Published on February 26, 2014
DOCUMENT RETENTION AND DESTRUCTION IN IDAHO: Lessons from the Courts John N. Zarian Stoel Rives LLP firstname.lastname@example.org August 21, 2007 Boise, Idaho www.lorman.com
1992: You want all the documents?
2007: You want all the documents?*
Boxes vs. Bytes Average banker’s box holds 2,500 sheets of paper 1 page of information contains, on average, .02 megabytes Typical PC hard disk = 1,000 boxes of information Typical server hard disk = 2,000 or more boxes of information
What do the Lawyers Want? New information and documents that do not otherwise exist in hard copy 93% of documents created electronically 30% or fewer actually exist in hard copy New sources of information E-mails, calendars, I-Ms, voice mails Drafts, temporary files, fragments Note: standards of practice require that lawyers pursue e-discovery
What are the Lawyers Looking for? The Facts Links in the “Chain” The “Smoking Gun” The Bad Actor Hiding the ball Liars and Cheaters Empty Heads The Silver Bullet!
What do the Lawyers do with Documents Obtained in Discovery? Libraries Concordance Notebooks Case Map eBinder Multimedia Productions Sanction
Discovery Paradigm in Litigation ________________ 1. Preservation 2. Disclosure 3. Collection 4. Production ________________
1. The Duty to Preserve The duty to reasonably preserve evidence from loss or destruction is triggered when an entity knows or reasonably should know that evidence may be relevant to pending or anticipated litigation. Summons, complaint, or notice Subpoena, discovery, preservation letter Event with high potential for litigation But generally not “simple posturing statements” Triggering standards may vary by company
Litigation Counsel’s Duties [C]ounsel must become fully familiar with her client's document retention policies, as well as the client's data retention architecture. This will invariably involve speaking with information technology personnel, who can explain system-wide backup procedures and the actual (as opposed to theoretical) implementation of the firm's recycling policy. It will also involve communicating with the “key players” in the litigation, in order to understand how they stored information. Zubulake v. UBS Warburg LLC, 229 F.R.D. 422, 432 (S.D.N.Y. 2004)
Litigation Holds Should be sent as soon as organization reasonably believes a claim may be filed by or against it, the organization has an affirmative duty to preserve relevant records, both hard copy and electronic. The organization should impose a “litigation hold” as its policy of preserving potentially relevant evidence. In re NTL, Inc. Securities Litigation, 2007 U.S. Dist. LEXIS 6198 (S.D.N.Y. Jan. 30, 2007) (spoliation sanctions for destruction of emails of 44 key employees; obligations extended to documents company had access to through an agreement with a successor company following bankruptcy). “Litigation hold” itself may not be privileged. But see Gibson v. Ford Motor Co., 2007 U.S. Dist. LEXIS (litigation hold need not be produced because likely attorney work product). A party has an ongoing duty to supervise (reasonably) a litigation hold. See Zubulake V, 299 F.R.D. at 432.
Litigation Holds - tips Written communication Targeted recipients Integrated with IT / infrastructure Related to existing record retention policy Key employee should determine “trigger.” See Consolidated Aluminum Corp. v. Alcoa, Inc., 2006 U.S. Dist. LEXIS 66642 (M.D. La. Jul. 19, 2006) (party should have begun litigation hold on email once it sent a demand letter; however, no showing of “bad faith” so no adverse inferences).
Litigation holds – protocols & strategy Template: internal preservation letter to key custodians and key players Template: internal preservation letter to key IT/infrastructure personnel Template: external preservation letter, balance between specificity and generality Template: response to external preservation request, citing reasonableness of efforts and “safe harbor” provision and requesting assistance in narrowing focus These may all be anti-spoliation evidence
Spoliation of Evidence – Federal Legal standards governing sanctions for spoliation of evidence depend on the timing of the spoliation. If the spoliation occurs before the litigation is filed, sanctions are governed by the inherent power of the Court to make evidentiary rulings in response to the destruction of relevant evidence. See Unigard Security Insurance Co. v. Lakewood, 982 F.2d 363 (9th Cir.1992); Performance Chevrolet, Inc. v. Market Scan Systems, Inc., 2006 WL 1042359 (D. Idaho 2006). If the spoliation occurs after the case is filed, Rule 37(b)(2) of the Federal Rules of Civil Procedure governs the sanctions. Id. A party engages in spoliation as a matter of law only if it had some notice that the documents were potentially relevant to litigation before they were destroyed. See U.S. v. Kitsap Physicians Service, 314 F.3d 995, 1001 (9th Cir.2002); Akiona v. U.S., 938 F.2d 158 (9th Cir.1991). However, spoliation can occur even in the absence of bad faith. See Glover v. Bic Corp ., 6 F.3d 1318 (9th Cir.1993).
(continued) The majority of courts have held that pre-litigation destruction can constitute spoliation when litigation was “reasonably foreseeable” – but not where it was “merely possible.” See Killelea, Spoliation of Evidence, 70 Brooklyn L.Rev. 1045, 1050 (2005); see, e.g., Cache La Poudre Feeds, LLC v. Land O’Lakes, Inc., 2007 U.S. Dist. LEXIS 15277 (D. Colo. Mar. 2, 2007) (demand letter inviting negotiations to resolve trademark dispute not explicit enough to trigger duty). The party alleging spoliation has the burden to produce evidence suggesting that the destroyed evidence was relevant to its claims and would have been used at trial if not destroyed. See Arizona v. Youngblood, 488 U.S. 51, 58 (1988). Sanctions could include exclusion of claims, exclusion of evidence, or a jury instruction that the jury may presume that the destroyed evidence, if produced, would have been adverse to the party that destroyed it. Unigard, 982 F.2d at 368-70.
Fed. R. Civ. P. 37(b) Failure to Make or Cooperate in Discovery; Sanctions. … [T]he court in which the action is pending may make such orders in regard to the failure as are just, and among others the following: (A) 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; (B) 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; (C) 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; (D) In lieu of any of the foregoing orders or in addition thereto, an order treating as a contempt of court the failure to obey any orders except an order to submit to a physical or mental examination; (E) Where a party has failed to comply with an order under Rule 35(a) requiring that party to produce another for examination, such orders as are listed in paragraphs (A), (B), and (C) of this subdivision, unless the party failing to comply shows that that party is unable to produce such person for examination. In lieu of any of the foregoing orders or in addition thereto, the court shall require the party failing to obey the order or the attorney advising that party or both to pay the reasonable expenses, including attorney's fees, caused by the failure, unless the court finds that the failure was substantially justified or that other circumstances make an award of expenses unjust.
Spoliation of Evidence – Idaho Evidentiary significance of a party’s conduct in losing or destroying evidence is analyzed under the evidentiary doctrine of “spoliation of evidence.” See Courtney v. Big O Tires, Inc., 139 Idaho 821, 824, 87 P.3d 930 (2003). Similar to federal court, however, in the context of pending litigation, courts will look to Rule 37(b) of the Idaho Rules of Civil Procedure to determine whether a party’s willful, intentional, and unjustifiable destruction of evidence, which the party knows is material to pending or reasonably foreseeable litigation, may so prejudice an opposing party that sanctions should be imposed. See id., at 825. The Idaho Supreme Court has articulated the evidentiary doctrine of spoliation of evidence as follows: “The evidentiary doctrine of spoliation recognizes it is unlikely that a party will destroy favorable evidence. Thus, the doctrine of spoliation provides that when a party with a duty to preserve evidence intentionally destroys it, an inference arises that the destroyed evidence was unfavorable to that party. Spoliation is a rule of evidence applicable at the discretion of the trial court.” Bromley v. Garey, 132 Idaho 807, 812, 979 P.2d 1165, 1170 (1999).
(continued) The spoliation doctrine is a general principle of civil litigation which provides that upon a showing of intentional destruction of evidence by an opposing party, an inference arises that the missing evidence was adverse to the party’s position. Stuart v. State, 127 Idaho 806, 816, 907 P.2d 783, 793 (1995), see McCormick On Evidence, § 265, pp. 189-94 (4th ed. 1992). The spoliation doctrine is a form of admission by conduct. Courtney, 139 Idaho at 824, citing McCormick, at pp. 190-91 (“By resorting to wrongful devices, the party is said to provide a basis for believing that he or she thinks the case is weak and not to be won by fair means.”). As an admission, the spoliation doctrine only applies to the party connected to the loss or destruction of the evidence. Courtney, 139 Idaho at 824. Furthermore, the merely negligent loss or destruction of evidence is not sufficient to invoke the spoliation doctrine. Id., citing McCormick at pp. 190-91 (“[T]he circumstances of the act must manifest bad faith.”).
(continued) Whether or not conduct constitutes an admission depends upon the party's knowledge or intent that can be inferred from that conduct. Courtney, 139 Idaho at 824. For the loss or destruction of evidence to constitute an admission, the circumstances must indicate that the evidence was lost or destroyed because the party responsible for such loss or destruction did not want the evidence available for use by an adverse party in pending or reasonably foreseeable litigation. Id. The merely “negligent” loss of evidence will not support that inference, nor would the intentional destruction of an item that a party had no reason to believe had any evidentiary significance at the time it was destroyed. Id. There may be circumstances, however, where such inference could be drawn from the “reckless” loss or destruction of evidence. Id.
Idaho R. Civ. P. 37(b) Failure to comply with discovery order - Sanctions. … “[T]he court in which the action is pending may make such orders in regard to the failure as are just, and among others the following: (A) 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; (B) 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; (C) 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; (D) In lieu of any of the foregoing orders or in addition thereto, an order treating as a contempt of court the failure to obey any orders except an order to submit to a physical or mental examination; (E) Where a party has failed to comply with an order under Rule 35(a) requiring the party to produce another for examination, such orders as are listed in paragraphs (A), (B), and (C) of this subdivision, unless the party failing to comply shows that the party is unable to produce such person for examination. In lieu of any of the foregoing orders or in addition thereto, the court shall require the party failing to obey the order or the attorney advising the party or both to pay the reasonable expenses, including attorney's fees, caused by the failure, unless the court finds that the failure was substantially justified or that other circumstances make an award of expenses unjust.
Case Study Re: Spoliation Performance Chevrolet, Inc. v. Market Scan Systems, Inc., 2006 WL 1042359 (D. Idaho 2006)
Case Study (continued) Contract dispute involving hardware and data subscription. Market Scan filed motion for sanctions for spoliation, based on deletion of software by employee without authorization. Owner had previously reprimanded employee for taking and using computers, and directed him not to do so. Nevertheless, employee apparently took the computer at issue and installed a new operating system so that it could be used for training purposes. This had the effect of deleting the files which would be relevant. Employee did this without the knowledge of, or permission from, company’s owner – 14 months before law suit was filed. Litigation against Market Scan at that point was remotely possible but certainly not “reasonably foreseeable.”
Case study (continued) Even if Market Scan had the computer back in 2002, Court found, the evidence indicated that it would have donated it to a high school and wiped the hard drive clean. Importantly, Market Scan did not request to examine the computer and software until month before trial, weakening case the evidence was absolutely essential to its defense. Performance filed a cross-motion, claiming Market Scan destroyed certain logs that would have shown update attempts and their success rate. Court found that Performance knew long ago logs were not available, and yet waited until just a few days before trial to file a motion. Performance's counsel “candidly conceded” that he filed motion in response to Market Scan's motion. Court found no clear evidence of intentional destruction. Since cross-motion was really a “me-too” motion, and Court denied original motion, Court denied cross-motion as well.
Note: Conduct of employess Is duty placed on all employees? See Zubulake v. UBS Warburg, LLC, 2004 U.S. Dist. LEXIS 13574 (S.D.N.Y. July 20, 2004) (sanctions for willful conduct of certain employees in deleting emails from active accounts, not because backup tapes were recycled) Distinction relevant to “safe harbor”? In other key cases, conduct involved counsel or key executives. See, e.g., Keir v. Unum Provident, 2003 U.S. Dist. LEXIS 14522 (S.D.N.Y. Aug. 22, 2003) (director of enterprise security architecture); Danis v. USN Communications, 200 U.S. Dist. LEXIS 16900 (N.D. Ill. Oct. 23, 2000) (chief executive officer).
(continued) Degree of diligence still likely to vary in each case, and for different employees, depending on the facts Courts will require “reasonable efforts.” See Fed. R. Civ. P. 37(f)(1); Nutrition Mgmt. v. Harborside Healthcare Corp., 2004 WL 887401 (E.D. Pa. Mar. 19, 2004) (no sanctions despite routine deletion of emails); McPeek v. Ashcroft, 202 F.R.D. 31 (D. D.C. 2001) (no controlling authority for proposition that restoring all backup tapes is necessary in every case). Still need some “culpable conduct” Evidence must be relevant Still must show evidence would have been used Bottom Line: you need good facts on your side!
“Safe Harbor” Fed. R. Civ. P. 37(f) provides that, absent exceptional circumstances, the court may not impose sanctions when ESI has been lost as a result of “routine, good faith operation of an electronic system.” This can be established by reference to a written records retention policy But policy may not be used to destroy relevant evidence. Compare Samsung Electronics Co., Ltd. v. Rambus, Inc., 2006 U.S. Dist LEXIS 50007 (E.D. Va. Jul. 18, 2006 (document “retention” policy targeting discoverable documents for destruction was spoliation) with Hynix Semiconductor, Inc. v. Rambus, Inc., 2006 U.S. Dist. LEXIS 30690 (N.D. Cal. Jan. 5, 2006) (annual “shred days” and pizza parties, actually no spoliation).
Duty to Preserve – Some Best Practices Advise employees routinely Include material in Code of Conduct Get confirmations on litigation holds Consider developing key expertise (don’t just rely on overworked employees) Internal teams / review panels
2. The Duty to Disclose Rule 26(a)(1)- Initial Disclosures. “[A] party must, without awaiting a discovery request, provide to other parties … a copy of, or a description by category and location of, all documents, electronically stored information, and tangible things that are in the possession, custody, or control of the party and that the disclosing party may use to support its claims or defenses, unless solely for impeachment.” Rule 34(a)&(b)- Request for Production. “Any party may serve on any other party a request  to produce and permit the party making the request, or someone acting on the requestor’s behalf, to inspect, copy, test, or sample any designated documents or electronically stored information … The response shall state, with respect to each item or category, that inspection and related activities will be permitted as requested, unless the request is objected to, including an objection to the requested form or forms for producing electronically stored information, stating the reasons for the objection.” Rule 37- Failure to Make or Cooperate in Discovery, Sanctions.
Discovery Scope and Limits A party need not provide discovery of electronically stored information from sources that the party identifies as not reasonably accessible because of undue burden or cost. On motion to compel discovery or for a protective order, the party from whom discovery is sought must show that the information is not reasonably accessible because of undue burden or cost. If that showing is made, the court may nonetheless order discovery from such sources if the requesting party shows good cause, considering the limitations of Rule 26(b)(2)(C). The court may specify conditions for the discovery. Fed. R. Civ. P., Rule 26(b)(2)
Duty to Disclose vs. Duty to Preserve “A party’s identification of sources of electronically stored information as not reasonably accessible does not relieve the party of its common-law or statutory duties to preserve evidence.” Committee Notes, Rule 26(b)(2)
Not Reasonably Accessible “A party need not provide discovery of electronically stored information from sources that the party identifies as not reasonably accessible because of undue burden or cost.” Rule 26(b)(2)(B)
Not Reasonably Accessible “The responding party must also identify, by category or type, the sources containing potentially responsive information that it is neither searching or producing. “evaluate the burdens and costs of providing the discovery and the likelihood of finding responsive information” Committee Notes, Rule 26(b)(2)
Not Reasonably Accessible “Legacy” data Disaster recovery backup tapes “Burden and expense” data
3. Collection & 4. Production There are limits to the scope of ediscovery. See Miller v. Holzmann (Miller III), 2007 U.S. Dist. LEXIS 4399 (D.D.C. Jan. 23, 2007) (government subpoenas for all documents, including electronically stored versions, in the possession of defendant’s experts were the “very zenith of an oppressive burden”) Potential for cost sharing / shifting
Address Scope of Discovery Issues Early in the Litigation Rule 26(f) Discovery Planning Conference Preservation Litigation Hold Records custodian Disclosure Reasonably available Not reasonably available Timing of disclosures Collection & Production Scope Form Privilege Schedule
Custodian Interviews Types of records Locations ESI Inventory Other persons with relevant records Litigation Hold
“Harvesting” ESI Centralized collection of data Coordinated Comprehensive Consistent Documented
Staging ESI for Production Use of vendors Search term sampling Form of production Litigation technology software
Form of Production Smith v. Clark, 2006 U.S. Dist. LEXIS 38804 (S.D. Ga. Jun. 12, 2006) (defendants in construction defect case ordered to produce an exact copy of the computer disc of the actual Quickbooks program, plaintiffs claimed printout did not contain all available information). Ameriwood Industries, Inc. v. Liberman, 2006 U.S. Dist. LEXIS 93380 (E.D. Mo. Dec. 27, 2006) (defendants did not produce email later produced by nonparty, ordered to produce mirror images of hard drives of business and personal computers – court weighed factors for producing info. “not reasonably accessible”).
(continued) EEOC v. Lexus Serramonte, 2006 U.S. Dist. LEXIS 58916 (N.D. Cal. Aug. 9, 2006) (defendant had to produce information about female employees for a 2-year period, but not as a database file in Quatro Pro readable format, unless already maintained that way). CP Solutions PTE, Ltd. v. General Electric Co., 2006 U.S. Dist. LEXIS 27053 (D. Conn. Feb. 6, 2006) (defendants who produced over 300,000 records in TIFF format not required to reproduce in PST; however, ordered to provide information and software to allow email to be matched to attachments).
Metadata Kentucky Speedway, LLC v. NASCAR, Inc., 2006 U.S. Dist. LEXIS 92028 (E.D. Ky. Dec. 18, 2006) (citing emerging presumption against production of metadata, declining to order further production of metadata for documents previously produced). Nova Measuring Instruments Ltd v. Nanometrics, Inc., 2006 U.S. Dist. LEXIS 49156 (N.D. Cal. Mar. 3, 2006) (manufacturer in patent litigation ordered to produce documents in native file format with meta data). Williams v. Sprint/United Mgmt. Co., 2005 U.S. Dist. LEXIS 21966 (D. Kan. Sept. 29, 2005) (party should not have electronically “scrubbed” meta data off spreadsheets) (party could have timely objected).
Metadata and Ethics Last year, the ABA Standing Committee on Ethics and Professional Responsibility issued an ethics opinion finding that, under Model Rule 4.4(b), a lawyer receiving privileged or confidential materials need do nothing more than provide prompt notice of “inadvertently sent” documents. If the receipt is not the result of the sender’s inadvertence (e.g., disgruntled employee), notice is not required at all. Also, lawyers who receive electronic documents are free to look for and use information hidden in metadata even if the documents were provided by an opposing lawyer Fed. R. Civ. P. 26(b)(5)(B), however, restricts a receiving party’s ability to use or disclose information “produced in discovery that is subject to a claim of privilege or protection as [work product]” – regardless of whether its original production was inadvertent – until a court resolves any disputed privilege claims.
Experts and Witnesses* Cenveo Corp. v. Slater, 2007 U.S. Dist. LEXIS 8281 (E.D. Pa. Jan. 31, 2007) (after weighing factors, plaintiff granted permission to appoint expert to image and examine drives, despite defendants’ desire to control its own computer hard drives, because issue was alleged misuse of confidential information and computers). Thielen v. Buongiornio USA, Inc., 2007 U.S. Dist. LEXIS 8998 (W.D. Mich. Feb. 8, 2007) (because unrestricted access provided by mirror image would be undue burden, court allowed only a forensic expert to examine computer). Sony BMG Music Entertainment v. Arellanes, 2006 U.S. Dist. LEXIS 78399 (E.D. Texas Oct. 27, 2006) (to protect privacy, court ordered appointment of a neutral computer forensics expert to inspect and copy of defendant’s computer).
(continued) Heartland Surgical Specialty Hospital, LLC v. Midwest Division, Inc., 2007 U.S. Dist. LEXIS 26552 (D. Kans. Apr. 9, 2007) (CEO produced by plaintiff was not adequately prepared under Rule 30(b)(6) to testify about production of data).
Privilege Issues Rule 26(b)(5)(A)&(B) provides that if a party produces ESI that is subject to a claim of privilege or protection, it must notify the receiving party of the claim and the basis for it. After the notification, the receiving party must promptly return, sequester, or destroy the ESI and may not disclose it until the claim is resolved. If the receiving party has disclosed the ESI, it must take reasonable steps to retrieve it. The receiving party may present the ESI to the court, under seal, for resolution of the claim. The ESI must be preserved by the producing party until the claim is resolved.
Inadvertent Production of Privileged Materials Notice to receiving party Duty to return, sequester, or destroy Court may review Agreements – “Quick Peek” and “Clawback” Rule 26(b)(5) Committee Notes Rule 26(b)(5), Rule 26(f)
Keys to Effective e-Discovery ________________ Preservation Disclosure Collection Production ________________ Develop a compliant record retention program Adopt/implement appropriate e-discovery protocols Designate response team and/or key personnel
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