AMD v. Intel Part One: A Look At The ‘Largest Electronic Production In History’

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

Introduction 

AMD v. Intel is one of the best known e-Discovery cases currently underway. Here is a quick summary of the case so far: AMD sued Intel in 2005 for antitrust violations, Intel destroyed or lost email that it was supposed to save under a litigation hold, Intel is going through a remediation plan to restore the email (although it could still face sanctions from the court), and now the New York Attorney General is exploring antitrust violations against Intel.

It’s a nasty case.

From an e-Discovery perspective, AMD v. Intel illustrates how costly it can be for big companies to implement massive legal holds across hundreds – if not thousands – of employees. Millions of email messages pass through large companies every day. Sorting through the email during litigation, preserving email that should be preserved, is a monumental task. The breadth of the ESI is simply staggering.

One of the lawyers involved in the AMD v. Intel litigation in Delaware said the case could involve “the largest electronic production in history or maybe this will be the case that proves you can’t do it,” according to the Remediation Plan filed by Intel in 2007.

In a three-part series of posts, CIOLaw.org, using court filings in this case, will look at the efforts made by Intel to preserve its millions of email messages, what mistakes were made, and how Intel has proposed to remediate the problem.

The court approved Intel’s Remediation Plan on October 22, 2007. However, AMD may still move for sanctions – including a spoliation finding – after the remediation is complete. AMD has already said Intel has not been forthright about the amount of data lost.

It is unlikely Intel can restore every lost message. A spoliation finding – such as an adverse inference instruction to the jury – could be terrible for Intel. Recall Zubulake v. UBS Warburg, a landmark e-Discovery case in which a spoliation finding propelled the jury to award $29 million in damages against UBS. The case forewarns that millions – if not billions – could be lost for spoliation.

Trial in AMD v. Intel is set for April 2009.

Part One: Intel’s Implementation Of Its Litigation Hold

AMD filed its lawsuit June 27, 2005. Intel says it began implementation of its legal hold on June 28.

A litigation hold is a duty placed upon a company to preserve all relevant information, including the all of the email passing in and out of the company.

In 2005, Intel had 100,000 employees working at 124 Intel facilities. They were spread over 57 countries. For IT, Intel maintained 79 IT sites in 27 different countries. Intel employed 9,500 IT professionals.

Intel estimated the company generated as many as 4.6 million email messages per day.

Once a litigation hold was in place, Intel was tasked with retaining all of the email and other ESI related to the litigation.

AMD argues all Intel had to do was turn off its auto-delete policy and the emails would have been retained. On the other hand, Intel argues that it did have a workable retention policy, and the policy was not the problem. Fully implemented, the policy would have worked, according to Intel. The problem was “human error,” according to Intel.

Here’s a list of what the company did to preserve email after the complaint was filed June 27, 2005:

The day after the complaint was filed, Intel began to preserve a company-wide snapshot of email and other electronic documents stored on Intel’s servers as of the week the complaint was filed (“Complaint Freeze Tapes”).

Two days after the complaint was filed, Intel sent a hold notice bulletin to 4,000 Sales and Marketing Group employees with instructions to retain documents related to competition with AMD and competition concerning the sale of CPUs generally.

Four days after the complaint was filed, Intel distributed a more detailed litigation hold notice to 629 employees, and has now provided such notices to approximately 1,500 employees.

Within days of the filing of the complaint, Intel began collecting the electronic and hard copy documents from certain employees – and has now collected materials from hundreds of its employees.

In the Fall of 2005, Intel began a process of preserving, on a weekly basis, the backup tapes containing emails of employees identified as having potential relevance to the lawsuit (“Weekly Backup Tapes”). These tapes were not the primary preservation method, but as a mechanism to fall back on in the event documents could not be obtained directly from the individual employees who originally generated or received the emails.

More recently, as an additional layer of backup, Intel purchased and implemented a new email archive system designed to capture and preserve automatically all incoming and outgoing email messages of currently employed custodians who have been identified on Intel’s Custodian List.

As noted in Intel’s court filing, the company sent a “detailed litigation hold notice” on July 1, 2005 to 629 employees. These employees were determined to have specific information that could be relevant to the litigation.

By August 2005, approximately 848 individuals had received retention notices. Over the next two years, Intel continued to send more retention notices and the list grew to approximately 1,500 employees. Paralegals were dispatched to offices in foreign countries to help retain email.

As a result, Intel claimed its efforts preserved “hundreds of millions of pages of e-mails and other electronic materials.”

On the flip side, Intel’s “lapse” in its retention policy, as the company calls it, resulted in Intel’s acknowledgment in March 2007 that email messages were lost. AMD called it a “stunning public admission.” AMD argues:

By any measure, Intel has allowed an immense loss of relevant evidence to occur during the course of this litigation…These were not the common accidental and inconsequential losses of electronic evidence that often occur in litigation…Rather, they are losses of a nature and scope as to call into question Intel’s entire document preservation scheme.”

No dispute exists that Intel’s efforts failed to preserve all of the email. According to Intel, here are some of the hurdles they faced from the outset:

Intel not only had to save relevant historical information relating to AMD’s allegations (which it did with the Complaint Freeze Tapes and the prompt hard drive harvesting), but it had to retain an enormous volume of electronic material generated by hundreds of Intel employees on a forward-going basis;

The number of custodians required to retain documents on a going forward basis was enormous, the relevant document requests numbered in the hundreds, and it was clear from the outset that most of the those custodians would never have to produce documents for the case;

Intel had to keep documents for custodians spread across six different continents;

Shortly after this litigation began, Intel, in an effort to cut costs as a result of the fierce competition in the semiconductor market, carried out a significant reduction in work force; many of its layoffs hit sales, marketing and information technology, and that made the job of document retention more complex;

This was a case of unprecedented proportions, for which Intel had to develop practical solutions as it went along; and

This effort had to be made in the context of rapidly evolving legal and technical standards and solutions

Intel was unable to implement a 100-percent effective litigation hold. Significant email was destroyed or lost.

Although nothing is certain, spoliation sanctions are still possible at a future point in the litigation.

NEXT FRIDAY: Part Two - What Mistakes Were Made And How Much Was Lost

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