Duties

The landmark series of e-discovery opinions by District Court Judge Scheindlin in New York City culminating in Zubulake v. UBS, 229 F.R.D. 422 (S.D.N.Y. 2004) (Zubulake V), impose a new discovery responsibility upon attorneys, a duty to supervise e-discovery by speaking directly with their client’s IT personnel, and understand what they say. Since this legal duty was first widely publicized in the Zubulake (pronounced “zoo-boo-lake”) opinions, it is sometimes referred to as the “Zubulake duty.” Since most lawyers are not trained in IT, and today’s technologies are horrendously complex, this new duty can be a enormous challenge.  Still, more and more court’s now require that the IT-legal burdens be met by the counsel appearing before them.  Lawyers today must rise to the occasion and train themselves in IT so that they can carry this load, or at least associate with others who can.  Failure to do so may lead to severe sanctions.

Zubulake V requires outside counsel to make certain that all potentially relevant electronic data are identified and placed “on hold”.  In the words of Judge Scheindlin:

To do this, counsel must become fully familiar with her client’s document retention policies, as well as the client’s data retention architecture. This will invariably involve speaking with information technology personnel, who can explain system-wide backup procedures and the actual (as opposed to theoretical) implementation of the firm’s recycling policy. It will also involve communicating with the “key players” in the litigation, in order to understand how they stored information.

This places a high duty on outside counsel to speak directly with their client’s IT personnel, and to understand the intricies of their computer systems.  Litigants and their attorneys can be sanctioned for their failure to discharge this duty and properly supervise e-discovery.  This is based upon the practical reality that “discovery is run largely by attorneys, and the court and the judicial process depend upon honesty and fair dealing among attorneys.” In re September 11th Liability Insurance Coverage Cases, 2007 WL 1739666 (S.D.N.Y. June 18, 2007). 

The authority of the Court to sanction outside counsel, as opposed to parties, for the failure to properly supervise the client’s document production, was discussed at length in Metro. Opera Ass’n Inc. v. Local 100, Hotel Employees and Restaurant Employees Int’l Union, 212 F.R.D. 178, 218-219 (S.D.N.Y. 2003).  The Court found three legal bases to sanction the attorneys: 1) the Rule 26(g)(2) requirement that an attorney sign and so certify discovery responses; 2) 28 U.S.C. 1927 allowing an award of fees if an attorney vexatiously multiplies litigation; and 3) the “inherent” or “implied” power of a court to manage its own affairs.  Still, if attorneys are diligent, and they properly investigate and communicate, they should not be held responsible for their client’s failures.  As Judge Scheindlin put it in Zubulake V: “A lawyer cannot be obliged to monitor her client like a parent watching a child.  At some point, the client must bear responsibility for a failure to preserve.”

Many courts after Zubulake have imposed sanctions on clients and lawyers alike for negligence in the search and production of Electronically Stored Information (”ESI”).  In the process, some courts have set very high standards, and imposed a strict duty on attorneys to investigate and comprehend even complex and arcane computer technicalities.  This is best exemplified in Phoenix Four, Inc. v. Strategic Resources Corp., No. 05-CIV-4837, 2006 WL 1409413; 2006 U.S. Dist. LEXIS 32211 (S.D.N.Y. May 22, 2006).

In Phoenix a the law firm and its clients were both sanctioned for the attorneys’ failure to personally investigate and understand that two of the clients’ computer servers had hidden partitions containing discoverable ESI.  In the words of the court: “The computer system in Schack’s office was configured in such a way that the desktop workstations did not have a ‘drive mapping’ to that partitioned section of the hard drive.” In truth, how many trial attorneys understand what the judge just said, much less what a “partitioned server” is, or that such a thing could be hidden and contain key evidence?  This case shows you had better find out, and find out fast, at the beginning of the case, or at least associate with counsel or other experts that already know.

The defendants’ law firm in Phoenix ended with a $22,581 sanction order against it for overlooking the hidden server partitions (one half of the total sanction of $45,161.82).  Phoenix Four, Inc. v. Strategic Res. Corp.,2006 WL 2135798 (S.D.N.Y. Aug. 1, 2006). The court also applied then future rule 26(b)(2)(B) and required disclosure of the sources of inaccessible data.  In this case, however, the data was not inaccessible at all, it was just hidden in a partitioned section of the hard drive. The attorneys did not understand this and personally paid for that mistake.

The facts in Phoenix illustrate just how dangerous e-discovery has become.  After suit was filed defense counsel in Phoenix requested that their clients produce electronic and hard copy documents. The clients produced paper but claimed that they did not have any relevant ESI.  Defense counsel repeated that assertion to plaintiff’s counsel.  Then, a year later, on the eve of trial, during routine maintenance of their computers, defendants discovered that two of them had hidden partitions, and that these sections of the servers’ hard drives held 25 gigabytes (equivalent to 2,500 boxes) of potentially relevant ESI. The clients immediately notified their counsel, who in turn immediately notified plaintiff’s counsel.  The defendants began to roll out the production of these documents as soon as they could, but at this point it was six weeks after the close of discovery. There was no allegation of bad faith on behalf of the defendants or their counsel, but the Court found that the defense counsel was grossly negligent in failing to timely discover the information on the server. In the words of the court:

[Counsel]  failed in its obligation to locate and timely produce the evidence stored in the server that the … Defendants took with them …. [Counsel] affirms that it engaged in dialogue with the defendants on the need to locate and gather paper and electronic documents. …. But counsel’s obligation is not confined to a request for documents; the duty is to search for sources of information.

It appears that [counsel] never undertook the more methodical survey of the … Defendants’ sources of information … outlined in Zubulake V. [Counsel] simply accepted the defendants’ representation that, because [it] was no longer in operation, there were no computers or electronic collections to search. Had [Counsel] been diligent, it might have asked-as it should have-what had happened to the computers …. Further, [Counsel's] obligation under Zubulake V extends to an inquiry as to whether information was stored on that server and, had the defendants been unable to answer that question, directing that a technician examine the server. In the case of a defunct organization such as SRC, this forensic effort would be no more than the equivalent of questioning the information technology personnel of a live enterprise about how information is stored on the organization’s computer system.

….The proposed amendments [to the FRCP] essentially codify the teaching of Zubulake IV & V, of which [Counsel] should have been well aware. I find [Counsel's] deficiencies here to constitute gross negligence.

Despite the words of Judge Baer, who is in the same New York City court as Judge Scheindlin, that “The proposed amendments [to the FRCP] essentially codify the teaching of Zubulake IV“, the new Rules do not explicitly require counsel to become fluent in “computer network architecture.”  But revised Rule 26(f)(3) does require parties to discuss during initial disclosure “any issues relating to disclosure of electronically stored information including the form or forms in which it would be produced.” Further Rule 26(b)(2)(B) requires the parties to identify sources of data which support the case or defenses, including sources of data which are “not reasonably accessible.”  Can you discuss the issues of ESI, and fulfill your duty as counsel without speaking “computerese,” or affiliating with counsel or other experts who do?

The judge in Hopson v. Mayor of Baltimore, 232 F.R.D. 228, 245 (D. Md. 2006) described the obligations under new Rule 26(f) with much greater particularity, making the answer to that largely rhetorical question even more obvious:

[C]ounsel have a duty to take the initiative in meeting and conferring to plan for appropriate discovery of electronically stored information at the commencement of any case in which electronic records will be sought. . . . At a minimum, they should discuss: the type of information technology systems in use and the persons most knowledgeable in their operation; preservation of electronically stored information that may be relevant to the litigation; the scope ofthe electronic records sought (i.e. e-mail, voice mail, archived data, back-up or disaster recovery data, laptops, personal computers, PDA’s, deleted data) the format in which  production will occur (will records be produced in “native” or searchable format, or image only; is metadata sought); whether the requesting party seeks to conduct any testing or sampling of the producing party’s IT system; the burdens and expenses that the producing party will face based on the Rule 26(b)(2) factors, and how they may be reduced (i.e. limiting the time period for which discovery is sought, limiting the amount of hours the producing party must spend searching, compiling and reviewing electronic records, using sampling to search, rather than searching all records, shifting to the producing party some of the production costs); the amount of pre-production privilege review that is reasonable for the producing party to undertake, and measures to preserve post-production assertion of privilege within a reasonable time; and any protective orders or confidentiality orders that should be in place regarding who may have access to information that is produced.

If you do not speak directly with the client’s IT and come into court prepared to discuss all of these issues, you are gambling that Phoenix, Zubulake, Hopson and the like are aberrations.  You can only hope that the presiding judges in your cases will not impose such high standards.  This hope may be misplaced, especially in federal court, where e-discovery training for federal magistrates has been ongoing for several years now, and this training favors the adoption of Zubulake duties. See eg. Isom, David;  Electronic Discovery Primer for Judges, 2005 Fed. Cts. L. Rev 1 (Section II.M. Defining Lawyer’s Responsibilities for Electronic Discovery).

Moreover, the imposition of Zubulake-type duties on outside counsel is not new. There are several decisions before Zubulake that found fault with counsel for not speaking directly with their client’s IT executives. See eg. GTFM, Inc. v. Wal-Mart, 2000 WL 1693615 (S.D.N.Y. Nov. 9, 2000), and WL 335558 (S.D.N.Y. Mar. 30, 2000).  In GTFM, the plaintiff requested certain local store sales information regarding the purchase and sale of alleged counterfeit goods.  Senior Wal-Mart executives told their attorneys that the information had been destroyed pursuant to normal records retention policy procedures wherein the data was only preserved for five weeks.  Wal-Mart’s attorneys responded to the request accordingly. Over a year later, a Wal-Mart IT Vice President was deposed and testified that: the information was kept for a year, not five weeks; it was available when the request was made; but had recently been deleted. The court sanctioned Wal-Mart ($109,754 and an on-site computer inspection) and criticized its attorneys for an inadequate investigation, holding that the attorneys should not have relied upon representations of the client’s business executive, instead they should have also spoken directly with the IT personnel involved.

Ignorance of IT is simply no longer an acceptable cover for mistakes in most federal courts.   If you mess up on e-discovery, you may have to pay for it.  For instance, in Tampa last year, a trial lawyer and his counsel, were sanctioned for producing only paper records, and claiming “computer illiteracy” as the reason they did not produce additional electronic records that were eventually found on plaintiff’s computers. Martin v. Northwestern Mutual Life Insurance Company, 2006 WL 148991 (M.D Fla. Jan. 19, 2006). The Magistrate rejected the attorney’s excuse of “computer illiteracy” as “frankly ludicrous.”

In Orlando, the Magistrates have gone on record as saying they will require counsel to talk directly with their client’s IT.  See my Blog entry of November 21, 2006.   In New Jersey, they have even promulgated a local rule requiring it.  L.Civ.R. 26.1(d) of the Local Rules of the U.S. District Court, District of New Jersey.  This rule has been in effect since 2003 and thus precedes Zubulake V.  (Perhaps “Zubulake Duty” is better named “New Jersey Duty”?)  The N. J. local rules states:

Prior to a Fed.R.Civ.P. 26(f) conference, counsel shall review with the client the client’s information management systems including computer-based and other digital systems, in order to understand how information is stored and how it can be retrieved … including currently maintained computer files as well as historical, archival, backup and legacy computer files.

The New Jersey rule also requires counsel to locate an “IT witness”:

Counsel shall also identify a person or persons with knowledge about the client’s information management systems, including computer-based and other digital systems, with the ability to facilitate, through counsel, reasonably anticipated discovery.

Other jurisdictions are getting on the N. J.  and Zubulake bandwagon and explicitly or implicitly requiring interaction between counsel and an IT “liaison”.  They are, in effect, requiring counsel to assume the Zubulake duty and understand their client’s ESI architecture.  See eg.  D. Ark. L.R. 26.1 (2002); M. Dist. Pa. L.R. 26.1(a) (2005); D. Wyo. L. Civ. R. 26.1 (2005).  Rule revisions are pending in many other jurisdictions, including many state courts. Many other courts, such as the district court in Orlando, do not have an express local rule, but nonetheless, the judges require it.  If your court is silent so far, you run the risk of being a test case.

Your local court may decide to reject Zubulake and Phoenix, and not impose such strenuous duties on counsel who appear before it.  They may let you off the hook when ESI is discovered at the last minute by your client, or worse, by opposing counsel.  But until they expressly reject these cases, do you really want to take that chance?  Do you want to simply accept at face value a client’s representation that the contents of a box or boxes of paper constitutes “the file,” or some other category of documents, and not discuss all of the in and outs of their ESI? Some in-house counsel say yes; if client says they are handling it, then outside counsel must abide by their instructions and let the client fulfill their obligations without you. See: Thomas Allman, Deterring E-Discovery Misconduct By Counsel Sanctions: The Unintended Consequences of Qualcomm v. Broadcom, 118 Yale L.J. Pocket Part 161 (2009). So far, however, I know of no courts who agree with that position.

In the old days (the early and mid-1990s), before the Information Age exploded (we are now up to 60 Billion emails a day),  you probably would accept such representations, and let it go at that.  Legal counsel would rarely, if ever, find it necessary to meet with file clerks and records custodians to verify the contents of paper records. In fact, depositions of paper records custodians have become mere formalities in most “paper” cases, and are usually replaced by a simple production of copies and later authenticity stipulations.  But in today’s world, it can be negligence, or as Judge Baer held in Phoenix, “gross negligence”, to fail to meet with IT personnel and discuss the origins and completeness of discovery.  If you do not, you could face sanctions against both your client and your law firm,  or, even worse, lose otherwise defensible cases with adverse inference sanctions, such as in Zubulake ($29 Million) and Coleman (Parent) Holdings, Inc. v. Morgan Stanley & Co., Inc.,2005 WL 674885 (Fla.Cir.Ct.. 2005) ($1.45 Billion FJ); Bray & Gillespie Management v. Lexington Insurance Co., Case No. 6:07-cv-222-Orl-35KRS, Order by Magistrate Judge Spaulding dated March 4, 2009) (sanctions imposed against law firm).