All Relevant Employee ESI Must Be Disclosed

Posted by Gregg Mayer on Friday, April 18th, 2008   

As recently discussed on CIOLaw.org , when a litigation hold is triggered, it affects not only the email of a CEO of a company, but also all of the email and other ESI for relevant employees.

This same principle holds true for initial disclosures of ESI at the forefront of litigation, as discussed in the 2007 case of Metro Wastewater Reclamation District v. Alfa Laval, Inc.

In this case, Alfa wanted to see all of the electronic files related to the plaintiff’s employees who worked on a project related to the litigation. The plaintiff complained that the request was “irrelevant, overly broad, overly burdensome, and costly.” In other words, not every employees’ ESI was necessary.

The court disagreed and required the disclosure of all the employees’ ESI. The Federal Rules of Civil Procedure favor a broad discovery of information, the court noted.

Consequently, not only did the plaintiff have to disclose all of the employees’ ESI, it had to pay for its retrieval. This can be a costly venture for an ill-prepared company.

Court Orders Inspection Of Hard Drive After Delays In ESI Disclosures

Posted by Gregg Mayer on Monday, April 14th, 2008   

In a March 26 opinion, a Florida federal magistrate ordered a plaintiff to open up the computer hard drives of various employees so that the defendant could search for responsive email and other electronically stored information (“ESI”).

The plaintiff was also ordered to pay the attorney fees for the various motions to compel that the defendant had to file before being granted access to the hard drives.

Since this is a case where the court had to intervene and order the defendant to open up certain computer hard drives, this case will likely be one of the more important e-Discovery decisions of early 2008.

In U&I Corporation v. Advanced Medical Design, Korean-based U&I filed a breach of contract case in October 2006 against American Medical for failing to pay a balance due for medical equipment. As part of the litigation, both sides sought various ESI, including email sent by U&I employees.

After some haggling over what ESI should be disclosed, U&I belatedly acknowledged that it could not retrieve email from 2004. U&I explained that a “failure of the hard drive caused the 2004 e-mail account to be ‘unloadable’ or unretrievable.” U&I agreed to produce email from 2003, 2005, 2006 and 2007.

However, American Medical discovered that not all of the 2005 and 2006 email was produced because when American Medical subpoenaed a third-party company, that company disclosed various email messages from U&I employees that U&I never disclosed.

In short, American Medical argued that U&I delayed in telling American Medical that its 2004 email was not recoverable, and it failed to disclose all of the email from 2005 and 2006. American Medical sought sanctions.

In response, U&I argued that – despite another company’s production of some email that U&I did not disclose – there was no evidence that U&I deliberately withheld ESI. U&I also noted it disclosed approximately 14,500 documents. In addition, U&I threw out a host of other excuses for failing to disclose all of its ESI, including “language barriers of its employees” and “confusion.”

In weighing the arguments, the court sided with American Medical.

U&I’s assertion that the delay in providing documents to American Medical was caused by the international travel requirements of its employees, server and software problems, confusion, language barriers of its employees and the lack of understanding of the American legal system does not excuse U&I’s tardy and incomplete responses. After all, U&I was the party which filed this lawsuit…At the outset of the litigation, U&I and its counsel had the responsibility to take affirmative steps to ensure that all sources of discoverable information were identified, searched, and reviewed so that complete and timely responses to discovery requests could be provided.

It is not the court’s role, nor that of opposing counsel, to drag a party kicking and screaming through the discovery process. U&I has failed to show substantial justification for its failure and unwillingness to abide by discovery rules and the court’s prior orders…

Consequently, the court ordered U&I to pay American Medical’s attorney fees for bringing the motion to compel. Moreover, the court ordered that American Medical be allowed to inspect the hard drives of certain U&I employees in search for responsive ESI. A forensic examiner would conduct the search.

U&I highlights the importance of maintaining a strong archiving system. When doubts are raised about whether a company has disclosed all of the relevant ESI, then courts are likely to step in and let the opposing side take a look for themselves.

Finding ESI Search Efforts Unclear, Court Requires More Discovery

Posted by Gregg Mayer on Friday, April 4th, 2008   

Under the Federal Rules of Civil Procedure (“FRCP”), parties must disclose relevant electronically stored information (“ESI”) unless that ESI is not reasonably accessible. In order to take advantage of this exception, a party has to be able to document the search protocol it implemented and why some sources are not reasonably accessible.

In short, a court has to know exactly what has been searched and what has not. Moreover, the court has to agree there are good reasons that the ESI is not reasonably accessible.

If any of ESI-search information is unclear, then the court will require further discovery, as a federal magistrate in New York recently did in Baker v. Gerould.

In a March 27 opinion, the court expressed frustration with the lack of information presented by defendants on the efforts to retrieve ESI:

As noted by this Court during oral argument, insufficient information had been presented at that time to determine the adequacy of defendants’ search for the requested emails from accessible sources. Regrettably, the record is no more fully developed now than it was then. Although it is clear that some email communications have been turned over, the source or sources of those communications is not clear. For example, it is unknown whether those emails were recovered from existing hard drives, backup hard drives or traditional files used to maintain paper records. It is likewise unknown whether computer and/or paper files have been searched for all defendants, some of whom are no longer employed…but some of whom are.

Consequently, the court ordered the defendants to identify in writing all of the people who conducted the search. Following those identifications, the plaintiff would be allowed to depose those individuals to investigate the search. After all of that, then the court could determine whether the defendants properly responded to the ESI requests or whether more ESI – including restoration of backup tapes – was necessary.

Equally important to cost-effective retrieval of ESI is the ability to document exactly the steps taken during an ESI search and to sufficiently offer valid reasons why some ESI is not reasonably accessible.

New Opinion Illustrates How Quickly ESI Issues May Proceed in Court

Posted by Gregg Mayer on Wednesday, April 2nd, 2008   

In a court opinion from March, a federal magistrate ordered an expedited forensic imaging of computers relevant to the litigation. In fact, within two days of the March 17 order, the computer servers and other electronic storage devices, including one employee’s laptop, were to be made available to a forensic examiner to make mirror images of the devices.

In the case, XPEL Technologies Corp. v. American Filter Film Distributors, XPEL worried that electronically stored information (“ESI”) could be altered or destroyed just by the day-to-day activities of the defendants’ computer use unless an expedited order permitted an immediate imaging of the computers. XPEL believes most of the relevant ESI was in metadata and other deleted – but still retrievable – files.

The court agreed to expedite the imaging, and it named a forensic examiner to move quickly to copy the servers. In addition, the court ordered that XPEL would pay for the costs of the forensic examiner, explaining:

The forensic images shall be copied and retained by the Forensic Examiner until such time the court or both parties request the destruction of the forensic image files.

The Forensic Examiner will maintain all mirrored images and do so in the strictest confidence, and not disclose any information obtained to unauthorized persons.

With this case as persuasive precedent, parties may more frequently seek to immediately make mirror images of opponents’ servers.

Ex-employee, Company Spar Over Unauthorized Access To ESI

Posted by Gregg Mayer on Thursday, March 13th, 2008   

In a decision this month, a federal judge is considering how to let an employer search an ex-employee’s personal computer in a lawsuit over whether that employee illegally accessed the company’s electronically stored information (“ESI”).

In Equity Analytics v. Lundin, Equity discovered that its former employee, Timothy Lundin, had accessed the company’s Salesforce.com account after he was fired.  Lundin explained he was given the password to the account by a member of Equity’s staff.

Equity wants to search Lundin’s computer, but the two sides cannot agree about how to do it.  Lundin wants Equity to use specified search terms and file types.  Equity wants broader access to the computer.

Interestingly, the judge hearing this case is the same judge who recently dealt with the search term issues of United States v. O’Keefe, discussed here on CIOLaw.org.  The judge has said expert testimony may be needed to determine search terms are sufficient when probing for ESI.

On March 5, 2008, the judge ordered Equity to have its computer forensics examiner submit an affidavit explaining why the limitations proposed by Lundin would render the search inadequate.

The expert shall also describe in detail how the search will be conducted. Armed with that information, supplemented if necessary by a hearing at which the expert will be cross examined, I can make the best possible judgment as to how to balance Equity’s need for information against Lundin’s privacy.

Equity will have until March 20 to submit its expert affidavit. Check back with CIOLaw.org to read the latest developments.

Even Non-Parties To Lawsuits May Have To Retrieve And Disclose ESI

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

Companies do not have to be sued in order to be burdened with retrieving and disclosing electronically stored information (“ESI”) for litigation.

Under the Federal Rules of Civil Procedure, Rule 45 provides ESI may be subject to subpoenas from the court. In general, a subpoena is a legal document that commands that a person or information – such as ESI – be made available for litigation.

Parties to litigation may subpoena information from a variety of relevant sources, including from companies that are not actually named in the lawsuit.

This issue arose last fall in the Louisiana case of Auto Club Insurance Company v. Ahner.

In the case, the Ahners, who were involved in a lawsuit involving damage to their home following Hurricane Katrina, issued a subpoena for ESI to Rimkus Consulting Group, Inc.

Rimkus had investigated damage to the Ahners’ home for Auto Club prior to the lawsuit.

Rimkus argued that it only wanted to produce the information as hard copies, not ESI. Next, Rimkus argued that the ESI was not reasonably accessible. The Ahners wanted the information in electronic format.

First, the court rejected Rimkus’ request to produce only hard copies of the information:

The mere fact that information which as a matter of ordinary course of one’s business is electronically stored has been produced in functional equivalent, such as through hard copy, does not in and of itself excuse a party from producing the requested information in electronic form.
…
Moreoever, the paper copies that Rimkus has deliberately retained in its files are highly unlikely to contain all of the respective material that was generated during its investigation…This type of information may well include, for example, working papers, e-mails requesting clarification, rough drafts and similar materials that are neither incorporated in final reports nor, perhaps, deemed worth of retention in hard copy.

Second, the court rejected Rimkus’ argument that the ESI was not “reasonably accessible.” Rimkus had failed to offer any evidence that retrieving the ESI would cause undue burden or costs. A mere statement by the lawyer was not enough.

The court is cognizant that Rimkus is a non-party with no direct stake in this litigation and that non-parties in particular are entitled to protection from undue burden and expense. However [the Federal Rules of Civil Procedure] impose a burden of proof upon Rimkus to show that the requested electronically stored information is unduly burdensome to produce. Rimkus has offered no evidence of any kind sufficient to satisfy this burden.

CIOs, in maintaining archiving for possible e-Discovery, should keep in mind that a company does not actually have to be named in a lawsuit in order to be forced to retrieve and disclose ESI. Non-parties to lawsuits are subpoenaed all the time. Once ESI is subpoenaed, it must be preserved and produced, unless a company is more successful than Rimkus in quashing the subpoena. Effective ESI management requires the ability to retrieve electronic information at any time.

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).

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.  

E-Discovery In A Criminal Setting

Posted by Gregg Mayer on Thursday, February 28th, 2008   

The Federal Rules of Civil Procedure (”FRCP”) only govern civil proceedings.  Criminal cases have their own set of procedural rules.  Occassionally, however, a federal judge overseeing a criminal case comes across an unusual aspect of procedure and turns to the FRCP for guidance.   This happened recently with an e-Discovery issue in a criminal case.

In United States v. O’Keefe, the defendant, an employee of the Department of State in Canada, is charged with receiving gifts for expediting visa requests for his co-defendant. As part of the criminal case, the government was ordered to search its electronic files for relevant evidence.

O’Keefe complained that the government’s e-Discovery disclosures were inadequate. Specifically, O’Keefe argued the government did not specify what process it used to preserve ESI, did not disclose metadata, and did not use the correct search terms in retrieving ESI for the case.

In the court’s Feb. 18, 2008 opinion, the judge noted that since there was no criminal rule of procedure governing ESI, the court would look to the Federal Rules of Civil Procedure:

In criminal cases, there is unfortunately no rule to which the courts can look for guidance in determining whether the production of documents by the government has been in a form or format that is appropriate. This may be because the “big paper” case is the exception rather than the rule in criminal cases. Be that as it may, Rule 34 of the Federal Rules of Civil Procedure speak specifically to the form of production…It is foolish to disregard [the rules] merely because this is a criminal case, particularly where, as is the case here, it is far better to use these rules than to reinvent the wheel when the production of documents in criminal and civil cases raises the same problems.

I. Preservation Of Government’s ESI 

Utilizing the FRCP, the court looked to the rationale of the FRCP 37(e) – the “safe harbor” provision – to reject O’Keefe’s argument that the government failed to preserve ESI.

The court explained that the government could not be liable for destroying ESI as part of its good faith, routine operation. The government’s ESI retention policy provided for ESI to be put on backup tapes for two weeks, and then those tapes would be reused. No other backup archive existed. The government enforced this policy. As explained in the opinion:

The government’s destruction of evidence pursuant to a neutral policy and without any evidence of bad faith does not violate the due process clause if the evidence was destroyed before the defendants raised the possibility that it was exculpatory and the government had no objective reason to believe that it was exculpatory.

This principle finds its analogue in the Federal Rules of Civil Procedure, which indicate that, absent exceptional circumstances, sanctions will not be awarded for a party’s failure “to provide electronically stored information lost as a result of the routine, good-faith operation of an electronic information system.” Fed. R. Civ. P. 37(e).

Consequently, unless O’Keefe could offer specific evidence that the government destroyed ESI it was “obliged to preserve,” then there was no claim for failure to preserve ESI.

II. Metadata 

On the metadata argument, the court explained that the government appeared to have complied with the FRCP.  The government disclosed the ESI as PDF or TIF images.  O’Keefe had not specifically requested the ESI in its native format with metadata.  As a result, the government’s production in PDF or TIF was appropriate unless there was a specific reason the metadata was needed. The court explained:

Under Rule 34 of the Federal Rules of Civil Procedure, a distinction between documents and electronically stored information is made in terms of the form of production. As established above, a party is obliged to either produce documents as they are kept in the usual course of business or it “must organize and label them to correspond to the categories in the request.” Fed.R.Civ.P. 34(b)(E)(i). But if, as occurred here, electronically-stored information is demanded but the request does not specify a form of production, the responding party must produce the electronically-stored information in the form in which it is ordinarily maintained or in a reasonably usable form or forms. Fed.R.Civ.P. 34(b)(E)(ii). Additionally, a party “need not produce the same electronically stored information in more than one form.” Fed.R.Civ.P. 34(b)(E)(iii).

If one were to apply these rules to this case, it appears that the government’s production of the electronically stored information in PDF or TIFF format would suffice, unless defendants can show that those formats are not “reasonably usable” and that the native format, with accompanying metadata, meet the criteria of “reasonably usable” whereas the PDF or TIFF formats do not.

However, the opinion noted that the government seemed willing to re-disclose the ESI with metadata after O’Keefe complained. If for some reason that did not work out, the judge wrote that O’Keefe should file a motion to compel – a legal maneuver where one party requests the court force another party to do something.  If a motion to compel was filed, the court would then decide whether the government needed to disclose metadata.

III. Search Terms 

Last, the court rejected O’Keefe’s arguments pertaining to the search terms used unless O’Keefe could offer more specific arguments about why they were deficient.  The court explained:

Whether search terms or “keywords” will yield the information sought is a complicated question involving the interplay, at least, of the sciences of computer technology, statistics and linguistics…Given this complexity, for lawyers and judges to dare opine that a certain search term or terms would be more likely to produce information than the terms that were used is truly to go where angels fear to tread.

O’Keefe illustrates the expanding use of ESI in the courtroom. Moreover, O’Keefe highlights the importance of a routine retention policy. When followed, that policy may preclude sanctions during litigation, even in a criminal setting.

« Previous Entries