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E-Discovery Luncheon Practical Implications of Recent E-Discovery Rulings: Advice from Outside Counsel

Today’s E-Discovery Wranglers

Seth RothmanPartner and Co-Chair of the E-Discovery Practice GroupHughes Hubbard & Reed LLP

Thomas MuellerPartner, Co-head of the E-Discovery Task ForceMorrison & Foerster LLP

William BeltShareholder and Leader, E-Discovery Solutions Practice GroupLeClairRyan LLP

Farrah PepperOf Counsel and Vice Chair, Electronic Discovery and Information Law Practice GroupGibson Dunn & Crutcher LLP

Moderated By:

Sarah CentrellaDirector of Fusion CloudExterro Inc

Overview

Recent rulings and opinions1

The duty to preserve2

Creating a courtroom ready preservation process3

Practical advice4

Preservation to-do list5

The changing landscape of E-discovery

Pension Committee Recap

PLAINTIFFS

Group of institutional Investors

DEFENDANTS

Two hedge funds et al

DISPUTE

$500 million securities fraud action

Pension Committee Case Summary

Apr. – Jul. 03:Hedge fund placed into Bankruptcy Receivership

Oct. – Nov. 03:Plaintiffs retain counsel Feb. 2004:

PSLRA stay goes into effect; no legal hold issued before or during stay

Aug. 2007:Plaintiffs’ depositions reveal gaps in plaintiffs’ document productions

Early 2007: Stay expires; plaintiffs institute legal hold

Oct. 07 – Jun. 08:Additional depositions reveal discovery failures, misstatements in declarations; some declarations amended

Feb. 12, 2004:Plaintiffs bring action to recover investment losses

Oct. 2007:Plaintiffs ordered to provide declarations regarding efforts to preserve and produce data

Pension Committee Case Summary

Ignored key witnesses; ignored repositories known to

contain potentially relevant data; delegated collection to

untrained employees

Did not preserve or produce documents prior to 07;

produced large volume of emails on Aug. 09, after

opposing defendants’ motion

Ignored key employees; made incorrect

declarations; deleted emails

Coronation

WANTED!

REWARD

$550,000,000

WANTED!

Hunnicutt

WANTED!

2m

REWARD

$550,000,000

REWARD

$550,000,000

Pension Committee Case Summary

Failed to preserve files from key players; back-up tapes

overwritten; arbitrarily withheld documents

Ignored key witnesses Ignored key witnesses; did not search or

preserve files prior to 2007

Bombardier

Foundations

WANTED!

REWARD

$550,000,000

WANTED!

Bombardier

Trusts

WANTED!

Chagnon

Plaintiffs

REWARD

$550,000,000

REWARD

$550,000,000

Pension Committee

The Good, The Bad, and The Ugly…

Backup tapes need not be preserved, provided they are not the sole source of

relevant information

Self collection is permissible, as along as

there is attorney oversight

It is gross negligence if you:

Fail to identify key players and preserve their

documents

Fail to preserve data for former employees

Fail to preserve backup tapes that are the sole

source information

Duty to preserve triggered before litigation

commences, especially for plaintiffs

Failure to issue document hold is grossly negligent and

sanctionable

Failure to suspend document retention and

destruction policy is grossly negligent and sanctionable

Rimkus Decision Recap

PLAINTIFFS

Consulting firm (forensic engineering)

DEFENDANTS

Two former employees

DISPUTE

Enforcement of non-competition and non- solicitation agreements, misappropriation of trade secrets

Rimkus Decision: Facts

Sept./Nov. 2006:Defendants resign to create U.S. Forensics, Inc.

Nov. 2006:Defendants sue in Louisiana state court for declaratory judgment regarding enforceability of employment agreements

Oct. 2007:Depositions begin — one Defendant produces just two emails

Mar. 2007:Discovery begins in Texas

Jan./Feb. 07:Rimkus sues in Texas federal court for breach of employment agreements and misappropriation of trade secrets

May 1, 2009:Court finds discovery efforts superficial and permits subpoena to search/collect email maintained by third party service provider

Jun. 2009:Search of personal email results in additional production

June 2009:Defendants produce 60 emails

Apr. 2009:Rimkus moves Court to compel search of personal email accounts; seeks sanctions against counsel and defendants, including monetary sanctions

Rimkus Decision: Facts

Aug. 28, 2009:Depositions reveal previouslyundisclosed personal email accounts

Sept. 2009:At depositions, defendants reveal that they’ve been following their normal practice of deleting emails and never issued instructions to preserve data

Aug. 6, 2009:At discovery motion hearing, Court orders defendants to search accessible data; reopens depositions

Sept. 13, 2009:One defendant produces new loose media and paper files

Feb. 2010:Defendants sanctioned

Rimkus

The Good, The Bad, and The Ugly…

Adopts proportionality approach for judging

conduct

In 5th Circuit you need bad faith to support severe

sanctions

Takes into account prejudice and mitigation

efforts

Scope of preservation is broad enough to cover all

responsive documents

Rule 37(e) exceptions are not applicable after the duty to preserve arises

Duty of preservation often triggered before litigation commences, especially for

plaintiffs

Litigants cannot ignore, but must sample, sources of data that are not readily

accessible

Key Takeaways

Legal holds are a must, courts require more than a memo

Preservation obligations start early, especially for plaintiffs

Sample data to determine scope of preservation — backup tapes

Set a “standard of care” for eDiscovery

The Duty to Preserve

When is the duty to preserve triggered?

•Palgut v. City of Colorado Springs, No. 06-cv-01142, 2007 WL 4277564 (D. Colo. Dec. 3, 2007) Retaining Counsel and Experts

•Silvestri v. GM, 271 F. 3d 583 (4th Cir. 2001)

•Wade v. TifflinMotorhomes, Inc., No. 5:05-CV-1458, 2009 US Dist. LEXIS 99831 (N.D.N.Y. Oct. 27, 2009)

Providing Notice to Insurance Carrier

•Phoenix Four, Inc. v. Strategic Resources, Inc., No. 05-cv-4837 (S.D.N.Y. May 23, 2006)

Filing of Claim with Administrative

Agency

•Zubulake IV, 220 F.R.D. 12 (S.D.N.Y. 2003)

•Chirdo v. Minerals Technologies, Inc. No. 06-5523, 2009 WL 2195135 (E.D.pa July 23, 2009)

•Scalera v. Electrograph Sys., Inc. No. CV 08-50, 2009 WL 3126637 (E.D.N.Y. Sept 29, 2009)

Receiving a Preservation Letter

The Duty to Preserve

Identifying preservation triggers

•Wm. Thompson Co. v. General Nutrition Corp., 593 F. Supp. 1443, 1455 (C.D. Cal 1984).

Preservation duty may being when litigation is likely

Must be a probability of litigation, not just

general concern

•Realnetworks Inc., v. DVD Copy Control et al., 2009 U.S. Dist. LEXIS 38221, at *28 (N.D. Cal. 2009)

•Rowe v. Albertsons, 116 Fed. App. 171, 175 (10th Cir. 2004) (applying Texas law)

When litigation is probable, not merely

possible

•Willard v. Caterpillar Inc., 48 Cal. Rptr. 2d 607, 620-21 (Cal. Ct. App 1995)

The Duty to Preserve

Application of this standard to Plaintiffs

•Pension Comm. Of the Univ. of Montreal Pension Plan., 2010 U.S. Dist LEXIS 4546 at *16 (S.D.N.Y January 15, 2010)

•Innis Arden Golf Club v. Pitney Bowes, Inc., 257 F.R.D. 334, 340 (D. Conn 2009)

•Cyntegra, Inc. v. Idexx Labs, Inc. No. 06 Civ. 4170, 2007 U.S. Dist. LEXIS 97417 WL 5193736, at *3 (C.D. Cal. Sept. 21, 2007)

Duty to preserve triggered before

litigation commences

Duty to preserve arose when retained

counsel

Must necessarily anticipate litigation before complaint is

filed

Creating a Courtroom Ready Preservation Process

Determine What Information Would be Relevant to Dispute

Identify Each Data Source that Potentially Contains Relevant

Information

Determine Degree of Accessibility of Data Sources that are Likely to Contain

Relevant Information

Do Substantially Similar Copies of Relevant Information Exists in More

Readily Accessible Data Source?

Preservation Not Required

IF DATA SOURCE LIKELY TO CONTAIN RELEVANT INFORMATION

IF THERE IS LOW DEGREE OF ACCESSIBILITY

IF THERE IS HIGH DEGREE OF

ACCESSIBILITY

NO

YES

In Cost or Burden of Preservation Excessive as Compared to the

Relevance or Value of the Information?Preservation Required

NO

IF DATA SOURCE NOT RESONABLY

LIKELY TO CONTAIN RELEVANT

INFORMATION

YES

* Source: The Sedona Conference®

Creating a Courtroom Ready Preservation Process

Determine Three Levels:

PEOPLE

SOURCESPROCESS

Creating a Courtroom Ready Preservation Process

Scoping for Key Players and Data Sources

Using interviews to determine preservation data sources and custodians

Personal and automated interviews

Pros and cons of self-collection

Identifying outlier data

Creating a Courtroom Ready Preservation Process

Monitoring and Tracking ComplianceLegal hold follow-up is critical• Cache La Poudre Feeds, LLC v. Land O’Lakes Farmland Feed, LLC, 2007 WL 684001 (D.

Colo. Mar. 2, 2007)

• Green v. McClendon, No. 08-Civ-8496, 2009 WL 2496275 (S.D.N.Y. Aug. 13, 2009)

Periodic reminders

Modifications

Track responses• Acorn v. Co. of Nassau,2009 WL 605859, (E.D.N.Y. Mar. 9, 2009)

Judicial Expectations

Preserve promptly and accurately informed by facts

Send well-written hold notices

Think about non-custodial sources and processes (e.g., back-up tapes, shared servers, ex- or exiting employees)

Be able to articulate why your protocols aredefensible and reasonable

Leave no “red flags” unexamined

Practical Advice

Systematic protocols and processes may mitigate risks and burdens

Be proactive versus reactive

Increasing importance of documentation

Utilize the meet-and-confer process wisely

Strive for reasonable, cooperative, transparent, proportional and iterative e-discovery practices

Conclusion – Preservation “To Do” List

Recognize a trigger

Quickly and accurately determine scope

Effect protocols to properly preserve

Track follow-up and modify as needed

Document the process to defend against criticism

For more information, contact Exterro at:

Thank You!

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Automation. Collaboration. Integration.

Sarah CentrellaNational Director– Fusion Cloudsarah.centrella@exterro.com(503) 501-5104www.exterro.com