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As defense attorneys are only too aware, people continue to think out loud in e-mails. This is so notwithstanding the high-profile discovery debacles represented by cases involving people like Martha Stewart, Frank Quattrone and even Bill Gates. But the case that has had the most influence on e-mail discovery is an employment case pending in the U.S. District Court for the Southern District of New York. New York practitioners, as well as lawyers throughout the United States, have followed the discovery disputes in Zubulake v. UBS Warburg LLC with interest and concern. In this case, described by the court as “a relatively routine employment discrimination dispute,” District Judge Shira A. Scheindlin of the Southern District has taken a leading role in quite literally making the rules with regard to preservation and production of electronic discovery in civil litigation. Zubulake V, the fifth and most recent written opinion in this case, continues the court’s exploration of the consequences of a party’s failure to preserve electronic evidence and sets forth rules for counsel in any litigation in which electronic evidence is likely to be present. WORDS AS GIFTS The court quotes in its first sentence one of the tamer pronouncements of Philip Roth in “Portnoy’s Complaint.” The quotation, in part: “Words aren’t only bombs and bullets — no, they’re little gifts, containing meanings!” The judge seems to have chosen this quote not solely for its literary value. Rather, the court goes one step further, saying that “[w]hen communication between counsel and client breaks down, conversation becomes ‘just crossfire,’ and there are usually casualties.” In this case, the casualties are Rule 26 sanctions, including awards of fees and costs, and, no less critically, adverse inference instructions — which the court imposed in this case. While the Zubulake quintet of decisions is not likely to have nearly the same societal impact as Roth’s groundbreaking comic masterpiece, it will undoubtedly cause strong concern in the offices of corporate general counsel and defense counsel in assessing their obligations as they respond to claims of discrimination — whether of the “relatively routine,” individual variety presented by this case, or the larger class-wide cases that employers increasingly face. OLD OBLIGATION Of course, the obligation to preserve documentary evidence is not new. Lawyers have always understood their obligation to communicate clearly to their clients the need to preserve documents relevant to a lawsuit. And it has always been necessary to preserve memoranda generated during the course of an ongoing litigation. But, as e-mail has become the routine mode of communicating within a corporation, and even between corporations and their contractors and customers, the ability of counsel to control the creation and even composition of relevant documents has become exceedingly challenging. Zubulake V sends the strong message that in-house and outside counsels’ burdens with regard to these matters is no less strong than it was in the pre-electronic evidence era. To the contrary, the challenge is far greater, as are the expense and the risk of noncompliance. I have previously written in these pages about the court’s four previous decisions in this matter, and so I will not revisit here those rulings. In brief, however, the defense attorneys here had given oral instructions to their client, immediately after plaintiff had filed her EEOC charge, not to destroy or delete materials potentially relevant to the plaintiff’s claims, and to segregate these materials into separate files for counsel’s eventual review. While this warning pertained to both electronic and hard-copy files, it did not specifically mention backup tapes maintained by the defendant’s information technology personnel. In subsequent e-mails, in-house counsel reiterated these instructions. Finally, a year after the charge was filed and after the initiation of the lawsuit, the plaintiff propounded a document request specifically calling for e-mails stored on backup tapes. Then, outside counsel instructed the defendant’s information technology personnel to stop recycling backup tapes. When e-mails were proved to be missing, the court granted plaintiff’s motion to order the defendant to bear the costs of restoring a sample of the backup tapes. Additional backup tapes were later also shown to be missing, and plaintiff demonstrated that a number of e-mails on the backup tapes were being deleted or otherwise lost. There followed a motion for sanctions for the defendant’s failure to preserve all relevant backup tapes and its deletion of relevant e-mails. The court ordered the defendant to pay for the re-deposition of several key employees, so that plaintiff could inquire about the newly restored e-mails. The dispute at issue in Zubulake V centers on plaintiff’s discovery of additional deleted e-mails and the existence of e-mails preserved on the defendant’s active servers that had not been previously produced. The evidence showed that certain employees of defendant had, notwithstanding the instructions of in-house and outside counsel, deleted e-mails and failed to produce responsive documents to counsel. Some of these e-mails were irretrievably lost. What are the duties of counsel in such a matter? In earlier decisions, the court had made clear that 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 data. However, that is only the beginning of counsel’s obligations. Indeed, counsel must oversee compliance with the litigation hold, actively monitoring the client’s efforts to retain and produce relevant documents. The court makes clear that counsel must take a hands-on approach to overseeing these obligations. This, according to the court, will invariably involve speaking with information technology personnel. It will also require that counsel interview key witnesses to determine how they stored information. For example, some employees may print out relevant e-mails and retain them as hard copies, while others may create separate computer files. As the court states: “Unless counsel interviews each employee, it is impossible to determine whether all potential sources of information have been inspected.” ‘COUNSEL MUST BE CREATIVE’ Even if it is not feasible for counsel to speak with every key player, the court rules, “counsel must be more creative.” For example: “It may be possible,” the court suggests, “to run a system-wide keyword search; counsel could then preserve a copy of each ‘hit.’” The court says that this is not necessarily as burdensome as it sounds: “Counsel does not have to review these documents, only see that they are retained. For example, counsel could create a broad list of search terms, run a search for a limited time frame, and then segregate responsive documents.” The court suggests that once a document request is propounded, the parties “could negotiate a list of search terms to be used in identifying responsive documents.” Counsel would only be obligated to review the documents that are identified by the more limited search, while “the initial broad cut � guarantees that relevant documents are not lost.” Then, the court rules, once a party and counsel have identified all of the sources of relevant information, it falls to counsel, pursuant to Rule 26′s duty to supplement responses, to be sure that information is retained and not lost. In seeking to delineate the scope of this duty, the court notes that the requirement on counsel “must be reasonable. A lawyer cannot be obliged to monitor her client like a parent watching a child.” While the client “must bear responsibility for a failure to preserve,” nevertheless, the court pronounces that counsel is more likely than the client to be “conscious of the contours of the preservation obligation.” To assure the client’s compliance, the court rules, counsel must actively supervise the client’s activities in this regard. In the case at issue, the court acknowledged that counsel had issued a litigation hold which was circulated to many key players; had made clear that the hold applied to backup tapes; had communicated directly with many of the key players and sought to impress upon them their duties to preserve data; and instructed employees to produce copies of their active files. Nevertheless, the court held, counsel were not “entirely blameless.” The court made specific findings regarding the ways in which defendant’s counsel failed to meet the duties she imposed. Thus, for example, counsel had failed to determine precisely how a particular employee had retained her data — whether they were retained in a separate, active file on her computer, or just how she had “archived” the data. Counsel also had not communicated the litigation hold instructions to a senior human resources employee who was intimately involved in plaintiff’s termination. Counsel, the court noted, had failed to protect relevant backup tapes. And, if the testimony of a particular witness that he had turned over all e-mails that he had received concerning plaintiff was to be credited, then, the court concluded, since some of them were never produced, counsel must have failed to produce them. The court concluded that while it was employees of the defendant who had improperly deleted e-mails, “copies of many of [them] were lost or belatedly produced as a result of counsel’s failures.” Consequently, the court awarded sanctions. The court ordered that the jury would be given an adverse inference instruction with regard to e-mails deleted after the EEOC charge was filed, and with regard to those that were lost when the defendant’s backup tapes were recycled. The court also ordered defendant to pay the cost of any depositions or re-depositions required by the late production of e-mails. The court finally noted that the defendant’s belated production had “resulted in a self-executing sanction.” That is, not only was plaintiff deprived of the ability to question witnesses regarding the missing e-mails, but so had been defendant unable to prepare its own witnesses with these documents. Counsel who litigate cases in New York need to take careful note of this broad-reaching decision, and, no less important, to apprise their clients of the obligations it imposes. Philip M. Berkowitz is a partner at Nixon Peabody, where he heads the international labor and employment practice team. 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