Blogging and Presenting at LegalTech West 2008

I was at the LegalTech West Convention in Los Angeles last week. There were several good presentations on e-discovery at this massive event, but the best by far was Craig Ball’s E-Discovery Jeopardy. This was part of the Game Show theme that he dreamed up for three e-discovery CLEs.

If you think that is surprising, you might also be taken aback by the sign on the front row seats of each event: “Reserved For Bloggers.” These seats were equipped with power strips to plug in blogger notebook computers. Looks like bloggers are finally getting some respect! Still, who wants to sit in the front row? The second and third rows were largely empty too because no one likes to sit up front. I’ll know blogging has truly arrived when we get the coveted back row seats. Then I’ll gladly plug in my MacAir and risk conspicuous over-the-shoulder snooping. In the meantime, for the most part, I prefer to remain just another suit in the crowd with a lap top. So too did most everyone else, as the fronts row seats with the “Bloggers Only” signs were usually empty.

The Many Legal IT Vendors at the Convention,
Most of Whom Were E-Discovery Focused

I spent a lot of time cruising the huge hall of vendors, and checking out several new companies I had not seen before. This included a couple of new companies with a focus on Asia, such as Ji2, Inc. It is a Japanese company, with offices in Tokyo and L.A., that specializes in services to Japanese multi-nationals. UBIC is another interesting Japanese company along the same lines as Ji2. They assist Asian companies with general computer forensics and e-discovery.

Attenex was there as a major event sponsor, even though they had just been purchased by FTI Consulting. They were the ultimate in low key sales, since they did not know what they had to sell, and neither did the people at the nearby FTI booth. They did not know whether the Attenex software would still be available for purchase, like FTI’s Ringtail, or whether FTI would switch to pure service offerings like the Applied and Kroll software.

Like everyone else, I collected a bag full of freebies from the many vendors. I liked the Attenex glow in the dark pens, and the Kroll golf balls, but my award for the best give-away goes to Exterro (whom I had never heard of before). They gave out a combination stress release squeeze ball and magic eight ball. Their corporate motto is “Empowering Legal Teams” and their software fits into the all important area of legal hold management. It is supposed to help you implement and track holds to try to “eliminate human errors in high-stakes litigation.”

This kind of human error is exactly what happened to Intel in the big antitrust case it is defending. Advanced Micro Devices, Inc., et al. v. Intel Corporation, et al., C. A. No. 05-441-JJF. A tech forgot to lookat page two of a spreadsheet and so did not suspend the auto-delete function on the email accounts of several key executives. The mistake was not discovered until two years into the case. I have written about this unfortunate mistake several times before, including the blog What Game Does an e-Discovery Team Play? No doubt the Intel error has been good for Exterro’s business and several other software companies like them, who now specialize in legal hold management.

I had dinner Thursday night with the good folks of Fios, primarily for the opportunity to get to know Mary Mack better. She is the Corporate Technology Counsel of Fios, and has her own blog that I read regularly, Sound Evidence. Fios gives out her newly updated book, A Process of Illumination: the practical guide to electronic discovery. She was the gracious host at Roys, a landmark Hawaiian restaurant in the historic section of downtown Los Angeles.

The event featured group discussions with many e-discovery luminaries and students alike, including, coincidentally, one of the senior partners in the firm representing Intel in the AMD antitrust case. He did not speak of that case, of course, but had many excellent insights. It is amazing how much agreement there is among experts in the field on all of the major e-discovery issues. This was a private event, so I will not get into the names and discussions, except to say they were lively and frank. If you get an invitation to a Fios dinner, be sure to take it.

Presenting on Search and Cost Control

I was also occupied at Legal Tech by my participation in two CLEs: one on e-discovery search, and another on cost control. They were LexisNexis sponsored panels and followed the game-show format set up by the master of ceremonies, Craig Ball.

For the search panel I followed Craig’s suggestion and created a Match Game theme Keynote presentation. The panel was led by Patrick Oot of Verizon, with help from Phil Strauss of H5, Inc., and Joe Utsler, a project manager of LexisNexis Litigation Services. The best Match Game question I could dream up was a quote by Marcel Proust, the French lawyer turned writer who lived from 1871 to 1922. One of the most famous quotes of the Marcel Proust is: “The voyage of discovery is not in seeking new landscapes, but in having ________?”

No one in the L.A. audience could fill in the blank, but unbeknownst to me, the father of one of the panelists, Phil Strauss from H5, was none other than Walter Strauss, one of the country’s leading Proust scholars. Phil of course knew that the answer was NEW EYES. “The voyage of discovery is not in seeking new landscapes, but in having new eyes.” The idea here is that we need new eyes, namely automated search technologies, to see the relevant evidence in ESI. Our human eyes are too slow, and weary too quickly, for discovery in the massive quantities of ESI that lawyers are faced with today. Since Phil’s Dad had recently passed away, the unexpected Proust e-discovery connection was an especially nice touch for us all.

The main case we discussed was Victor Stanley, which I have previously discussed in Hundredth Blog: Thoughts on SEARCH and Victor Stanley, Inc. v. Creative Pipe, Inc. There was some disagreement in the panel on the impact of Victor Stanley and whether and when attorneys should hire search experts to help them with a case. Phil Strauss, aside from being the son of a Proust scholar, is a practice director of H5, a linguistic/information retrieval and consultancy company. Naturally he was the strongest proponent of bringing in experts to help on search issues as Judge Grimm opined was necessary in Victor Stanley. But Patrick Oot, who heads up Verizon’s e-discovery team, is far more reluctant to incur the added expense. I am somewhere in the middle, with the focus on scalability and proportionality, considering the size, dollar value of the case, and the cost of review. If hiring an expert, or using special, albeit expensive concept type search software can reduce the volume of ESI enough to pay for itself, then by all means use it. The new eyes are then well worth it. The quality of retrieval will also improve as an added bonus to the cost savings.

For cost control, the game show theme Craig suggested was The Price Is Right. Here I was helped by Rick Hauser of Farmers Insurance. He is an attorney on their e-discovery team, and is in charge of litigation cost control overall. He was a good complement to my presentation focusing on e-discovery teams and how they are the Holy Grail of e-discovery cost control. As usual, the killer statistic in my presentation comes from CISCO, who brags that its e-discovery team saved it over $25 Million in the first full year of operation.

It was a creative challenge to makes slide on e-discovery issues with game show themes, but one that I enjoyed. For instance, for The Price Is Right, I came up with the question: “What is the price to review one terabyte of ESI?” The answer, upon the authority of Anne Kershaw, is approximately $18,750,000. (This assume that one terabyte equals about 75,000,000 pages, a review time of 50 documents per hour, and thus 375,000 hours of review.) But by far the most imaginative e-discovery event in the whole show was Craig Ball’s own E-Discovery Jeopardy. There I was pleased to sit on the front row as the only confessed blooger for this entertaining CLE.

Craig Ball’s E-Discovery Jeopardy

Craig created a terrific PowerPoint presentation that mimicked the Jeopardy game show perfectly, including effective use of video clips from the game itself. He has done this several times before with great success. Craig does an excellent Alex Trebek impersonation and begins by selecting three volunteer contestants from the audience. At this show the contestants were Charles, Nancy and Travis. Nancy was a paralegal specializing in e-discovery, and Charles and Travis were senior level techs. Apparently no lawyers in attendance were brave enough to volunteer, myself included. Craig’s PowerPoint slides mimicked the Jeopardy “Answer Board” perfectly, except that all of the categories, clues, and answers were related to e-discovery. In the first Jeopardy board the six categories Craig came up with were:

I Never Metadata I Didn’t Like
EDD-ucation
Alphabet Soup
Down to Cases
E-Discovery Lingo
By the Numbers

The “I Never Met a Data …” category had questions in some way pertaining to metadata, the “Down to Cases” questions all pertained to famous e-discovery cases, etc. For example, a clue on the Answer Board might be: “the fingerprint of all ESI” where upon the correct answer would be “What is hash?” Very clever stuff here, and the whole presentation had the look and feel of the game show. The contestants picked a category and dollar amount that indicated degree of difficulty. If they thought they knew the answer, they would ring their bell. All of the Jeopardy rules applied, and there was even a panel of judges to decide who rang a bell first in close calls, and there were many. The contestants were all good sports, and tried very hard, especially since there was a real $100 gift certificate for the winner. They got the question right almost half of the time (ok, I’m being generous). After each answer Craig would give an explanation of the correct answer and explain why and how it is important to e-discovery. That is where the learning took place.

Craig has thus figured out a way to make the infusion of real knowledge, often very technical and dry information at that, a fun experience. It is especially enjoyable for the audience who does not have to suffer the embarrassment of not knowing Craig’s many difficult questions. Still, when the contestants are all stumped, Craig gives the audience a chance to shout out the answers, which I enjoyed doing myself on a few occasions. So everyone gets to play along, including the judges who were hand picked in advance for having some sort of background and expertise in e-discovery.

Just like the real game show, E-Discovery Jeopardy also has a second round of Double Jeopardy, surprise Daily Doubles questions where you bet what you want, and even Final Jeopardy where you can bet all of your winnings to try for a come-from-behind victory. The six categories in Double Jeopardy were again very clever:

Playing by the Rules
Geek Speak
Beginning with “E”
Search Me
More Alphabet Soup
Computer Forensics

By the time Double Jeopardy was over, one of the Techs, Charles, who is a security expert, had amassed a huge lead. The Final Jeopardy question, which Craig was gracious enough to allow me to reveal in this blog, was:

The jurors who convicted this domestic diva were disturbed by her reported efforts to tinker with ESI on her assistant’s computer.

The correct answer of course was “Who is Martha Stewart?” and all of the contestants got it right. That meant Charles walked away with the gift certificate.

Congratulations to Craig Ball for coming up with the most creative e-discovery CLE yet. He covered 61 different e-discovery words/issues in an hour’s time, and made it all fast-paced and entertaining. With a different audience, this could have been, should have been, very exciting. I am told it has been at other venues where Craig has done E-Discovery Jeopardy before. (The LegalTech attendees in L.A. were very laid back; many seemed like they were paralegals and techs ordered to go to an e-discovery CLE on a Friday afternoon when the boss had already gone home for the weekend).

I have seen many, many e-discovery CLEs, and this was one of the best. Once again, Craig Ball sets a high standard for the rest of us to follow. He has got me thinking of how to make my own e-discovery contest. Perhaps some kind of reality show might work? America’s Got E-Discovery Talent perhaps? If you get any ideas, please let me know.

Legal Tech Key Note Speeches

The keynote speaker of the first day was Charles James, Chevron’s General Counsel, and a former antitrust partner at Jones Day. He admitted to technological illiteracy, and so explained his presence as the lead speaker of a high tech event because, as he put it, “I am the target … my IT needs are astronomical.” Seems somewhat odd to me, but who can say no to the general counsel of a big oil company. He explained that Chevron has more than 400 in-house lawyers, gets sued an average of 2.5 times a day, and spends $190 million a year on outside counsel, spread out among 500 law firms. Yes, Chevron is a big consumer of legal services, and it pays to know what the customers want.

Mr. James spoke of his successes since he became General Counsel six years ago, none of which pertain to e-discovery, so I will skip them here. He did include e-discovery in his list of gripes, however, focusing his main wrath on the propaganda of vendors. He dislikes gross overselling of capability and functionality of products, and hates jargon like “complete enterprise solution” and “seamless integration.” Who doesn’t? But certainly there were a few vendors in the hall nearby who could have profited from hearing this message. Most still puff and over-promise to an embarrassing extent. Of course, when everybody else is shouting, who can hear the plain talking whisperer?

Mr. James also noted the convention center’s proximity to south central L.A., and quoted Rodney King’s famous line: “Why can’t we all get along?” He says that compatibility between different software systems is a major issue for Chevron. So much for “seamless integration.”

Finally, Mr. James, who was billed as a controversial speaker, delivered with statements such as: “Electronic discovery is a waste of society’s resources.” Instead, he imagines a world without plaintiffs lawyers, litigation holds or prosecutors. Kind of like John Lennon’s imagining a world without government, or me imagining cars that run on water. He wants a world where we all just get along, where no one would ever sue anyone else. Who doesn’t? Still, back in the real world, his company is sued 2.5 times a day, and counting; so, like it or not, e-discovery is here to stay.

The keynote of the second day was delivered by the decidedly uncontroversial Magistrate Judge Elizabeth D. Laporte, from San Francisco district court. She was well prepared and reviewed the holdings of many of the current e-discovery cases of the day. Her presentation included the major cases coming out of California, such as Qualcomm and Columbia Pictures. She read many of the key case quotes, and like a good judge, said nothing controversial or outside of the record. The audience seemed interested, and if you were new to e-discovery, and most in attendance seemed to fit that bill, you would have learned a great deal from her excellent speech.

Judge Laporte also agreed with Judge Scheindlin’s Zubulake Duty. She stated that legal counsel and their clients need to understand and learn about their ESI prior to attending Rule 26(f) “meet and confers” and other pretrial discovery conferences. She said the days of “drive by conferences” were over. Lawyers today either have to learn the complex technologies themselves, or bring in experts to assist them who can. This is now mainstream gospel truth among the federal judiciary. Yet, it is too painful a truth for many attorneys to hear. In my experience, many attorneys, especially otherwise terrific trial lawyers, still live the lie that e-discovery is not important, and can safely be ignored. In the words of the immortal Marcel Proust:

Lies are essential to humanity. They are perhaps as important as the pursuit of pleasure and moreover are dictated by that pursuit.

Wells Fargo’s is Robbed of Staged Documents and Seeks the Death Penalty for the Lawsuit, But Gets an Adverse Inference Instruction Instead

In Reno, Nevada, Wells Fargo used e-discovery as a weapon to help defend against a disgruntled mortgagee. Johnson v. Wells Fargo Home Mortgage, Inc., 2008 WL 2142219 (D. Nev. May 16, 2008). Wells Fargo moved for dismissal as a sanction for intentional spoliation of computer evidence. Magistrate Judge Robert A. McQuaid, Jr. did not dismiss the case, but did order an adverse inference jury instruction that will probably be outcome determinative. The instruction requires the jury to assume that all of the information plaintiff deleted from his hard drives would have supported Wells Fargo’s defense.

I have never seen a defendant lose a case after being granted a key jury instruction like that, but still, the expense of going forward with trial can be considerable, and you never know what might happen. No doubt Wells Fargo was disappointed with the result, and, as I will explain in this blog, they have every right to be.

Facts of the Case

The plaintiff sued Wells Fargo alleging violation of the Fair Credit Reporting Act. Wells Fargo supposedly reported to credit agencies that two of plaintiff’s loans from Wells Fargo were in default, when they were not. Plaintiff also claims that Wells Fargo foreclosed on one of the loans, even though he was current in payment. Plaintiff claims that he ”spent nine months making multiple phone calls and sending correspondence, including cancelled checks and loan documents, verifying the loans were current.” Id. at *1. Plaintiff attached some of the correspondence and other documents as exhibits to his complaint. Wells Fargo not only denied the complaint, it alleged that the plaintiff manufactured the evidence, that the whole thing was staged. According to Wells Fargo, the alleged communications never happened, and the documents were backdated frauds.

To prove its electronic document forgery defense, Wells Fargo, on July 28, 2007, asked plaintiff to produce for inspection the two laptop computers he used to write these documents. Wells Fargo hoped that a forensic exam would prove that plaintiff’s case was fabricated. It expected the forensic examination to show that the key documents supporting plaintiff’s case were prepared just before suit was filed and backdated to support his story of prior communications. Plaintiff objected to the request on September 14, 2007, stating that he would only produce specified files. Wells Fargo made several attempts to resolve the dispute, but ultimately was forced to file a motion to compel production of the hard drives on October 10, 2007. Id. at *3.

The motion was granted, and the plaintiff was ordered to produce the hard drives of his two laptop computers. When the drives were produced and examined by the computer forensic expert retained by Wells Fargo, he discovered that both drives had been ”reformatted and/or reinstalled.” Id. at *1. The forensic exam showed that “Plaintiff deleted files and reformatted both hard drives on September 25, 2007 and October 5, 2007.” Id. at *3. That is two months after the request to produce. In other words, plaintiff secretly had his hard drives reformatted and reloaded while the parties were in negotiation over the production.

The expert said that the reformatting prevented him from retrieving useful information about the files that were on the disc before it was reloaded with new files. (This does not, however, mean that more information could not be gleaned by further study.) Still, among the new reloaded files the expert was able to find two of the letters that were key to plaintiff’s claim. The expert also found evidence to prove that these documents were created more than one year after plaintiff claims to have written them. In fact, consistent with Well Fargo’s suspicions, he found that they were created just a few weeks before suit was filed.  It was not explained exactly what evidence the expert had to prove the back dating, but I suspect it was in the word documents’ internal metadata.

Wells Fargo also stated that it would be able to recover still more information from the hard drives, even though they had been formatted, if additional, more expensive forensic recovery work were performed. This would be possible because when a disc is reformatted, all of the original data remains on the disk and is not fully destroyed. Instead, the areas on the disk containing the data are merely marked as available. The old data stays there until overwritten with new files. Wells Fargo confidently predicted that additional forensic study would uncover more forged documents. However, they did not want to incur that additional expense. They wanted the case dismissed.

Naturally, Wells Fargo was upset by the inability to get at all but two of the documents which it claimed the plaintiff had forged and backdated. It had hoped the forensic evidence would be conclusive, and the case would promptly end with a summary judgment. Wells Fargo responded to this discovery of spoliation with a motion for sanctions, seeking the ultimate remedy of dismissal of plaintiff’s case. Here is Judge McQuaid’s summary of Well Fargo’s motion:

Defendant asserts that “Plaintiff has altered numbers on correspondence and checks, fabricated evidence to bolster his position, and most recently, erased his hard drives knowing the information on them was relevant to this action.” (Id.). Defendant goes on to assert that Plaintiff’s “despicable behavior was intended to hamper the fact gathering process by preventing Wells Fargo from obtaining highly relevant information that may have defeated his only remaining claim under the Fair Credit Reporting Act and his damage claims.” (Id.). Defendant contends an adverse jury instruction and monetary sanctions are not enough because the relevant documents no longer exist and that, instead, Plaintiff’s calculated and willful misconduct warrants dismissal of this action (Id.).

Plaintiff tried to justify his secret reformatting of the hard drives with a convenient story about his computers becoming infected with a virus. In these circumstances, that is about as convincing as the “dog ate my homework.” Here is the court’s summary of his excuse:

Plaintiff argues that his laptops were infected with computer viruses and spy-ware and that a computer technician diagnosed the problem and recommended wiping clean and reformatting each hard drive and then reinstall the operating systems (Doc. # 133 at 4). Plaintiff claims that before this procedure is performed, data on the hard drive is backed up and saved and then downloaded back onto the hard drive after the operating system is reinstalled (Doc. # 133 at 4). Thus, Plaintiff argues Defendant’s motion should be denied because no data has been destroyed (Id.).

One problem with plaintiff’s story, aside from the obvious that he did it in secret months after the request to produce, was that plaintiff refused or was unable to produce any of the back-up files of these computers. Further, there are the aggravating circumstance of the testimony of the plaintiff’s wife, and the affidavit that Well Fargo obtained from the technician the plaintiff hired to reformat the laptop. (Apparently the plaintiff himself has not yet been deposed.)

The deposition of plaintiff’s wife occurred just two weeks after the hard drives were formatted, yet in response to questions she denied that any work had been done to their computers. To make matters worse, the plaintiff’s technician who formatted his laptop stated that he only formatted one laptop. He said the other laptop was formatted by plaintiff’s wife two weeks later, with his help and instructions over the phone. Further, the plaintiff’s tech said that he never backed up the files on the laptop before the formatting, and did not instruct the wife on how to do so. Id. at *8. This certainly impeaches the deposition testimony of plaintiff’s wife, and shows that plaintiff was trying to hide his reformatting actions, apparently in the naive hope it would never be discovered. It also contradicts plaintiff’s claim that he backed up both computers before having them reformatted. 

The fact that plaintiff had to hire an expert to format his laptops, and the expert had to talk the wife through the process, tells me that they are both computer novices. Formatting a disc is very easy to do, and is not something you normally need to take to a technician. You might retain a tech to try and get rid of viruses, but there is little evidence the plaintiff’s technician was ever even asked to try and fix the virus problem. Normally a tech could find several less drastic methods than reformatting to rid a disc of viruses and spyware.

Also, when you think about plaintiff’s virus story, you realize it makes little sense.  Plaintiff said he copied all of the files onto backup discs, had the hard drive formatted, and then reloaded the files back onto the computer. How would that get rid of the viruses? The backup discs would include the infected files. When you restore the files onto the freshly formatted hard drive, the virus files would be restored too. You need to delete or quarantine viruses to get rid of them, not copy them back and forth. Alternatively, if you reformat, you do not reload the same files that were on the original infected disc, at least not until inspecting and cleaning all of these files to remove all of the malware.

The plaintiff here also showed his lack of expertise with computers when he tried to hide ESI by simply formatting the disk. More experienced users typically try to hide evidence by wiping a disc, not formatting it. This is easy to do with several off-the-shelf software programs. I have written about this several times before in prior blogs, including IT Tech’s Fast-Talk Had Zero Persuasive Value with Judge, and GhostSurfer Wipe Out Leads to Jail Order Sanction in Bankruptcy Court. These other attempts to hide ESI by unscrupulous litigants, although more sophisticated, also ultimately failed. Even when better software does succeed to clear a disc of all incriminating ESI, there are still records left on the computer that these “Evidence Eliminator” type programs were run. Either way, you cannot win for trying, and there is almost always a way to catch a fraudster.

As to the two documents that Well Fargo’s expert found and claimed were backdated, plaintiff argued that this was pure speculation and “completely meaningless unless it is known whether the date and time set on the computer were correct when the documents were created.” Id. at *7. Again, that is a lame argument of a computer novice, to claim that the dating evidence is meaningless simply because a computer’s clock could have been changed. Why would it have been changed? Moreover, there are ways to detect computer clock resetting, as the CFO in Hawaiian Airline found out in In re Hawaiian Airlines, Inc., Debtor; Hawaiian Airlines, Inc. v. Mesa Air Group, Inc., 2007 WL 3172642 (Bkrtcy. D. Hawai’i, Oct. 30, 2007). I wrote about this and forensic recovery in my blog “Book ‘em Danno”: Hawaiian Judge Sanctions Company for Trusting its Top Officers after One Wipes His Laptops, Allegedly to Hide Porn. An employee who changed the date on his resume by changing the computer clock learned the same lesson in Plasse v. Tyco Elec. Corp., 2006 WL 2623441, (D.Ma. Sept. 7, 2006). In Plasse, the plaintiff’s case was dismissed for this attempted fraud on the court.

Motion For Sanctions

Wells Fargo’s motion for sanctions was based on both Rule 37 and the court’s inherent power. Judge McQuaid made short work of Rule 37 and held that it did not apply simply because plaintiff’s “conduct was not in violation of any discovery order governed by Rule 37.” That is a very narrow construction of the rule, and he did not try to explain or justify it, instead focusing on Well Fargo’s other grounds of the court’s inherent authority to impose sanctions. Judge McQuaid’s legal analysis was based on Ninth Circuit law in this area, primarily Anheuser-Busch, Inc. v. Natural Beverage Distributors, 69 F.3d 337, 348 (9th Cir. 1995). Anheuser-Busch requires courts to consider several factors “before imposing the harsh sanction of dismissal,” including whether the misconduct was intentional or in bad faith, whether there was a “relationship between the sanctioned party’s misconduct and the matters in controversy, such that the transgression threaten[s] to interfere with the rightful decision of the case,” and the effectiveness of “less severe alternatives than outright dismissal.” Id.

Plaintiff here conceded that the reformatting was intentional, but he denied this caused any evidence to be lost. Further, he claimed his actions were all done in good faith and so his case should not be dismissed.

Court’s Holding Denied Dismissal, But Imposed an Adverse Inference Instruction  

The court disagreed with plaintiff’s stories and pleas of good faith, and instead held:

The timing of Plaintiff’s reformatting of his hard drives is also very suspect. Plaintiff reformatted both hard drives within a few days of each other, not only during the period of time he knew Defendant sought production of the hard drives, but also after Defendant informed Plaintiff, on September 20, 2007, that it intended to file a motion to compel production of the hard drives (Id.,Exh. 6). Within five (5) days of being notified that Defendant intended to file a motion to compel, Plaintiff reformatted his first hard drive (Id.,Exh. 1). Then within ten (10) days of reformatting his first hard drive, Plaintiff reformatted his second hard drive (Id.). During this entire period of time, Defendant sent numerous e-mails to Plaintiff attempting to settle the dispute over production of the hard drives (Id.).

Plaintiff’s explanation that he reformatted his hard drives because they were infected with viruses and spy-ware and then he downloaded all the files back onto the hard drives is of little help to the court in finding an absence of willfulness or bad faith. At no time did Plaintiff inform Defendant that his hard drives were infected with viruses or spy-ware, despite having knowledge Defendant requested production of said hard drives. And, as previously stated, Plaintiff has produced no evidence of any back-up files, nor has he indicated that he will produce any back-up files to show that he did, in fact, download all the files back onto the hard drives. 

*5 Under these facts, the evidence weighs heavily against Plaintiff and tends to show Plaintiff did, in fact, willfully reformat his hard drives knowing Defendant was vehemently requesting production of those hard drives. Thus, this factor also weighs against Plaintiff.

So far, so good, for Well Fargo’s request to have the case dismissed because of spoliation. All of the factors the court considered as required by Anheuser-Busch  weighed in defendant’s favor, except for the last one: whether alternatives less severe than dismissal might be appropriate. Here the court was inclined to give the plaintiff a break, and just order an adverse inference instruction instead of outright dismissal. As I stated before, although this means Well Fargo is almost certain to win, it will still be put to the great expense and burden of trial, and it is always possible a jury will rule for the plaintiff. Judge McQuaid must have had some unexpressed doubts about this case to let it go to trial like that. It is also possible he just wanted to play it safe and not risk reversal by the district court. It is hard to say without knowing more about this case and the personalities involved. In any event, here is Judge McQuaid’s explanation for his ruling:

Under these facts, it appears the evidence that Defendant’s forensic computer expert retrieved, together with the timing of Plaintiff’s conduct, actually lend support to Defendant’s theory of the case–that Plaintiff manufactured this action and the evidence he planned to use to support the action–rather than prevents Defendant from fully developing it’s theory as Defendant suggests. Accordingly, for the foregoing reasons, the court finds a jury instruction creating a presumption in favor of Defendant that the spoliated evidence was unfavorable to Plaintiff is a more appropriate, less drastic sanction.

Basically Judge McQuaid is saying that since the plaintiff’s fraudulent destruction of evidence confirms the defense position that the whole case is a fraud, that makes it more appropriate to allow the case to continue to trial, than be dismissed. I am not sure I understand that kind of “two wrongs make a right” logic. A plaintiff who manufactures a case out of whole cloth should not for that reason have carte blanche to commit more fraud. The court should have granted Wells Fargo’s motion and dismissed this case.

Sanctions in the San Diego “Hobie Cat” Case Fall Short of the Tiger We Need to Keep Our Courts Fair

San Diego has long been famous in golf circles for having one of the best public golf courses in the country, Torrey Pines. This is where the U.S. Open was held this weekend, and where Tiger Woods won one of the most dramatic golf tournaments of all times. Last year San Diego became famous in legal circles for the Qualcomm case. In Qualcomm, a plaintiff and many of its attorneys were, in a court room drama, caught playing “hide-the-ball” with 46,000 emails. The San Diego district court spoke harshly about Qualcomm’s attempted deception. The judges condemned the actions as unethical and imposed some sanctions against Qualcomm. The court is now engaged in an extended process of imposing some type of sanctions against six of Qualcomm’s outside counsel.

We Need More Tigers on the Bench
to Stop the Cycle of Discovery Abuses

Most commentators described the Qualcomm sanctions, like the high rough at Torrey Pines, as either suitably tough or too severe. Apparently, I am the only commentator to criticize the sanctions as too lenient. I do not think the punishment was proportionate to the enormity of the discovery misconduct, and for this reason I previously called the sanctions “wimpy.” Qualcomm’s “Monumental Discovery Violations” Provokes Only Wimpy Sanctions. A new opinion from the same federal court in San Diego seems to follow in the footsteps of Qualcomm and provides only a paper tiger response to e-discovery abuses. R & R Sails, Inc., d/b/a Hobie Cat Co. v. Insurance Company of the State of Pennsylvania, 2008 WL 2232640 (S.D.Cal., April 18, 2008). 

The opinions in Qualcomm show that the presiding judges considered Qualcomm’s conduct to have been intentional and in bad faith. Qualcomm was not a case involving accidental omissions, miscommunications, or simple lawyer/IT mistakes. If it had been, my opinion would be completely different. As I noted in my 100th Blog, e-discovery is like golf. Perfection in both is impossible to achieve. Even Tiger Woods sometimes makes mistakes. He did at Torrey Pines this weekend, many times, including a double bogey on the first hole. He roared back from these mistakes, overcoming great pain in his left knee, and pulled off miracle shots when needed. He did so primarily because of his fierce warrior determination and uncompromising intensity. 

If Qualcomm had just involved mistakes and errors in judgment, a lenient response would have been appropriate. But according to the San Diego judges, Qualcomm intentionally hid-the-ball on a grand scale. They crashed well past the line between zealous representation and unethical practice. In a situation like that, involving a strong showing of bad faith, the sanctions should match the misconduct. The intensity of Tiger Woods is called for. Proportionate and just consequences are the only way to send a credible message that fraud will not be tolerated in our courts. Harsh rhetoric alone will not suffice. That is why I thought the sanctions in Qualcomm were too weak.

The Hobie Cat case is again no tiger. Moreover, it seems to confirm my hypothesis that Qualcomm’s sanctions were not severe enough to deter hide-the-ball play, even in the same court. But see what you think. Consider the findings that Magistrate Judge Louisa S. Porter made in the Hobie Cat opinion. Then decide whether you think this defendant took the Qualcomm message seriously? Did they even hear it at all?

The Facts of R&R Sails, d/b/a Hobie Cat Co. v. Insurance Company of the State of Pennsylvania

The defendant in this case is an insurance company, and is thus a serial litigant. Insurance companies are routinely embroiled in litigation, and I know from long experience that they are frequently forced to defend frivolous claims and to respond to outrageous demands. This can sometimes lead to jaundiced behavior by claims examiners and attorneys. I make this observation not to excuse the actions in this case, but to explain how it can sometimes happen, even to the best of companies.

The plaintiff here, Hobie Cat Co., makes recreational and racing sailboats. A wildfire in Australia destroyed one of their manufacturing plants. This made it impossible for Hobie Cat to fulfill a contract to provide sixty catamarans for use in a racing event in April 2002. The insurer paid Hobie Cat for the loss of property, but would not pay for the loss of income, business interruption and other expenses. Suit was filed in San Diego state court in May 2007 and removed to federal court in June 2007. The suit alleged bad faith claims handling and also alleged that the laws of Australia should apply. (This choice of law argument was denied by the court in an earlier ruling.)

The insurer responded to the first request for production in August 2007 by producing paper documents, but did not include the adjuster’s computer notes. This information is key to most insurance disputes, especially ones that involve allegations of bad faith claim denial. The file usually documents all of the claim adjuster’s notes and analysis. It also logs all conversations concerning the claim, both in person and by phone. The key computer file is often called the claim activity log, and many insurers, including the defendant here, use an AEGIS type database software system for that purpose. 

All insurers today keep such records, using some kind of software or another, and so the failure to include these notes was an obvious oversight. Here is how Judge Porter describes plaintiff’s counsel response to this non-production:

On September 7, 2007, Plaintiff sent a later to Defendant noting that “[c]onspicuously absent from [Defendant's production of documents] are electronic or handwritten daily activity records/logs which are generally kept with an adjuster’s notes and telephone call records.” This letter was followed by another letter on September 10, 2007, in which Plaintiff’s counsel listed topics to be discussed at a requested meet-and-confer regarding discovery. This letter states: “we have not been provided with any electronic or handwritten daily activity records/logs which are generally kept with an adjuster’s notes and telephone call records.”

Hobie Cat at *1 (record citations omitted in this and subsequent quotes).

At this point, the activity log should have been produced, and this little game of hide-the-ball would only have drawn a smile and comment from Plaintiff’s counsel of “nice try, but I was not born yesterday.” However, defense counsel continued to insist that they had no activity logs to produce. Plaintiff’s counsel then did what they had to do. They asked the court for a hearing to resolve the dispute. Here again, defense counsel had another opportunity to “find” the file and produce it prior to a hearing before the judge. Most of the time, that is how this sort of situation plays out. Most counsel will not want to chance a referee’s review of a hide-the-ball play.

However, this defendant was apparently willing to take a chance. Counsel for defendant showed up at the hearing and continued to assert that the insurer did not keep activity logs, either in paper or electronic format. Judge Porter, an experienced magistrate who has no doubt heard thousands of insurance company disputes, did not believe the story. No modern insurance company investigates a claim without keeping a computer log of events. Here is how Judge Porter describes what happened at this hearing at *2:

At that time, Defendant’s counsel represented that a complete copy of Plaintiff’s claim file had been produced on August 30, 2007. Defendant’s counsel asserted at the conference that Defendant had responded to Plaintiff’s request for discovery and explained that no daily logs or telephone records had been produced to Plaintiff because no daily logs or telephone records were maintained by Defendant’s insurance adjusters. The Court expressed skepticism about counsel’s claim and ordered on November 29, 2007 that “Defendant shall either produce all daily activity logs or a verified declaration that Defendant is not in possession of daily activity logs.”

Here was yet another chance for the defendant to come clean, and find the “missing” logs before filing a sworn affidavit with the court. Instead, on December 14, 2007, the defendant filed an affidavit by their senior adjuster swearing that: ”[t]here were no daily activity logs or telephone record logs that were created or maintained in connection with plaintiff’s claim.” 

The defendant insurer should have anticipated that plaintiff’s next move would be to take the deposition of the affiant, the senior adjuster. That is exactly what happened. Then, at this point, the insurer claimed that it suddenly found the missing logs. This supposedly happened while defense counsel was interviewing the witness to prepare him for his deposition. Counsel provided no explanation as to why this revelation did not occur earlier, especially as this same witness must have been (or at least should have been) previously interviewed for his affidavit. The defendant printed out the computer notes, and then faxed eleven pages of log files to plaintiff’s counsel. However, due to unfortunate timing, no doubt completely accidental, the fax was not received by plaintiff’s counsel until after he was on a plane to New York en route to take the senior adjuster’s deposition.

Still, plaintiff’s counsel got the fax the night before the deposition, and asked the senior examiner some questions about it the next day, January 9, 2008. Now under oath and before a court reporter, the senior claims examiner, Blaise Lombardo:

[C]onceded on the record that his declaration dated December 14, 2007 was incorrect and that a claim log was maintained electronically by Defendant, separately from the paper-form claim file that had been produced to Plaintiff. Lombardo also represented that all documents responsive to Plaintiff’s discovery requests had since been produced. 

Id. at *2. So apparently the “hide the ball” game was over; or was it?

After this admission, plaintiff’s counsel refused to conclude this deposition, and instead demanded more time to study the production, and readjurn the deposition another day to ask Lombardo more questions. Defense counsel refused, and plaintiff’s counsel was able to get an emergency hearing with Judge Porter by phone at the deposition in New York. Judge Porter of course agreed with plaintiff’s counsel:

Defendant opposes Plaintiff’s request to suspend the deposition on the ground that the deposition ought to be completed as scheduled because Plaintiff is now in possession of all the records necessary to depose Lombardo. . . .  the deposition shall be adjourned and the remainder of [Lombardo's] deposition shall be taken at a later date. Plaintiff’s counsel reserves a request for sanctions.

Here is where, in my view, things become really bizarre. Lombardo’s deposition was scheduled to continue on February 13, 2008. In addition, Lombardo’s supervisor, Joseph Chianese, who initially handled Plaintiff’s coverage claim before Lombardo took over, was scheduled to be deposed on February 12, 2008. Here is how Judge Porter describes the defendant’s version of what happened next:

On February 11, 2008, while preparing for Chianese’s deposition, Defendant’s counsel “realized for the first time that [he] had failed to produce six pages of the computer notes that Mr. Lombardo had provided to [him] in January.” According to counsel, “[u]nfortunately, in my rush to provide plaintiff’s counsel with the notes, I mistakenly faxed only eleven of the seventeen pages … I did not realize my error until I was back in New York for the deposition of Mr. Chianese in early February.” 

Defendant’s counsel produced the remaining pages of claim log entries to Plaintiff’s counsel on February 12, 2008, the morning that Plaintiff was scheduled to depose Chianese. The additional six pages of log entries were all from the period of time when Chianese managed Plaintiff’s claim. The parties agreed immediately to continue Chianese’s deposition to a later date. 

The following day, Plaintiff took Lombardo’s deposition for a second time. Lombardo testified that he had given all of the information that he printed out from Defendant’s electronic database to counsel in January.  After questioning by Plaintiff’s counsel regarding Defendant’s database, whether data stored in the database could be altered, and whether all relevant data had in fact been produced, Lombardo’s deposition ended prematurely and was subsequently scheduled to be taken yet a third time. 

Every time there is a deposition more documents are discovered, and produced at the last minute. I could understand this if we were talking about a database of thousands of documents, but here there were only eighteen pages. (One page was withheld for privilege, although the privilege log was apparently never served.) Not only that, but the deposition is adjourned for unexplained reasons when questions are asked as to whether any of the electronic files were modified before production, and whether still more files might exist. These questions are left unanswered by the opinion.

So what do you think? Were the sanctions in Qualcomm tough and scary enough to send a convincing message to would-be “hide the ball” litigants?  I point out that all of the facts in Hobie Cat occurred after the Qualcomm revelations in August 2007. Qualcomm Inc. v. Broadcom Corp., No. 05-CV-1958-B(BLM) Doc. 593 (S.D. Cal. Aug. 6, 2007); Qualcomm Inc. v. Broadcom Corp., No. 05-CV-1958-B(BLM) Doc. 599 (S.D. Cal. Aug. 13, 2007). 

The Parties Sanction Arguments in Hobie Cat

Of course, the plaintiff responded to these over-zealous defense games by moving for sanctions. Here is how the Court summarized plaintiff’s position at *3:

Plaintiff argues that sanctions are warranted in this case under Federal Rule of Civil Procedure 37, for violations of the Court’s order that Defendant produce claim logs if they existed, and for violations of Federal Rules of Civil Procedure 26(e) and 26(g). Plaintiff contends that production of the claim log was an especially important part of the discovery process because of the significance of the log to Plaintiff’s claim that Defendant exhibited bad faith in handling Plaintiff’s insurance claim. Plaintiff quotes the Advisory Committee Notes to the 1983 Amendment to Federal Rule of Civil Procedure 26(g), which state: “[i]f primary responsibility for conducting discovery is to continue to rest with the litigants, they must be obliged to act responsibly and avoid abuse.” Plaintiff argues that Defendant’s representations to Plaintiff and to the Court that a claim log responsive to Plaintiff’s discovery request did not exist, violated Rule 26(g) and represent at least a negligent failure by Defendant to locate, review and produce discovery.

Defendant responded that these were all just “honest mistakes” that were promptly remedied as soon as discovered. Here is the court’s summary of defendants explanation of the false affidavit at *4:

Though Defendant concedes that Lombardo’s signed declaration was incorrect in stating that the claim log did not exist, Defendant explains that Lombardo did not associate Plaintiff’s document request with the electronically-stored records which are maintained on his computer rather than in hard-copy, paper form. Defendant seeks to explain the incomplete production of the claim log, once identified, as another “inadvertent mistake” unworthy of sanctions. 

Apparently this is the best explanation that they could come up with, that they did not think key records had to be produced because they were only stored on a computer, and had not been printed out. This kind of argument might have had some credibility ten years ago; but today? Also, remember the affidavit filed with the court said: “[t]here were no daily activity logs or telephone record logs that were created or maintained in connection with plaintiff’s claim.” Remember that this affidavit was filed at the judge’s request after the judge found it hard to believe that there were no computer logs. If you were the judge, how would you respond to all this? How should a judge respond to deter that kind of conduct by other litigants in the future?

Court’s Ruling in Hobie Cat

Here is what Judge Porter did. She starts off by chiding both sides for not solving their e-discovery problems at the initial 26(f) conference.

In 2006, Federal Rule of Civil Procedure 26(f) was amended “to direct the parties to discuss discovery of electronically stored information during their discovery-planning conference.” Advisory Committee Notes to 2006 Amendments. In this case, the parties’ discovery plan made no mention of possible sources of discovery and gives no indication that the parties discussed the discovery of electronically-stored information at their 26(f) conference.

Personally, under these facts, I do not see how a more complete 26(f) conference would have made any difference. The spirit of cooperation necessary to make these conferences effective was clearly never present in this case.

Next, the magistrate chided the plaintiff for not making a specific request for the electronic activity log files, and instead just asking for all “documents” related to the claim. I do not understand the point of those remarks. Judge Porter then recognizes that this error by plaintiff, if you can call it that, was corrected in the subsequent communications and conferences. After that, the defendant clearly knew that the plaintiff wanted to see the electronic log files, and not just the portions of the claim file that happen to be in paper.

Judge Porter then lays out the facts of defendant’s disingenuous denials, and piecemeal, last minute productions, and moves on to the governing law at *5:

Federal Rule of Civil Procedure 26(g) requires that every discovery response be signed by an attorney and the signature “certifies that to the best of the person’s knowledge, information, and belief formed after a reasonable inquiry” that the response is complete and correct. This rule is enforced by a mandatory sanction under Rule 26(g)(3), which reads: 

If a certification violates this rule without substantial justification, the court, on motion or on its own, must impose an appropriate sanction on the signer, the party on whose behalf the signer was acting, or both. The sanction may include an order to pay the reasonable expenses, including attorney’s fees, caused by the violation.

Defendant’s production of electronically-stored claim log entries on January 8, 2008 demonstrate that Defendant had made incorrect certifications to Plaintiff as well as representations to the Court-that Defendant’s production of discovery was complete.

Judge Porter then makes short work of defendant’s attempt to dress up its actions as “honest mistakes.” Her writing on this is excellent, although it is of course written in a typical restrained judicial fashion:

Sanctions under Rule 26(g) must be issued unless violation of the rule was “substantially justified.” Defendant claims substantial justification for maintaining the position that no claim log was in Defendant’s possession, based on Lombardo’s misunderstanding of the discovery being requested of Defendant. According to Defendant, Lombardo failed to recognize that the AEGIS database that he entered notes into contained the “daily activity logs or telephone records” that Plaintiff had been requesting.

Lombardo has been an insurance adjuster for twenty-six years and explains that he did not associate the AEGIS database with the claim file that he maintains because “[t]he AEGIS computer system records are kept on a computer system that is separate from my file materials and I do not have a practice of printing them out to put in my file.”

Defendant argues that this “honest mistake” substantially justifies the incorrect certifications made to Plaintiff, as well as the false declaration provided to Plaintiff in response to this Court’s Order of November 29, 2007. However, to give meaning to the certifications provided on discovery responses, Rule 26(g) requires attorneys or parties to sign their responses “after a reasonable inquiry.” Evidence of such an inquiry prior to January 2007 may provide this Court with justification for the incorrect certifications provided to Plaintiff. Instead, this Court is presented with evidence that Lombardo was maintaining a claim log on his own computer using the AEGIS system while failing to recognize that this log was the same “record/log” being requested by Plaintiff. Lombardo entered notes of a communication with counsel into the AEGIS system on November 16, 2007, immediately prior to counsel’s representation to this Court that such a system was not possessed by Defendant and close in time to his signing a declaration that no such notes are maintained. The Court cannot find that a reasonable inquiry was made into whether Defendant possessed discovery responsive to Plaintiff’s requests, and therefore the Court does not find Defendant’s incorrect certifications to be substantially justified.

*6 Defendant is liable for sanctions, pursuant to Federal Rule of Civil Procedure 26(g), for making incorrect certifications to Plaintiff regarding discovery responses. Those certifications caused Plaintiff unwarranted attorney fees and costs.

The incorrect certifications were not only made to the Plaintiff, but also to the Court. A false affidavit was filed with the court. Yet Judge Porter does not include this as a basis for sanctions. What kind of message does this send? 

Next, the opinion explains that sanctions are also appropriate under Rule 37(c) for failure to timely supplement initial disclosures. Here is how the defendant violated this rule: 

Once Plaintiff established, at Lombardo’s January 9, 2008 deposition, that Defendant’s earlier certifications and Lombardo’s declaration regarding Defendant’s discovery responses were incorrect, the parties jointly contacted the Court. At that time, Defendant represented that Plaintiff was in possession of the entire claim log which Plaintiff had earlier requested. However, one month later, when Plaintiff’s counsel traveled again to continue the deposition of Lombardo and also to depose former insurance adjuster Joseph Chianese, Defendant produced additional portions of the claim log. Lombardo declares that he printed all pages of the claim log maintained in the AEGIS system prior to his deposition scheduled for January 9, 2008. Defendant’s production of additional claim log entries on February 12, 2008 demonstrate that Defendant did not complete the disclosure of the claim log in a timely manner.

Then the court concludes by determining what sanctions are appropriate for this type of conduct. As every lawyer who has ever moved for sanctions knows, this is the part of the order that you really care about. The statement of facts and law are interesting, but the sanctions are what count. If an order is filled with tough talk, but not tough sanctions, like Qualcomm, it is just a barking dog with no bite. You can ignore it and carry on. 

Plaintiff sought sanctions of $67,154.72 to fully compensate it for the fees and costs it incurred because of defendant’s hide-the-ball tactics. They did not get it. Instead, the judge cut the award down to $39,914.68, and made the sanction payable by both defendant and its legal counsel:

IT IS HEREBY ORDERED that Defendant and Defendant’s counsel are jointly and severally liable for attorneys’ fees and costs caused by the failure to search for and timely produce electronically-stored information. Defendant and Defendant’s counsel shall pay Plaintiff, in care of Plaintiff’s counsel, the amount of $39,914.68, within thirty (30) days of the date of this order. These monetary sanctions are SO ORDERED by this Court and are not made on a report and recommendation basis. 

Plaintiff also sought non-monetary sanctions, primarily preclusion of defendants use of any evidence that it has not already produced. This seems like a pretty mild request to me. I cannot understand why plaintiff did not ask for much more, such as striking defenses or total preclusion of the claims files. Of course this slap on the wrist was granted:

*9 Based on Defendant’s past failure to timely produce electronically-stored information, and Plaintiff’s concern that additional responsive electronically-stored information may be in Defendant’s possession, the Court finds it necessary to recommend non-monetary sanctions “aimed at resolving the compliance issue and restoring some confidence in the discovery process.” Board of Regents of the University of Nebraska v. BASF Corp., 2007 U.S. Dist. LEXIS 82492 (D.Neb., Nov. 5, 2007) (ordering sanctions where responsive documents were produced one day before the deposition of a key witness but without evidence of a willful failure to produce). 

The Judiciary Must Act Forcefully to Restore Confidence in the Discovery Process

In my view, Hobie Cat, like Qualcomm, is more bark than bite. This kind of mild judicial response will not restrain future hide-the-ball tactics. For many litigants it is business as usual. Words alone are not enough for an effective wake up call. This is one reason I predict we will see more cases like this in San Diego, and other courts, in the coming months. 

Litigants and attorneys are to blame for this, but so is the judiciary. The bench underestimates the temptation of parties to hide-the-ball, and overestimates the chilling effect of harsh rhetoric. Many litigants and lawyers are by no means boy scouts. It is naive to treat them as such. We need stronger responses by the judiciary to resolve the compliance issues and restore confidence in the discovery process. Only strong sanctions will stop this cycle of abuse. We need more Tigers on the bench. Tigers that are willing to roar and bite in the face of bad faith.

Hundredth Blog: Thoughts on SEARCH and Victor Stanley, Inc. v. Creative Pipe, Inc.

This is my One Hundredth Blog. I would like to think that like the mythical Hundredth Monkey, my blog writing will now somehow be an easy task, an innate skill. But I doubt it. Much like the task of e-discovery search, writing a 2,500 – 4,000 word essay on e-discovery each week takes time, effort, and careful planning to do right. In a way, as I will explain, this is the core message of the hot case of the day, Victor Stanley, Inc. v. Creative Pipe, Inc., 2008 WL 2221841 (D. Md., May 29, 2008).

This scholarly e-discovery Order was written by Judge Paul Grimm in Baltimore. He is one of the country’s top judicial experts on e-discovery. Judge Grimm fully understands that ESI search and review is a complex, learned skill. It is not an innate ability that every lawyer somehow picks up in law school when they are taught Legal Research 101. Lawyers need to treat search and review seriously, and either take the time necessary to become adept in this complex area, or employ experts who are. If not, the consequences can be devastating, as Victor Stanley shows. The defendants waived their attorney-client and work product privileges to 165 ESI files by their botched search and review before production.

Victor Stanley, Inc. v. Creative Pipe, Inc. and Reasonable Search

Judge Grimm’s forty-three page opinion is, on one level, a detailed ruling on waiver of attorney-client privilege. On another level, it is a treatise on e-discovery search and a guide to proving reasonable efforts. As Jason R. Baron is quoted as saying: “what Judge Grimm has done is give a road-map to lawyers in the United States on how to present to a court how they went about searching for relevant documents.”

Such proof may be required when a search fails and you are faced with sanctions as a result, or, as in this case, loss of privilege. In these circumstances, you may be required to prove that your search was reasonable, albeit, imperfect. As everyone in the industry knows, e-discovery is like golf, there is no such thing as perfect, and everybody, even Tiger Woods, makes a few mistakes.

That is what the defendants in this case claimed, that the disclosure of the privileged documents was just an honest mistake, and there should be no waiver. Plaintiff agreed that it was a mistake, but denied it was an honest one, and even alleged that some of the ESI revealed fraud. They also challenged the adequacy of the search efforts. Judge Grimm did not directly address the dishonesty allegations, but did agree that no credible evidence was presented to establish reasonable search efforts. Primarily for that reason, Judge Grimm held that defendants disclosure of attorney-client and work product privileged ESI acted to waive those privileges.

That is a pretty scary ruling, especially for the vast majority of litigators in the U.S. who have strictly amateur status in the game of e-discovery. They cannot even begin to comprehend the skills and expertise developed by the likes of Tiger Woods, much less the kind of practice and dedication he puts into every round. Yet, Judge Grimm suggests that when it comes to privilege review at least, they had better improve their game. He does not expect everyone to attain the level of a top professional, but he does expect some time and attention to be put into the important task of ESI search. See Eg.: Clearone Communications, Inc. v. Chiang, 2008 WL 920336 (D. Utah, April 1, 2008) (parties and court labored over keyword search plan). You just cannot hope for the Hundredth Monkey Effect. Moreover, he suggests that some attorneys would be well advised to seek the help of a professional. For most cases, a simple club pro consult will do, but if it is a “bet the company” case, you might want to retain a touring professional.

Speaking of which, several of Jason Baron’s writings and research projects on search were cited by Judge Grimm in Victor Stanley, including The Sedona Conference, Best Practices Commentary on the Use of Search and Information Retrieval, 8 The Sedona Conf. J. 189 (2007), which I have previously written about in Sedona’s New Commentary on Search, and the Myth of the Pharaoh’s Curse, and the Text Retrieval Conference (TREC) sponsored by the National Institute of Standards and Technology. The TREC event is in its third year of scientific evaluations of various kinds of ESI automated search techniques, including the kind of lame keyword search that the losing defendants apparently ran in Victor Stanley. The results are surprising. They suggest that keyword searches alone, especially when poorly done without sampling and iteration, and without the help of more advanced techniques and technologies, will miss most of the documents sought. That finding should be alarming to anyone who does e-discovery, especially if you use keyword searches alone to try to protect against waiver of privilege in a massive production.

Judge Grimm’s opinion is a wake up call to all litigators who put blind trust into simple keyword searches, and think that anyone can do it. It is a dangerous delusion as this case shows. I call it the Myth of Google, where litigators think that since they can run a Google search, and also a Westlaw or Lexis search, that they can run an e-discovery search too. They think that since they know the case, they know what the best keywords are, and that is all it takes to find what they need. After all, it works for them on Google and legal research, so it should work on email search too. It never even occurs to the average trial lawyer that special expertise and training might be needed to find the needles in today’s electronic haystacks. They do not think they need an expert to help them formulate an adequate search strategy, including, but most definitely not limited to, formulating keywords.

Grimm’s tale is that when a search fails miserably, do not expect the judge to simply take your word for it that the efforts were appropriate. It is going to require some kind of expert evidence. In Judge Grimm’s words:

Assuming that the Plaintiff’s version of how Defendants conducted their privilege review is accurate, the Defendants obtained the results of the agreed-upon ESI search protocol and ran a keyword search on the text-searchable files using approximately seventy keywords selected by M. Pappas [Defendant] and two of his attorneys. Defendants, who bear the burden of proving that their conduct was reasonable for purposes of assessing whether they waived attorney-client privilege by producing the 165 documents to the Plaintiff, have failed to provide the court with information regarding: the keywords used; the rationale for their selection; the qualifications of M. Pappas and his attorneys to design an effective and reliable search and information retrieval method; whether the search was a simple keyword search, or a more sophisticated one, such as one employing Boolean proximity operators; or whether they analyzed the results of the search to assess its reliability, appropriateness for the task, and the quality of its implementation. While keyword searches have long been recognized as appropriate and helpful for ESI search and retrieval, there are well-known limitations and risks associated with them, and proper selection and implementation obviously involves technical, if not scientific knowledge.

It cannot credibly be denied that resolving contested issues of whether a particular search and information retrieval method was appropriate –in the context of a motion to compel or motion for protective order– involves scientific, technical or specialized information. If so, then the trial judge must decide a method’s appropriateness with the benefit of information from some reliable source– whether an affidavit from a qualified expert, a learned treatise, or, if appropriate, from information judicially noticed. To suggest otherwise is to condemn the trial court to making difficult decisions on inadequate information, which cannot be an outcome that anyone would advocate. . . . Indeed, it is risky for a trial judge to attempt to resolve issues involving technical areas without the aid of expert assistance.

Judge Grimm follows in the footsteps of Judge John Facciola, who has previously warned of the need for special expertise for appropriate searches in several cases:

• United States v. O’Keefe, No. 06-249 (D.D.C. Feb. 18, 2008), which I wrote about in Criminal Case Raises Interesting e-Discovery Search Issues,
• Disability Rights Council of Greater Wash. v. Wash. Metro. Area Transit Auth., 2007 WL 1585452 (D.D.C. June 1, 2007), which I wrote about in Keyword Searches v. Concept Searches,
• Equity Analytics, LLC v. Lundin, 248 F.R.D. 331, 331 (D.D.C. March 7, 2008) where Judge Facciola stated:
  • “[D]etermining whether a particular search methodology, such a keywords, will or will not be effective certainly requires knowledge beyond the ken of a lay person (and a lay lawyer).”

Some have criticized Judge Facciola for these decisions, arguing that they unnecessarily drive up the cost of litigation. These same critics will now criticize Judge Grimm for joining his camp. They think that requiring expert input in discovery unnecessarily raises the bar of professional standards and forces litigation attorneys to retain yet another set of experts, e-discovery search experts, which clients can ill afford.

Perhaps it is self-serving on my part, but I strongly disagree. In my experience, experts in this area will save more money than their fee. They can effectively cull the data set down to a more manageable level where final review and production is far less expensive. The trial lawyer with no special skills or experience in e-discovery is likely to just copy and review everything. The keyword searches that I typically see performed by novices are a model of inefficiency, producing far too high a noise-to-hit ratio.

Judge Grimm anticipated and responded to these expense criticisms in footnote 10 of Victor Stanley. The footnote, which is three pages long, and is partially quoted above, makes several additional points explaining why such search experts are needed:

Instead, Judge Facciola made the entirely self-evident observation that challenges to the sufficiency of keyword search methodology unavoidably involve scientific, technical and scientific subjects, and ipse dixit pronouncements from lawyers unsupported by an affidavit or other showing that the search methodology was effective for its intended purpose are of little value to a trial judge who must decide a discovery motion aimed at either compelling a more comprehensive search or preventing one.

Viewed in its proper context, all that O’Keefe and Equity Analyticsrequired was that the parties be prepared to back up their positions with respect to a dispute involving the appropriateness of ESI search and information retrieval methodology–obviously an area of science or technology–with reliable information from someone with the qualifications to provide helpful opinions, not conclusory argument by counsel.

The message to be taken from O’Keefe, Equity Analytics, and this opinion is that when parties decide to use a particular ESI search and retrieval methodology, they need to be aware of literature describing the strengths and weaknesses of various methodologies, such as The Sedona Conference Best Practices, supra, n.9, and select the one that they believe is most appropriate for its intended task. Should their selection be challenged by their adversary, and the court be called upon to make a ruling, then they should expect to support their position with affidavits or other equivalent information from persons with the requisite qualifications and experience, based on sufficient facts or data and using reliable principles or methodology.

For those understandably concerned about keeping discovery costs within reasonable bounds, it is worth repeating that the cost-benefit balancing factors of Fed. R. Civ. P. 26(b)(2)(C) apply to all aspects of discovery, and parties worried about the cost of employing properly designed search and information retrieval methods have an incentive to keep the costs of this phase of discovery as low as possible, including attempting to confer with their opposing party in an effort to identify a mutually agreeable search and retrieval method. This minimizes cost because if the method is approved, there will be no dispute resolving its sufficiency, and doing it right the first time is always cheaper than doing it over if ordered to do so by the court. Additionally, cost can be minimized by entering into a court-approved agreement that would comply with Hopson, or if enacted, Proposed Evidence Rule 502. In addition, there is room for optimism that as search and information retrieval methodologies are studied and tested, this will result in identifying those that are most effective and least expensive to employ for a variety of ESI discovery tasks.

Proper search is the cornerstone of e-discovery, and key to controlling costs. Since most of the cost of e-discovery lies in review expenses, estimates range from 50% to 80%, our efforts should be focused on searches that reduce the amount of ESI to be reviewed. Obviously, the better the search, the more chaff is separated from the wheat. We do not want our reviewers reading chaff – every minute a reviewer spends reading an irrelevant email is a minute wasted. Here experts can help and should be consulted at the very beginning of the case, at the same time as the litigation hold notices. If you are going to consult a pro, it only makes sense to do so before the round begins, not on the eighteenth tee.

Judge Grimm takes pains to point out that search is not only important, but requires a high level of skill to do properly. He also provides some suggestions on how to do that:

Use of search and information retrieval methodology, for the purpose of identifying and withholding privileged or workproduct protected information from production, requires the utmost care in selecting methodology that is appropriate for the task because the consequence of failing to do so, as in this case, may be the disclosure of privileged/protected information to an adverse party, resulting in a determination by the court that the privilege/protection has been waived.

Selection of the appropriate search and information retrieval technique requires careful advance planning by persons qualified to design effective search methodology. The implementation of the methodology selected should be tested for quality assurance; and the party selecting the methodology must be prepared to explain the rationale for the method chosen to the court, demonstrate that it is appropriate for the task, and show that it was properly implemented. In this regard, compliance with the Sedona Conference Best Practices for use of search and information retrieval will go a long way towards convincing the court that the method chosen was reasonable and reliable, which, in jurisdictions that have adopted the intermediate test for assessing privilege waiver based on inadvertent production, may very well prevent a finding that the privilege or work-product protection was waived.

Since I consider search so important, many of my first 100 blogs have addressed this topic, not only in the above cited blogs on Judge Facciola’s cases, but also in Inadequate Keyword Searches by Untrained Lawyers May in Some Circumstances Be Sanctionable which discusses an opinion by District Court Judge Nancy F. Atlas in Houston, Texas, Diabetes Centers of America, Inc. v. Healthpia America, Inc., 2008 U.S. Dist. LEXIS 8362, 2008 WL 336382 (S.D. Tex. Feb. 5, 2008), and Sedona’s New Commentary on Search, and the Myth of the Pharaoh’s Curse which discusses the Sedona treatise edited by Jason Baron.

Defendant’s Failure in Victor Stanley to Prove Reasonable Search Efforts Results in Loss of Attorney-Client Privilege

Judge Grimm, in this case, found the defendants’ search efforts to be negligent.

In this case, the Defendants have failed to demonstrate that the keyword search they performed on the text-searchable ESI was reasonable. Defendants neither identified the keywords selected nor the qualifications of the persons who selected them to design a proper search; they failed to demonstrate that there was quality-assurance testing; and when their production was challenged by the Plaintiff, they failed to carry their burden of explaining what they had done and why it was sufficient.

Further, the Defendants’ attempt to justify what was done, by complaining that the volume of ESI needing review and time constraints presented them with no other choice is simply unpersuasive.

Since their review was negligent, or at least not proven to be adequate, the defendants were found to have waived their privilege to the 165 documents that they accidentally produced to the plaintiff. Bear in mind that the defendants produced tens of thousands of documents in this same production, and so percentage wise, the mistake was very small, less than one percent. (Even so, Judge Grimm thought that 165 documents was a lot to miss, and suggested he might have reached a different result if only a couple had been missed.) Based on the the high number of electronic files that the defendants had to review for privilege, you might be surprised by the seemingly strident tone of the opinion. The defendants were, after all, being stripped of their attorney-client privilege, which is a fundamental right recognized by the Supreme Court since 1826. Here are the Judge’s Grimm words:

Thus, the disclosures were substantive- including numerous communications between defendants and their counsel. . . . any order issued now by the court to attempt to redress these disclosures would be the equivalent of closing the barn door after the animals have already run away.

Every waiver of the attorney-client privilege produces unfortunate consequences for the party that disclosed the information. If that alone were sufficient to constitute an injustice, there would never be a waiver. The only “injustice” in this matter is that done by Defendants to themselves.

But when you dig deeper into the record of this case, you see how restrained his opinion is, and how these defendants really did get what was coming to them.

The Bad Facts Behind the Victor Stanley Law

It is true that defendants produced nearly 39 gigabytes of ESI, comprising tens of thousands of documents and unsearchable image files, such as engineering drawings and photographs. It is also true that the sheer volume of the ESI involved would weigh in favor of leniency for an accidental production of 165 files. But, when you dig deeper, and not only closely study the whole opinion, but also delve into the voluminous record in this case, you find numerous countervailing considerations. You can only guess at some of these factors because parts of the record are still sealed, including the 165 documents at issue. Still, this record is filled with smoke suggestive of bad faith. The total record helps explain this decision, and makes it easy to distinguish. For instance, it is also true that:

1. Defendants could have protected themselves by entering into a Clawback agreement, but choose not to. In fact, at first they agreed to enter into such an agreement to protect themselves from inadvertent disclosures such as this. Judge Grimm suggested it and the plaintiff, Victor Stanley, Inc., agreed. Then, after months of delay, the defendants changed their mind and decided it was not necessary. The plaintiff claims it was all part of their delay tactics. So this whole case is much like a Greek drama where the hero is punished for hubris. In my view, you should always enter into a Clawback agreement in any case involving significant amounts of ESI. I see no downside in doing so.
2. The defendants failed to establish that the 165 electronic documents at issue were covered by the attorney-client or work product privilege. At pages 30-42 of the Order Judge Grimm spelled out in great detail how they failed to follow proper procedures to establish the privileges.
3. The plaintiff claimed that two of the documents produced, emails to and from the defendant and one of his lawyers, was excluded from privilege by the crime/fraud/tort exception. Judge Grimm did a in camera review of all 165 documents before making his ruling, including the two emails alleged to show fraud. While I have not seen these emails of course, the other pleadings suggest that they pertain to an earlier Rule 11 Motion that the plaintiff filed against the defendants. This motion alleged that a counter-claim was filed with an improper purpose, namely to have plaintiff’s lead counsel disqualified by filing a bogus claim against him personally. It appears from the arguments that the emails in question pertained to the strategy challenged by the Rule 11 motion, and otherwise may have implicated the integrity of defendant.
4. Defendants are now on their fourth law firm to represent them. Judge Grimm was careful to point out in the Order that the search and review negligence was committed by predecessor counsel. As any experienced litigator knows, churning legal counsel is a huge red flag.
5. The 39 gigabytes of ESI was derived from defendants’ computer system through an agreed upon search protocol. A forensics computer expert was used by defendants to run this search and collect the ESI from their systems. Under the discovery agreement, the defendants were then to review this ESI and remove any privileged documents before production. The privileged ESI was to be logged, and all of the rest was to be produced. The search found to be negligent by Judge Grimm was the privilege search and review, not the original relevance search and collection. The defendants’ privilege review was based on seventy search terms that one of the defendants and his lawyers dreamed up. The computer expert did not assist in developing the search strategy or keywords, she merely ran the search.
6. Defendants refused to disclose the 70 search terms used for a privilege review, even after the adequacy of their search was challenged. This seems strange to me, but not to the Plaintiff, who forcefully argues that the 70 search terms were never intended to try and catch privileged documents. They were instead used to try to locate documents that might prejudice the defense, and then remove these documents from the production in violations of the terms of the production agreement. Plaintiff contends that during the time defendants were supposed to be reviewing files for privilege, they were instead reviewing and culling for hot files. Plaintiff claims that revelation of the 70 search terms would reveal defendants’ true, improper purpose. No doubt there will be additional discovery on this alleged improper secretion of documents.
7. Defendants had months to search through the ESI that they produced, and they still missed 165 attorney-client communications. Conversely, plaintiff claims that they easily found these documents in only a one hour search by using “a readily available desktop search tool.” Plaintiff argues that this confirms its allegation that no privilege review was ever conducted, that the whole exercise was a ruse to buy time to search for and remove harmful files.

I could go on, but you get the picture. The case itself is also interesting, involving allegations of unfair competition based on lying about whether goods were made in China, and violations of copyright. But, at this point, these are all just allegations. The remaining discovery and trial should soon reveal much more. When it does, I will look again at this case to see what, if any, fire is behind all of this smoke.

Hundredth Monkey

In the meantime, don’t fall for the Myth of Google, or let your friends fall for it either. Search and review are learned skills of some complexity and require adequate tools to perform correctly. Maybe 100 other lawyers and information scientists can do it, but that does not mean the skill has somehow magically transferred itself to the rest of the Legal or IT professions.

Although the Hundredth Monkey is an inspirational story and may work for ideas, it is based on bad science and does not work for skills. Complex skills of any kind, from monkeys washing sweet potatoes, to lawyers searching emails, to golfers striking a ball, all have to be individually learned. They cannot be learned by some, until a magic numerical threshold is passed, and then instantly transmuted through fields of energy and suddenly ingrained in everyone else. Sorry, it looks like we will all have to do the work. We cannot just wait for others to learn these e-discovery skills, and then hope to wake up one day with their hard earned abilities. If so, considering the number of professional golfers there now are in the world, we should all be breaking 100.

The Lessons of Qualcomm: A Wake Up Call for the Legal Profession

Qualcomm v. Broadcom is much more than another e-discovery case gone bad. It is an integrity wakeup call for the entire legal profession, much like Enron and Arthur Anderson were for business and accounting. Qualcomm shows what can happen when the profession strays too far from its roots, and the pursuit of profits takes precedence over the pursuit of justice. Some law firms may well be big businesses, but that is never all that they are. They are first and foremost professional associations. If they act like businesses, then it should be in the tradition of the London Stock Exchange, whose motto since 1801 has been: “dictum meum pactum.” All of the top attorneys I have ever known have practiced this motto religiously. It means “my word is my bond.” When a real lawyer tells you something, you can take it to the bank. Isn’t that the kind of lawyer you want? Isn’t that the kind of lawyer society needs? But See: Qualcomm, Inc. v. Broadcom Corp., 2008 WL 66932 (S.D. Cal. Jan. 7, 2008) (one of several relevant decisions in this case).

I have written on Qualcomm many times already, and am now resigned to doing so for a long time to come. Yes, I now think it is that important. See Eg. the following prior blogs:

1. ABA Litigation Section Reacts to the Qualcomm Case and Recommends e-Discovery Checklists
2. Sanctions Have Been Lifted Against the “Qualcomm Six” and a New Trial Ordered Where They May Now Speak Freely to Defend Themselves
3. Qualcomm’s “Monumental Discovery Violations” Provokes Only Wimpy Sanctions;
4. Update of Two Prior Sanctions Blogs: Qualcomm and Morgan Stanley,
5. Heavy Sanctions Loom Against Attorneys for e-Discovery and other “Aggravated Litigation Abuses”

At the West Legalworks A-Z E-Discovery CLE that I recently wrote about, John M. Barkett of Shook, Hardy & Bacon started the event with a very good explanation of the facts of Qualcomm v. Broadcom. Every presenter in this day and a half event had something to say about Qualcomm. The only exception was the chair of this CLE, Browning E. Marean, whose law firm DLA Piper now represents Qualcomm in that case. His lips were sealed, and he said nothing, but still squirmed mightily. Everyone who spoke agreed that Qualcomm is the major case of the year, not just for e-discovery practitioners, but for all litigators.

Factual Summary of Qualcomm

I will not recite all of the details of the case again, but a very brief summary of the amazing facts of this case may be helpful. Qualcomm sued its rival Broadcom claiming infringement of two of its key patents. Broadcom defended by claiming the patents were invalid because they were developed at the time Qualcomm was participating in an international standards setting group called the “Joint Video Team.” Qualcomm denied participating in this team. Numerous discovery requests were made for Qualcomm to produce documents related to this defense. Qualcomm repeatedly denied having any such documents, consistent with their position that they never participated.

After years of discovery, where that party line was consistently upheld by all Qualcomm witnesses, and all responses to discovery requests, the case went to trial. After weeks of trial a Qualcomm witness, Viji Raveendran, admitted on cross exam to having 21 emails related to Qualcomm’s participation in the standards setting team. It was later discovered that Raveendran had told Qualcomm’s lawyers about these 21 emails as part of final preparation for her trial testimony, and Qualcomm’s outside counsel had seen the emails, but decided to hide them, and hope it would not come up on cross. According to the trial judge, the direct exam questions of this honest witness by Qualcomm’s attorney were carefully designed to avoid asking Raveendran any question that might cause her to reveal the existence of those 21 emails.

Right after the surprise admission by Raveendran to 21 emails, Broadcom’s attorney immediately complained to the judge. The judge summoned counsel to a sidebar conference. Qualcomm’s attorneys assured the court that they had looked at these emails, and they were not responsive, and that there was no cover-up as Broadcom was now alleging. The judge accepted these assurances by the prominent and senior trial attorney conducting the case, dictum meum pactum, and the trial continued. Days later the jury found for the defendant. The jury foreman later explained that they all knew Qualcomm employees were lying and it was an easy decision.

After trail, at Broadcom’s urging, the judge ordered a complete investigation into whether there had been an email cover-up. Turns out, there had been, big time! Also, that sidebar representation by prominent counsel was, according to the presiding trial judge, a lie. After trial, Broadcom proved that Qualcomm had not only lied about and hid 21 emails, they had hidden over 46,000 emails with attachments comprising over 200,000 pages of relevant evidence! Naturally, both the court and defendant were astonished and upset, to say the least.

It is one thing to hide the ball, but to hide 200,000 balls and almost get away with it; that’s pretty impressive in a twisted Dr. Evil sort of way. Still, in this case at least, they were caught and crime did not pay. Qualcomm was stripped of it patents and ordered to pay $8,568,633.24 in fees to the prevailing defendant, Broadcom. By the way, patent litigation between these two companies continues in other courts around the country, and I do not have to tell you what kind of credibility Qualcomm now has with the courts.

This post trial discovery of a cover-up led to sanctions motions against Qualcomm and it attorneys. The District Court referred them to the Magistrate. Of course, Qualcomm had by now fired their former attorneys, and now they were each blaming the other for the massive fraud on the court. Qualcomm then asserted its attorney-client privilege, and the Magistrate agreed, effectively gagging Qualcomm’s outside counsel from testifying about what their client had told them. Six of the many outside counsel representing Qualcomm were then sanctioned by the Magistrate, and referred to the California Bar for further action. On appeal this sanction was reversed by the District Court Judge who held that Qualcomm’s attorney-client privilege was subject to the self-defense waiver. For a good explanation of this, see Kevin McBride’s blog e-Discovery LA.

The case has now been remanded for a new trial where outside counsel, and in-house counsel, can now freely testify as to who told who to hide what. John characterized the upcoming proceedings as a “circular firing squad.” As an aside, John has just written an article on e-Discovery ethics that he handed out to the A-Z participants. It will be published by the ABA Litigation Section later this year and provides a much needed overview of the subject.

Lessons of Qualcomm

The faculty of the A-Z CLE all agreed that the moral of the Qualcomm story is not only that hide the ball is prohibited by the rules and all governing ethics, but so too is never even look for the ball to begin with. You should instead make a reasonable inquiry and disclose all responsive evidence that this inquiry uncovers. Moreover, you should develop methodologies and lists to help make sure your search and disclosure duties are properly discharged. It is never in the client’s best interests to lie or break the rules, even if some of your client’s employees may sometimes think so. If the client does not want you to reveal evidence that will ruin the client’s case, then you must counsel with them and persuade them otherwise. As the Judge clearly states in Qualcomm, if the client will still not comply, you must resign. Also See United States v. Johnson, 2008 WL 2060597 (E.D.Va. May 15, 2008) (Defense attorney resigns midtrial when he discovers that his client has produced forged emails. After a mistrial the court applied the crime-fraud privilege exception and required the attorney to explain why he resigned. The defendant was later convicted of obstruction of justice, along with the original charges. Interestingly, the emails were forged to try and hide information in connection with a fraud investigation into the defendant’s company, PurchasePro.com, led by Arthur Anderson and Heller Ehrman.)

Kevin McBride has also written on the steps you should take to avoid the mistakes of Qualcomm. Aside from the obvious, but sometimes elusive, advice to tell the truth, Kevin recommends, as do I, to form an e-discovery team and establish a “discovery plan” at the beginning of a case. According to Kevin the plan should include at least ten items:

1. A detailed inventory and map of the client’s ESI and IT infrastructure.
2. A description of retention policies and practices.
3. Identification of the key players to the dispute.
4. A “litigation hold” notice interrupting deletion practices of key players and resources.
5. A list of all resources searched for relevant ESI, plus a list of potentially relevant sources not searched not searched because of accessibility problems.
6. A list of all search terms and methodologies used to identify relevant ESI.
7. “A list of all persons to whom discovery requests were circulated for review in advance of production.”
8. “Policies to periodically monitor preservation compliance by the client and client’s agents.”
9. “Policies to supplement discovery searches (and productions) when “red flag” information becomes known over the course of litigation that suggests new document resources or custodians need to be included in document production.”
10. “A policy for counsel to re-check the current state of discovery plan compliance before signing additional discovery responses or pleadings or making important arguments in court.

Alan Cohen, a writer for Corporate Counsel magazine, has also recently examined the lessons of Qualcomm from an in-house perspective. He draws five important lessons:

1. Outside counsel should know that they won’t be penalized for pursuing the evidence.
2. Keep asking questions [about whether more documents exist, etc.].
3. Don’t outsource e-discovery — oversee it closely, at the very least.
4. Don’t annoy the judge.
5. Document the document collection.

The lessons of Qualcomm were also recently explored by Gregory D. Shelton in his excellent article for the ABA’s Litigation Section discovery committee. Gregory D. Shelton, Qualcomm v. Broadcom: Lessons for Counsel and a Road Map to E-Discovery Preparedness, 16 A.B.A. Sec. Pub. PP&D 3, at 13 (Spring 2008). Here are Greg’s conclusions and advice.

Outside counsel, at all levels of authority, who rely on a client’s search and retrieval of electronically stored information, are obligated to ask probing questions, audit the search and retrieval, and confirm that all potential sources of information have been investigated. To paraphrase the court in Qualcomm, if a junior attorney who is unable to get a client to conduct the type of search he or she deems necessary to verify the adequacy of the document search and production, then he or she should obtain the assistance of a supervising or senior attorney. If the supervising or senior attorney is not able to get the client to perform a competent and thorough document search, he or she would withdraw from the case or take other action to ensure production of the evidence. [Qualcomm, Inc. v. Broadcom Corp., No. 05cv1958-B (BLM), 2008 WL 66932 (S.D. Cal. Jan. 7, 2008) at *13, n.10.]. Another solution may be to insist that in-house counsel appear in the case and sign the discovery responses if the client is not providing sufficient verification of the search and retrieval process. Although outside counsel may also consider some sort of indemnification agreement with the client, such an agreement does not relieve counsel from his or her ethical obligations.

I am not sure I understand what Greg had in mind about an indemnity agreement, but do not think anything like that is a good idea. What kind of attorney client relationship would that be? How exactly would a client indemnify an attorney from disregarding their duties to the court? Would such an agreement be enforceable? Do we really want opposing counsel and the courts to wonder if our representations on discovery are mere empty promises emboldened by secret hold-harmless agreements? No, I certainly hope the profession does not go in that direction. Ethics and professionalism are not something that can be papered over with clever agreements.

But Greg’s other suggestion to have in-house appear of record and sign discovery responses is practical and could work. Still, outside counsel would have to beware of falling into a trap of the three “no evil” monkeys and a conspiracy of silence. “Turning a blind eye” may have worked for Admiral Horatio Nelson, but will not work for lawyers. The attorney-client relationship must be built on full and open communications. It must be built on trust

Mary Mack, Technology Counsel of Fios, Inc., was interviewed recently about Qualcomm:

One effect of the Qualcomm v. Broadcom case is that it has introduced distrust and suspicion into relationships. It has adversely impacted the relationship between inside and outside counsel in a profound way.

Mary concludes her comments on this topic with a similar suggestion to Greg’s, that in-house attorneys may want to protect themselves with indemnity agreements and insurance:

Finally, inside counsel may experience a greater demand from law firms for an agreement that the client will waive the privilege if they need to defend themselves. And, inside counsel will have to consider their own liability in such matters and may wish to consider protecting themselves with insurance and/or a company indemnification agreement.

I do not think carriers will insure for the kind of behavior evidenced in Qualcomm. Some companies may go in that direction, but I think it is a mistake. The only viable solution is client education and counseling. The relationships of attorneys, both internal and external, must be built on honesty and trust.

We must all remember and follow the motto of the London Stock Exchange: dictum meum pactum. This is not an outdated concept. It is the bedrock of the American system of justice. I am not saying to avoid written agreements. That is not at all what it means. Dictum meum pactum means to be honest, truthful, and keep your commitments. It is the essence of trust and good reputation.

In the world of litigation, dictum meum pactum means that if an attorney makes a representation in Court to the Judge about discovery, or anything for that matter, it must be true, it must be substantial. There is no room for half truths and partial disclosure buttressed by secret indemnity agreements. If, for instance, you tell the court you made reasonable efforts to find relevant email, mean it, and be prepared to prove it. People may differ on what is reasonable under the circumstances. That is to be expected. If the court sees a good faith effort, albeit not diligent enough in their eyes, the response should be mild. But if you have found email and are hiding it, it is not a matter of a difference of opinion, it is a matter of honesty. If you compound the error with lies to the court and opposing counsel, the sanctions should be harsh.