What's Up With E-Discovery??

In-house Counsels concerned about Social Media Challenges

e-doc — Sat, 26 Jun 2010 01:01:49 +0000

Deloitte recently surveyed in-house counsels at several corporations regarding the challenges of social media.

Roughly two-thirds (62 percent) of respondents surveyed who expressed an opinion say their company is concerned about e-discovery challenges posed by online social media forums, according to a survey commissioned by the Deloitte Forensic Center.

During the next three years, 49 percent of respondents expect their companies’ information technology department to increase e-discovery efforts; 44 percent expect e-discovery challenges to increase; and 39 percent expect to devote more resources to e-discovery. However, of respondents with an opinion, 61 percent expect their companies to be only somewhat effective or not effective at all in dealing with e-discovery challenges three years from now.

One-quarter of respondents indicated their companies are unprepared to handle e-discovery requests pertaining to business-related use of social media, and an additional 36 percent indicated their companies are only somewhat prepared. Beyond social media platforms, only 9 percent of companies are well prepared to capture electronically stored information on third-party platforms, such as information stored in the cloud or used in software-as-a-service (SAAS) applications.

“The demands of e-discovery are clearly growing. Facebook and Twitter have not only become more prevalent in employees’ personal lives, but have also become more accepted in the workplace, as companies are beginning to leverage social media platforms throughout the corporate environment,” said Jeff Seymour, leader of the northeast analytic & forensic technology practice for Deloitte Financial Advisory Services LLP. “With electronically stored information rapidly rising in volume, avoiding e-discovery missteps requires cooperation from two corporate functions that typically have little in common and often don’t speak the same language: legal and IT.”

See remainder of article here.

Attorney barred in the District of Columbia and California currently looking for opportunities in the private and government sectors. Specializes in ediscovery/litigation efficiency project management but can do straight litigation or litigation management. Feel free to contact me with opportunities at info@sentrycg.com

Personal Jurisdiction established by way of Email transmission

e-doc — Tue, 02 Jun 2009 19:33:29 +0000

Most will admit that technology has made business operations a much easier and more streamlined process. However, there are some drawbacks associated with the newfound convenience. Some judges in New York have ruled that even though a litigant has not stepped foot in the state, the state can exercise personal jurisdiction over a defendant where the nonresident defendant sent emails to a resident plaintiff in an effort to ease their business dealings. A New York judge ruled that such electronic transmissions were sufficient to establish personal jurisdiction over the defendant. Other courts in New York have ruled for and against the sufficiency of email, telephone, or facsimiles in establishing personal jurisdiction. However, in Deutsche Bank Sec., Inc. v. Montana Bd. of Inv. , 7 N.Y.3d 65, 71 (2006), the court ruled in favor. See case summary below.

New York

Under New York’s long-arm statute, CPLR § 302(a)(1), a court may exercise jurisdiction over a non-domiciliary who transacts “any business within the state or contracts anywhere to supply goods or services in the state.” Known as the “single act statute,” the Court of Appeals has clarified that “proof of one transaction in New York is sufficient to invoke jurisdiction, even though the defendant never enters New York, so long as the defendant’s activities here were purposeful and there is a substantial relationship between the transaction and the claim asserted.” Deutsche Bank Sec., Inc. v. Montana Bd. of Inv. , 7 N.Y.3d 65, 71 (2006).

In Deutsche Bank , the Court of Appeals noted that historically New York courts have “recognized CPLR 302(a)(1) long-arm jurisdiction over commercial actors and investors using electronic and telephonic means to project themselves into New York to conduct business transactions.” Id. Consistent with that observation, the court held that the defendant, “a sophisticated institutional trader that entered New York to transact business” via the Bloomberg Messaging System (an instant message service), should reasonably expect to defend its actions in New York. Id. at 71-72. In reaching its decision that there was jurisdiction over the defendant, the court accounted for the fact that the defendant had engaged the plaintiff in a series of trades. “Where a defendant deals directly with the broker’s New York office by phone or mail or e-mail in a number of transactions instead of dealing with the broker at the broker’s local office outside New York, long-arm jurisdiction may be upheld.” Id. at 72.

Outside New York

The Fourth Circuit Court of Appeals recently affirmed a dismissal for lack of personal jurisdiction over two nonresident defendants, on the determination that a handful of emails and telephone communications alone did not satisfy minimum contacts with the state of Virginia. Consulting Engineers Corp. v. Geometric Ltd. , _ F.3d _, 2009 WL 738165 (4th Cir. Mar. 23, 2009). Defendant Structure Works, which is a Colorado corporation, had limited contact with the plaintiff, comprised of four telephone calls and twenty-four emails, only eight of which were sent by Structure Works. Id. at 4. Although the plaintiff argued that Structure Works had “intentionally directed electronic communications into Virginia with the clear intent of transacting business there,” the court rejected that broad application and looked instead at “the quality and nature of the contacts” to evaluate whether they met the standards for minimum contacts. Id. The court held that even had Structure Works “reached out” to plaintiffs via email in Virginia, that fact, coupled only with the emails and telephone calls, was insufficient to establish personal jurisdiction.

A $6 Million Discovery bill is NOT an outlier

e-doc — Sat, 30 May 2009 18:50:15 +0000

Companies can avoid such high discovery bills simply by planning ahead.

When the Office of Federal Housing Enterprise Oversight was subpoenaed for documents in litigation involving Fannie Mae and Freddie Mac, its IT department thought it had searched every cranny to find relevant e-mails. It turned out the agency overlooked disaster-recovery backups that were stored off-site.

That oversight triggered a legal fight and then a protracted search that resulted in a $6 million discovery bill–a whopping 9% of the office’s annual budget.

When it comes to e-discovery costs, $6 million isn’t an outlier, which points to the urgency of IT and legal departments working hand in hand to build policies and execute on them when litigation hits. At times, however, IT and legal work at cross-purposes–they don’t communicate or, worse, argue over the best approach to collecting electronically stored information that’s being called for, often on short notice.

To avoid these squabbles and the mistakes that come out of them, smart companies are creating e-discovery teams led by legal and IT principals, with other stakeholders in the organization brought in as needed. These teams set policies for data retention and preservation, oversee implementation of these policies, and handle e-discovery work

Federal Rules of Civil Procedure Amendments

e-doc — Thu, 16 Apr 2009 19:29:10 +0000

Litigation readiness by corporations is a necessity of operating effectively in todays business environment. The following is a list of some of the recent amendments to FCRP that every prudent general counsel should know.

Rule 16: Pretrial Meetings

Requires all parties to meet and discuss a discovery plan and evaluate the preservation and production of ESI.

Rule 26(a): Duty to Disclose

Requires parties to identify all sources of ESI that may be relevant by category and location.

Rule 26(b): Discovery Scope and Limits

Every organization has “a duty to disclose all potentially relevant sources of information” to the courts as soon as they “reasonably anticipate” litigation unless these sources are “not reasonably accessible because of undue burden or cost.”

Rule 26(f): Planning for Discovery

Requires opposing parties to meet before the trial, or at least 21 days before a scheduled conference to discuss the nature and basis of their claims in an attempt to speed the possibilities of a prompt settlement.

Rule 34(a): Producing Documents

Electronically stored data – including email – is one of the types of records which can be requested for inspection by opposing parties.

Rule 34 (b): Procedure and Form of Production

As a part of the discovery process, the responding party should provide a “proposed plan for discovery” and produce all requested information, including ESI, in a form that is “reasonably useable.”

Fourth Circuit allows Punitive Damages without Proof of actual damages for plaintiff after employer Hacked into former employee’s AOL account

e-doc — Mon, 23 Mar 2009 19:30:08 +0000

In adding teeth to the federal anti-hacker email privacy law, the Fourth circuit ruled a few days ago that a plaintiff does not have to prove actual damages to receive punitive damages under the Stored Communications Act (SCA). In Van Alstyne v. Electronic Scriptorium, F.3d, 2009 WL 692512 (4th Cir. March 18, 2009), Bonnie Van Alstyne was awarded punitive damages and not actual damages when she proved that her employer intentionally hacked into her personal AOL email account and downloaded her personal emails without her authorization. The court ruled that the plaintiff is entitled to damages without having suffered any actual damages in order to punish the defendant for such a violation and deter future misconduct.

This is a significant development in privacy protection law because the general rule is that punitive damages cannot be awarded without proof of actual damages. The Court found its authority in the civil enforcement section of the SCA. The section states:

If the violation is willful or intentional, the court may assess punitive damages

It’s also a crime to hack into an employee’s email account as per the Electronics Communications Privacy Act. The offense is punishable by fine and/or up to 5 years in prison the first time and a fine and/or up to ten years imprisonment all subsequent times.

(a) Offense.— Except as provided in subsection (c) of this section whoever—

(1) intentionally accesses without authorization a facility through which an electronic communication service is provided; or

(2) intentionally exceeds an authorization to access that facility;

and thereby obtains, alters, or prevents authorized access to a wire or electronic communication while it is in electronic storage in such system shall be punished as provided in subsection (b) of this section.

(b) Punishment.— The punishment for an offense under subsection (a) of this section is—

(1) if the offense is committed for purposes of commercial advantage, malicious destruction or damage, or private commercial gain, or in furtherance of any criminal or tortious act in violation of the Constitution or laws of the United States or any State—

(A) a fine under this title or imprisonment for not more than 5 years, or both, in the case of a first offense under this subparagraph; and

(B) a fine under this title or imprisonment for not more than 10 years, or both, for any subsequent offense under this subparagraph;

An expensive eDiscovery lesson taught by the D.C. Circuit

e-doc — Sat, 28 Feb 2009 00:28:58 +0000

An important lesson to practitioners courtesy of the D.C. Circuit.

A recent decision from the U.S. Court of Appeals for the District of Columbia Circuit affirms an order requiring a nonparty to spend $6 million (9 percent of its annual operating budget) to comply with an e-discovery subpoena.

The D.C. Circuit’s ruling in In re Fannie Mae Securities Litigation, 552 F.3d 814 (2009), highlights the importance of counsel understanding issues related to e-discovery, and the potential scope of that discovery, before entering into any type of agreement governing the future conduct of discovery in the case.

…………

In re Fannie Mae serves as a cautionary tale to all practitioners faced with discovery demands. Agreements should be carefully negotiated and counsel should not agree to unmitigated keyword searches without reserving the right to negotiate search terms and without waiving the right to pursue cost shifting.

If the producing party cannot reach a fair agreement with the requesting parties, nonparties may be better served by refusing to comply with subpoenas until the court considers the burdens and rules on cost-shifting rather than entering into broad agreements.

2008: Five Groundbreaking cases In Ediscovery

e-doc — Mon, 15 Dec 2008 13:03:31 +0000

This is one writer’s opinion, what’s yours?

5) Mancia v. Mayflower Textile Servs. Co., 2008 WL 4595175 (D. Md. Oct. 15, 2008)

If there ever was an opinion written by a judge to make a larger societal point, Mancia was certainly it. Judge Paul Grimm, who’ll appear on this list in another slot as well, has clearly taken the mantle from Judge Scheindlin as the leading electronic discovery jurist. He’d heretofore authored a number of significant opinions in this area, including Hobson and Thompson. Now, in Mancia he used a garden variety discovery dispute, which was typically rife with boilerplate objections and other obstreperous tactics, to highlight the Sedona Conference’s Cooperation Proclamation.

The lasting takeaway from the opinion is the notion that “[c]ourts repeatedly have noted the need for attorneys to work cooperatively to conduct electronic discovery, and sanctioned lawyers and parties for failing to do so.” To support this notion he cites the Sedona Conference Proclamation and the little used FRCP 26(g). This opinion is noteworthy because it gives precedent to bolster the Sedona initiative and should provide a ready citation for all those counsel who aren’t getting the level of cooperation they need from the opposition. It remains to be seen if other judges will follow suit, but this could be the beachhead for a more cooperative electronic discovery process in 2009 and beyond.

4) Flagg v. City of Detroit, 252 F.R.D. 346 (E.D. Mich. 2008)

Flagg highlights the growing need to reconcile the electronic discovery landscape, which typically focuses somewhat myopically on email, with the larger informational trends which are now categorized by the use of blogs, social networking sites, instant messaging, and text messaging. Flagg was one of the first to determine text messages (e.g., messages exchanged among certain officials and employees of the City of Detroit via city-issued text messaging devices) were discoverable under the standards of FRCP 26(b)(1). The holding further demonstrated the challenges of conducting electronic discovery across information systems that mix personal information with business communications. This type of information commingling will continue to escalate, causing significant long term electronic discovery challenges due to thorny privacy, privilege and policy implications.

3) Rhoads Indus., Inc. v. Bldg. Materials Corp. of Am., 2008 WL 4916026 (E.D. Pa. Nov. 14, 2008)

Rhoads is one of the first cases post Federal Rule of Evidence (FRE) 502, which recently created a national standard (versus the previous split in jurisdictions) and now states a “middle ground” for the determining of inadvertent disclosure during electronic discovery. The key provision is (b)(2) which provides protection only if “the holder of the privilege or protection took reasonable steps to prevent disclosure.” So, Rhoads took that “reasonableness” question head on in a scenario where the plaintiff Rhoads admittedly (yet inadvertently) produced over eight hundred privileged, electronic documents. The decision is significant because it used the five-factor test stated in Fidelity, but put an undue weighting on the final test which was: “whether the overriding interests of justice would be served by relieving the party of its errors.” This approach potentially threatens the development of sound case law that will be necessary to help the deployment of FRE 502 into practice because it casts too much uncertainty with its weighting of “fairness” (a problematically vague notion) in the analysis. It will be interesting to see if/how this approach is subsequently adopted as we enter the New Year.

2) In re Seroquel Prods. Liab. Litig., 244 F.R.D. 650 (M.D. Fla. 2007)

Seroquel is significant because it set out very clear guidelines for electronic discovery behavior that, while perhaps commonplace, is now deemed unacceptable and sanctionable under FRCP 37. Stating that “it is not appropriate to seek an advantage in the litigation by failing to cooperate in the identification of basic evidence” the court went on to note specific failings by the producing party, including (i) the use of a plainly inadequate key word search terms, (ii) the failure to provide attachments, (iii) deficient efforts in preventing/solving technical problems and (iv) inadequate quality control oversight. This type of holding makes it clear that the bar for electronic discovery conduct is rapidly increasing, such that it is likely to see more frequent malpractice actions against counsel if and when things go wrong.

1) E-Discovery Case of the Year: Victor Stanley, Inc. v. Creative Pipe, Inc., 2008 WL 2221841 (D. Md. May 29, 2008)

Judge Grimm’s hallmark opinion has had the legal community buzzing over the past several months and the reason appears pretty straight forward. In Victor Stanley Grimm builds on the holdings in Seroquel, O’Keefe and Equity Analytics, to boldly cast doubt on a practice so routine that it’s literally shocked the legal community into reevaluation:

(”[D]etermining whether a particular search methodology, such as keywords, will or will not be effective certainly requires knowledge beyond the ken of a lay person (and a lay lawyer) . . . .”

The notion that electronic discovery search is beyond the ability of most attorneys has caused tremors within the litigation support community who had a long history of blindly receiving keywords from counsel, running them and turning back over the results - often blissfully unaware of the extent to which those keyword searches actually located relevant information. Victor Stanley’s analysis of the “reasonableness” of search protocols also has impact on the FRE 502 and therefore cements its place alongside other e-discovery “must reads” such as Zubulake and Morgan Stanley.

Defendant pays for not being thorough, efficient, and timely in E-Discovery

e-doc — Thu, 11 Dec 2008 14:49:42 +0000

In the court case Omega Patents v. Fortin Auto Radio, both the plaintiff and the judge were unhappy with the defendant’s volume of e-discovery production, which included a few documents and just five emails in a universe of tens of thousands. The defendant subsequently searched for and reviewed more than 17,000 emails, of which 2,000 were produced for plaintiff review. The court was not pleased at the long delay and ruled that the defendant had not proved the undue burden and expense of the subsequent search. The court issued a monetary sanction against the defendant.

Eight ways to Prepare for E-discovery in a pinch

e-doc — Mon, 08 Dec 2008 13:26:35 +0000

LTN gives eight ways to prepare for e-discovery when you are under the gun.

1. Apply the five Ws of journalism (who, what, when, where, and why) to get a handle on your core preservation duties. Immediately list the people, events, time intervals, business units, records, and communications central to the case.

a. List apparent key players (don’t forget assistants who, for example, handle the boss’ e-mail, and significant third parties over whom your client has a right of direction or control).

b. Hone in on what happened — both from your perspective and theirs — and posit what ESI sheds light either way, or tends to explain or challenge the key players’ actions and attitudes.

c. Decide what dates and time periods are relevant for preservation. Is there a continuing preservation obligation going forward?

d. Determine which business units, facilities, systems, and devices most likely hold relevant ESI.

Your lists will change over time. But a focused, thoughtful, and well-documented effort that is diligently implemented will be more defensible, less costly, and invariably more effective than a scattershot approach. Don’t delay. It needn’t be flawless right now — reasonable will do.

2. Focus on the fragile first. What potentially relevant ESI has the shortest shelf life and requires quickest action to preserve while it’s still reasonably accessible? Voicemail, web mail and text messaging, computers requiring forensic examination, web content, and surveillance video are examples of ESI that tend to be rapidly discarded or overwritten. Grabbing e-mail of key custodians before it migrates to backup media can save a bundle and accelerate search and processing.

3. Protect employees from themselves. People who wouldn’t dream of shredding a paper record will purge ESI with nary a thought. In the blink of an eye, history will be reinvented as employees delete overly candid e-mail and commingled personal communications. The results are often catastrophic and always costly. Assess whether those entrusted with preservation can be trusted to perform and don’t rely on custodial preservation alone when its failure is reasonably foreseeable.

4. Holds should be instructional, not merely aspirational. Too many lawyers draft legal hold instructions designed to protect lawyers. Broadly disseminating a form hold directive saying “keep everything” isn’t helpful and will come back to haunt you at deposition. “I got the memo,” they say, “but I didn’t know where to start.”

Tell custodians what to do and how to do it. Give examples that inform and deadlines that demand action. Get management buy-in for the time needed to comply. Better a handful of key players take the hold directive seriously than dozens or hundreds of minor players wink at it. (more…)

Is FRE 502 all it’s cracked up to be? Not so much

e-doc — Thu, 04 Dec 2008 12:12:22 +0000

As pointed out by one author, FRE 502 may not the panacea to ediscovery costs that many herald it to be. See below the three main problems that FRE 502 does not address and therefore makes the new rule.

Federal Rule of Evidence 502, enacted on Sept. 19, 2008, has been heralded as a significant development which “will effectively limit the skyrocketing costs of discovery.” The Rule and its promotion as a cost-saving panacea have no doubt raised expectations among clients and courts alike.

As a rule of evidence, FRE 502 is significant because it (a) resolves conflicts among federal courts concerning the effect of voluntary and inadvertent productions of privileged material and (b) imposes federal evidentiary rules on state courts. FRE 502 will not meaningfully reduce the costs of discovery, particularly in cases involving huge e-discovery obligations, related investigations by state government entities, and “asymmetric” discovery obligations (where one party has to produce a tremendous number of documents and the other does not) for three reasons:

The touting of FRE 502 as a cost-savings measure is based on the erroneous premise that mitigating the risk of waiver will substantially reduce e-discovery costs.

To avoid waiver, litigants must take “reasonable steps” to avoid inadvertent disclosures and “reasonable steps” to rectify productions errors, an ambiguous standard that is expensive to meet.

As acknowledged by its drafters, FRE 502’s ability to mitigate the risk of waiver requires that state courts be bound by the Rule. Its so-called “controlling effect” provisions may not be constitutional. Until, and unless, FRE 502’s constitutionality is established, it will provide little assurance to litigants that state attorneys general and private litigants will be unable to establish waiver in state court proceedings.

OTHER FEARS DRIVE DISCOVERY COSTS

FRE 502 is based on the premise that litigants spend millions of dollars on privilege review, which they would not otherwise spend, out of fear that waiver of attorney-client privilege or work-product protection will result from the inadvertent production of protected documents. Thus, the scope and cost of privilege review can be reduced if the risk of waiver is minimized.

While avoiding waiver is important, the practice of reviewing potentially privileged documents on a document-by-document basis is motivated primarily by the desire to prevent disclosure of the protected information contained in the reviewed documents to adversaries. Avoiding waiver is a worthwhile goal, but the risk of disclosure, itself, warrants close scrutiny of potentially privileged documents.

Even if a document can be clawed back, the protected information in the document cannot be retrieved once it is viewed by an adversary. For this reason, the consensual disclosure of potentially privileged documents pursuant to “quick peek,” “claw back,” and non-waiver agreements is virtually inconceivable in a major litigation, where counsel has not first reviewed the documents for privilege.

Clients willing to allow adversaries access to privileged documents and work-product may save some money, but the costs of discovery in major cases will still be extremely high.

The high costs of e-discovery are driven by the sheer volume of documents and e-data that must be retrieved and reviewed because they are potentially “relevant” pursuant to Rule 26 of the Federal Rules of Civil Procedure. Large scale document production in the electronic age requires an integrated approach to review large numbers of documents, often on a document-by-document basis, for responsiveness, confidentiality, substantive analysis and the need to redact trade secrets, privacy information and other sensitive information.

Read the remainder of the article here.