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.

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.

If Relevance Of ESI On Backup Tapes Is Unclear, Court May Adopt Phased Restoration

Posted by Gregg Mayer on Tuesday, March 25th, 2008   

Companies that have archived electronically stored information (“ESI”) on backup tapes may face the costly consequence of having to restore those tapes if needed for litigation.

Generally, under the Federal Rules of Civil Procedure, ESI that is not “reasonably accessible” does not have to be restored and disclosed unless the other side can show good cause.

A problem emerges when it is unclear exactly what ESI is stored on the backup tapes. Neither side wants to pay for a full restoration only to discover the email on the backup tapes has no bearing on the litigation. On the flip side, if there is relevant ESI and it should be disclosed, then the court will want those backup tapes restored.

One solution courts have implemented is a phased restoration of certain tapes. This happened in AAB Joint Venture v. United States last year.

In this case, involving a contractor suing the Government, the contractor wanted the Government to restore email from backup tapes that were believed to be relevant to the litigation. During the course of the legal discovery, it was unclear whether the government improperly allowed some email to be deleted that should have been preserved.

The Government acknowledged some relevant email may be on the backup tapes. However, the Government complained the restoration was too costly compared to the benefits of any email retrieved.

The court was faced with two questions: (1) should the tapes be restored? and (2) who pays for it if they should?

In the end, the court decided a sample of the backup tapes – picked out by the contractor – should be restored. If those tapes proved relevant, they could restore more.

A phased approach will allow the Court to engage in a more meaningful benefit-burden analysis before determining whether to require cost-shifting or cost-sharing…The Court believes that restoration of one-fourth of the total back-up tapes is warranted.

The Government had to pay for the initial restoration. Once those tapes were restored, the parties could argue if more tapes were necessary and whether the Government would have to pay for more restoration, or if the contractor would have to split the costs.

Temporary ESI Automatically Deleted From Cache Files Did Not Result In Spoliation

Posted by Gregg Mayer on Tuesday, March 18th, 2008   

When a law firm was sued and later accused of spoliation of electronically stored information (“ESI”), the question arose as to whether parties had to a duty to preserve  locally stored cache files on recently used Web pages when litigation is reasonably anticipated?

In this case, Healthcare Advocates, Inc. v. Harding, Farley, Follmer & Frailey, the answer was no: the images temporarily stored in the cache files did not have to be preserved.

It helps to have a brief background of the complicated fact scenario to understand how this lawsuit came about.

Initially, Healthcare Advocates, a patient advocacy organization, sued a competitor for trademark infringement. The Harding law firm represented that competitor.

During the discovery of that lawsuit, lawyers with the Harding firm viewed archived screenshots of the Healthcare Advocates Website using an internet tool that allowed them to see prior versions of the Website.

The Harding firm printed copies of the screenshots and used those images in the litigation between Healthcare Advocates and its competitor.

Healthcare Advocates then sued the Harding law firm alleging the firm hacked into the Healthcare Advocates Website to view protected material. Consequently, by allegedly hacking into the Website and printing screenshots, Healthcare Advocates argued the law firm committed copyright infringement.

In response, the law firm claimed it used a publicly available Website that permitted users to search screenshots of archived Websites. In short, there was no copyright infringement.

Specific to e-Discovery, Healthcare Advocates argued for a spoliation sanction against the law firm for failing to save the internet data temporarily stored in cache files. Generally, cache files are a temporary storage area for frequently accessed data. When a computer accesses a web page, it sometimes stores a copy of the page in its cache.

Healthcare Advocates argues that the images were involuntarily saved in temporary files on the Harding firm’s computers. Thus, the firm’s duty to preserve extended to these temporary files. Since the files are lost, [Healthcare Advocates] alleges that the Harding firm failed to fulfill their duty to preserve. Healthcare Advocates believes that if these temporary cache files had been preserved, they would have been able to determine if the Harding firm used the archived images for any purpose other than what has been alleged or admitted.

Without dispute, the law firm made no effort to preserve the temporary ESI in the cache files. However, the court rejected Healthcare Advocates’ argument:

What the Harding firm should have anticipated was that the images they copied would be relevant, which they did and saved accordingly…The Harding firm had no reason to anticipate that using a public website to view images of another public website would subject them to a civil lawsuit containing allegations of hacking.

Moreover, even though Healthcare Advocates’ attorney had sent a letter to the law firm demanding that nothing be deleted or altered on the firm’s computers, the letter “said nothing about preserving the temporary cache files on these computers,” the court wrote.

Ultimately, the cache files were deleted from the Harding firm’s computers. However, no evidence has been presented showing that the Harding firm was responsible for erasing them. The files were deleted automatically…The cache files may have been emptied dozens of times before the request for production was made…The most important fact regarding the lost evidence is that the Harding firm did not affirmatively destroy the evidence…Very little fault can be attributed to the Harding firm for the loss of these temporary cache files.

Consequently, the court refused to impose sanctions, and ultimately dismissed the lawsuit against the law firm.

Although the facts in this case favored the law firm, as technology changes, and as opinions about what should be preserved change with it, then whether temporary cache files may also be included in litigation holds remains open for debate.

Lacking Ability To Search ESI Does Not Preclude Court Requiring Disclosure

Posted by Gregg Mayer on Friday, March 14th, 2008   

Regardless of a company’s in-house capabilities, courts expect parties in litigation to have the ability to retrieve and disclose electronically stored information (”ESI”) when it is needed for litigation.  

In Kelly v. Montgomery Lynch & Associates, Inc., a lawsuit in Ohio, James Kelly sued Montgomery Lynch under various debt collection acts.

As part of the lawsuit, Kelly requested that Montgomery Lynch search its ESI and determine how many other individuals received the same letter of collection sent to Kelly.

Montgomery Lynch argued it lacked the technological capabilities for a search of that size:

Defendant claims that the discovery request is unduly burdensome because the Defendant’s filing system is not maintained in a searchable way and the information sought would require “manually searching through hundreds of thousands of records.”

Dismissing this argument, the court concluded in its December 2007 opinion that Montgomery Lynch had to retrieve the ESI regardless of its in-house search capabilities:

Even if [Kelly’s] discovery requests pose a burden on the Defendant, this Court finds that the importance of the issues involved outweighs any claim of inconvenience or cost.

Consequently, Montgomery Lynch would have to pay the added costs for a manual search.

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.

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.

Judge warns: ‘You can’t just throw up your hands’ at ESI obligations

Posted by Gregg Mayer on Friday, February 29th, 2008   

In a slow-developing lawsuit in New York, a federal judge recently took the County of Suffolk to task for its “lack of diligence” in disclosing electronically stored information (“ESI”).

In a nutshell: the county at first said it only had two email messages to disclose; then, the county acknowledged that it had email on inaccessible back-up tapes, including several back-up tapes damaged by a water pipe burst; later, the county said the tapes could be restored at a great expense, and the water pipe burst was not so bad; finally, the county hired a vendor that restored more than 2,400 pages of email, most of which needed to be disclosed.

It is a remarkable case of e-Discovery gone awry.

How The Case Developed

The case is Toussie v. County of Suffolk. As brief background, Toussie sued the county in 2001 for a violation of his civil rights for denying him an opportunity to purchase 31 acres of property, according to The New York Times.  A second lawsuit with additional plaintiffs commenced in 2005 and was joined with the first lawsuit.

During the discovery process – a process where both sides disclose evidence to the other side – the county disclosed only two emails. Toussie complained this was insufficient – after all, what business, let alone a county, only has two emails to disclose with so much communication taking place over computers? The court agreed with Toussie.

The court ordered the county to search its servers for email. The county responded it did not have the resources to fully search the back-up tapes. Moreover, it was clear the county did not implement a litigation hold on email once the litigation was underway. This lapse drew the court’s ire at a subsequent hearing:

You can’t just throw up your hands and say we don’t store email in an accessible form and then expect everybody to walk away. The question is, how can a plan be implemented to provide for some production.

Threatened with sanctions

Pressed by the court to do something, the county estimated it would cost nearly $934,000, and take 960 man hours, to retrieve email. The county said hiring an outside consultant would cost between $617,000 and $672,000. In addition, the county said it would take approximately two-and-one-half years to restore all of the email and complete production.

After receiving the county’s estimates, the court scheduled another hearing to try to implement a less costly and time-consuming search. At this next hearing, however, the county lawyers said a water pipe had burst and destroyed some of the back-up tapes. No one had told the other lawyers or the judge of this disaster.

The court threatened a spoliation sanction for the lost email, and the county responded it would hire an outside vendor to restore the tapes that were not damaged. The cost to hire the vendor would range from $418,000 to $963,500.

Following the threatened sanctions, the county was able to restore some tapes on its own. Then, the outside vendor was asked to restore 417 back-up tapes. Of those, the vendor could not restore 9 percent – or 36 tapes. The water pipe burst, it turns out, had only damaged “one tray of tapes,” and other tapes were not recoverable for other reasons, such as formatting problems. (It is worth noting the vendor was able to restore the 400-plue tapes in under 80 days – far less time than the two-and-a-half years the county initially estimated.)

No Spoliation, But Must Pay Attorney Fees

In the end, the vendor retrieved more than 2,400 pages of email messages, of which only 200 were withheld due to attorney-client privilege issues. There were still problems with this ESI disclosure, according to Toussie, and there were still missing email messages. Toussie still wanted spoliation sanctions against the county.

The court concluded, however, that even if there were some missing email messages, that was not enough to warrant a dismissal or adverse jury instruction:

While the evidence is clear that at least 9% of the back up tapes were destroyed and the plaintiffs may be correct that e-mails have been deleted by users, there is no reason to believe that any of those e-mails would have provided any additional support of plaintiffs’ claims.

Accordingly, the plaintiffs have not sufficiently demonstrated that the destroyed/lost emails were favorable or relevant and the motion for a default judgment or an adverse inference instruction is denied.

The county was ordered to pay Toussie’s attorney fees for the e-Discovery debacle.

For another discussion of this case, and to read the court opinion, see the e-Discovery Team blog.

Best Buy Off The Hook – This Time

Posted by Gregg Mayer on Monday, February 11th, 2008   

Best Buy Stores recently stared down the barrel of having to pay more than $120,000 to restore back-up tapes of electronically stored information in a lawsuit that Best Buy had instigated. The district court in Minnesota, however, ruled the tapes are not reasonably accessible and Best Buy won’t have to dig them up unless the other side can show “good cause.”

As background, Best Buy brought a lawsuit against several landlords for a variety of reasons, including breach of contract and fraud.

Separately, in another lawsuit, Best Buy had prepared a database – called the Odom database – of ESI. Subsequently, Best Buy “downgraded” that database while the separate lawsuit against the landlords was pending.

The landlords said there was relevant ESI on the Odom database and Best Buy should have to restore it for the current litigation. Best Buy said it would cost $124,000, plus a monthly storage fee, to restore it. Best Buy’s lawsuit seeks about $800,000 in damages (although that could be enhanced).

The court agreed that Best Buy did not have to preserve the Odom database for the lawsuit against the landlords. Although the database would have had relevant information, the court explained:

The database, however, would have been potentially relevant to virtually any litigation involving Best Buy because of the quantity and nature of the information it contained. Absent specific discovery requests or additional facts suggesting that the database was of particular relevance to this litigation, the court determines that Best Buy did not have an obligation to maintain the Odom database at a monthly cost of over $27,000. Moreover, by downgrading the database, Best Buy did not destroy the information it contained but rather removed it from a searchable format. Therefore, Best Buy did not have a duty to preserve the Odom database as of July 27, 2006, and it need not restore the information to searchable format unless defendants establish good cause.

In other words, the information on the Odom database was likely available from other Best Buy sources and the cost to restore the Odom database was disproportionate to the value of doing it. The landlords needed more “particularlized arguments” – and a showing of “good cause” – before forcing Best Buy to restore the Odom database.

Of course, this case could have gone the other way too. After all, Best Buy admits the ESI was relevant to the case at hand, and although $124,000 is a lot of money, it is conceivably not overly prohibitive for a company the size of Best Buy to pay it.

Read a discussion about the case and the other Odom case too.