A series of Principles Relating to the Discovery of Electronically Stored Information (“ESI”) were developed and codified in a standing order. These principles are intended to serve as supplemental procedural ediscovery guidelines for the parties in selected cases. Individual district court, magistrate, and bankruptcy judges in the Seventh Circuit have agreed to adopt the principles and implement them in selected cases during Phase I of the program, which runs through May 1, 2010.

Kenneth J. Winters, the Managing Director of the Sedona Conference®, and former Colorado Supreme Court Judge Rebecca Kourlis, the Executive Director of the Institute for Advancement of the American Legal System (“IAALS”) at the University of Denver, assisted in the development and review of these principles.

IAALS is developing questionnaires to assess the efficacy of the principles. The questionnaires will be completed by the judges and lawyers participating in Phase I of the program. The results of the IAALS’ questionnaires will be presented to the Seventh Circuit at its annual meeting in May, 2010. At that time, the program’s ediscovery principles will be reviewed and refined as needed. Phase II of the program is scheduled to proceed from June, 2010 through May, 2011. It is contemplated that in May, 2011, Phase II findings will be presented and the Seventh Circuit’s final ediscovery principles announced.

Among other things, the principles require in the event of a dispute during the meet and confer process, the appointment of an ediscovery liaison who should be prepared to participate in ediscovery dispute resolution. These principles also recognize that that Rule 26(b)(2)(C)’s proportionality principles should be applied when formulating a discovery plan; provide that sanctions can be imposed for the failure to cooperate and participate in good faith in the meet and confer process; identify categories of ESI, which are generally not discoverable in most cases; and provides that if a party intends to request the preservation or production of these categories of ESI, that such a request be discussed at the parties’ initial meet and confer session or as soon thereafter as practicable.

Some of the other noteworthy aspects of the Seventh Circuit’s principles include:

• Acknowledging Fed. R. Civ. P. 1’s forgotten role in ediscovery by providing the purpose of these principles is to assist courts in the administration of the Rule’s requirement of securing “the just, speedy, and inexpensive determination of every action and proceeding.”
• Recognizing that an attorney’s ethical duty of zealous representation is not compromised by conducting discovery in a cooperative manner.
• Specifying that Rule 26(b)(2)(C)’s proportionality standard should be applied when formulating a discovery plan, meaning that requests for production and responses thereto “should be reasonably targeted, clear and as specific as practicable.”
• Noting that ESI disputes will be resolved more efficiently if before the initial conference with opposing counsel, the attorneys for each party review and understand how their client’s data is stored and retrieved in order to determine what issues must be addressed during their initial meet and confer discussions.
• Authorizing a court to require additional discussions prior to the commencement of discovery and/or to impose sanctions where appropriate on any party or counsel that fails to cooperate and participate in good faith in the meet and confer process.
• Requiring in the event of a dispute concerning the preservation or production of ESI, the designation of an ediscovery liaison for the purposes of meeting, conferring, and attending court hearings.
• Providing the ediscovery liaison may be an in-house or outside counsel, a third-party consultant, or an employee of a party.
• Specifying the ediscovery liaison must be prepared to participate in ediscovery dispute resolution; know the parties’ ediscovery efforts; and have access to those who are familiar with the parties’ electronic systems and capabilities in order to explain those systems and answer relevant questions. The ediscovery liaison must also have reasonable access to those who are knowledgeable about technical aspects of ediscovery.
• Providing that vague and overly broad preservation orders should not be sought or entered and noting that the information sought to be preserved through a preservation letter or court order should be reasonable in scope and mindful of Rule 26(b)(2)(C)’s proportionality factors.
• Explaining that if the recipient of a preservation letter chooses to respond, the response should provide useful information regarding the preservation efforts undertaken by the responding party. Examples of useful and specific information for such a response include the information a responding party is willing to preserve, the steps taken in response to any preservation letter, any disagreements with the preservation request, and any further preservation issues that were not raised.
• Mandating that every party and its counsel are responsible for taking reasonable and proportionate steps to preserve relevant and discoverable ESI within its possession, custody, and control.
• Recognizing that discovery concerning another party’s preservation and collection efforts may be appropriate, but noting that if used inadvisably, can cause unnecessary expense, delay, and may unnecessarily implicate work product and attorney-client privilege. Requires that prior to initiating such discovery, the parties are expected to meet and confer concerning its need and the suitability of alternative means for obtaining that information. Acknowledges this requirement does not preclude deponents addressing the merits of the case from answering questions concerning the steps taken to preserve and collect ESI.
• Specifying that certain categories of ESI are considered generally “not discoverable” in most cases and requiring a party that intends to request the preservation of production of those categories of ESI, discuss that discovery request at the parties’ initial meet and confer session, or as soon as practical thereafter.
• Identifying categories of ESI that are generally not discoverable to include: (a) deleted, fragmented, unallocated data, or data found in the slack space of computer hard drives; (b) random access memory (RAM) or other ephemeral data; (c) temporary internet files, history, cache, cookies, and other forms of on-line access data; (d) data in metadata fields that are frequently updated automatically such as last-open dates; (e) backup data that is substantially duplicative of data that is more accessible elsewhere; and (f) other forms of ESI whose preservation requires extraordinary affirmative measures that are not utilized in the ordinary course of business.
• Requiring in the event of a dispute concerning the scope of a party’s preservation efforts that counsel meet and confer and fully explain their reasons for believing that additional efforts are not reasonable or appropriate.
• Encouraging parties, at their initial Rule 26(f) conference, to discuss ways to eliminate duplicative ESI, including horizontal or vertical deduplication, the filtering of data by date ranges, file types, custodians as well as the use of search terms, keyword searching, concept clustering, or other advanced methodologies.
• Providing that ESI or other tangible or hard copy documents, which are not text searchable, need not be made text searchable when produced.
• Recognizing the requesting party is responsible for the incremental cost of creating its copy of any requested information.
• Encouraging parties to discuss cost sharing for optical character recognition (OCR) or other upgrades of paper documents or other forms of non-text-searchable ESI.
• Noting that ESI stored in a database or a database management system can be produced by querying the database for discoverable information resulting in a report or a reasonably useable exportable electronic file for review by the requesting party or its counsel.

Several years ago, in an article to the members of the Illinois Association of Defense Trial Counsel, I wrote that if left unchecked, the cost of electronic discovery will prove to be the biggest single threat to our civil jury trial system. Only time will tell whether these steps will fulfill their purpose of streamlining ediscovery and reducing the cost of federal-court litigation or whether a more “radical” step such as some form of mandatory cost as under the Texas rules will be required.

Pilot photo courtesy of Flickr user UNC – CFC – USFK under this Creative Commons license.

“You’re traveling through another dimension, a dimension not only of sight and sound, but of mind; a journey into a wondrous land whose boundaries are that of imagination – Next stop, the Twilight Zone.”

Any lawyer who inadvertently produces privileged information steps into a legal twilight zone. However, that legal twilight zone is not a “wondrous land,” but one filled with sleepless nights and many questions. How did it happen? When and how do I tell the client? How do I get the materials back? Will I lose the client, my job, my career? With ediscovery, the risk that privileged or confidential information will be inadvertently produced geometrically increases. While the use of clawback or nonwaiver agreements and FRE 502(b) lessen that risk, they do not eliminate it. Sensient Colors establishes that point.

Sensient Colors involved the electronic production of 45,000 documents totaling 135,000 pages or 450 boxes of records by the United States (“government”). Several months after that production was completed, the defendant initially returned a group of documents that were privileged. Over the ensuing months, the defendant continued to identify additional documents that the government had produced but were privileged. Ultimately, the defendant sought a ruling that the government had waived its right to assert privilege over the documents it had produced.

The court in Sensient Colors concluded the privileged documents were inadvertently produced by the government and that the requirements of FRE 502(b) were met as to the first group of documents the defendant returned. However, as to the subsequently identified privileged documents, the court ruled that the government waived its right to assert privilege under Rule 502(b) as to those documents because it had failed to promptly take reasonable steps to rectify its error after being notified of the initial inadvertent production.

The explanatory note to FRE 502 provides: “The Rule does not require the producing party to engage in a post-production review to determine whether any protected communication or information has been produced by mistake.” However, the court in Sensient Colors concluded that once a party has been put on notice that privileged information has been inadvertently produced, Rule 502(b)(3) requires the producing party take “prompt and reasonable steps to reassess its document production.” The court in Sensient Colors concluded the government failed to act reasonably and diligently to correct its error and waived its privilege and work-product protection as a result.

Carefully draft non-waiver orders and agreements

Sensient Colors demonstrates the importance of carefully drafting any non-waiver orders or agreements. The parties included two provisions in their joint discovery plan which ultimately failed to protect the government against a waiver of privilege. The first provision specifically addressed the issue of waiver and provided:

Non-waiver: By exchanging documents or information with each other, the Parties do not waive any privilege, confidentiality or other protection from production that otherwise applies to such documents or information.

The discovery plan also included a provision on inadvertent production:

The Parties agree that the inadvertent production of privileged documents or information (including ESI) shall not, in and of itself, waive any privilege that would otherwise attach to the document or information produced.

Addressing these provisions of the parties’ joint discovery plan, the court initially observed that if the non-waiver provision was applied as written, it would render the inadvertent production provision superfluous. The court did not address how the defendant could challenge the terms of the joint discovery plan or why it should be allowed to make such a challenge, once it had agreed to its terms. At one time, a lawyer’s word was his bond. Lawyers seem to have forgotten that in today’s digital era.

The court further observed that the parties discovery plan did not provide that they were excused from the requirements of Rule 502(b). Reconciling these provisions, the court ruled that by including the phrase “in and of itself” in the inadvertent production provision of their joint discovery plan, the parties were merely agreeing that the unintentional production of privileged information did not result in a waiver. The court ruled the parties intended to incorporate a “flexible” standard when determining if a waiver occurred. As support for that conclusion, the court in Sensient Colors quoted a passage from Koch Materials Co. v. Shore Slurry Seal, Inc., 208 F.R.D. 109, 118 (D.N. J. 2002), which explains that courts “generally frown upon ‘blanket’ disclosure provisions” because they essentially immunize “attorneys from negligent handling of documents, [and] could lead to sloppy attorney review and improper disclosure which could jeopardize clients’ cases.”

The court in Sensient Colors also noted the absence of any clawback provision in the discovery plan. It observed that if the parties had intended to implement a clawback procedure, they would have specifically mentioned a clawback provision in their discovery plan. However, Fed. R. Civ. P. 26(b)5(B), outlines the process parties are to follow when an inadvertent production occurs. The court did not clarify whether it was suggesting that the inclusion of a clawback agreement would trump Rule 26(b)5(B)’s procedures, but it never hurts to include a clawback in any FRE 502 non-waiver order.

The entry of a Rule 502 non-waiver order generally will not obviate the requirement that the producing party take reasonable steps to prevent an inadvertent disclosure from occurring. And, the court in Sensient Colors concluded that the parties joint discovery plan did not preclude a finding that attorney client privilege or work-product protection could be waived even though the parties agreed that by exchanging documents they did not waive privilege.

Sensient Colors is an example why many general counsel believe that the passage of Fed. R. Evid 502 will not materially lessen the costs of electronic discovery.

Re-review required once on notice that privileged documents were inadvertently produced

The court in Sensient Colors had little difficulty concluding that the first two prongs of Rule 502(b) were met. The court did not question that the government’s production was inadvertent in the sense that it was “not intended.” It explained, however, that subjective intent is not controlling. Whether a production inadvertently occurred within the meaning of rule 502(b) is determined by examining if the producing party took reasonable precautions to the prevent an error from occurring. The court found the government readily satisfied the requirements of Rule 502(b)(1) and (b)(2).

The court recognized that the document production was substantial and that the volume of inadvertently produced documents were relatively minor (214 documents). Additionally, the government did not erroneously produce the same document on multiple occasions. The court found that the government took reasonable steps prior to production by using twelve attorneys and paralegals from the Department of Justice to review its documents. The court further acknowledged that the government made “a commendable effort to employ a sophisticated computer program to conduct its privilege review.”

So what went wrong in Sensient Colors?

After being initially notified that it had inadvertently produced privileged information, eight days later the government confirmed its error and advised the defendant that the documents were indeed privileged. That was sufficient to meet Rule 502(b)(3)’s requirement as to the first group of documents returned by the defendant. The court noted that prior to that point in time, the government was not on notice of any problem with its document production.

Regarding the subsequently identified privileged documents, the court reached the opposite conclusion. Once the government was advised that it had produced privileged information, “it was on notice that something was amiss with its document production and privilege review.” Thus, the court held the government should have promptly re-assessed its procedures and re-checked its production in order to comply with Rule 502(b)(3)’s requirement that the producing party promptly take reasonable steps to rectify its error. The court in Sensient Colors relied upon Preferred Care Partners Holding Corp. v. Humana, Inc., 2009 WL 982449 *14 (S.D. Fla. April 9, 2009), for the proposition that once a party is aware that it inadvertently produced privilege information, it has an obligation “to ensure that no additional privileged documents were divulged.” Because the defendant continued to identify privileged documents it had received while the government took more than three months to confirm that it had inadvertently produc
ed additional privileged documents, the court ruled that the privilege had been waived.

The court in Sensient Colors also commented on a “glaring omission” in the government’s submissions to the defendant’s waiver arguments. The court noted that the government failed to provide any meaningful details regarding the steps it took immediately after being notified that it had inadvertently produced privileged information. All the government proffered was that it began to re-review the documents returned to it for privilege. The government’s declarations were silent as to what steps it took to assure the accuracy and completeness of its entire document production, not just the documents that the defendant had flagged as inadvertently produced.

So several practical points bear mentioning. First, once a party is notified that it has produced potentially privileged documents, do not delay in responding to your opponent’s notification. The third element of Rule 502(b) requires that a prompt response be made by the producing party. The producing party should promptly confirm whether the documents are in fact privileged, and if so, assert privilege over the inadvertently produced documents and demand their return.

Second, Rule 502(b) requires the producing party establish its reasonable care both before a production occurs and after receiving notice that it has inadvertently produced privileged information. So keep track of what steps were taken by you, the client and any ediscovery vendor both before the production occurred and afterwards so that you are in a position to adequately litigate the issue of privilege waiver. Don’t forget about Rule 502(b)(3)’s requirements, and be prepared to outline in detail what steps were taken and when they were taken to insure that no other privileged documents were produced.

Finally, once you have responded to opposing counsel and have confirmed the assertion of privilege over the inadvertently produced documents, you should also consider promptly reviewing all of the documents that had been originally produced to the opposing party to determine if any other privileged documents were inadvertently produced. After Sensient Colors, you can’t necessarily rely on a non-waiver agreement with your opponent to protect you and the client. If you discover additional documents that were inadvertently produced, immediately notify opposing counsel that you are asserting privilege as to those documents and demand their return. While your immediate focus should be the return of the privileged documents or data that you know are in the possession of your opponent, Sensient Colors teaches that you also need to promptly review the previously produced documents and how you screened them for privilege.

Conclusion

I wonder if Rod Serling were still alive how he would handle the attorney’s nightmare of inadvertently produced privileged information. One of my favorite Twilight Zone episodes was “Nightmare at 20,000 Feet.” In that episode, a gremlin appeared on the wing of an airplane that could only be seen by one passenger. That episode was ultimately remade into the Twilight Zone movie. Borrowing heavily from “Nightmare at 20,000 Feet” the attorney’s episode would pan to a tired and distraught attorney and the opening narration for the episode would begin:

“Portrait of a frightened attorney: thirty-seven, partner at a reputable law firm, husband, and father of three who until recently had been in charge of defending a major lawsuit where privileged information was inadvertently produced to his client’s top competitor. Tonight, beset by insomnia, and questioning how this could have happened, he returns to the office and turns on the computer used to create the database containing the privileged information in an attempt to determine why and how the mistake occurred. His ultimate destination is one of the darkest corners of the Twilight Zone.”

Perhaps Mr. Serling would have the gremlin take up residence in the computer system so that it could only be seen by that attorney when he looks at his computer screen.

When a party takes reasonable steps before a production occurs and after it has been notified of an inadvertent production, Rule 502(b) should prevent that gremlin from doing anymore dirty work. However, it is easier said than done.

We hear a lot about “concept searching” and “advanced analytics” but very often, the definitions are confusing, and the situations where you would use features like these aren’t often clear.

We’re all familiar with keyword searching – as well as its limitations. Take for a very simplistic example, you’re working on a case involving leases in a 600-unit housing complex. The lease agreements aren’t standardized, so you’ll need to make sure your search terms include lease, leases, leasing, rental, renting, and since there are subleases involved, sublease, sublet, sub-let, and sub-leasing as well. You could use Boolean operatives (like wildcards, if/then statements) but those can be unforgiving.

Will you get all the relevant documents? The answer is maybe, maybe not – there are many ways to lease property. However, you are likely to find many irrelevant documents with any basic keyword search. Say that this building also provided leases for satellite dishes. Your set of keywords will return those as well – hundreds of irrelevant documents.

Few lawsuits present discovery searches which are this simple. This is why concept searching and advanced analytics are so useful. Most concept search engines can work right alongside keyword searches, and give you the ability to make a representative “lease” or even cut-and-paste the relevant paragraphs from that lease into a search window. The search engine, in turn, will find and rank all documents that use similar terminology and talk about similar concepts. Yes, it may also find the documents about satellite dishes – but those will be ranked very low on a scale of relevance because, while they’re definitely leases, they’re not about property.

Defensibility is often a question about keyword searching (in fact, keyword itself is only a de facto standard). Some judges are pushing hard for using advanced techniques, and many have been quick to point out the pitfalls of keyword-only searches. So what do you do?

Consider the use of concept searching as another tool in your arsenal. In the example above, if a document gets returned that is relevant but doesn’t contain any of your variant of keywords, perhaps that’s an indication that your list is too exclusive. If you’re reviewing the ESI that you have received, then a concept search can allow you to quickly sort “responsive” documents based on the keyword searches into truly relevant ones that actually address the issues you’re reviewing.

Most concept search engines also provide a number of other features as well, all driven by concepts. These include categorizing or grouping documents by concepts, and even clustering conceptually-related documents automatically into groups by concept. Properly implemented, these tools can greatly enhance your ability to bring an orderly process to a mountain of ESI and find relevant information more quickly. In today’s economy, speed and efficiency are more important than ever – and concept searching is one tool at your disposal with tremendous benefits.

About the Author:

Headquartered in Reston, Virginia, Content Analyst® is a leader of advanced search tools and technology. Content Analyst’s software known as CAAT, includes patented Latent Semantic Indexing technology, and provides advanced, conceptual-based search and document analysis for a wide range of customers, from highly-classified intelligence installations to world-class publishers to cutting-edge eDiscovery and litigation and support providers. CAAT exponentially reduces the time needed to discern relevant information from large volumes of documents and data. To learn more about how Content Analyst, visit their website at www.contentanalyst.com, or email info@contentanalyst.com.

By now, any attorney worth his or her salt knows that the federal rules have set up a two-tier system for the discovery of electronically stored information (“ESI”). Under Rule 26(b)(2)(B), a party need not produce ESI from sources that it “identifies as not reasonably accessible because of undue burden or cost.” The federal rules themselves do not provide any guidance as to what “sources” of ESI should be considered “inaccessible.” Indeed, the Advisory Committee Notes explain: “it is not possible to define in a rule the different types of technological features that may affect the burdens and costs of accessing electronically stored information.”

One of the conundrums created by the federal ediscovery rules is whether there is any duty to preserve ESI from a source that a party has designated as “inaccessible.” The Advisory Committee Notes to Rule 26(b)(2) explain that the identification of a source as inaccessible “does not relieve the party of its common law or statutory duties to preserve evidence.” The Advisory Committee Notes furnish no guidance for counsel in this scenario. The Notes to Rule 26(b)(2) state that whether a party is required to preserve ESI from an inaccessible source “depends on the circumstances of each case.” The Note then observes, “[i]t is often useful for the parties if you discuss this issue early in discovery.”

In Forest Labs, the defendants filed a spoliation motion claiming the plaintiff failed to preserve backup tapes concerning the drug it manufactured which was the focus of the litigation. The district court concluded that the backup tapes in question were inaccessible because they were used solely for disaster recovery purposes. Nonetheless, the court ordered that a hearing be held on the defendant’s spoliation motion. The court also noted that if ESI is destroyed intentionally or willfully, “that fact alone is sufficient to demonstrate [the] relevance” of the lost evidence, and would be sufficient to warrant the entry of sanctions. However, as our last post indicated, the Fifth Amendment’s Due Process Clause can limit the type of sanctions which may be imposed for the loss of ESI, and requires a nexus be demonstrated between the information destroyed, and the plaintiff’s claim or the defendant’s defense.

Federal Law Governs Spoliation Sanctions

Forest Labs initially noted that the Sixth Circuit in Adkins v. Wolever, 554 F.3d 650, 652 (6th Cir. 2009)(en banc), recently held that federal law governs the imposition of sanctions for spoliation in all federal cases. The Sixth Circuit in Adkins observed that previously the Second, Fourth, and Ninth Circuits had reached the same conclusion. Those courts recognized that the authority to impose sanctions for spoliation stems from a court’s inherent power to control the judicial process, and “is evidentiary in nature.” Adkins also explained that “federal courts generally apply their own evidentiary rules in both federal question and diversity matters.”

No Sanctions For Destroying Evidence Before A Duty To Preserve Is Triggered

The district court in Forest Labs also recognized that a party seeking sanctions must first show that the opposing party had a duty to preserve the allegedly spoliated ESI at the time it was destroyed. As the district court aptly noted: “any destruction of potentially relevant evidence that occurs before the trigger date would be harmless, since the party was unaware of the need to safeguard evidence.”

Party Seeking Sanctions Must Provide Support For Its Position That A Duty To Preserve Was Triggered

In Forest Labs, the defendants asserted that the plaintiffs “should have known by the late 1990’s, when [they] first began developing [the drug], that litigation over the patent was inevitable.” The court rejected that argument noting that the defendants had proffered no evidence that could support such a finding. The district court explained that the defendants provided no proof that anyone “under plaintiffs’ control had reason to anticipate, or actually did anticipate litigation in the 1990’s.” The court rejected the argument that a duty to preserve is triggered simply when future litigation was merely possible. The court explained that such an approach would be crippling for large corporations.

However, in 2003 plaintiffs brought suit against another company alleging infringement of the same patent as the one at issue in this case. As a result, the court concluded that a duty to preserve was triggered in August 2003 by virtue of that prior litigation. Because plaintiffs acknowledged that they did not halt the recycling of their backup tapes until almost two years later in May, 2005, the court in Forest Labs then analyzed whether the backup tapes in question were inaccessible, and/or needed to be preserved.

Preservation of Inaccessible Sources of Information

In addressing whether there was any duty to preserve backup tapes in this instance, the court in Forest Labs turned to Zubulake where the court explained:

As a general rule, [a] litigation hold does not apply to inaccessible backup tapes (e.g., those typically maintained solely for the purpose of disaster recovery), which may continue to be recycled on the schedule set forth in it’s policy. On the other hand, if the backup tapes are accessible (i.e., actively used for information retrieval), then such tapes would be likely subject to the litigation hold.

Zubulake v. UBS Warburg, LLC, 220 F.R.D. 212, 218 (S.D.N.Y. 2003). As a result, the court in Forest Labs concluded that if the backup tapes that had been destroyed were “inaccessible,” there could be no sanctions for spoliation. The court then concluded that the backup tapes were inaccessible because they were solely used by the plaintiff for disaster recovery.

However, the district court also noted Zubulake further held that if a party can identify where a particular employee’s documents are stored on backup tapes, then those tapes should be preserved if the information contained on the tapes is not otherwise available. Zubulake noted that when the exception is applicable, it applies to all backup tapes. Zubulake, 220 F.R.D. at 218.

Accordingly, the court ordered that a hearing be held to determine whether or not the Zubulake exception was applicable. The court in Forest Labs observed that the Zubulake exception has three requirements. First, a party must be able to identify where particular documents are stored on backup tapes. Second, it must be shown that documents of those key players are actually stored on the tapes. Finally, the information stored on the tapes must not be “otherwise available.” The court ordered that the hearing was to focus on the application of Zubulake’s exception for the backup tapes in question.

Culpability and Relevance

Forest Labs noted that the failure to produce information can fall “along a continuum of fault ranging from innocence through the degrees of negligence to intentionality.” It observed that Turner v. Hudson Transit Lines, Inc., 142 F.R.D. 68, 75 (S.D.N.Y. 1991), recognized that the sanction of an adverse inference should be available even for the negligent spoliation of ESI. The court in Turner explained: “it makes no difference to the party victimized by the destruction of evidence whether the act was done willfully or negligently. The adverse inference provides the necessary mechanism for restoring the evidentiary balance.”

However, Forest Labs also recognized that the party seeking sanctions must produce some evidence suggesting that the documents destroyed were relevant to their claim. The court noted that relevance in this context means something more than “sufficiently probative to satisfy Rule 401.” Rather, the relevancy test to obtain sanctions for spoliation requires that a party demonstrate the lost evidence “would naturally have been introduced into evidence.”

However, Forest Labs also recognized that prior decisions had concluded that “when evidence is destroyed in bad faith (i.e., intentionally or willfully), that fact alone is sufficient to demonstrate relevance. By contrast, when the destruction is negligent, relevance must be proved by the party seeking the sanctions.”

The Federal Rule’s Approach to Inaccessible Sources of Information

While the district court in Forest Labs relied exclusively upon Zubulake in ordering the hearing, it should be noted that the approach taken by the federal rules for determining whether a source is “inaccessible” involves an analysis of the costs, and burdens of retrieving and producing ESI from that source. Thus, a number of factors including the condition of the backup tapes, and whether they are indexed, organized, electronically searchable or have to be restored are factors to consider on the issue. The number of hours it would take to restore, search and produce the information could vary significantly based on these and other factors. Thus, counsel should resist the temptation of simply focusing on a single factor as in Zubulake in determining whether information on backup tapes is inaccessible.

So what are your options when it comes to preserving inaccessible sources of information? You essentially have four. A party can do nothing, and continue to reuse its tapes or backup storage media on its regular rotation cycle. However, as the Forest Labs decision demonstrates, that approach can result in sanctions, even when the backup tapes are considered inaccessible. Additionally, it a party uses its backup tapes for anything other than for disaster recovery, it is unlikely that a court will conclude those backup tapes are inaccessible.

A somewhat less risky approach is to remove selected tapes from their normal rotation cycle which may contain relevant information. However, a party still runs the risk that an argument will be made that relevant information was contained on other tapes that were not preserved, and that a motion for sanctions be brought. We do not recommend either of these approaches, but recognize that some clients are more risk tolerant than others.

What the Advisory Committee Notes encourage is a discussion between the parties, and if possible, an agreement between the parties concerning whether there is any obligation to preserve ESI from an inaccessible source. If such an agreement cannot be reached, the safest course to action is to bring the issue to the court’s attention, and seek a ruling that the preservation of information from an inaccessible source is unnecessary. When such a ruling is sought, be sure to provide the court with a declaration explaining in detail not only why the source of information is inaccessible, but also outlining the cost to the client of having to preserve the information on those tapes indefinitely.

Finally, in our last post, we addressed a recent decision recognizing the Fifth Amendment’s Due Process Clause can in appropriate instances, limit the nature and/or extent of the sanctions imposed for the spoliation of ESI. We suggest that such an instance is presented when a party claims that it does not need to prove the “relevancy” of the lost information because it was allegedly disposed of “intentionally or in bad faith” as noted in Forest Labs. If the lost or missing information has nothing to do with any party’s claim or defense, it would seem that the Fifth Amendment should preclude the issuance of an adverse inference or a default judgment. A party case or defense should not be prejudiced in that way by the loss or destruction of ESI which is not relevant to the case.

In this multi-district litigation, plaintiffs brought claims against the defendants asserting various state law theories because the defendants sold motor fuel at a specific price per gallon without adjusting for temperature expansion. In discovery, plaintiffs sought information concerning the defendants’ activities dating back to 1970. They noted that in 1974, the National Conference on Weights & Measures began considering the issue of temperature adjustments in the retail sale of motor fuel. During this time, the defendants allegedly contributed to industry studies on average fuel temperatures, and lobbied against temperature adjustments. Plaintiffs also claimed that during this time frame, the defendants created documents which acknowledged that when temperatures rise above 60 degrees Fahrenheit, selling motor fuel which has not been temperature adjusted unjustly enriches the seller. Additionally, in the 1990’s, the Canadian government passed legislation permitting the installation of automatic temperature compensation (“ATC”) equipment in retail gas stations.

Defendants initially objected to the plaintiff’s discovery requests about their activities prior to January 1, 2001 on the ground that it was unduly burdensome. The defendants subsequently agreed to provide plaintiffs with responsive, non-privileged pre-2001 documents found in their active files, but resisted searching for pre-2001 data or documents in their archived files.

While the defendants’ undue burden arguments did not convince the court that that the pre-2001 information did not have to be produced, it nonetheless fashioned a remedy attempting to balance the cost of that discovery, given the parties competing interests. While the court never mentioned Rule 26(b)(2)(b) or Fed. R. Evid. 502 in its decision, it essentially allowed the plaintiffs to have a “quick peek” of the requested information subject to a nonwaiver order. The decision provides a good example of the type of factual information that a party needs to provide when making an undue burden argument under Rule 26.

The court initially noted that the party objecting to discovery has “the burden to show facts justifying their objection by demonstrating that the time or expanse involved in responding to requested discovery is unduly burdensome.” Horizon Holdings, Inc. v. Genmar Holdings, Inc., 209 F.R.D. 208, 213 (D.Kan. 2002). It explained that this burden imposes an obligation “to provide sufficient detail and explanation about the nature of the burden in terms of time, money and procedure required to produce the requested documents.” Id.

Pre-2001 documents and data

In the Motor Fuel Temperature case, one group of defendants provided a declaration explaining that a search of the archived documents by category code identified 48,721 boxes of records potentially relevant to the plaintiff’s discovery requests. The cost to simply retrieve those boxes from storage was estimated at $197,000, and that did not include the expense of search for responsive documents within each box. Another defendant provided a declaration explaining that it had identified 6,750 boxes, likely to contain responsive documents which were located in three different offices. That defendant estimated that searching those boxes for responsive information would require 5,063 hours of time at a cost of $253,150. A third defendant’s declaration explained that its archived email systems included formerly independent entities that had merged with it, each of which had its own archived email systems that were difficult to access and search. This included thousands of backup tapes that were not electronically searchable, and would have to be individually reviewed. A third-party vendor would have to be hired at a substantial cost simply to facilitate the review of the data on those tapes.

The court apparently felt that there was good cause to order production of this information because it directed the defendants to make their pre-2001 records available to the plaintiffs as they are maintained in the ordinary course of business at each defendant’s expense. However, to the extent that plaintiffs wanted to search thousands of boxes of records, the court directed that they had to do so at their own expense. Moreover, the court directed that if the plaintiffs selected any records or documents for copying, the defendant in possession of the records would be entitled to then review them for responsiveness, privilege or any other objection. Notably, the court explained that the defendants’ production of these documents as directed by the court, did not waive any privilege objections. If, after reviewing any of the defendants’ pre-2001 documents, the plaintiffs identified a specific pre-2001 email or other electronically stored information that they believed relevant to the lawsuit, the court provided that the plaintiffs may then seek discovery of that specific ESI.

Canadian data

Plaintiffs also sought pre-2001 information concerning how the defendants implemented and used ATC equipment at gas stations in Canada. The defendants argued that obtaining station specific information in Canada would be overly burdensome. One defendant pointed out that the requested information would have to be obtained from 750 service stations throughout Canada which would require 35 weeks to obtain and review. Another defendant demonstrated that it had 246 service stations in Canada, and would take 300 hours to simply gather the information. The court was persuaded by those figures that the plaintiffs’ requests were unduly burdensome. It ordered that the defendants which provided declarations in support of their objection to gather a sample of information from ten representative service stations.

Each party should provide a factual predicate establishing undue burden

The court, however, overruled the undue burden arguments of the remaining defendants which failed to submit declarations concerning their Canadian operations. The court noted that two defendants submitted “factually divergent” declarations, and that the burden on one defendant was not likely representative of the burden on the other defendants. So a word of caution, each party in any multi-party case should provide the necessary factual predicate for its undue burden argument or run the risk that the court will find one or more of the parties failed to meet its burden of proof. It is common in litigation involving multiple parties on one side of the ledger to divide up tasks among themselves so that each party is not reinventing the wheel and incurring unnecessary legal costs. However, each party should supplement lead counsel’s undue burden objection with their own supporting declaration, or run the risk of the same outcome.

Lady Justice photo courtesy Flickr user vaXzine under this Creative Commons license.

In Newman v. Borders, Judge John Fasciola relied upon Rule 1 of the Federal Rules of Civil Procedure to limit a party’s request for an additional 30(b)(6) deposition sought by the plaintiff in a motion to compel. Newman involved a racial discrimination claim where the discovery costs dwarfed the potential recovery. Thus, in order to bring the discovery dispute to “a just and inexpensive conclusion,” rather than allowing another costly 30(b)(6) deposition requested by the plaintiff, Judge Fasciola ordered the defendant to submit an affidavit from a knowledgeable company representative answering a series of nine questions which he outlined, addressing the issues that were the subject of the motion to compel.

In light of the costs of electronic discovery, given Rule 1’s mandate that the Federal Rules should be interpreted to secure the “inexpensive determination of every action and proceeding,” it should be part of any party’s playbook to control ediscovery costs. Frequently however, it seems that court and counsel lose sight of Rule 1’s approach. Perhaps Newman, and other likeminded decisions will signal the way to control the costs of discovery.

The Newman lawsuit stemmed from an incident at a Borders book store where a store detective approached and questioned the plaintiff. The plaintiff believed the incident was racially motivated, and subsequently brought a §1981 discrimination claim against Borders. Borders defended the action noting that the plaintiff was questioned only because the store detective saw him take an item from the shelf, and place it into a bag which he had brought into the store.

During the course of discovery, plaintiff sought to take a Rule 30(b)(6) deposition of a Borders’ representative. One of those topics to be covered in that 30(b)(6) deposition was “Borders’ document, information, and record collection and retention policies and practices.” During the course of the 30(b)(6) deposition, the Borders’ representative was questioned regarding the company’s policy dealing with the retention and destruction of emails. However, that was not one of the topics listed in the 30(b)(6) notice. The witness did not know the company’s email retention policy, and while the witness was aware that emails were backed up by the IT department, she did not know how long they were retained. The representative also did not know whether Borders had a written policy regarding the retention of emails, did not know what custodians’ emails were searched or what search terms were used.

The plaintiff subsequently filed a motion to compel requesting Borders designate another 30(b)(6) witness to testify as to the company’s email retention policies, and any searches conducted for emails. In opposing that motion, Borders pointed out that the plaintiff never sought any documents retention or email policies in any formal discovery requests, and that plaintiff never specifically referred to the defendant’s email policies or search protocols for responsive emails in the description of the topics to be covered in 30(b)(6) deposition.

Discovery of Document Retention and Email Policies

Judge Fasciola recognized that a party’s document retention policies including its policies involving electronically stored information are a proper subject of discovery. He also noted that these policies can be the topic of a 30(b)(6) deposition, and that a party must produce a “30(b)(6) designee,” who can knowingly address these topics. If necessary, a party must educate its designee so that the witness can address the topic on the company’s behalf.

Rule 30(b)(6) Deposition Notices Must Clearly Define the Topics to be Covered

Judge Fasciola also observed however, that any party seeking a Rule 30(b)(6) deposition must clearly delineate the topics to be covered at the deposition. He noted that in Newman the terms “email” and “electronically stored information” were conspicuous by their absence in the description of the topics to be covered in the 30(b)(6) deposition. After carefully reviewing the deposition notice, Judge Fasciola concluded that any reasonable lawyer would not have thought that Borders’ email retention policies and its email search protocols were going to be topics at the deposition.

Fed. R. Civ. P. 1

Rule 1 of the Federal Rules of Civil Procedure requires that the federal rules “be construed and administered to secure the just, speedy, and inexpensive determination of every action and proceeding.” Judge Fasciola noted that a court has “the unquestioned right (if not the duty) to bring discovery disputes to a just and an inexpensive conclusion” under Rule 1.

Because the case was littered with a number of discovery disputes, he noted that the legal fees incurred to date likely dwarfed the plaintiff’s potential recovery and, therefore, refused to allow another costly deposition. In lieu of another Rule 30(b)(6) deposition, Judge Fasciola directed Borders to submit an affidavit from a knowledgeable representative addressing the following nine questions:

• What kind of e-mail system does Borders have? (i.e., Outlook, Lotus Notes or proprietary)?
• Is that system programmed to delete emails automatically that have been in existence for a certain period of time? If the answer is yes, what is the period of time and was that system shut off or kept on after the incident involving plaintiff?
• Does Borders have a policy that requires either the retention or deletion of e-mails and, if so, what is the policy and is it in writing? If it is in writing, it will be appended to the affidavit.
• Was it necessary to make efforts to prevent the deletion of emails after the incident involving plaintiff, and, if so, what efforts were made?
• Is Borders aware of the deletion of any emails pertaining to the incident involving plaintiff?
• Who was responsible for search for any emails pertaining to the incident involving plaintiff?
• How did this person or these persons conduct the search? What receptacles of electronically stored information were searched? Network serves, individual hard drives?
• If individual hard drives were searched, whose were they?
• Did the search involve the use of keywords and, if so, what were they?

Conclusion

Frequently, attorneys pursuing civil rights litigation have little concern over the extent of discovery because if they prevail, they can recover their fees under 42 U.S.C. §1988. That scenario is aggravated when electronic discovery is involved. In Newman, Judge Fasciola relied on Rule 1 to limit some discovery costs. Parties should also not overlook Rule 26(b)(2)(C) which authorizes a court to limit the extent of discovery otherwise allowed when “the burden or expense of the proposed discovery outweighs its likely benefit.” See Fed. R. Civ. P. 26(b)(2)(C)(iii). In a future post, we will discuss the application of Rule 26(b)(2)(C) to discovery in civil rights claims brought against municipalities and other units of local government.

Michael Doyle comments on this case over at Suits & Sentences.

Stop sign photo courtesy Flickr user ladybeames under this Creative Commons license.

Defendant Mid America Engine ran a keyword search on its electronically stored information and produced responsive documents to plaintiff Surplus Source Group. After Surplus Source complained about shortcomings in the production, Mid America asked for information from Surplus Source that would help Mid America conduct a second search. Six weeks later, Surplus Source’s lawyer responded by email, outlining the purported deficiencies. Mid America’s in house counsel replied that same day, asking for particular keywords with which to search. More than two weeks after that, Surplus Source provided those keywords. By that time, however, Mid America had already conducted the second search.

Surplus Source moved to compel Mid America to run a third keyword search using the terms Surplus Search had proposed. The court found that the additional discovery was warranted, but ordered Surplus Source to pay for the third search, up to the amount that the second search cost. Mid America would be responsible for the rest.

Operating under the teaching of Oppenheimer Fund, Inc. v. Sanders, 437 U.S. 340 (1978), the court recognized that normally “the responding party must bear the expense of complying with discovery requests.” It also recognized its ability to shift the costs of discovery to the requesting party where doing so would protect the responding party from “undue burden or expense.” In this case, the court found that Mid America had “shown a persistent willingness to aide [Surplus Source] in crafting an ESI search that would yield the documents if they do, in fact, exist.” Had Surplus Source provided the search terms to Mid America sooner, the court found, the third search would not have been necessary.

By shifting the costs in this manner, the court did not drastically alter the traditional cost-bearing framework, which requires the responding party to pay. Mid America had paid for the second search, which did not satisfy Surplus Source. But the court believed Surplus Source’s dissatisfaction arose, at least in part, because of its own delay. If the third search was to take place, Surplus Source would pay the amount already incurred by Mid America for the second search. To the extent the third search was more extensive, and therefore, more expensive, Mid America would be responsible for that. In this way, the court cleverly shifted to Surplus Source the portion of duplicate costs occasioned by the delay in supplying keywords.

When the opening line of an ediscovery decision is: “This Opinion should serve as a wake-up call to the Bar in the District,” visions of another Qualcomn blowup immediately come to mind. When you realize the decision is about “the need for careful thought, quality control testing, and cooperation with opposing counsel in designing search terms or key words,” you guess this is another decision addressing the inadvertent waiver of privilege. Because ediscovery is easier to get wrong than it is to get it right, lawyers – being the cynical lot we are – immediately think the worst.

 Well, luckily for those involved in Gross Construction Associates, the decision’s opening salvo was a reflection of the judge’s frustration over having to design a keyword search when the parties could not agree on the terms to employ. While much of the decision retraces the same ground covered by the Victor Stanley and Equity Analytics decisions, the court does provide several interesting insights, and one practical tip to help prevent keyword searches from disintegrating into a game of Scrabble.

The decision arises out of a construction defects and delay claim involving the development of the Bronx County Hall of Justice. The Dormitory Authority of the State of New York (“DASNY”) was the “owner,” and employed Hill International as its construction manager on the project. Hill was not a party to the lawsuit.

DASNY agreed to produce Hill’s project-related documents and ESI to the other parties in the litigation. The issue confronting counsel, and the court, however, was how to segregate Hill’s project-related e-mails from those that were unrelated. Thus, the parties proposed to use the use of keyword searches to filter out the unrelated e-mails.

After DASNY proposed a number of keywords, the other parties “requested the use of thousands of additional search terms” which the court recognized “would require production of the entire Hill email database, since Hill’s business is construction management, and the proposed search terms would be used for any construction project.” There were two other complicating factors. First, Hill was also involved in an unrelated construction project involving the Bronx Zoo so the parties could not filter out the unrelated emails by simply inserting the term “Bronx’ to the list of keywords. Additionally, Hill did not use the standard “RE” line for its emails relating to the construction of the criminal court complex in order to distinguish those emails from emails relating to its other projects.

The court noted that Hill’s “only contribution” to the keyword dispute “was to agree that DASNY’s search terms were probably too narrow,” and that “the other parties’ terms were over-broad.” Further adding to the court’s frustration was that while Hill was in the best position to explain “what nomenclature its employees used in [their] emails,” it failed to do so because “it wanted to have as little involvement in the case as possible.” This left the court having to craft a keyword search methodology without adequate information from the parties.

The court noted that the issue presented “is just the latest example of lawyers designing keyword searches in the dark, by the seat of the pants, without adequate (indeed, here, apparently without any) discussion with those that wrote the e-mails.” The court then recalled that in Victor Stanley, Judge Grimm observed:

Selection of the appropriate search and information retrieval techniques requires careful advance planning by persons qualified to design effective search methodology. The implementation of the methodology selected should be tested for quality assurance; and the party selecting the methodology must be prepared to explain the rationale for the method chosen to the court, demonstrate that it is appropriate to the task, and show that it is properly implemented.

The court in Gross Construction Associates then recalled that in his O’Keefe opinion, Judge Facciola explained:

Whether search terms or “keywords” will yield the information sought is a complicated question involving the interplay, at least, of the sciences of computer technology, statistics and linguistics. Given this complexity, for lawyers and judges to dare opine that a certain search term or terms would be more likely to produce information than the terms that were used is truly to go where angels fear to tread. This topic is clearly beyond the ken of a layman and requires that any such conclusions be based on evidence that, for example, meets the criteria of Rule 702 of the Federal Rules of Evidence.

The court ultimately concluded that in addition to DASNY’s proposed keywords, the search should also include the names of the parties’ personnel involved in the Bronx Courthouse construction project.

The court in Gross Construction Associates did not address whether expert assistance is required in the development of a keyword search. Rather, it explained that what is required “is something other than a lawyer’s guesses, without client input, and without any quality control testing to see if the search terms produced reasonably all the responsive ESI and limited ‘false positives.’”

The court in Gross Construction Associates added a practical tip for lawyers when developing keyword searches. It noted that lawyers should carefully craft the appropriate keywords “with input from the ESI’s custodians as to the words and abbreviations they use.” Thus, as with other aspects of ESI discovery, communication with your client is a key. Don’t overlook speaking to your client’s employees to gain insight into how they draft, reference, and store their emails. This practical tip should help prevent your next attempt to draft a keyword search from turning into a game of scrabble with opposing counsel. To paraphrase the concluding line from Gross Construction Associates, this practical tip is one “that the Bar – even those lawyers who did not come of age in the computer era – understand.”

Several points about Rhoads bear mentioning. First, even though the lawsuit was filed and the inadvertent production occurred before the enactment of Rule 502, the district court found it was “just and practicable” to apply Rule 502 in the case before it. So Rhoads supports the notion that the Rule can be applied even when the discovery production occurred before Rule 502′s effective date.

Second, even though an e-discovery consultant was retained and a “fairly sophisticated screening device” was used to screen a data set for privilege and work product, the court found that attorney-client privilege was waived as to a group of documents for which a privilege log was not provided on a timely basis. This case teaches that F.R.C.P. 26′s obligation to provide a privilege log must be taken seriously and that Rule 502 may not save you if a privilege log is not timely provided.

The court in Rhoads cited with approval Victor Stanley, Inc. v. Creative Pipe, Inc., 250 F.R.D. 251 (D. Md. 2008), which discussed the care that must be taken when using keyword searches during privilege review and noted: “An understandable desire to minimize costs of litigation and to be frugal in spending a client’s money cannot be an after-the-fact excuse for a failed screening of privileged documents.”

Victor Stanley acknowledged that keyword searching has been widely accepted by courts when parties use them to search for responsive documents to a discovery request. However, the court in Victor Stanley further explained that “simple keyword searching is inadequate in at least some discovery contexts” because keyword searches end up being both over and under – inclusive. One such context where extreme care must be taken with keyword searches is when keywords are used to find privileged documents. When an inadvertent production of privileged documents occurs as in Victory Stanley, a party that used a keyword search to screen for privilege has the burden to demonstrate that the search methodology was reasonable. Because the defendants failed to prove the reasonableness of their methodology, the court in Victor Stanley concluded that attorney-client privilege had been waived as to the particular documents that had been inadvertently produced in that case.

Rhoads however, provides at least a partial answer to the problem noted in Victory Stanley when search techniques or methodologies are used to screen a set of documents for privilege. The district court in Rhoads concluded that the use of a “fairly sophisticated screening device” showed substantial compliance with F.R.E. 502(b)’s requirement that reasonable steps be taken prior to production to prevent inadvertent disclosure.

The district court in Rhoads issued another twelve days later, which addressed privilege log issues for an e-mail string. That opinion notes there is disagreement among various district courts as to whether only the last message sent to an attorney which is part of an email string or all messages which make up that string have to be included in the privilege log. For examples of the contrasting viewpoints, see Baxter Healthcare Corp. v. Fresenius Medical Care Holding, Inc., 2008 WL 4547190 (N.D. Cal. Oct. 10, 2008) (ordering production of a log “that separately identifies the author, reciepient(s), copyee(s), and blind carbon copyee(s) for each logged email communication regardless of whether the communication is part of an email string”), with Muro v. Target Corp., 250 F.R.D. 350 (N.D. Ill. 2007) (holding only the last email sent to an attorney should be logged because logging the preceding emails which are part of the string and which are not themselves privileged could thereby reveal what information was sent to the attorney and result in a breach of attorney-client privilege), and Rhoads v. Building Materials Corp of America, 2008 WL 5082993 (E.D. Pa. Nov. 26, 2008) (same).

For movie trivia buffs, if you run a Google search on the word “privilege,” you will eventually discover a 1967 movie by the same name which has been described by some as a “mockumentary” and others a “cult film.” The movie, Privilege, stars the “immortal” Paul Jones who plays a rock star in the future where entertainment is controlled by the government. This weekend, see if you can find a copy of the movie Privilege and while you are it, checkout Rhoads so that your next privilege review doesn’t turn into its own ediscovery “mockumentary.”