees that the contents of emails sent via personal accounts could be reviewed by the company. – Because Stengart’s expectation of privacy was deemed reasonable, the emails were deemed confidential and the attorney-client privilege was not waived. 28
Privacy/Attorney-Client Privilege (Stengart) – Lest you think a clearer company policy could save the day in NJ, note the following statement by the Court: “Because of the important public policy concerns underlying the attorney-client privilege, even a more clearly written company manual—that is, a policy that banned all personal computer use and provided unambiguous notice that an employer could retrieve and read an employee’s attorney-client communications, if accessed on a personal, password-protected email account using the company’s computer system—would not be enforceable. ” 29
Privacy/Attorney-Client Privilege (Alamar) • Alamar Ranch, LLC v. County of Boise, 2009 WL 3669741 (D. Idaho. Nov. 2, 2009) – In pertinent part, this case is very similar to Stengart, only in this instance an employee exchanged emails with the employee’s attorney using the employer-company’s computer and the company email address. – Jeri Kirkpatrick was a non-party that opposed Alamar’s construction of a treatment facility for troubled youth. – Alamar served subpoenas on Ms. Kirkpatrick and her employer, the Idaho Housing and Finance Association (IHFA), to obtain copies of relevant emails Kirkpatrick had sent or received using her work computer and her work email address. The IHFA had stored those emails on its server, and it produced them to Alamar in response to the subpoena. Among the emails, were emails exchanged between Kirkpatrick and her attorney that related to the Alamar dispute. 30
Privacy/Attorney-Client Privilege (Alamar) – Ms. Kirkpatrick and her attorney claimed that the emails should be returned because they fell under the attorney-client privilege. – The IHFA had an employee policy guideline that stated that the IHFA “reserved and intends to exercise the right to review, audit, intercept, access, and disclose all messages created, received, or sent over the email system for any purpose. ” – Ms. Kirkpatrick was aware of the policy, but claimed that she was unaware that IHFA ever actually monitored her emails. – The Alamar Court distinguished the application of Stengart because Kirkpatrick did not attempt to protect the confidentiality of her email messages by using a web-based, passwordprotected email account. She simply used her work email. 31
Privacy/Attorney-Client Privilege (Alamar) – Furthermore, the Court stated: • “It is unreasonable for any employee in this technological age-and particularly an employee receiving the notice Kirkpatrick received-to believe that her emails, sent directly from her company's email address over its computers, would not be stored by the company and made available for retrieval. ” – Accordingly, the Court held that: • Kirkpatrick waived the privilege for the email messages that she sent from her work computer, using her work email address, to her attorney. • Likewise, the emails sent from Kirkpatrick’s attorney to her were not privileged because the attorney sent them to Kirkpatrick’s work email address, Jeri. K@IHFA. org, which, according to the Court, clearly put the attorney on notice that he was using her work email address. 32
Privacy/Attorney-Client Privilege (Alamar) • The Court said: – “Employer monitoring of work-based emails is so ubiquitous that [the attorney] should have been aware that the IHFA would be monitoring, accessing, and retrieving emails sent to that address. Given that, the Court finds that [the attorney’s] emails sent to Kirkpatrick's work email are likewise unprotected by any privilege. ” 33
Privacy Take Aways • Workplace privacy with respect to ESI is up in the air at the moment. • Company policy must: – Express and be specific to the covered media. – Be communicated and consistently enforced. • Assuming appropriate policy in place, workplace email on company computer using company email address likely creates no expectation of privacy and no attorney-client privilege. 34 • Workplace email with an attorney on company computer using password protected, private, web-based email account probably trumps an appropriate policy. • Attorneys beware about how you handle such ESI and how you communicate with your clients, including the email address that is used!
Production of Foreign ESI Access. Data Corp. Gucci
Production of Foreign ESI (Access. Data Corp. ) • Access. Data Corp. v. ALSTE Tech. GMBH, No. 2: 08 cv 569, 2010 WL 318477 (D. Utah Jan. 21, 2010) – Plaintiff Access. Data sought discovery from Defendant ALSTE, a German company. – ALSTE objected to the discovery, in part, because it alleged that the disclosure of certain third-party personal information would violate German Data Protection Law and the German Constitution subjecting ALSTE to civil and criminal penalties. 36 – Access. Data moved to compel the production of the requested information. – It is important to keep in mind, that generally speaking, privacy is protected much more in Europe than in the United States.
Production of Foreign ESI (Access. Data Corp. ) – Nevertheless, the Court granted Access. Data’s motion to compel and order ALSTE to produce the responsive third-party personal data. – The Court held that even though ALSTE asserted that providing personal information about its customers and employees would be a “huge breach of fundamental privacy laws in Germany, ” ALSTE failed to demonstrate that the assertion was true. It did not even cite to the particular provisions of the German Data Protection Act or the German Constitution that would prohibit the requested disclosure. – Relying on Societe Nationale Industrielle Aerospatiale v. United States District Court, 482 U. S. 522, 544 n. 29 (1987), the Court also held that even if the German statute or Constitution prohibited the disclosure of the personal information, the Supreme Court already held that “[i]t is well settled that such [blocking] statues do not deprive an American Court of the power to order a party subject to its jurisdiction to produce evidence even though the act of production may violate that statute. ” 37
Production of Foreign ESI (Gucci) • Gucci America, Inc. v. Curveal Fashion d/b/a Replicasi. com and Semelur. com, et al. , No. 09 Civ. 8458(RJS)(THK), 2010 WL 808639 (S. D. N. Y. March 8, 2010) – This trademark infringement case is very similar to Access. Data. – Plaintiff Gucci served a subpoena on a third-party foreign bank called United Overseas Bank Limited, Singapore (“UOB”) requesting the production of certain electronic banking records regarding the Defendants’ Malaysian bank accounts. – UOB refused to comply with the subpoena on the grounds that doing so would violate Malaysian banking secrecy laws. 38 – This Court also relied on Societe Nationale, and it analyzed the question using a multi-part test set forth in the Restatement (Third) of Foreign Relations Law of the United States § 442(1)(c), which is followed in the Second Circuit, but the Court noted that the fifth factor, which examines the competing interests of the United States and Malaysia, was of greatest importance in determining whether to defer to the conflicting laws of the foreign jurisdiction.
Production of Foreign ESI (Gucci) – Unlike ALSTE in Access. Data, UOB’s Malaysian counsel did provide information showing that disclosure of the requested information could result in significant civil and criminal penalties under Malaysian law—up to three years of prison and $900, 000 in fines. – Still, after balancing all of the factors, the Court concluded that UOB had to comply with the subpoena. The Court said that the documents were vital to the litigation, the requests were direct and specific, the documents were not easily obtained through alternative means, the interest of the United States outweighed that of Malaysia under the circumstances, and the likelihood that UOB would face civil or criminal penalties was speculative. 39
Production of Foreign ESI Take Aways • Foreign companies that are resisting discovery must be able to describe why producing the discovery violates the foreign law and provide some proof as to the likelihood that the foreign sanctions will be enforced. • Even if foreign companies provide such detail regarding the foreign conflicting laws, U. S. Courts still often order the production of the information. 40
Sanctions Against In-House Counsel Swofford
Sanctions Against In-House Counsel (Swofford) • Swofford v. Eslinger, No. 6: 08 -cv-00066 -Orl-35 DAB, 671 F. Supp. 2 d 1274 (M. D. Fla. Sept. 28, 2009) – This case is significant because the Sheriff Department’s In. House Attorney was found liable for spoliation of pertinent ESI, and the In-House Attorney personally was held jointly and severally liable for the attorneys’ fees and costs associated with motion practice. – The background facts surrounding Swofford’s claim are interesting!! 42
Sanctions Against In-House Counsel (Swofford) – Swofford sued the Sheriff in his official capacity and Officers Morris and Remus in their individual capacities pursuant to § 1983 for excessive force and unlawful entry in violation of the Fourth Amendment, and Swofford also asserted a number of state common law claims. – Procedurally, the facts revealed that Swofford’s attorney sent several letters to the Sheriff’s Office requesting that all evidence be preserved, including electronic evidence. – The Sheriff’s Office acknowledged that it received the preservation notices, but it never issued any litigation hold to suspend practices that could lead to the destruction of evidence relevant to the case. 43
Sanctions Against In-House Counsel (Swofford) – In pertinent part, the Sheriff’s Office General Counsel said that the only action taken in response to the preservation notices was that a paralegal in his office reviewed the letters and forwarded copies of them to six senior Sheriff’s Office employees, including the Sheriff. The General Counsel said that he thought copying the letters and sending them to the senior employees would cover the matter and nothing else needed to be done. Officers Morris and Remus did not receive the letters and were not instructed to preserve evidence. None of the senior employee who received the copies of the letters did anything to see that relevant evidence was preserved. – As a result, among other things, Officer Remus’ laptop computer containing relevant ESI was destroyed, and relevant emails spanning a year after the shooting were deleted. 44
Sanctions Against In-House Counsel (Swofford) – Swofford moved for sanctions for spoliation of evidence, and the Court found that the Defendants acted in bad faith, including the General Counsel, granted the motion, and awarded sanctions. – With respect to the General Counsel, the Court stated that nothing other than bad faith could be inferred from the facts. – The Court found that the General Counsel: • Received the preservation letters • Represented the Sheriff's Office • Represented Officers Remus and Morris until outside counsel was retained • Failed in the interim to preserve the evidence 45
Sanctions Against In-House Counsel (Swofford) – In fact, the Court stated that the General Counsel admitted that he had never read the pertinent portions of the Federal Rules of Civil Procedure "to ascertain on even a rudimentary level what his and his client's obligations were in this regard. " – In terms of sanctions, the Court awarded Swofford adverse jury instructions for both the destruction of the emails and the laptop computer. The Court also held the General Counsel jointly and severally liable for Swofford’s attorneys’ fees and costs, which were substantial. 46
Sanctions Against In-House Counsel Take Away • In-House Counsel are not immune from discovery sanctions, including personal sanctions, for the failure to properly handle ESI in litigation. Hiring Outside Counsel does not necessarily absolve In-House Counsel of responsibility for the collection and preservation of relevant ESI. 47
Failure to Cooperate in E-Discovery Bray & Gillespie Mgmt.
Failure to Cooperate in E-Discovery (Bray & Gillespie) • Bray & Gillespie Mgmt. , LLC v. Lexington Ins. Co. , No. 6: 07 -cv-0222 -Orl-35 KRS, 2010 WL 55595 (M. D. Fla. Jan. 5, 2010) – Defendant served discovery requests on Plaintiff seeking production of certain ESI related to Plaintiff’s business interruption damages claims. – Court ordered Plaintiff to produce the requested ESI three times, threatening to dismiss Plaintiff’s entire case and to sanction its counsel. 49 – Close to trial, 28 months after the ESI was requested, and 20 months after the Court first ordered that it be produced, the Court learned that Plaintiff had never even consulted its software provider to attempt to retrieve the archived documents.
Failure to Cooperate in E-Discovery (Bray & Gillespie) – The Court also learned that the archived files were likely retrievable with minimal effort and at minimal expense and could likely render all of the requested ESI available for review for the relevant time period. Court was not happy. 50 – The Court found that the Plaintiff acted willfully and with bad faith. The Court dismissed with prejudice all claims against the Defendant for damages arising from or related to any alleged interruption of business at the Treasure Island Property caused by Hurricane Jeanne, and the Court ordered Plaintiff to pay $75, 000 to the Defendant for the expenses it incurred in pursing the motion for sanctions.
Failure to Cooperate in E-Discovery (Bray & Gillespie) Take Aways • Failure to cooperate, search for, and produce ESI that is reasonably available and within a party’s custody or control can result in serious consequences. • A one-time offense can be bad enough, but a repeat offender is asking to get whacked. 51
Questions & Answers
for Attending Today Please remember to fill out your CLE Registrations. Presentations can be found on our websites: ACC America: www. acc. com/chapters/swohio Taft: www. taftlaw. com Fios, Inc. : www. fiosinc. com
Скачать презентацию E-Discovery Practice Tips Presented by J Steven Justice
7dbb224c4f07ee034465a8e1aa792067.ppt