Litigation Requirements for Records Retention and Electronic ...

Electronic Document Electronic Document DiscoveryDiscovery

NCHELP Legal MeetingNCHELP Legal MeetingPalm Springs, CaliforniaPalm Springs, California

March 20, 2006March 20, 2006

ParticipantsParticipants

Steven Brower, Esq.Steven Brower, Esq. Litigation AttorneyLitigation Attorney Orange County, CAOrange County, CA [email protected]@sortm.com

Mark D. GershensonMark D. Gershenson Litigation AttorneyLitigation Attorney Palm Springs, CAPalm Springs, CA [email protected]@mdglaw.com

What Does The Legal System What Does The Legal System Expect Of Document Production?Expect Of Document Production?

Rational ExpectationsRational Expectations The ability to produce potentially relevant The ability to produce potentially relevant

documentary evidence, in a timely manner, in documentary evidence, in a timely manner, in a form which provides credibility to the a form which provides credibility to the documentsdocuments

The ability to provide persuasive testimony The ability to provide persuasive testimony confirming the aboveconfirming the above

Extreme ExpectationsExtreme Expectations The ability to produce and explain all The ability to produce and explain all

documentary evidence which the opposing documentary evidence which the opposing party claims might be helpful to their caseparty claims might be helpful to their case

What Documents Must Be What Documents Must Be Produced?Produced?

Any Representation Of Data In A Form Any Representation Of Data In A Form Which Can Be Converted For Use By PeopleWhich Can Be Converted For Use By People Formally Retained Documents, Including Formally Retained Documents, Including

ElectronicElectronic Documents Which Should Have Been Destroyed, Documents Which Should Have Been Destroyed,

But Were NotBut Were Not Document Retention Policies Allow Destruction, But Document Retention Policies Allow Destruction, But

Only If The Destruction Already HappenedOnly If The Destruction Already Happened Informal Personal FilesInformal Personal Files ““Scratch” Notes Of Telephone ConversationsScratch” Notes Of Telephone Conversations Notes Scribbled On A NapkinNotes Scribbled On A Napkin

Document Retention - NapkinsDocument Retention - Napkins

Text from FAQ on website of TFT:Text from FAQ on website of TFT:

Electronic Data Is A “Writing”Electronic Data Is A “Writing”

Federal Rules of Evidence, Rule 1001Federal Rules of Evidence, Rule 1001““For purposes of this article the following For purposes of this article the following

definitions are applicable:definitions are applicable:(1) “Writings” and “recordings” consist of letters, (1) “Writings” and “recordings” consist of letters,

words, or numbers, or their equivalent, set down words, or numbers, or their equivalent, set down by handwriting, typewriting, printing, by handwriting, typewriting, printing, photostatting, photographing, photostatting, photographing, magnetic impulse, magnetic impulse, mechanical or electronic recording,mechanical or electronic recording, or other form or other form of data compilation.”of data compilation.”

Electronic Data Is Subject To Electronic Data Is Subject To Rule 34 DiscoveryRule 34 Discovery

Federal Rules of Civil Procedure, Rule 34Federal Rules of Civil Procedure, Rule 34““Any party may serve on any other party a request (1) Any party may serve on any other party a request (1)

to produce and permit the party making the request, to produce and permit the party making the request, or someone acting on the requestor’s behalf, to or someone acting on the requestor’s behalf, to inspect and copy, any designated documents inspect and copy, any designated documents (including . . . other data compilations from which (including . . . other data compilations from which information can be obtained, translated, if necessary, information can be obtained, translated, if necessary, by the respondent through detection devices into by the respondent through detection devices into reasonably usable form) reasonably usable form) . . .”. . .”

19197070 Revisions to FRCP 34 Revisions to FRCP 34

Advisory Committee NotesAdvisory Committee Notes““The inclusive description of “documents” is The inclusive description of “documents” is

revised to accord with changing technology. revised to accord with changing technology. It makes clear that Rule 34 applies to It makes clear that Rule 34 applies to electronic data compilations from which electronic data compilations from which information can be obtained only with the use information can be obtained only with the use of detection devices, and that when the data of detection devices, and that when the data can as a practical matter be made usable by can as a practical matter be made usable by the discovery party only through respondent’s the discovery party only through respondent’s devices, respondent may be required to use devices, respondent may be required to use his devices to translate the data into usable his devices to translate the data into usable form.”form.”

2006 Federal Rules Revisions2006 Federal Rules Revisions

New rules for electronic discovery will be New rules for electronic discovery will be effective as of December 1, 2006 if effective as of December 1, 2006 if approved by the Supreme Courtapproved by the Supreme Court More involvement, at an early time in the More involvement, at an early time in the

case, by information technology personnelcase, by information technology personnel

What Are Documents?What Are Documents? Any Representation Of InformationAny Representation Of Information

Scanned Documents (and all earlier forms)Scanned Documents (and all earlier forms) FaxFax EmailEmail Instant MessagingInstant Messaging SoftwareSoftware Voice MailVoice Mail SpreadsheetsSpreadsheets Databases (from Quicken to Sabre)Databases (from Quicken to Sabre) Personal Information DevicesPersonal Information Devices

Document Retention PoliciesDocument Retention Policies

Document retention policies can’t conflict Document retention policies can’t conflict with legal requirementswith legal requirements

Document retention should not be Document retention should not be perceived as evidence destructionperceived as evidence destruction Do the policies make sense? (Instant Do the policies make sense? (Instant

destruction of email, for example)destruction of email, for example) The cost of retaining the records isn’t the The cost of retaining the records isn’t the

problem – it is the cost of reviewing the problem – it is the cost of reviewing the records in litigationrecords in litigation

Consistent RetentionConsistent Retention

Standards should be enforced in a Standards should be enforced in a consistent mannerconsistent manner ““Reminder” messages, which are first sent out Reminder” messages, which are first sent out

once there is already a reason to suspect a once there is already a reason to suspect a problem, have been trouble in some casesproblem, have been trouble in some cases

Cannot destroy documents after you know Cannot destroy documents after you know about issues, even if they “should have been” about issues, even if they “should have been” destroyed beforedestroyed before

California Federal BankCalifornia Federal Bank

California Court of Appeal, 2002 Cal.App. California Court of Appeal, 2002 Cal.App. LEXIS 3077 (3/14/02 – Unpublished)LEXIS 3077 (3/14/02 – Unpublished)

Class action filed in 1997 regarding Class action filed in 1997 regarding reconveyance practices and feesreconveyance practices and fees

More California Federal BankMore California Federal Bank ““The trial court made certain findings concerning The trial court made certain findings concerning

CalFed’s conduct during discovery. First, CalFed CalFed’s conduct during discovery. First, CalFed destroyed computer databases used to track the destroyed computer databases used to track the reconveyance process and collection of reconveyance process and collection of reconveyance fees for the period of October 1, 1991 reconveyance fees for the period of October 1, 1991 through April 1, 1997. They destroyed these through April 1, 1997. They destroyed these databases databases afterafter claiming in sworn discovery claiming in sworn discovery responses and in meet-and-confer conferences that responses and in meet-and-confer conferences that the databases did not exist. CalFed also destroyed the databases did not exist. CalFed also destroyed other databases and withheld other information other databases and withheld other information relevant to the litigation, and it provided false or relevant to the litigation, and it provided false or misleading declarations and answers to misleading declarations and answers to interrogatories.”interrogatories.”

Technical Issues - Voice MailTechnical Issues - Voice Mail

Nature of DataNature of Data Digital Voice RecordingDigital Voice Recording Digital DataDigital Data

Date/Time StampDate/Time Stamp Recipient InformationRecipient Information Sender InformationSender Information PriorityPriority Read/Not ReadRead/Not Read

No IndexNo Index

Technical Issues - ContinuedTechnical Issues - Continued

Backup RetentionBackup Retention Generally PeriodicGenerally Periodic

Mirroring Is Not PermanentMirroring Is Not Permanent Deleted Are Often GoneDeleted Are Often Gone

Reuse of BackupReuse of Backup Customer Controlled InformalCustomer Controlled Informal Often Third-Party ControlOften Third-Party Control

Identification of Voice DataIdentification of Voice Data

Assume You Got Lucky!Assume You Got Lucky! Determine the Volume of DataDetermine the Volume of Data

50 Active Phones, 10 Messages/Day, 1 50 Active Phones, 10 Messages/Day, 1 Minute Average/Message, 1 Year (250 Minute Average/Message, 1 Year (250 days) = 125,000 Minutes of Voice or days) = 125,000 Minutes of Voice or 2,000 Actual (Not Billable) Hours2,000 Actual (Not Billable) Hours

Identification of Voice Data - Identification of Voice Data - ContinuedContinued

RequiresRequires ““Same” Voice Mail MachineSame” Voice Mail Machine

Configuration Data With Extensions, Etc.Configuration Data With Extensions, Etc. Screening for Privilege, Etc.Screening for Privilege, Etc.

Persons with Knowledge of VoicesPersons with Knowledge of Voices Language SkillsLanguage Skills

Technology does not yet give a Technology does not yet give a solutionsolution

Big Companies Have IssuesBig Companies Have Issues

GTFM v. Wal-Mart Stores, 2000 US Dist. GTFM v. Wal-Mart Stores, 2000 US Dist. LEXIS 16244, SDNY 11/9/00LEXIS 16244, SDNY 11/9/00 Sanctions of “only” $110,000 (would have Sanctions of “only” $110,000 (would have

been $280,000 but for settlement) for failure been $280,000 but for settlement) for failure to disclose capabilities of Walmart computers to disclose capabilities of Walmart computers to assist with discovery in case involving to assist with discovery in case involving purchase and sale of alleged counterfeit purchase and sale of alleged counterfeit goodsgoods

More With Wal-MartMore With Wal-Mart

Ex-Parte Wal-Mart, 2001 Ala. LEXIS 283, Ex-Parte Wal-Mart, 2001 Ala. LEXIS 283, Supreme Court of Alabama (2/21/02 Supreme Court of Alabama (2/21/02 Publication)Publication) Falling merchandise casesFalling merchandise cases Issue of whether Wal-Mart should be required Issue of whether Wal-Mart should be required

to provide information which is readily to provide information which is readily available due to computer, answered in the available due to computer, answered in the affirmativeaffirmative

More With Wal-MartMore With Wal-Mart

Testa v. Wal-Mart, 1Testa v. Wal-Mart, 1stst Circuit, 144 F.3d Circuit, 144 F.3d 173173 Truck driver who fell at a Wal-MartTruck driver who fell at a Wal-Mart Issue of notice of potential litigationIssue of notice of potential litigation

Lombardo v. Broadway StoresLombardo v. Broadway Stores

2002 Cal.App. LEXIS 662 (1/22/02 2002 Cal.App. LEXIS 662 (1/22/02 unpublished)unpublished) Case study in mishandling of discovery Case study in mishandling of discovery

request for electronic datarequest for electronic data Class action relating to payment of Class action relating to payment of

accrued vacation benefitsaccrued vacation benefits

Broadway – ChronologyBroadway – Chronology

1/95 and 7/95 (before litigation) sent 1/95 and 7/95 (before litigation) sent preservation letterpreservation letter

10/95 suit filed10/95 suit filed 11/95 Broadway responded to discovery 11/95 Broadway responded to discovery

saying that it would produce documentssaying that it would produce documents 2/96 got some payroll documents2/96 got some payroll documents 2/97 new set of discovery requests2/97 new set of discovery requests

Broadway – ChronologyBroadway – Chronology 5/97 “Broadway provided unverified responses 5/97 “Broadway provided unverified responses

that consisted almost entirely of unmeritorious that consisted almost entirely of unmeritorious objections and a false statement all such objections and a false statement all such documents had been provided”documents had been provided”

6/97 Broadway agreed to produce in exchange 6/97 Broadway agreed to produce in exchange for motions to compel being withdrawnfor motions to compel being withdrawn

8/97 Broadway first admitted “problems” in 8/97 Broadway first admitted “problems” in retrieving recordsretrieving records

9/97 Claimed HR was off-line for conversion9/97 Claimed HR was off-line for conversion

Broadway – ChronologyBroadway – Chronology 11/97 In response to motions to compel 11/97 In response to motions to compel

Broadway said it had been acquired by Broadway said it had been acquired by Federated and documents have been “lost, Federated and documents have been “lost, misplaced or destroyed”misplaced or destroyed”

1/98 Plaintiff sent new discovery requests, 1/98 Plaintiff sent new discovery requests, got boilerplate objectionsgot boilerplate objections

Parties went to mediation, given some Parties went to mediation, given some pages of payroll recordspages of payroll records

10/98 Motions to compel granted with 10/98 Motions to compel granted with monetary sanctions now up to $12,000monetary sanctions now up to $12,000

Broadway – ChronologyBroadway – Chronology 2/99 Broadway says that records had been 2/99 Broadway says that records had been

sent to Georgia in 1996 and can’t be sent to Georgia in 1996 and can’t be located, didn’t give other informationlocated, didn’t give other information Broadway says there are about 5 million pages Broadway says there are about 5 million pages

of records relating to 90,000 class membersof records relating to 90,000 class members 7/99 Plaintiff wants Broadway to pay to 7/99 Plaintiff wants Broadway to pay to

reconstruct the computerized recordsreconstruct the computerized records

Broadway – ChronologyBroadway – Chronology 8/99 Broadway explains that records sent 8/99 Broadway explains that records sent

to Federated data center in Georgia in to Federated data center in Georgia in 2/96, then storage devices were reviewed 2/96, then storage devices were reviewed in summer, “when it was determined they in summer, “when it was determined they could not be read because they were could not be read because they were damaged or the software to read them damaged or the software to read them could no longer be obtained, they were could no longer be obtained, they were destroyed.”destroyed.”

Broadway – ConclusionsBroadway – Conclusions ““Broadway urges the hard copy payroll Broadway urges the hard copy payroll

documents were the same as the computerized documents were the same as the computerized data. Not so. The hard copy may have data. Not so. The hard copy may have contained the same information, but that contained the same information, but that information was not equally accessible. As information was not equally accessible. As [plaintiff] notes in her motion, it would be [plaintiff] notes in her motion, it would be virtually impossible to manually extract all of the virtually impossible to manually extract all of the necessary and pertinent information from five necessary and pertinent information from five million pages of records.”million pages of records.”

Broadway – Rest of the StoryBroadway – Rest of the Story 4/02 Determined that Broadway was using 4/02 Determined that Broadway was using

different data than what had ever been provided different data than what had ever been provided to Lombardo’s counselto Lombardo’s counsel

9/02 Discovery referee agreed that a 9/02 Discovery referee agreed that a “terminating sanction” was appropriate as to “terminating sanction” was appropriate as to Broadway due to discovery abuseBroadway due to discovery abuse

11/03 Parties were getting ready for trial when 11/03 Parties were getting ready for trial when case was finally settledcase was finally settled

Attorneys’ fees were about $6 million, plus over Attorneys’ fees were about $6 million, plus over $1 million in expenses$1 million in expenses

Questions And AnswersQuestions And Answers

We have discussed We have discussed what the legal system what the legal system expects of document expects of document productionproduction

Hopefully we inspired Hopefully we inspired you to think about you to think about this aspect of your this aspect of your profession in a new profession in a new mannermanner