Electronic Data Records Law | How to Win E-Discovery

Litigation Hold

Lawsuit Strategy

If an enterprise is not archiving e-mail in a systematic way, e-discovery can be a headache when a lawsuit it filed.  This lesson applies just as much to a plaintiff (the one who initiates a lawsuit) as to a defendant (the party against whom the lawsuit is filed).  A case in point is The Pension Committee of the University of Montreal Pension Plan, et al. v. Banc of America Securities LLC, et al., No. 05 Civ. 9016 (SAS), 2010 WL 184312 (S.D.N.Y. Jan. 15, 2010).  In this case,
several institutional investors (the “plaintiffs,” which included a university pension fund) sued hedge fund managers (the “defendants,” which included a subsidiary of Bank of America) to recover $550 million in investment losses. 

In a lawsuit, e-discovery is a two-way street.  The plaintiff can demand that defendant turn over its email, and the defendant can demand that the plaintiff turn over its email.  So in this case the defendants said, “Plaintiffs, you have drug us into court regarding these investments.  We demand to see your email concerning these investments.” 

The plaintiffs had been haphazard in retaining email.  In practice, the essence of their policy (which, largely, was not in writing) was to retain much of their email for short periods of time – a few weeks, maybe a few months, maybe a year . . . it all varied because the plaintiffs had no systematic policy for archiving email.  Different employees made different decisions about keeping e-mail.  But the general practice was to destroy rather quickly.

The judge said that at the time the plaintiffs started to prepare for the lawsuit (2003-2004), they should have instituted a “litigation hold” on all relevant email, wherever it may be, whether on servers, laptops or even backup tapes if the email was stored only in backup.  The judge’s reasoning was that if the plaintiffs think they are going to be in a lawsuit, then they need to preserve the evidence related to the topic of the lawsuit.  They should not let the evidence be destroyed; they should allow emails to be erased.

Analysis:  The reality is that in any enterprise (public sector or private sector) a litigation hold is VERY HARD to implement in practice.  A litigation hold requires real work, diligence, expertise and forethought to find, evaluate and preserve all the relevant email (the relevant email can be voluminous, involving, in a case like this, maybe thousands of messages).  The plaintiffs did not institute a good litigation hold at the right time, and therefore the court believed important emails were deleted and relevant evidence had been lost.

Result:  Because the plaintiffs did not do what they should have done, the court ruled the defendants were entitled to a remedy in the form of a so-called “negative inference.”  When a party like a defendant is awarded a “negative inference,” it gets a strategic advantage in the lawsuit.  The strategic advantage means it will be easier for the party (the defendant) ultimately to win the lawsuit. [Technical detail: The negative inference in this case was that the jury would be told that plaintiffs possessed relevant email evidence, but lost it, and the evidence is more likely to have supported the defendants’ side of the case.]

The court also ruled that plaintiffs must pay some of the defendant’s attorney and expert fees/costs related to e-discovery.  Ouch.  That ruling is expensive for the plaintiffs.

Lesson:  Litigation is hard to predict.  But for many enterprises, they know that eventually they will be involved in lawsuits of one nature or another, and they will be expected to have instituted a litigation hold to preserve email.  Knowing precisely when and how to institute the litigation hold is, in practice, very hard. 

Courts like the one in this case are becoming progressively more demanding in their standards for litigation hold on email. 

Thus, a haphazard policy on email retention, which generally includes short retention periods (such as 90 days and the like), can come back to haunt an enterprise like the university pension fund in this case.  As a practical matter, the risk of this problem can be mitigated by adopting a policy to archive the emails of important people – like investment analysts and decision makers -- for numerous years (e.g., seven years).

--Benjamin Wright

In collaboration with Netmail, Mr. Wright leads on-site workshops for the development of electronic records policy in mid-to-larger sized enterprises.

 

Reasonable, Proportionate ESI Demand

Denied without Rational Basis

E-discovery is not the gateway to a feast for the litigant requesting access to the electronic records held by its adversary. The party requesting e-discovery of complex information 

from a larger enterprise must be careful.  If the request is not targeted, proportionate to the seriousness of the case and rationally based on already-known evidence, the request may be blocked. 

Sanctions for Overly-Broad eDiscovery Request?

One e-discovery expert, Mary Mack, even predicts that soon a court will sanction a requester for being overly broad in its e-discovery request.  

Another leader in e-discovery, Craig Ball, advises that when a requester demands that the record holder preserve ESI, the requester is shooting himself in the foot if he “demands the moon and paralyzes [his] opponent’s operations.”

In other words, crafting an e-discovery request is hard work. The request must be tailored to the case at hand as it exists – and according to the information that is available – at the time of the request.

Request Denied

See Mirbeau of Geneva Lake, LLC v. City of Lake Geneva, 2009 U.S. Dist. LEXIS 101104 (E.D. Wis. Oct. 15, 2009).   After a city government turned over some paper printouts of email, the requester (Mirbeau) demanded that the city make all its computers and electronic storage devices available for forensic examination.  To justify this demand, the requestor argued that, in an earlier deposition, a city employee hinted that some relevant electronic evidence was being destroyed. 

The court denied the request because the requester “failed to demonstrate why a more rigorous discovery process, with extensive forensics analysis of the computers by the plaintiffs, is needed in this case….  Mirbeau has failed to identify what type of information it hopes will be discovered through the forensic mapping of the entire City’s computer system, and Mirbeau has not explained that the information it is requesting would be in the form in which the defendant’s ESI [electronically stored information] is normally maintained.” 

Court Urges Cooperation

Still, the court believed further e-discovery was warranted because the city had been less than diligent in retrieving records. The court urged the parties to cooperate to come up with a fair way to get information. It said : “While not intended to be all inclusive, the parties need to contemplate: (1) what different methods could be used to find ESI relevant to this litigation; (2) whether neutral parties could be procured to run scans on the electronic devices of the defendants; (3) whether the searches for ESI could be staggered, such as not to disrupt the City’s ability to function; (4) whether the searches could be narrowed such that they are focused only on certain parties and certain dates; and (5) what methods need to be in place to ensure that the privacy rights of third parties are not adversely affected during the discovery process.”

Rational Request, Based on Existing Evidence

The negotiation of e-discovery is a delicate, intellectual process.  It's not enough for the requester to say, "give me [or save for me] everything you got."  Nor is it enough for the record holder to say, "you aren't entitled to anything more," or "we just don't have any more records than these."

In this computer age -- when one fully comprehends every scrap of data that may exist anywhere on an iPhone, hard drive, or backup tape -- the quantity of records in an enterprise is infinite.  Accordingly, it is ridiculous to say either:

- "I want everything" (to find and disclose every last data element takes too much effort); or

- "nothing more exists" (something more always exists somewhere within the control of the enterprise).

For the requesting party, a key challenge is to gather enough intelligence via depositions, interrogatories or other research to inform rational e-records demands.

For the responding party, the challenge is to be cooperative, while not enabling a "fishing expedition" by the requester.

–Benjamin Wright