Tips For Corporations Faced With Electronic Discovery Rules¹

By: RACHNA B. SULLIVAN

August 2008

The amendments to Rule 26 of Federal Rules of Civil Procedure address Electronically Stored Information (“ESI”). The purpose of the rule is “just, speedy, and inexpensive” discovery. The following are some of the initial steps corporations can take to be prepared if litigation ensues:

1. Take stock of corporate information management systems.

1. Early on in a litigation, parties are required to describe ESI. Lack of knowledge/control over ESI can result in early setbacks. E.g., be prepared to address trade secrets, privileged documents, and accessible and inaccessible documents that are in electronic format so that at the initial “meet and confer”  counsel can define and control the scope of discovery. Therefore, corporations must connect with IT personnel and implement procedures for storing information; e.g., data mapping or relying upon document repositories.
2. Also, set up corporate document retention and adherence policy. This will reduce the time and effort required each time litigation ensues.

2. Take stock of the information.

1. Find out who is likely to have relevant information. Example, legal department, leaders of certain business units, the assistants of leaders of business units, IT staff, document management personnel, key players.
2. Find out the time period for which the information is available. Example, do you have only current data or historical also? How long is the data kept, is it backed-up?
3. Find out if you have proprietary data. Example, can you transfer the data if using proprietary software?
4. Understanding what electronic data exists and where is imperative. Example, is the data classified, HIPPA, etc. Understanding the type of data can assist counsel during discovery to engage in a dialogue regarding whether the documents should be encrypted, etc.
5. Find out the volume of data.

3. Find out the cost of retrieving/producing the relevant data.

ESI needs to be produced exactly in the same format as kept by the corporation unless agreed to otherwise by opposing party and counsel. Information at the outset about cost of production can permit counsel to engage in a dialogue to reduce cost.

4. Litigation Hold.

1. Be wary – litigation holds are necessary when there is “reasonable anticipation of litigation.” E.g., fire an employee. This is reasonable anticipation of litigation. Investigations or government inquiries are also a “reasonable anticipation of litigation.” Threatened litigation also raises the obligation of litigation hold. This obligation does not require the preservation of “every single scrap of paper in a business.” Rather, “a party must preserve evidence it knows, or reasonably should know, is relevant in the action, is reasonably calculated to lead to the discovery of admissible evidence, is reasonably likely to be requested during discovery and/or is the subject of a pending discovery request.”
2. Prompt notification. As soon as there is “reasonable anticipation of litigation,” key people must be notified immediately.
3. Create a policy for who should send the notification to ensure consistency.
4. Be careful about “spoliation” sanctions, “adverse inference” instruction, and monetary sanctions. Get rid of automatic delete, routine system upgrades, email janitor systems, etc.

5. Keep a log of all steps taken to preserve evidence.

This is important to demonstrate that efforts are being made to preserve the evidence.

6. Periodically Re-Notify.

Simply furnishing a notice is not sufficient. Period re-notification/supplemental notice for preservation of evidence and guidance is necessary. Also, inquire what steps are being taken. The following is a list of steps that should be taken.

1. Refine what must be retained.
2. How to retain.
3. How will data be collected. Example re-routed to the legal department where one point person is the repository.
4. Who to contact with questions.
5. Follow-up with interviews or conference calls to find out how data is being preserved.
6. Corrective action must be taken if the litigation hold is not being followed correctly.

7. Be aware of the breadth of ESI.

ESI is vast – Documents can be and are created on cell phones, BlackBerries, home computers, wikis (databases on the internet), voicemail, floppy disks, flash drives, etc. Also, be careful about metadata and other “hidden” data. Corporations must be aware of all ESI.

8. Identify IT person.

Most commonly, at the outset, the deposition of a technical expert is taken who understands where, what, how, data is kept, and the document retention and adherence policy. Within a corporation, identify the IT person who is ready and prepared to answer location and format of data questions, and preservation and production steps taken .

9. Access Data.

Identify IT personnel who will be able to access all data necessary for production. Retention is the first step. However, the ability to produce documents in an efficient manner when requested is equally important.

10. Identify “not reasonably accessible due to undue burden or cost.”

Rule 26(b)(2) provides that documents “not reasonably accessible due to undue burden or cost” need not be produced in discovery. “Accessibility” is not defined in the rules. Corporations can define accessibility by shaping their retrieval systems to provide maximum efficiency for their  business. E.g., if corporation does not back up tapes in its day-to-day business operations, does not access them for business purposes, and because any relevant information captured on those tapes will be elsewhere, e.g., archiving system, this information may be deemed inaccessible. Beware, a party cannot avoid discovery because its own record keeping system makes discovery burdensome.

11. Lifting the Litigation Hold.

1. This is very tricky. It is a case by case analysis. Do not lift the litigation hold unless the matter has been through the appellate process and no evidentiary issues remain.
2. The lifting of the litigation hold must be in writing, similar to the notification for the hold. It should state that the hold is no longer in effect and that the business can return to normal document retention policy.
3. Be wary if the company has more than one on-going litigation matter.

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¹ The information contained herein is a compilation of information from various sources.