Hospital Defendants Martyred in the Cause of Cooperative e-Discovery

A class action against eight hospitals in Detroit produced a “gotcha-type” e-discovery ruling that unfairly punished the hospitals for trying to cooperate with opposing counsel. Cason-Merenda v. Detroit Medical Center, 2008 WL 2714239 (E.D.Mich. July 7, 2008). Here is Magistrate Judge Donald A. Scheer’s own words at the end of his opinion:

Having elected to martyr itself rather than to seek relief in a timely fashion, DMC seeks an order imposing the cost of its choice upon its opponents. I find neither substantive merit nor equity in its request. IT IS THEREFORE ORDERED that Detroit Medical Center’s Motion to Require Plaintiffs to Share Third Party Vendor Costs of Electronic Discovery is denied.

Judge Scheer held that the defendants had elected to martyr themselves by cooperating with plaintiffs and relying upon a stipulation with plaintiffs. The stipulation reserved the parties rights to do e-discovery first and seek cost-sharing later. Judge Scheer’s use of the inflammatory word “martyr” is ironic, and so is his reliance upon the Sedona Principles to try to justify his ruling. (To pile the irony on even higher, Judge Scheer misspells Sedona throughout the opinion and instead calls it the “Sadona” Conference.)  It is ironic because the Sedona Conference’s latest publication is  The Sedona Conference® Cooperation Proclamation. The Proclamation encourages parties to reach agreement and specify plans. That is exactly what the defendant hospitals did here, but instead of rewards and accolades, they were punished. 

The eight hospitals are indeed martyrs, but not in the self-imposed manner that Judge Scheer’s opinion suggests. They are martyrs to the cause of cooperative e-discovery that the Sedona Conference and many others promote. Their martyrdom was not voluntary as the judge sarcastically suggests. It was caused by opposing counsel and the very judge who labeled them such. Cason-Merenda is bad law, but is nevertheless important. It is significant and deserves attention because it demonstrates that the cooperative approach will not work unless the judiciary understands and supports cooperation in both word and deed.

Defendants Cooperated As They Should 

The defendants here met with plaintiffs at the beginning of the case and agreed to certain e-discovery. Instead of reaching an agreement as to cost sharing at this early stage, which is nearly impossible, especially before anybody really knows what the costs will be, both sides agreed to defer the issue of cost sharing. They agreed to reserve their rights to later move for cost sharing. The court then approved the stipulation and made it into an order of the court. After that happened, defendants should have been able to rely on the order, and make production first, without concern of waiver of rights. That is in fact what they did. Only later did they discover that reliance on this court’s order put them on a path to martyrdom.

The six defendant hospitals acted in a cooperative manner to advance the process by doing the e-discovery work required and making the production. The opinion does not set forth any of the details, but in a class action like this, involving six major hospitals, the e-discovery work would almost certainly have been extensive and complicated. It is very hard to predict in advance the cost of this kind of work. That is the practical reason parties should be free to agree to defer this issue.

After defendants first production, when they knew the actual costs, as opposed to speculative predictions, they were then in a position to evaluate whether cost sharing was justified. Apparently they thought it was, and so contacted plaintiffs counsel to try to reach an agreement.  When plaintiffs’ counsel would not agree to any cost sharing, defense counsel was forced to seek relief from the court by filing a motion.

These were not the crazed actions of a deluded martyr. Defense counsel was following the cooperative approach built into the rules and modern principles of e-discovery. They should not have been punished for trying to cooperate and work things out before filing motions. At the very least, the court should have provided them with their day in court and heard the issue of whether cost sharing was justified. But that is not what happened in Cason-Merenda.

Instead, the plaintiffs ceased their prior cooperative attitude, and went into full adversarial mode. They not only opposed the motion on its merits, which is certainly fair, but they also challenged defendants right to bring the motion at all. Their procedural objection was unfair and excessive adversarial conduct because it was contrary to their prior agreement. They had agreed that both sides preserved their rights to later seek cost sharing, but when defendants attempted to asset their right, they ignored their agreement. Instead, Plaintiffs pulled out all stops to try to prevent defendants from being heard. They confused the judge with arguments that defendants must have waived their rights to seek cost shifting, and so the judge should not even address the more complicated merits of motion. 

At this point, the judge should have put aside plaintiffs’ technical, forget-the-stipulation waiver arguments. He did not. Instead, the adversarial attack worked, and the procedural objections were sustained. What kind of message do you think this sent to the parties in this case?

Defendants Were Unwilling Martyrs

The Court refused to hear the merits and instead denied defendants motion on procedural grounds. Judge Scheer held that defendants should have moved for cost sharing before they incurred the costs. Never mind the stipulation. He held that defendants had waived any right for cost sharing. He called them martyrs who had voluntarily incurred the e-discovery costs, and now, after martyrdom, it was too late to seek any reimbursement or other relief.

Judge Scheer spent most of the decision explaining how the rules and law contemplate the filing of motions for cost sharing before costs are incurred. I think he is right on that point, as a general matter. But in this case, the parties entered into a contrary stipulation and order, and that should have changed everything. It did not, and thus fundamental principles of judicial estoppel were violated. Judge Scheer in effect vacated his prior order after the defendants had relied upon it. By this action, he avoided addressing the complex merits of defendants’ motion for cost sharing and punished them for taking a cooperative track. 

At the hearing on defendants’ motion, they protested the plaintiffs’ argument that they had waived their rights. Defense counsel pointed out that they had relied on the stipulation and order. Judge Scheer made short work of that argument in his written opinion by pointing to a provision in his scheduling order that required parties to file discovery motions within 14 days after a discovery dispute arises. He held this provision trumped the stipulated order. He determined, based on an affidavit filed by one of the plaintiffs’ attorneys, that a discovery dispute existed between the parties on cost sharing no later than April 4, 2008.  The defendants kept trying to resolve their dispute without judicial intervention after that date and did not file a motion until May 20, 2008. That was too late according to Judge Scheer, who, at the urging of plaintiffs’ counsel, determined that the deadline was April 28th.

Fortunately, I rarely see this kind of hyper-technical “gotcha-type” ruling in U.S. District Courts. They may make that kind of observation about questionable timeliness, but then they usually go on to address the merits of the motion. This was not done here. The judge refused to even consider or engage in any type of reasoned evaluation as to whether cost shifting was justified. 

Martyrs to the Cause of Cooperation

Defendants here are true involuntary martyrs, worthy of admiration. They followed exactly the kind of collaborative process contemplated by the new Rules, specifically Rule 26(f), Federal Rules of Civil Procedure. It is also the kind of cooperative arrangement contemplated by the Sedona Conference in its latest publication: The Sedona Conference® Cooperation Proclamation. The Proclamation encourages attorneys, parties, and judges to move away from traditional adversarial models of discovery into more cost effective and balanced collaborative approaches. The cooperative model Sedona promotes follows the new rules and encourages parties to reach agreement and specify plans. Here is the introduction from the Cooperation Proclamation:

The costs associated with adversarial conduct in pre-trial discovery have become a serious burden to the American judicial system. This burden rises significantly in discovery of electronically stored information (”ESI”). In addition to rising monetary costs, courts have seen escalating motion practice, overreaching, obstruction, and extensive, but unproductive discovery disputes - in some cases precluding adjudication on the merits altogether - when parties treat the discovery process in an adversarial manner.

The Sedona Proclamation goes on to explain how cooperative discovery is not only an economic imperative, but also an ethical one.

Cooperation in Discovery is Consistent with Zealous Advocacy.

Lawyers have twin duties of loyalty: While they are retained to be zealous advocates for their clients, they bear a professional obligation to conduct discovery in a diligent and candid manner. Their combined duty is to strive in the best interests of their clients to achieve the best results at a reasonable cost, with integrity and candor as officers of the court. Cooperation does not conflict with the advancement of their clients’ interests - it enhances it. Only when lawyers confuse advocacy with adversarial conduct are these twin duties in conflict.

Lawyers preparing cases for trial need to focus on the full cost of their efforts – temporal, monetary, and human. Indeed, all stakeholders in the system – judges, lawyers, clients, and the general public – have an interest in establishing a culture of cooperation in the discovery process. Over-contentious discovery is a cost that has outstripped any advantage in the face of ESI and the data deluge. It is not in anyone’s interest to waste resources on unnecessary disputes, and the legal system is strained by “gamesmanship” or “hiding the ball,” to no practical effect.

The effort to change the culture of discovery from adversarial conduct to cooperation is not utopian. It is, instead, an exercise in economy and logic. Establishing a culture of cooperation will channel valuable advocacy skills toward interpreting the facts and arguing the appropriate application of law.

But what happens when one side cooperates and the other does not? As this case shows, it can be dangerous. “Turn the other cheek” may be a noble thought, but it will not work in litigation. The Sedona Cooperation Proclamation notes this common problem at page 2:

And there remain obstreperous counsel with no interest in cooperation, leaving even the best-intentioned to wonder if “playing fair” is worth it.

They note the problem, but offer no solution, at least not in this short proclamation. The only solution I know of is to try to turn the aggression on the attacker, a kind of aikido-like maneuver that I discussed in Adversarial Search, a “Perfect Barrier” to Cost Effective e-Discovery, and One Litigant’s “Aikido-like” Response. That is exactly what the eight hospitals did in Cason-Merenda, but instead of stepping in, the judge stepped out. The judge should have rewarded the good behavior; he should have at least considered the defendants’ motion. Instead, he fell hook, line, and sinker for the plaintiffs’ adversarial gamesmanship and joined in the attack. He even added insult to injury by calling defendants martyrs; all while invoking the ironic name of “Sadona.” Sad indeed!

Cason-Merenda is important because it shows that the collaborative approach embodied by the Sedona Proclamation will not work without the active support and participation of the judiciary. Unless judges encourage and support the collaborative model, the presence of one obstreperous counsel in a case will act like a rotten apple in a barrel. I know that Sedona understands this well. In fact, on October 7, 2008, they are having a “virtual press conference” wherein they will release a list of state and federal judges who have endorsed the Proclamation. Be on the lookout for this. The courtrooms of these judges should be martyr-free zones.

The Cooperation Proclamation calls the move from adversarial to cooperative discovery a fundamental paradigm shift. Sedonda thinks we can get there by a three part process:

Part I: Awareness - Promoting awareness of the need and advantages of cooperation, coupled with a call to action. This process has been initiated by The Sedona Conference® Cooperation Proclamation.

Part II: Commitment - Developing a detailed understanding and full articulation of the issues and changes needed to obtain cooperative fact-finding. This will take the form of a “Case for Cooperation” which will reflect viewpoints of all legal system stakeholders. It will incorporate disciplines outside the law, aiming to understand the separate and sometimes conflicting interests and motivations of judges, mediators and arbitrators, plaintiff and defense counsel, individual and corporate clients, technical consultants and litigation support providers, and the public at large.

Part III: Tools- Developing and distributing practical “toolkits” to train and support lawyers, judges, other professionals, and students in techniques of discovery cooperation, collaboration, and transparency. Components will include training programs tailored to each stakeholder; a clearinghouse of practical resources, including form agreements, case management orders, discovery protocols, etc.; court-annexed e-discovery ADR with qualified counselors and mediators, available to assist parties of limited means; guides for judges faced with motions for sanctions; law school programs to train students in the technical, legal, and cooperative aspects of e-discovery; and programs to assist individuals and businesses with basic e-record management, in an effort to avoid discovery problems altogether.

Conclusion

The Proclamation came too late for the hospital defendants in Cason-Merenda. But hopefully their martyrdom will not be in vain. Cason-Merenda should drive home the point that judiciary buy-in and training is paramount to this movement’s success.

Judges must not allow themselves to be duped into punishing parties who try to cooperate. They should not reward traditional gamesmanship. They should be trained to see through the clever smoke screens that experienced litigators can emit. If they are not sure, they should err on the side of ruling with the lawyers that cooperated. Hyper-technical “gotcha” litigation has no place in cooperative e-discovery. It should not be tolerated by the lawyers or the judges. If a District Court Judge sees a Magistrate ruling like Cason-Merenda, they should not hesitate to reverse it.

The ABA Releases a Book on e-Discovery which has already been cited by Judge Facciola

Last week the ABA released e-Discovery: Current Trends and Cases (2008), the first book to introduce this high-tech field to all readers, not just lawyers. The book discusses the issues and cases in an easy-to-read format that can also be used as a reference. In seven chapters and fifty-eight separate articles, the book introduces electronic discovery and explains the latest trends and cases, in what I think you will find is an interesting manner. It also outlines the new interdisciplinary team approach to solving the unique problems of e-discovery–where the talents of law, IT and management are combined.

This book is intended for all levels of readers, including lawyers, judges, law students, academics, paralegals, IT professionals, e-discovery vendors, business executives and the general reader with an interest in technology and law. It can be ordered online at the American Bar Association website, or by phone from the ABA during business hours at: 1-800-285-2221. The discounted purchase price for ABA members is $79.95; for all others, it’s $99.95. 

If you enjoy reading this blog, then you should like the book, since it is based on the blogs I wrote here from November 2006 to September 2007. You can find more details and background on the book at the ABA website or my own web at FloridaLawFirm.com. 

e-Discovery: Current Trends and Cases is 313 pages in length, including an index. The book is organized and presented by categories in seven chapters:

Chapter One - Introduction to E-Discovery
Chapter Two - New Ethical Standards for E-Discovery;
Chapter Three - New Federal Rules of Civil Procedure;
Chapter Four - Spoliation and Sanctions;
Chapter Five - Metadata;
Chapter Six - Search and Review of ESI;
Chapter Seven - New Technologies.

There is also an Appendix with several useful reference materials, including the new Federal Rules of Civil Procedure on e-discovery.

I met a couple of people I know the other day, lawyers in other fields, and one non-lawyer who just likes techstuff, who have already started reading the book. They told me, all smiles, that they were astonished to find that they actually understood it, a book on electronic discovery! There is no reason a complex subject cannot be explained clearly. The trick is to also keep it interesting, fresh, and true for the experts. That was my goal, and I think I have done that, but do me a favor and buy the book to see for yourself. Feel free to leave me a comment here, or privately, as to what you think. Here is what a few others have already been kind enough to say about the book:

“…a brilliant combination of tales, advice, victories and defeats which brings technology within the easy grasp of lawyers, allows IT staff to understand why their attorneys can’t sleep at night, and explains the whole headache to upper management. (It) captures the pace and wit of the original blog and informs like a text. It is your e-discovery field guide. “
–William F. Hamilton, Partner, Holland & Knight LLP and Adjunct Professor at the University of Florida’s Levin College of Law

“Ralph Losey’s book is an e-discovery tour-de-force. For every litigator who thinks he or she has heard enough about e-discovery already, I suggest that the book will be eye-opening. For every CEO and CIO who hasn’t heard about the e-discovery tsunami engulfing the profession, I recommend that he or she be given a copy as a holiday present this year.”
–Jason R. Baron, Esq., Editor in Chief of The Sedona Best Practices Commentary on The Use of Search and Retrieval Methods in E-Discovery

“By bringing together the law, science and art of e-discovery, Ralph Losey’s book brings the e-discovery discussion back to life - a most welcome accomplishment.”
Anne Kershaw, founder of A. Kershaw, P.C. // Attorneys & Consultants

“All participants in the enormous electronic discovery industry owe it to themselves to read Ralph Losey. His deep knowledge of the field never prevents him from approaching each new event or insight as a passionate, well-informed observer. The net-net is to make e-discovery a good read, and I don’t know of anybody who does that better.”
–Jon Neiditz, Author, Presenter, and Of Counsel, Locke, Lord, Bissell & Liddell LLP

“Ralph’s book is a terrific resource for the litigator about to dive into the seemingly murky waters of electronic discovery. He not only summarizes the key issues in the field, but provides valuable insights based on his practical experience in the area. His writing style is straightforward (and humorous at times). In other words, unlike much lawyer-authored material, it’s actually readable! An excellent tool for the practitioner.”
–W. Lawrence Wescott II, author of the Electronic Discovery Blog

“E-Discovery- Current Trends and Cases is an excellent resource for any professional trying to stay current with the ever-changing world of Electronic Discovery. Mr. Losey tackles a very complex subject and makes it accessible and understandable to a wide spectrum of readers.”
–Keith D. Mobley, Esq., Legal Consultant, Legal Technologies, Kroll Ontrack

“Written in a clear, engaging style, Ralph Losey blends discussion of electronic discovery practice, case law, and issues into a concise and useful work. A must-read for the attorney new to e-discovery seeking a trustworthy mentor as well as to the experienced practioner seeking to deepen their knowledge.”
–Jim Barrick, President & CEO, Control Discovery, Inc.

“Litigation attorneys will increasingly find that courts will impose sanctions on those who do not know their client’s information systems, and who do not understand the e-discovery process and rules. This book is a must read for any litigation attorney who will inevitably have to deal with electronic data.”
–Ben Brush, Society of Corporate Compliance and Ethics; Account Manager, Datum Legal

“…(this book) does an extraordinary job of explaining challenges that frequently arise. Even more importantly, (Ralph Losey) proposes solutions to them. His book suggests ways to make e-discovery more manageable and discusses how new technologies and techniques may be used for e-discovery in the near future.”
–Peter D. Siddoway, Jones Day

Judges are not generally allowed to publicly praise a lawyers book, nor should they be. If they think a book is of any value, then they cite to it in an opinion. To a practicing attorney such as myself, this is really the highest compliment I can receive. For that reason, I was very excited to learn that immediately upon its release my book was both cited and quoted. I have Judge John M. Facciola to thank, who is Magistrate Judge in the hottest federal jurisdiction in the country for e-discovery, Washington D.C. He is one of the hardest working judges around and a true expert in the field of e-discovery. He is known for writing opinions that are not only learned, but also clever and well written.

The cite to my book is found at page 10 of the Memorandum Opinion rendered on January 23, 2008, in D’Onofrio v. SFX Sports Group, Inc., __ FRD __, 2008 WL 189842, or 2008 U.S. Dist. LEXIS 4252, (D.D.C., 2008). This part of the e-discovery order denied the plaintiff’s motion to compel production of metadata largely because the plaintiff did not ask for it in the original production request. Here is the specific cite to the book:

See also RALPH C. LOSEY, E-DISCOVERY, CURRENT TRENDS AND CASES 158-59 (2007) (summarizing recent cases as amounting to a “lesson . . . that in order to obtain metadata you may need, you should specifically ask for it to begin with”).

I am very honored by that. Thank you, Judge Facciola.

So that this blog won’t be all fluff, I want to end with some discussion and analysis of a few interesting points in D’Onofrio. This is a sex discrimination case where the plaintiff moved to compel discovery and impose sanctions against her former employer. Most of the discovery disputes relate to electronically stored information (”ESI”). Plaintiff asked the court to compel production of a business plan document and certain emails in their “original electronic format, with accompanying metadata.” D’Onofrio pg. 5. Plaintiff claimed that “defendants have deliberately caused the spoliation of electronic records and have purposely failed to produce many e-mails and documents.” Apparently, defendants produced the records requested, but they produced the business plan in paper form, and the emails in MSG format. (For more information on the deficiencies of MSG production, and why only PST production includes full metadata, see my prior blog: MSG is Bad for You.)

Rule 34(b) states that a discovery request “may specify the form or forms in which electronically stored information is to be produced.” If it does not, then the responding party must produce the information in a form ”in which it is ordinarily maintained” or is ”reasonably usable.”  Rule 34 also only requires production of the same information in one form. Plaintiff argued that her original request for production specified that the information should be produced in its original form with metadata, and so the paper production was non-compliant. The problem is, her production did not say that; instead, it read as follows:

[F]or any documents that are stored or maintained in files in the normal course of business, such documents shall be produced in such files, or in such a manner as to preserve and identify the file from which such documents were taken.

This is “so last century” boilerplate language. It is quite a stretch for the plaintiff to argue that the above is a request for native production with full metadata. It quite obviously does no such thing. To the contrary, it clearly refers to a paper production, and asks for the paper files to be produced in the paper folders in which they were originally maintained. Judge Facciola was not impressed by this attempt to convert such archaic language into an 21st Century request for native ESI.

It is apparent that this language, when first written, was not meant to encompass electronic data. Instead it addresses a common concern of paper discovery: the identification of a document’s custodian and origination. It is for this reason that the Instruction applies to documents “stored or maintained in files,” and why it seeks to “preserve and identify” the identity of that file. Indeed, the Instruction makes perfect sense when one presumes “file” to refer to a physical file cabinet or folder.

Id. pgs. 7-8. The court properly concluded that plaintiff’s request permitted paper production of the business plan. It is in this context that the court cited and quoted several authorities, including my new book. Here is the full string cite:

Ultimately, then, it does not matter whether the Instruction referred to paper or electronic files - a plain reading leads to the conclusion that plaintiff did not make a request that the Business Plan be produced solely in its original format with accompanying metadata. See Vanston Bondholders Prot. Comm. v. Green, 329 U.S. 156, 170 (1946) (”Putting the wrong question is not likely to beget right answers even in law.”). A motion to compel is appropriate only where an appropriate request is made of the responding party. See Fed. R. Civ. P. 37(a)(1)(B); Raghavan v. Bayer USA, Inc., No. 3:05-cv-682, 2007 WL 2099637, at *4 (D. Conn. July 17, 2007) (”The court will not compel discovery that has not been sought.”).

Because no such request has been made concerning the Business Plan, the Court will not compel the defendant to produce it in its original form with accompanying metadata.9 See, e.g., Ponca Tribe of Indians v. Continental Carbon Co., No. CIV-05-445-C, 2006 WL 2927878, at *6 (W.D. Okla. Oct. 11, 2006) (”The original document requests issued by Plaintiffs failed to specify the manner in which electronic or computer information should be produced. [Defendant] elected to use a commonly accepted means of complying with the request. Nothing in the materials provided by Plaintiffs supports requiring [Defendant] to reproduce the information in a different format. Accordingly, Plaintiffs’ request for reproduction of documents in their native electronic format will be denied.”); Wyeth v. Impax Labs., Inc., No. Civ. A. 06-222-JJF, 2006 WL 3091331, at *1-2 (D. Del. Oct. 26, 2006) (”Since the parties have never agreed that electronic documents would be produced in any particular format, [Plaintiff] complied with its discovery obligation by producing image files”). Cf. Treppel v. Biovail Corp., 233 F.R.D. 363, 374 (S.D.N.Y. 2006) (requiring production in native format where requesting party asked for it and producing party did not object). See also RALPH C. LOSEY, E-DISCOVERY, CURRENT TRENDS AND CASES 158-59 (2007) (summarizing recent cases as amounting to a “lesson . . . that in order to obtain metadata you may need, you should specifically ask for it to begin with”).

Id. pgs. 9-10. The court next considered the defendants’ email production in MSG format, instead of PST format. Here defendants claim they did make production in PST format, and the complaint is ill founded. Defendants submitted an affidavit in opposition to plaintiff’s motion by John Cavender, who is identified as a  “Security Principal.” I am not sure what that is, but he was obviously an IT expert of some kind, probably in charge of IT security. Cavender’s affidavit stated that he was responsible for the “retention and extraction of Clear Channel’s archived email on the Legato system” and that:

he has reviewed the DVDs that were produced to plaintiff and can confirm that they contain defendants’ e-mail production in .PST format, and that the production can be “searched by many criteria.” 

Id. pg. 11. Apparently, plaintiff offered no contradictory testimony, and so there was no real dispute. This appears to be another classic example of law-IT miscommunication which I previously wrote about in Who’s On First?

On the sanctions motion, plaintiff offered additional grounds, including an alleged non-production of relevant emails. Plaintiff alleged that her expert, a representative of Kroll Ontrack, could verify the omission of the emails. Judge Facciola found the record on the missing email issue to be “too thin” to make a ruling, so he ordered an evidentiary hearing to hear testimony on the alleged claim by Kroll.  The last half of the opinion goes on to address other issues that are not too interesting to anyone other than the parties.

The first half of the opinion in D’Onofrio v. SFX Sports Group, Inc. is very interesting and well worth reading. It may become well known as a case which exemplifies what can go wrong when a request for production uses obsolete language. The Electronic Discovery blog has already tagged this case for that proposition. The case thus shows the importance for practitioners to study up on e-discovery and use the correct language. Reading e-Discovery: Current Trends and Cases is one way to do that.

Update of Two Prior Sanctions Blogs: Qualcomm and Morgan Stanley

This entry provides an update to two prior blogs concerning e-discovery sanctions: the Qualcomm attorney sanctions case, and the Morgan Stanley 9/11 disaster email case.

Qualcomm

The first sequel pertains to the blog of August 18, 2007, Heavy Sanctions Loom Against Attorneys for e-Discovery and other “Aggravated Litigation Abuses”.  Here I recounted the e-discovery “horror story” of the Qualcomm Inc. v. Broadcom Corp. patent case.  It involved a series of abuses culminating in an Order to Show Cause directed against Qualcomm’s attorneys as to why certain very harsh sanctions should not be entered against them. The Show Cause hearing date was originally set for August 29, 2007; upon a motion by the 14+ lawyers facing sanctions, it was postponed until October 12, 2007.

The attorneys accused of wrong doing are from two prominent law firms, Day Casebeer, a small IP boutique firm in Cupertino California, and Heller Ehrman, a 700 attorney firm founded in 1890 in San Francisco.  They advised the court that they could not defend themselves without revealing attorney client-privileges, and Qualcomm refused to waive the privilege. They asked the court for permission to reveal secret, privileged communications with Qualcomm under the “self-defense” exception. Their motion states that they have “very compelling exonerating evidence,” but it involves privileged communications. Apparently they plan to defend themselves by blaming the misconduct on their client. 

On September 28, 2007, Magistrate Judge Barbara Major heard oral argument on the privilege issues and ruled from the bench as to what the attorneys could and could not do to defend themselves. She held that the self-defense exception to the attorney-client privilege did not apply. This means the former Qualcomm attorneys cannot reveal their secret communications with Qualcomm.  But, Magistrate Major also held that the work product privilege could be waived without the client’s consent. According to the Law.com report, this means that ”attorneys can describe how various duties in the case were allocated, and possibly other insights.”  Magistrate Major also stated that if the information the attorneys can provide does not fully explain how the discovery abuses occurred, and Qualcomm still refuses to waive the privilege, then she will consider imposing sanctions against Qualcomm itself.

This situation is highly reminiscent of another recent case, Exact Software v. Infocon, 479 F.Supp.2d 702 (N.D. Ohio, Dec. 5, 2006), that I blogged about in Sanctions for e-Discovery Abuses - Is the Attorney to Blame?  In Exact Software, the court decided that sanctions were appropriate, but could not decide whether to impose sanctions against the plaintiff, or the plaintiff’s attorneys. The attorneys blamed the client, and the client, through its new attorneys, blamed the prior attorneys.

Is the “blame-game” the new litigation sport of e-discovery? If so, it is not a game anyone can win.  No matter what the final outcome, the message of these cases to the legal community is clear.  Your duties as an officer of the court, to be honest and truthful to the court and follow the rules of procedure, must be fulfilled. This duty trumps the duty to zealously represent your client. If a client requires you to depart from that duty, then you must decline, and, if necessary, withdraw from representation. There is no special exception allowed for complicated e-discovery issues. If you do not know what is going on, you had better figure it out. The integrity of the justice system is at stake, and so too is your reputation and career.

Morgan Stanley

The second sequel of interest pertains to the blog of January 19, 2007, E-Mail Woes Hit Morgan Stanley Again. In this blog, I reported that a disciplinary proceeding had been commenced against Morgan Stanley for allegedly failing to produce any pre-9/11 e-mails to regulators and investor plaintiffs.  For years, Morgan Stanley claimed that the Sept. 11, 2001, terrorist attacks on New York’s World Trade Center had destroyed all of its pre-9/11 email.  That is the response they gave in hundreds of arbitration and other proceedings when claimants against Morgan Stanley sought pre-9/11 emails. NASD alleged that this was a lie, that even though their main servers were destroyed in the 9/11 attacks, they had backup tapes and other copies, and millions of the pre-9/11 emails were restored from the tapes, but still never produced. Many people were outraged by this alleged misuse of a national tragedy as a “dog-ate-my-homework” type of excuse to hide evidence.

On September 27, 2007, NASD announced a settlement wherein the disciplinary action was resolved by Morgan Stanley paying $12,500,000. The NASD has, by the way, changed its name since this proceeding was commenced and is now called FINRA, which stands for the Financial Industry Regulatory Authority. FINRA came about through the consolidation of NASD and NYSE Member Regulation. It is now the largest non-governmental regulator for all securities firms doing business in the United States.

According to FINRA’s Press Release:

In settling this matter, Morgan Stanley neither admitted nor denied the charges, but consented to the entry of FINRA’s findings.

The FINRA press release summarized the findings that Morgan Stanley, a/k/a “MSDW,” consented to as follows:

FINRA found that MSDW failed to provide pre-9/11 emails to claimants in numerous arbitration proceedings and in response to three regulatory inquiries during the period from October 2001 through March 2005. FINRA found that MSDW made statements in numerous arbitration proceedings and to the former NASD, New York Stock Exchange Regulation and the Massachusetts Securities Division that those emails had been destroyed. Those statements were not true. In fact, MSDW possessed millions of pre-9/11 emails that had been restored to the firm’s system shortly after Sept. 11, 2001 using backup tapes. Many other emails were maintained on individual users’ computers and had not been affected by the events of 9/11. Among the matters where MSDW failed to produce e-mail was an NASD investigation that resulted in an August 2005 settlement with the firm.

FINRA also found that MSDW later destroyed many of the pre-9/11 emails it did possess. The firm did so in two ways - by overwriting backup tapes that had been used to restore the emails from 11 of its 12 servers to the firm’s system, and by allowing users of the firm’s email system to permanently delete the emails over an extended period of time. As a result, between September 2001 and March 2005, MSDW deleted millions of pre-9/11 emails from the firm’s systems.

In addition, FINRA found that MSDW failed to provide updates to the firm’s supervisory manual for branch office managers to claimants in numerous arbitration proceedings over a period of years. The Branch Manager’s Manual was issued in 1994 and was subsequently supplemented with numerous updates. FINRA found, however, that MSDW repeatedly failed to provide updates to the manual in discovery in numerous arbitration proceedings from late 1999 through the end of 2005.

Under the settlement, a $9.5 million fund will be established by Morgan Stanley to pay certain arbitration claimants.  Another $3 million will be paid to FINRA as a fine. Further, FINRA announced that certain future remedial measures are part of the settlement:

Also as part of the settlement announced today, Morgan Stanley is required - again, at its own expense - to retain an independent consultant acceptable to FINRA to review the firm’s procedures for complying with discovery requirements in arbitration proceedings relating to the firm’s retail brokerage operations. The firm will be required to implement the independent consultant’s recommendations for improving those procedures, or alternative improvements acceptable to the independent consultant.

According to the Bloomberg reports of this settlement, Morgan Stanley issued the following emailed statement on its behalf:

We are pleased to have reached an agreement with FINRA to resolve these legacy legal matters and put them behind the firm.

This is not the first time the government has sanctioned Morgan Stanley for mishandling electronic messages.  Last year, it paid a record $15 million to settle an SEC probe of deficient e-mail preservation. Before that, in 2002, the SEC and other regulators faulted the New York-based firm (and others) for destroying emails and backup tapes, and Morgan Stanley was fined $1.65 million. 

It is very interesting to note that FINRA’s investigation did not find proof of intentional wrongdoing, but rather incompetence on a grand scale.  As usual, there was a complete disconnect between IT and legal. Susan Merrill, FINRA’s chief of enforcement, said in an interview with Reuters:

The failure to produce e-mails was a huge problem.   . . .   We didn’t find evidence that Morgan Stanley intended to hold back e-mails, but it was a case of one hand not knowing what the other was doing.

Susan Merrill also said that FINRA is “focused” on e-mail retention practices, not only at Morgan Stanley, but with other brokerages where it is also a problem.

This Blog to Become a Book! AND You Are Invited to Contribute to It!

I am very pleased to announce that the American Bar Association will soon publish a book based on this blog. It will be called e-Discovery: Current Trends and Cases. This will be, to my knowledge, the first time a legal blog has become a book, now sometimes called a “blook.” Although the book will not be exactly the same as the blog, it will be derived from and based on it. 

Thanks to all of you, my thoughtful blog readers, for the many encouraging comments and suggestions you have provided.  Your positive input and support led me to propose this project.  Thanks also to ABA Publishing for having the vision and energy to make it happen.

The ABA is rushing the book to print so that it will be available by December. That is extraordinarily quick for a book publisher, far faster than any of the other major legal publishers who also expressed an interest in the project. Due to the time-sensitive nature of this material, I felt that it was important to get to press quickly.  The ABA, which has been great to work with, is committed to making that happen.

So how can you be a part of this blog-to-book project? Leave a good, substantive comment on any of the blogs I have ever written, and it may be included in the book. One of the unique things about the new book is that it will include select comments by blog readers, and occasionally, my responses to these comments.  In a few weeks, I will have a chance to add a few additional blog comments to the final version of the book. So please, add your comments in the next two to three weeks and you may become a part of this blog-to-book project. Please do it now! 

As far as I know, this is also another first: an author opening up his book for anyone to review and add content to just before its publication. Take advantage of this opportunity and join me in providing content. This new field of law and technology is, or at least should be, both interesting and exciting. Help me spread the buzz by adding your ideas and insights. Keep it short and sweet, and your comment might make it to print.

Although comments will be anonymous and may be edited, the blog will remain online even after the book is published.  That means everyone will be able to access the blog and see the original comments, including commentators’ names when provided.  Another interesting thing about the project, one that I frankly did not expect, is that the ABA wants me to keep all of the blogs online, available to everyone for free, even though the book will be very close in content to the original blogs. They see the law blook as a win-win media convergence.  The ABA is following other mainstream publishers who, according to a Wall Street Journal article, have already discovered that blogs-to-books can be a recipe for success.

e-Discovery: Current Trends and Cases is expected to be about 90,000 words in length (including your comments). The blogs will be edited, and sometimes added to and rewritten, and then reorganized and presented by categories in Seven Chapters:

Chapter One - Introduction to E-Discovery
Chapter Two - New Ethical Standards for E-Discovery
Chapter Three - New Federal Rules of Civil Procedure
Chapter Four - Spoliation and Sanctions
Chapter Five - Metadata
Chapter Six - Search and Review of ESI
Chapter Seven - New Technologies

There will also be an Appendix with several useful reference materials, including the new Federal Rules of Civil Procedure on e-discovery.

I know from your feedback that the “blook,” like the blog, will be very accessible to all types of readers. Litigation attorneys with years of experience in e-discovery will enjoy the analysis and finer legal points. So too will sophisticated in-house counsel, and academicians. Still, the material is also very accessible to lawyers just beginning in this area, or those who just want to learn something about e-discovery, including paralegals, law students, and law firm IT support professionals. Since most of these blogs explore recent events and technology issues, as well as the law, they have also been of interest to many technologists and management professionals outside the legal profession. Many of my regular blog readers are non-lawyer IT experts and management involved in some way with e-discovery or general information management services.

If you like the blog, you’ll like the book too.  You will be able to order it online from the ABA as soon as it is released. If you would like, I can also endorse copies any way you want, just send me an email. They might make a good present for your clients and customers, and should be out in time for the holidays.

Again, my thanks to all of you, my law firm, and the ABA for helping to make this blog into a book, and thus spread the word even further of the interdisciplinary team solution to the many issues and challenges of e-discovery.

The Sedona Conference Releases Two New Must-Read Commentaries on “Email Management” and “Legal Holds”

The Sedona Conference has done it again and group-written two more excellent guides: one on Legal Holds, and the other on Email Management. Both were just released for public comment and may be downloaded from the Sedona website for personal use.

The Sedona Conference Commentary on Legal Holds: The Trigger & The Process (August 2007 Public Comment Version) provides much-needed guidance on an issue very troublesome to most large organizations: when and how to preserve ESI for purposes of litigation.  In their words:

The basic principle that an organization has a duty to preserve relevant information in anticipation of litigation is easy to articulate. However, the precise application of that duty can be elusive. Everyday, organizations apply the basic principle to real-world circumstances, confronting the issue of when the obligation is triggered and, once triggered, what is the scope of the obligation. This Article, intended to provide guidance on those issues, is divided into two parts: The “trigger” and the “legal hold.”

Once again, this is a group effort by a special committee of The Sedona Conference called the “Working Group on Electronic Document Retention and Production.” The Working Group includes many well-known experts on this tricky topic. Under the guidance of the group’s editors, Conor Crowley, Eric Schwarz and Gregory Wood, they agreed upon a set of eleven guidelines with detailed commentary on each. 

These are common-sense-type principles that will, I predict, be acceptable to most companies, although still challenging for many to implement. It is also likely that these guidelines will often be referred to by courts when reviewing the reasonability of a party’s legal hold activities in litigation.  If you can show that your organization made a good faith effort to follow these guidelines, then you will be in a strong position to argue that any loss of data that incurred anyway is not sanctionable.

The eleven guidelines include advice and language such as:  

Guideline 1 - notice of a “credible threat” of litigation as the trigger of the duty to preserve;

Guideline 2 - the “adoption and consistent implementation” of a written policy as a key factor to show reasonableness and good faith;

Guideline 3 - the need for established procedures to report potential litigation threats;

Guideline 6 - the need to issue a written legal hold notice in most circumstances; and,

Guideline 10 - the need for legal holds, once issued, to thereafter be “regularly monitored.”

Guideline 7 provides important input on the scope of a hold, including the key “proportionality” criteria that I have written about before, namely the consideration of the amount in controversy and related factors.

Guideline 7: In determining the scope of information that should be preserved, the nature of the issues raised in the matter, experience in similar circumstances and the amount in controversy are factors that may be considered.

The proportionality factor in determining the proper scope of a hold is often overlooked, especially by some plaintiffs’ counsel who still routinely make outrageously overbroad preservation demands.

The comments to Guideline 7 also point out that accessibility is another important factor to consider in determining the proper scope of preservation. In fact, the wording of Guideline 7 in the commentary is slightly different from the wording quoted above that appears at the beginning of the document. They both begin the same, but the version in the comments sections ends with ”accessibility of the information” as a factor that may be considered, instead of the first stated ”amount in controversy” factor. I think this is just a mistake that will be cleaned up in the final draft.

The comments do, however, make clear that the issue of the costs and burden to try to preserve certain types of data, including, as the comments mention, “voicemail and instant messaging” should be considered. In my view, this means that in many circumstances, not-reasonably-accessible ESI does not need to be preserved. The Sedona comments to Guideline 7 do not, however, go quite that far.  They instead make the point, which is not necessarily contrary because it is dependent on the facts, that just because a type of ESI is not-reasonably-accessible, does not mean that it is outside of the scope of a duty to preserve.

We all agree that it depends on the circumstances.  In some circumstances, the inaccessibility of ESI will take it outside of the scope of preservation, but in some circumstances it will not.  In my view, the general bias should be to exclude not-reasonably-accessible ESI from preservation.  As I have mentioned several times previously in this blog, I think Judge Scheindlin got it right in Zubulake IV when she held:

The scope of a party’s preservation obligation can be described as follows: Once a party reasonably anticipates litigation, it must suspend its routine document retention/destruction policy and put in place a litigation hold to ensure the preservation of relevant documents. As a general rule, that litigation hold does not apply to inaccessible backup tapes, for example, typically maintained solely for the purpose of disaster recovery, which may continue to be recycled on the schedule set forth in the company’s policy. (emphasis added)

Zubulake v. UBS Warburg LLC, 220 F.R.D. 212, 218 (S.D.N.Y. 2003). Backup tapes are, of course, a prime example of not-reasonably-accessible ESI.

Guideline 8 is the most detailed guideline:

A legal hold is most effective when it:
(a) Identifies the persons who are likely to have relevant information and communicates a preservation notice to those persons;
(b) Communicates the preservation notice in a manner that ensures the recipients will receive actual, comprehensible and effective notice of the requirement to preserve information;
(c) Is in written form;
(d) Clearly defines what information is to be preserved and how the preservation is to be undertaken;
(e) Is periodically reviewed and, when necessary, reissued in either its original or an amended form.

Guideline 8 comes with a sample Certification of Completion document (Appendix B) designed to serve as a checklist for the recipient to confirm that he or she has complied with a hold notice. It requires the recipient to certify to the general counsel’s office that they have searched a long list of locations where responsive ESI might be located, including the LAN server for their office, laptop and office computer, email, home computers, Blackberries, email trash bin and desktop recycle bin, “removable storage media, such as disks, CDs, DVDs, memory sticks, and thumb drives,” and “files of any administrative personnel working for me.” 

Many companies will dislike how extensive and complete this list is, especially the inclusion of home computers, removable storage media and secretarial ESI. The commentary softens the blow somewhat by clarifying that this is not a form; it is only a sample, and may not be appropriate for every case. Still, this long list could put a huge search burden on many employees that is not appropriate for many cases, and so this aspect of the commentary is likely to be controversial.

Another controversial aspect of Guideline 8 is its placement of the burden for search and preservation upon the individual employees themselves, instead of on the company, its IT department or automated procedures. This let-the-employees-do-everything procedure has been the norm in the past, but is beginning to be challenged by many courts, especially where there is inadequate follow-up. See Cache La Poudre Feeds, LLC v. Land O’Lakes Farmland Feed, LLC, 2007 WL 684001 (D.Colo. March 2, 2007) and my prior blog on the subject Litigation Hold Is Not Enough: Sanctions Imposed Under Rule 26(g) for Negligent Collection and Preservation.

Email Guidelines

The second commentary on email is a short gem edited by Thomas Y. Allman, The Sedona Conference Commentary on Email Management: Guidelines for the Selection of Retention Policy (August 2007). The Commentary begins with a flurry of statistics showing the prevalence of email today, citing to one study estimating that 183 Billion email messages a day were sent in 2006.  This is quite a bit larger than the previous estimates I have seen of 60 Billion a day. Whatever, it is huge, and getting bigger every day, and everyone knows the strongest ESI evidence is usually an intemperate email.  See my prior blog Top Corporate Officers Continue To Write Embarrassing Emails. That is why most litigation today correctly focuses on email, and why this Email Commentary is so important.

The Sedona working group on email was able to agree on four general guidelines:

Guideline1: Email retention policies should reflect the input of functional and business units through a team approach and should include the entire organization including any operations outside the United States.

As the name of this blog indicates, e-Discovery Team, I obviously think they have it right to emphasize the need for the team approach in forming policies of any kind, not just email. The commentary explains that this should be an interdisciplinary team including Legal, IT and Management, including “Records Management, Compliance, Finance and representatives of major business units.” The commentary also mentions that the internal corporate team may want to utilize outside counsel, consultants and vendors. They also recommend that:

A fully engaged responsible person should be appointed to lead the team to work closely on implementation, including recommendations on budget or funding decisions as well as monitoring the program after implementation.

The next Guideline 2 points to the obvious need to understand the actual practices of the organization, as opposed to its written rules on emails, since in most organizations there is a gap between the two that the team needs to address.

Guideline 2: The team should develop a current understanding of email retention polices and practices actually in use within the entity.

The commentary includes a list of useful questions for the team to ask to explore the organization’s actual practices.

The third Guideline states:

Guideline 3: An entity should select features for updates or revisions of email retention policy with the understanding that a variety of possible approaches reflecting size, complexity and policy priorities are possible.

The commentaries on Guideline 3 point out that it is usually difficult to reach consensus between the different needs of the groups represented in the team, and suggests open discussion of the differences as the best approach.  See Osterman, “E-Mail Archiving Dependent upon Corporate Culture,” Network World (March 22, 2005) (describing the resolution of competing views of legal counsel who preferred to purge and a compliance officer who preferred to save email).

To help the team reach a consensus, the Guidelines include an Appendix with two opposite email policy statements.  Policy 1 is based on a “short default retention strategy” where emails are only retained for a short period (e.g., 30-90 days) and thereafter are automatically deleted. The user can only avoid this deletion “by taking explicit, affirmative actions” such as moving the email to a dedicated storage area. The other opposite Policy 2 is based on an “indefinite default retention strategy.” In this policy, email is retained on active servers for a time, and then “moved automatically to tiered storage and retained indefinitely” or some other specified period such as three to five years.

The fourth Guideline states:

Guideline 4: Any technical solutions should meet the functional requirements identified as part of policy development and should be carefully integrated into existing systems.

Most e-discovery teams studying these issues find that some kind of software and hardware purchases are needed to implement their recommended email practices. This guideline addresses this reality, and counsels the importance of carefully integrating the new purchases into existing systems.  The commentary notes that there are many different software and hardware solutions offered by competing vendors to solve these problems, and no one approach is superior. The commentary then provides a list of practical issues to consider when evaluating competing vendor proposals.

My congratulations and thanks to the hard work of ”The Sedona Conference Working Group on Electronic Document Retention and Production, eMail Management and Archiving Special Project Team.”  They have a long name, but their short, concise guidelines and commentary are a very practical and useful work. Every e-discovery team in America struggles with email issues and all will benefit from these pioneering guidelines.

Second Edition of The Sedona Principles and the Need for Proportionality

The Sedona Conference  this week published the second edition to The Sedona Principles: Best Practices Recommendations & Principles for Addressing Electronic Document Production (June 2007).  As a Sedona Conference member, I may be somewhat biased, but it is safe to say that everyone in the e-discovery world considers The Sedona Principles a key document for understanding electronic discovery and best practices.  This is especially true of the judiciary, who play an active role in Sedona.  Many district court judges across the country cite to The Sedona Principles and consider it to be authoritative.  The new  Principles can be downloaded for free at the Sedona website, so long as the copy is for your personal use only. 

If you have not read the first edition published in 2004 (with annotations revised in 2005), I strongly recommend you now go ahead and read this new and improved second edition.  To those who have studied the original Sedona Principles, relax, the 14 Principles remain the same, although they have been reworded somewhat.  This is a refined and updated version, not a radical rewrite, which is hardly necessary or appropriate after only three years.  But, you will still want to download and begin using this new version ASAP.  It is a significant improvement over the first edition in several respects. 

First, and most importantly, the second edition now ties directly into the new Federal Rules of Civil Procedure, most of which were significantly influenced by the Principles. The interface between the 14 Principles and the new rules is well explained. All of the Principle Commentaries have been updated and refined, but especially the Commentaries for Principle 12 on metadata, and Principle 14 on the imposition of sanctions. The Resources and Authorities provided with each Comment have been updated to include several new e-discovery cases and articles. In the process the total text has grown 30%, from 56 to 73 pages (excluding Appendixes). Finally, the second edition is more user-friendly and better written than before. For instance, it now includes a handy chart in the front that lists Topics correlating to the Principles, Federal Rules, and Sedona Commentary.

The new Preface makes the point that the Conference tried to keep the “rule of reasonableness” foremost in mind when writing and revising these e-discovery principles and best practices.

That rule is embodied in Rule 1 of the Federal Rules of Civil Procedure (courts should secure the just, speedy and inexpensive determination of all matters) and is applied through former Rule 26(b)(2) (now renumbered as Rule 26(b)(2)(C) - proportionality test of burden, cost and need) and in many state counterparts. The rule of reasonableness means that litigants should seek - and the courts should permit - discovery that is reasonable and appropriate to the dispute at hand while not imposing excessive burdens and costs on litigants and the court.

The best practices recommended by Sedona must always be tempered by proportionality. In other words, what may be reasonable for a ten million dollar case may be impractical for a routine case that barely makes the federal jurisdictional minimum.  That point is also embodied in Principle 2, which counsels application of the proportionality standard in making a costs-versus-needs analysis to determine what e-discovery efforts are appropriate. The Preface goes on to expand upon this point as follows:

Electronic discovery is a tool to help resolve a dispute and should not be viewed as a strategic weapon to coerce unjust, delayed, or expensive results. The need to act in good faith also extends to the efforts taken to reasonably preserve relevant electronic information, to the form of the production, and to the allocation of the costs of the preservation and production. All discovery issues should be considered in light of the nature of the litigation and the amount in controversy, as well as the cost, burden, and disruption to the parties’ operations.

If only all counsel would remember and follow these wise dictates, and judges would enforce them, we would all be better off. The reality is, many litigants are misusing e-discovery as a strategic weapon, including the so-called “weapons of mass discovery” as discussed in my June 20, 2007, Blog on discovery of computer RAM memory.

This is a key point for me, and so I am pleased that the newly revised Comment 2.b. now emphasizes how the total costs of e-discovery must be considered, not just the costs of retrieval and production:

Costs cannot be calculated solely in terms of the expense of computer technicians to retrieve the data but must factor in other litigation costs, including the interruption and disruption of routine business processes and the costs of reviewing the information. Moreover, burdens on information technology personnel and the resources required to review documents for relevance, privilege, confidentiality, and privacy should be considered in any calculus of whether to allow discovery, and, if so, under what terms. In addition, the non-monetary costs (such as the invasion of privacy rights, risks to business and legal confidences, and risks to privileges) should be considered. Evaluating the need to produce electronically stored information often requires that a balance be struck between the burdens and need for electronically stored information, taking into account the technological feasibility and realistic costs involved.

Comment 2.b. at page 17 of Sedona Principles.

This point about hidden costs needed to be emphasized.  It has been overlooked multiple times in the last several years, especially by over-reaching plaintiffs and less-discerning judges.  The disruption and privacy factors are hard to quantify, but are very real and burdensome. Further, the cost of review is skyrocketing out of control, despite some attempts to export the work to low paid hourly lawyers in India.  The attorney fees incurred to review ESI for relevance, privilege, confidentiality, and the like, now constitute the bulk of all e-discovery expenses. The estimates I have seen range from a low of 40% to a high of 60% of total e-discovery costs. 

All of these costs, especially review expenses, should, in my opinion, be considered by the courts in any proportionality analysis of whether to allow discovery, or to shift the costs of discovery.  These costs should be considered regardless of whether or not the ESI at issue is “reasonably accessible.” Unfortunately, Rule 26(b)(2)(B) does not expressly say that.  It provides for cost-shifting only if the ESI is inaccessible. For that reason, a request for accessible ESI that would impose unreasonable expenses on the producing party must be opposed on the proportionality test under Rules 1 and 26(b)(2)(C), Federal Rules of Civil Procedure, and Sedona Principle 2. Only in this way can the integrity of the judicial system be protected from the intentional misuse of e-discovery to force settlements based on expense avoidance, instead of merit.

Intellectual Foundation of Electronic Discovery

Electronic discovery is a new, multi-disciplinary field of knowledge that arises out of the Law, but goes beyond it to include Information Science and Technology.  This new fractal synthesis is emerging by necessity to meet the many radical challenges imposed upon our system of justice by the rapid acceleration of technology.

Our writings and other forms of communication are being digitized at a dizzying pace. In one generation, we have moved from a primarily paper-based, tangible information culture, to a culture based on intangible binary code. We have moved from a society that stores and retrieves information locally in paper files, filing cabinets, books and libraries, to one that stores information globally in electronic devices and the Internet.

This revolution is necessarily having a profound impact upon the law because information is the foundation of our justice system.  We determine what is just and right based on the evidence.  As Judge Scheindlin stated in Zubulake IV: “Documents create a paper reality we call proof.” Zubulake v. UBS Warburg, LLC, 220 F.R.D. 212 (S.D.N.Y. 2003). For lawyers to adapt to this new world we need to rethink what we mean by documents, to understand and revisualize them as electronically stored information.  Then we will see the electronic reality we call proof. 

As attorney and information expert, Jason Baron, put it in the law review article he recently wrote with attorney George Paul: “Information is fundamental to the legal system. Accordingly, lawyers must understand that information, as a cultural and technological edifice, has profoundly and irrevocably changed.” Information Inflation: can the legal system adapt? 13 Rich J.L. & Tech 10 (2007). Baron and Paul argue that litigators must move beyond the gamesmanship model of paper discovery into a more cooperative search for truth in e-discovery. They point out how the sheer volume of electronic documents makes this new collaborative model imperative. They do not suggest that the adversarial system of dispute resolution be abandoned entirely, just that the discovery model be changed. They also argue for the creative adoption of new technologies and records management systems by lawyers. They observe correctly that:

All this equates to perhaps the biggest new skill set ever thrust upon the profession – a revolution for the practice. What it means to be a lawyer will change rapidly in the years to come.

The new skill set needed to comprehend the electronic reality we call proof does not come easily. Many are unwilling to take the time and effort needed to begin to master the rudimentary elements of  computer technology and information science.  The younger generations have some advantage in familiarity with technology, but still most have never studied information technology and records management in college. Very few move from out of these disciplines into the law. Unfortunately, these subjects are ignored altogether in law school.  Therefore, until academia catches up with these new trends and radically alters curricula to match the new reality, most lawyers will have no choice but to try to learn these new fields on their own, or in CLEs. Unfortunately, most of the CLEs on information management and technology in e-discovery are sponsored by vendors, and have not so hidden agendas.  They often make competing and confusing claims on what technology to use, and how to manage the flow of information. Until you have had a few decades of experience with all this, it can be very difficult to sort out.

I expect (hope) that the quality of continuing education for lawyers in the areas of Information Science and Technology will improve dramatically in the next few years.  Most of this will come in the context of litigation and e-discovery, but other areas of the law are also burdened with the flood of information.  In the meantime, we will all have to struggle and do the best we can on our own, attending seminars given by vendors and others with a healthy dose of skepticism. 

One good place to start is the Sedona Conference, although most of the materials are legal, they do contain a heavy dose of IT.  Other places to look and learn are Computer World, the IEEE Computer Society, the Association of Records Managers and Administrators, and many technology law review periodicals.   For information science webs try: the Digital Library of Information Science and Technology, which is an open access archive for the Information Sciences; the Journal of  Information Science; and, the American Society for Information and Technology.

There are many other more “fun” and entertaining webs and blogs where you can keep up with the latest trends and learn as you go, such as IT Wire, the ever popular WIRED, the venerable PC World Magazine, the hip SlashDotOrg, the GigaOm, the Register, the DIGG,  and Tech Crunch, to name just a few.  A few minutes with Google will uncover many more. 

I am still looking for other good sources, especially good old paper books on the subjects (easier to read after hours in front of a terminal), and from time to time will post information about them here.  If you have any good suggestions, please feel free to let me know by email or post a comment here.  But please spare us the commercials.  I will quickly delete any such comments anyway, so save yourself the time.

Top Corporate Officers Continue To Write Embarrassing Emails

Everyone in e-discovery knows that people writing emails will, much like kids on the old Art Linkletter show, ”say the darndest things“.  Of course, instant messaging is even worse, as Congressman Mark Foley showed.  Private emails and instant messages have a way of becoming public, especially when discovered in litigation and introduced into evidence at trial. There are hundreds of examples of this from past lawsuits, and the phenomena has been widely discussed since the late 1990s.  See for instance the scholarly observation by Kenneth Withers in his 1999 article, Is Digital Different?:

Much is made in the electronic discovery literature of the informal, revealing, and often embarrassing nature of e-mail. E-mail is considered the window into the corporate soul, and is therefore a highly sensitive area for discovery. The literature also notes a deep disconnect between individuals’ perceptions of e-mail as private and transitory, and the reality of e-mail as a permanent and discoverable corporate record, although only rarely does the literature suggest that this phenomenon has been studied empirically in any other discipline, such as linguistics or psychology.

Since this has been known for a long time, you might think that, at the very least, senior management in businesses that are frequently involved in litigation would watch what they say.  But you would be wrong, and that is why email continues to be the best field for “smoking gun” searches.

Unfortunately for Microsoft, which was one of the first companies to be burned by email in its antitrust cases,  Microsoft offers the latest proof that senior corporate officers continue to say the darndest things in email.   The point is proven by a horde of once private Microsoft emails that were introduced into evidence at a trial in Iowa in December 2006.  The case is a class action styled Comes et al. v. Microsoft.  After the emails were admitted into evidence, plaintiff’s counsel, Roxanne Conlin, a former United States Attorney, posted them  on the Internet, just as she has done with all of the other evidence in this case.  (Note: when this blog was originally written, all of these materials were published on the web and some were linked here. A few weeks later the case settled and all of the materials were removed as part of the settlement.  I then removed the links since they no longer functioned.)

Plaintiff’s Exhibit 7,264, which Bates marking indicates was originally produced on June 15, 2005, and marked “Confidential”, was  circulated on the Net as soon as it was admitted into evidence, even before plaintiff’s counsel posted it last week.  It is an email dated January 7, 2004, from Jim Allchin to Bill Gates and Steve Ballmer.  The subject line of the email is “losing our way.” Mr. Allchin’s email to his bosses begins like this:

This is a rant. I’m sorry. I am not sure how the company lost sight of what matters to our customers (both business and home) the most, but in my view we lost our way.

The second paragraph of the email gets worse and he says: “I would buy a Mac today if I was not working at Microsoft.” This is the line that is now being widely quoted. Today Mr. Allchin is not working for Microsoft; he retired from Microsoft on the day Vista was released, January 30, 2007. According to Microsoft, “Allchin was a member of the Senior Leadership Team, responsible for developing Microsoft’s core direction along with Steve Ballmer and Bill Gates.”  No news yet on what kind of computer Jim Allchin is now using, but he did leave a humorous blog on what his life after Microsoft is like.

In fairness to Microsoft and Jim Allchin, this is the reply which Jim posted on the Windows Vista Team blog when this story first broke on December 12, 2006:

In the email, I made a comment for effect about buying a Mac if I was not working at Microsoft. Taken out of context, this comment could be confusing. Let me set the record straight:

This email is nearly 3 years old, and I was being purposefully dramatic in order to drive home a point. The point being that we needed to change and change quickly. We did: We changed dramatically the development process that was being used and we reset the Windows Vista development project in mid-2004, essentially starting over.

2-and-½ years later, Windows Vista has turned into a phenomenal product, better than any other OS we’ve ever built and far, far better than any other software available today, in my opinion. It’s going to be available to customers on Jan 30, and I suggest everyone go out and get it as soon as you can. It’s that good.

The spirit of being self-critical continues to flourish at Microsoft. Within Microsoft everyone considers it their duty to always put their convictions and our product quality ahead of everything else. That was the intent of my mail to Bill and Steve, and I consider it a great example of how this company can focus and do what’s right for customers.

It is interesting to note that the evidence admitted was not the original email from Jim Allchin to Bill Gates, but rather an email from Allchin to another Microsoft executive, Eric Rudder, sharing his private email to Gates.  Again, this shows the danger of email and other electronic documents; they can easily be circulated to others without your knowledge, and turn up later as part of an email chain.  Email has an amazing way of  surviving and appearing later, sometimes where you least expect it, despite all efforts to the contrary.

Eric Rudder still works for Microsoft. He has reported directly to Bill Gates since September 2005, when promoted to Senior Vice President leading what Microsoft calls the “Developer and Platform Evangelism division.” 

Judge Shira A. Scheindlin Video on the New Rules is now Online

A video has recently been posted online of a speech by Judge Scheindlin of Zubulake fame. She gave the keynote address on October 23, 2006, at the annual meeting of ARMA  (formerly known as the Association of Records Managers and Administrators).   Although it is unlikely to be a hit on YouTube, it is certainly worth watching.

Judge Scheindlin’s speech is on the new rules.  She begins with the standard explanation from the commentary on why the new rules were needed:

1. volume of e-records, much more than paper records;

2. e-storage systems are dynamic; created and destroyed automatically;

3. ESI is difficult, but not impossible to delete (you only transfer information from an accessible location to inaccessible location);

4. ESI has to be  retrieved, restored and translated before it can even be reviewed.

Judge Scheindlin then talks about the “meet and confer” Rules 26 and 16, pointing out  that the revision to Rule 26 requiring the parties to  discuss “any issues relating to preserving discoverable information” is the first time the Federal Rules have ever mentioned the word ”preservation”. 

She then turns to Rule 26(b)(5)(B) on return of privileged materials, pointing out how that the Advisory Committee on the Rules of Evidence has proposed a new Evidence Rule 502.  It would provide the procedural rule with much needed teeth by prohibiting a finding of waiver if reasonable precautions to review were taken.

Then Judge Scheindlin goes into Rule 26(b)(2)(B) on inaccessibility, and Rule 37(f) on “safe harbor” destruction. No new comments on either rule, instead she just outlines the text of the rules and commentaries.  

You can also download a copy of the full text of her speech. 

e-Discovery Library

What are the basic books for an e-discovery reference library?  There are many right answers, but the following would make almost everyone’s top ten list:

Electronic Evidence and Discovery Handbook: Forms, Checklists, and Guidelines, ABA Section of Law Practice Management

Electronic Discovery and Evidence: Best Practices Guide, Michael R. Arkfeld

The Sedona Guidelines for Managing Information and Records in the Electronic Age (Sept. 2005 Version) (free on-line)

Electronic Discovery: Law and Practice, Adam I. Cohen

The Practical Guide to Electronic Discovery, Mary Mack and Matt Deniston

For good general background reading I’d recommend John Battelle’s book: The Search: How Google and Its Rivals Rewrote the Rules of Business and Transformed Our Culture. It does not pertain to e-discovery, but it helps in understanding the general “search” culture we are now in.

For more specific background reading, I suggest books on computers and computer networks.  Personally, I like the ones with many large color pictures and simple, yet valid explanations:  How Computers Work (8th ed.) by Ron White; and, How Networks Work (7th ed.) by Derfler & Freed.  Finally, for a pure reference book that is handy to have, try the Computer and Internet Terms Dictionary by Barron’s.

When Do the New Rules Apply?

First, to state the obvious, the new rules  only apply to cases in federal court, although no doubt the new Federal Rules of Civil Procedure and their commentaries will also be frequently argued in state court e-discovery disputes. 

Second, the new FRCP certainly apply to all cases filed in district courts on or after December 1, 2006, the date the new rules went into effect.  As to federal cases filed before December 1, 2006, the Supreme Court said they should apply “insofar as just and practicable”.  See: http://www.supremecourtus.gov/orders/courtorders/frcv06p.pdf 

Thus, under the Supreme Court guidelines, if a case was filed before December 1, 2006, it will be up to the district court to determine on a case by case basis whether application of the new rules will be too burdensome, or result in undue delay.  If a court determines it is impractical or unjust to use the new rules, then the old rules will apply.  This will almost certainly be the case where discovery has already closed or is in the final stages.
 

Top Ranked Tech Law Journals

I just completed writing a long, scholarly type article on e-discovery and the mathematical algorithm known as “hash”.  Hash is a fascinating (well, to me anyway) encryption process that is the key to all electronic document identification and authentication.  I will write more on hash at another time (it is my current favorite e-discovery topic).  But for now I wanted to share what I learned when trying to decide which scholarly law/technology journals to submit my article to. 

Of course I would like to have the article published by the best law journal possible, the most influential and widely read.  So I started by asking one of our librarians if they knew which technology law journals were considered to be the best.  Akerman has long been known for having one of the best private law firm libraries in the country, so I was surprised they did not know.  Aside from a general correlation with the ranking of law schools, they were unaware of any ranking or rating service of law journals. 

So I started on the search myself, beginning with the journal from my Alma Mater, the University of Florida’s Journal of Technology Law & Policy.  There I found a very complete list of Law and Technology type journals from around the world, but no ranking. (It is, by the way, an excellent journal, and I eventually picked it to publish my article: HASH: the New Bates Stamp, 12 Journal of Technology Law & Policy 1 (June 2007). )  I then looked at a few on the list I had already heard of, and quickly landed at the Harvard Journal of Law and Technology.  Unlike the other journals I had seen, the Harvard journal, which calls itself “JOLT”, stated that it was ranked #1 among Science & Technology law reviews by ExpressO, and put a link to the ExpressO website.

Here my search ended successfully with a ranking service of all specialty law journals in various areas of the law, including “Science & Technology”.  Moreover, I found that ExpressO is a service of the Berkeley Electronic Press and appears to be legitimate, although I remain unsure of exactly how these rankings are made.  So, to get to the bottom line, here is their RANKING OF SCIENCE AND TECHNOLOGY LAW JOURNALS:

1. Harvard Journal of Law & Technology
2. Berkeley Technology Law Journal
3. Virginia Journal of Law & Technology
4. Boston University Journal of Science & Technology Law
5. Columbia Science and Technology Law Review
6. Duke Law & Technology Review
7. North Carolina Journal of Law and Technology
8. I/S: Journal of Law & Policy for the Information Society
9. Journal of Law, Technology & Policy
10. University of Illinois Journal of Law, Technology & Policy