Avoid an E-discovery Disaster
Fred Blum and Nader Mehdizadeh
While the British Petroleum leak in the Gulf is being plugged, legal claims from the oil spill are just starting to flow. The leak has resulted in an environmental and economic disaster, ruining countless lives and businesses – not to mention the havoc that it has wreaked on wildlife and the sea. With the catastrophe, lawsuits by fishermen, business owners and others have followed. Class actions and individual lawsuits have already been filed by major plaintiffs’ law firms competing for clients.
The outcome of these disputes will invariably depend on volumes of BP’s vast stores of electronically stored information. Plaintiffs will attempt to obtain ESI relating to the cause of the leak and attempts to stem it, as well as e-mails between BP executives. This most likely involves hundred of thousands, if not millions of electronic records. It will necessitate dozens of decisions by the parties, with knowledge that the wrong decision could lead to significant sanctions for the failure to properly handle ESI. As one consultant recently asked: “Could the BP oil spill lead to an e-discovery disaster?”
Fortunately, few cases involve the stakes or the scope of the BP leak. However, the starting point for any case, whether it is the BP spill or a minor breach of contract, is to understand the rule of proportionality. Rule 26(b)(2)(C) of the Federal Rules of Civil Procedure and §2031.060(f) of the California Code of Civil Procedure recognize that a party should not be compelled to spend more to comply with an ESI discovery request than the case is worth. A party needs to know what is needed to prosecute or defend its case, versus what it wants. Not every case allows you to compel the opposing side to preserve and produce every piece of ESI. The bottom line is to keep things in perspective. With this framework, consider these six factors while drafting e-discovery requests.
1. Preserve relevant ESI
All parties to potential litigation have a duty to preserve ESI. The failure to do so can lead to catastrophic results, including monetary and issue preclusion sanctions. The first step is to prepare and distribute a “litigation-hold” letter instructing employees not to destroy or alter relevant ESI. Customary e-mail and document destruction policies must be suspended. Once the letter is issued, there is also an obligation to ensure that employees received it and are complying with its mandates. In one case, the failure to properly distribute and ensure compliance with the letter led to sanctions of $1 million. ( In re Prudential Ins. Co. of America Sales Practices Litigation , 169 F.R.D. 598, 615-17 (D.N.J. 1997)).
2. COnfer with your opponent
No matter what the case, any party can, and some parties will, use e-discovery to make discovery expensive and cumbersome for its opponent. For instance, most network systems have the ability to do keyword searches. However, individuals may also store ESI on their individual hard drives. The data on the individual hard drives may have been deleted from the network or never placed there. Thus, the question is whether you have to check the personal hard drives of every employee.
In The Pension Comm. of the Univ. of Montreal Pension Plan v. Banc of America Securities , 685 F. Supp. 2d 456, 471 (2010), Judge Shira Scheindlin wrote: “[T]he failure to obtain records from all those employees who had any involvement with the issues raised in the litigation or anticipated litigation, as opposed to just the key players, could constitute negligence.” Thus, for even a modest-sized case, “all” employees with “any” involvement could equate to a huge amount of data.
However, the parties may negotiate a limited preservation and collection of records. For example, after an initial round of client interviews, it may be obvious that only three people in your client’s organization were significantly involved with the dispute. Explain this to your opponent and reach an agreement to limit your preservation requirements to these three custodians. Not only will this save you time and money, it will diffuse charges of spoliation if you later discover a fourth custodian. This proactive step can prevent a lot of headaches as the case develops. Another issue to consider is the whether backup or archive systems need to be searched. This could be a problem because courts have generally shifted the costs of such searches to the party demanding the search. Zubulake v. UBS Warburg LLC , 217 F.R.D. 309, 318 (S.D.N.Y. 2003).
3. Collect data intelligently
“Self collection” can have many dangers, ranging from malfeasance to simple technical incompetence. It is true that parties without sufficient technical expertise have no business collecting their own data. But to paraphrase general counsel for one of the world’s largest corporations, why do companies spend all of this money to organize their data for business purposes, only to hire an outside vendor to make it less organized for litigation purposes?
Take advantage of your client’s existing information systems and structure. Your client may be the one who knows how and where the relevant information is stored and what is the best way to review it. Talk to your client, if for no other reason than to explain the need to hire an outside vendor to collect the information.
4. Rely on your vendor
Once you identify the location of the relevant ESI and other relevant parameters for a search, consider hiring a vendor you can trust, who is willing to explain things to you and can actually do the data collection. It is critical to identify a specific individual who will be responsible for the data collection and who can potentially be a witness if a dispute spills over to the courtroom.
5. Consider using hosted databases
Once the ESI is collected, you will want to review it before it is produced. You need to review the data to ensure that privileged or other objectionable documents are not disclosed as well as become familiar with what is being produced. This review requires the use of a database and can be a time-consuming and expensive proposition.
As a result of technological advances nearly all litigants can afford the world’s most sophisticated review platforms. Many vendors will not only store your collected ESI, they will also host a web-based review tool and database. Monthly charges may be in the area of several hundred dollars per user; however, training and setup fees are usually negotiable. All you need is an Internet connection and the appropriate web browser. There is no need to buy expensive software and hire the even more expensive litigation support employees to maintain it. Once you have completed your review and production of documents, you can store the production in house, archive the database and stop incurring the monthly charges.
6. If all else fails, go to court
If your opponent is unreasonable or if a legitimate dispute still exists after the meet-and-confer process, the parties can bring the matter to the judge. The court process begins with the responding party objecting to the discovery request. In California, a responding party may simply object to the production on the grounds that the information is “from a source that is not reasonably accessible because of undue burden or expense.” California Code of Civil Procedure §2031.310. However, you are required to support this claim. Your vendor should be the primary witness for any motion for a protective order or in response to a motion to compel. Use your vendor as a resource to develop the technical facts as to why the opposing side’s request is unreasonable or disproportionate. These issues should be thoroughly discussed in the meet-and-confer process and you should have a paper trail to support your position.
As e-discovery becomes more common in litigation in California, negotiating with opponents and working with vendors should become easier. As you work through e-discovery issues, you will develop your own methods for resolving these problems. Through cooperation, reasonableness and careful planning you should be able to avoid an e-discovery disaster.
Fred M. Blum is a partner in the law firm Bassi, Edlin, Huie & Blum and has had an environmental and business litigation practice for over 25 years. Nader Mehdizadeh is a summer associate at Bassi, Edlin and has a master’s degree in engineering management and a bachelor of science in computer engineering from Santa Clara University.