Electronic Discovery and Digital Evidence in a Nutshell - Chapter 2 Outline

Here's a continuation 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. The last installment was on November 12, 2016.

CHAPTER II: PRESERVATION OF ELECTRONIC INFORMATION

A. AMENDED RULE 26

Discovery on subject matter no longer permitted even if good cause - must be proportional to needs of case.

1. Importance of issues at stake.

2. Amount in controversy

3. Parties' relative access to relevant information.

4. Parties' resources.

5. Importance of discovery in resolving the issues.

6. Whether the burden of the discovery outweighs its benefit.

The Amended Rule states only that “information within this scope of discovery need not be admissible in evidence to be discoverable” but eliminates the phrase “if the discovery appears reasonably calculated to lead to the discovery of admissible evidence.”

B. TRIGGER OF DUTY TO PRESERVE

- reasonably anticipates litigation - must suspend routine document retention/destruction policy, put hold in place.

1. When does the duty to preserve arise?

- constructive knowledge of future litigation.

2. How should parties determine when the duty to preserve has been triggered?

- inherently fact specific. More than mere possibility. Credible threat. Need not be imminent according to Federal Circuit cases. Is it foreseeable?

Zubulake IV - when nearly all employees associated with Zubulake recognized the possibility that she might sue.

a. Pre-filing Communications Among Counsel

Cache La Poudre Feeds LLC v. Land O'Lakes (D. Colo. 2007) pre-filing communication that did not threaten communication litigation, did not trigger preservation.

b. Pre-filing Preservation Letters

Can be too board if require to preserve all business records. Frey v. Gainey Transportation (N.D. Ga. 2006).

Healthcare Advocates v. Harding (E.D. Pa. 2007) - The court noted that while defendant had preserved the copies, it had no duty to preserve the cached files because the letter had not requested preservation of temporary cached files.

c. Closely Related Proceedings

- provide constructive notice. Zubulake - filing of EEOC complaint provides notice that suit is likely to follow. Hixson v. Las Vegas, (D. Nev. 2013) internal complaints not sufficient notice.

C. SCOPE OF DUTY TO PRESERVE "POSSESSION, CUSTODY, AND CONTROL"

1. What is control?

Rule 26, 34, 45 all restrict production to information in party's possession, custody and control.

a. Practical Ability Test

Prokosch v. Catalina Lighting (D. Minn. 2000) legal ownership or physical possession not required - must have practical ability to obtain documents. Bleeker v. Standard Fire (E.D.N.C. 2000) - reject the practical ability test.

b. Functional Control

In re WRT Energy Sec. Litig., (S.D.N.Y. 2007) plaintiff's failure to object to non-party destruction of documents, and then having expert opine on issues addressed by those docs, meant that plaintiff could not contest those issues at trial.

c. Party and Non-Party Stores

Brown v. Tellermate (S.D. Ohio 2014) defendant had to produce data stored on web - salesforce.com.

d. Parent, Subsidiary and Affiliate Corporations

Parent still has control over subsidiary's documents even if it does not own it directly. Gucci v. Curveal (S.D.N.Y. 2010) even though compiling with subpoena would violate Malaysian law parent in NY still had to get Malay subsidiary's document.

e. Control Imposed by Law

Tomlinson v. El Paso (D. Colo. 2007) - ERISA imposes duty on defendant to ensure employee benefit records are accessible, can't delegate to third party.

f. Control Based on Agency

Corporations may have a legal right to obtain documents from their agents. Seattle v. Professional Basketball Club (W.D. Wash. 2008)

g. Outside Directors

In re Triton Energy Limited Sec. Litig. (E.D. Tex. 2002) - in spirit of the law to get outside directors to preserve and produce documents.

2. What is Possession?

Philliips v. Netblue (N.D. Cal. 2007) - duty to preserve documents accessible thru links in emails? - court found that the party was never in possession. No duty to gather.

a. Access Alone Does Not Equal Possession

In re Kuntz (Tex. 2003) Possession requires more than mere access.

b. Possession Does Not Require Ownership

in re Bankers Trust (6th Cir. 1995) - fed. regs. forbidding production does not provide excuse for ignoring court order to produce when those regs contravene FRCP.

D. BRING YOU OWN DEVICE (BYOD)

Company Owned, Personally Enabled COPE. U.S. Government Policy for BYOD is given - acknowledging expectation of privacy; forbids d/l of sensitive data to personal device; email wipe after 25 password attempts; FIPS 140-2 encryption required when connecting devices to PCs.

Mintz v. Bartelstein (C.D. 2012) defendants owned plaintiffs account with AT&T - must request from plaintiff, not AT&T. Limited expectation of privacy for plaintiff. Could obtain non-content data from AT&T.

E. CLOUD COMPUTING AND SOCIAL MEDIA

EEOC v. Original Honeybaked Ham of Georgia, (D. Colo. 2012) - special master to review data on cell phones, social media, and email accounts - gives hard copies to court to review in camera.

Lester v. Alllied Concrete (Va. 2013) - plaintiff and attorney fined and adverse inference instruction given for destruction of social media evidence.

F. ACCESSIBLE / NOT REASONABLY ACCESSIBLE ESI

Zubulake IV - backup tapes solely for disaster recovery inaccessible; tapes accessed in regular course of business were accessible. "parties need not suspend their normal systems for overwriting disaster recovery tapes even when they are aware that the preservation duty has been triggered, unless they know, or should know, that the ESI contained on them is potentially relevant to the claim and that data is non-duplicative of other accessible information. But the court created an exception for backup tapes of key players, if the data on those tapes were not available from a more accessible source and were like to contain relevant information."

Rule 26(b)(2) "A party need not provide discovery of ESI from sources that the party identifies as not reasonably accessible because of undue burden or cost."

1. What ESI Must be Preserved?

I-Med Pharma v. Biomatrix (D.N.J. 2011) - records in unallocated slack space need not be reviewed because requesting party could not say with certainty that any non-duplicative relevant information could be found.

Tener v. Cremer (1st Dep't 2011) what is not reasonably accessible ESI is based on burden and cost of retrieval not on type of storage media.

2. Does Downloading ESI From an Accessible to an Inaccessible Format Violate Preservation Duty?

Committee Note to FRCP 34 - if ESI for production is searchable, format for production should not alter this feature.

3. Does the Duty to Preserve Include Metadata Embedded in ESI?

FRCP 34 requires that documents be kept in the as they are in the regular course of business, and in the form in which they are ordinarily maintained or in a reasonably usable form.

" Given that metadata may have inherent value for searchability and document authenticity, there may be a rebuttable presumption that metadata is relevant even when the metadata provides no substantive information that directly relates to the claims or defenses."

If party has a reason to ask for metadata it should promptly ask that it be preserved. Right to it can be waived if metadata not initially requested.

4. Does the Scope of the Duty to Preserve Include Relevant But Ephemeral Data?

E.g., cache files of visited web pages.

Courts have never sanctioned parties for the failure to preserve ephemeral data.

Convolve v. Compaq (S.D.N.Y. 2004) - sanctions rejected for failure to preserve data on hard drive tuning device which is overwritten when the device is used the next time.

Courts should consider four factors in considering whether or not to preserve ephemeral data:

i. is the data uniquely relevant to the litigation.

ii. how is the data treated by the party in the ordinary course of business.

iii. excessive cost or burden to preserve relative to value?

iv. does technology exist to preserve the data.

G. PROPORTIONALITY IN THE PRESERVATION CONTEXT

Not every scrap of evidence needs to be preserved regardless of burden or cost. Case law indicates concept of proportionality applies in the context of preservation. FRCP 26(b)(2)(C) - proportionality test for all discovery in federal courts.

H. IMPLEMENTING THE DUTY TO PRESERVE

1. Litigation Holds/Monitoring

Cache La Poudre v. Land O'Lakes (D. Colo. 2007) - cleaning hard drives of former employees eliminates a source of relevant ESI. Litigation hold does not satisfy a reasonable inquiry under FRCP 26(g).

Brown v. Tellermate - affirmative obligation to speak to key players.

Pension Comm. of the Univ. of Montreal v. Banc of Am. Secs., (S.D.N.Y. 2010) must direct employees to preserve all relevant documents; can't have total reliance on employee to search and select.

2. What Should an Organization Do After the Duty to Preserve Arises?

i. lawyers determine claims, defenses and key issues.

ii. identify employees with relevant information

iii. IT and Records help locate and preserve ESI.

iv. Refer to documentation retention policy.

3. How to Preserve Relevant Data?

- Example of Litigation Hold Notice - list of preservation categories; steps to ensure discoverable information is not lost; acknowledgment of compliance; interview with each custodian.

4. Lifting Litigation Holds

- due diligence to determine the data is not relevant to other pending litigation.

5. Records Retention Policies and Information Governance

Arthur Andersen v. U.S. - (U.S. 2005) - okay to have policy that requires the destruction of documents. To act as shield against spoliation must applied consistently.

I. PRESERVATION ORDERS

" Federal Rules do not specify how relevant information should be preserved or how one litigant can ensure that the other will not destroy relevant information before it is produced in the course of litigation. In some cases, one or both parties may ask the court to enter a preservation order that will instruct a party to preserve certain types of information and dictate how it is to be preserved. It is important to remember, however, that a party’s obligation to preserve relevant information exists even in the absence of such an order."

J. OBLIGATION OF NONPARTIES TO PRESERVE ESI

"nonparties generally do not have an obligation to preserve relevant data even when they anticipate that there may be a litigation in which such data is needed."

- some jurisdictions recognize a tort for intentional or negligent nonparty spoliation of evidence if reason to know of litigation and relevance of data.

FRCP 45 subpoena - once complied with preservation obligation terminates.

Courts may permit preservation subpoenas on nonparties.

1. Privacy and Preservation

"Stored Communications and Transactional Records Act prohibits providers of electronic communications services from disclosing the content of stored customer communications to any person, except the federal government upon a court-issued warrant."

2. Preservation Obligations Under State and Federal Law

Sarbanes-Oxley Act requires publicly traded companies to retain records for 5 years after audit.

FLSA - must retain employment records for 3 years.

Dept of Health and Human Services - requires that providers that participate in Medicare keep medical records for 5 years.