Transcript Project Management: The Headache Two Aspirin Can’t Begin

First Responses –
Pitfalls and Practical Tips
UNIVERSITY OF HOUSTON
SUMMER III 2010 – 5297 E-DISCOVERY
Overview of The Week
 Building
on The Duty of Preserve
Zubulake v. UBS Warburg
Coleman Holdings v. Morgan Stanley
Other cases
 Litigation Holds
Current state
Best Practices
A word on project management
United Medical Supply Co. v. United States (2007)
 “Aside perhaps from perjury, no act serves to threaten the
integrity of the judicial process more than the spoliation of
evidence.”

“Our adversarial process is designed to tolerate human
failings -erring judges can be reversed, uncooperative
counsel can be shepherded, and recalcitrant witnesses
compelled to testify. But, when critical documents go
missing, judges and litigants alike descend into a world of ad
hocery and half measures--and our civil justice system
suffers.”
Electronic Discovery Life Cycle
Risk
Management
Cost
Containment
Processing
Identification
Collection
Review
Preservation
Analysis
Production
Presentation
Zubulake v. UBS Warburg

A total of six decisions.

Zubulake V:

“[c]ounsel must take affirmative steps to monitor compliance
so that all sources of discoverable information are identified
and searched.”

Attorneys are obligated to ensure all relevant documents are
discovered, retained, and produced.

Litigators must guarantee that identified relevant documents
are preserved by placing a "litigation hold" on the documents,
communicating the need to preserve them, and arranging for
safeguarding of relevant archival media.
A Thought…
In other words,
inisthe
electronic
“E-Mail
evil…
in the era in
which we
find
ourselves,
actions
same
way
that Bert is
evil.” can
have long range unintended effects.
Case in point:
Coleman v. Morgan Stanley.
6
Morgan Stanley: Timeline #1
 February 20, 1998: Morgan Stanley pitches the success

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
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story of Sunbeam.
February 27, 1998: Merger agreement signed.
March 18, 1998: Morgan Stanley receives comfort letter
about Sunbeam – detailing expected profits for the first
quarter.
March 19, 1998: Morgan Stanley helps write press releases
about those expected profits.
March 30, 1998: Sunbeam and Coleman merge.
7
Morgan Stanley: Timeline #1, cont.
Here’s the problem:
 March 18, 1998: Morgan Stanley receives comfort
letter about Sunbeam – detailing expected profits
for the first quarter.
 March 19, 1998: Morgan Stanley helps write press
releases about those expected profits.
These two contain VERY different information.
8
Morgan Stanley: Timeline #1, cont.
 By the end of April 1998, Sunbeam stock is in freefall.
 By the end of November 1998, the stock is worthless.
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The Challenge for Coleman
 To prove Morgan Stanley was liable for fraud, Coleman
needed to show
 Sunbeam had defrauded, and
 Morgan Stanley participated in that fraud.
 Not so easy… but…
10
The Verdict
 At trial, Coleman was awarded:
$605,000,000.00 in compensatory damages;
 $805,000,000.00 in punitive damages.
 $208,000,000.00 in interest.

 And the interest was still accruing…
And you may ask yourself
“Well, how did I get here?”
11
Morgan Stanley: Timeline #2
 March 2003: Morgan Stanley tells the court it has no emails to


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

produce.
September 2003: Morgan Stanley acknowledges it has not searched its
backup tapes.
December 2003: Coleman files a Motion to Compel.
April 2004: Court enters an Agreed Order and Morgan Stanley
produces about 1300 pages.
June 2004: Morgan Stanley signs a Certificate of Compliance and
submits to the Court.
November 2004: Morgan Stanley sends a letter to Coleman noting that
the previous production was not complete.
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Morgan Stanley: Timeline #2, cont.
 Coleman is unhappy. So is the Court.
 February 2005:




The Court conducts a series of hearings about what documents are
available, when they became available, and where those documents
are.
Morgan Stanley provides multiple contradictory statements from the
same people with a week’s time.
Some of these statements are to the Court (in hearings and
depositions). Some are to the SEC.
The Court remains unhappy. Really unhappy.
13
Morgan Stanley: Timeline #2, cont.
 March 1, 2005: Court enters adverse inference order
against Morgan Stanley.
 (March 10, 2005: Even more recently discovered
documents produced. Morgan Stanley has now identified
almost 7000 additional backup tapes to be searched.)
 March 23, 2005: Court enters default order against
Morgan Stanley.
 Late March 2005: Morgan Stanley fires its law firm and
asks for a continuance to right its ship. The Court remains
unhappy.
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Pension Committee v. Banc of America
 2010 WL 184312 (S.D.N.Y.) (January 15, 2010)
 The subtitle: “Zubulake Revisited: Six Years Later.”
 “By now, it should be abundantly clear that the duty to
preserve means what it says and that a failure to preserve
records-paper or electronic-and to search in the right places
for those records, will inevitably result in the spoliation of
evidence.”
 Important points:
 The case looks at preservation and spoliation from the
perspective of the plaintiff
 The issue: when information that should have been preserved
by the plaintiffs after the lawsuit was filed but was not.
Pension Committee v. Banc of America
 Discusses/defines levels of culpability -- negligence,
gross negligence, and willfulness in the electronic
discovery context, identifying “failures”:
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the failure to issue a written litigation hold (gross negligence);
the failure to collect information from key players (gross
negligence or willfulness);
the destruction of email or backup tapes after the duty to
preserve has attached (gross negligence or willfulness);
the failure to obtain records from all employees (some of
whom may have had only a passing encounter with the issues
in the litigation), as opposed to key players (negligence);
Pension Committee v. Banc of America
 Discusses/defines levels of culpability -- negligence,
gross negligence, and willfulness in the electronic
discovery context, identifying “failures”:



the failure to take all appropriate measures to preserve ESI
(negligence).
the failure to collect information from the files of former
employees that remain in a party's possession, custody, or
control after the duty to preserve has attached (gross
negligence); and
the failure to assess the accuracy and validity of selected search
terms (negligence).
Pension Committee v. Banc of America
 Discusses who should bear the burden of
establishing the relevance of evidence that is lost and
who should be required to prove that the absence of
the missing material has caused prejudice to the
innocent party.
 Suggests a burden-shifting test in dealing with
burden of proof and severity of the sanction
requested.
 Provides guidance on preservation of backup tapes.
Rimkus Consulting v. Cammarata
 2010 U.S. Dist. LEXIS 14573 (S.D. Tex. Feb. 19, 2010).
 Judge Rosenthal praised the careful analysis in the Pension
Committee, but she also noted the important differences in
viewing claims of alleged negligence versus claims of
intentional destruction of evidence.
 Notable difference: Rimkus permitted a jury instruction
about whether to decide the defendants had acted in bad
faith, and, even if they did, whether to draw adverse
inferences. Pension Committee had issued a jury
instruction that required the jury to accept the court’s
finding that the plaintiffs were grossly negligent.
Rimkus Consulting v. Cammarata
 The acts included:
 Deleting emails directly relevant to impending litigation
 Failing to undertake steps to preserve ESI following the
commencement of litigation
 Conducting only a ‘‘superficial’’ search, even after numerous
discovery requests and court orders
 Giving away or destroying laptops that contained ESI
 Making no effort to identify alternate sources of ESI
 Providing inconsistent testimony regarding preservation and
spoliation of ESI
 Producing ESI years after applicable requests
 Producing a key email in a format that left no indication that
six documents had been attached and were not produced
And on May 28, 2010…
 Old sentence:
 “By contrast, the failure to obtain records from all employees
(some of whom may only have a passing encounter with the
issues in the litigation), as opposed to key players, likely
constitutes gross negligence as opposed to a higher degree of
culpability.”
 New sentence:
 “By contrast, the 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 key
players, could constitute negligence.”
And now for some nuts and bolts…
Documenting preservation effort
 Org charts, past and present.
 Interview questionnaires.
 Treat documents as privileged, but
prepare someone to testify about them.
 Document any actual collection that
occurs – think “chain of custody.” This
issue may be critical at the time of trial.
Basics of a Litigation Hold
The basics of a litigation hold include
issuing a hold notice,
identifying the right custodians (or key players),
coordinating data identification and
preservation,
monitoring the implementation of the hold, and
then releasing the hold.
Key player interviews
 Interviewers: knowledge of the company – people
and products – and specific matter.
 Be substantive:
 Who do you work for?
 Who did you work for?
 Where are they now?
 Be an active listener – learn about the next interview.
Practice Tips
 Memorialize each step of the collection and
production process to bolster reliability.
 Use every opportunity during discovery to
authenticate potential evidence.

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For pretrial disclosures under F.R.C.P. 26(a), you have 14 days
to file objections or possible waiver
Documents produced by opposing party are presumed to be
authentic – burden shifts
Requests for Admissions
Request stipulation of authenticity from opposing counsel
Practice Tips
 Be ready to provide with enough information to
understand the technology issues as they relate to
the reliability of the evidence at hand.
 Consider case management tools that might assist in
addressing evidentiary problems concerning some of
the more complex issues (such as “dynamic” data in
a database or what is a “true and accurate copy” of
ESI).
 Keep your audience in mind.
Turn to Hypothetical on p. 109
 Which facts change your opinion on the need to
preserve?
 When do you start?
Turn to Hypothetical on p. 110
 Which facts change your opinion on the need to
preserve?
 When do you start?
The E-Discovery Process-Overview
PHASE 1
COLLECTION
Preservation
Collection
Analysis
Meet
Rule 16
&
Scheduling
Confer
Conference
& SCOPE
PHASE 2
PLANNING &
NEGOTIATING
Discovery
Plan
PHASE 3
EXECUTION
ESI
Legal
Processing
Review
Production
PHASE 1 Actions & Decisions
Preservation
Collection
1.
Identify Key Players
1.
2.
Publish Lit Hold
2.
3.
Interview Key Players
3.
4.
Determine Relevant ESI
Locations with Data Map
5.
Identify Vulnerable ESI
6.
Determine Privacy or
Confidentiality Issues
7.
Determine Need for
Forensics
8.
Notify Opposing
Counsel?
Collect
Coordinate with
Custodians
Maintain Chain
of Custody
Records
Analysis
1.
2.
3.
4.
Generate ESI
Collection Inventory
Report
Identify File Types of
Interest
Identify Files where
Native is Necessary
Identify non-standard
File Types
1.
Non-Indexable
2.
Non-Commercially
usable
3.
Internal Proprietary
Preservation Cost Mgmt Opportunities
Preservation
1.
Consider tiered KP list with different [less rigorous] search criteria
for lower tiers.
Identify Key Players
Technology tools exist to automate much of this process.
2.
Publish Lit Hold
3.
Interview Key Players
4.
Determine Relevant ESI
Locations with Data Map
5.
Identify Vulnerable ESI
6.
Determine Privacy or
Confidentiality Issues
7.
Determine Need for
Forensics
8.
Notify Opposing
Counsel?
Use of questionnaires in advance of personal interviews
Develop a detailed Data Map internally which can be edited
for each matter
If forensic collections are deemed appropriate, consider
whether outside collectors are needed.
If you intend to exclude any significant ESI from
preservation, consider notifying OSC to limit later spoliation
risk.
Collection Cost Mgmt Opportunities
Collection
Decide if making collection
as a means for
preservation is costeffective.
1.
2.
3.
Consider internal
collections. Will
necessitate software,
hardware, and people.
Collect
Coordinate with
Custodians
Maintain Chain of
Custody Records
Establish protocol for
collections from PC’s which is
subject to interruption and
can be very time-consuming.
Consider whether to do this
over the network or locally in
user’s office[s].
Perform collections internally with
enterprise applications that track CoC
automatically.
Analysis Cost Mgmt Opportunities
Confirm the availability of applications or resources that
can generate these reports quickly. These can be
desktop apps, or provided by ED vendors.
Consider using “inclusive” rather than “exclusive” approach.
Identify hi-qty file types that can be excluded [e.g. html]
Quantity of these file types can present significant cost
challenges
Non-indexable file types cannot be electronically
searched, so special process [e.g. OCR], or costly
human review is necessary
Consider the means to produce these in “reasonably
usable” forms.
Analysis
1.
2.
3.
4.
Generate ESI
Collection Inventory
Report
Identify File Types of
Interest
Identify Files where
Native is Necessary
Identify non-standard
File Types
1.
Non-Indexable
2.
Non-Commercially
usable
3.
Internal Proprietary
First Responses –
Pitfalls and Practical Tips
UNIVERSITY OF
HOUSTON
SUMMER III 2010 – 5297 EDISCOVERY