ELECTRONIC DISCOVERY Practices & Checklist Bradley J. Gross, Esq. * Becker & Poliakoff, P.A. 3111 Stirling Road Fort Lauderdale, FL 33312 (954) 364-6044 BGross@Becker-Poliakoff.com * Chair, e-business & Digital Content Practice Group, Becker & Poliakoff, P.A.
Introduction: Electronic Discovery The volume of electronic information created during the ordinary course of business exposes companies to increased risk. Deleted information is often not deleted. Instead, references to the location of the information are deleted, giving the illusion that the information has been destroyed. Back-ups, or archived data, can become huge depositories of information. Computer programs can create duplicate copies of documents, or store web pages in memory. Careless employees send information via email; Disgruntled employees can copy / steal information. Electronic versions of documents can contain metadata (or, information about information ) that is non-existent in hard copies. Locations are varied: workstations, servers, backup media, PDAs, mobile telephones, off-site storage, flash media, etc. Electronic documents are often easier to search and browse than paper-based documents. Consequently, it is easier than ever to find the proverbial needle in a haystack. EXAMPLE IranGate (1981) Hostages released purportedly in response to Reagan presidency. Email thought to have been destroyed, but copies were found on backup tapes. Cartoon from Paul Szep, Boston Globe, (July 1987). Page 2 of 7
Best Practice: Document Retention / Destruction Policy To begin, you should recognize the fact that the term document retention policy has little to do with retention, and everything to do with destruction. (Though, admittedly, the term retention sounds far less nefarious than the term destruction. ) Document retention policies are not only legal, but I encourage all of my corporate clients to have them. Simply put, unless there is a statutory or overriding corporate reason to hang on to old records, outdated or expired records should be destroyed. By destroying old records, companies can maintain efficient and organized filing systems, eliminate confusion over different iterations of documents, substantially lower the risk of theft and/or misuse of old records, as well as lower (or eliminate) archiving, storage and warehousing costs. There is no template for a document retention policy, and each company should evaluate its needs on an individual basis. That said, however, there are certain rules of thumb that you should follow when drafting a document retention policy: 1. The document retention policy must apply to all employees who obtain (regardless of the duration of such possession), create, manipulate, analyze, or store physical or electronic documents that belong to, or are created or received by, a company. 2. The term document should be defined broadly to ensure that all documents, regardless of size or importance, are treated equally. For example, the term documents could be defined as all notes, memos, messages, reports, analyses, receipts, forms, schedules, charts, graphs and related materials that exist in physical form (i.e., paper form), or which exist and/or are stored in electronic form on desktop computers, laptop computers, personal digital assistants (often called PDAs ), or in other electronic devices that are capable of storing such information. Email should be treated the same as paper documents. 3. Records that are known to be relevant to a pending or impending litigation matter should not be destroyed. Destruction of such documents could lead to causes of action for spoliation, court sanctions, or default judgments. 4. The predicate for the policy should be explicitly stated in the policy itself. Put another way, a company should have legitimate business reasons for destroying their records, and those reasons should be stated at the beginning of the policy. 5. Statutory retention periods MUST be followed strictly. Retention periods vary widely depending on the types of records at issue. In addition, certain documents will naturally fit into a designated category (such as HIPAA records or Sarbanes-Oxley records ); but some will not. Do not merely assume that a particular document fits into a particular category. If you have any question as to how a particular document should be categorized, consult an attorney. Page 3 of 7
6. Destruction schedules should be followed strictly. Failure to enforce consistent destruction schedules could lead to an inference that records are destroyed for illegitimate reasons (e.g., to avoid litigation). 7. A single person should enforce the record retention policy, as well as the record destruction schedule. This minimizes the risk of inconsistent document handling. Selected Caselaw: Lewy v. Remington Arms Co., 836 F.2d 1104 (8 th Cir. 1988): Widely regarded as the seminal case in connection with document retention policies. Court created a three-part test to determine the reasonableness of a document destruction policy: (i) the reasonableness of the policy in light of the facts and circumstances surrounding the documents to be destroyed; (ii) the degree to which litigation involving the documents was likely; and, (iii) whether the policy was instituted in bad faith. Vick v. Texas Employment Commission, 514 F.2d 734, 737 (5 th Cir. 1975): Fifth Circuit refused to give an adverse instruction where records destroyed were destroyed under routine procedures without bad faith. Turner v. Hudson Transit Lines, Inc., 1992 U.S. Dist. LEXIS 2827, reh g denied, 1992 U.S. Dist. LEXIS 3290 (S.D.N.Y. 1992): Held that defendants could not rely on their document destruction policy to excuse them from destroying documents relevant to the litigation; [A] corporation cannot blindly destroy documents and expect to be shielded by a seemingly innocuous document retention policy. Computer Associates International, Inc. v. American Fundware, Inc., 133 F.R.D. 166 (D. Colo. 1990): Court granted default judgment against defendant where it was shown that defendant willfully destroyed documents after the company was put on notice that the documents would be relevant to the litigation. Murphy Oil USA, Inc. v. Fluor Daniel, Inc., No. Civ. A. 99-3564, 2002 WL 246439 (E.D. La. Feb. 19, 2002): Court sanctioned defendant where defendant failure to adhere to its own document destruction schedule caused defendant to destroy documents relevant to the litigation. Page 4 of 7
E-Discovery Checklist The Stages of E-Discovery: Pre-Litigation, Litigation/Discovery, Post-Litigation 1. Familiarize yourself with the business structure and corporate operations. a. Map out the divisions and business units, and the operations in which each is engaged. b. Determine what type of information is received. c. Determine how information is received. d. Determine how / where information is stored. e. Determine how information is retrieved. f. Determine the costs of retrieval. 2. Initial Document Retention Policy Due Diligence. a. Collect existing retention policies. b. Identify employees responsible for retention/destruction, and speak with them to determine retention/destruction procedures. c. Identify gaps in retention policies, schedules, enforcement and monitoring. 3. Document Retention Policy Creation / Enforcement. a. Draft a single document retention policy. b. Ensure that the policy addresses electronic information; document retention periods; document destruction schedules; cessation of policy in the event of actual or threatened litigation; enforcement mechanisms; monitoring mechanisms. c. Review the policy with various levels of administration to ensure company s ability to implement the policy. 4. Information Technology Personnel. a. Identify / establish a relationship with key IT personnel. b. Provide specific guidance / training to IT personnel to ensure ambiguities in retention / destruction policies are eliminated. 5. Anticipate Discovery Requests / Protocols. a. Organize retained documents in a manner that will ease discovery of relevant documents. (Options include physical marking, keywords, file names, etc.) b. Label privileged documents to ensure that such documents are not accidentally disclosed in discovery procedures. Remember: Documents inadvertently disclosed in discovery may result in the waiver of the attorney-client privilege with respect to those documents and other materials related to them. See Texaco P.R., Inc. v. Dept. of Consumer Affairs, 60 F.3d 867, 883-84 (1 st Cir. 1995). c. Ensure that preservation letters are handled appropriately. Page 5 of 7
1. (In extreme cases): Consider obtaining an ex parte seizure order. a. Effective, but difficult to obtain. b. Rule 65 of the Federal Rules of Civil Procedure provides the primary source of judicial authority for issuing ex parte orders. Rule 65(b) provides that a court may issue a TRO without notice to the opposing party if a movant can show: i. that immediate and irreparable injury, loss or damage will occur before the opposing party has an opportunity to respond; ii. the movant s efforts, if any, in providing prior notice to the opposing party or establishing reasons why notice was not given. c. Other factors considered in a Rule 65 motion are (i) the movant s likelihood of success on the merits of his claim, (ii) whether less drastic and adequate remedies are available, (iii) a balancing of the hardships of the parties, and (iv) the effect of the ex parte order on the public interest. 2. Preservation Letter: Ensure that a preservation letter is timely delivered to a party possessing electronic records. a. Broad reminder of duty to preserve; specific examples to eliminate any doubt or ambiguity as to the types of records at issue. b. Ensure that your client / company preserves its own records that are (or are likely to be) relevant to the litigation, regardless of whether a preservation letter is received. c. Require opposing counsel to confirm that destruction policies have been suspended, and that preservation policies have been implemented. If confirmation is not timely supplied, seek a preservation order on an emergency basis pursuant to Rule 16(c) (which describes the court s inherent ability to control the production, disclosure and scheduling of discovery). 3. Confer with opposing counsel to seek agreement on (i) the types of documents to be produced, (ii) the form / format of the documents to be produced, (iii) the costs of document production, and (iv) the confidentiality of the documents to be produced. Costshifting arguments should be addressed promptly. Note: This may be done pursuant to a Rule 16 conference. 4. Review document requests with IT personnel. Do not assume that requests will be selfexplanatory. Determine whether in-house personnel will be capable of producing requested documents, or whether outside consultants will be needed. Determine the form in which electronic documents must be produced. 5. Review all discovery before it is provided to opposing counsel. Ensure that privileged documents are filtered out. 6. Maintain a list of all electronic documents provided to opposing counsel. Page 6 of 7
7. Maintain the chain of custody by documenting the following: a. The date, time and place of collection of electronic evidence received from opposing party. b. The name and title of the person providing the electronic evidence to you, and the name and title of the person(s) collecting the evidence. c. A description of the electronic evidence provided by the opposing party. d. The media type and format on which the evidence is stored. e. All movement / handling of the electronic evidence, including (i) the people responsible for storing and/or browsing the evidence, (ii) the locations in which the evidence is stored, and (iii) the purpose behind the movement of the evidence. f. Date and time of check-in and check-out of the media on which the evidence is stored. Generally, electronic evidence will be admitted if it can be shown that the evidence is authentic, and either not hearsay or eligible for a hearsay exception. 1 8. Prepare an IT employee to be a Rule 30(b)(6) witness. 9. Schedule a Rule 30(b)(6) deposition early in the case to determine the opposing party s infrastructure, procedures, and the scope of electronic information possessed by the opposing party. 10. Consider expedited discovery pursuant to Rule 26(d). 2 Remember: Under ordinary circumstances, a party can not seek discovery of any evidence until after the Rule 26(f) conference, which is held at least 21 days before the scheduling conference or 21 days before an order is due pursuant to Rule 16(b). Rule 16(b) provides that orders are due within 120 days of the filing of the complaint. Translation: You might not be able to get e-discovery until almost 3 months after the complaint is filed. Expedited discovery can prevent the loss of electronic evidence. Upon the conclusion of the litigation, and provided that all appeals / post-trial procedures have been concluded with finality, document retention / destruction procedures should promptly commence (or re-commence, as the case may be). Do not assume that such procedures will automatically resume follow-up to ensure that retention policies are enforced. 1 See Kupper v. State, 2004 WLL 60768 (Tex. Ct. App. Jan. 14, 2004). In Kupper, the defendant argued that electronic evidence used against him at trial should have been excluded on chain of custody grounds. The Kupper Court rejected the defendant s argument, and concluded that the testimony established that the appearance, contents, substance, internal patterns, or other distinctive characteristics, taken in conjunction with the circumstances, authenticated the evidence in question. 2 To obtain expedited discovery, a movant must show that reasonable grounds exist to believe that the opposing party is destroying, or will destroy, relevant electronic evidence, and that such destruction will irreparable harm the movant. While expert testimony is not a prerequisite to expedited discovery, such testimony dramatically increases the odds that a request for expedited discovery will be granted. Page 7 of 7