As we bid adieu to 2011, the news and entertainment world is a flurry with the year's greatest hits and most memorable, or un-memorable, moments. In the spirit of the season, and with homage to the great David Letterman, here are our Top Ten E-Discovery Lessons as addressed by the courts – and this Blog – this past year:
10. Know Your Responsibilities
In-house and outside counsel have a duty to ensure that their clients comply with e-discovery obligations. In- house counsel's failure to give notice to preserve documents; provide criteria as to what should be saved; review documents being discarded; and failure to review existing document retention policies led to e-discovery sanctions. See "I'm Responsible To Do What?" posted On Aug. 18, 2011.
9. Know When The Duty To Preserve Arises
The duty to preserve electronic evidence arises once a party "reasonably anticipates litigation." Whether and when a party reasonably anticipates litigation depends on many factors, including but not limited to, who within the defendant organization anticipates the litigation, the clarity of the threat, and when privileged documents are created and labeled as such. See "When Does The Duty To Preserve Electronic Evidence Arise," posted on Aug. 10, 2011.
8. Know When To Issue A Litigation Hold
A litigation hold should be issued when a party is reasonably aware that it will be a party to litigation. For a plaintiff, triggers could include filing a complaint, seeking advice of counsel, or sending a cease and desist letter. For a defendant, triggers could include receiving a summons or complaint, receiving official notice of a government investigation, or receiving notice of an accident, or receiving discovery requests. See "Litigation Holds, Take 1," posted on Aug. 12, 2011.
7. Know What A Litigation Hold Should Cover
A Litigation Hold should describe the litigation in general terms with understandable language, and avoid legal terms at all costs. It should broadly state where relevant data and information could be located and it should provide instructions on how to preserve relevant information. The consequences of non-compliance and the importance of not destroying or altering relevant information should be discussed. See "Litigation Holds, Take 2," posted on Aug. 16, 2011.
6. Know Your Sources Of Potentially Relevant Information
Explore all types of data. For example, this year, courts in Pennsylvania ruled that text messages and Facebook posts are discoverable. See "When Are Text Messages Admissible," posted on Oct. 7, 2011; "Post At Your Own Risk," posted on Dec. 5, 2011. See also When An Employee Tweets, posted on Sept. 7, 2011.
5. Know The Standards Governing Production And How They Are Applied
Courts have applied the proportionality standard with much variation in 2011. For example, in Pippins v. KPMG, the court ordered the defense, who had already spent over $1,500,000 in preservation costs, to preserve the hard drives of over 7500 potential class members. The court reasoned that there were too many unknowns, such as the ultimate length and cost of preservation, the relevance of the information on the hard drives, and the outcome of the motion for class certification to allow the hard drives to be destroyed. See "Weighing Burdens And Benefits In Hard Drive Preservation Dispute," posted on Oct. 31, 2011.
In I-Med Pharma Inc v. Biomatrix, Inc., by contrast, the court did not require the plaintiff to produce documents from "unallocated space" (i.e., the area where deleted files and temporary data are stored) because of the overwhelming cost in terms of time and money to do so and because the requesting party failed to show a likelihood that relevant and non-duplicative information would be recovered. See "The Importance Of Negotiating With Your Adversaries," posted on Dec. 23, 2011.
4. Know The Consequences Of Non-Compliance
Sanctions in the form of adverse inferences, admitted facts, default judgment and fines continued to be levied in 2011. For example, the deliberate destruction of evidence despite knowledge of a Litigation Hold provided grounds for a default judgment. See "Document Preservation: Spoliation And The Ultimate Sanction," posted on Nov. 14, 2011.
Another court, faced with defendants who were "unsophisticated in the requirements of litigation and preservation" rather than willfully destructive and who produced 7 computers, 10 hard drives, and 23 CDs of documents, concluded that the plaintiff had "plenty of information upon which to pursue their claims" and required a stronger showing of bad faith before granting a default judgment. See "Document Preservation: Spoliation And The Ultimate Sanction," posted on Nov. 14, 2011.
A defendant's refusal to disseminate a Court Order to preserve electronic evidence led to an adverse inference and a presumption of relevance when electronic discovery is willfully destroyed. See "E-Discovery Abuses Result In Permissive Adverse Inference Instruction," posted on Dec. 23, 2011.
A defendant who failed to: issue a litigation hold; conduct any email search; or seek its IT department's assistance; and, instead, instructed employees to delete electronic documents at least ten times during the litigation was fined and ordered to file a copy of the court's memorandum and order with its first pleading or filing in every case in which the defendant was involved for the next five years. See "Ensuring Discovery Compliance: Sanctions Relating To Past, Present And Future Adverse Parties," posted on Sept. 22, 2011.
3. Know The Electronic Discovery Obligations of Non-Parties
In Tender v. Cremer, New York's Appellate Division ruled that while a non-party need not provide discovery of ESI from sources that are not reasonably accessible because of undue burden or cost except upon a showing of good cause, such good cause exists when the information at issue goes directly to the plaintiff's claim. Under Tender, nonparties served with subpoenas for deleted ESI may not rely on the fact that the data has been deleted in the course of its normal business as a means for avoiding the costs of complying with the subpoena. Instead, the nonparty should undertake an active investigation into whether the data can be retrieved, the difficulty of such retrieval and the concomitant costs. See "Cost-Benefit Analysis Adopted By The New York Supreme Court For Determining When A Nonparty Must Undertake The Burden And Expense Of Recovering Deleted ESI," posted on Sept. 27, 2011.
2. Know When Electronic Discovery Costs Can Be Recovered
Over $500,000 in costs related to processing native files, restoring back-up tape files, hosting and storing documents in electronic databases, scanning hard copy documents, de-duplicating documents, and filtering documents to capture the documents containing the agreed-upon search terms were awarded to prevailing defendants. See "Prevailing Parties May Recover E-Discovery Costs Under The Federal Rules," posted on Aug. 30, 2011.
Under 35 U.S.C. § 285 (which allows the court to award a prevailing party in a patent dispute reasonable attorney's fees in "exceptional cases"), a plaintiff was sanctioned nearly $500,000 for litigation misconduct after adopting a policy that it would not retain relevant documents. See "Cost Recovery Toolbox: Exceptional Cases under 35 U.S.C. § 285," posted on Aug. 19, 2011.
28 U.S.C. § 1920, similarly, was used to reimburse successful defendants for over $367,000 in e-discovery costs. These costs included those incurred by third-party vendors to produce the requested electronic documents. The court deemed these services to be "an indispensable part of the discovery process" and their costs to be recoverable. See "Recovering E-Discovery Costs In Federal Court," posted on June 16, 2011.
1. Know Thyself
Know the rules, your obligations, and when they are triggered. Know your company and the types of ESI you produce and store. Know how to be flexible and transparent with the E-Discovery process to comply with the rules in a manner that is reasonable, proportional, and cost effective.
It has been our pleasure to bring you this E-Discovery Law Review this year and we look forward to continuing to keep you up to date in 2012. Please accept our best wishes for a happy and healthy New Year and, as always, Happy Reading!
www.cozen.comThe content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
