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• In-house Counsels concerned about Social Media Challenges
• Personal Jurisdiction established by way of Email transmission
• A $6 Million Discovery bill is NOT an outlier
• Federal Rules of Civil Procedure Amendments
• Fourth Circuit allows Punitive Damages without Proof of actual damages for plaintiff after employer Hacked into former employee’s AOL account
• An expensive eDiscovery lesson taught by the D.C. Circuit
• 2008: Five Groundbreaking cases In Ediscovery
• Defendant pays for not being thorough, efficient, and timely in E-Discovery
• Eight ways to Prepare for E-discovery in a pinch
• Is FRE 502 all it’s cracked up to be? Not so much
• Ediscovery Boot Camp
• SEC steps up its enforcement actions as it defines its priorities
• Litigation Holds
• The Glory Days are Over….we are now entering the Renaissance of litigation practice
• Ediscovery: Two different Judges, different reasoning, same conclusion, ease the discovery process
• 30(b)(6) witness sanctioned for lack of Knowlege about ESI systems
• New Federal Rule Of Evidence 502
• ABA Opines on Outsourcing
• The Sedona Conference working paper on E-Discovery of Inaccessible Information
• Judge Paul Grimm Gives Guidance on How to Conduct keyword searches

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SEC steps up its enforcement actions as it defines its priorities

November 26th, 2008   Filed Under E-discovery, legal news  

One thing is going up in this faltering economy, the number of enforcement actions being initiated by the SEC.  The number of SEC enforcement actions are at an all-time high.  By the close of this fiscal year the SEC had brought a total of 671 enforcement actions in this year alone.  Insider trading cases are  up 25%, market manipulation related cases up 45%, and there are at least 50 pending sub-prime related investigations.  Insider trading and market manipulation cases have reached record highs.  In the SEC’s Fiscal 2008 Enforcement Results there is a clear upward trend in investigations and enforcement actions.  Further, with the new Congress promising to increase regulation of the financial markets it is not implausible that these numbers will increase even more in 2009.  In a recent statement issued by the SEC, it’s evident that the regulatory body will require much more information from corporations in a much shorter turn-around time.  Three of the goals that the SEC outlined as its priorities are:

• Aggressively Combating Fraud and Market Manipulation Through Enforcement Actions
• Taking Swift Action to Stabilize Financial Markets
• Enhancing Transparency in Financial Disclosure

Litigation Holds

November 25th, 2008   Filed Under E-discovery, IT, Litigation holds  

Knowing when to issue a litigation hold is key to a successful litigation strategy.  The cost of a mistake can be significant.  This is an interesting article about the cost of a misstep on this front.

In the court case Consolidated Aluminum v. Alco, the defendant suffered monetary sanctions for failing to properly apply litigation holds. In spite of the fact that Alco had a litigation hold policy in place, someone was asleep at the wheel. There were several serious issues: Alco issued the holds after litigation had begun, did not make the holds broad enough, and did not enforce holds when key employees deleted relevant data.

One of the federal rules of civil procedure’s strictures requires that companies demonstrate consistent litigation hold practices. This does not mean that litigation holds must be issued willy-nilly. No one (with the possible exception of opposing counsel) believes that a company must lock up all its active data in case of potential relevance, no matter how slight. However, litigation holds do come into serious play when looming litigation is “reasonably anticipated” and when data has high potential relevance, no matter where it may be located.

This area is another example where human oversight and e-discovery technology can and should work together. Attorneys and IT should work together to decide what electronically stored information (ESI) should be retained for upcoming discovery actions, which individuals have custody of the relevant ESI, and where the files are located — fileshares, email servers, archives, laptops. Once these decisions are made, then the firm can use e-discovery tools to search for and hold the relevant data.

The Glory Days are Over….we are now entering the Renaissance of litigation practice

November 16th, 2008   Filed Under E-discovery, legal news  

Remember in the glory days when corporations would shrug off litigation cost as a possible cost of doing business rather than a definite cost of doing business.   Corporate legal departments have begun to recognize the need to be more proactive in meeting regulatory and legal requirements.  Such departments are also looking for cost-effective ways of meeting the litigation demands of the corporation.

The current financial crisis has been an additional wake up call for many who have not yet got their information management house in order.  A poorly managed information system can reak havoc with risk management causing litigation cost to rise three or four times the amount it would be if there is an effective, efficient system in place prior to the litigation.  With the increasing cost and decreasing timelines of most litigation, it is critical that a corporation has a rapid response system in place for assessing risk, collecting data, and processing and reviewing information.  Run-a-way e-discovcery can make a huge dent in a corporation’s budget.  However, there is a way around it.  The solution is planning for a litigation before it hits.

Ediscovery: Two different Judges, different reasoning, same conclusion, ease the discovery process

November 12th, 2008   Filed Under E-discovery  

Leonard Deutchman of Pennsylvania Weekly wrote an interesting article about the Mancia v. Mayflower Textile Service Company and the Containment Technologies Group v. American Society of Health Systems Pharmacists cases.

Two thoughtful jurists issued opinions in discovery matters that took opposite tacks in different situations to achieve the same goal. 

In Mancia v. Mayflower Textile Service Company, No. 1:2008cv00273 (D.Md. Oct. 15, 2008), the well-respected Judge Paul W. Grimm held that the party requesting discovery must make tailored requests while the producing party must supply specific responses as to why a request may be overboard, inaccessible or otherwise burdensome.

In Containment Technologies Group v. American Society of Health Systems Pharmacists, No. 1:2007cv00997 (S.D. Ind. Oct. 10, 2008), Judge Tim A. Baker held that a producing party may broadly include e-discovery within a protective order and does not have to review each part of each file before so doing. The specificity required in Mancia and its absence in Containment Technologies both have the same goal, which was one of the goals of the 2006 Amendments to the Federal Rules: to move along the discovery process. They also both shed light on the practices emerging from the amendments as well as illustrate one tenet of those practices, namely, that in e-discovery practice, informed, smart answers win.

30(b)(6) witness sanctioned for lack of Knowlege about ESI systems

October 25th, 2008   Filed Under E-discovery, Rule 30(b)(6)  

 Ideal Aerosmith, Inc. v. Acutronic USA, Inc., 2008 U.S. Dist. LEXIS 85619 (W.D. Pa. Oct. 23, 2008)

The defendant argued that information regarding ” [it’s] e-mail systems, other computer systems, and backup policies and procedures” was irrelevant even though defendant had only produced one relevant document when plaintiff had identified, through other documents produced during discovery, an additional 24 relevant emails. Defendant further argued that the only source of such information was an independent consultant in Switzerland who refused to testify.  The court opined that Rule 30(b)(6) requires that, “[t]he designated deponent has a duty of being knowledgeable on the subject matter identified in the area of inquiry. A corporation must prepare its selected deponent to adequately testify not only on matters known by the deponent, but also on subjects that the entity should reasonably know.” Id. at *7 (citation omitted). The court went on to to say:

In modern litigation, discovery almost always involves the production of documents stored on computers, servers and other electronic facilities. It is commonplace in litigation to inquire of a corporate defendant the steps it took to find and produce documents relating to the litigation, as well as the corporation’s electronic document storage and retrieval systems, in order to ensure that discovery was diligently completed. Where a defendant, like Acutronic Switzerland, has failed to produce any meaningful documents in response to Plaintiff’s discovery requests, the need for and relevance of this inquiry is unquestionable.

The court opined further that it could “see no reason why [the deponent] could not have prepared himself, either through documentation prepared by [the consultant] or conversations with him, to answer even the foundational questions posed by counsel for Plaintiff at the 30(b)(6) deposition.” Id. at *10-*11  The court concluded by sanctioning the defendant under Rule 37(d) and ordering him to pay one third of defendant’s expenses incurred preparing for and attending the 30(b)(6) deposition, produce a knowledgeable 30(b)(6) witness within 14 days, and pay defendant’s attorney fees and expenses incurred in connection with the instant motion.

Read the entire opinion here: Ideal Aerosmith, Inc. v. Acutronic USA, Inc., 2008 U.S. Dist. LEXIS 85619 (W.D. Pa. Oct. 23, 2008)

New Federal Rule Of Evidence 502

September 21st, 2008   Filed Under E-discovery, Federal Rule of Evidence 502  

Federal Rule of Evidence 502 goes into effect immediately.

Make no mistake about it. For every lawyer who ever feared sending privileged communications to a non-privileged person — in particular the other side — the president’s recent signature on an amendment to Federal Rule of Evidence 502 is a godsend.

One of the great fears of such an accidental mistake is now substantially ameliorated. And the relief does not come any too soon. In a world of electronic discovery and the possibility of sending an e-mail to the wrong person by looking at one’s computer keyboard cross-eyed, Rule 502 will now assure the errant lawyer that the mere act of sending privileged documents to an unintended recipient will not act as a waiver of the subject matter of the inadvertently disclosed communications so long as the lawyer took reasonable care in the review of the documents.

Indeed the legislation goes as far as jurisprudentially possible to provide this protection not just in federal court but in certain state court proceedings.

Four questions not answered by Rule 502:

First, the new rule does not tell us what happens with respect to the peripatetic documents themselves. One might breathe a little easier knowing the other side cannot ask for another thousand related documents simply because the other side received two or three. But the two or three in and of themselves might reveal juicy information. Can the opposing counsel read them? Share them with opposing counsel’s client? Use them in deposition and at trial?

The second question unanswered by Rule 502 — whether receiving counsel has any obligation to notify the producing party of the inadvertent disclosure……

Third, Rule 502 tells us nothing about any duty on the part of the lucky lawyer to return the privileged documents…..

Fourth, Rule 502 provides no protection for the lawyer from the lawyer’s client. It is our duty to protect the client’s privilege…. 

The Sedona Conference working paper on E-Discovery of Inaccessible Information

July 28th, 2008   Filed Under E-discovery, legal news  

Recently the Sedona Conference, of which this writer is a member, released its working paper titled Preservation, Management and Identification of Sources of information that are Not Reasonably Accessible.  A summary of the guidlines are as follows:

Guideline 1. Where litigation is anticipated but no plaintiff has emerged or otehr considerations make it impossible to initiate a dialogue, the producing party make preservation decisionsby a process conforming to that set forth here.

Guideline 2. As soon as feasible, preservation issues should be openly and coopertatively discussed in sufficient detail so that parties can reach mutually satisfactory accomodation and also evaluate the need, if any, to seek court or assistance.

Guideline 3. In conjunction with the initial discussions or where appropriate in response to discovery request requests, parties should clearly identify the inaccessible sources reasonably related to the discovery or claims which are not being searched or preserved.

Guideline 4. A party should exercise caution when it decides for business reasons to move potentially discoverable information subject to a preservation duty from accessible to less accessible data stores.

Guideline 5. It is acceptable practice, in the absence of an applicable preservation duty, for entities to manage their information in a way that minimizes accumulations of inaccessible data, provided that adequate provisions are made to accomodate preservation imperatives.

See PDF version of guidelines here.

Judge Paul Grimm Gives Guidance on How to Conduct keyword searches

July 17th, 2008   Filed Under E-discovery, legal news  

Recently Judge Paul Grimm provided some insight as to the best way to conduct keyword searches.  In Victor Stanley, Inc. v. Creative Pipe, Inc., 2008 WL 2221841 identifies the primary issues in e-discovery and how to comply with the legal demands of your case without being over or under inclusive in the process.  The two approaches suggested by Judge Grimm are to use a “collaborative” approach or a “best practices” approach.  The “collaborative approach” involves both parties agreeing to a search methodology and its implementation.  The second is the “best practices” approach advocated by the Sedona Conference where both parties demonstrate that they have taken reasonable measures to reduce over and under production errors.

Mikron Indus. v. Hurd Windows & Doors, Inc., Protective order denied

June 8th, 2008   Filed Under E-discovery, FCRP 26(c)  

Mikron Indus. v. Hurd Windows & Doors, Inc., 2008 U.S. Dist. LEXIS 35166 (W.D. Wash. Apr. 21, 2008). 

“This matter comes before the Court on defendants’ “Motion for Protective Order Regarding ESI.”  . . . Relying on Fed. R. Civ. P. 26(b)(2), defendants ask the Court to shift the costs of defendants’ remaining electronic discovery to plaintiff. Defendants allege that searching through their electronically stored information (”ESI”) would generate substantial costs and yield cumulative results. Aside from the cost-shifting request, defendants raise no objection to discovery of their ESI.  In response, plaintiff contends that defendants have not reasonably complied with discovery requests to date. In particular, plaintiff continues to seek communications relating to the inception and termination of plaintiff’s business relationship with defendants. Having reviewed the memoranda, declarations, and exhibits submitted by the parties, the Court finds that defendants failed to discharge their meet and confer obligation in good faith, as required by Fed. R. Civ. P. 26(c). Accordingly, defendants’ motion for protective order regarding ESI is DENIED for failure to comply with Rule 26(c).”

Trend: IT transferring the Burden of E-Discovery back to Legal Departments

May 5th, 2008   Filed Under E-discovery, IT  

In recent years since E-discovery has become a major concern of most corporate legal departments, a significant portion of the burden of producing relevant documents have rested on the IT departments of such corporations.  IT professionals are required to retroactively search through back up tapes, locate relevant information, and organize it in a user-friendly environment so that such information can be reviewed and produced by attorneys to the opposing side.  Now IT departments are being more proactive and are anticipating future litigation by culling such data beforehand.  This eliminates disruptions to the corporation and decreases litigation costs at the same time.  By making such data more easily accessible, the burden then becomes reviewing and classifying such data instead of on the retrieval of the data.  This is then a legal question of relevance and non-relevance as oppose to a question involving information technology.  It pays to plan ahead.