This same principle holds true for initial disclosures of ESI at the forefront of litigation, as discussed in the 2007 case of Metro Wastewater Reclamation District v. Alfa Laval, Inc.

In this case, Alfa wanted to see all of the electronic files related to the plaintiff’s employees who worked on a project related to the litigation. The plaintiff complained that the request was “irrelevant, overly broad, overly burdensome, and costly.” In other words, not every employees’ ESI was necessary.

The court disagreed and required the disclosure of all the employees’ ESI. The Federal Rules of Civil Procedure favor a broad discovery of information, the court noted.

Consequently, not only did the plaintiff have to disclose all of the employees’ ESI, it had to pay for its retrieval. This can be a costly venture for an ill-prepared company.

The case, Wells v. Berger, Newmark & Fenchel, involved explicit email that one of the law firm’s partners allegedly sent to Wells, a paralegal at the firm. The email would have been relevant to Wells’ claims.

The firm was notified about Wells’ allegations in December 2005. However, the firm took no steps to preserve the partner’s computer – or any email sent from it – until the spring of 2007. Consequently, an unknown number of email messages were lost.

[The law firm partner] testified that he deleted all emails with sexual images on them. When [the partner’s] hard drive was finally searched, it yielded very little, and [the] computer consultant attested he could not determine how many files were permanently lost.

The law firm tried to argue it did not have a duty to preserve the email. The court flatly refuted this argument, noting the initial investigation of Wells’ allegations by the Illinois Department of Human Rights specifically made specific mention of the offensive email messages in 2005.

Consequently, the court said it will read a statement to the jury that the law firm failed to preserve the email. Moreover, the law firm will be prohibited at trial from arguing that the absence of explicit email supports its argument that there was no harassment.

Courts consider it a serious problem when parties fail to preserve ESI after a litigation hold is in place. As a result, sanctions are often forthcoming. CIOs should always discuss with legal counsel any issues that may arise about a duty to preserve in order to avoid sanctions in subsequent litigation.

In Autotech Technologies Ltd v. AutomationDirect.Com, Inc., ADC sought ESI related to customer communications from Autotech. After an initial dispute, the parties agreed ADC could use a third-party consultant to search the database. ADC crafted the keyword protocol.

After this search, the results produced approximately 10,000 pages. Autotech wanted ADC to come to its headquarters to review the documents. ADC wanted Autotech to produce everything under a clawback agreement – an agreement that provided Autotech could “clawback” any ESI it determined was not relevant after it was produced.

Unable to resolve the dispute, the parties went back to court. The magistrate ordered Autotech to disclose the 10,000 pages.

After the first review, ADC determined the 10,000 pages did not contain all of the information it wanted. For example, the information did not include the name of the Autotech representative who talked to each customer.

So the parties are back in court, with ADC asking that its consultant be allowed another crack at Autotech’s database.

Autotech countered that it followed ADC’s keyword protocol during the first search. Consequently, the results reflected what ADC asked for.

ADC wanted to sanction Autotech for failing to disclose all of the relevant ESI.

In a March 25 opinion, the magistrate determined that ADC’s consultant could redo the original search to determine if some documents were excluded; however, the consultant could not do a “free-ranging search of the database to determine whether a different protocol will yield the information that ADC now seeks.”

As a result, if ADC’s initial keyword searches were deficient, then they are stuck with the responses. During litigation, the CIO and e-Discovery team must ensure the search of another side’s ESI is comprehensive. As ADC may learn the hard way, if the first search fails, there may not be a second chance.

The plaintiff was also ordered to pay the attorney fees for the various motions to compel that the defendant had to file before being granted access to the hard drives.

Since this is a case where the court had to intervene and order the defendant to open up certain computer hard drives, this case will likely be one of the more important e-Discovery decisions of early 2008.

In U&I Corporation v. Advanced Medical Design, Korean-based U&I filed a breach of contract case in October 2006 against American Medical for failing to pay a balance due for medical equipment. As part of the litigation, both sides sought various ESI, including email sent by U&I employees.

After some haggling over what ESI should be disclosed, U&I belatedly acknowledged that it could not retrieve email from 2004. U&I explained that a “failure of the hard drive caused the 2004 e-mail account to be ‘unloadable’ or unretrievable.” U&I agreed to produce email from 2003, 2005, 2006 and 2007.

However, American Medical discovered that not all of the 2005 and 2006 email was produced because when American Medical subpoenaed a third-party company, that company disclosed various email messages from U&I employees that U&I never disclosed.

In short, American Medical argued that U&I delayed in telling American Medical that its 2004 email was not recoverable, and it failed to disclose all of the email from 2005 and 2006. American Medical sought sanctions.

In response, U&I argued that – despite another company’s production of some email that U&I did not disclose – there was no evidence that U&I deliberately withheld ESI. U&I also noted it disclosed approximately 14,500 documents. In addition, U&I threw out a host of other excuses for failing to disclose all of its ESI, including “language barriers of its employees” and “confusion.”

In weighing the arguments, the court sided with American Medical.

U&I’s assertion that the delay in providing documents to American Medical was caused by the international travel requirements of its employees, server and software problems, confusion, language barriers of its employees and the lack of understanding of the American legal system does not excuse U&I’s tardy and incomplete responses. After all, U&I was the party which filed this lawsuit…At the outset of the litigation, U&I and its counsel had the responsibility to take affirmative steps to ensure that all sources of discoverable information were identified, searched, and reviewed so that complete and timely responses to discovery requests could be provided.

It is not the court’s role, nor that of opposing counsel, to drag a party kicking and screaming through the discovery process. U&I has failed to show substantial justification for its failure and unwillingness to abide by discovery rules and the court’s prior orders…

Consequently, the court ordered U&I to pay American Medical’s attorney fees for bringing the motion to compel. Moreover, the court ordered that American Medical be allowed to inspect the hard drives of certain U&I employees in search for responsive ESI. A forensic examiner would conduct the search.

U&I highlights the importance of maintaining a strong archiving system. When doubts are raised about whether a company has disclosed all of the relevant ESI, then courts are likely to step in and let the opposing side take a look for themselves.

Now imagine having to archive everything on the Internet. Of course, no one can do it. But a multiplicity of Websites around the world are trying the next best thing:

By virtue of its shear enormity and its warp-speed evolution, the task of archiving the internet in its entirety is clearly impossible, like trying to catalog every grain of sand on the world’s beaches. But as it is easy to take a photograph of a beach, it also is possible to grab snapshots of the internet, or specific portions of it, to preserve for future generations.
And that’s exactly what researchers at the Internet Archive, the Library of Congress, the National Archives and libraries worldwide are working on.

There have been some remarkable strides already, starting with the Mountain View, Calif.-based Internet Archive and its Wayback Machine, where its creator hopes to build a sort of second coming of the Library of Alexandria, the long-ago destroyed institution that housed much of the ancient world’s recorded knowledge.

The project has archived some 85 billion web pages on computers that measure data in unfathomably large quantities called petabytes.

One petabyte, by the way, is the equivalent of approximately 20,000 personal computers with 50-gigabyte hard drives. It’s a lot of stuff.

Read the rest of this fun article here in The Star Ledger.

Nevertheless, that’s apparently what a former Texas district attorney did when he was subpoenaed for email from his office. As a result, the court on March 28 held the former DA in contempt, fining him and calling all of his excuses “implausible.”

The case, In re Rosenthal, stems from a civil rights lawsuit in Texas. As part of the case, the plaintiffs sought email communications from Harris County District Attorney Charles Rosenthal to the Harris County Sheriff, among other officials.

At first, the county officials said they “fully complied” with the email request, noting of the 12,785 email messages retrieved during a search, only 61 were relevant to the case.

After more wrangling over what should be disclosed, the plaintiffs argued that not only did the county delay in producing email, but that Rosenthal purposely deleted 2,500 email messages that could no longer be recovered. Astonishingly, Rosenthal acknowledged he did delete the email after he was on notice to preserve the messages:

The respondents admit that Rosenthal deleted e-mails that were the subject of the October 31 subpoena. However, they argue that he did not delete or attempt to delete all e-mails responsive to that subpoena. Rosenthal also asserts that he did not act in concert with the other respondents or seek help from anyone in deleting his e-mails. He contends that at the time that he deleted his e-mails, he believed them to be available for an indefinite period of time on back-up tapes maintained by Harris County Information Systems personnel. Further, Rosenthal contends that he committed error by deleting the e-mails only because he assumed that his counsel…had also printed a hard copy of each email.

The court almost seemed baffled by the blatant disregard of court rules.

At the outset, it is important to note that Rosenthal was familiar with the rules governing the discovery process…Indeed, during the relevant period, he was the District Attorney of Harris County, Texas with more than 40 years of legal experience.

Rosenthal offered a host of hollow excuses: (1) thought there were existing hard copies, (2) thought they were permanently stored in the network’s back-up tapes, (3) wanted to reduce the “large volume of email visible” on his desktop, (4) wanted to be more efficient at work, and (5) wanted to free up memory space.

The court responded:

There is no evidence that Rosenthal’s computer memory space was threatened by additional e-mails or that, in fact, it was short of space. Hence, these reasons – all implausible inconsistencies – defy the law of common sense…This conduct reveals a man confident in his status, entrenched in his brand of law. He would not or could not acknowledge an authority beyond himself. And, like the County Attorneys who appeared earlier in this case, Rosenthal reposes in the idolatry of their own perverted wisdom.

Ultimately, the court held Rosenthal in contempt and monetarily sanctioned him. The court also sanctioned Rosenthal’s attorney representing him in the lawsuit, describing the attorney’s conduct “unprincipled and dilatory, at best, constituting a deliberate indifference” to the court’s orders.

Time and again on CIOLaw.org, we’ve highlighted the dumb ways individuals try to outsmart the court system by deleting – or similarly throwing away – ESI. It never works.

CIOs should ensure they have an archiving system that reliably and effectively stores email and other ESI. Moreover, the system has to preclude rogue activity by end-users who may think it is better to delete email messages that they should preserve. It always backfires, even against former district attorneys.

Read another short post about this case and the court order itself at the terrific “ride the lightning” blog.

In short, a court has to know exactly what has been searched and what has not. Moreover, the court has to agree there are good reasons that the ESI is not reasonably accessible.

If any of ESI-search information is unclear, then the court will require further discovery, as a federal magistrate in New York recently did in Baker v. Gerould.

In a March 27 opinion, the court expressed frustration with the lack of information presented by defendants on the efforts to retrieve ESI:

As noted by this Court during oral argument, insufficient information had been presented at that time to determine the adequacy of defendants’ search for the requested emails from accessible sources. Regrettably, the record is no more fully developed now than it was then. Although it is clear that some email communications have been turned over, the source or sources of those communications is not clear. For example, it is unknown whether those emails were recovered from existing hard drives, backup hard drives or traditional files used to maintain paper records. It is likewise unknown whether computer and/or paper files have been searched for all defendants, some of whom are no longer employed…but some of whom are.

Consequently, the court ordered the defendants to identify in writing all of the people who conducted the search. Following those identifications, the plaintiff would be allowed to depose those individuals to investigate the search. After all of that, then the court could determine whether the defendants properly responded to the ESI requests or whether more ESI – including restoration of backup tapes – was necessary.

Equally important to cost-effective retrieval of ESI is the ability to document exactly the steps taken during an ESI search and to sufficiently offer valid reasons why some ESI is not reasonably accessible.

Perhaps the first case to appreciate the importance of metadata was [the 1993 case of] Armstrong v. Executive Office of the President. In Armstrong, the court decided that paper copies of electronic mail did not qualify as an “extra copy” for purposes of the Federal Records Act, which would allow the originals to be destroyed, “because important information present in the email system, such as who sent a document, who received it, and when that person received it, will not always appear on the computer screen and so will not be preserved on the paper print-out.” Although not explicitly referring to this type of information as “metadata,” the Armstrong court clearly recognized that its value warranted preservation.

Read the entire article in the Richmond Journal of Law and Technology here.

The case, Bell v. Rochester Gas & Electric Corp., involves Bell’s claim that he was illegally fired from the company Energetix because of his race. As part of his proof, Bell provided the court with an alleged hard copy of an email message. The hard copy was allegedly found either “weeks or months” after Bell’s termination by another employee within a stack of recently printed papers.

The email, purportedly written by Bell’s supervisor to another supervisor, contained racist statements about Bell’s firing. The supervisors denied ever writing or receiving the email. Energetix investigated the alleged email, as described in the March 26 court opinion:

Energetix conducted an internal investigation to determine whether [the email] had originated there. After a search [of the supervisors’] hard drives gave no indication that the message had ever been sent, received, stored, deleted or printed from their e-mail files, Energetix retained the services [of an outside vendor] to restore backup tapes of its e-mail server and search for electronic copies of the message between April 2002 and December 2002.

Again, nothing turned up. Energetix then hired another vendor to analyze the hard drives of the supervisors.

Despite these efforts, neither Energetix nor the two outside firms were able to find any evidence that the purported e-mail was ever written, sent, received or printed…

Bell argued that the email, which was marked as sent on May 21, 2002, was completely obliterated from the company’s servers before the implementation of backup tapes on June 2, 2002.

In a Sherlock Holmes-twist of logic, the court rejected Bell’s argument:

[O]ne need not be an expert in the field of computer forensics to recognize that if the e-mail had been sent by [one supervisor] on May 21, 2002 but deleted and overwritten at some point within the next twelve days to eradicate any trace of its existence such that it would not appear on any of the named defendants’ hard drives or Energetix’s daily backup tape for June 2, 2002, it would have been impossible…to have printed it…weeks or months after May 21, 2002, when [the other employee] allegedly discovered it, commingled with papers she had just printed and removed from a copier the previous day.

Taking all of the evidence as a whole, including evidence that Bell tampered with Energetix’s computer systems over billing, the court ruled there was sufficient evidence that Energetix fired Bell for non-discriminatory reasons. It dismissed Bell’s claims.

Although the court never directly called Bell’s email a fraud, it did note the ease with which email messages can be faked:

It is undisputed that e-mail messages can be easily fabricated, and a host of websites offer software and instructions for creating and/or sending faux e-mails…As such, a practical understanding of the available technology, both with respect to the fabrication of e-mails, and their preservation through electronic data, dictates that authentication of a printout as the hardcopy of a bona fide e-mail message now requires something more than a bar conclusion that the printout ‘appears to be’ an e-mail message.

Obviously, companies that have implemented effective and objective archiving systems have little fear of forged email messages since they can easily detect which email messages were sent or received within the system.

In the case, XPEL Technologies Corp. v. American Filter Film Distributors, XPEL worried that electronically stored information (“ESI”) could be altered or destroyed just by the day-to-day activities of the defendants’ computer use unless an expedited order permitted an immediate imaging of the computers. XPEL believes most of the relevant ESI was in metadata and other deleted – but still retrievable – files.

The court agreed to expedite the imaging, and it named a forensic examiner to move quickly to copy the servers. In addition, the court ordered that XPEL would pay for the costs of the forensic examiner, explaining:

The forensic images shall be copied and retained by the Forensic Examiner until such time the court or both parties request the destruction of the forensic image files.

The Forensic Examiner will maintain all mirrored images and do so in the strictest confidence, and not disclose any information obtained to unauthorized persons.

With this case as persuasive precedent, parties may more frequently seek to immediately make mirror images of opponents’ servers.

The case, Schmidt Pontiac-GMC Truck, Inc. v. DaimlerChrysler Motors Company, involves a breach of contract case. Essentially, Schmidt claims DaimlerChrysler breached a settlement agreement to let Schmidt open a Chrysler franchise.

Schmidt filed a lawsuit in 2004. At that time, DaimlerChrysler would have been under a duty to preserve all relevant electronically stored information (“ESI”).

During discovery of the litigation, Schmidt learned DaimlerChrysler had not preserved ESI. Schmidt filed a motion with the court to add a claim of spoliation against DaimlerChrysler. This is called a Motion To Amend. Schmidt alleged:

DaimlerChrysler (1) failed to implement a litigation hold to prevent the destruction of evidence after the complaint was filed…and (2) intentionally destroyed evidence, including replacing employee hard drives.

The court agreed with Schmidt, explaining that if DaimlerChrysler altered or replaced hard drives, then that would impact Schmidt’s ability to prove its case. Consequently, Schmidt is permitted to amend the initial complaint to add a claim for spoliation of evidence.

There has been, and probably will continue to be, discovery as to the destruction of evidence for the purposes of the adverse inference instruction. Any evidence developed in that regard might become known to the jury as a predicate for an adverse inference instruction.

Legal holds are crucial to avoid spoliation claims. CIOs must consult with legal counsel if ever any issues arise that might require preservation of ESI.

The lawsuit, L.H. v. Schwarzenegger, is a class action involving juvenile parolees suing California over the parole revocation process. Schwarzenegger, as governor, is one of the named defendants.

The plaintiffs wanted the defendants to demonstrate the capabilities of the Ward Information Network (WIN) and the Offender Based Information Tracking System (OBITS), both of which are relevant to the litigation. Moreover, the plaintiffs wanted a list of scheduled trainings and to attend the trainings for the use of those two systems.

The magistrate on March 20 denied the request, explaining other means were available to obtain the same information. For example, the plaintiffs could ask an official from the state during a deposition about how the systems work.

Consequently, the defendants do not have to perform a demonstration of the systems. On hearing the news, Schwarzenegger reportedly said: “Hasta La Vista, Baby.”

Plaintiffs, however, did win a smaller ESI victory. The magistrate ordered certain electronically stored information in databases – such as ESI relating to appeals of parole revocation – to be disclosed to the extent the defendants had not already turned it over.

In Great American Ins. Co. of New York v. Lowry Development, the insurance company Great American wanted to see the personal computer files of Danny Groves, who operated Groves & Associates, which was a party in the litigation. Groves used his personal computer for business correspondence, including sending email, to the insurance company.

At first, Groves said lightning had damaged his computer and it was not repairable. As a result, he said, he just abandoned it with the technician.

Later, apparently forgetting his first response, Groves said he had the computer, but that the motherboard was damaged by lightning and a computer technician told him that all of the files were lost.

The insurance company did the obvious: it called the computer technician. The technician swore in an affidavit that he was able to fix the computer and none of the files were lost.

In response, Groves said what he really did was throw the computer away after it malfunctioned a second time following the repair from the lightning strike. Needless to say, the court had a hard time believing him:

Groves offers no explanation for his untruthful testimony or for his inaccurate and incomplete response to Great American’s request for inspection…I am of the opinion that Great American has established, by clear and convincing evidence, that the destruction of this computer has deprived the parties and the Court of the benefit of any records that may have been contained in the computer hard drive.

Consequently, the court said it would read an adverse inference instruction at trial and lower the burden of proof for Great American on one of its claims.

In Consumer Federation of America v. U.S. Dep’t of Agriculture, the CFA requested in 2004 copies of official calendars – including related ESI – maintained by certain USDA officials. The USDA at first refused, but then was ordered to produce the information in 2006 by the Court of Appeals for the District of Columbia.

However, the USDA never implemented a legal hold until after the 2006 order. Consequently, ESI related to the request was never archived and it was overwritten before it could be produced to the CFA.

The court observed:

In this case, it is clear that defendant’s initial searches were inadequate. Indeed, counsel for the defendant acknowledged during oral argument that the documents in this case were ‘not handled in the way they should have been…[However] the defendant has [subsequently] conducted – albeit belatedly – a search reasonably calculated to under all relevant documents…

Nevertheless, it appears some ESI is irretrievably lost. As a result, the court is considering sanctions against the USDA:

In view of defendant’s acknowledgement during oral argument that its search was not handled as well as it might have been, and in order to ensure that defendant carries out future FOIA searches responsibly from the outset, the Court directs defendant to file a supplemental declaration detailing: (1) the specific steps the agency will take when responding to a FOIA request, particularly one including electronic documents; and (2) the steps, if any, the agency has taken to correct the problems that led to the loss of responsive documents in this case.

The USDA has until April 30 to file its supplemental pleading with the court.

Read Part Two here.   

In this third part, we look at the ways Intel proposed to restore the missing ESI, including the multimillion dollar remediation plan.

By the time Intel filed it Remediation Plan to recover lost email, it estimated it had already spent approximately $3.3 million in outside vendor costs in its efforts to restore back-up tapes. Intel estimated it would spend “millions more” to complete all of the remediation.

According to Intel’s Remediation Plan:

Intel is cataloging, indexing and, to the extent appropriate, restoring thousands of backup tapes. Intel is willing to undertake this massive effort because it regrets the lapse in its retention practices, wants to set them right, and wishes to get the case back on the path to being resolved on the merits.

Intel is relying on “complaint freeze tapes” and “weekly backup tapes” in its efforts to restore as much of the data as possible. Intel concedes, however, that not all of the information lost due to the problems with the litigation hold will be retrieved.

In its efforts to avoid sanctions, Intel proposed the following remediation:

It re-issued its litigation hold notice, and will send out reminders every six months

Intel is also calling by telephone all 1,023 custodians to verbally remind them of the litigation hold

The legal department will have the say-so over whether any laptops in the future can be scrubbed

Intel will harvest and re-harvest all ESI from custodians working for Intel

Intel utilized an email archive company to capture all of the email from the custodians as a way to retain all relevant email

AMD has argued that Intel has not been forthright about the amount of data lost; however, AMD supported Intel’s decision to move ahead with its remediation plan.

No final cost is determined, but it will likely be in the tens of millions. Intel describes it as a “perhaps unprecedented” amount of resources to implement the Remediation Plan. AMD argues no matter how much Intel spends, that’s not an indicator of how much was lost because some data will be irretrievably gone.

AMD has said:  

Any honest assessment of this fiasco requires Intel to acknowledge that it cannot remediate the irremediable.

The court approved Intel’s plan on October 22, 2007.

Potential sanctions from the court – including a spoliation finding – still loom, despite Intel’s efforts to restore the data. In the court’s order approving the Remediation Plan, the court states:

(A)lthough [plaintiffs] acknowledge that Intel’s Proposed Remediation Plan contains all elements that should reasonably be required of Intel under the circumstances to remediate its documents preservation lapses, Plaintiffs do not acknowledge or concede that Intel’s Proposed Remediation Plan, even if fully executed, will effectively or substantially remediate Intel’s lapses, and for which lapses Plaintiffs specifically reserve the right to seek sanction.

In short, after discovery ends, AMD may – likely will – move for sanctions against Intel, including asking for an adverse inference instruction to be given to the jury. As has been forewarned by the Zubulake case, an adverse jury instruction could result in a multimillion dollar verdict. That remains to be seen for AMD v. Intel.

In the end, the court sanctioned WideBand for misrepresenting it did not have a source code with comments. The court ordered an adverse inference instruction.

The court did not sanction WideBand for failing to disclose the “smoking gun” email. The court reasoned that since the email was automatically deleted from the company’s “sent” folders as part of its routine retention policy, then sanctions were not warranted. However, the court did describe this type of retention policy as a “significant irregularity” and “questionable.”

Here’s a more detailed rundown of the e-Discovery issues:

First, ClearOne sought a sanction against WideBand for failing to disclose an email sent by WideBand’s founder that was relevant to the litigation. The email surfaced when the company that received it disclosed the email in litigation. WideBand said the email had been automatically deleted from its system as part of its policy not to retain any items in the “sent” folder.

The court found WideBand’s deletion policy unusual:

For any business this is a significant irregularity; almost unimaginable for a technology company; and even more unlikely for a person of [the founder’s] importance in such a company.

However, since WideBand followed its routine policy in good faith, then the court opted not to sanction the company since it was not under a duty to preserve that email right after it was sent.

Second, ClearOne accused WideBand of stripping comments from source code that WideBand had provided to another party. The source code was at the heart of the infringement litigation.

ClearOne wanted “any and all versions, derivatives, and forms of the computer code.” WideBand only disclosed a stripped version of the code.

Of course, as it was discovered at the end of May, there was another copy of the source code and it does contain comments. Very shortly after this discovery, the source code with comments was provided to ClearOne.

During a deposition, a WideBand representative failed to disclose there existed a source code with comments, even though he was asked about it. As a result, the court ordered an adverse inference instruction against WideBand.

This is a serious remedy for a serious situation. It is not dispositive or case-terminating remedy, but it is significant. Such a jury instruction will have a considerable impact on the jury.

Read an analysis of the case and the court’s opinion here.

This is an illustrative case that shows if a company has records – including ESI – within its possession, and those records are relevant to litigation, then the records will have to be disclosed even if the law would have permitted destroying those records earlier.

In Thong v. Andre Chreky Salon, a Fair Labor Standards Act (FLSA) lawsuit filed in 2006, the employee wanted time cards, work schedules, notes and any other reports dating back to 1998. The employer, who had disclosed payroll records, objected to going back for the other records. The employer argued that going back to 1998 was too far. The statute of limitations to bring a claim under the FLSA is three years. Essentially, the employer said it should not have to provide documents past 2003.

The court disagreed in an opinion rendered earlier this year:

This Court finds that the request is reasonably calculated to lead to admissible evidence related to matters other than the alleged FLSA violations, including plaintiff’s claim that Mr. Chreky reduced plaintiff’s work schedule as a form of punishment for resisting his alleged sexual advances.
…
To the extent that defendants have within their possession, custody or control documents – other than payroll records and time cards previously produced – evidencing hours worked, this Court shall order defendants to provide such documents to plaintiff. If, in fact, defendants have no additional documents responsive to Request No. 19, this Court shall require defendants to provide an amended, verified discovery response stating that fact.

In short, even though the company could have destroyed those documents and deleted ESI under the law, when it decided to retain the information, then that information became open for disclosure in litigation. CIOs should consider the implications about unnecessarily retaining ESI for too long.

Generally, under the Federal Rules of Civil Procedure, ESI that is not “reasonably accessible” does not have to be restored and disclosed unless the other side can show good cause.

A problem emerges when it is unclear exactly what ESI is stored on the backup tapes. Neither side wants to pay for a full restoration only to discover the email on the backup tapes has no bearing on the litigation. On the flip side, if there is relevant ESI and it should be disclosed, then the court will want those backup tapes restored.

One solution courts have implemented is a phased restoration of certain tapes. This happened in AAB Joint Venture v. United States last year.

In this case, involving a contractor suing the Government, the contractor wanted the Government to restore email from backup tapes that were believed to be relevant to the litigation. During the course of the legal discovery, it was unclear whether the government improperly allowed some email to be deleted that should have been preserved.

The Government acknowledged some relevant email may be on the backup tapes. However, the Government complained the restoration was too costly compared to the benefits of any email retrieved.

The court was faced with two questions: (1) should the tapes be restored? and (2) who pays for it if they should?

In the end, the court decided a sample of the backup tapes – picked out by the contractor – should be restored. If those tapes proved relevant, they could restore more.

A phased approach will allow the Court to engage in a more meaningful benefit-burden analysis before determining whether to require cost-shifting or cost-sharing…The Court believes that restoration of one-fourth of the total back-up tapes is warranted.

The Government had to pay for the initial restoration. Once those tapes were restored, the parties could argue if more tapes were necessary and whether the Government would have to pay for more restoration, or if the contractor would have to split the costs.

This rule provides that as long as a company follows in good faith its regular document retention policy, then it cannot be sanctioned if electronically stored information (“ESI”) is destroyed, even if that ESI may have been useful in subsequent litigation.  This rule is often called the “safe harbor” rule.

Importantly, however, the “safe harbor” offers no protection if a company allows ESI to be deleted subsequent to a “duty to preserve” – or “litigation hold.” A duty to preserve kicks in when a company reasonably anticipates litigation.

An illustrative way to understand how these two concepts work together is through the case of Doe v. Norwalk Community College.

In Doe, the plaintiff (who was referred to as “Jane Doe” in the lawsuit) sued the college in 2004 after a professor sexually assaulted her. As part of the litigation, the plaintiff wanted to inspect the professor’s computer hard drive.

Before her inspection, the college “wiped” the professor’s hard drive.  Consequently, the plaintiff asked the court to sanction the college.  Specifically, the plaintiff wanted an “adverse inference instruction” in which the court told the jury it could consider the lost ESI in the worst possible light against the college.

In its defense, the college argued the “safe harbor” provision precluded sanctions.  The college argued that the hard drive was wiped as part of the college’s routine deletion practices and it could not be sanctioned for failing to have it on hand.

The court disagreed with the college for two reasons.

First, the college never implemented a legal hold.  The college wiped the hard drive after the plaintiff’s lawyer had sent a demand letter in September 2004.  The demand letter had put the college on notice of the impending lawsuit.  The college should have preserved relevant ESI, including the professor’s hard drive.  As a result, even if the college had a routine deletion practice, a legal hold would have taken priority.

Second, the college failed to routinely follow its own retention policy.  Some email had been backed up for a year, some six months.  The dean acknowledged the college did not follow its retention policy as it relates to hard drives.  Since the college did not have a consistent policy, it could not rely on the safe harbor as a defense.

Litigation holds trump the safe harbor provision.  When a duty to preserve relevant ESI attaches, a company must modify its retention policy to accommodate the change.  Blindly allowing ESI to be deleted after a duty to preserve kicks in is an unacceptable practice.  As the college learned, courts will find spoliation and enter sanctions.

Moreover, once a company has a policy, follow it. It does no good to have a retention policy in writing but actually delete on a different schedule. There is no “safe harbor” protection if a company does not follow in good faith a routine policy.

Taubman Centers, Inc., a company in Michigan, was on the receiving end of a third-party subpoena recently as part of a lawsuit in Nevada. Taubman was not a named party in the lawsuit.

The subpoena sought 20 categories of ESI going back to 2001. After a preliminary review of the subpoena, Taubman determined it would take three employees working full time for four weeks to retrieve and review all of the 250,000 files at issue. Taubman argued this rendered the subpoena “unduly burdensome.”

The court disagreed, although the judge told the parties to work in good faith to reduce the scope of the subpoena, such as by shortening the time frame or changing key word searches.

Discovery of electronic files…is commonplace in business litigation. The Court believes that the parties should be able to narrow the scope of this subpoena so that it does not generate an overly burdensome amount of documents.

Regardless of the amount, the non-party company still has to bear the costs of disclosing the ESI. The case highlights the importance of companies being ready to retrieve and respond to subpoenas in the most cost-efficient way possible.

Read more about the case here.