Are you competent to handle discovery of electronically stored information?

The California Bar now says e-discovery matters, and you must be competent to handle it

2014 October

The Foundation for Scientific and Industrial Research recently announced that approximately 90 percent of all electronic data in the world has been created in the last two years. Furthermore, numerous studies suggest that over 98 percent of information is now created, transmitted and stored electronically. These stunning statistics clearly illustrate why electronic information cannot be ignored by counsel – both before and during litigation.

In fact, this year, The State Bar of California Standing Committee on Professional Responsibility and Conduct tentatively approved Proposed Formal Opinion Interim No. 11-0004 which states that “[a]n attorney’s obligations under the ethical duty of competence evolve as new technologies develop...” and that “[a]ttorney competence related to litigation generally requires, at a minimum, a basic understanding, and facility with, issues relating to…the discovery of electronically stored information…” The proposed opinion cautions that “such competency requirements may render an otherwise highly experienced attorney not competent to handle certain litigation matters involving ESI” and that in such a situation an attorney has only “three options: (1) acquire sufficient learning and skill before performance is required; (2) associate with or consult technical consultants or competent counsel or (3) decline the representation.”

Below is a summary of some e-discovery basics to get you started:

What is ESI?

The California Code of Civil Procedure (herein “CCP”) defines electronically stored information (“ESI”) as “information that is stored in an electronic medium.” (CCP § 2016.020 (e)). The term “electronic” is defined as “relating to technology having electrical, digital, magnetic, wireless, optical, electromagnetic, or similar capabilities. (CCP § 2016.020 (d)). In contrast, the Federal Rules of Civil Procedure (“FRCP”) define ESI as “including writings, drawings, graphs, charts, photographs, sound recordings, images, and other data or data compilations – stored in any medium from which information can be obtained either directly or, if necessary, after translation by the responding party into a reasonably usable form.” (FRCP 34(a)(1)(A)).

ESI includes a wide variety of information such as e-mails, text messages, word documents, spreadsheets, presentations, social networking content, images, videos, and sound files. ESI may be found on various devices and locations including smart phones, desktop computers, laptops, iPads, iPhones, tablets, GPS devices, ATM machines, flash drives, cloud storage (e.g., DropBox, Google Docs, iCloud), social media accounts (e.g., Facebook, LinkedIn, Twitter), or other cloud-based services such as Skype (voice-over-IP service and instant messaging client) and RingCentral (cloud-based phone and fax system).

It is important to note that the majority of ESI is never reduced to paper. Furthermore, ESI contains information that its paper counterpart does not: metadata. Metadata is additional information embedded in a file that reveals information about the file itself, such as who created the file, the location where the file is saved, and the exact date the file was created, accessed, or altered; information which can help authenticate the file or establish material facts. These distinctions further illustrate why ESI is particularly valuable in litigation.

E-discovery

Electronic discovery (“e-discovery”) is the process of identifying, preserving, collecting, preparing, reviewing and producing ESI. (The Sedona Conference Glossary, Fourth Edition, (2014)). In principal, e-discovery is no different from “regular” discovery − the goal is to gather information related to a lawsuit from other parties and non-parties.

In federal courts, e-discovery is governed by the FRCP which was revised in December 2006 to address e-discovery. In California state courts, e-discovery is governed by the California Electronic Discovery Act (C.C.P. § 2031, 2016, 1985 et seq., 1985.8) (“California EDA”) which was signed into law in June 2009. For the most part, the California EDA was modeled after the FRCP e-discovery provisions, with some exceptions. Counsel should also consult applicable local rules that may apply.

What follows is a general outline of the e-discovery process based, in part, on the Electronic Discovery Reference Model (published by EDRM, a leading standards organization in the field of e-discovery; www.edrm.net) and the California and federal rules. In practice, some of these steps may overlap, recycle or change.

Identification

Historically, governments, businesses and corporations were typically the only ones creating and storing large volumes of ESI. From a litigation standpoint this meant that individuals (and small businesses) had little to worry about in terms of identifying, preserving and producing ESI – as well as the associated sanctions for failing to do so. However, this is no longer true. Whether they know it or not, individuals generate voluminous amounts of ESI on a daily basis through their use of computers (in the broad sense of the term), the Internet, mobile apps, social media and cloud-based services. Consequently, there has been a significant increase in the amount of ESI requested from and produced by, individuals − particularly in the form of social media and mobile phone content. Therefore, the identification and preservation of this information is crucial. Counsel should focus as much attention on their own client’s ESI as to that of defendant and non-parties.

Duty to preserve

The duty to identify and preserve potentially relevant ESI is triggered when litigation is reasonably anticipated. For plaintiffs’ counsel, this duty may trigger before filing of a lawsuit or even, depending on the facts, as soon as the client signs a retainer agreement. Counsel must immediately begin ascertaining the scope of potentially relevant ESI to assure its preservation. To accomplish this, counsel must first determine the “who, what, when, where and why” of the client’s case. It is important to keep track of the client’s potential claims, relevant date ranges and time frames, important locations, key players, electronic devices and sources where the information may be stored. This information will enable counsel to better evaluate what ESI may exist, where it may exist and how much of it may be relevant.

To help determine the scope of a client’s potentially relevant ESI, counsel should consider propounding comprehensive discovery on the client – even before filing a complaint. Here, the words “propound” and “discovery” are not to be given their formal meaning. In this context, they are simply used to suggest that counsel give the client a written assignment asking them to identify and describe their use of things such as the Internet, computers (use a broad definition), electronic devices, smart phones, mobile apps, social media accounts and cloud-based services (e.g., Dropbox). Counsel should also ask the client to create a written inventory of electronic devices and online accounts the client uses, along with associated usernames and passwords. If possible, this assignment should also be given to the client’s significant other and immediate family members.

This “discovery” will accomplish several goals: it allows counsel to (a) gather additional information to analyze the case adequately; (b) create an inventory from which counsel can determine what ESI and storage devices need to be preserved; (c) identify individuals and data custodians who may possess relevant ESI; (d) develop a list of keywords and concepts which may be used to identify relevant ESI; (e) educate the client on how their “private” ESI (particularly social media content) may not be so private when they are a party in a lawsuit; (f) draft detailed preservation letters to potential defendants and non-parties and (g) will serve to assist plaintiff’s counsel when they receive a preservation letter from the defendant and/or written discovery seeking ESI.

The client may also be familiar with the defendant’s, or non-party’s, potentially relevant ESI. This may be particularly true, for example if the client is defendant’s former employee. Examples of potential non-parties include companies which provide “cloud computing, SaaS, off-site company storage facilities, co-location data centers, third-party data warehousing, or third-party tape storage (i.e., Iron Mountain, Recall, etc.).” (www.edrm.net).

Additionally, counsel may be able to ascertain what potentially relevant ESI defendants and non-parties may have from publicly available information (e.g., company’s Web site). Counsel can also supplement this information with the deposition of defendant’s person most qualified on this subject (deposition witness pursuant to CCP § 2025.230; FRCP 30(b)(6)). Additionally, crucial information may be obtained with document requests seeking defendant’s, or non-party’s, records retention policy and schedule, e-discovery response plan, computer system lists, data maps or diagrams, IT policies that may impact discovery and organization charts. (www.edrm.net).

Taking steps to preserve

Client’s ESI. Once the plaintiff’s potentially relevant ESI (and their location) have been identified, counsel must take steps to preserve the client’s information. Counsel should send the client a preservation letter clearly explaining his/her duties to preserve relevant information. The client can also be asked to sign an agreement confirming that they will not modify or delete any content on social media accounts, electronic devices or computers until steps have been taken to preserve that information. However, it is ultimately counsel’s duty to ensure the plaintiff’s compliance by preserving the ESI at their office if the requisite expertise is available, or hiring a professional. Preservation letters should be sent to anyone who may have the client’s relevant ESI, including non-parties. These non-parties should also be interviewed in order to gain a better understanding of where/how they store the ESI.

If counsel fails to adequately identify and preserve the plaintiff’s potentially relevant ESI, counsel, and/or the client, may be found guilty of spoliation – potentially crippling the plaintiff’s case and provoking sanctions, including adverse-inference instructions to the jury. For example, in Gatto v. United Air Lines, Inc., (2013) U.S. Dist. LEXIS 41909, 2013 WL 1285285 (D.N.J. Mar. 25, 2013), the Court gave an adverse inference instruction to the jury when it found that the plaintiff had failed to preserve ESI contained in his Facebook account. The plaintiff had deactivated his Facebook account, and the account was automatically deleted after a certain amount of time. Though the plaintiff argued that he was not to blame since he merely deactivated the account as opposed to actually deleting it, the court still found spoliation.

Defendant/Third-Party’s ESI. Counsel must send preservation letters to non-parties and potential defendants who may have relevant ESI as well. While at this early stage it is inevitable that the preservation letter will be somewhat broad, counsel should be sure to provide enough information regarding their plaintiff’s claim(s) to trigger a duty to preserve potentially relevant ESI. Once the duty to preserve is triggered, defendants face the possibility of sanctions for their failure to preserve potentially relevant ESI. For example, in the employment-discrimination case Zubulake v. UBS Warburg LLC, (2004) 229 F.RD. 422 (S.D.N.Y. 2004), the plaintiff obtained a verdict totaling $9 million in compensatory damages and $20 million in punitive damages after the court gave the jury an adverse-inference instruction because defendant spoliated potentially relevant ESI.

Identification and preservation of potentially relevant ESI is arguably the most important step of the entire e-discovery process, and the plaintiff’s case, because of the ease by which it can be modified or deleted (along with its valuable metadata). For example, destruction of ESI can result from willful or accidental conduct, automatic deletion due to data storage limitations (e.g., security cameras) or pursuant to record-retention policies.

Unfortunately, once ESI has been destroyed it can be extremely costly, if not impossible, to retrieve. While the California and federal rules both permit sanctions for a party’s failure to produce responsive ESI, they also offer a “safe harbor” precluding sanctions if the responding party’s loss of responsive ESI is due to routine, good-faith operation of its electronic information systems. (See, CCP §§ 2031.060(i)(1), 2031.300(d)(1); FRCP 37(e)). (Note: counsel should keep an eye on currently proposed amendments to FRCP 37(e) concerning sanctions and spoliation.)

Therefore, the preservation letter should also request the halt of any business routines that may destroy potentially relevant evidence. Specifically request that the preservation obligations reach all custodians of discoverable information. With an increasing number of employees using their own devices for work, counsel should be mindful that relevant ESI may also be located on these non-company devices. In the event counsel has good cause to believe that sending a preservation letter may result in the intentional destruction of evidence, counsel should consider seeking a temporary restraining order instead.

Meet and confer

In California state courts, the parties must meet and confer regarding the specific topics relating to e-discovery no later than 30 days prior to the first case management conference (“CMC”). (See, CRC 3.724, 3.727). However, the federal rules require the parties to discuss e-discovery matters no later than 21 days before the first Rule 16(b) scheduling conference (i.e., no later than 99 days after the complaint is served). (See, FRCP 26(f)(3)). (For a comprehensive list of what must be discussed at this early meeting, see, CRC 3.724 (8); FRCP 26(f)(3)).

At this meeting, the parties will discuss a variety of e-discovery issues such as what relevant ESI the parties have and how they intend to preserve, collect and produce the information. Counsel will also discuss any privilege or protection issues, set timeframes for the discovery, discuss whether the ESI is reasonably accessible, the technical requirements of producing or reviewing files in native format and any other issues related to e-discovery. Therefore, it is essential that counsel be knowledgeable about the plaintiff’s ESI and production capabilities.

Additionally, the parties should discuss the methods for asserting or preserving claims of privilege or attorney work product, confidentiality, privacy, trade secrets, or other proprietary status of information relating to a party or non-party, including whether such claims may be asserted after production. (See, CRC 3.724; FRCP 26(b)(5)(B)). The parties can formalize these agreements in the form of a “clawback” agreement. In order to help reduce e-discovery disputes, counsel should request to have all agreements reached at this meeting included in the court’s scheduling order.

The federal rules also require the parties to make initial disclosures within 14 days after the Rule 26(f) conference unless there is an objection, a different time set by stipulation between the parties, or a court order. (See, FRCP 26(a)(1)(C)). (Note: The Federal Court for the Northern District of California offers guidelines for the discovery of ESI and a handy ESI checklist for use during the Rule 26(f) meet and confer process at www.cand.uscourts.gov/eDiscoveryGuidelines)

It is important to note that California permits the parties to commence discovery prior to this early discussion. Plaintiffs can commence discovery 10 days after service of the complaint or an appearance by defendant. (See, CCP § 2031.020 (b)). Defendants can commence discovery at any time. As a result, e-discovery issues are likely to come up much quicker under the California rules, potentially resulting in e-discovery disputes and motions practice prior to the early meeting and CMC. The parties are likely to deal with motions to compel or protective orders long before the CMC – another reason why counsel should determine, early on, what ESI is relevant, where it is located and how it is stored.

Discovery requests

State and federal rules address e-discovery in an inspection demand and provide that a party can obtain ESI by inspecting, copying, testing or sampling. (CCP § 2031.010 (a); FRCP 34(a)(1)(A)). Further, a party requesting ESI may request the files be produced in “native format” with metadata. (CCP § 2031.030(a)(2); FRCP 34(b)(1)(C)). Native format is a file format in which the file was originally created, such as .doc for Microsoft Word or .psd for Adobe Photoshop, which preserves the file’s metadata so that counsel can “mine” the file for additional data.

If the responding party objects to the requested form of production, the intended form of production should be stated in the discovery responses. (CCP § 2031.280 (c); FRCP 34(b)(2)(D)). If the demand for production does not specify a form for producing ESI, a party must produce it in a form or forms in which it is ordinarily maintained or in a reasonably usable form or forms. (CCP § 2031.280 (d)(1); FRCP 34(b)(2)(E)(ii)).

After production in the form specified by the requesting party, or the form chosen by the responding party if no method of production is specified, the responding party need not produce the same ESI again in another form. (CCP § 2031.280(d)(2)). For example, if the requesting party does not request the ESI be produced with metadata, the court is unlikely to allow a request for it at a later time. (Autotech Techs. Ltd. P’Ship v. AutomationDirect.com, Inc., (2008) 248 F.R.D. 556, 557 n.1 (N.D. Ill. 2008)).

Reasonably accessible. Both federal and California rules address requests for ESI that a party asserts is not “reasonably accessible.” The court may consider shifting costs relating to production of ESI which is not reasonably accessible. Unlike the federal rules, California rules require the responding party to “identify in its response the types or categories of sources of electronically stored information that it asserts are not reasonably accessible.” (CCP § 2031.210(d)).The responding party may also move for a protective order on the same grounds.

The federal rules provide that “a party need not provide discovery of electronically stored information from sources that the party identifies as not reasonably accessible because of undue burden or cost.” (FRCP 26(b)(2)(B)). The federal rules place the burden on the propounding party to bring a motion to compel. The responding party must then make a showing of undue burden or cost. However, though not required, if counsel is objecting to a request for the production of ESI on the grounds that the information is stored in locations that are not reasonably accessible, counsel is well advised to specifically identify the sources of the ESI and explain why it is not reasonably accessible. (Note: counsel should keep an eye on currently proposed amendments to FRCP 26(b)(1) concerning proportionality).

Although it is always sound practice to avoid drafting overbroad discovery requests, this is especially true when seeking ESI. Given the sheer amount of ESI usually available, overbroad requests will more than likely be met with objections and disdain from the judge. Therefore, counsel should not ask for more than that which can be reasonably defended in a motion to compel or in opposition to a motion for a protective order.

Collection

Collection involves gathering, from various sources, all the relevant ESI which may be responsive to a requesting party’s discovery requests. Collection must be conducted in a manner consistent with best practices including capturing metadata. This process may be scrutinized and must be legally defensible, proportionate, efficient, auditable, and targeted. Evidentiary concerns require that such things as chain of custody be well-documented to facilitate the authentication process of this information at trial. Depending on the volume of ESI, and the technical capabilities of counsel’s office, this step may require hiring a professional.

Processing

Once the relevant ESI has been collected, it needs to be processed and indexed using special software to make it searchable. Once the ESI is searchable, it can be put through multiple searches using criteria such as keyword, custodian, date ranges, and time frame, to extract relevant ESI that is responsive to the discovery requests. Counsel may have already established these criteria during the mandatory meet and confer/ early meeting of counsel or they may have been established by court order.

Some other examples of processing methods which narrow ESI to those documents which are responsive include:

• Concept search: a search method that uses word meanings and ideas, as opposed to the actual word itself, to locate ESI related to a particular concept;• De-duplication: compares files to remove duplicates; and• Predictive coding: a relatively new type of technology-assisted review that attempts to “learn” how to make decisions regarding the responsiveness of documents, based − in part − on a sample of human decisions made on a smaller set of documents.

Knowledge of the various processing methods allows counsel to participate effectively in tailoring the processing to the specific needs of the case. Regardless of which methods are used, it is important for the responding party to exercise some quality control by inspecting the responsiveness of the documents being output. The processing criteria can then be refined (e.g., using different keywords) until the process is outputting the desired information. It is important to be patient and thoughtful. Effective processing will reduce the number of documents required to be reviewed, thereby reducing the associated costs.

Review

Document review is a crucial, and potentially expensive, part of e-discovery. Obviously, there are different steps which will need to be undertaken for reviewing documents in preparation for production as opposed to reviewing documents produced by opposing counsel. However, “the common thread is the need (a) to understand the scope of the review, (b) to put in place supervision and procedures for managing the reviewers and (c) to select the appropriate professional, tools and platform for the review.” (www.edrm.net).

This step should begin with eliminating documents that are known to be irrelevant. Professionals can be hired to help automate this process so that each document does not have to be reviewed individually. Next, it is necessary to review the documents that need to be produced (or which have been produced by opposing counsel). The producing party will need to review the documents for potential privileges (e.g., attorney/ client communication). Documents should also be reviewed for confidentiality and privacy issues, and any necessary redaction should be applied. The requesting party will review documents for responsiveness, completeness and to determine if additional requests for production are necessary.

Analysis

Analysis should be conducted throughout the pre-discovery and discovery phases of the case. It is an ongoing process which involves understanding the issues and facts of the case, constant exploration of the universe of potentially relevant ESI, and examination of each step in the e-discovery process to ensure effectiveness and efficiency. There may be multiple times throughout the e-discovery process where it is necessary to go back to an earlier stage. For example, as ESI is processed and analyzed, it may become apparent that a keyword needs to be added or removed from the search process, requiring counsel to return to the identification, preservation and collections stages to recapture information including the new keyword.

Production

The production of data involves delivering the relevant ESI to the requesting party. Negotiations about the form of production should have already taken place by the time documents are being prepared to be produced. If a party inadvertently produces ESI to which a claim of privilege is made, the producing party should advise opposing counsel. In California, opposing counsel must immediately sequester the information and either (a) return all copies back to the producing party or (b) file the documents at issue with the court under seal for determination. A request for a ruling on the issue of privilege must be made within 30 days. (CCP § 2031.285). Until there is a court ruling, the requesting party cannot use or disclose the information. If the information has already been disclosed by the receiving party, that party must take reasonable steps to retrieve it. Federal rules also state that inadvertent disclosures do not operate as a waiver if “(1) the disclosure is inadvertent; (2) the holder of the privilege or protection took reasonable steps to prevent disclosure, and (3) the holder promptly took reasonable steps to rectify the error, including (if applicable) following Federal Rule of Civil Procedure 26 (b)(5)(B). (See, Federal Rules of Evidence 502(b)).

Conclusion

Given the voluminous, and technical, nature of electronically stored information, e-discovery can appear overwhelming. However, with significant advances in technology, the e-discovery process has become increasingly streamlined and efficient. Additionally, new search technologies, such as predictive coding, continue to increasingly narrow document review to documents that are more likely to be responsive, saving significant time and expense. Working knowledge of available tools and technology is a must for counsel who wishes to continue practicing competently in this ever-increasing world of ESI.

 

Editor’s note: Additional resources:

The Sedona Conference

www.sedonaconference.org

Law Technology News

www.lawtechnews.com

Electronic Discovery Law

www.ediscoverylaw.com

EDRM

www.edrm.net