Last week, Forbes published an article by Karl Schieneman entitled Legal Hydra? Top Ten Tips to Become More Proficient with Machine-Assisted Review. As he points out in the first paragraph of the article,
“The fact is, when it comes to electronic discovery, lawyers take a disproportionate role in the battle to solve what is largely a technological problem, i.e, how to find information that is relevant to a case from the huge vats of Electronically Stored Information (“ESI”) that are collected and preserved in many cases or government investigations.”
It is an excellent article that highlights one of the major rifts in today’s legal discovery between attorneys and technologists. As a technologist (self-declared), I do have a somewhat biased opinion on this issue, but I try and look at this issue as objectively as I can. It is clear to me that while the two fields are integrally related, that each requires some particular expertise that is not necessarily possessed by a single individual. Even thought I have been involved in the legal industry for 30 years, I would never go to trial without an attorney. So why do so many lawyers attempt to handle EDiscovery on their own?
It is accepted practice in the legal profession that you consult with a doctor in a medical malpractice case, a software engineer in a software case and an accountant when the case involves financial malfeasance. So why is there such resistance to “partnering” with electronic discovery experts during the phase of the case that involves this ever present discipline? By attempting to handle this technology in house, lawyers can negatively impact the case, unless they happen to possess this ancillary legal expertise. While clearly, there are many lawyers that have acquired the knowledge needed to handle some basic EDiscovery on their own; the newest technologies in the field, including machine-assisted review, predictive coding or concept clustering requires some very special knowledge.
Lawyers and legal technologist often speak the same language, but they are often speaking different dialects which can make it difficult to communicate effectively. As a result, technologists can be rejected by a legal team for two primary reasons: 1) technology is viewed to be too expensive and should be avoided whenever possible; 2) technologists don’t explain clearly how machine-assisted review and other technology solutions can end up saving money in the long run. Remember that it was not so long ago that lawyers insisted on physically looking at every document in a population, before the implementation of keyword searches helped lawyers parse out the more useful information for individual review. New technologies need to be explained, tested and perhaps most importantly, explained and accepted by the courts.
It is time for the basic conversation between the two parties take place, with each party parking their egos at the door and truly listening to what is being said. Machine-assisted review is likely to be a game changer in EDiscovery. It is still very new to the marketplace and vendors need to spend a lot of time explaining why the legal profession should pay attention to it. Lawyers will need to become comfortable with conducting EDiscovery under this new paradigm, and the change won’t come easily. But I firmly believe that this technology will help control the volume of information which has to be reviewed during EDiscovery.
In order for that to happen, lawyers need to view technologists as partners in litigation, not as an uninterested outside vendor. Making vendors an integral part of the team will result in someone vested in both reducing costs and making sure that technology is employed effectively on behalf of their clients. There is a major difference between legal expertise and technological expertise. Look for vendors who understand both the technology and have experience in the legal marketplace and you will have found an effective partner for your litigation. Then go review some documents, a vastly reduced number of documents.
I have written in the past about the importance of Search in today’s litigation (“Are Search Technologists a Foregone Conclusion” and “The Role of Search in E-Discovery-Guidelines that Lawyers Need to Consider”. There continues to be a growing body of case law regarding search technology and search terms that makes it imperative for attorneys to be aware of the implications of a poorly executed document strategy.
Lawyers need to become better versed in search term construction and the need to include expertise in linguistics, statistics and computer science in creating effective and defensible search terms. Courts are beginning to question the validity of key word searches that have been presented to define case strategy and have further questions the ability of lawyers to craft searches without the assistance of technology experts.
In fact, I strongly believe that the “practice” of search as part of electronic discovery has evolved into the “art” of search and is rapidly evolving into the “science” of search. A recent case, Custom Hardware Eng’g & Consulting v. Dowell, 2012 U.S. Dist. LEXIS 146, 7-8 (E.D. Mo. Jan. 3, 2012), the parties disagreed over the development and use of keyword searches to provide correct results from the data. The defense argued that the search terms required a precise match between the limited set of search terms and the ESI, while the plaintiffs argued that the preset set of narrowly defined search terms would artificially limit the volume of discoverable information and therefore not be responsive.
The Court took the time to base their analysis on one of the seminal cases in this area of law, Victor Stanley, as well as information from the Sedona Conference Best Practices Commentary on the Use of Search and Information Retrieval Methods. From Victor Stanley, the court focused on the language that search terms are “appropriate and helpful” for performing electronic discovery searches but that they also have “well-known limitations and risks”. From the Sedona Commentary, the court quoted some limitations and risks exist because “keyword searches identify all documents containing a specified term, regardless of context”. The Court concluded that limited, precise search term searching alone could simultaneously be both over and under inclusive results based on retrieving irrelevant information and missing relevant documents due to simple misspellings.
Specific Issues Addressed by the Court
1. Fear of producing privileged information
The Court rejected the defendant’s objection regarding the production of privileged information using the proposed search terms. The Court pointed to the extensive case precedent that existed which allows a producing party to create a privilege log to exclude documents that would otherwise fit the search term results. If responsive information is also privileged, a privilege log must be created and provided to exclude documents from production.
2. Search Terms would include ‘only irrelevant information’
Defendant’s argued that the search terms selected would include ‘only irrelevant information’. The Court found the argument meritless and without any foundation in fact since there was no support provided for what the Court determined was a conclusion with no supporting 3evidence.
3. Limited response of search terms
The Court determined that the Defendants’ proposed search terms would be “problematic and inappropriate” since it would likely limit the responsive ESI to exact search term matches, including “phrasing, capitalization, or both.” The result of using such a set of search terms would be an incomplete production because discoverable material would be rejected for reasons such as capitalization or unexpected phrasing of the search terms in the discovery material.
The Take Way
What is the importance of this ruling for the legal community? I believe it further underscores the need to recognize the growing importance of the “science” of in today’s litigation. .Before an objection is raised about the creation of search methodology; there must be a true legal basis for the objection. Merely having concern about the production of damaging information does not meet the accepted criteria. In order to craft an objection that will be entertained by the court, you must have the appropriate back up documentation to prove your point. .Much of this back up documentation is technical in nature and must be provided by an “expert” who understands the limits of certain technology or processes.
Even better than being reactive to a search dispute is to be proactive by working with search experts throughout the entire ESI process. This will help assure that you produce what you are required to without producing that which is not. Search technology is indeed a science, and therefore lawyers need to join forces with experts to properly perform their legal obligations. It is a rapidly changing area of expertise that requires the dedication and experience to stay current in the filed. It is indeed a different skill set that is outside the training of most practicing attorneys.
Drafting a well thought out search methodology requires a close collaboration between the subject matter expert (the attorney) and a technology expert (the search consultant). While it does cost money to retain the services of a search technologist, they can often save much more than their cost in reduced document production and decreased challenges from the opposition. As the field moves further into new forms of technology to assist in controlling the rising costs of EDiscovery (concept searches, predictive coding, linguistics and ultimately artificial intelligence), it may well require collaboration between attorney and technologist.
At the heart of a new federal lawsuit in San Francisco is the question of control of a Twitter account once an employee has left the company. PhoneDog LLC, is a South Carolina company that provides performance information on mobile phones and related applications. They have sued their former employee, Noah Kravitz, alleging that he is harming its business by continuing to use a Twitter account that he started while he was employed by PhoneDog LLC. It is likely that the outcome may hinge on an examination of business social media policies, or the lack of them. While the focus of the case is on the control and use of the court, it is the number of account followers that is of paramount importance.
In 2006, Noah Kravitz started using a company Twitter account to communicate with technology gadget followers with his take on new products and industry trends. The use of social media has become relatively standard practice in marketing at US firms, who often employ a specialist in this form of communication. Prior to joining PhoneDog, Kravitz was already a well-known technophile in Silicon Valley, with a certain measure of success.
In late 2010, Kravitz resigned from PhoneDog. He made a slight change in his Twitter account name and took about 17,000 Twitter followers out the door with him. PhoneDog filed a lawsuit against Kravitz in federal court, alleging that the followers are effectively, a customer list and therefore PhoneDog’s property; the conversion of Twitter account allowed Kravitz to pursue business opportunities adverse to PhoneDog. They allege damages in the amount of $340,000, calculated at the rate of $2.50 per follower per month for 18 months. A hearing in the case, PhoneDog LLC v. Kravitz, is scheduled for January 26 in San Francisco.
The Case Consequences
This case is likely to be the first of many that will effect how business form and maintain employer-employee social media policies and agreements. The legal boundary lines are currently quite hazy regarding employee’s personal use of social media and employer’s claim on the channels of communication. It has been settled law for some time that client lists, built over time using a company’s name and resources, and are in fact company property. The question is, do Twitter followers, LinkedIn contacts or Facebook contacts meet this same standard? Additionally, the suit may provide some guidelines on determining the value of a Twitter follower and further define ownership of accounts offered by an internet service provider, associated and paid for by a company and maintained by an individual.
This case should be closely watched by companies anxious for guidance on how their employees are using social media. This case will also likely affect e-discovery protocols and policies of businesses, firms and government agencies since Social media content has become a routine target of information requests in litigation and investigations. It is likely that the volume of social media requests in Ediscovery will continue to grow as companies expand their use of Twitter, Facebook and other forms of social media as they pursue all possible business opportunities.
A Quick Case Summary
During his time of employment at PhoneDog, Kravitz used the Twitter account to advertise PhoneDog products as well as to tweet non-work related material. This was apparently a standard practice of PhoneDog employees. The original account was created under the moniker of “@PhoneDog_Noah” and grew to 17,000 followers between the time he was hired in April 2006 and October 2010 when he resigned. Upon his resignation, he changed the name of the account to “@noahkravitz”. Later, he began working for PhoneDog competitor TechnoBuffalo. His account currently has about 24,000 followers.
PhoneDog claims it owns both the account and the password as company property and further calls the information “proprietary”. PhoneDog claims that the Twitter followers are the equivalent of a company list, and accuses Kravitz of using the account to: 1) communicate with its customers without permission and 2) benefiting from relationships formed through PhoneDog, including appearances on network and cable television programs.
Kravitz Preliminary Response
Kravitz provides several points to counter the arguments put forth by PhoneDog. He claims that PhoneDog gave him permission to continue using the Twitter account and further, directed existing followers to his new Twitter addresss on its website and with a farewell video it made available. Kravitz has emails which purport to show that PhoneDog subsequently asked him to continue “tweeting” about PhoneDog products and publish favorable articles, and that he did so under his new name. An important point to understand is that Kravitz claims that PhoneDog did not ask that he return the account before June 8, 2011, the day he sued the company for unpaid wages in California state court.
Social Media Ownership is the fundamental factor to consider
With a focus on the ownership of social media accounts, it is an important case for businesses to follow because there is no clear answer to the question under current law. PhoneDog asserts that both the account and the followers it generates are the sole property of PhoneDog. Kravitz argues that the account belongs to Twitter. Twitter’s terms of service states that “All right, title, and interest in and to the Services (excluding Content provided by users) are and will remain the exclusive property of Twitter and its licensors” Twitter also reserves the right to terminate users and/or to reclaim usernames.
Another consideration to be resolved with this case are the policies regarding whether employees may create and mix non-work related content with work-related social media accounts. Kravitz claimes that PhoneDog had no policy on employee social media use but did ask its agents and employees to maintain Twitter accounts to help generate traffic to its site. He says he regularly used the account to tweet about sports, television, music, and other personal interests. An important secondary question that this suit raises is the following: Are followers interested in your employer and their goals, or is their interest in the individual writing the blog? Absent any direct policies, it is likely that employees may assume that if they use personal equipment (Smartphones, home computers, etc) to ‘tweet, connect or friend’ to various social media, that their views remain their own property, even when using a corporate sponsored platform.
What should companies do immediately
While the details of this particular case work their way to a decision, there are a number of steps that companies should immediately consider taking regarding social media policy. A written social media policy should be drafted and distributed to all employees to help eliminate any misunderstandings.
A partial list of considerations should include:
• A definition of who owns and controls the employee account
• Proper procedures to follow regarding use of accounts when an employee is terminated or leaves employment
• Procedures on permissions to change account names, settings and control of social media
• Create a policy on whether employees may mix personal with company messages on the social media site. Encourage employees to establish and keep separate forms of social media that represent and employees individual online persona.
The Federal Rules of Civil Procedure require that litigants know what potentially relevant electronic information they have stored as part of their business operations. This knowledge includes: what electronically stored information (ESI) they have, where it is located, how it is maintained, what it would cost to retrieve and produce it, and what the retention policies are of each business unit. It is imperative that this information be known and revealed in the earliest stages of litigation. Parties must be ready to disclose whether their ESI is readily accessible or not, based on the burden and expense associated with its retrieval.
During the Meet and Confer portion of the process, the Rules also require the parties be in a position to discuss the different forms that their ESI production might be in, including the production of ESI in its "native" format. Additionally, although destruction of ESI can result in sanctions, the new Rules provide possible protection against sanctions when ESI is destroyed by routine procedures such as automatic deletions, if they occurred in "good faith" and as part of the normal and planned course of business.
In fact, businesses able to show that certain information is not readily accessible may succeed in shifting significant costs of production to their opponents, or in forcing withdrawal of their opponents' discovery requests.
How Should Companies Proceed with Compliance?
There are a number of fundamental steps that companies must take in order to be on track for compliance with new EDiscovery rules. Sometimes this can be completed using internal resources, other times an experienced ESI consultant should be retained to help provide the correct framework for compliance. The most fundamental of these is the creation of a “data map”, making it part of the ordinary course of business, before litigation is even on the horizon. Essentially, a data map is a complete catalog of the record’s created and held by a company. The data map should describe the company’s records by business unit and include a complete description of the types of electronic media that they are maintained on and the location of each form of information. Each business unit should include retention practices that they follow, especially if they are different from the company as a whole. This process will result in the business having an in-depth snapshot (which must be constantly updated) of the nature, type and location of all documents and the retention policies that exist for each classification. This is the base information needed to quickly respond to requests for information from external resources and provide the basis for educating outside counsel on potential document production issues.
Due to the increased scrutiny of recordkeeping practices during litigation, a company also needs a written record retentions plan which utilizes the data map information as the first step. The data map allows the business group to review the different data populations and develop a practical rationale for determining which records to maintain and for how long the records need to be kept. The Sedona Conference on Best Practices recognizes that no single document retention policy can meet all the different needs of an organization. These determinations are guided by understanding whether there are business, legal or regulatory requirements that impact certain records. Based on this determination, a rational basis for keeping or destroying categories of records can be made and perhaps more importantly, be defended if needed.
The detailed information in a data map can include facts that outside counsel can use to convince their opposition – or the court – that certain forms of ESI are too difficult or costly to access. Indeed, recent case law makes it clear that courts will require specific and factually detailed support for any finding that ESI is not readily accessible and that either the business should not be required to produce it or the opposition should shoulder the cost of its production.
Given the volume of data and the speed with which companies are required to comply with requests by parties and fulfill compliance regulations, it is never to early to start preparing for litigation. The challenges of responding to requests has shifted from solely the ultimate results of the discovery to include the speed at which you can respond to these requests. Data mapping is key to this process.
Charting a data map can be a challenge for some companies considering much of their data is scattered about due to the explosion of electronically stored information in recent years. Nevertheless, like anything else pertaining to email retention and eDiscovery processes, it must be addressed in an efficient manner. Below is a summary of six key steps for companies to follow when creating a data map of their electronically stored information
1) Create a multi-disciplinary team
Data mapping starts with first identifying the ultimate needs of the different players, how the information will be used. Schedule a meeting to obtain input and buy-in from legal, IT, compliance, records management, finance and executive management. This will allow the group to create document retention policy(s) that will cover all relevant business units.
2) Conduct interviews with key personnel
Interviews of various company personnel must be conducted to probe into responsibilities and practices, including identifying who is responsible for the records maintained by each department or division of the business and whether they comply with pertinent records retention procedures. Any deviations in practice from existing records retention policies should be cataloged.
3) Develop a formal policy
After the interviews are completed, the team must discuss the findings in the context of meeting various requirements under the Federal Rules of Civil Procedure and if applicable, any industry regulations or government regulations.. The email retention policy should then be reviewed so that everyone is clear on the retention requirements and policies for the company.
4) Create a data map
Data maps should encompass the various types of electronic media on which the records are maintained, including file and email servers, desktop and notebook computers, portable drives and optical media, and Blackberries and other PDAs. Details are important, to facilitate as comprehensive a records assessment as possible.
As the policies are being developed, IT can start gathering information about the company's ESI, guided by a series of questions including: what type of ESI does the company have, where is it stored and what are the current retention periods? How difficult is it to access each data location and what format is data stored in? Who is responsible for each data location? The end result is a document that contains the company’s data map. Users should consider creating both a detailed spreadsheet of the information as well as a flow chart to be used to describe the data to outside counsel.
5) Data map verification
An important part of the data map process is verification. Once the information has been documented and charted, it is important to verify the data map to ensure it is complete and accurate. IT should test the map to determine if information is actually located where the map indicates and if it is accessible as indicated. This verification will highlight any potential data gathering processes in the future and allow changes to be made before there is a time consideration.
6) Keep the data map current
Finally, as technology changes and digital storage growth and application upgrades are constant, it is important for companies to check and update data maps regularly. This is not a one time process. An outdated data map is only slightly more useful than no data map at all once it is needed in litigation.
The Take Away
Companies must be knowledgeable about what information they have, where it is stored and how easy it is to retrieve. Data maps allow a company to have this information at their fingertips, along with written retention policies and practices to use during discussions with opposing counsel. The map will allow proper response to EDiscovery requests, plan for the Meet and Confer, provide a rational and defensible process to the court and help protect against sanctions.
The dire “prediction” continues in the blogosphere, newspapers and law firms that predictive coding will somehow eliminate the need for human review of documents during EDiscovery, and eliminate key legal jobs. The amount of world information (data) continues to double every two years, which makes it increasingly difficult for company’s to organize, track and identify information as responsive to EDiscovery requests. I believe that it is wishful thinking on the part of corporate law departments who are looking at the high cost of historical document reviw and hoping that technology will provide a low cost answer to the review of discovery documents.
The “history of discovery can easily be summarized in a few key steps:
• It wasn’t that many years ago when most discovery requests involved the exchange of only a few dozen boxes of information between attorneys. This information was reviewed by the lead counsel and a few associates over the course of a couple of weeks with certain documents identified as relevant for litigation. Oh, the good old days!
• Next came the discovery was the practice of “dumping” hundreds of boxes of documents on the opposition, burying the key documents throughout the boxes making it difficult to locate them. This is when the rise of linear review by teams of attorneys and paralegals became commonplace. It was the only practical way to get through the documents, and hopefully identify the key documents. Generally, you had one chance to locate documents.
• .Soon, databases were created that contained document summaries of key “fielded information” that allowed the attorneys to search through the database multiple times, using the information in the fields. The creation of a fielded database of every document was extremely expensive and time consuming and was often filled with errors due to the differences in review and legal experience of the review teams.
• For the last 10 -12 years, early EDiscovery emerged due to the rise of computerization and the increase in data. EDiscovery allowed us to perform online review of the total data set, which was a vast improvement over the handling of documents or document summaries. But the process was still lengthy and expensive to implement.
• Currently, EDiscovery involves collecting, processing and hosting documents, emails and other document types. Advanced technology allowed us to de-dupe populations, exclude non-responsive documents, remove personal emails and exclude documents using date range searches. The time of complex Boolean search technology allowed us to reduce document populations and allow teams of lawyers to review them all before they deliver “responsive” data to the opposition.
• The volume of data that must be included in EDiscovery has recently grown to include personal laptops, Smartphone’s, the cloud, social media, etc. Along with this increase in the volume of data, EDiscovery vendors have created advanced technology to help parse through the data. The emergence of predictive tagging has brought the technology further to the forefront. Predictive tagging (or analysis) involves “training” the software using algorithms to identify categories of relevant documents for each case. The algorithms help the programs to “learn” to perform iterative passes through the data, identifying documents that match what the attorneys have identified as relevant documents. And then, once it has been created the subset of documents identified must still be reviewed by a team of attorneys to verify all the decisions made by those developing the algorithms. While it is amazing technology that goes a long way to reducing vast quantities of data to a more manageable document population size, it must be driven by extremely smart attorneys and technologists, or the system will fail and return garbage for results.
What is the common link throughout this short history of discovery? That attorney reviewers and human interaction have been key to the success of litigation from the start. At each phase of the process, the role of attorney reviewers has changed, but there can be no denying that even with the advanced technology that is emerging, attorney reviewers will continue to play a strong and central role. Without human guidance and verification, computers can not handle the complex decision making that ultimately determines whether a single document is responsive or relevant to a particular set of circumstances.
Predictive tagging requires that a team of lawyers knowledgeable about the case must first manually go through a sample set of documents and teach the program what is relevant and what is not. This is an iterative process that must be performed, refined and repeated in order to create a relevant search of the total population. Once this baseline of documents has been identified, legal teams can benefit from the software’s quick prioritization of data. But ultimately, it is still the lawyer’s job to confirm the results and add new search parameters based on each set of results. This also involves complex use of sampling techniques and iterative processing.
The Takeaway
The review of data using advanced technology highlights the collaboration that must exist between technology and human review. Automation technology is the engine that improves the process, but so far, it can not drive it without people. It is clear that people are an indispensible part of the success of implementing technology into document review. While the technology can speed the process and dramatically reduce the number of documents which ultimately need to be reviewed, human involvement is key to both the success of the culling and the final review of the documents identified as fitting the search parameters.
Software is just a tool to be used effectively by lawyers to help identify relevant information in a sea of data. But people need to remember that it is the human mind that can identify a parallel course of investigation from reviewing the content of a document “selected” by using comprehension to process nuance in language, intuition and logic. Critical thinking will always be the most important process involved in the discovery process. Document review processes will change over time. The number of reviewers needed to perform this work is likely to decline over time, but the effectiveness of review teams will require lawyers and review teams to have a higher level of technological and legal background to be effective at this very important job. Those companies that harness this power and create processes to exploit the new technology while employing legal staff to perform a more sophisticated type of document review will rise to the top.
I am sure that there is a corollary “law” similar to Moore’s law (the number of transistors that can be placed inexpensively on an integrated circuit doubles approximately every two years) regarding the increase in new crimes that rapidly follow advances in new technology. Each time there is advancement in computer technology, it seems that there is an equal increase in the need for forensic analysis as people use computer skills in attempts to cover up their crimes. Electronic data has created an entirely new method of falsifying evidence which has required a corresponding increase in investigative methods.
An increase in the importance of forensic document analysis has occurred both within government agencies (think FBI) and EDiscovery consultants, on the cutting edge of technology in order to keep up with the increasing demand during litigation. The courts are realizing that this expertise is required in order to fairly evaluate the evidence that is part of today’s litigation.
Since this is an emerging area of expertise, there has been some confusion about where and how to present individuals as experts for the purposes of testifying. A recent ruling in the US District Court for the Southern District of Florida, Coquina Investments v. Rothestein and TD Bank, 2011 U.S. Dist. LEXIS 120267 (S.D. Fla. Oct. 18, 2011, helps to define the reliability of a digital forensic expert’s report. This is a civil case that included allegations of electronic forgery. There were several Daubert motions filed that sought to exclude the testimony of various traditional types of experts that covered areas of financial damages and generally accepted accounting practices. Additionally, the plaintiff sought to exclude what they claimed was a new type of expert when the defendant’s expert submitted an opinion that certain electronic documents were in fact e-forgeries.
The plaintiffs main argument was that the opinion of the defendants’ metadata expert was unreliable and should be excluded because the expert had only reviewed a sample subset of the total data. The Court reviewed the expert’s accompanying methodology and report and ruled that the expert had “employed a sound metadata analysis” and would be able to offer testimony about the emails identified as forgeries. The Court further concluded that the fact that only a sample was examined would only impact the weight of the evidence presented but did not impact the reliability of the experts conclusion about the forgeries.
I believe that this ruling creates an important precedent in metadata analysis while employing a commonsense approach to today’s exponential growth in data. Since EDiscovery productions often number in the hundreds of thousands if not millions of pages of documents, there needs to be a practical scientific method of analyzing the documents and the related metadata. It is impractical to think that each and every document needs to be examined before certain conclusions can be drawn about the document population. The use of sampling is a long accepted scientific practice that must be employed in litigation given the ever increasing size of document populations. This ruling goes a long way towards making sampling an accepted practice and offering forensic metadata expertise as a valid reporting mechanism.
As electronic discovery costs continue to grow and the complexity of litigation increases, lawyers and corporations need to pay closer attention to the document requests that they make during the discovery process. Why? Because ever since Race Tires II awarded EDiscovery costs in favor of the prevailing party, there has been an increase in the number of cases that award these types of expenses. Therefore, expected EDiscovery costs should be added to the list of things to consider before filing a case, and strong consideration should given to the methods utilized to capture and review the data.
Focusing on crafting a reasonable discovery request and then employing the most cost effective method to analyze and control the data are key to guarding against a large bill should you lose your case. In addition, cost shifting can be prevented if the parties participate in a jointly developed review process with shared expenses. Given the sophistication of software today, it is quite easy to put up confidential walls between data in the same system.
Courts in California and Pennsylvania have recently found that the prevailing party can recovery EDiscovery costs under FRCP 54. How the court interprets 28 U.S.C. § 1920(4), with key language that states, “fees for exemplification and the cost of making copies of any materials where the copies are necessarily obtained for use in the case” is the determining factor. Recently this language has been interpreted to mean that electronic discovery costs that are related to the duplication and production of data are in fact recoverable.
Three recent cases are summarized briefly below to show the results of this recent trend. To obtain the details, you should read the full rulings. My focus is on awareness and options to help you avoid these types of situations moving forward.
In Jardin v. DATAllegro, Inc., argued in the U.S. District Court for the Southern District of California, the court granted the defendants summary judgment on non-infringement and dismissed their counterclaims. Judgment was entered and included electronic discovery costs as valid taxed costs against the plaintiff, based on Rule 54 (d) which creates a presumption in favor of awarding costs to the prevailing party. .
The court focused on two types of EDiscovery costs in its ruling: (1) costs that were associated with converting electronic data into a TIFF file format and (2) costs associated with electronic discovery project management. The court found that the costs to convert data “was a necessary part of discovery” in this case because the FRCP require the production of electronically stored information in a format that is useful. Conversion to Tiff format allowed for better document control during the discovery process (numbering, metadata, etc). The basis for the rule is that it is now often necessary to have electronic information to have any meaningful discovery. Regarding project management, the court parsed out the expense needed to prepare and produce documents vs. the lawyers’ judgment developing strategy in review of documents. Since the project managers duties were limited to overseeing data conversion, his costs were allowed.
In Tibble v. Edison Internation, The U.S. District Court for the Central District of California also awarded electronic discovery costs. Edison prevailed on 11 claims while the plaintiffs prevailed on one part of an ERISA claim. While both parties sought an award of costs as the prevailing party, the court determined that the Edison "prevailed in the substantial part of the litigation."
The defendants' submitted for approximately $530,000 in electronic discovery, specifically requesting that the costs for "utilizing the expertise of computer technicians" to unearth computerized data sought by the plaintiffs' discovery requests. The opinion differentiated between costs incurred "merely for the convenience of counsel" and those "necessarily incurred in responding to . . . discovery requests." The court ruled that the costs necessarily incurred were in fact taxable. While ultimately, the court declined to award attorney's fees, rendering the defendants' request for taxation of costs moot; effectively the court granted the request for taxation of costs as an offset up to the amount of any attorney fee award.
In re Aspartame Antitrust Litigation, the U.S. District Court for the Eastern District of Pennsylvania upheld the taxation of most of the $575,000 in electronic discovery costs that had been awarded by the Clerk against the losing plaintiff’s. The basis for the ruling was that costs incurred, other than attorneys’ fees, have a “heavy presumption” of being automatically taxed and awarded to the prevailing party according to legislative history. This presumption forces the non-prevailing party to bear the burden of demonstrating the opposite, that costs should not be awarded. The plaintiffs claimed: an inability to pay, the lawsuit was brought in good faith, that the costs sought were not sufficiently explained, and that the costs were incurred as a result of the defendants' bad faith. The Clerk did not find these arguments persuasive and dismissed them.
The court upheld the majority of clerk's award, noting that "in cases of this complexity, electronic discovery saves costs overall by allowing discovery to be conducted in an efficient and cost-effective manner." Allowable costs included: the creation of a litigation database, storage of data, imaging of hard drives, keyword searches, privilege screen searches, deduplication, data recovery, data extraction, data processing, running documents through an optical character recognition (OCR) program, creating load files, creating production CDs and DVDs, and the technical support required to complete these tasks. This is a formidable list of allowable costs. The court reduced the costs submitted for scanning documents since there was no valid reason that all documents needed to be scanned in color. The court denied the costs for the use of clustering software, for converting documents from TIFF into PDF format, finding such costs were incurred for solely for the convenience of counsel,, since the parties had agreed to production in TIFF, PDF, or native format, document branding and Bates labeling. This case lays out a fairly comprehensive list of what the courts are beginning to delineate as reasonable recoverable costs.
Some Preliminary Conclusions
• Since there is a strong presumption in favor of awarding costs to the prevailing party, and argument to refute those costs must be extremely strong and well documented.
• All parties engaged in litigation should be prepared to pay an opponent’s EDiscovery costs (at least a substantial portion), if you receive a negative ruling.
• Attorneys and clients need to include an estimate of these costs during their Early Case Assessment meetings where discussions focus on the costs and benefits of litigating a claim.
• Discovery requests should be crafted conservatively, with a focus on the key information needed, rather than broad-based data gathering.
• Whenever possible, negotiated a joint EDiscovery plan that limits the data gathered by:
o restricting custodians
o shortening time frames
o developing joint search term lists
o developing data filtering and sampling parameters.
• If a cost sharing agreement is reached, make sure that it is detailed and that both sides understand the commitments made under the agreement. If there is a possibility a party may seek costs for a shared hosted review database, a clause should be put into the agreement about cost-shifting for a prevailing party. The time to raise this issue is during a Rule 26(f) meet and confer meeting, not after the litigation ahs concluded.. As always, the devil is in the details and if it is not written down, it is highly unlikely that it will be remembered the same way by opposing parties.
• Perhaps most importantly, counsel needs to keep accurate records on the costs involved in each step of the EDiscovery process. When and if the Court requests details on your costs, you need to be prepared to provide them.
Email continues to dominate the exponential growth in EDiscovery, with articles written weekly on the increased volume of information. As a tool, U.S.businesses rely on email to perform activities from the mundane to the complex. The bottom line is that email is often the most complete record of a business transaction or business plan and therefore create a significant security concern. Yet it appears that many companies are still wondering why they should archive email files.
In my weekly conversations with a group of EDiscovery professionals that range from in house experts to outside consultants, the topic of Email archives is often at the forefront, mostly because the group can’t believe the number of companies that have still not implemented an email archive process. In fact, it appears that many businesses store large volumes of critical information within the email messaging system in personal archives that are neither backed up nor easily accessible through an enterprise solution. Email correspondence is now considered a “record” by the courts and therefore it is subject to all the document retention rules that exist on both the State and Federal levels.
Simply put, email archiving provides a systematic organization to preserve email messages in a centralized location that can be quickly accessed when needed. There are three common scenarios when an email archiving system is useful and needed by an organization.
Internal Research
When a company spends two years planning, developing and implementing a new product or service, there are generally tens of thousands of pages of material produced by dozens of employees in the process. There are often monthly or quarterly reports produced that summarize the data which are widely distributed during update and planning meetings. This data is often easily retrievable because of its distribution requirements. But as the saying goes, the “devil” is often in the details, which don’t make it to the update reports. Rather, as a project progresses, there are dozens of decisions, changes and information that is exchanged between team members in the form of email communication. In fact, over time, people lose track of who introduced an idea, or why a decision was made to change the design, or how market conditions influenced a decision.
So after a few employees leave, and market conditions force a revisit to the original design and decision process, the person tasked with creating a detailed timeline of the decisions that were made several years ago is forced to try and reconstruct the information. Without a central email archive, it is virtually impossible to gather and review all the emails that are relevant to the process. Oftentimes, when employees leave an organization, there files are deleted in entirety, making it impossible to retrieve any relevant information. With an email archive system implemented, the vast volume of internal research and materials that may be important to the future of the company is available and accessible.
Litigation
The second scenario involves the litigation process. EDiscovery rules often require an organization to produce emails related to the case matter, regardless of the passage of time. Without an email archive system, emails can be stored on virtually any type of media used by the company. This can include PDA’s, phones, servers, desktops or laptops and now even in the cloud. And the problem is multiplied when you have multiple business locations, remote employees or an international presence. The problem is the high cost of locating and searching every one of these device that may contain relevant information. And these costs must often be borne by the party required to provide the material in response to a document request.
Email archive systems, with a central location allow quick and efficient access to the data in response to a document request. Additionally, a quality email archive system includes an internal indexing capacity and an advanced searching process to help locate specific files and reduce the number of files that need to be examined and produced. Perhaps most importantly, with an email archive system in place, with standards and processes that are following on a schedule, document destruction procedures (the removal of material after a “reasonable” retention period) are generally accepted by the courts without a lot of question.
Compliance
Even without impending litigation, many compliance regulations exist that force a company to be more stringent in archiving email. Any record that pertains to “business activity” is subject to compliance regulations. Some businesses (finance, banks, government contracting, etc.) re highly regulated and have stringent retention policies. Compliance statutes require that data, including email, must be protected from security threats that could damage or endanger the information and further requires that data be retained in its original state, without alteration or deletion and be easily accessible whenever requested.
Email archiving stores messages in their original format. Advanced archiving tools have complex “rules” which can be created to classify which emails require archiving, which ones fall outside the parameters and can then automatically delete messages when the statutory period expires.
Two Methods for Archiving Email
There are two main methods for archiving email. In-house solutions are put in place and run by your IT department, hosted solutions are provided by third party providers under a contract to provide services. The correct choice should be made based on an evaluation of the capabilities of your existing IT department, along with an understanding of the issues surrounding each option.
In-house solution archive emails on a server located within the company. Controlled entirely by the company’s own employees, there may be better control over data integrity, security and confidentiality. In-house solutions can put a strain on the existing IT’s resources and might be expensive to maintain since it is not your core business. Systems must be constantly monitored to assure proper implementation.
Hosted solutions generally have much lower implementation and storage costs, since this is the business that they are engaged in and they can easily scale their business on an incremental basis. The expertise resides with the hosted solution and therefore your internal staff does not have to stay on top of technology changes. However, there is a loss of control and perhaps some level of confidentiality since outside parties are responsible for handling the information. Most vendors, however, offer significant security measures that make confidentiality problems less significant.
The Take Away
Regardless of your selecting an in-house or a hosted solution, it is a fiduciary responsibility for a company to implement some type of email archiving system. Email correspondence is considered by the courts as a record of your company’s business transactions. To insure that your company meets compliance statutes and will be prepared should it face litigation, it is time to take this important step. If you need assistance in evaluating how to properly address archive email in preparation for discovery, contact an EDiscovery provider with the resources to help you evaluate the best solution. Studeo Legal will be happy to provide guidance to your organization.
In last weeks blog on the new Model Order that is being promoted by Judge Randall Rader regarding the implementation of strict limits on electronic discovery in patent suits, I mentioned in passing that the rules had already moved outside the Texas circuits into the California District Court under Judge Grewal. The case, DCG Sys., Inc. v. Checkpoint Techs, LLC, has been used as a testing ground by the judge to experiment with a change to the EDiscovery process. This post is a more detailed look at Judge Grewals approach.
On November 2nd, Judge Grewal issued an order that curtailed email production in a patent infringement case that was pending in his San Jose courtroom. Patent litigators are following the case closely to determine whether the approach will in fact reduce EDiscovery costs, or prove unworkable in the patent practice or even result in further venue shopping by litigants.
Grewals Order
Grewal’s has implemented the new order in DCG Sys., Inc. v. Checkpoint Techs, LLC, 11-03792 which involves patent litigation surrounding optical inspection of computer chips. Grewal decided to break up the EDiscovery into a series of phases (over plaintiffs objhections) with the first phase regarding an exchange between both sides of “core documentation” and only later moving into discovery regarding emails. Once emails were to be exchanged, the productions must focus on “particular issues”, with the number of search terms and custodians of records limited to only five per side, unless there is a mutual agreement to increase that number. Without an agreement, the requesting party will be forced to pay the costs of the increased production of any email information.
The unique factors surrounding Grewal’s adoption of the new Model Order is that his Order includes an explanation of his reasoning for adopting the Order, as well as some direct references to Judge Rader’s implementation speech. Specifically his order included language about the “disproportionately high expense of discovery in patent cases," and says, "these restrictions are designed to address the imbalance of benefit and burden resulting from email production in most cases." Both of these quotes are at the heart of the Model Order passed by Judge Rader.
Extending the Order Beyond Non-Practicing Entities
The original rule was aimed at non-practicing entities, often refereed to as “patent trolls” because these suits typically had a huge imbalance in the cost of discovery. Patent trolls have been known to file cases with the express hope of achieving high priced settlements from defendants in order to avoid the high cost of litigating the matter. However, DCG Sys., Inc. v. Checkpoint Techs, LLC is a suit between competitors and DGS Systems attorney, Mark Miller from O’Melveny argued that the Model Order was designed exclusively for non-practicing entity suits.
Grewal responded to this issue by saying, “"there is no reason to believe that competitor cases present less compelling circumstances in which to impose reasonable restrictions on the timing and scope of email discovery." And further, if competitor cases "lack the asymmetrical production burden often found in NPE cases, so that two parties might benefit from production restrictions, the model order would seem more appropriate, not less."
Grewal acknowledges in his order that he is breaking new ground with the Order that he crafted. "Perhaps the restrictions of the model order will prove undue," he wrote in his order. "In that case, the court is more than willing to entertain a request to modify the limits. But only through experimentation of at least the modest sort urged by the chief judge will courts and parties come to better understand what steps might be taken to address what has to date been a largely unchecked.”
Only time will tell whether this attempt at controlling EDiscovery costs will be successful.
In a prior blog posted on October 03, 2011 with the title “ New Model Order Would Control EDiscovery During Patent Cases, I described a new model order that would place some limits on eDiscovery in patent cases had just been unveiled by Chief Judge Randall Rader of the U.S. Court of Appeals for the Federal Circuit. The reasons cited behind the changes focused on the excessive costs of the discovery process, particularly in patent cases, which produce “disproportionately high discovery expenses”. Judge Rader posited that the Model Order serve as a starting point for district courts to create “responsible, targeted use of e-discovery” in patent cases, with the purpose of streamlining and imposing discipline on the process.
In the short time since the Model Order has been issued, it appears that the legal community has decided to adopt the Model Order in a number of current patent litigation in the Eastern District of Texas. There have been three recent patent cases from the Eastern District that either incorporated the model order or issued orders embracing the major terms of the order that were proposed by Judge Rader.
These cases are:
• Stambler v. Atmos Energy (Case No. 2:10-CV-594)
• Effectively Illuminated Pathways v. Aston Martin Lagonda (Case No.:6:11cv34)
• Intravisual v. Fujitsu (Case No. 2:10cv090)
Additionally, courts outside of Texas are also taking notice of this change to attempt to limit e-discovery. DCG Sys., Inc. v. Checkpoint Techs., LLC , in the California District Court adopted a version of Judge Rader’s model order, stating “only through experimentation of at least the modest sort urged by the Chief Judge will courts and parties come to better understand what steps might be taken to address what has to date been a largely unchecked problem.”
This rapid and initial acceptance of Judge Rader’s model order by these courts supports the position that many judges believe prudent measures that limit the scope and costs of e-discovery must be taken before the legal system grinds to a halt. Judge Rader stated that one of the over riding reasons for his model order was to force the EDiscovery process to “focus on the proper purpose of discovery—the gathering of material information.”
The Take Away
The Model Order forces litigants to narrow their focus on gathering only “material” information which according to Judge Rader, is the “proper purpose of e-discovery”. The Model Order would also halt the use of EDiscovery as an unlimited fishing expedition, particularly with respect to the gathering of email documents. Reducing the expenses of EDiscovery would remove some of the pressure that accused infringers felt to settle non-meritorious claims simply to avoid the high costs of EDiscovery. In the words of Judge Rader, the era of “unlimited fishing expeditions” in e-discovery must be brought to an end.
While written specifically for patent litigation in Texas, the Model Order could easily be adopted to other areas of litigation. Litigators should begin to craft their discovery requests more carefully, in a more targeted manner in order to avoid the court imposing more draconian measures on them. The concept of “reasonableness” as it applies to EDiscovery continues to provide the safest path when being forced to defend a request for information. Crafting an EDiscovery request carefully will also help reduce the high cost of processing and review of material, a goal that should be supported by all the involved parties.