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A SHORT PRIMER ON ELECTRONIC DISCOVERY

Posted by Susan J. Levy

“Electronic Discovery,” two words that strike fear into the hearts of many lawyers. Ask most seasoned litigators to define “metadata,” “native format,” or “clawback agreements” and you will see the eyes of the proverbial deer in the headlights. Unfortunately, however, the time has come to hold our collective noses and jump in or we risk disaster for our clients.

What is Electronic Discovery? Often called e-discovery, it is, simply, the process of preserving, collecting, reviewing, and producing electronically stored information or “ESI.” That electronically stored information includes, but may not be limited to, email, files downloaded from the internet, instant messages, voicemails, and all the information people collect and store on their Blackberrys and iPhones. The sheer volume of ESI is overwhelming. Where paper discovery once filled banker’s boxes, ESI will fill rooms. Large companies may have ESI stored all over the world.

The most frightening aspect of ESI is that is often contains metadata, which has been aptly described as the “ghost haunting electronic documents.” See David Hricik and Chase Edward Scott, Metadata: The Ghost Haunting E-documents, GA Bar Journal, Vol. 13, No. 5, (2008). Metadata is simply the data about data. You can see metadata in Microsoft Word when you click on properties and can display the author of a document, the date the document was created, the number of times the document was opened or even the number of minutes spent creating the document. Metadata can also be embedded, like the fax band which shows the time, date, and fax number on every fax we send or receive. While these examples only represent the tip of the iceberg, you can start to imagine the potentially tremendous impact on our clients when they are forced to produce ESI.

The seminal case on e-discovery is Zubulake v. UBS Warburg, 217 F.R.D. 309 (S.D.N.Y. 2003) which began as a garden variety employment discrimination case and ultimately spawned four other cases, Zubulake II – Zubulake V, which together signaled the transformation of discovery from a predominately paper-based process to an electronic one.

See Zubulake I, 217 F.R.D. 309 (addressing the legal standard for determining the cost allocation for producing emails contained on backup tapes); Zubulake v. UBS Warburg, LLC, 2003 U.S. DIST LEXIS 7940, No. 02 CIV. 1243, 2003 WL21087136 (S.D.N.Y. May 13, 2003) (‘Zubulake II‘) (addressing Zubulake’s reporting obligations); Zubulake v. UBS Warburg, LLC, 216 F.R.D. 280 (S.D.N.Y. 2003) (‘Zubulake III‘) (allocating backup tape restoration cost between Zubulake and UBS); Zubulake v. UBS Warburg, LLC, 220 F.R.D. 212 (S.D.N.Y. 2003) (‘Zubulake IV‘) (ordering sanctions against UBS for violating its duty to preserve evidence).

Zubulake v. Warburg, LLC, 229 F.R.D. 422 fn 5 (S.D.N.Y. 2004) (‘Zubulake V‘) (addressing the issues of spoliation and sanctions.)

The Advisory Committee on Civil Rules responded to the evolving world of electronic discovery by enacting a package of amendments to Federal Rules of Civil Procedure 16, 26, 34, 37 and 45 which all went to effect on December 1, 2006. One of the most significant revisions to the federal rules came with the addition of the phrase “electronically stored information” to Federal Rule 34’s definition of “document.” Additionally, Federal Rule 26(b)(2) was amended to include a two-tiered approach to e-discovery. Relying on Zubulake and its progeny, Rule 26 divided the world of e-discovery into two categories, “accessible data” and “inaccessible data.” Accessible data can be obtained without unreasonable burden or technological difficulty and can be discovered without court intervention. Conversely, “inaccessible data” includes information that often requires the assistance of an IT consultant to retrieve and requires good cause and a court order for production. While inaccessible data need not be produced in the absence of an agreement or court order, parties nevertheless have a duty to preserve the data.

The issue of what electronically stored information needs to be preserved and when was also addressed by Zubulake in its progeny. The Zubulake court held that when a party, “reasonably anticipates litigation,” the obligation to preserve both paper documents and ESI is triggered. Unfortunately, neither Zubulake or the Federal Rules prescribed a bright-line test and instead, what triggers the duty to preserve ESI is determined on a case-by-case basis.

Zubulake also imposed the duty upon attorneys to understand our clients’ retention programs and information management systems. We were required to issue a litigation hold notice once litigation is reasonably anticipated. With that litigation hold, attorneys have a duty to explain ESI as a source of discovery, the importance of suspending ESI deletion, and inform our clients to suspend all routine document destruction. The risk of spoliation (the intentional destruction of evidence) can include fines, the dismissal of pleadings, or an adverse inference instruction whereby a court can charge the jury that the defendant deleted certain information after they had an obligation to preserve it. The jury is then instructed that it can infer that the deleted information was harmful to the defendant.

Federal Rule 37 was amended to restrict the Judge’s obligation to impose sanctions on parties for the failure to provide ESI lost as a result of “the routine, good faith operation of an electronic information system.” Fed.R.Civ.P. 37(e). However, this so called “safe harbor” may also prove unsafe if the litigation hold letter or preservation letter has been issued, but our client fails to disable its auto-delete functions.

Finally, Rule 26(b) encourage parties to execute so-called “clawback” agreements, which permit parties to request the return of privileged ESI which was inadvertently produced without a claim that the privilege was waived. Simply put, these clawback agreements acknowledge the fact that the sheer volume of ESI makes the inadvertent or accidental production of privileged information inevitable and simply permits parties to request the return of that information without waiving their privilege to the information contained thereon. See also Federal Rule of Evidence 502.

Thankfully, there is plenty of help available to lawyers and our clients as we step into the world of e-discovery. The Honorable Shira A. Scheindlin, author of the landmark Zubulake opinions, has co-authored Electronic Discovery and Digital Evidence: Cases and Materials with Daniel J. Capra and The Sedona Conference. Books such as eDiscovery, Plain and Simple (or as I call it, e-discovery for dummies) by Allison Brecher and Shawnna Childress can serve as a good introduction for those just learning about e-discovery. There are also companies like Fios, Inc. or RenewData which specialize in helping organizations process, analyze and review potential relevant electronically stored information associated with litigation. Finally, there is specialized software for e-discovery, like Clearwell’s e-discovery platform, Discover-e, or Lexis Nexis’s Applied Discovery.

The year 2010 will be a watershed year for e-discovery. It is time for lawyers to bite the bullet so that we can understand ESI, protect our clients from the consequences of not preserving ESI, and use ESI strategically to our client’s benefit throughout the litigation process and at trial.