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Keeping up with the subject of electronic discovery is a lot like following the latest developments in the lives of Britney Spears or Lindsay Lohan: every week a new story and never good news. But just as we can live and learn vicariously through the missteps of the rich and famous, so can we learn from the facts through which the early years of electronic discovery jurisprudence is evolving. There have been hundreds of cases officially reported and/or discussed in the mainstream media since last December, when the amended Federal Rules of Civil Procedure became effective, but the decisions discussed below are particularly illustrative of the most prevalent issues confronting the management, collection and production of electronically stored information (ESI). The most overarching concern has to do with compliance with the general duty under Rule 26. The duty of a party to locate and produce all materials responsive to discovery and counsel’s oversight obligations are nothing new to the discovery process. What is new, brought on by the staggering volume of data and the complexities associated with their management, is the broad array of possible pitfalls and the ability to reveal mistakes and outright gamesmanship through the often inerasable trail of electronic evidence. The most prominent cases are Zubulake v. UBS Warburg, 229 F.R.D. 422 (S.D.N.Y. 2004); Broadcom v. Qualcomm, No. 05cv1958, 2007 WL 1031373 (S.D. Calif. March 21, 2007 ); and the well publicized Coleman Holdings v. Morgan Stanley, No. CA 03-5045, 2005 WL 679071 (Fla. Cir. Ct. March 1, 2005). Zubulake and Coleman involved spoliation-of-evidence sanctions for failure to preserve relevant e-mails when the parties knew that claims were or would be asserted. Qualcomm dealt with post-trial findings that relevant e-mails were not produced during discovery despite many discovery requests. In Zubulake, Judge Shira Sheindlin quoted the legendary speech from the Paul Newman movie Cool Hand Luke: “What we’ve got here is failure to communicate.” In most instances, e-discovery problems result from a breakdown in communication among lawyers, clients and information technology experts. It is stating the obvious to say that the solution is to improve communication. How to accomplish this goal, however, is far from obvious, and the challenge has befuddled some of the largest and most highly regarded companies and law firms. For those who think that the problem is limited to companies that cannot adapt quickly to technology, there is AMD. v Intel, MDL No. 05-1717-JJF (D. Del. filed June 27, 2005), in which the biggest designer and supplier of the very technology that launched the tech boom found that its corporate culture was no better prepared than an investment bank or securities firm when it came to meeting its discovery obligations. Once again: failure to communicate. The problem crystallized before the court in March 2007, when Intel Corp. acknowledged, in its own court submission, “document retention lapses that have occurred, related primarily to emails generated after the filing of the complaint.” At its core, the problems occurred through inevitable human error in executing what appeared on paper to be a comprehensive identification and collection effort � one described appropriately by Intel’s counsel as “from a process standpoint . . . best practices in such a massive case.” In hindsight, the process was a blueprint for failure. For example, litigation-hold notices were sent to hundreds of employees with instructions to transfer e-mails to their hard drives, before they were automatically deleted after 30 days by an enterprisewide setting. Unfortunately, many employees saved only the e-mails in their “inbox” while ignoring the “outbox” containing all messages sent or forwarded. Others failed to follow the instructions at all, through sheer noncompliance or misunderstanding. Intel’s collection problems demonstrate the risks associated with relying on hundreds of custodians to thoroughly follow all steps necessary to effectuate preservation. In large companies, the volume, complexity and geographic distribution of network resources make centralized collection and identification much more difficult, and there is no “magic button” to put a collection plan into effect. The result can be more delegation of tasks than can be controlled. It goes without saying that if a tech goliath such as Intel can have problems collecting and preserving electronically stored information, this can happen to anyone. The cases discussed below illustrate more precisely where the “failure to communicate” can arise in the context of several key terms embodied in the revised rules. Production and record-keeping Rule 34 always required parties to produce records in the same manner in which they are kept in the ordinary course of business. This concept takes on a more complex meaning when dealing in ESI, as seen in PSEG Power New York Inc. v. Alberici Constructors, No. 1:05-CV-657, 2007 U.S. Dist. Lexis 66767 (N.D.N.Y. Sept. 7, 2007). In this case, PSEG produced a disc containing e-mails but without the attachments that the e-mails referenced. The separation of attachments was attributed to limitations in downloading software and incompatibility with the format of software used by PSEG’s vendor. The court ordered PSEG to repeat its production of thousands of e-mails at its own expense (which it estimated at $26,000) and to ensure that e-mails and attachments were produced in the corresponding “family” grouping. It bemoaned “this discovery quagmire created by PSEG’s vendor [which] falls woefully short of comporting with the spirit of Rule 34.” As PSEG demonstrates, the collection process often involves vendors outside of the firm or individuals within the client’s business who have never assisted with litigation or investigations. This scenario is fertile ground for misunderstanding, of which the failure to produce in proper format under Rule 34 is a common result. With today’s technology, less-than-diligent efforts by parties will be revealed, which ends up costing more in the long run. This occurred in Wingnut Films Ltd. v. Katja Motion Pictures Corp., No. CV 05-1516-RSWL, 2007 U.S. Dist. Lexis 72953 (C.D. Calif. Sept. 18 2007). The court found that the defendants failed to conduct reasonable e-mail and document searches, failed to suspend automatic e-mail deletion and other document-destruction policies and misrepresented the status and scope of collection and production. As a sanction, the court ordered them to bear the cost of having a selected vendor comb through their networks and work stations, in effect repeating all discovery production independently. The defendants were also ordered to pay attorney fees up to $125,000, and expenses associated with repeated depositions. The sanctions followed court-ordered depositions of two witnesses regarding record-keeping policies and the search and collection of records in the litigation. The testimony of one defendant’s senior counsel led the court to conclude that the defendant “has still not performed any meaningful search for emails and other electronic documents.” The court found that this defendant had failed to conduct the most rudimentary search using relevant terms and failed to provide sufficient guidance to employees regarding responsive e-mails. It also found that the standard “auto delete” function of the network kept erasing potentially relevant e-mails long after litigation was anticipated. Wingnut Films is one of a growing number of cases in which litigants are frequently proving discovery transgressions through the testimony of the custodians who collected the records for litigation. When conducting collection, therefore, counsel should closely scrutinize the process, playing devil’s advocate with those who actually collect and identify records � and who may some day be called to testify � before making representations as to completion of discovery. Thorough collection requires an equally complete understanding of the sources from which collection is made. If this statement sounds obvious, consider Phoenix Four Inc. v Strategic Res. Corp., No. 05 Civ. 4837, 2006 U.S. Dist. Lexis 32211 (S.D.N.Y May 23, 2006). In Phoenix Four, the defendants’ search for relevant ESI missed an entire section of a computer server because the server was configured in such a way that the user’s work station search commands did not access the “partitioned” section of the server. Several months after producing all known documents in discovery, a routine service call revealed the equivalent of 2,500 boxes of documents in the “partitioned” section. The court ordered the defendants and their counsel to pay $30,000 for the costs of redeposition of three witnesses, plus attorney fees and costs associated with the motion necessitated by their conduct. Notably, the court ordered that the sanctions be paid by counsel and defendants equally and not be borne by the defendants’ insurance carriers. Phoenix Four demonstrated that there are many ways, unfamiliar to those not fully versed in technology, in which information can hide in plain sight. Investigation and collection is best left to experts who can validate search results, but counsel may be taken to task when 20/20 hindsight reveals efforts that are found to be less than thorough under the circumstances. Fed. R. Civ. P. 37(f) exempts a party from sanctions for the loss of ESI in the course of “routine good faith operations” of the network or system. The “good faith” element mirrors the traditional spoliation doctrine, denying refuge to parties that could have suspended the otherwise “routine” deletion at a time when they knew or should have known that litigation or claims were likely. In Doe v Norwalk Community College, No. 3:04-cv-1976, 2007 U.S. Dist. Lexis 51084 (D. Conn. July 16, 2007), the court declined to apply the “safe harbor” provision when the defendants argued that e-mails and other data were deleted through routine good- faith operations of computer systems. The analysis focused on a common practice whereby employers delete or “wipe” the hard drive of computers after users terminate employment. The court focused on the language of Rule 37 and found that the deletion was neither “routine” nor “in good faith,” because at the time the data were lost, there was reason to believe a claim would be asserted, and because the policies at issue were not applied consistently across the enterprise. In addition, the court found that the defendants violated a state policy requiring all electronic communications to be saved for two years. This decision reinforces the view that the “safe harbor” provision will be read in the context of the spoliation doctrine, and parties are required, if possible, to suspend even “routine operations” that result in deletion of electronically stored information. Stated differently, the concept of deletion “in good faith” is not likely to be available to parties with knowledge that relevant evidence may be lost. Each time a sanction is imposed for conduct related to the collection and production of ESI, there is a tendency to get discouraged if not scared by the many ways in which one can run afoul of the rules. Within each convoluted fact pattern, however, there are common themes that can assist litigants in avoiding sanctions. If attorneys fail to learn from the mistakes and misfortune of others, they run the risk of experiencing the same fate for themselves and their clients. John J. Coughlin is a commercial litigator and solo practitioner in Moorestown, N.J., who regularly counsels clients in e-discovery preparedness. He can be reached at [email protected].

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