Employee Who Refused To Destroy ESI May Proceed With Lawsuit Against Wal-Mart

Posted by Gregg Mayer on Friday, March 7th, 2008   

In a whistle-blower lawsuit in Arkansas, a former employee of Wal-Mart who refused to destroy paper copies of digitized documents – hard copies of electronically stored information (“ESI”) – recently received court approval to go forward with her lawsuit.

The plaintiff, Rita Miles, alleges Wal-Mart bosses and co-workers retaliated against her when she refused to destroy ESI-related documents after Wal-Mart was served with a subpoena in a criminal investigation.

According to the January 25, 2008 court opinion:

On May 24, 2005, Wal-Mart attorney Robert DeMoss sent an email to each member of the Wal-Mart Labor Relations Department instructing them to preserve all documents responsive to the grand jury subpoena. However, some 15 minutes later, a meeting was called in the library, where Plaintiff’s project team was instructed to place paper copies of digitized documents in a tub for shredding. Plaintiff refused to destroy documents that might be subject to the subpoena.

Rita Miles alleges she was treated with hostility by her supervisors and co-workers after she refused to destroy the documents. The court agreed to let her lawsuit move ahead despite Wal-Mart’s arguments that no genuine issue of material fact exists.

This lawsuit is far from over, but it offers an easy lesson: do not instruct employees to destroy documents – including ESI – when subpoenaed for that information. Moreoever, destroying ESI can lead to spoliation sanctions during litigation, or even a default judgment.

If you are curious about the related criminal investigation into Wal-Mart, read about the Wal-Mart executive who pleaded guilty in the case, as well as more about Rita Miles, here.

Company Spared Restoration Of Back-Up Tapes Since It Followed Normal Retention Policy

Posted by Gregg Mayer on Thursday, March 6th, 2008   

In a recent decision in Georgia, a federal judge ruled that the costs to search a company’s back-up tapes for old employee email outweighed the benefits of finding any evidence that may be on that email. Consequently, the company, which regularly and in good faith enforced its email retention policy, did not have to pay to restore the back-up tapes.

In Petcou v. C.H. Robinson Worldwide, Inc., the plaintiffs sued C.H. Robinson Worldwide for employment discrimination. Specifically, the plaintiffs complained about inappropriate conduct and pornographic email and images on co-workers’ computers.

As part of the lawsuit, the plaintiffs wanted to see all of the email of certain branches of the company for a six-year period, both from former and current employees. However, C.H. Robinson Worldwide regularly enforced it retention policy; as a result, most of the email had been deleted and only available on back-up tapes.

Here is how the court explained C.H. Robinson Worldwide’s email policy in its February 25, 2008 opinion:

When an individual employee deletes an e-mail, that e-mail can be easily retrieved for only 8 days thereafter…When an individual leaves Defendant’s employ, his e-mails are automatically deleted from Defendants’ servers after 10 days…While deleted e-mails can be retrieved from back-up tapes, after these 8 or 10 day periods, the costs to do so are very high. To conduct a search for e-mails with sexual content, a third-party vendor would have to look through the e-mail of all of Defendant’s approximately 5,300 employees because Defendant does not have servers dedicated to individual branches…Each back-up tape contains three to five days of e-mails. The cost of retrieving e-mails from one back-up tape ranges from $325 to $365 per tape. The cost of retrieving about two years’ worth of e-mails for one employee is approximately $79,300.

With such high costs, the court ruled the back-up tapes were not reasonably accessible and did not have to be restored unless the plaintiffs could show “good cause.” Under the Federal Rules of Civil Procedure, a party may have to restore and retrieve inaccessible electronically stored information (“ESI”) if the other side can show “good cause” for its production.

Turning to the issue of “good cause,” the court ruled that the costs to restore the back-up tapes outweighed the benefit of any information contained in the email. Consequently, the court denied the plaintiffs’ efforts to force C.H. Robinson Worldwide to restore the back-up tapes.

Interestingly, C.H. Robinson Worldwide had continued following its normal retention policy even after the plaintiffs had filed an EEOC complaint in 2001 alleging the company-wide sexual harassment. The plaintiffs argued the company should have been under a litigation hold to preserve all of the email.

The court, however, ruled that since the plaintiffs did not ask for a company-wide preservation of email when the complaint was filed, then C.H. Robinson Worldwide did not act in bad faith in continuing to follow its retention policy. The only email the company would have to produce was the undeleted email from current employees specifically named in the lawsuit and any email that the company specifically had saved.

In short, because C.H. Robinson Worldwide followed it email retention policy in good faith, then the court was not going sanction the company for deleted email.

ESI Disclosures May Include Cell Phone Images

Posted by Gregg Mayer on Thursday, March 6th, 2008   

In an employment harassment lawsuit in Washington D.C., the court ordered the photographic images on an employee’s cell phone be preserved so the opposing attorney could inspect them.

As this case demonstrates, disclosures in the world of e-Discovery may reach beyond just desktop and laptop computers.

The case, Smith v. Café Asia, involved an employee suing the company for harassment based on the employee’s sexual orientation. The employee alleged he was taunted by kitchen staff, physically harassed, and that management was complicit in the harassment.

The restaurant countered that the employee instigated and invited the attention. Specifically, the restaurant argued the employee showed the staff explicit photographs of himself on his cell phone.

The employee conceded his phone had personal photos, but denied sharing them with the staff.

The judge ordered the photographs preserved. Moreover, the judge ordered that one of the restaurant’s attorney’s be allowed to inspect those photographs to prepare for arguments over admissibility of photographs at trial.

Although this case’s holding is limited to its facts, it demonstrates that ESI may find its way into the most unlikely places, including employee cell phones. Consequently, if the ESI may be relevant to the litigation, no matter where it is, a court may order it preserved.

Read another analysis, along with the court opinion, here.

Choosing Keywords For ESI Disclosures

Posted by Gregg Mayer on Wednesday, March 5th, 2008   

When retrieving electronically stored information (“ESI”) for litigation, parties often rely on keyword searches to identify relevant email and other ESI needed to be disclosed. Choosing just the right words can be tricky, as a recent article explains:

Lawyers, and their clients, may have different goals in mind when developing keyword searches. A requesting party may want to force the opponent to produce a massive amount of data, making the litigation more expensive and increasing the likelihood of settlement. Conversely, a producing party may want to produce massive amounts of data in a difficult form to review, so that the opponent may overlook damaging evidence.

Alternatively, one or both parties may want to locate and produce only the most relevant information, avoiding the need to review large quantities of irrelevant data for privilege, relevancy, and etcetera. Or the parties may not think much about it, with the requesting party asking for search terms developed in an informal brainstorming session and the responding party just looking for whatever the opponent seeks. When the parties disagree about whether a search is sufficiently broad, too narrow, or too expensive to implement, a Magistrate or Judge must decide.

The article notes that the recent decision of United States v. O’Keefe (discussed earlier on CIOLaw.org here ) explains that expert testimony may be needed in the future to determine whether adequate keyword search terms were used in finding ESI to disclose.

Read the rest of the article from Wisconsin Technology Network here.

Basketball Club Given 14 Days To Produce Hundreds of Thousands of Email Messages

Posted by Gregg Mayer on Wednesday, March 5th, 2008   

In an ongoing lawsuit in Seattle involving the Supersonics (“Sonics”), a court ruled that the Professional Basketball Club, owners of the Sonics, must produce thousands of email messages from six of its members within 14 days of the February 25, 2008 court order.

The lawsuit, City of Seattle v. Professional Basketball Club, LLC. (“PBC”), involves a dispute over the Seattle Coliseum lease agreement between the city and the club. The city wants improvements made to the Coliseum.

As part of the lawsuit, the PBC turned over approximately 150,000 email messages from two members of the club. The city sought email messages for another six members. PBC objected, arguing the search for those email messages would “increase the email universe exponentially” and produce irrelevant and duplicated messages.

After concluding from a preliminary analysis that the six PBC members were “managers” of the club, the court determined that the email messages were relevant and should be disclosed. The court rejected PBC’s argument:

PBC argues that the emails at issue are irrelevant because the case is centrally about whether the City can compel PBC to specific performance under the terms of the Lease. PBC argues that the substance of the emails – information regarding the formation of PBC and the Sonics’ finances – is irrelevant or duplicative of discovery PBC already produced. But…managers of PBC are agents of the PBC. Thus, communication within PBC, as well as communication by PBC members with third parties, may be relevant to the underlying issues.

As a result, the email must be disclosed. The court was not convinced that producing the email messages – which presumably run into the hundreds of thousands of messages since just two members resulted in 150,000 email messages – would be “unnecessarily burdensome.”

With Increase In e-Discovery, Courts Turn To Special Masters

Posted by Gregg Mayer on Tuesday, March 4th, 2008   

Businesses are not the only ones trying to keep up with the increasing demands of e-Discovery. The legal system, including judges with no particular technical knowledge, has to keep pace too.

As a result, courts are turning more frequently to “special masters” to handle e-Discovery matters. A special master is an appointed mediator for complex e-Discovery who facilitates the exchange of electronically stored information (“ESI”) between the parties. The special master works on behalf of the judge during the discovery process.

According to a recent article:

Special e-discovery masters have become prevalent because over the last few years, “the level of technical detail simply outgrew what judges and counsel could comprehend,” explained Craig Ball, a trial lawyer and technologist in Austin, Texas, who has served as a special master in approximately two dozen cases. “When neither the attorneys nor the court felt able to ask the right questions or understand the answers, that created the need for a technical special master,” he said.

While some tasks an e-discovery special master might take on are strictly technical, others require legal knowledge and expertise. A special master must “speak fluent litigator and fluent geek,” Ball said. “I couldn’t do what I do without both extensive trial experience and the training and background that qualifies me as a certified computer forensic examiner.”

Read more about special masters here and in The Daily Record (subscription required).

Company Looks For Sneaky Changes In Metadata

Posted by Gregg Mayer on Tuesday, March 4th, 2008   

One reason parties in litigation seek metadata – the hidden data about data inside ESI – is to look for sneaky modifications to documents.

This is exactly what one company is looking for in an ongoing lawsuit in the state courts of Texas.

In A&W Development, LLC v. Honza, the two sides are involved in a real estate dispute about the wording of a contract assignment for the purchase of land. A&W alleges that the Honzas changed the wording of a contract after the two sides had an agreement. The wrong contract was signed and executed, according to A&W.

Here is how the court explained it:

Under the terms of the partial assignment actually executed, A & W retained “the right to purchase a portion of this property for the construction of a street with an approximate width of 78′ in a North to South direction of approximately 413′.”

However, an earlier draft of this partial assignment makes no reference to such “purchase,” and A & W contends that the consideration the parties negotiated for the partial assignment took into account the consideration the Honzas should receive for the street referenced in the assignment.

In an effort to prove the contract was changed, A&W is seeking metadata off the Honzas’ office computers to compare alleged contract modifications with the diary entries that the Honzas’ kept during the time the parties negotiated:

A & W seeks the metadata from the Honzas’ hard drives because it wants to identify the points in time when the partial assignment draft was modified in relation to the diary entry. This goes to the issue of whether the Honzas altered the partial assignment after the parties concluded their agreement but before the document was presented for execution.

The Texas Court of Appeals recently affirmed the trial court’s decision to let a third-party consultant take a mirror image of the Honzas’ computer hard drives and look for the metadata.

Although there appear to be no Texas decisions addressing a request for access to an opponent’s computer hard drives, a body of state and federal decisions has emerged and has established a fairly uniform approach for such requests….Federal district courts have consistently held that electronic data stored on computer hard drives, including “deleted” files and related data, is subject to discovery.

Consequently, if there were any improper changes, the metadata will have the answers. Understanding the consequences of metadata is just as important as proper email archiving in today’s business world.

Early Meeting To Discuss ESI

Posted by Gregg Mayer on Monday, March 3rd, 2008   

One of the more important steps during the preliminary stages of litigation is the Rule 26(f) meeting – otherwise known as the “initial conference” of the parties.

Since the December 2006 e-Discovery amendments to the Federal Rules of Civil Procedure, one topic to be discussed at these meetings is where and how much electronically stored information (“ESI”) is relevant to the litigation, among other ESI issues.

One recent article explains:

Parties (and their lawyers) will need to prepare for this conference, including obtaining an understanding of the client’s computer systems, which means additional costs as well as the associated burdens on already over-taxed IT personnel. Even worse, parties can no longer hide behind objections, as they may have done before the new rules went into effect, in response to Rule 30(b)(6) depositions or interrogatories directed at ESI.

The buzz word commonly used to describe the initial case management conference under the new rules is “transparency.” Companies are expected to openly disclose information about their computer systems, warts and all. They will need to be prepared to discuss their various backup systems and to identify what data is backed up, how they are backed up, and the periods for which they have retained backup tapes.

Even more frightening, companies may need to explain what they have been doing to preserve potentially relevant information up to and prior to the conference. Courts often find that the duty to preserve is triggered well in advance of the filing of the lawsuit.

Specifically, a CIO needs to have a clear and efficient policy for a company’s ESI archiving to prepare for litigation. A good way to do this is form an e-Discovery team, bringing together IT professionals and the legal team.

Read the full article from The New York Law Journal.  

Repeat Searches For ESI On Back-Up Tapes Causes Problems For Company

Posted by Gregg Mayer on Monday, March 3rd, 2008   

During discovery for electronically stored information (“ESI”), parties on both sides get together early in litigation and often agree on search terms to use for retrieving ESI. This is especially true when the volume of ESI is extensive, or the litigation involves restoring back-up tapes.

This issue proved troubling recently in a lawsuit in Michigan.

The lawsuit Henry v. Quicken Loans, Inc. involves 422 plaintiffs suing Quicken Loans under the Fair Labor Standards Act. The plaintiffs are suing for overtime pay.

Both parties agreed to search terms to locate ESI on back-up tapes owned by the defendant, Quicken. In addition, the plaintiffs – the 422 “loan consultants” who had done work for Quicken – agreed to pay for the search of Quicken’s back-up tapes. It was also agreed that Quicken’s lawyers would monitor the search. A third-party consultant would do the search.

When the consultant utilized the agreed terms in searching Quicken’s back-up tapes, however, Quicken’s lawyers did not like the results. The lawyers worried the retrieved ESI included too much potentially privileged information – communications between Quicken and its lawyers that should not be disclosed.

Consequently, the Quicken lawyers told the consultant to do the search again with changed search terms. Unhappy again, the lawyers asked for a third search, and then a fourth search, and finally settled on the fifth search.

The plaintiffs had no idea about these multiple searches. Since a single search was supposed to cost around $12,000, the plaintiffs’ lawyers were understandably baffled when a bill arrived for $79,965.

According to the court opinion

Plaintiffs’ counsel contends that without their knowledge, Defendants chose to go beyond the scope of the agreed upon protocol with numerous modified searches, resulting in a bill that bears no relation to the parties’ agreements and the Court’s order.

…

While there is no suggestion that defense counsel was acting unethically in serving his client’s interest, defense counsel’s actions exceeded the scope of the ‘direction and control’ powers this Court vested in him in his unilateral and unauthorized modifications…

The court ordered Quicken to pay for the extra searches. In addition, the court ordered the defendant to show cause – a legal phrase essentially meaning to offer legal arguments – as to why Quicken should not have to disclose all of the results from the first search.

If Quicken fails to convince the court that the modified searches were necessary, then all of the email from the first search will have to be disclosed to the plaintiffs, including the email that the lawyers worried about.

Search terms are critical in ESI retrieval and disclosure. Informed parties know what and how ESI is stored. This enables the parties to better communicate early on about what they think should be searched – and how – to avoid facing the issue of having to turn over more email than intended.

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