Jail time! (Victor Stanley v. Creative Pipe)

Big news in the world of e-discovery! A judge has found a defendant in contempt of court, and has ordered jail time for the defendant, at least until he pays plaintiff's attorney fees and costs!

The case is called Victor Stanley v. Creative Pipe, and the decision was issued last month, September 2010.

In a nutshell, the defendant in this case, Mark Pappas, deleted and destroyed electronically stored information ("ESI"), on a massive scale. Much of this ESI can't be recovered.

As a result, the plaintiff requested sanctions, and Judge Paul Grimm, of the U.S. District Court in Maryland, granted them.

On top of the sanctions, defendant basically conceded the underlying case (which was copyright infringement) when he agreed to a default judgment against himself on the primary claim!

That's how bad things became in discovery in this case - the defendant gave up defending against the original claim. He admitted that most of plaintiff's allegations were accurate.

Here's the amazing quote:

"Among the sanctions this memorandum imposes is a finding... that Pappas's pervasive and willful violation of serial Court orders to preserve and produce ESI evidence be treated as contempt of court, and that he be imprisoned for a period not to exceed two years, unless and until he pays to Plaintiff the attorney's fees and costs..."

Wow!

What happened?

The defendant really upset the judge. The case went on for years, taking up "hundreds of hours of my time and my law clerk's time", according to the judge. The judge was not happy, and let the defendant have it.

The background of the case can be stated somewhat simply: Victor Stanley, Inc. ("VSI") makes park benches, bike racks, metal trash cans, and other things one might find outdoors, in a public space.
Someone using the name "Fred Bass" extensively downloaded design drawings and similar material from VSI's website.

VSI filed a complaint against Mark Pappas in October 2006 alleging violations of copyrights and patents, and unfair competition, claiming that "Fred Bass" was actually Pappas.

For the next several years, "Pappas engaged in a cat and mouse game to hide harmful ESI from production during discovery, repeatedly trying to stall or prevent VSI from discovering evidence that he improperly accessed or used VSI's website or drawings."

The judge lists eight preservation failures:

1) Pappas did not implement a litigation hold.
2) Pappas deleted ESI soon after VSI filed suit.
3) Pappas did not preserve his external hard drive after VSI demanded preservation of ESI.
4) Pappas did not preserve files and emails after VSI asked for preservation.
5) Pappas deleted ESI after the court issued its first perservation order.
6) Pappas continued to delete ESI, and use programs to permanently remove files after the court reminded the parties of their duty to perserve evidence and issued its second preservation order.
7) Pappas did not preserve ESI when he replaced his company's server.
8) Pappas continued to permanently delete ESI after the court issued a number of production orders.

What seems to have upset Judge Grimm the most is defendant's continued deletion and permanent destruction of ESI, after the court told him to preserve all material related to the case. Defendant did this for years, over the life of the case... He intentionally tried to destroy evidence - information that would hurt his defense.

That's what upset the judge. And that's why the judge ordered jail time, until the defendant pays plaintiff's attorney's fees and costs.

Victor Stanley v. Creative Pipe is an amazing case, with lots of interesting details.
Details for another time, though...
That's all for this week, on Discovering E-Discovery!

Social Networking and Electronic Discovery: An Introduction

Social networking has changed our world. It has changed both personal communications and work-related communications. Some of the most interesting challenges in the electronic discovery world come from questions about social networking.

One question is: who owns user-created content on a social network? Is it the person who posted the picture; uploaded the video; wrote on someone's wall? Or does the social network itself own this content?
What happens when a user closes her account? Is everything she created wiped off the network, or does some of it remain, perhaps on someone else's personal page? For example, if Mary had a back-and-forth public conversation with Bob, on Bob's personal page, and Mary closes her account, is the conversation erased from Bob's page? Or not? Or is Mary's part of the conversation deleted, while Bob's writings remain?

What about a court's request for evidence? Is a social network obliged to turn over data created by a user? Or does the court go to this user for the data?

There is a federal law which attempted to address some of these questions, but the law was enacted long before today's social networks existed. In fact, the law was enacted in 1986, so it predates even the World Wide Web!

As part of the 1986 Electronic Communications Privacy Act, the U.S. Congress passed the Stored Communications Act (the SCA).
The SCA defines two types of online services:

• Electronic communication services
• Remote computing services

The definitions are straight-forward:

Electronic communcation services include any service that lets users send or receive data.

Remote computing services include any service that lets the public store data or use processing services, over an electronic communications system (a network).

The SCA protects data that is stored or transmitted via electronic communciation services much more than data that is stored or transmitted via remote computing services. Congress' logic seems to have been that by placing data on a remote site, the data user has a lower expectation that the data will remain private, while data sent over an electronic communication service is more like a phone call, where the user has higher expectations of privacy.

U.S. courts are looking to the SCA to fit social networking fact patterns, and they are having difficulty applying the 2010 facts to the 1986 law.

There is much more to be said about social networking and electronic discovery, and I will address the topic in the future.

Cloud Computing and E-Discovery

This week, I'd like to talk about cloud computing and electronic discovery.
What is 'cloud computing'?

To understand the concept, first think of the traditional way of storing information on a computer. When you save a document, you can save it on your computer's hard drive, which is located inside the machine.
If you are on a network, you can also save the document remotely, usually on a bigger hard drive you can access over your network.

In each case, you know where the document is physically located: either on the hard drive inside your computer, or on a larger hard drive in another computer on your network.

Turning to cloud computing, it is possible you are already familiar with the basic concept, if you use internet-based email:
When you send and receive email using an online email account, you don't know where those emails are actually located. They could be sitting on a server right next to you, or on a server thousands of miles away, around the world. But you don't really care. What matters to you is that you can send and receive email, and read emails you have saved in your archive.

Cloud computing is very similar:
You store data on a network, but you don't know where that data is actually located, and you don't really care.
The 'cloud' metaphor gives you the mental image of sticking data into a cloud in the sky, and pulling data back out of it. Once the data is in the cloud, you can't see where it is, and you don't know if there is one copy, or many copies, or if the data is moving from computer to computer. Again, though, you don't care, as long as you can pull the data back out of the cloud. And, of course, as long as the data is secure while it is in the cloud.

Another useful analogy is to compare cloud computing to electricity service.
Cloud computing users may pay for the amount of data they send into, and bring out of, the cloud, just like the way consumers of electricity pay for the amount of electricity they bring into their buildings, to power their appliances and lights.

What are the advantages of cloud computing?
Lower cost and more flexibility.
To store data, a user doesn't need to buy a lot of hard drives, which may be eventually be idle and empty if the user's storage needs change. The user also doesn't need to maintain a network to store and access data.

What are some of the e-discovery challenges related to cloud computing?

One is the concept of possession and control of data.
The end user is almost always in control of the data, as he or she can decide how and when to put it on the cloud, or to remove it from the cloud.
But who is in possession of the data? The end user, or the entity which owns the storage space in the cloud where the data resides?

Another question relates to preservation of attorney-client privileges when storing data in the cloud. Are these privileges preserved?

Document preservation obligations are another concern. If you store your data on the cloud, and you are required to preserve, and not destroy, certain data, can you make sure that the data remains intact?

Privacy questions may also arise. The European Union's privacy standards are much more strict than those in the United States. Where is data being stored? Is it subject to the jurisdiction and the laws of the EU? Of the US? Or of another location?

These are some of the interesting electronic discovery questions relating to cloud computing, and they deserve their own discussions. For the moment, I hope I have introduced the concept of cloud computing, and some of the e-discovery issues related to it.

HIPAA HITECH - E-Discovery and the Healthcare Industry

This week, I'd like to talk about HIPAA HITECH.


What is HIPAA HITECH?


Well, HIPAA is a 1996 federal law on health insurance, and it stands for:


Health
Insurance
Portability and
Accountability
Act


In 2009, HIPPA was amened to add the HITECH Act. This, in turn, stands for:


Health
Information
Technology for
Economic and
Clinical
Health
Act


It's the 'Information Technology' of HITECH that hints at the law's purpose. According to the U.S. Department of Health and Human Services (HHS), HITECH is intended "to promote the adoption and meaningful use of health information technology." HITECH covers security and privacy issues when a person's health information is transmitted electronically.


HIPAA HITECH brings the world of electronic discovery to the world of health care in the form of "electronic health records" and how these records are handled.


HIPAA HITECH is complicated, and has many aspects. I'd like to touch on just a few, this week:

• The law extended privacy protections to 'business associates' of 'covered entities'. Basically, health information has to be kept private not only by health care providers, but also by their business associates.
• The law also has new breach notification requirements. If health information is released to the outside world, notification must be made, as per new regulations of HHS (which were required under the new law).
• Another significant change in the law includes new rules on how to account for disclosures of a person's health information.

These changes are just a few of the changes under HIPAA HITECH (although they are some of the more significant ones). In the months to come, I plan to discuss more, and more detailed, aspects of HIPAA HITECH.

E-Discovery basics: The Sedona Conference

This week on Discovering E Discovery, I'd like to talk about the Sedona Conference.

The Sedona Conference is a research and educational institute based in Sedona, Arizona. The Conference strives to improve law and policy in the areas of antitrust law, complex litigation and intellectual property rights.

The Sedona Conference's first Working Group is called 'Electronic Document Retention and Production', and it deals with the subject of e-discovery. Starting in 2002, a lot of very smart people have met together to talk about current issues in, and challenges to, the world of electronic discovery.

Working Group 1 released its first publication in 2003, and it was cited by Judge Scheindlin in the Zubulake cases.

The Sedona Conference's website can be found here. The documents published by Working Group 1 are found here. They are a very valuable resource for e-discovery professionals.

Everyone who works in electronic discovery should be familiar with the Sedona conference, and its Working Group 1!

(A short post this week, but Discovering E Discovery is in a brief summer hiatus.)

E-Discovery Basics: Spoliation and Metadata

This week, I'd like to define the term 'spoliation'. If you are not familiar with the word, you may have to be a little careful - you could mispronounce it. It's not 'spoil-ation' (which isn't a word, according to the Merriam-Webster dictionary), but 'spo-li-ation'.

'Spoliation' is related to the word 'spoil', however, and its first definition comes from the Latin word for 'plundering'.

We are more interested in its second definition, which is to alter a document so that evidence is lost, destroyed, or even just changed.
Spoliation is a bad thing - it can be done intentionally or negligently, and it can be a criminial act.

Spoliation can occur quite often in the electronic discovery context. It usually happens to metadata.
What is metadata? 'Metadata' is data about data. For example, most electronic documents have a creation date, the name of the document's author, the date the document was last saved, etc. All of this is considered 'metadata'.

If the contents of an electronic document are changed (such as text in the body of an email), this is clearly spoliation. However, if even the creation date of a document is changed, this is also considered spoliation.

Why is spoliation important in e-discovery? Spoliation can lead to a judge imposing sanctions or even giving adverse inference instructions to a jury, which, as we have seen, can be devastating.

In my experience, the problem with spoliation usually arises in the context of restoring electronic documents from back-up media such as back-up tapes. It is very possible that some of the metadata is changed in the restoration process. I've found that if spoliation has occured, it is usually the document's creation date that is changed, and it is changed to the restoration date.

For example, an email may be written and sent on 1/1/2005. Its creation date is therefore 1/1/2005. At some point, the email is backed up into an archive. If the email is restored from the archive on 6/25/2009, and the email's creation date is changed from 1/1/2005 to 6/25/2009, then this is spoliation.

Spoliation can happen this way quite often - many regulators and judges are familiar with the problem, and may allow minor spoliation of documents turned over to the court or to the other side, so long as the original archive copy of the data is clean and unaltered.
However, being aware of the situation and notifying the court or the other side is extremely important in this case. Handing over data that has undergone spoliation, and not telling the recipient, is a recipe for disaster.

E-Discovery Background: The Billion-Dollar Verdict

This week, I will talk briefly about e-discovery's "billion-dollar verdict."

In 2005, a Florida court sanctioned investment bank Morgan Stanley in the case of Morgan Stanley & Co. v. Coleman Holdings Inc. In 1998, billionaire Ronald Perelman sold his majority share in camping equipment company Coleman, in exchange for Sunbeam stock. After Sunbeam went bankrupt in 2001, Perelman sued Morgan Stanley, claiming he was fooled into accepting the Sunbeam shares.

The judge sanctioned Morgan Stanley for not turning relevant emails over to Perelman. Because of this punishment, Perelman did not have to show he was damaged by the deal. Instead, he had to prove only that he relied on Morgan Stanley's advice on the Coleman-Sunbeam transaction.

After a trial, the jury returned a $1.5 billion verdict for Perelman. This included over $600 million in actual damages, and over $850 million in punitive damages!

This verdict was a shock to the financial world. A billion-dollar decision, because of e-discovery issues! The result drew even more attention to electronic discovery and its importance.

Years later, a Florida appeals court reversed the decision - Morgan Stanley wasn't able to present a defense in the case. But the original verdict put the fear of liability into a lot of people. It showed that e-discovery issues matter.


(And, on an unrelated note, some World Cup congratulations go out to: the U.S. team, for holding England to a draw; the German team, for the crushing defeat of Australia; and the Swiss team, for the shocking upset of Spain!)

E-Discovery Basics: The 2006 changes to the FRCP

On December 1, 2006, the Federal Rules of Civil Procedure (FRCP) were changed, in an attempt to address electronic discovery.
(For the curious, the Rules which were changed were Rules 16, 26, 33, 34, 37 and 45, plus Form 35.)
For about ten years, the federal court system in the United States had struggled with how to handle electronic discovery, and the 2006 changes were an attempt to modernize the discovery process. The changes to the Federal Rules are significant because they are applied not only at the federal level, but also at the state level, as many states in the U.S. use the FRCP as a guideline for their own rules.
The 2006 changes defined the term "electronically stored information", and defined it broadly. (This term is sometimes shortened to "ESI".)
The term is meant to include any kind of information in electronic form.

Here is a brief summary of some of the changes:

- The rules require the parties to a lawsuit to discuss ESI when they meet to talk about the case (this is called the "meet-and-confer").
- The rules roughly adopted Judge Schiendlin's two-tiered system of reasonably accessible data and not reasonably accessible data.
- A "claw-back" procedure was established: if one party accidentally produced material that was subject to attorney-client privilege, the producing party can ask the other side to return or destroy the data.
- The rules created a "safe harbor" - a party usually cannot be sanctioned for not providing ESI that was lost or destroyed as part of the routine, good-faith operation of an ESI storage system.

The rule changes tried to address some of the major issues in electronic discovery:
- The court system wanted to encourage the parties to a lawsuit to be on the same page when dealing with ESI, and therefore they must talk about ESI when they meet and confer about the case, instead of ignoring the issue and then battling over electronic discovery later in the case.
- The drafters of the amendments wanted to encourage parties to quickly produce data; if they included privileged material by accident, the "claw-back" would (in theory) protect them. Of course, when this happens, the other side now has emails between an attorney and client, and can read them. They can't use or disclose the information, but they have it.
- The "safe harbor" was meant to calm some nerves: companies can destroy their data as part of their business routine. However, once a litigation hold is placed on the information, then the data can't be lost or destroyed.

The 2006 changes to the Federal Rules of Civil Procedure removed some uncertainty in the electronic discovery process. They weren't perfect, but they were a good attempt at modernizing the Rules.

E-Discovery basics: The EDRM

This week, I will discuss the EDRM.

What is the EDRM?

Well, the letters stand for the Electronic Discovery Reference Model.

Here's some background:

In the early-to-mid 2000s, and especially after the release of the Zubulake decisions, it became clear that the world of electronic discovery needed to agree on an intellectual framework. A common way to talk about e-discovery. A model to which everyone could refer. (A reference model!)

In 2005, some very smart people developed the Electronic Discovery Reference Model, and, courtesy of EDRM.net, here it is in all its glory:

The EDRM identifies six consecutive phases of e-discovery:

• Information Management
• Identification
• Preservation & Collection
• Processing, Review & Analysis
• Production
• Presentation

The model also shows us that as we progress through these phases, from Information Management to Presentation, the volume of data we are dealing with goes down. At the same time, the relevance of this data goes up. (Or, better said: the data becomes more relevant.)

Here are my brief summaries of each of the six parts of the EDRM:

1. Information Management
Every business must manage its information. Even if no litigation is pending, a company must keep track of its data. However, managing information with the EDRM in mind gives the company a big head start in dealing with future litigation.

2. Identification
Once a company and its counsel are aware of the need to conduct electronic discovery on the company's data, they must ask the question: Whose data? Which employees are involved?

3. Preservation & Collection
After the appropriate custodians are identified, counsel must ensure their data is preserved (and not lost or destroyed). Counsel begins to collect this data.

4. Processing, Review & Analysis
Once the data is collected, it is processed - this usually means putting the data into some form of e-discovery review tool. Duplicate copies of the same document are removed. Next, someone (usually an attorney) reviews the data for attorney-client privilege and relevancy to the case. Counsel analyzes the data, to understand what it is and what it means for the case.

5. Production
The data is turned over to the 'other side', or to whomever requested the data.

6. Presentation
The data is shown to a witness in a deposition, or used in a trial setting. At this point, there is relatively little data, but it is very relevant to the case.

This is the EDRM. A model that the industry has agreed upon, so that we understand each other when talking about e-discovery.

Next week: the 2006 changes to the Federal Rules of Civil Procedure.

Aftermath of the Zubulake decision

The Zubulake V decision was released in the summer of 2004.

(For background on Zubulake, see my earlier Zubulake posts here.)

In her decision, Judge Scheindlin created a framework for handling electronic discovery requests. She described what she considered the proper way to respond to requests for documents.

My electronic discovery group looked at the judge's recommended model, and liked what we saw. At the time, there weren't many 'best practices' guides we could rely on, and especially not any that were issued by a judge, and by a judge in our jurisdiction. So, we looked to the Zubulake decision to show us the way.

What is Judge Scheindlin's model?

She recommended the following:

1. A party's counsel should issue a 'litigation hold' to notify employees who may have relevant information that they could not destroy this information. The litigation hold should be kept 'fresh' in the minds of current employees, and be conveyed to new employees.

2. Counsel must talk to the 'key players' in the litigation, to make sure they understand the litigation hold, and to find out whether these employees store relevant information in non-standard or unusual places. If so, this data must also be preserved.

3. Counsel should obtain a copy of the relevant information. Counsel should also ensure backup media is kept safe, either by taking possession of it, or by telling the company's technology professionals that they must keep the relevant backup media separate from other media, and especially not to lose or destroy it.

What did we learn in following the model? Most importantly: Communication Is Key!

- A party's counsel must keep in close touch with the company's IT people, and keep reminding them they must make sure no relevant data is lost or destroyed.

- We also found that counsel must develop a deep understanding of how and where the company's data is stored. If you don't know what to include in a litigation hold, you may overlook vital information. As the defendant in Zubulake found, this is a bad thing.

- Finally, we had to ask key employees if they stored any data in any non-standard way. Different departments at my firm had different rules about storing company data, and it seemed as if each group of employees stored data in its own, unique way. It was a challenge to make sure we didn't overlook any source of relevant data. But it was a fun challenge, and each case was new and never a routine.

While the Zubulake case was the beginning of my discovery of e-discovery, it was only the beginning. In the weeks to come, I'll talk about other influences like the EDRM, the 2006 changes to the Federal Rules of Civil Procedure, and more...

(Post updated 5/28 to generalize names of companies.)

E-Discovery Basics: Zubulake V

The fifth and final decision of the Zubulake case was released in the summer of 2004, and it was a shocker.
(For background on Zubulake, please see my discussion in these four earlier posts.)

Zubulake had an effect on my world - it didn't exactly rock it, but it changed the way many legal departments viewed electronic discovery, including the department where I worked at Bear, Stearns & Co.
Some personal background: in early 2003, I had started working in the litigation group of the Bear Stearns Legal Department, just as the Zubulake decisions were being released. We read the Zubulake decisions as the judge issued them. The fifth Zubulake ruling worried a whole lot of people.
Why?
Well, the "adverse inference instruction" is why - the atomic bomb of the litigation world.
What happened here?

When Zubulake's legal team re-deposed certain UBS employees, as ordered by the judge in Zubulake IV, they found out about many more emails: emails that were improperly deleted and emails that were supposed to have been given to Zubulake almost two years earlier.
Even worse for UBS, the depositions showed that the deleted emails were important to the case, and they had been lost, forever. The back-up tapes that held copies of these emails were gone too.
The depositions also revealed that UBS had other emails important to Zubulake's case, but never turned them over to her.
Zubulake asked the judge for an adverse inference instruction to the jury. For the judge to grant this request, UBS had to have an obligation to preserve relevant evidence which was lost or destroyed, and it had to do so with a "culpable state of mind". In the court's jurisdiction, a "culpable state of mind" included not only willful or reckless behavior, but also negligence (although Zubulake then had to prove that the evidence lost was relevant to her case).

Ultimately, the judge found that UBS counsel did not do everything it should have done to preserve evidence, and that UBS employees also ignored much of the advice given to them by their counsel. Therefore, the judge decided that UBS willfully lost the evidence, and that under the legal standard, the lost information was presumed to be not only relevant to the Zubulake case, but favorable to Zubulake. The jury was instructed of this decision by the judge.

How did the case end? The jury awarded Zubulake almost $30 million in damages for her gender discrimination claim: about $10 million in compensatory damages, and about $20 million in punitive damages. A nice outcome for Zubulake, and not so nice for UBS.

Next week, I'll talk about my reactions to the Zubulake case, and some of the lessons learned...

(Zubulake V is cited as: Zubulake v. UBS Warburg, 229 F.R.D. 422 (S.D.N.Y. 2004))

E-Discovery Basics: Zubulake IV

In the last few weeks, I have been discussing the Zubulake case of 2003 and 2004. Background on the case can be found in my previous installments here, here and here. If you are not familiar with the case, it is worthwhile to review these earlier blog posts.

Picking up the story, a few months after issuing her third decision in the Zubulake case, Judge Scheindlin released her fourth decision.
UBS had been restoring back-up tapes related to the case and found that some tapes were missing.
Also, UBS discovered that emails important to the case had been deleted from the UBS email system, and were now available only on back-up tape. This was a problem, as UBS had told its employees to stop deleting any emails relating to this case.
Zubulake asked the judge to impose sanctions on UBS because of this issue.

The judge decided that UBS had a duty to preserve emails related to Zubulake, and that that this duty started when it seemed very likely that Zubulake would sue UBS.
The next question addressed was: preserve which emails? The judge decided that all documents relevant to the case belonging to "key players" had to be kept by UBS.

Zubulake had requested an "adverse inference instruction" from the judge. If granted, this would end the case, as UBS would have no reasonable option but to settle with Zubulake. An adverse inference instruction is extreme - a judge tells a jury to assume that if one side destroyed evidence, then this evidence must have been very harmful to that side's case.

Judge Scheindlin decided that Zubulake could not show that the lost evidence would have supported her claims, and so she would not issue an adverse inference instruction. However, UBS did have to cover Zubulake's cost for re-deposing some witnesses on issues raised by the missing back-up tapes.

Next week, I'll wrap up my discussion of the Zubulake case.

(Zubulake IV is cited as: Zubulake v. UBS Warburg, 220 F.R.D. 212 (S.D.N.Y. 2003))

E-Discovery Basics: Zubulake III

This week, I briefly continue my discussion of the Zubulake case, one of the most significant electronic discovery case of the 2000s.

Here's a brief recap: Laura Zubulake sued her employer (UBS) on grounds of gender discrimination. She asked for UBS emails relevant to her case. UBS said that emails relevant to the case were available only on back-up tapes, and claimed that it would be expensive to recover these emails. Judge Scheindlin, the federal court judge in the case, instructed UBS to restore a sample of back-up tapes, so that the judge could make a decision on whether to shift the costs from the defendants (UBS) to the plaintiff (Zubulake).

The judge's third decision in the case (known as Zubulake III) was released in July 2003, a couple of months after her first decision.
She applied her cost-shifting analysis and its seven-factor test (discussed in last week's post here), and decided that the plaintiff (Zubulake) would pay 25% of the costs of restoring the back-up tapes, while the defendant (UBS) would pay 75%.

However, it is important to remember that the restoration costs were much smaller than the costs of reviewing the emails to see what was there: UBS spent a lot of money to pay attorneys to look over the documents restored from the back-up tapes. The judge said that because UBS had control over these costs, it was responsible for all of them.

Zubulake III is interesting because the judge decided to shift some of the restoration costs to the plaintiff, but not the costs of reviewing the restored emails.

Next week, I'll continue my discussion of the case by looking at Zubulake IV, and hopefully, the last in the series, Zubulake V!

(Zubulake III is cited as: Zubulake v. UBS Warburg, 216 F.R.D. 280 (S.D.N.Y. 2003))

E-Discovery Basics: Zubulake Part Two

Last week, I started to talk about one of the most important and influential electronic discovery cases of the past decade: Zubulake v. UBS Warburg. I'll pick up my discussion of this 2003 case where I left off...

Laura Zubulake had sued UBS, her employer, claiming gender discrimination. She asked UBS for emails relevant to her case. UBS said it did not have these emails, and that the costs of restoring its back-up tapes to recover the Zubulake emails would be very high (in the hundreds of thousands of dollars). UBS asked the court to consider first whether UBS had to give the emails to Zubulake, and if so, who had to pay the costs of getting the emails from storage on the back-up tapes.

Judge Shira Scheindlin looked to the Federal Rules of Civil Procedure, which allowed Zubulake to ask UBS for emails related to her case. The Rules presumed that UBS would have to pay the cost of recovering the emails from back-up tapes, but also gave the court the discretion to shift some or all the costs to the party asking for the emails (in this case, Zubulake).

This is the point where the case becomes very interesting to the electronic discovery world. Judge Scheindlin pointed out that in many cases involving restoring emails from a back-up tape, the party that is supposed to produce the emails argued that it would be far too expensive to recover the emails. In other words, why ask someone to pay $100,000 to find emails relevant to a case, when the case involves only $10,000? This was the argument made by many companies when they were asked for emails.

Judge Scheindlin noted that many courts had automatically assumed that electronic evidence meant much higher costs, and would deny email requests. This often ended the case, as a plaintiff couldn't get access to necessary evidence. Judge Scheindlin recognized that electronic data could be searched much more cheaply than paper documents could be read and reviewed - an office computer using a search engine could find something in seconds.

The judge created a three-step analysis:

First, how is the data stored? Is it accessible, or inaccessible?
The judge said 'accessible data' means data that is readily usable, and doesn't have to be restored. Examples include data stored on hard drives, CDs, DVDs, etc.
'Inaccessible data' means data that is on backup tapes, or has been erased or damaged. This data is inaccessible because something has to be done to it before it can be accessed. That "something" will cost time and money.
When faced with inaccessible data, the judge said that courts should consider shifting the restoration and production costs to the party asking for the data.

Second, in order to analyze whether to shift costs, the court needs to know what is in the inaccessible data. The judge suggested restoring a small sample of the requested inaccessible data to find out what is there.

Third, the judge developed a seven-step cost-shifting analysis:
1. How specifically is the request tailored to find relevant information? In other words, has the request been written so that it will discover documents relevant to the case?
2. Is this information already available from other sources?
3. What's the total cost of production, compared to the amount of the case?
4. What's the total cost of production, compared to each party's resources? (Does one party have deep pockets?)
5. Can each party control costs, and does each one want to?
6. How important are the issues at stake in the case?
7. What are the benefits to the parties of restoring the data?

The judge stressed that these seven factors are not a check-list and they don't have equal weight with each other. The first factors on the list are the most important, and they are less important as the list goes down.

The judge summarized the central questions of the seven-factor cost-shifting test as: 'does the request impose an "undue burden or expense" on the responding party?' and "how important is the sought-after evidence in comparison to the cost of production?"
In other words, "is it an undue expense?" and "is the data important enough to be worth the cost?"

Judge Scheindlin decided that UBS must produce accessible data, as UBS could do this quickly and cheaply.
The judge also decided that UBS must restore responsive emails from five back-up tapes so that the court could look at the data and begin its cost-shifting analysis.

And so ended the first Zubulake decision (known as Zubulake I). The story continues in Zubulake III! (The Zubulake II decision didn't address anything related to electronic discovery, so I won't talk about it.)

E-Discovery Basics, Part Two - Introduction to Zubulake

This post is the next installment in my survey of e-discovery basic principles.

One of the most important, and consequential, series of court decisions in the area of electronic discovery is the Zubulake v. UBS Warburg case, normally referred to simply as "Zubulake".

Zubulake is important because it deals with the question of who is responsible for paying the costs of e-discovery; the plaintiff or the defendant?

E-discovery can be very expensive. It is especially expensive when one party asks the other to hand over data, and that data is not easily accessible. For example, the data may exist only on back-up tapes, which forces the producing party to find the correct back-up tape, restore it so that the data is accessible, find the data, check to make sure the data hasn't become corrupted, make a copy of the data somewhere else, and only then begin to look at the data to see what is actually there, and what it says. All of this takes time and money, and diverts the producing party's resources away from other tasks (such as running a business). The question is: who should pay for this?

Zubulake is a series of five decisions released from 2003 through 2004 by Judge Shira Scheindlin of the U.S. District Court (a federal court) for the Southern District of New York.
Laura Zubulake sued her employer, claiming gender discrimination. She asked UBS for any emails or other documents discussing her case. UBS turned over a relatively small number of emails, while Zubulake herself produced almost five times as much email information. UBS did not search its back-up tapes or its other archives for emails related to the Zubulake matter, saying it would be a burden, and it would be expensive. UBS asked the court to shift the costs to Zubulake (and make her pay for retrieving the emails from the UBS archive).

The court considered the question of whether UBS should be required to produce relevant emails. If so, who should pay for this? Should the cost be shifted from one party to the other?

The exciting continuation of this case will be the next intallment of this blog. Stay tuned!

(For the curious, the Zubulake case is cited as Zubulake v. UBS Warburg, 217 F.R.D. 309 (S.D.N.Y. 2003).)

E-Discovery Basics, Part One

When talking about electronic discovery, it is helpful to have some context. This post is an attempt to give some quick background information that is useful but yet not too boring.

The United States is a common law country, which means that the law is usually created and updated through decisions made by the courts. When a judge decides a case, she normally looks to precedent to make her decision - how have other courts in her jurisdiction decided this kind of matter? The judge's decision usually then becomes precedent for future cases.
The common law system is contrasted with the civil law system, where laws are normally written by a legislature into a legal code - a list of statutes which are the body of the law.

There is another meaning to "civil law" in the U.S. - here, it is contrasted with criminal law. Civil law usually involves litigation between private parties.
Civil procedure is the body of law which describes how the court handles a civil case - these are rules describing how a case is started, how to communicate with the other side, how to interact with the court and the judge, how to request documents from the other side, etc.
Civil discovery normally takes place before a trial - each side follows the rules of civil procedure to request documents and other material from another party in the lawsuit. The party receiving the request is responsible for examining and searching its own data for anything responsive to the request.

At the federal level in the U.S., the Federal Rules of Civil Procedure describe how a civil case is handled by the court system. These rules also guide the discovery process.
At the state level in the U.S., most states follow the Federal Rules, usually adding some modifications. There are exceptions, though: California and New York (among other states) have their own civil procedure rules.

Electronic discovery is now a very, very large part of civil discovery. Because of the importance of e-discovery, the Federal Rules of Civil Procedure were updated in December 2006 to address electronic discovery. The impacts of these changes are still spreading through the legal system, and e-discovery has become an exciting area of the law.

Welcome to Discovering Electronic Discovery!

(also known as: "Discovering E-Discovery")


What's the purpose of this blog?
It is to share my insights about the world of electronic discovery (also known as e-discovery).

This answer leads to the next question: What is electronic discovery?

Well, e-discovery is legal discovery - part of the legal process where one side in a dispute can request documents from the other side. The 'electronic' part of e-discovery usually refers to documents that were created not on paper, but electronically - emails, spreadsheets, etc. This isn't some obscure legal issue - any person, company or institution that could be involved in a legal dispute should have some understanding of e-discovery.

And, finally, why would my insights matter?

I am an attorney with an undergraduate degree in computer science, so I have studied both the law and the technology of e-discovery. I spent many years in the legal department of a large investment bank, building and then managing a substantial in-house electronic discovery group. I keep myself up-to-date on how the world of e-discovery is growing and changing, and I'd like to share my thoughts and opinions.

My intention in writing this blog is to try to make electronic discovery easier to understand. This is not legal advice, of course, but simply my attempt to make e-discovery more accessable to more people.

Again, welcome to "Discovering Electronic Discovery", and I hope you enjoy your stay.