The defendants failed to take reasonable measures to ensure that all business communications were preserved as per the legal hold notice instructions, which ultimately lead to spoliation of the documents and sanctions for acting grossly negligent.  Through various motions and testimony of one the defendant’s IT director, it became clear that defendants relied on backup tapes in order to retrieve documents which were at issue, the reliance on which was flawed from the start.  For example, poor preservation of documents, lack of communications regarding the document retention policy, lack of communication between counsel and client, and flawed technical infrastructures failed to capture all deleted emails sent and received by the company.

The defendant’s failure to institute a legal hold was improper because it ultimately led the defense to present materially inaccurate information during the discovery proceedings.  For example, the IT director filed an inaccurate affidavit and defense counsel represented to have provided all the documents within their clients’ custody to the plaintiffs, when they had not.  The court noted a breakdown in the relationship between counsel and the IT department.  While the court found that the IT director was to blame for the failure to communicate with anyone about the deletion policy, counsel for the broker was also to blame for failing to investigate.

When faced with electronic discovery demands, hold a meeting of the minds between counsel, the client’s IT Department, and all relevant employees involved in the issue.  Be very clear as to what information needs to be culled and preserved from all electronic mediums.  Most importantly, keep clear lines of communication open among all interested team members so that accurate information can be disseminated.

It is essential to establish and disseminate clear and concise instructions for document preservation and legal hold notices in order to protect the integrity of your documents. Complete reliance on backup tapes to protect documents when litigation ensues is not only risky, but also can lead to significant problems.  Electronic discovery obligations have brought back office operations into the spotlight of litigation.  Your IT department is not only responsible for maintaining and supporting your technical infrastructure but also it is critical that the department also becomes legally savvy in order to protect your business in the emerging landscape of eDiscovery demands.

In this March 2009 case stemming from a multi-million dollar construction dispute, the project owner agreed to produce all project-related emails and ESI from its non-party construction manager.  The issue before the Court concerned the production of the construction manager’s emails from its server, and how to separate unrelated emails from project-related emails.

In planning the search, the project owner suggested keywords specific to the names of the parties and the project, which were likely to be under-inclusive.  The other parties requested  the use of generic construction project keywords such as “build” and “claim” that would have triggered production of a vast amount of unrelated emails and ESI.  The non-party construction manager, not wanting to be involved in the litigation, offered very little assistance in the development of the search terms.  The parties’ inability to establish a keyword search compromise compelled the court to develop the terms of the keyword search, with little information and guidance from the parties.

Chastising the parties and counsel for these recurring problems, the Court emphasized the need for counsel to cooperate with each other and get adequate information from email authors and document custodians in order to successfully develop a keyword search.  The Court underscored the importance of advanced planning by those qualified to develop the search methodology, along with the need for quality control to assure accuracy and completeness of the search.  The party who selects the method must be able to explain it to the Court, including reasons for using the particular method, why the method was appropriate, and how it was properly applied.

Outside Counsel must cooperate when it comes to e-discovery issues.  In formulating and conducting searches of emails and ESI, obtaining input from clients, email authors, and ESI custodians is key; and the use of quality control methods assures accuracy and completeness of the keywords and search.  Not only will these techniques make the eDiscovery process easier and more reliable, but also courts now expect counsel to employ such methods without having to be told to do so.

Does anything work short of hiring an expert?

Jason Baron and Doug Oard of the 2009 TREC Legal Track research team are addressing the many questions plaguing the field of E-discovery by testing the current E-discovery technology and various search methods.

With the help of lawyers, researchers, and scientists, the TREC researchers are seeking the perfect search for mining relevant e-discovery documents.

The shocking news – the technology tested from over 20 e-discovery vendors proved no better than Boolean keyword searches.  A Boolean keyword search is basically a search using keywords combined with “and” and “or” as connectors.

While TREC searches on for the next frontiers of e-discovery searches, they have identified a “best practices” for attorneys conducting keyword searches.

1. Work with opposing counsel to identify search terms.

1. Test the search terms by sampling to determine whether the search engines are finding relevant information with identified terms.

1. Depending on the results, the attorneys may need to meet again to discuss additional terms or form a final agreement as to terms used.

These steps obviously require cooperation with your adversary – which depending on the person – could be a challenge.  Ultimately, the TREC researchers reiterated the importance of the Sedona Conference’s Best Practices for E-Discovery Searches.

Katherine Sparks is a third year Seton Hall law student who is looking forward to graduating and working with a litigation firm in Texas.

“Data and information security is simply the ongoing process of ensuring that data and information systems are kept safe from unauthorized access, use, disclosure, destruction, modification, disruption or distribution. Now, more then ever, we live in a world were an enormous amount of information is created, exchanged, and stored electronically. With this proliferation comes the daunting task and legal obligation to keep the data and information safe, secure, and accessible,” explained Pinguelo.

Participants of the one-hour webcast program will learn about business and legal reasons to address both data and information security, including Federal laws and standards enforced. Speakers will explore the costs experienced by companies that encounter a breach, including response costs, reputational costs, customer loss, and litigation. They will review examples to identify problems, examine key areas to ensure data and information are secure, and identify cost effective tips and practical policy tips to implement. The webcast is approved and available for CLE credit in California, Illinois, New York, Pennsylvania, and Texas.

For more information and to register, visit ACC website and see Upcoming Webcasts.

Visit the IASA Conference’s official site.

From the Norris, McLaughlin & Marcus, P.A., press release, dated June 6, 2009:

Fernando M. Pinguelo, a Member of the law firm Norris McLaughlin & Marcus, P.A. and Co-Chair of its Response to Electronic Discovery and Information (REDI) Group, will be speaking at the 2009 Annual Educational Conference and Business Show of the Insurance Accounting & Systems Association (IASA), which will be held on June 7-10, 2009. He will speak on a panel titled, “The Rise of eDiscovery,” and explore the legal implications of eDiscovery on the insurance, accounting, and systems industries. The conference provides the most comprehensive educational program and business show targeted for financial and technology professionals in the insurance and financial services industry. Joining Pinguelo on the panel will be Darby J. O’Neill, Vice President, Information Technology, Princeton Insurance; Eric Offenberg, Business Development Manager, IBM Software Group; and Carlos Correa, Assistant Vice President, US Technology Manager, Liberty International Underwriters, Inc.

IASA is a non-profit, education association that strives to enhance the knowledge of insurance professionals and participants from similar organizations closely allied with the insurance industry by facilitating the exchange of ideas and information.  IASA is one of the insurance industry’s largest, and most well represented trade association. . . .

Notably, Pinguelo was involved in New Jersey’s first case addressing its new e-discovery rule amendments, and has lectured numerous times on the topic, including at the Judicial College which provides judges with a wide range of academic programs to keep abreast of developments in the law. He designed a state-of-the-art electronic discovery law course and teaches one of only a handful of such courses in the country at Seton Hall University School of Law. He also created e-Lessons Learned, an educational blog about e-discovery and technology.

Pinguelo regularly publishes articles and lectures on a variety of topics, including electronic discovery and information, entertainment law, employment, and contracts. Recently, the Fulbright Program, the U.S. government’s flagship international exchange program, designated Pinguelo a Fulbright Specialist for his work in eDiscovery, and he will engage in a collaborative project at a university in one of over 100 participating countries worldwide. He has appeared on television as a legal commentator on various high-profile trials, and has been quoted and cited in newspaper and magazine reports about cases he has handled.

E-Lessons Learned will be covering the event.

While filing six different motions to mirror image a third party’s computer may make the senior partners at your firm really happy that you are bringing in the big bucks, unless you have discovered something that there was absolutely no way of knowing about previously, you should probably cut your losses and move on. The plaintiff in this case alleged that prior to Meesham Neergheen leaving Mintel; he emailed himself Mintel documents via his personal email account and was using these documents at his current employer Datamonitor.

The original complaint was filed on July 11, 2008. Subsequently on August 28, 2008 the first of six motions to mirror image the computers of Datamonitor was filed. Like each of the following motions, this motion was denied without prejudice. The current motion, filed on December 23, 2008, asserted that the analysis by Mintel’s forensic expert of the USB drives turned over by Datamonitor in mid-September resulted in evidence supporting the mirroring of Datamonitor’s computers. This evidence included that Neergheen’s resignation letter was printed from one of the USB drives onto a Datamonitor printer server “Thames” and that a “wiping” program had been used to overwrite some of the material on the USB drives due to the “FF” values found in the unallocated space on the drives.

The Magistrate Judge first made clear that on motions for reconsideration based on newly discovered evidence, the orders would only be overturned based on evidence that based on reasonable diligence could not have been discovered in time to have been presented previously. Here, the Court notes that Mintel should have known of the Mintel documents on the USB drives before the order, which was entered on December 23, 2008. While, Mintel claims that this was not possible because Datamonitor did not turn over information required to complete the analysis until December 31, 2008, the discovery order placed a deadline on discovery for November 30, 2008. Therefore, Mintel’s expert should have concluded his analysis by November 30^th at the very latest.

Although the lack of diligence by Mintel presents enough reason to deny the motion, the Court further analyzed the presence of new evidence asserted by Mintel. Looking at the claims of new evidence the Court noted first that both parties admit that the only document connecting the USB drives with Datamonitor is the resignation letter printed by Neergheen on Datamonitor’s printer. Next, the Court acknowledged that two fragile Mintel documents were found on the USB drives, however, observed that there was no connection between them and Datamonitor. Lastly, the Court looked at the conflicting opinions of the experts, which contradict regarding the presence of “FF” values found on the unallocated space of the drives. Since Mintel’s expert was unable to state which program was used to wipe the drives or whether any other wiping program results in a “FF” hexadecimal pattern upon wiping, the Court concluded that this evidence was insufficient to result in an overturning of the previous order.

Thus, while Mintel certainly had reasons for desiring to mirror Datamonitor’s computers, mere postulating was insufficient evidence to allow their motions. Even after they had secured information from Datamonitor that may have allowed them to secure a motion to mirror the computers, the diligence by the party was inadequate to persuade the court. Also, because Datamonitor was a third party in this action, it is likely that anything which came close to being “on the line” in terms of influencing the court’s decision was decided in favor of protecting Datamonitor.

Courtney is a graduate from UCLA and is currently a third year student at Seton Hall Law School with a concentration in intellectual property law.

This is the fifth chapter in our Zubulake series.

Zubulake’s suit against UBS was your typical, run on the mill, employment discrimination case. However, along the way it has now become one of the seminal e-discovery cases.

Zubulake V is concerned with the plaintiff’s request for electronically stored information (“ESI”), in particular, e-mails. This motion was made after two years of attempting to get the information that she requested. The court was faced with the issue of whether to issue sanctions on UBS for its failure and delay in producing relevant evidence and if so whether UBS acted negligently, recklessly, or willfully.

The UBS’s lawyers did make some efforts to preserve evidence. They told employees to not delete relevant information. They instructed IT personnel to preserve back up tapes. And they met with key individuals and explained that the need to preserve all relevant evidence. However, it eventually came to light that these efforts were not enough. It was discovered that some back up tapes that stored e-mails had been deleted and that at least one relevant e-mail had been lost.

Judge Scheindlin immediately noted that many of the discovery issues presented in this case were due to the lack of effective communication.

Judge Scheindlin outlined the attorney’s and client’s duty to preserve and produce ESI. In short, counsel has an obligation to instruct his client to preserve relevant information. The client has an obligation to take that instruction to heart.

Ultimately, the court found that Zubulake was prejudiced by the failure to produce relevant e-mails and therefore, UBS was sanctioned with costs and fees. The court also determined that adverse inference instruction based on spoliation was appropriate in this situation. This was based on three elements. One, the defendant was in control of the evidence and had a duty to preserve. Two, the defendant willfully destroyed the records. Three, the destroyed evidence was relevant to Zubulake’s claim.

Attorneys, as well as clients, should be aware of the recommendations made by Judge Scheindlin in regards to e-discovery practices. These include the following:

1. Communicate Effectively. Attorneys need to talk with the key players involved in the litigation in regards to their discovery obligations. Litigation holds must be issued and attorneys are responsible for re-issuing the litigation hold to remind the employees about their obligation to preserve information. An active role must be taken by counsel to ensure that the litigation hold is closely followed.
2. Understand the Client’s ESI network. Attorneys should know all the places that ESI is stored and reasonable efforts should be made to identify and preserve relevant ESI. Discussions with key players will help unveil discoverable information. Further, attorneys should know their clients’ document retention policies inside and out. It is wise for the attorney to meet with IT personnel and receive a basic education on the system and policies.
3. Backup! Attorneys should make sure that their backup materials are identified and retained in a safe place. It may be best for counsel to personally store the backup materials, if there is a small amount. However, if there are a number of backup tapes, they should be placed into storage.
4. Get Employees to Produce. Attorneys must instruct the employees to produce a copy of all the relevant documents that they have retained.

Shannon is a graduate of Boston College and is currently a third year student at Seton Hall Law.

Often times, the posts on this blog talk about a specific lesson to be learned related specifically to e-discovery rules, practice, and procedure. It can be easy to forget that in many cases, the e-discovery part of the litigation is not the end all and be all of the case, but it rather is interrelated with other substantive areas of law. This was especially true in the Zubulake v. UBS Warburg LLC opinion cited above, one of the many in the seminal Zubulake case.

In this 2003 Zubulake v. UBS Warburg LLC opinion, the plaintiff, Laura Zubulake, moved for an order permitting her to release the transcript of Christopher Behny’s deposition to securities regulators. Behny was the Manager of Global Messaging for UBS. The Southern District of New York had previously ordered UBS to produce an individual knowledgeable about UBS’s email retention and retrieval policies. After UBS produced Behny for a deposition, Behny testified on the structure of UBS’s backup system, its backup tape destruction/retention policy, and the feasibility and estimated cost of restoring the data that Zubulake requested.

Upon review of the deposition, Zubulake concluded that UBS was in violation of Section 17(a) of the Securities Exchange Act of 1934 and SEC Rule 17a-4 promulgated thereunder. (These combine to require certain document retention requirements on brokerage firms.) Zubulake thus requested the court allow her to release the transcript of the deposition so that should could comply with her ethical obligations under various securities laws to report knowledge of rule violations to the appropriate authorities.

In denying Zubulake’s motion, the court determined that Zubulake failed to proffer any reason for disclosing the contents of Behny’s deposition. The court ruled that Zubulake had no clear duty to disclose the information contained within the deposition, and it thus denied her motion.

At first glance, it would seem that this case has little, if anything, to do with e-discovery. However, if one digs a little deeper, we see that there is one important e-discovery lesson to be learned. Namely, e-discovery issues often are interrelated to other areas of law. Thus, it is important to keep in mind the interplay between e-discovery and other legal theories when seeking to compel disclosure of electronic information. In this specific opinion, the e-discovery issues played out in the context of securities law. In other cases that have been discussed on this blog, e-discovery issues played out in the context of internet law, employment law, intellectual property, and construction law, to name a few.

The point here is that e-discovery issues can arise in all types of litigation. It is thus imperative for attorneys (and future attorneys) to be familiar with e-discovery concepts so that at the very least, they will know when to seek the advice of an e-discovery expert.

Tim Cedrone is a third year student at Seton Hall Law School.

For those of you that have been living under an e-discovery rock, and therefore have never heard of Zubulake, please continue reading.

The Zubulake decisions in 2003 through 2004 shook the world of e-discovery. Litigators, law professors, and all kinds of pundits, tuned in and took notice: U.S. District Judge Shira Scheindlin, one of the most brilliant trial judges on the bench today, and unfortunately for UBS, an e-discovery expert threw the gavel at UBS on this one. Zubulake walked away from this case with close to $30 million and UBS was left with a deep hole and lots of sanctions.

But we are skipping ahead in our saga. The case started as a common gender discrimination suit brought by Zubulake against her former employer, UBS. Zubulake requested that UBS produce “[a]ll documents concerning any communication by or between UBS employees concerning the plaintiff.” UBS produced 350 pages of documents, including approximately 100 pages of email. Zubulake knew that emails existed that the defendant had failed to produce because she, in fact, had produced approximately 450 pages of email correspondence. Fed. R. Civ. P. 26 provides that discovery permitted with respect to any matter not privileged that is relevant to the claim or defense of any party. The presumption is that responding party must bear the expense of complying with discovery requests. Nonetheless, UBS refused to produce any of the emails from their archival media, claiming undue burden and expense of over $175,000. UBS wanted the court to shift the cost of production to the plaintiff.

The main issue in this case was determining to what extent is inaccessible electronic data discoverable, and who should pay for its production? The court considered the Rowe 8-factor cost shifting test. The court noted that the application of the Rowe factors may result in disproportionate cost shifting away from large defendants, and the court modified the test to 7 factors, in descending order of importance:

(1) the extent to which the request is specifically tailored to discover relevant information;

(2) the availability of such information from other sources;

(3) the total cost of production compared to the amount in controversy;

(4) the total cost of production compared to the resources available to each party;

(5) the relative ability of each party to control costs and its incentive to do so;

(6) the importance of the issue at stake in the litigation and;

(7) the relative benefits to the parties of obtaining the information.

However, the court would not apply its new 7-factor test just yet. The court wanted to follow a three step process to arrive at a solution. The steps iterated in the opinion are:

1. Thoroughly understand the responding party’s computer system, both with respect to active and stored data.
2. Because the cost-shifting analysis is so fact-intensive, it is necessary to determine what data may be found on the inaccessible media. Production from a small sample is a sensible approach.
3. Apply the 7-factor cost-shifting factor.

Therefore, the court ordered the defendant to produce, at its own expense, all responsive email existing on its optical disks, active servers, and five backup tapes as selected by the plaintiff. The court determined that only after the contents of the backup tapes are reviewed and the defendant’s costs are quantified, the court will conduct the appropriate cost-shifting analysis.

So, Zubulake I leaves us with an important lesson – the undue burden card has been taken out of play and now courts will be more skeptical of defendants trying to weasel their way out of paying for data retrieval, especially when the plaintiff has a legitimate case.

Throughout the next few days, we will be continuing with the Zubulake case line.  Check back again tomorrow for more.

Tanya Basu is a Pharmacist and a third year student at Seton Hall Law School, focusing on Health and Intellectual Property Law.