Chief Judge William Jay Riley - United States Court of Appeals for the Eighth Circuit Sheri Moreno – Counsel, Hudson River Program, General Electric Company, Corporate Environmental Programs Phil Goodin - Vice President of Litigation Services and Head eDiscovery Consulting, UnitedLex Moderator: Caitlin Murphy, AccessData What conduct gives rise to sanctions and what form can they take? Definitions “E-Discovery” Something to do with computers. “ESI” Electronically Stored Information. Topic Sanctions relating to ESI. ESI Issues Can arise in any type of case. Complex Commercial Cases Antitrust, Securities, Intellectual Property Personal Injury Employment Civil Rights Criminal Family Relations Sanctions Impose a fine Award of attorney fees & costs Exclude evidence and bar further discovery Preclude testimony or a party’s defense Adverse jury instruction Limit argument of lawyer Lawyers ordered to CLE, ethics classes, or disciplined Enter judgment against violator How do You Get Sanctioned? Can 3 rd parties be dinged? Third Party Sanctions as Experts Probably violated court order compelling production = contempt Only after due process notice and hearing Not strictly sanctions, but you could be sued for negligence, spoliation, or intentional misconduct. How to Get Sanctioned Fail to preserve ESI The most common ground for sanctions. Fail to perform adequate searches Must make reasonable effort to comply with discovery requests. Fail to produce or delay production of ESI What documents? You’ll have to be more specific. My computer guy is on vacation. How to Get Sanctioned Lie to the Court Guess about things Intentionally Destroy the Evidence Use “Evidence Eliminator” By Robin Hood software. Now available in version 6! How to Get Sanctioned Whatever you do, do it in bad faith Just last year, a United States magistrate judge threatened a party with two years’ imprisonment over a series of egregious e-discovery violations. See Victor Stanley, Inc. v. Creative Pipe, Inc., 269 F.R.D. 497, 528 (D. Md. 2010). From the practitioner’s view: What are some effective ways to avoid sanctions? How Do You Avoid E-Discovery Sanctions? Answer: Don’t get sued and don’t sue anyone! Challenges with E-Discovery Rules • Lack of uniformity of E-Discovery Rules • Federal Courts – Not uniformly interpreting E-Discovery requirements under FRCP • State Courts – All over the map • Issues for Multi-Nationals • Crushing costs of E-Discovery • Over-preserving can impede ongoing business 2 Challenges with E-Discovery Rules – Not Uniform Federal Rules: When does the obligation to preserve documents and issue a document retention notice begin? • No Federal Rule addressing this; Federal Courts interpret differently: • Obligation begins when you at least contemplated the possibility of litigation – Johnson v. Waterford Hotel Group (D. Conn 2011) • Obligation begins when a party reasonably anticipates litigation – Pension Committee of the University of Montreal Pension Plan v. Banc of America Securities, 685 F.Supp.2d 456 (S.D.N.Y. 2010) • 7th Circuit E-Discovery Pilot Program – E-Discovery Principles, Standing Order, etc. 2 Challenges with E-Discovery Rules – Not Uniform State Laws • Many largely follow FRCP, but with certain modifications • California’s Electronic Discovery Act – Largely follows FRCP • Not reasonably accessible • Safe harbor provisions • 3rd party subpoena recipients protected from undue burden or expense • Others enact unique set of rules • New York – Unique and demanding • Prior to preliminary conference, parties must confer on e-discovery issues and agree to a data preservation plan • Programs and manner in which ESI is maintained • Anticipated cost of data recovery • Proposed initial allocation of cost • No E-Discovery Rules – 20 States have not adopted e-discovery rules (ex. Illinois) • Proposed Connecticut law on sanctions: • Judges may not impose sanctions on a party for failure to provide electronically stored information, lost as the result of the routine, good-faith operation of a system or process unless the party was intentionally avoiding known preservation obligations. 2 Asymmetry in E-Discovery; Challenges of Multi-Nationals Asymmetry Can Result in Greater E-Discovery Challenges • Equally sophisticated parties - business to business litigation • Product liability class actions and environmental litigation • Volume of ESI When being big isn’t good… • Custodians can be located throughout the world • Language differences • Time and cost of interviews/collections • Privacy laws – getting ESI back to the US • Acquisitions – acquired company may not have robust systems in place for e-discovery compliance • Held to a higher standard • Harder to prevail on proportionality arguments – the company can afford it… Litigation is increasingly less about adjudicating on the merits of the case, and more about cost of defense and “processing” claims… E-Discovery Costs – Costs of Preserving to Preserve 100 Employees 16,650,000 Emails Average Email Output 40 Months 3 Years SOL 36 months 100 Legal Fees Complaint 1 month Motion / Reply 2 months @ $200 / hr. Hearing 2 weeks Fees: $20,000 Ruling 1 week Preservation Cost: ~$750,000 40 months to Ruling $770,000 to WIN “But while it is inexpensive to store immense quantities of ESI…” NY State E-Discovery Report , 2010 – Really? Scope of Preservation – Can Impede Ongoing Business Operations • Document Retention Notices often are over-inclusive • When litigation concerns an ongoing operation, significant business interruption can occur • Size limitations on mailboxes, hard drives – cause e-mail interruption and computers to crash • Ongoing collection efforts (interviews, document collections, etc.) take time • To move anything requires strict compliance with established procedures – time and hassle So What to Do? Some Best Practices: Have a knowledgeable cross- Training for management function team in place asap and in-house counsel on •In-house counsel Know the rules of your when preservation •Outside counsel jurisdiction obligations may begin •Internal IT •E-discovery expert Be thorough up front in Have a written policy on identifying custodians and Use a consistent approach to preservation and DNRs – sources – interview and issuing DRNs – and regular AND FOLLOW IT! document efforts (don’t reminders forget third-parties…) Be really prepared before Be transparent with the Rule 26(f) conference – Consider negotiating a safe opposing counsel on what is know what and where you harbor agreement even being preserved and what have ESI, and know where before litigation is filed isn’t your challenges lie Engage in early, thoughtful, comprehensive process; Be transparent But are we better off than this? Spoliation | The Facts Spoliation has many root causes - some intentional and some unwitting. Where Should eDiscovery Live? Proper Fit IT Interests Responsible for “the data” – security, availability and retention Typically a cost center – eDiscovery is just another requirement Legal Interests Responsible for defending the corporation Maintain privilege and affords protection Professional and personal risk with reduced control and understanding Staffing Considerations eDiscovery expertise in IT and Legal Inherent interest (Look for the guy with the newest cell phone) Room to grow Performance reviews – team that works in the shadows Workload Considerations Peaks and valleys Understand competing priorities, but maintain common objective The Balancing Act Build Stakeholder Support Empower champions Grassroots approach - collaboration The bottom line… eDiscovery is a business decision Awareness of internal political considerations and potential for job disruption Considerations for Outside Counsel Test for holistic understanding Visibility into the data and process Case is progression according to rules of jurisdiction Must be in a position to ask process questions and feel comfortable with the answer Budget, planning and strategy decisions Where, when and how does the ball get handed over Practical Ways to Build Trust Seek first to understand Take it on the road Education is the key Stay Current with Technology Train, Test and Trend Aggregate CLEs for your team Sedona, EDRM, LegalTech, etc, etc One Size Does Not Fit All Software Considerations POC and baseline testing are iterative events Flexible workflow Ensure entry and exit points are malleable Agnostic approach Supports multiple data formats and downstream tools Evolution, Not a Hard Switch Tackle the biggest headache first Program vs. Project Service Provider Relationships Full blown dress rehearsals are required References are a must – “Describe worst case….” Regular and routine status meetings Education is the key – they are part of your team Infrastructure Considerations Talk To Your Architects Industry trends and internal projects Get buckled in – archiving, email, social media, “cloud solutions” Define Support-Level Agreement Typically higher touch than existing infrastructure Dedicated team vs. existing organization Data Map Holy Grail of eDiscovery – not unattainable, just requires care and feeding Automated data mapping tools are very immature Storage Analysis paralysis candidate Near-line or offline storage is applicable for some data Plan for growth Collection methodology Targeted vs. kitchen sink – risk profile Assume a standard and add the caveats Buy-in on disposition process and authority – require periodic review Network Impact – Frequently Overlooked Risk Profile Leads the Way Risk Profile Creation Litigation Trends Case volume and type – handful of buckets with similar topics Case Law Risk for sanctions and case precedent Know your judge and share the wealth – be specific Talk to outside counsel – press for case metrics Early Data Assessment and Early Case Assessment are your friends Determine collection approach Estimate cost Develop case strategy and assess litigation risk Follow the Bouncing Ball Data is Mobile, One Should Consider: Employee transfers Retiring employees Retention policy exceptions Who is responsible? PC reuse and disposal Domain account policies Custodians on leave or extended vacations Successful custodian collections require a “wedding planner” mind set. Awareness of change management and asset management (i.e. “Get Buckled In”) Most Common Bloopers People Inadequate commitment from ALL stakeholders (in-house counsel, outside counsel, IT) Underestimate necessary level of expertise Strategic vendor partnerships – references and experience Failed trust with the insourced eDiscovery team – it’s all or nothing. If you can’t commit to full trust, don’t bother insourcing. Empowerment of the process and team is critical. If the team cannot fish for itself, the company is at risk of sanctions from both a timing and quality perspective. Process Process is not paramount – it’s the people sucka! Poorly defined strategy for implementation and upkeep – care and feeding Clearly understood objectives and scope Timing and expenditure expectations are not defined Lack of funding, both initially and over time – feed it to make it grow Technology Details are not clearly captured (processing, encryption and data storage location, network impact, etc.) Inflexible or immature technology Questions?