Electronic Discovery and Digital Evidence in a Nutshell - Chapter VII Outline

Here's another installment of my outline of Electronic Discovery and Digital Evidence in a Nutshell, the second edition of the West Academic guide to electronic discovery law in the United States authored by Judge Shira Scheindlin (the judge in the Zubulake v. UBS Warburg) and members of the Sedona Conference. An outline of the previous chapter was posted on February 5, 2017.

VII. CHALLENGES TO – AND COSTS OF – EDISCOVERY

A. CHALLENGING AND DEFENDING EDISCOVERY PROCESS a. Ediscovery often descends into contentious motion practice. b. Victor Stanley v. Creative Pipe court warned that parties must be prepared to explain the rationale for selecting the search methodology, demonstrate that it is appropriate, and show that it was properly implemented. c. Nat’l Day Laborer v. ICE not enough to know the search terms, also have to demonstrate the method in which they are combined and deployed. d. Standard of Reasonableness i. FRCP 34(b)(1)(A) – must describe each item requested with reasonable particularity. ii. FRCP 26(g) responding party must certify that response has been formed to the best of the person’s knowledge after a reasonable inquiry. iii. Freedman v. Weatherford (S.D.N.Y. 2014) – FRCP does not require perfection. Not surprising that some relevant documents fell through cracks – these were uncovered when plaintiffs substituted their search terms for those used by the defendants. iv. FHFA v. HSBC (S.D.N.Y. 2014) – the court refused a request to for discovery from a parallel litigation to be used to test completeness of production. All that can be expected is a good faith, diligent commitment to produce all responsive documents uncovered when following agreed upon protocols. e. Challenges to EDiscovery Process i. Discovery about discovery 1. Motion to compel further discovery under 37(e) 2. Motion for a protective under 26(c) 3. Motion for sanctions under 37(a); (c); or (e) ii. Some courts, including D. Kan, require good cause considering the specific need for discovery, including relevance and suitability of alternative means for obtaining the information. Good cause exists where there is evidence of failure to preserve or produce discoverable ESI. iii. Kinetic Concepts v. Convatec (M.D.N.C. 2010) – even an informed suspicion that additional non-privileged documents exist, cannot support an order to compel production. iv. Finding of good cause requires more than speculation that discovery may be inadequate in the future. v. Am. Mktg. In-Store v. Floorgraphics (D.N.J. 2012) court said that while party used incorrect search terms and did not search all sources, motion to compel was premature because party was still checking its production. f. Defending EDiscovery Process i. Must demonstrate that due diligence was exercised in the process. Some courts have approved checklists and guidelines. ii. Considerations for developing reasonable process: 1. Identity of key custodians 2. Locations of relevant ESI 3. Steps taken to preserve 4. Suitability of criteria used to identify ESI for collection, processing, and review. 5. Suitability of tools 6. Qualifications of individuals entrusted to collect, process, search and review ESI. iii. Contemporaneous documentation of the process is required. 1. Description of information systems. 2. Records of interviews with key custodians. 3. Sources of information excluded including those not reasonably accessible. 4. Chain of custody records. 5. Specifications used to process data 6. Search and culling methods employed, including keywords, date restrictions, TAR protocols, and other culling parameters and filters; 7. Document reviewer guidelines. 8. Sampling or other validation methods used to test efficacy of search methods. 9. Substance of the meet and confer. iv. Da Silva Moore v. Publicis Groupe – Rule 702 and Daubert not applicable to how documents are searched for and found in discovery. But there is a split in opinion on this. g. Information Resolution of EDiscovery Challenges i. Best way to avoid challenges is to avoid them through transparency and cooperation using the Rule 26(f) meet and confer process. ii. Progressive Cas. Ins. v. Delaney (D. Nev. 2014) – court would approve ESI protocol if parties had worked with their ediscovery consultants and agreed at the outset to a predictive coding protocol.

B. COST, COST SHARING, AND COST SHIFTING a. The Costs of Discovery – i. 2011 Degnan Study – 1. $1000 per GB for hosting and processing. 2. $28 per hour to outsource review to India; $65 in New York. 3. Attorneys can review 50 documents per hour. 4. Review cost for 100 GB is between $7,000 and $284,000. 5. Total cost of discovery between $2.70 - $4 per document. ii. 2012 Rand Study 1. Collection 8% of total costs. 2. Processing 19% of total costs. 3. Review 73% of total costs. b. Approaches to Cost Reduction i. FRCP 26(b)(1) restricts scope of discovery to matters relevant to claims and defenses, but not any matter relevant to the subject matter of the dispute. ii. FRCP 26(b)(2)(B) – per se category of unduly burdensome or expensive discovery. – not reasonably accessible. Cost shifting may be ordered. iii. Costs may also be awarded to the prevailing party. c. Cost Sharing and Cost Shifting: The Zubulake Factors i. Zubulake v. UBS Warburg (S.D.N.Y. 2003) – cost shifting should only be considered when there is an undue burden or expense on the producing party. This depends on whether the data is accessible which depends on the media on which it is stored. ii. Backup tapes are the most expensive media to produce from. iii. Seven factor cost shifting test: 1. Specificity of the discovery requests. 2. Availability from other sources. 3. Total cost of production in comparison to the amount in controversy. 4. Total cost of production in comparison to the resources of each party. 5. Relative ability of each party to control costs and its incentive to do so. 6. Importance of issues at stake in the litigation. 7. Relative benefits to the parties of obtaining the information. iv. Boeynaems v. LA Fitness (E.D. Pa. 2012) – cost shifting is available even for accessible data. v. All courts agreed that the mere fact that ESI is not reasonably accessible does not require cost shifting. vi. The 2015 amendments to the Rules resolved the split, by stating in Rule 26( c)( 1)( B) that the court may consider, when framing a protective order, “specifying terms, including time and place or the allocation of expenses, for the disclosure or discovery” (emphasis added) without reference to accessibility of ESI. d. Factors In Addition to Zubulake i. Quinby v. WestLB (S.D.N.Y. 2006) – data moved to backup tapes after a duty for preservation had been triggered. Cost would not be shifted if on such notice at the time of transfer. e. Shifting the Costs Incurred by Nonparties Responding to Rule 45 Subpoenas i. FRCP 45 – attorney issuing the subpoena must take reasonable steps to avoid imposing undue burden or expense on person subject to the subpoena. ii. Courts have traditionally looked favorably on requests to quash unduly burdensome subpoenas or shift cost to the requesting party. iii. DeGeer v. Gillis (N.D. Ill. 2010) – 3 factor test to see if costs should be shifted in case of subpoena on third party. 1. Whether nonparty has an interest in the outcome of the case. 2. Whether the nonparty can more readily bear the costs than the requesting party. 3. Is the litigation of public importance? f. Recovering EDiscovery Costs as a Prevailing Party i. FRCP 54(d) – unless federal statute, FRCP, or court order provides otherwise costs should be allowed to the prevailing party. ii. 28 U.S.C. 1920 narrow definition of costs: 1. Clerk / marshal fees 2. Transcript fees 3. Fees for printing and witnesses. 4. Fees for exemplification and costs of making copies. 5. Docket fees 6. Compensation of experts and interpreters. iii. Race Tires v. Hoosier Racing Tire – (3d Cir. 2011) – Under 28 U.S.C. 1920 – conversion of natives to TIFF and scanning of documents are making copies, not processing and indexing, or collection and preservation. But responding party can invoke FRCP 26 (c) court discretion to grant orders protecting from undue burden or expense, and shift costs.

Exterro's Judges Survey

Exterro's new judiges survey, is worth checking out, if only the finding that no judges agree with the statement, "The typical attorney possesses the subject matter knowledge (legal and technical) required to effectively counsel clients on e-discovery matters." 22 federal judges participated in the study. In contrast the judges feel that 87% of the federal judiciary possess a level e-discovery competency that is okay, good, or strong.

77% found that poor cooperation between parties was the most frequent cause of e-discovery problems. Since the amendment of FRCP 26(b)(1), 95% found parties making more proportionality claims. Only 18% found that parties were taking advantage of the option to send out FRCP 34 discovery requests in advance of the 26(f) conference. 59% cited FRCP 26(b)(1) as the amendment having the greatest effect on e-discovery practices.

Electronic Discovery and Digital Evidence in a Nutshell - Chapter VI Outline

Here's another installment of my outline of Electronic Discovery and Digital Evidence in a Nutshell, the second edition of the West Academic guide to electronic discovery law in the United States authored by Judge Shira Scheindlin (the judge in the Zubulake v. UBS Warburg) and members of the Sedona Conference. An outline of the previous chapter was posted on January 12, 2017.

CHAPTER VI – PRODUCTION OF ESI - Request and production of ESI Governed by FRCP 34 - 34(b)(1) – request can specify the form of the ESI. - 34(b)(2) – response can object to the requested form; must state form it intends to produced in. Unless otherwise stipulated must produce documents as they are kept in the ordinary course of business or organize and label them according to the categories in the request. If request does not specify must be produced in form kept in the ordinary course of business, or a reasonably usable form. ESI need not be produced in more than one form. - ESI is distinguished by the fact that it can be produced in a number of different forms and is searchable and sortable.

A. RULE 34 FORM OF PRODUCTION (PAPER, IMAGES, NATIVES OR OTHER FORMS) a. Is production in PDF form acceptable? Dixon v. Experian (N.D. Ind. 2014) production of unsearchable PDFs. Motion to compel approved required ESI in its native format. b. Database Reports and Emails – PSEG Power v. Alberici (N.D.N.Y. 2007) Emails produced divorced from attachments. Court ordered re-production of emails with their attachments. c. Unless the requesting party states a clear preference (which may trigger negotiation if the responding party objects), the requesting party may be forced to accept whatever “reasonably useable” form the requesting party chooses. XL Specialty v. Bollinger (E.D. La. 2014) – 4M documents produced as unindexed by OCR recognizable images. Motion to compel native format was denied. d. Reasonably usable? Sedona Principle 12 – absent party agreement or court order production should be in form in which it is ordinarily maintained or reasonably usable, “ taking into account the need to produce reasonably accessible metadata that will enable the receiving party to have the same ability to access, search, and display the information as the producing party where appropriate or necessary in light of the nature of the information and the needs of the case.”

B. RULE 34 ORGANIZATION OF PRODUCTION a. Are FRCP 34(b)(2)(E)(i) [requiring documents to be organized according to categories in the request] and FRCP 34(b)(2)(E)(ii) [if party does not specify form for ESI must produce in form used in ordinary course of business or reasonably usable form] mutually exclusive? b. Anderson Living v. WPX Energy (D.N.M. 2014) ESI produced as searchable PDFs need not be categorized because it was searchable. c. Venture v. Barrett (N.D. Cal. 2014) Goal of FRCP 34(b)(2)(E)(i) is to prevent a document dump, and applies to ESI as well as FRCP 34(b)(2)(E)(ii). Ordered initial production of ESI without an agreement as to form, to be re-produced custodial and organization information, and with load files containing metadata and searchable text. d. SEC v. Collins & Aikman (S.D.N.Y. 2009) form in which ESI is ordinarily maintained is not necessarily reasonably usable. Records must be produced in the compilations (175 organized file folders) already prepared by the SEC for their own internal review purposes, despite the SEC’s objection that producing the compilations would reveal attorney work product. The court held that production of a sprawling, disorganized database did not satisfy the requirement that the documents be produced in a reasonably useable form.

C. PRODUCTION OF METADATA a. Application metadata embedded in a file and system metadata used by file system to track file location, name, size, creation, modification and usage. b. Native format: associated file structure defined by the original creating application. c. Document metadata – information accessed via properties view. d. Embedded metadata – track changes or comments. e. User added metadata – includes annotations and subjective coding information. f. Vendor added metadata – data generated as a result of processing a document g. Williams v. Sprint (D. Kan. 2005) – metadata for Excel spreadsheets was scrubbed prior to production and certain cells locked so they could not be accessed. Metadata was not specifically requested. Court held that ESI should be produced with metadata intact unless the party timely objects to its production, parties agree that it should not be produced, or producing party requests a protective order. Party should have reasonably understood request to mean spreadsheets should be produced with their metadata intact. Ordinarily maintained is not synonymous with native format. Data may be archived for long terms storage. Routine migration may result in loss of metadata. If metadata is relevant to claims or defenses it must be specified for preservation purposes.

D. PRODUCTION OF DATABASES a. Aguilar v. ICE (S.D.N.Y. 2008) – Plaintiffs requested production of ICE database and ICE produced text searchable PDFs. Court held that metadata is more critical to understanding a database. b. Sedona Conference Six Database Principles i. Scope of Discovery – only database fields that contains relevant information, not underlying application. ii. Accessibility and proportionality – not all data in database is equally accessible. Parties should apply proportionality to determine marginal value and cost. iii. Use of test queries and pilots – to determine burden and benefits of collecting and production information iv. Validation – reasonable measures to ensure that collection is complete and did not alter the data. v. Data Authenticity and Admissibility – validation of collection does not make the information true or authentic – these are separate issues. vi. Form of Production – the way in which the requesting party intends to the use the data is important in determining the form of production.

E. PRODUCTION OF DIGITAL IMAGES AND LOAD FILES a. Production of ESI in form in which it is ordinarily maintained may present burdensome privacy or privilege concerns, or difficult to use without proprietary software, and so must be produced as digital images. b. Particular fields to be included vary and should be negotiated by the parties depending on the needs of the case.

F. ON-SITE INSPECTION AND MIRROR IMAGES a. Court ordered inspections are allowed under FRCP 34(a) to mirror image an opposing parties hard drives. b. FRCP 34(a) does not create a routine right of access. Courts must balance need for relevant evidence against disclosure of privileged material and undue intrusiveness. c. Inspection protocols should: i. Forensic expert will obtain the images ii. Images maintained by party whose drives were imaged. iii. Production party must have chance to remove privileged or non-relevant information. iv. Responsive data disclosed with privilege log. d. Ingrid & Isabel v. Baby Be Mine (N.D. Cal. 2014) – because response to requests was late and inadequate, court ordered plaintiff be given access to defendant’s computers by expert jointly retained by the parties. e. Schreiber v. Schreiber (N.Y. Sup. Ct. 2010) – courts will not order wholesale turnover of computer drive. No fishing expeditions. Will consider need for confidentiality of competitive materials, privileged materials, and inconvenience to owner. Necessary components of protocol: i. Discovery referee to supervise. ii. Forensic computer expert iii. Cloning procedure that prevents alteration or files and allows for recovery of files. iv. Scope of discovery – keywords and date range. v. First level review by producing party. vi. Second level review by requesting party. vii. Mechanism for resolving disputes by the referee. viii. Provisions for costs to be borne by the requesting party. ix. Fast track discovery schedule x. Provisions for retention and disposition of clone at conclusion of action. f. Mere conjecture or suspicion that an adversary has not produced discoverable information is not enough. g. Courts may deny request for imaging where the burden on the responding party is too great.

G. DISCOVERY FROM RULE 30 (b)(6) WITNESS WITH KNOWLEDGE OF DOCUMENT RETENTION AND PRODUCTION a. 30(b)(6) witnesses must testify about information known or reasonably available to an organization; not just personal knowledge. b. Majority rule is that scope of deposition is limited by relevance and privilege bounds of FRCP 26(b). Some courts have held that the requirement that a party noticing the Rule 30( b)( 6) deposition “describe with reasonable particularity the matters on which examination is requested” limits the scope of the deposition to the contents of that notice. c. IT professional or record retention manager is routinely designated as 30(b)(6) witness. d. In re Actos Prod. Liab. (W.D. La. 2014) – no one person familiar with all aspects of preservation and collection. Company hired consultant that interviewed many employees and made on-site visits. Court found that because consultant was never employee and showed no knowledge of IT procedures and interplay with litigation hold policy, Takeda did not act in good faith in designating him, and Takeda acted in bad faith as to destruction and deletion of documents and engaged in willful abuse of judicial process in attempt to conceal deletion and destruction.

H. PRODUCTION FROM NON-PARTIES PURSUANT TO RULE 45 a. Rule 26( b)( 2)( B) (not reasonably accessible data) is the same as Rule 45( e)( 1)( D). b. Rule 26( b)( 5)( B) (inadvertent disclosure of material) is the same as Rule 45( e)( 2)( B). c. Rule 34( b)( 2)( E)( iii) corresponds to Rule 45( e)( 1)( C). d. Rule 34( b)( 2)( E)( ii) is the same as Rule 45( e)( 1)( B) (form of production). e. Court must have personal jurisdiction to enforce FRCP 45 subpoena. f. Concept of possession, custody and control applies just as it does for FRCP 34 document request. g. Relief From Undue Burden or Expense – Rule 45 subpoenas may be subject to heightened scrutiny; courts will relief nonparties from substantial burden. h. Nonparty Preservation Duties - Third parties may have obligations to preserve evidence relevant to others’ litigation imposed by contract or other special relationship once they have notice of the existence of the dispute. i. Subpoenas of Internet Service Providers – Getting email, social media postings, etc. from ISP prohibited by Electronic Communications Privacy Act absent customer’s express consent. j. Legal Restrictions on Disclosure – i. HIPAA – privacy protection for health records. Title II of HIPAA provides extensive rules regarding the secure storage and exchange of electronic data transactions and requirements promoting the confidentiality and privacy of individually identifiable health information. ii. Computer Fraud and Abuse Act – illegal to access a computer without authorization or to exceed authorized access.

I. CROSS BORDER PRODUCTION ISSUES a. Aerospatiale Framework – Hague Convention is not the exclusive or mandatory procedure for obtaining evidence from abroad. Five factor test: i. Importance to litigation of requested info. ii. Specificity of request iii. Did info originate in U.S.? iv. Alternate means to obtain info? v. Would noncompliance undermine the important interests of the United States? b. Subsequent decisions added additional factors to the Aerospatiale test: i. Competing interests of nations whose laws are in conflict. ii. Hardship of compliance iii. Good faith of party requesting discovery. c. Privacy and Data Protection Laws i. EU laws regulate the collection, processing, transfer and disclosure of personal information. ii. In the Matter of a Warrant to Search a Certain E-Mail Account Controlled by and Maintained by Microsoft Corp. (S.D.N.Y. 2014) emails stored on servers in Dublin. Court held that SCA warrant operates like a subpoena “Even when applied to information that is stored in servers abroad, an SCA Warrant does not violate the presumption against extraterritorial application of American law. d. Foreign Discovery in the United States – i. 28 U.S.C. 1782 procedural mechanism. ii. Certain Funds, Accounts and/or Inv. Vehicles v. KPMG (2d Cir. 2015) – discovery from American firms denied because it was not established that it was for use in foreign proceedings and other proceedings were not within reasonable contemplation. e. Sedona International Framework and Principles i. Due respect should be demonstrated to foreign data protection laws. ii. Where full compliance presents a conflict party’s conduct should be judged under standard of good faith and reasonableness. iii. Preservation or discovery should be limited in scope in order minimize conflict of laws and impact on data subject. iv. Where conflict exists, a court order or stipulation should try to minimize it. v. Data controller should be prepared to demonstrate that data protection obligations have been addressed and safeguards instituted. vi. Protected data should be retained only as long as necessary to satisfy legal and business needs.