Microsoft Seeks Delay in Discovery Process on Vista Trial

From the Article in Computer World:

Microsoft Corp. on Friday asked that a lawsuit claiming it duped consumers in a Windows Vista marketing program be suspended while the company appeals a judge’s decision to grant the case class-action status.

If granted, the motion would also postpone any new disclosures of potentially embarrassing company e-mails. Last month, the release of similar documents showed that top-level company executives struggled with the new operating system on machines labeled “Vista Capable,” and that partners such as Dell Inc. warned Microsoft that the campaign would confuse consumers.

Microsoft is challenging two aspects of the case. First, they challenged the trial court’s decision basing class-action status on a Washington state law. They also questioned the court’s approval of plaintiff’s theory of harm, called “price inflation,” whereby Microsoft’s actions resulted in increased demand, and price, of systems running a basic version of Vista. Microsoft’s argument is basically that if their appeal is successful, all the expenses and disruptions associated with discovery are or naught.

[HT: Slashdot]

E-discovery from a Canadian Perspective

The ALSP (Association for Litigation Support Professionals) has posted an interview with Canadian attorney, and legal technology expert, Martin Felsky, who, inter alia, discusses differences in electronic discovery processes between the U.S. and his country:

In Canada the issue of how much e-Discovery must be conducted is decided using a proportionality test that weighs the need for the electronic data compared to the costs and burdens of producing it in the context of the amounts in controversy and the issues in the case. Counsel tend to reduce the volume to be examined whereas in the US the attitude is more along the lines of we have to find and process virtually everything that might be relevant.

Mr. Felsky discusses his background, as well as other differences between the two legal systems…

[HT: Information Governance Engagement Area]

The EDD Hot Potato…lands at Counsel’s feet

We have blogged about the fact that many corporate law departments try laying the responsibility for Electronic Discovery projects at the feet of the IT staff. The post was partly motivated by this article. Yet, and we have mentioned this as well, case law indicates that it is up to the attorneys, and not the IT technicians, to properly manage the process. As Reed Smith’s Janet Kwaon and Karen Wan state in a new article, counsel delegates this responsibility at his or her own peril:

[I]n the current climate, given the interplay between ethical obligations and standards for professional conduct and these e-discovery requirements, attorneys may be surprised to learn that inattention to e-discovery may not only work to the detriment of clients — it may lead to professional malpractice or the imposition of sanctions on counsel.

In other words, pointing the finger at IT may not allow counsel to shift liability. And the problem is, there really is no easy fix:

The duty of a party to locate and produce all materials responsive to discovery and counsel’s oversight obligations are nothing new to the discovery process. What is new, brought on by the staggering volume of data and the complexities associated with their management, is the broad array of possible pitfalls and the ability to reveal mistakes and outright gamesmanship through the often inerasable trail of electronic evidence.

We have noted the complexities associated with electronic discovery before:

[E]lectronic discovery requires an understanding across several disciplines. Law, IT, records management, and compliance are some of those areas of knowledge from which any discovery team should draw. It is difficult for any one individual to have sufficient knowledge across all these areas, so communication between experts from these professions becomes important.

Furthermore, we have also advised readers that the selection of an EDD vendor is a critical point in any complex discovery project:

It is my view that the process used to select a vendor (or vendors) is one of those key points of time in the litigation, with respect to discovery. A thorough vetting of a vendor’s capabilities, technology, experience and reputation is essential to defending that decision in the future should the need arise.

So what can attorneys do to avoid some of the pitfalls of EDD that we have previously spotlighted? Well,

• Take Discovery seriously. I mean it; stop laughing.
• Learn the case law. Use our Case Bibliography as a starting point.
• Understand the basic technical concepts (ask experts you hire, or plan to hire, about their methodologies).
• Negotiate the 26(f) conference in good faith; and prepare for it as thoroughly as you would for a deposition, or hearing before the judge.
• In-house counsel should learn the basics of their company’s IT infrastructure; outside counsel should assess both their own clients’ data enterprise, and that of the opposing party.
• Hire EDD vendors and experts by thoroughly vetting the candidates. Remember, price is not everything.

Oh. One more thing. Read my blog!

Why it’s best to be proactive

Two articles (ht: EDD Blog Online) I’ve just read illustrate the need for corporate legal and IT departments to be proactive with respect to the effects of litigation on everyday IT decisions. Mark Apicello has penned an article that suggests your lawyer accompany you when you buy storage hardware:

[Choosing hardware] used to be relatively simple: Research your requirements; conduct a critical analysis of how your current infrastructure meets those needs; and then make Draconian decisions on what to toss, what to buy, and what can be reasonably integrated with new systems.

And when it came to requirements, they traditionally boiled down to balancing capacity and speed. Thanks in large part to regulations such as the FRCP (Federal Rules of Civil Procedures), however, that is no longer the case. These days, choosing a storage system without knowing your company’s legal obligations can cost you dearly.

Hmmm. Considering how well attorneys and technology mix, this thought seems unlikely to make the typical IT pro’s day.

A second article, suggests that IT will be blamed if something goes wrong during e-discovery:

In a survey conducted by Canvasse Opinion among in-house legal departments at 200 of the Fortune 500 companies, 18 percent of the attorneys said that IT has primary responsibility for the development of an ESI [Electronic Storage Information], aka e-discovery, strategy/policy within their organization.

Let me add that FRCP covers only litigation. Government regulations and ensuing investigations would more than likely make an even greater demand on e-discovery than the new Federal Rules, according to Kristin Nimsger, Kroll Ontrack president, the company for whom the survey was conducted.

Okay, well 18 percent is far from a consensus, but this will nevertheless irritate those in IT. Ultimately, the lesson that should be gleaned, is that corporations need to address the issue before major disputes erupt. Being proactive is the key. And, as Ralph Losey might suggest in one of his well-written articles, obtaining a bit of technical competence might not be a bad place to start:

[P]laintiff’s position was basically that since the email was not reasonably accessible to plaintiff’s counsel, it did not have to be produced. After all, he argued, there could be privileged materials in there. Apparently it never occurred to him to hire someone with technical competence to open and read the emails for him.

The court doesn’t usually buy incompetence, and such an argument might very well establish an attorney’s violation of Model Rules requiring diligent and competent representation. Be careful there, buddy.

Again…e-discovery is part of every-day litigation. Follow the example of the Boy Scouts, and be prepared.

Mini Primer on E-Discovery

Metro. Corp. Counsel has posted an article giving a nice, concise overview of the electronic discovery process, including steps to take before a dispute begins:

Establish an ESI task force comprised of members from the legal department, IT, records, outside counsel and an ESI vendor. This team should begin by comparing paper retention periods to that of electronic data. In addition, they should also familiarize themselves with the network environment and the appropriate locations to preserve and collect data when needed. The team should then focus on streamlining and minimizing the preservation and collection process, and removing personal and administrative garbage from business records.

The article breaks e-discovery down into these categories:

• Proactive Pre-disputes Steps to take
• Preserving Data
• Comparison of Preservation v. Collection
• Processing of Digital Evidence
• Review
• Production

It’s a solid article, given the space constraints. I might have added a bit on identifying data sources and key players, which one must do before preservation, but that’s nit picking.

Dealing with Search Criteria

A recent post of ours cautioned readers to be careful on formulating, and to use some method of verifying, their initial assumptions. We refer to initial assumptions with respect to EDD as assumptions on keywords, effective date ranges, and data sources that must be preserved for an electronic discovery project.
Law.com has posted an article discussing keyword searches, and calls attention to one danger of not carefully considering the formulation of search criteria:

The results of a recent e-discovery keyword search should have come as no surprise. Working on a case related to a specific transaction, the attorneys requested production of all documents containing the word “buy.” Despite being cautioned against this broad search, they were reluctant to heed the warnings, and many unrelated documents were incorrectly deemed responsive. Unfortunately, it takes a $750,000 mistake like this one for some people to understand the benefits of using a strategic approach to keyword selection.

If this had been my project…well, never mind. As I have said repeatedly, it is essential for the initial assumptions used in extracting data for review to be thoroughly vetted, because the filter ultimately determines what documents the reviewer sees. Searches that are too broad cost time and money. Searches that are too narrow will miss vital data, and could cost the client even more in the long term (by skipping over helpful information or by landing them in hot water with the judge). The importance of the process of building a verifying a list should not be underestimated.

That said, keywords are not the panacea. New technologies, using concept-based ontologies and techniques continue to evolve, and will move us beyond the era of the boolean keyword search.

The Basics on Sanctions

This is the Fourth Installment of Effectively Managing E-Discovery.

Which actions or omissions may give rise to sanctions is partly dependent upon the circuit in which one practices. First, the attorney approaching a discovery project of any size should not have any misguided notion that judges are apt to forgive a lack of familiarity of his client’s system. The Conference of Chief judges stated in a report it issued 2005:

While the manner in which this encouragement should be given will, of necessity, depend on the procedures and practices of a particular jurisdiction, the court should establish the expectation early that counsel must be well informed about their clients’ electronic records. FN1

FN1: Conference of Chief Judges, Guidelines for State Trial Courts Regarding Discovery of Electronically-Stored Information (Rev. Draft, Sept. 2005). See also, Leonard Dutchman, Preserving Data in the Wake of Amended Rule 37(f), http://www.law.com/jsp/legaltechnology/PublArticleFriendlyLT.jsp?id=1160643922347 (last visited October 30, 2006) (“It is ultimately counsel’s duty to preserve and gather discoverable ESI.”); Phoenix Four, Inc. v. Strategic Resources Corp., 2006 WL 1409413 (S.D.N.Y May 23, 2006), *5 (citing Zubulake V) (“Counsel has the duty to properly communicate with its client to ensure that ‘all sources of relevant information [are] discovered.’ “); Craig Ball, EDD Showcase: Worst Case Scenario, Law Technology News (Oct. 31, 2006) at http://www.law.com/jsp/legaltechnology/pubArticleLT.jsp?id=1162215324083, (quoting J. William Speros, referring to attorney liability and explicitly mentioning Residential Funding Corp. v. DeGeorge Fin. Corp., 306 F.3d 99, 108 (2d Cir. 2002) and In re Worldcom, 2004 WL 768573 (S.D.N.Y. 2004)) (“We’ve seen courts hold parties responsible for failing to supervise their vendors.”)

As a matter of principle, sanctions should be used sparingly. Fed. R. Civ. P. R. 37(b)(2). The Federal Rules of Civil Procedure authorize a court to issue, as sanctions for disobeying discovery orders, the following orders (not an exclusive list):

• An order that the matters regarding which the order was made or any other designated facts shall be taken to be established for the purposes of the action in accordance with the claim of the party obtaining the order;
• An order refusing to allow the disobedient party to support or oppose designated claims or defenses, or prohibiting that party from introducing designated matters in evidence; and
• An order striking out pleadings or parts thereof, or staying further proceedings until the order is obeyed, or dismissing the action or proceeding or any part thereof, or rendering a judgment by default against the disobedient party.

Federal courts also possess an inherent authority to impose sanctions for the conduct of litigants in counsel regardless of whether the behavior at issue would be covered specifically under a rule or statute. O’Brien v. Ed Donnelly Ents., Inc., 2006 WL 2583327, at *2 (S.D. Ohio Sept. 5, 2006). The court is given a great deal of latitude in deciding what, if any, sanction should be imposed for bad conduct. Id. What kind of conduct may be penalized? The spectrum of attorney or disputant behavior subject to sanction is large, but for the purposes here, non-production or late production of relevant documents is behavior subject to sanctions, as is spoliation, and the destruction of evidence. Spoliation may be defined as “the failure to preserve evidence that is relevant to pending or potential litigation. See, e.g., Jimenez-Sanchez Restaurants, LLC, Civ. No. 05-1131 (JAG), 2007 WL 1098667, at *1 (D. Puerto Rico March 5, 2007).

The purpose of sanctions is to “deter parties from engaging in [prohibited conduct], place the risk of an erroneous judgment on the party who wrongfully created the risk, and restore the prejudiced party to the position it would have been in had the misconduct not occurred.” Consolidated Aluminum Corp. v. Alcoa, Inc., 2006 WL 2583308 (M.D.La. July 19, 2006). A court has “broad discretion to fashion appropriate sanctions on a case by case basis.” Phoenix Four, Inc., 2006 WL 1409413 at *3. The form in which sanctions can appear include:

• Exclusion of “spoiled evidence.
• Allowance of an Adverse Inference;
• Allowance of further discovery by the party injured by the misconduct;
• Monetary sanctions;
• Dismissal of a case (for misconduct by the plaintiff or cross-plaintiff).
• Default Judgment.

Although the flexibility accorded district courts is understandable, clarity is diminished because of it. Additionally, clarity suffers further from the fact that particular sanctions may be imposed for differing standards of conduct, depending upon the circuit in which the case is taking place.

This ‘Gotcha Moment’ brought to you by Electronic Discovery

SignOnSanDiego.com has posted an article describing an uncomfortable moment for a witness testifying in Federal Court:

Under questioning by Stulac’s defense lawyer, Michael Attanasio, Mastro denied that she was trying to protect Matt Gless, Peregrine’s former chief financial officer. Mastro testified her relationship with the CFO did not become intimate until months after both had left Peregrine.

In the courtroom, though, Burk searched her computer database of more than 1 million electronic documents the defense team had compiled, yielding several love-struck e-mails Mastro and Gless had exchanged months before they exited the company. In one e-mail that begins, “Thanks again for making my Valentine special,” Mastro asked, “What could be better than getting high on wine, dope and love in one night?”

And what could be worse than getting caught in a lie in front of a jury? The theme of the article is that those whose manage their electronic data before and during trial have quite the edge. This concept is one of which our frequent readers are very aware.

Definitions of “Document” and “Communications” included in discovery requests

I’ve just read an opinion highlighted by The Electronic Discovery Blog, where a paper production was found to be insuffient, so the court ordered a production in electronic format. The opinion notes that the discovery request included a definition of the terms “document” and “communications:”

“Communications” means any transmittal of information in any form or format, whether oral, written, or electronic, including, without limitation, all correspondence, inquiries, discussions, conversations, negotiations, agreements, understandings, meetings, telephone conversations and message logs, letters, notes, memoranda, telegrams, faxes, emails, or recordings. It is understood that all categories of documents described above shall include with respect thereto all communications as defined, whether or not expressly stated. The production of electronic communications should be accompanied by a description of the software and technology used to prepare the communications and needed to read them.

The term “document” means all writings of any kind, including the originals and all nonidentical copies, whether different from the originals by reason of any notation made on such copies or otherwise (including without limitation, correspondence, e-mail, memoranda, notes, diaries, statistics,
checks, statements, receipts, returns, summaries, pleadings, affidavits, depositions, pamphlets, books, prospectuses, inter-office and intra-office communications, offer notations of any sort of conversations, telephone calls, meetings or other communications, bulletins, printed matter, computer printouts, information contained in any computer although not yet printed in hard copy, teletypes, telefax, invoices, worksheets, and all drafts, alterations, modifications, changes and amendments of any of the foregoing), graphic or oral records or representations of any kind, (including without
limitations, photographs, charts, graphs, microfiche, microfilm, videotape, recordings, motion pictures) and electronic, mechanical or electrical records or representations of any kind, (including without limitations, tapes, cassettes, discs, recordings).

John B. v. Goetz, 2007 U.S. Dist. LEXIS 75457 (M.D. Tenn. Oct. 10, 2007) (emphasis in the opinion).

We just posted about an article on CNet describing how the definition of the term “document” has been expanded. I do have an issue with defining a document (as is done above) as “information contained in any computer although not yet printed in hard copy.” That seems rather nebulous. A document, I believe, is a coherent unit of information that may consist of a single file (a simple Word or Adobe file) or may consist of multiple files (an html page that includes images and the like separately, or a Word file that links to graphs and spreadsheets).

Companies are taking Forensics in-house

According to an article posted by Dark Reading, (annoying ad warning) IT departments are doing more of the intrusion investigations, and other tasks traditionally outsourced to experts, themselves.

If you think finding out who did what with your data always means calling in high-priced spooks armed with arcane software, think again. The trend is toward placing the power to handle investigations in the hands of enterprises themselves. Why? With security incidents, e-discovery and litigation on the rise across all industries and organizations of all sizes, having tools in-house allows IT to mobilize quickly and address situations before there’s significant impact.

The forensics software landscape has also gotten more inclusive, with enterprise-class investigative tools in the pipeline along with log-analysis software, network monitors, and systems that can aid in investigations and e-discovery involving e-mail. Many of these do double duty, making them easier sells come budget time.

The article also discloses that Guidance Software, producer of EnCase, will soon get a little more competition:

In the forensics space, at least two upstarts are set to rival the enterprise edition of Guidance Software’s Encase, the granddaddy of investigative toolsets. By year’s end, security services provider Mandiant will step into the enterprise incident response arena with its Intelligent Response appliance, and AccessData is also prepping an offering, due in the first half of next year, that will encompass forensics, incident response and e-discovery.

I’m not sure what a product that encompasses “forensics, incident response and e-discovery” will look like (seems like it might be taking too big a bite of the cookie), but I’m willing to reserve judgment for now.