I normally develop the custom
articles that you read in the Forensic Discoveries eDiscovery newsletter.
However, this month I have chosen to republish and article written by a good
friend of mine, Charles E. Young, partner at Kramer Rayson LLP in Knoxville, TN.
The below article is a reprint from the Knoxville BAR Association's December
2009 DICTA Publication. Special thank you
to both the Knoxville BAR Association and Charles E. Young for permitting me to
republish.
E-Discovery
Update
2009 has been a busy, lively year in electronic discovery.
For some, it will be remembered as the year Tennessee caught up
with the world, as formal e-discovery amendments to the Tennessee Rules of
Civil Procedure took effect on July 1. Those amendments mirrored the 2006
amendments to the Federal Rules of Civil Procedure with only a few immaterial
differences.
Thus far, however, no Tennessee
state court has rendered a published opinion on e-discovery, so we will
continue to look to the federal courts for guidance. And in 2009,
electronic discovery issues percolated throughout the country as courts and
practitioners continued to deepen their appreciation of how electronically
stored information - ESI - is created, stored, located, preserved, reviewed,
and produced.
Some have used that understanding to serve
their clients well. Others have been sanctioned for failing to understand
ESI fully. Still others have invoked e-discovery to launch burgeoning
judicial reform movements, claiming that the burdens are more than anyone
should bear.[i]
I have long believed that technology can be both the cause of, and solution to,
this purportedly difficult situation. We created an ESI-dominated world;
now, we are creating and refining tools to help manage it. You can buy
inexpensive, sophisticated software that will enable you to search, sort,
analyze, and produce thousands of "pages" of information.
Similarly, your clients can buy software that will enact and maintain a
litigation hold in a provable, defensible way. Just as next year's
computers will double last year's in power, e-discovery technologies continue
to advance.
With that in mind, consider three trends in recent e-discovery cases: (a)
increasingly frequent sanctions, (b) locating the trigger for preservation
duties, and (c) courts' strong interest in litigants' voluntary
cooperation. In the interest of time, I omit other interesting
developments, chiefly the effect of new Federal Rule of Evidence 502 on
privilege issues.[ii] Bottom line: as e-discovery technology improves, courts
expect us to improve our understanding on a parallel track.
Sanctions: First, courts are plainly
becoming impatient with failures of parties and their counsel to
manage the process and understand the technologies that contain evidence.
Courts are considering sanctions - and awarding them - more often than ever.[iii]
A
critical 2009 case in this regard is Bray & Gillespie Management LLC v. Lexington
Insurance Company,[iv] which saw one of the world's largest law firms, and two of its
attorneys individually, sanctioned for a series of errors and unnecessary
wrangling. The underlying case was a straightforward insurance
coverage dispute, but the plaintiff, an owner and operator of resorts in
Florida, prepared for litigation in a curious way: it downloaded ESI in native
format, converted it to TIFF images (which like PDFs are basically flat
pictures of data) and, in the process, failed to preserve metadata relevant to
the parties' claims and defenses. The plaintiff's lawyers were also, to
put it charitably, less than forthcoming about what they had done.
The
insurers requested the ESI in native format, and eventually they moved to
compel production and for sanctions. The court granted the motion and
held, among other things, that the ESI produced was not in a "reasonably
useable" form, that the plaintiff and its attorneys concealed information
and made material misrepresentations, and that monetary and other sanctions
were warranted against all of them. In a detailed opinion, the court
noted that the plaintiff, "as the client, has the obligation to supervise
its lawyers"; that inside counsel cannot blindly rely on outside counsel;
and that outside counsel acted in bad faith.
In
November 2009, another court sanctioned in-house counsel for what is believed
to be the first time.[v] The in-house attorney was general counsel to a local
sheriff's office, and he managed the initial response to a citizen's lawsuit
over an allegedly wrongful shooting with preservation letters sent only to
senior employees, and with no follow-up to monitor compliance with the
instructions. When it became clear that critical evidence had not been properly preserved as a result of this lackadaisical approach, the citizen plaintiff sought sanctions and the court awarded them: an adverse inference
instruction on the spoliated evidence, and a to-be-determined monetary sanction
against the sheriff's department and its in-house lawyer - who, it should be
noted, never formally appeared in the litigation.
The
Duty to Preserve: As the in-house sanctions case demonstrates, a key issue courts
continue to face is identifying when a party has a duty to preserve ESI.
Some courts have affirmed, as has long been suggested, that the duty often
attaches before the filing of a complaint.[vi] In fact, were you to read only one e-discovery opinion
from this year, it should probably be Goodman v. Praxair Services, Inc.,[vii] which carefully analyzes the
duty to preserve and related spoliation issues. The Goodman court
held that a demand letter openly threatening litigation was enough to trigger
the duty to preserve ESI.
A much
more controversial 2009 decision, Phillip M. Adams & Associates, L.L.C.
v. Dell, Inc.,[viii] scrutinized an information management policy in extreme detail
and sanctioned a party for failing to implement a proper litigation hold in 1999,
a full seven years before the federal rules were amended to address e-discovery
and well before the seminal Zubulake opinions on the duty to
preserve. In so doing, the court startlingly opined that businesses must design their information management practices in a manner that
promotes accountability to third parties. E-discovery scholars are hotly
debating this factually complex ruling, which has been appealed.
In other
circumstances, the duty to preserve may not attach, at least for certain kinds
of data, until the filing of discovery requests. In an MP3 file-sharing
case, Arista Records LLC v. Usenet.com, Inc.,[ix]the court imposed substantial
monetary sanctions and an adverse inference to punish the defendant's
alteration of data needed to calculate damages. The defendant did not
manipulate the data until after receiving a discovery request for it, and the
court reasoned that the defendant erred because it should then have known that
the unaltered data was relevant to the claims and defenses in the case.
Put differently, once you are on notice that a particular source or kind
of data is being sought, your duty to preserve may expand.
Cooperation:
Third,
as courts continue to define the scope of preservation and production
requirements, they increasingly urge parties to act "in a manner
consistent with the spirit of cooperation, openness, and candor owed to fellow
litigants and the court and called for in modern discovery."[x] Citing the 2008 Sedona
Conference Cooperation Proclamation, an aspirational document that
eloquently advises e-discovery practitioners to find areas for agreement
wherever possible, several courts have recently recognized that "the best
solution in the entire area of electronic discovery is cooperation among
counsel."[xi]
U.S. Supreme Court Associate
Justice Stephen Breyer recently wrote the preface for a Sedona Conference
Journal symposium issue on the Proclamation. Justice Breyer
encouraged practitioners to heed the call to resolve cases more efficiently, so as to "help ensure that
the courts are not open only to the wealthy."[xii] Likewise, U.S. Magistrate Judge Paul
Grimm of Baltimore, the author of several leading e-discovery opinions
including the Goodman case discussed above, has observed
that "there is nothing inherent in [the legal system] that precludes
cooperation between the parties and their attorneys during the litigation
process to achieve orderly and cost effective discovery of the competing facts
on which the system depends."[xiii] Rather, we have an affirmative duty to act consistently with the
"spirit and purposes" of the procedural rules, a duty that
"requires cooperation rather than contrariety, communication rather than
confrontation."[xiv]
Strong, sensible words. No one should
be expected to agree on everything, but an e-discovery approach premised on
cooperation will help everyone navigate these still relatively uncharted
waters. Courts will appreciate your efforts, and clients will be grateful to you for saving their time and money. What's not to like?
[i]E.g., Joint
Project of the American College of Trial Lawyers Task Force on Discovery and
the Institute for the Advancement of the American Legal System, Final Report
(Mar. 11, 2009).
[ii]
If you'd like a primer on that, read Heriot v. Byrne, Case N. 08 C 2272,
2009 U.S. Dist. LEXIS 22552, 2009 WL 742769 (N.D. Ill. Mar. 20, 2009).
[iii]E.g., Technical Sales Assocs.,
Inc. v. Ohio Star Forge Co., Case Nos. 07-11745, 08-13365, 2009 U.S. Dist.
LEXIS 22431, 2009 WL 728520 (E.D. Mich. Mar. 19, 2009) (sanctioning defendant
for deleting approximately 70,000 files when a forensic examination was
requested).
[iv]No.
6:07-cv-222-Orl-35KRS, 2009 U.S. Dist. LEXIS 21250, 2009 WL 546429 (M.D. Fla. Mar. 4, 2009).
[v]Swofford v. Eslinger, Case No. 6:08-cv-Orl-35DAB (M.D. Fla. Sept. 28, 2009), discussed
and slip op. available at e-Discovery Team, http://ralphlosey.wordpress.com
(Nov. 1, 2009, 10:15 EST).
[vi]See,
e.g., Beard Research v. Kates, Civil Action No. 1316-VCP, 2009
Del. Ch. LEXIS 94, 2009 WL 1515625 (Del. Ch. May 29, 2009) (finding that a
former employee's duty to preserve may have attached when he gave a
presentation to a competitor disclosing confidential information while he was
seeking employment with the competitor); Micron Tech., Inc. v. Rambus,
Inc., 255 F.R.D. 135 (D. Del. 2009) (ruling that a patent holder's
duty to preserve was triggered when it developed a litigation strategy against
potential infringers well before filing a complaint).
[vii]
632 F. Supp. 2d 494 (D. Md. 2009).
[viii]
No. 1:05-CV-64 TS, 2009 U.S. Dist. LEXIS 26964, 2009 WL 910801(D. Utah Mar. 30,
2009), appeal filed.
[ix]
608 F. Supp. 2d 409 (2009).
[x]Sentis Group,
Inc. v. Shell Oil Co., 559 F.3d 888, 891 (8th Cir. 2009).
[xi] William
A. Gross Constr. Assocs. v. American Mfrs. Mut. Ins. Co., 256 F.R.D. 134,
136 (S.D.N.Y. 2009); see also SEC v. Collins & Aikman Corp.,
256 F.R.D. 403, 415 (S.D.N.Y. 2009) (citing the Cooperation
Proclamation); Wells Fargo Bank, N.A.
v. LaSalle Bank Nat'l Ass'n, No. 3:07-cv-449, 2009 U.S. Dist. LEXIS
70514, 2009 WL 2243854 (S.D. Ohio July 24, 2009)
(same).
[xii] e-Discovery Team, http://ralphlosey.wordpress.com
(Nov. 8, 2009, 21:14 EST).
[xiii] Mancia
v. Mayflower Textile Servs. Co., 253 F.R.D. 354, 361 (D. Md. 2008).
[xiv] Id. at
358.
