Best Practices for Preservation of ESI John Rosenthal

Transcription

1 Best Practices for Preservation of ESI John Rosenthal November 16, 2016

2 John Rosenthal Partner Washington, D.C. Antitrust and commercial litigator Chair, Winston E-Discovery & Information Governance Group National E-Discovery Counsel for several Fortune 500 companies Advisory Board - Georgetown Law School ediscovery Institute The Sedona Conference: Working Group on Electronic Discovery Working Group on International Privacy Working Group on Data Security Chambers - Band 1 (Domestic and Global) 2

3 Why is Preservation So Difficult? Here is what we don t have:

4 Why is Preservation so Difficult? Business went from this To this

5 The Trouble With ESI Voluminous Easily duplicated Persistent 4 GB thumb drive = 350,000 Pages = 140 Bankers Boxes Dynamic and changeable Consists of user data AND metadata Subject to environmental dependence and obsolescence Subject to dispersion Searchable

6 It is Pervasive!

7 And It is Growing! Total amount of data predicted to double every 1-2 years. 90% of the data in the world was created in the last two years More data means higher costs and increased risk Almost 2/3 of medium to large-sized businesses have more than 25 legal and regulatory matters per year

8 And It is Only Getting More Complicated! 8

9 The Duty to Preserve Preservation The duty to identify, locate, maintain and protect relevant, potentially discoverable evidence Source of Duty Professional Rule 3.4, Fairness to Opposing Party and Counsel Inherent Powers of the Court Common law Federal Rules of Civil Procedure (Rule 37 & 26(g)) Statutory and Regulatory Obligations 9

10 The Duty to Preserve Litigation Hold Trigger Pending Litigation (Investigation or Other Legal Proceeding) Duty arises upon formal or informal notice of the legal matter and that corporate records are potentially relevant Notice = Complaint, Service of Process, or Subpoena Threat of Future Litigation (Investigation or Other Legal Proceeding) Must be a concrete and identifiable threat Duty arises upon formal or informal notice of the future legal matter and that corporate records are potentially relevant Notice = Demand Letter or Press Release Beware of Reference to Preservation Obligations in Demand Letter (important to make written response) 10

11 The Sedona Conference Working Paper on Legal Holds The nature and specificity of the complaint or threat; The party making the claim; The position of the party making the claim; The business relationship between the accused and accusing parties; Whether the threat is direct, implied or inferred; Whether the party making the claim is known to be aggressive or litigious; Whether a party who could assert a claim is aware of the claim; The strength, scope, or value of a potential claim; The likelihood that data relating to a claim will be lost or destroyed; The significance of the data to the known or reasonably anticipated issues; Whether the company has learned of similar claims; The experience of the industry; Whether the relevant records are being retained for some other reason; and Press and or industry coverage of the issue either directly pertaining to the client, or of complaints brought against someone similarly situated in the industry. 11

12 Difficult Issues Rumors Pattern Cases Calls to customer hotline Verbal threat 12

13 Scope of Preservation What to Preserve? Prior to litigation, in the ordinary course of business: May maintain data in any reliable format May migrate data from system to system After litigation commences or is reasonably foreseeable: Must suspend normal records retention program Must preserve the data in its native format May not destroy, manipulate, overwrite, or modify the data May move data only if all the data can be preserved 13

14 Rule 37(e): Failure to Preserve Electronically Stored Information If electronically stored information that should have been preserved in the anticipation or conduct of litigation is lost because a party failed to take reasonable steps to preserve it, and it cannot be restored or replaced through additional discovery, the court may: (1) upon finding prejudice to another party from loss of the information, order measures no greater than necessary to cure the prejudice; or (2) only upon finding that the party acted with the intent to deprive another party of the information s use in the litigation: (A) presume that the lost information was unfavorable to the party; (B) instruct the jury that it may or must presume the information was unfavorable to the party; or (C) dismiss the action or enter a default judgment.

15 Rule 37(e): Predicates Each must apply prior to the application the subsections: 1. Electronically stored information 2. Should have been preserved (i.e., was lost or destroyed) 3. Failed to take reasonable steps to preserve it, 4. Cannot be restored or replaced through additional discovery Because the rule calls only for reasonable steps to preserve, it is inapplicable when the loss of information occurs despite the party s reasonable steps to preserve. - Rule 37(e) Comments.

16 Reasonable Steps Perfection Due to the ever-increasing volume of electronically stored information and the multitude of devices that generate such information, perfection in preserving all relevant electronically stored information is often impossible.... This rule recognizes that reasonable steps to preserve suffice; it does not call for perfection. The court should be sensitive to the party s sophistication with regard to litigation in evaluating preservation efforts; some litigants, particularly individual litigants, may be less familiar with preservation obligations than others who have considerable experience in litigation. For example, the information may not be in the party s control. Or information the party has preserved may be destroyed by events outside the party s control the computer room may be flooded, a cloud service may fail, a malign software attack may disrupt a storage system, and so on. Courts may, however, need to assess the extent to which a party knew of and protected against such risks. - Rule 37(e) Comments.

17 Reasonable Steps = Proportionality 17 Another factor in evaluating the reasonableness of preservation efforts is proportionality. The court should be sensitive to party resources; aggressive preservation efforts can be extremely costly, and parties (including governmental parties) may have limited staff and resources to devote to those efforts. A party may act reasonably by choosing a less costly form of information preservation, if it is substantially as effective as more costly forms. It is important that counsel become familiar with their clients information systems and digital data including social media to address these issues. A party urging that preservation requests are disproportionate may need to provide specifics about these matters in order to enable meaningful discussion of the appropriate preservation regime. - Rule 37(e) Comments.

18 Best Practices re Preservation 1. Understanding the client s infrastructure / Retention Plan meeting 2. Development and documentation of a retention plan 3. Issue legal hold memorandum 4. Follow-up with key players 5. Engage opposition in active preservation dialogue at Rule 26(f) conference with goal to reach an agreement on the scope of preservation 6. Monitor compliance 7. Periodically update legal hold order 8. Documentation and transparency 18

19 Understanding the Client s Infrastructure and Litigation History Every lawyer owes his client and ethical duty of competence: Duty has been interpreted to include understanding the client s potentially relevant ESI Prior to developing a reasonable preservation plan, you need to undertake steps to understand the client s: ESI infrastructure Records management practices Legal hold practices History of sanction related decisions 19

20 Retention Plan Meeting Meeting should occur as soon as practical after the trigger (recommended to be in person) Participants: E-Discovery Director or designee if high risk In-house attorney, legal assistant to case manager IT staff Outside counsel (depending on size and complexity) Key business clients (operations, engineering dept., etc.)? Purpose: develop retention plan 20

21 Checklist of Items to Address Scope of preservation: Date range Systems Custodians File types Active and inactive paper Electronic records located on or in: PCs/laptops Network stores Collaboration work spaces Cloud environments Removable media Web Content Social Media Instant messaging/voic /txt Databases Smartphones Tablets Personal computers/devices Identification and preservation of Inaccessible data Back-up tapes Burden Methods of preservation: Reliance on individual custodians Taking snapshots of systems Ghosting drives Creating a preservation repository Other Issues Third parties Preservation orders Handheld devices Voic On-boarding/Off-boarding Timing and content of the LHO Memorandum 21

22 Specific Preservation Issues IM Medium Auto deletion settings Archiving/Journaling Office 365 Ephemeral communications platforms TXT Cloud Social Media Analytical Framework Regulatory requirements? Relevant to the claims and defenses? Proportional under Rule 26(b)(1) and Rule 37(e)? Who has possession, custody and control? What privacy issues are involved in its preservation? Practical considerations: Policy Process Technology 22

23 Issue a Legal Hold Order Memorandum What is a legal hold order? Why issue one? The obligation to retain discoverable materials is an affirmative one; it requires counsel or corporate officers having notice of discovery obligations to communicate those obligations to employees in possession of discoverable materials. National Ass n of Radiation Survivors v. Turnage, 115 F.R.D. 543, 557 (N.D. Cal. 1987) 23

24 Legal Hold Order Memorandum (cont d) Reasonable notice depends upon circumstances, but LHO should: Be issued as soon as practicable Be in writing Be labeled as privileged List categories of records to be preserved Give general instructions for preserving the records 24

25 Zubulake V Follow up w/ Key Players Duty of in-house counsel to be involved in process Understand your IT systems Don t rely solely on outside counsel or individual custodians representations Communicate with the key players in the litigation: Who is a key player? What should the communications be? Who should do the follow-up? 25

26 Monitoring Compliance and Updating Paper tigers will provide no defense You must monitor compliance with the Legal Hold Order Legal Hold Order should be adapted over time to reflect changes in the case 26

27 Resource Materials Duke Conference s Guidelines and Practices for Implementing The 2015 Discovery Amendments To Achieve Proportionality _guidelines.pdf. Benchbook for U.S. District Court Judges, SIXTH EDITION, Federal Judicial Center (March 2013) at 6TH-FJC-MAR-2013-Public.pdf/$file/Benchbook-US-District-Judges- 6TH-FJC-MAR-2013-Public.pdf Managing Discovery of Electronic Information: A Pocket Guide for Judges (Federal Judicial Center 2nd ed. 2012) at 2d_eb.pdf The Sedona Conference Working Group 1 Principles at 27

28 Thank You! John Rosenthal (202)