Carefully Choose Search Protocol In Litigation

Posted by Gregg Mayer on Wednesday, April 16th, 2008   

A recent decision by an Illinois federal magistrate highlights the importance of carefully identifying keywords when searching through electronically stored information (“ESI”) for litigation.

In Autotech Technologies Ltd v. AutomationDirect.Com, Inc., ADC sought ESI related to customer communications from Autotech. After an initial dispute, the parties agreed ADC could use a third-party consultant to search the database. ADC crafted the keyword protocol.

After this search, the results produced approximately 10,000 pages. Autotech wanted ADC to come to its headquarters to review the documents. ADC wanted Autotech to produce everything under a clawback agreement – an agreement that provided Autotech could “clawback” any ESI it determined was not relevant after it was produced.

Unable to resolve the dispute, the parties went back to court. The magistrate ordered Autotech to disclose the 10,000 pages.

After the first review, ADC determined the 10,000 pages did not contain all of the information it wanted. For example, the information did not include the name of the Autotech representative who talked to each customer.

So the parties are back in court, with ADC asking that its consultant be allowed another crack at Autotech’s database.

Autotech countered that it followed ADC’s keyword protocol during the first search. Consequently, the results reflected what ADC asked for.

ADC wanted to sanction Autotech for failing to disclose all of the relevant ESI.

In a March 25 opinion, the magistrate determined that ADC’s consultant could redo the original search to determine if some documents were excluded; however, the consultant could not do a “free-ranging search of the database to determine whether a different protocol will yield the information that ADC now seeks.”

As a result, if ADC’s initial keyword searches were deficient, then they are stuck with the responses. During litigation, the CIO and e-Discovery team must ensure the search of another side’s ESI is comprehensive. As ADC may learn the hard way, if the first search fails, there may not be a second chance.

AMD v. Intel Part Two: The Mistakes Made And The Data Lost

Posted by Gregg Mayer on Friday, March 21st, 2008   

In Part I, we explored the obstacles Intel faced in implementing a massive legal hold.  In this part, we discuss the mistakes made and the data lost as a result of failing to implement a 100-percent effect legal hold across the company.

In this Part II, we explore the mistakes Intel made in trying to implement its legal hold.  Intel blames various mistakes made by individuals - such as failing to notify specific employees about the hold.  

Humans – not the policy – were the problem when Intel discovered it lost thousands of email messages, according to Intel.

These human errors were “misunderstandings or errors by individual employees, with ongoing day to day business responsibilities, working diligently to carry out the complex and unprecedented scope of preservation obligations in this case,” according to the company. It was not an intentional effort to delete email to prevent AMD from seeing them, according to Intel.

Of course, human errors or not, failing to preserve email when a litigation hold is in place will be costly. The party will either wind up paying to restore backup tapes – as Intel is having to do – or worse, the judge will order an adverse inference instruction, possibly even ordering a default judgment. An adverse instruction or other court-ordered sanction is still possible here.

So how much and what email was lost in Intel’s case?

Here’s a breakdown of what Intel acknowledges:

The first problem: Several custodians identified by Intel failed to properly save email messages as they were supposed to do. Some of those individuals failed to archive “sent” items from their email. Others failed to archive email for the period of time required. Still others failed to archive all of the proper email messages. Adding to the troubles, some of the custodians had computer crashes or other technical problems that caused a loss of data.
Consequently, these individual losses resulted in lost email.

The second problem: Some of the “custodians” were not told about the litigation hold by the company’s in-house counsel. This occurred for “newly selected” custodians as the list of custodians evolved. As a result, about 378 employees did not get word of the notice until February and March of 2007.

The third problem: Departed employees. According to Intel, 73 employees left and Intel only captured the hard drives for 60 of them. Thirteen were missed.

Backup sources exist for some of these lost email messages, but it will cost Intel millions to retrieve. Moreover, it appears at least some of the data may be lost forever.

AMD summarizes Intel’s losses as:

(C)ombined with the reckless decision to leave its auto-delete system running after this litigation began, one of Intel’s most fundamental ‘lapses’ was its failure to notify hundreds of its Custodians of their obligation to preserve evidence. All told, 378 of Intel’s Custodians, or 37% of the individuals on its Custodian List, received no evidence preservation instructions until late February or early March 2007 – twenty-one months after AMD and the Class commenced suit – or, in the case of employees who left Intel in the interim, not at all.

Intel has started taking steps to retrieve the data that it can. Without question, it will be expensive.

NEXT FRIDAY: Part Three - Intel’s proposed remedial measures and its cost

Ignorance Is Not Bliss With e-Discovery

Posted by Gregg Mayer on Tuesday, March 11th, 2008   

In an insurance dispute in Colorado, the attorney for the plaintiff claimed he lacked the technical know-how to properly search a DVD for all of the email messages stored on it, resulting in his failure to disclose several email messages to the defendant. The court, explaining incompetence with a computer is no excuse, ordered the email messages disclosed.

The lawsuit, Garcia v. Berkshire Life Insurance Company of America, involves Tina Garcia’s claim against her disability insurer, who refused to pay her benefits from August 2003 to February 2007. As part of its defense, the insurer sought email messages that Garcia sent from her University of Denver email account.

The university burned all of the email messages onto a DVD and provided it to Garcia and her attorney. In turn, Garcia’s attorney disclosed 10 email strings to the insurer, and then claimed there were only 135 additional email messages that did not have to be disclosed.

As it turned out, there were more than 4,000 email messages on the DVD with more than 1,500 attachments. The insurer complained that Garcia and her attorney were hiding evidence.

In response, Garcia’s attorney said he simply was technologically incompetent and had inadequately searched the DVD for the email messages.

The judge was not convinced Garcia and her attorney did all they could, particularly after the insurer had put them on notice that there were significantly more email messages on the DVD than 135:

Plaintiff’s claim that she acted in good faith with respect to the contents of the DVD goes only so far. Perhaps plaintiff’s counsel can be heard to plead technical ignorance or mistake in his initial dealings with the DVD, but by September 21, 2007, upon the receipt of [opposing counsel’s] letter, he was on notice of the potential problem and was obligated to seek competent professional assistance to ascertain the truth about the contents of the DVD. He did not do so, and apparently still has not done so, in view of his expressed doubt, unsupported by any evidence, that the DVD contains substantial additional material.

Consequently, the court ordered in November 2007 that the email messages be disclosed, despite the added costs and burden to Garcia.

Parties must do all they can to fully disclose relevant evidence required under the Federal Rules of Civil Procedure, including being able to thoroughly search and disclose ESI for litigation

In this instance, the consequences were only the costs of going back to correctly reproduce all of the email. In more extreme cases, courts can enter sanctions for failing to disclose evidence, including precluding use of evidence at trial, or even more damaging sanctions, such as an adverse inference instruction for spoliation.

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.”

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.

Court Tells Company To Hire Outside Vendor To Retrieve ESI

Posted by Gregg Mayer on Wednesday, February 27th, 2008   

In a lawsuit involving the movie trilogy The Lord Of The Rings, a court ordered New Line Production, Inc., the distributor of the movies, to hire an outside vendor to search for electronically stored information (“ESI”) needed for the litigation.

The judge in the case seemed more than frustrated that New Line apparently failed to retrieve and disclose all of the ESI needed for the litigation. Rather than allow New Line another chance to redo the search on its own, the judge ordered a separate, outside vendor to come in and do the work – at New Line’s expense. The judge wrote:

New Line’s failure to perform any structured search for emails and other electronic documents from the company’s servers and from individual employees’ desktop or laptop computers requires a different solution. Nor does the Court have any confidence that once again ordering New Line to conduct a good faith search for electronic documents will be any more effective than it has in the past. The Court has determined that, under the circumstances here presented, New Line should be required to retain an outside vendor experienced in electronic document retrieval to collect responsive documents.

As noted previously on this blog , it is important for companies to not just archive ESI, including email, but also to be able to implement solutions that permit cost-effective retrieval. Generally, companies have to pay to produce their own ESI during litigation. The more efficiently a company can retrieve ESI, the less it should cost.

As brief background on the lawsuit, director Peter Jackson’s Wingnut Films is suing New Line for not calculating the movie revenue properly, as reported in The Sidney Morning Herald and The New York Times.

As part of the contentious litigation, Wingnut complained New Line was not disclosing all of the information it should, including ESI. The court agreed. On New Line’s efforts to retrieve ESI, the court summarized the problems:

The testimony of New Line’s custodians demonstrates that New Line’s efforts to locate and collect electronic documents has been less than diligent. Ken Horowitz, who was the designated custodian with respect to documents relating to participant audits of Lord of the Rings and other films, testified at his first deposition that he was not aware of any search for electronic documents on New Line’s servers, on any individual’s desktop or laptop computer, or otherwise…At the second day of his deposition, Mr. Horowitz confirmed that no electronic search had been conducted….

…New Line’s other custodian, Dain Landon, testified that he had undertaken a search of New Line’s servers for documents relating specifically to merchandising agreements. Mr. Landon’s “search” consisted of little more than clicking through various folders on the only two server drives he personally could access…Mr. Landon acknowledged that he did not conduct or arrange for a server-wide search for documents containing the phrase “Lord of the Rings” or any other keywords; indeed, he did not even search for documents with “Lord of the Rings” in the title…

…New Line likewise failed to conduct any search of the company’s email servers for email correspondence containing the phrase “Lord of the Rings” or any other keywords. While some individual employees were asked to collect their emails, others were not; and even those employees who did collect emails were given little or no guidance on where to search (e.g., inbox, sent items, deleted items, archived folders) or how to conduct their search (e.g., keyword searching). Indeed, of the eleven individuals Mr. Landon spoke to in preparation for the second day of his deposition, only three told him that they had even looked for emails, and Mr. Landon had no information regarding how those searches were performed….

With that dismal effort, the court explained what New Line should have done:

At the very least, New Line should have charged its in-house information technology professionals with responsibility to ensure that all of the company’s servers and individual computers were searched, and that they were searched in a manner that was reasonably calculated to capture all responsive documents (e.g., keyword searches of electronic documents and emails). To the extent this could not be accomplished in-house, New Line should have retained an outside vendor…Instead, New Line practically disregarded its obligation to produce electronic documents at all.

Since New Line wholly failed to comply with the court’s order to produce ESI, the court explained that an outside vendor was necessary:

The vendor shall be granted access to New Line’s servers, including without limitation its email server(s), for the purpose of conducting keyword searches for responsive documents and emails. The vendor shall also be granted access to the hard drives from the desktop and laptop computers of specified employees who are connected with this dispute for the purpose of conducting keyword searches. All documents and emails collected by the outside vendor may be reviewed by New Line for privilege and confidentiality designations; however, no documents identified by the vendor may be withheld on relevance grounds.

….The vendor shall prepare a log of all collected documents so that Wingnut can confirm that all such documents are either produced or logged. In the event that the parties are unable to agree upon the identity of the outside vendor, the search protocol, or the individual employees whose desktop and laptop computers will be provided for inspection, those disputes should be promptly submitted to the Court for resolution. New Line shall bear all costs and expenses of the outside vendor.

In short, New Line not only has to redo it ESI disclosures, it also has to pay to let an outside vendor do it. What should have been an efficient retrieval of electronic documents has turned into an e-nightmare.

Courts take the proper disclosure of ESI seriously. With the rapid explosion of email and other ESI, parties must ensure they comply with the Federal Rules of Civil Procedure or face stiff sanctions during litigation. Here, New Line failed to meet its obligations and must pay the consequences.

Company Must Pay To Reproduce Email Messages With Attachments

Posted by Gregg Mayer on Tuesday, February 26th, 2008   

In a contract dispute in New York, PSEG Power New York, Inc., disclosed thousands of email messages to Alberici Constructors, Inc., but a “technical glitch” caused problems with viewing the email attachments. For some reason, the attachments were divorced from the email messages and could not be matched up.

Alberici wanted to see those attachments and a question arose as to who would pay to reproduce the email messages with the attachments.

“Attempting to reunite these documents has been nothing short of a donnybrook for Alberici,” wrote the New York magistrate judge in an opinion last fall. “It has been frustrated if not completely hamstrung in locating these documents.”

Cost estimates to reproduce the email messages were all over the map: PSEG said it would cost more than $200,000; Alberici said it had a vendor that said it could do the work for $37,500. PSEG did not want to use Alberici’s vendor.

Ultimately, the judge said the costs to reproduce the email fell on PSEG:

We acknowledge that discovery production is rarely perfect or ideal, yet this discovery quagmire created by PSEG’s vendor falls woefully short of comporting with the spirit of Rule 34 [of the Federal Rules of Civil Procedure]…The long-held precept on discovery should not be lost on the parties: relevancy does not turn on admissibility at trial but rather whether the disclosed item is calculated to lead to discovery of admissible evidence, and in this case, these emails and their attachments may do just that. In the total scheme of things, re-production is warranted in this case.

The judge said PSEG could either reproduce the email messages with the attachments or go through the mass of hard copies and match them up. Either way, PSEG had to pay. 

The case illustrates the importance of cost-effective archiving and retrieval on the front end to avoid costly problems during litigation. 

The case is PSEG Power New York v. Alberici Constructors.

Who Pays To Produce ESI?

Posted by Gregg Mayer on Wednesday, February 20th, 2008   

Electronically stored information (“ESI”), particularly old email, can be expensive to retrieve if you do not have an effective archiving system. Moreover, if you move email to backup tapes after you anticipate litigation, the costs could skyrocket.

Why? In litigation you often have to pay to produce your evidence and the other side has to pay to produce theirs.

One exception that has evolved with ESI involves the production of inaccessible information on backup tapes if – and this is a big if – the company could not reasonably anticipate the litigation before it moved the ESI to the backup tapes. Under these circumstances, you may be able to shift the cost to produce the ESI to the other side.

One way to avoid ever worrying about this risk is simply to have an efficient, searchable archive where you store all of your email without resorting to backup tapes. But if you do resort to backup tapes for old email, then cost-shifting may be possible, even if it is for only part of the costs.

An illustrative case for cost-shifting is Quinby v. WestLB, a federal employment discrimination case in New York.

In this case, the company wanted to shift the costs of restoring backup tapes for old email to the plaintiff. The company claimed the tapes were inaccessible and costly to restore. As noted above, backup tapes are generally considered “inaccessible,” so they do not have to be produced for litigation unless the other side shows good cause – or, unless the company reasonably anticipated the litigation for which the email is relevant prior to moving them to backup tapes.

In Quinby, the judge found the company could reasonably anticipate litigation for some email prior to moving them to back-up tapes. As explained by the judge:

(C)ost-shifting may be considered concerning the restoration and search of backup tapes because the process is burdensome and costly, the appropriateness of cost-shifting is less clear here because it appears that defendant converted the Former Employees’ e-mails into an inaccessible format after it should have anticipated this litigation.

It cost the company $226,266.60 to restore the backup tapes. In determining whether any of those costs should be shifted to the plaintiff, the judge walked through a series of factors – a legal test – to determine if any of the costs should be shifted. These factors are:

1. The extent to which the request is specifically tailored to discover relevant information;
2. The availability of such information from other sources;
3. The total costs of production, compared to the amount in controversy;
4. The total costs of production, compared to the resources available to each party;
5. The relative ability of each party to control costs and its incentive to do so;
6. The importance of the issues at stake in the litigation; and
7. The relative benefits to the parties of obtaining the information

After reviewing those factors, the judge decided that the plaintiff – the employee suing – would have to pay 30 percent of the costs. The company had to bear the other 70 percent.

For a nice discussion about cost-shifting written by a federal judge, read this article.