In This Issue:

	RECENT E-DISCOVERY AND COMPUTER FORENSIC COURT DECISIONS
	PRACTICE POINTS: 2006 YEAR-IN-REVIEW: E-DISCOVERY'S BIGGEST DEVELOPMENTS
	KROLL ONTRACK NEWS & EVENTS

Court Orders Mirror Imaging of Computer Hard Drives, Citing New Federal Rules of Civil Procedure
Ameriwood Industries, Inc. v. Liberman, 2006 WL 3825291 (E.D. Mo. Dec. 27, 2006). In a suit alleging misappropriation of trade secrets inter alia, the plaintiff sought e-mails from the defendants containing specific communications related to the claims. After the defendants failed to produce an e-mail, which was subsequently discovered by the plaintiff, the plaintiff motioned the court for an order to compel the defendants to produce computer hard drives for imaging. The plaintiff not only requested all work-related computers, but any home computers that may have been used to transmit the trade secrets. The plaintiff argued it was entitled to the hard drives even if information was deleted since the computers might contain evidence that went to the heart of the claims. The defendants argued the costs involved would be substantial and imaging should not be completed. The court determined the data requested was not reasonably accessible because of undue burden and cost. However, the court closely examined the newly implemented Federal Rules of Civil Procedure and determined there was good cause for the plaintiffs to search the defendants' hard drives since "allegations that a defendant downloaded trade secrets onto a computer provide a sufficient nexus between plaintiff's claims and the need to obtain a mirror image of the computer's hard drive." The court then provided detailed guidance for the mirror-imaging process and discovery of documents on the defendants' hard drives. It instructed the plaintiff to choose a qualified computer forensics expert and required the defendants to produce all hard drives, including those from their homes. A disclosure process, including provisions regarding production of documents and privilege issues, was also ordered.

Court Orders Production of Electronic Documents, Citing New FRCP
Flexsys Americas, LP v. Kuhmo Tire U.S.A., Inc., 2006 WL 3526794 (N.D. Ohio Dec. 6, 2006). In a patent infringement suit, the defendants brought a motion to compel the plaintiff to produce electronic documents. The defendants claimed the plaintiff only provided and searched for documents related to one individual. The defendants argued they were entitled to search all documents created by every employee within the plaintiff's company. The plaintiff responded it had produced all documents at issue and that a company-wide search would be costly and could not occur before the discovery deadline. The court found the parties had not come to any agreement regarding the scope of e-discovery according to the new guidelines set forth in the amended Federal Rules of Civil Procedure. As a compromise in this discovery dispute, the court ordered the plaintiff to produce all electronic documents from 10 individuals of the defendant's choosing.

Court Denies Motion for E-mail Production in the Native File Format
Williams v. Sprint/United Mgmt. Co., 2006 WL 3691604 (D. Kan. Dec. 12, 2006). In an employment termination case, the plaintiffs moved the court for native file production of e-mails which had been previously produced by the defendant in a hardcopy format. In the original production, the e-mails had spreadsheets that were detached and provided as separate documents in their native, electronic format. The plaintiff claimed that without the native e-mail, the plaintiff was forced to match the hardcopy e-mails with the corresponding electronic spreadsheet attachment using a correlation table created by the defendant, which caused the plaintiff to incur more time and cost. The defendant argued that the parties agreed during pre-trial conferences that any electronic discovery would be produced as TIFF images and not in a native file format. Furthermore, producing native e-mail files would increase the risk of privileged information being disclosed since native files cannot be redacted. The court reasoned that the prior production of e-mails was not a deliberate attempt by the defendant but the result of an agreement between the parties. The court held the plaintiffs failed to give an adequate reason to compel the native e-mail production and denied their motions to produce native e-mails. See also Williams v. Sprint/United Mgmt. Co., 2006 WL 1867478 (D. Kan. July 1, 2006).

Parties Agree to Discovery Management Plan, Including Computer Forensic Examinations and Active Data Collection
In re Celexa and Lexapro Prods. Liab. Litig., 2006 WL 3497757 (E.D. Mo. Nov. 13, 2006). In this multi-district litigation regarding two prescription drugs, the parties agreed to a document management plan which the court incorporated into its order. The parties established that the plaintiffs would preserve the hard drives of computers used by the plaintiffs and the plaintiffs' decedents, and such hard drives would be imaged and analyzed pursuant to an agreed forensic examination protocol. The parties also decided the defendants would not be required to restore any of their backup tapes at this time, and instead, responsive electronically stored information would be collected from the defendants' active IT environment. They must preserve the thirty-five backup tapes set aside for this litigation, but may otherwise resume backup tape recycling. The plaintiffs deferred the production format decision to the defendants and allowed them to produce data in any format that is generally searchable and manageable. The parties were unable to agree on how costs should be apportioned, the scope of discovery into electronic databases, and who should perform the forensic examination of the computer hard drives. The court determined it would decide these issues after more briefing by the parties.

Parties Ordered to Agree Upon Electronic Evidence Sampling Protocol
Zurich Am. Ins. Co. v. Ace Am. Reinsurance Co. , 2006 WL 3771090 (S.D.N.Y. Dec. 22, 2006). In an insurance dispute, the plaintiff sought to compel electronically stored information regarding two lawsuits involving the defendant, a large reinsurance company, with similar circumstances to the plaintiff's case. The defendant failed to pay its share of a settlement the plaintiff reached with one of its insured. The defendant argued the information sought could not be retrieved from its computer system since it could not segregate claims according to specialized search terms. However, the court gave the defendant's argument little merit since, "[a] sophisticated reinsurer that operates a multimillion dollar business is entitled to little sympathy for utilizing an opaque data storage system, particularly when, by the nature of its business, it can reasonably anticipate frequent litigation." Yet, the court also recognized that a search of its entire database may be infeasible. Therefore, the court ordered the parties agree upon a discovery protocol to sample possible claims in the defendant's database.

Court Sets Forth E-Discovery Plan, Ordering Preservation of Evidence and Production of Native Files
Palgut v. City of Colo. Springs , 2006 WL 3483442 (D. Colo. Nov. 29, 2006). In an age and sex discrimination dispute, the court entered a stipulated order regarding the discovery of electronically stored information. The order includes definitions of various e-discovery terms and sets forth a number of discovery protocols. The order included a mandate that all electronic documents be produced in their native formats unless otherwise agreed amongst the parties. Additionally, the court established a procedure for the parties to object to the production of any electronic documents, requiring the parties to state reasons why the documents are not accessible, why there would be an undue burden or cost, and whether there is any available information that it is willing to produce. Finally, the court ordered all electronic evidence be preserved by the parties.

Court Refrains from Issuing Sanctions Until Fault Is Determined
Exact Software N. Am., Inc. v. Infocon, Inc. , 2006 WL 3499992 (N.D. Ohio Dec. 5, 2006). In a collection action by the plaintiff, the defendant sought sanctions for the plaintiff's failure to produce and preserve electronic evidence. The defendant argued the plaintiff completely failed to produce adequate reasons for the non-production of electronic documents. Additionally, the defendant argued the plaintiff deleted electronic documents before and after litigation started. The plaintiff failed to respond to the allegations of deliberate spoliation. The court ruled sanctions and default were likely against the plaintiff since it completely failed to produce any adequate excuse as to why electronic evidence was not produced or preserved. However, the court ruled it could not issue a default judgment because it was unclear who was at fault for the discovery mishaps. The court found that it could not ascertain whether the discovery misconduct was due to willfulness or bad faith on the part of the plaintiff, its counsel, or both, and set a hearing at which the plaintiff would have an opportunity to show cause why it should not be sanctioned.

A current and comprehensive archive of case law summaries pertaining to electronic discovery and computer forensics is available at http://www.krollontrack.com/case-summaries/.

From common law opinions and the new FRCP rules to forward-looking technology advancements, 2006 was full of changes that revolutionized e-discovery practices in civil litigation. This article examines the year's biggest e-discovery occurrences as forecasts trends on the horizon for 2007.

Common Law

In 2006, we saw more e-discovery opinions than in any previous year-over 175 cases. Specifically, the cases broke-down in the following manner:

• 35% Discovery requests and motions to compel
• 32% Spoliation/Sanctions
• 13% Form of production
• 11% Preservation/Litigation hold
• 5% Privilege/Waiver
• 4% Costs

What were the top e-discovery cases of the year?

• Treppel v. Biovail Corp. , 2006 WL 278170 (S.D.N.Y. Feb. 6, 2006) (defendant ordered to search and produce relevant electronic documents in native form).

• Williams v. Sprint/United Mgmt. Co ., 2006 WL 1867478 (D. Kan. July 1, 2006) (privilege not waived for inadvertent disclosure of electronic spreadsheets).

• Peskoff v. Faber 2006 WL 1933483 (D.D.C. July 11, 2006) (court ordered defendant to explain search efforts used to locate discoverable documents).

• Consolidated Aluminum Corp. v. Alcoa, Inc. , 2006 WL 2583308 (M.D. La. July 19, 2006) (delayed litigation hold warrants monetary sanctions).

• Quinby v. WestLB , 2006 WL 2597900 (S.D.N.Y. Sept. 5, 2006) (plaintiff ordered to pay percentage of defendant's production costs).

• Wyeth v. Impax Lab. Co. , 2006 WL 3091331 (D. Del. Oct. 26, 2006) (court refused to order native format production).

FRCP Rules

The implementation of the new Federal Rules of Civil Procedure on December 1st was highly anticipated. How will the new rules impact e-discovery practices? First, lawyers and judges will add another acronym to their vernacular, ESI, which stands for Electronically Stored Information. In addition, the new rules require more preparation and education than ever before, as parties meet and confer and present arguments about e-discovery protocols. Lastly, states are acting fast to amend their rules of engagement. California, New Jersey, Maryland, Delaware, New Hampshire, Idaho, and Kansas have already amended, or are in the process of amending, their state civil procedure rules to consider ESI.

As the new year unfolds, anticipate interesting and thoughtful opinions from members of the judiciary relating to the new FRCP rules. Expect decisions evaluating some of the following issues: 1) what is reasonably accessible and what is inaccessible; 2) when data can be destroyed in the ordinary course; and 3) what is a usable production format. Additionally, with the enormous volume of information produced in electronic form, a party may inadvertently disclose privileged documents which may force courts to rule on whether the disclosure amounted to waiver of the privilege. Also, watch for the state discovery rules to change in your state to mirror the FRCP amendments.

Technology

This year also brought a plethora of technology changes to the way ESI can be stored and recovered. These advances give litigation professionals more control over the e-discovery process, while cutting time and costs associated with e-discovery. Perhaps the most interesting and revolutionary change was the implementation of topic review technology. This newest discovery technology analyzes the content of a set of documents and determines which themes are represented within the data -- prior to a legal team beginning any review activity. Legal teams using this technology benefit from features that allow them to develop and test theories; identify key people, terms, dates and documents; prioritize and assign folders for the review team; and manage the work flow. Anticipate additional technology advances in 2007, including, but certainly not limited to, improvements in data collection tools, online review features, production processes and case management systems.

Conclusion

E-discovery is one of the most exciting and revolutionary areas of law today. What lies ahead for 2007? Change is the only certainty.

KROLL ONTRACK NEWS & EVENTS

Attention Ontrack� InviewT Users!
Kroll Ontrack is pleased to introduce a new quarterly newsletter for Ontrack Inview users. Ontrack Inview User News is a free e-mail newsletter dedicated to keeping the Ontrack Inview user community in touch with online review innovation and developments. Subscribers can expect useful technical tips, examples of how other customers are using Ontrack Inview, product news, and company announcements. The newsletter is a valuable resource for Ontrack Inview administrators and reviewers who want to be more productive when conducting document review or gathering data for production. Click here now to subscribe: http://www.krollontrack.com/newsletters/

Committee to Hear Comments on FRE 502 Amendments
The Judicial Conference Advisory Committee on Evidence Rules will host public hearings this month and take testimony regarding the proposed amendments to Federal Rule of Evidence 502. The hearings are scheduled for January 12, 2007, in Phoenix, AZ and January 29, 2007, in New York City. The Rule proposal protects parties from waiving certain privileges after the disclosure of privileged documents during discovery. The Committee will accept written public comments until February 27, 2007. For information on the proposed amendments and how to submit a comment, please visit: http://www.uscourts.gov/rules/newrules1.html. Following the public comment period, proposed Rule 502 will require approval by the Advisory Committee on Evidence Rules, the Standing Committee, the Judicial Conference, and the United States Supreme Court and will require an act of Congress before going into effect.

Meet Kroll Ontrack Representatives at the following events:

Visit http://www.krollontrack.com/upcoming-events for more information on these events and others.

KROLL ONTRACK REQUESTS YOUR INPUT

This newsletter is written by Michele C.S. Lange, staff attorney with Kroll Ontrack. Ms. Lange has published numerous articles and speaks regularly on the topics of electronic discovery, computer forensics, and technology's role in the law. She can be contacted by writing to mlange@krollontrack.com.

For more information about electronic discovery and computer forensics services, contact Kroll Ontrack at 1-800-347-6105 or www.krollontrack.com