In This Issue:

	Recent ESI Court Decisions
	Practice Points: Recent Survey Highlights ESI Preparedness, Ownership and Challenges
	News & Events

Recent ESI Court Decisions

Court Orders Prompt Production of E-Mail Threatening Additional Sanctions
Yeisley v. PA State Police, 2008 WL 906465 (M.D.Pa. March 31, 2008). In this civil rights litigation, the plaintiff sought sanctions for untimely discovery disclosures and a lack of e-mail production. Claiming the turnover in defense counsel attributed to discovery delays, the defendants asserted any untimely production resulted from a desire to fully comply with discovery requests. Ordering the re-depositions of select people at no cost to the plaintiff, the court refused to impose further sanctions. However, the court ordered the defendants to promptly search and produce electronic records, including e-mail, or further sanctions would be considered.

Court Finds Balance Between Conjunctive and Disjunctive Search Terms
ClearOne Commc'ns, Inc. v. Chiang, 2008 WL 920336 (D.Utah April 1, 2008). In this trade secret litigation, the plaintiff moved for entry of a search protocol order establishing guidelines for searching mirror images and identifying relevant and responsive documents. Previously the plaintiff accepted search terms proposed by the defendants with five additions, but disputes arose over the conjunctive or disjunctive use of the terms. The defendants argued it was reasonable to search conjunctively (i.e., require connectors between the search terms) in order to narrow the results to relevant subjects. Analyzing the advantages and disadvantages of both search techniques, the court ordered "license" terms to be searched disjunctively and "name" terms to be searched conjunctively.

Court Denies Belated Production Format Request
Autotech Techs. Ltd. P'ship v. Automationdirect.com, Inc., 2008 WL 902957 (N.D.Ill. April 2, 2008). In this trademark and copyright infringement litigation, the defendant sought production of a document in its native format with metadata. Arguing against production, the plaintiff asserted the document in question was previously produced in both .PDF format and in paper format. Finding no previous specific production format request, the court determined the plaintiff had the option to produce the document in the form in which it is ordinarily maintained, or in a reasonably usable form. Additionally, the court stated the defendant "was the master of its production requests [and] it must be satisfied with what it asked for" – as the original request did not include metadata.

Court Attributes Error to Lack of Computer Familiarity
Alexander v. F.B.I., 2008 WL 903115 (D.D.C. April 3, 2008). In this Privacy Act litigation, former employees and political appointees from the Reagan and Bush administrations brought suit against the FBI alleging violation of privacy interests after their FBI files were improperly handed to the Clinton White House – a scandal known as "Filegate." The plaintiffs filed an emergency motion to supplement their motion to compel and request for evidentiary hearing, claiming the Executive Office of the President ("EOP") filed a false declaration in an attempt to obstruct the narrowed request for e-mail. Finding the plaintiffs did not demonstrate the EOP obstructed the e-mail request, or acted in bad faith, the court concluded no credible evidence existed to grant the emergency motion. In making this determination, the court found the essential errors committed by the White House's counsel were a result of the lawyers' lack of familiarity with computer terminology, all of which occurred long before the "current sophisticated ways that lawyers have had to learn to deal with computer experts."

Court Finds Non-Compliance and Warns Party of Possible Future Default Judgment
Sterle v. Elizabeth Arden, Inc., 2008 WL 961216 (D.Conn. April 9, 2008). In this unlawful termination litigation, the defendant sought a protective order to prevent further inspection of the defendant's computer systems and attorneys' fees. In response, the plaintiff filed a motion for contempt claiming the defendant violated the previously issued inspection order and a motion for attorneys' fees. Addressing the defendant's motions, the court found no good cause to justify a protective order or attorneys' fees. Turning to the plaintiff's motions, the court determined the defendant failed to comply with the Inspection Order and failed to demonstrate that special circumstances justified the non-compliance. Subsequently, the court ordered the defense attorneys to pay reasonable fees and expenses to the plaintiff attorney, in addition to paying consultant expenses incurred for prior inspection work hampered by the defendant's non-compliance. Additionally, the court ordered the defendant's electronic records be inspected. Finally, the court denied the plaintiff's request for default judgment, but warned one will be entered if the defendant does not comply with this court order.

Court Orders Party to Identify Responsiveness of Documents
GP Indus., LLC v. Bachman, 2008 WL 1733606 (D.Neb. April 10, 2008). In this patent litigation, the court reconsidered the plaintiff's motion for sanctions and to compel after the defendant produced approximately 3,000 pages of documents "in a jumbled fashion" and refused to identify which documents were responsive to which document requests. The defendant argued the documents were produced as they were kept in the ordinary course of business and submitted an index. Finding the index to be untimely and unhelpful, the court determined the defendant did not comply with the previous court order. Additionally, the court ordered the defendant to identify the responsiveness of each document or potentially face the imposition of sanctions. The court also awarded the plaintiff costs associated with bringing the motion to compel.

Court Upholds Order Quashing Overbroad Subpoena
In re Subpoena Duces Tecum to AOL, LLC, 2008 WL 1956266 (E.D.Va. April 18, 2008). In this insurance fraud litigation, the defendant objected to the magistrate judge's order that quashed its subpoena. The subpoena sought production of documents from the non-party witnesses' e-mail accounts through AOL. The non-party witnesses claimed the subpoena violated the Electronic Communications Privacy Act, imposed an undue burden, and sought e-mails protected by the attorney-client privilege. Determining the statutory language of the Privacy Act does not allow AOL to divulge the contents of the requested electronic communications, the court upheld the magistrate judge's order. Additionally, the court held the subpoena was overbroad and imposed an undue burden under Fed.R.Civ.P. 45(c), since it requested all e-mails from a six week period including private information unrelated to the litigation.
 
Court Finds ESI Reasonably Accessible and Denies Cost-Shifting Argument
Mikron Indus., Inc. v. Hurd Windows & Doors, Inc., 2008 WL 1805727 (W.D. Wash. April 21, 2008). In this dispute, the defendants sought a protective order regarding electronically stored information (ESI), claiming searching through their ESI would create significant costs and would yield cumulative results. The defendants also relied on Fed.R.Civ.P. 26(b)(2) to make a cost-shifting argument. The plaintiff argued the defendants had not reasonably complied with discovery requests. Denying the protective order, the court determined the defendants did not sufficiently demonstrate the inaccessibility of the requested ESI, or an undue hardship; therefore, cost-shifting was not appropriate. Specifically, in alleging continued discovery of ESI would be unduly burdensome, the defendants failed to offer evidence beyond a cost estimate, such as the number of backup tapes, different methods used to store electronic information, or document retention policies. The court ordered the parties to meet and confer to discuss ESI discovery, prior to bringing any future motions.

Court Reminds Parties of ESI Preservation Duties
In re Flash Memory Antitrust Litig., 2008 WL 1831668 (N.D.Cal. April 22, 2008). In this antitrust litigation, the court issued an Order Regarding Preservation of Evidence and reminded the parties to comply with the duty to preserve all potentially relevant documents, data and tangible things in their possession, custody or control. The court identified documents, data and tangible things to encompass a broad list of electronically stored information, including writings, reports, calendars, telephone message logs, ledgers, bills, charts, films, and phonographic recordings. Additionally, the court ordered that each party must identify and notify non-parties of their duties to preserve potentially relevant information.

Court Instructs Trial Court to Reconsider Protective Order
Ex parte Vulcan Materials Co., 2008 WL 1838309 (Ala. April 25, 2008). In this breach of contract litigation, the defendant sought review of an order regarding permissible post-trial discovery in response to a punitive damages award. The defendant claimed the trial court exceeded its discretion in denying the motion for a protective order regarding production of e-mail circulated within the company. Specifically, the defendant claimed because the e-mail sought was created after the case was filed, it was not relevant to the issue of punitive damages and protected by work product doctrine. Relying upon Ex parte Cooper Tire & Rubber Co., So.2d (Ala.2007) and the Fed.R.Civ.P. 26(b)(2)(B), the court directed the trial court to reconsider the defendant's motion for a protective order.

Court Upholds Magistrate Judge's Order of Costs and Attorneys' Fees
Acker v. Workhorse Sales Corp., 2008 WL 1902034 (E.D.Mich. April 28, 2008). In this suit, the plaintiff objected to the Magistrate's Order requiring the plaintiff to pay the defendant's costs and attorneys' fees incurred in the previous motion to compel. The plaintiff claimed the promised disclosure was provided and argued the delay was attributable to the defendant's failure to give adequate production format directions. Rejecting the plaintiff's numerous justifications for the discovery delay, the court overruled the objection determining the Magistrate's award of costs and attorneys' fees was not erroneous or unreasonable.

Court Intervenes in Discovery Dispute, But Reprimands Parties for Not Reaching Agreement Without Judicial Intervention
Ruiz v. Ed Richard Discing, Inc., 2008 WL 1925203 (N.D.Cal. April 29, 2008). In this suit alleging unpaid overtime wages, the plaintiff filed a motion to compel production and sought monetary sanctions. Prior to the hearing, the defendants contacted the plaintiffs to inform that the documents were available and would be produced if the plaintiffs agreed to absorb the costs of copying. The plaintiffs agreed to pay for costs incurred for copying the documents. Holding the motion to compel to be technically granted since the documents in dispute have not yet been produced, the court stated this dispute should never have reached court intervention due to this prior agreement and denied the motion for monetary sanctions.

To view additional case summaries visit http://www.krollontrack.com/case-summaries.

Practice Points: Recent Survey Highlights ESI Preparedness, Ownership and Challenges

Your corporation faces significant risks when confronting litigation, investigations or regulatory matters involving electronically stored information (ESI). Despite the gravity of potential consequences, most lawyers are still struggling to understand what ESI means – let alone develop comprehensive plans to manage ESI when the necessity arises. The ESI Trends Report highlights what ESI management measures businesses in the United States and United Kingdom have in place, and whether they are in a position to provide electronic evidence which complies with legal and regulatory requirements. Three key themes emerged from this report: preparedness, ownership and challenges.

The most important finding from this survey was a severe lack of understanding, preparedness and enforcement by organizations regarding how to manage their ESI. Only 25% of US in-house counsel and 17% of UK in-house counsel claim to be fully up-to-speed with all case law, developments and regulations relating to ESI. Even more astonishingly, approximately half of the respondents in the US and UK do not have any ESI policy at all. Given the high volume of media attention and the educational and consulting resources available today, this lack of preparedness is unsettling. As electronic communications increase exponentially each year, the issues will become ever more problematic for companies that fail to educate themselves and take action. Moreover, the costs associated with fines, sanctions and lost cases could be debilitating to some corporations. Legal teams should surround themselves with knowledgeable experts who understand the numerous complex technical details and legal considerations of ESI.

Importantly, the survey also found immense confusion over who within a company is responsible for creating an ESI policy and who is accountable should the policy fail. Almost half of US in-house counsel and a quarter UK in-house counsel believe the in-house legal department has primary responsibility for ESI strategy development. Conversely, the majority in both the UK and the US believe the CEO or Board should bear the brunt of responsibility should the ESI policy result in fines, sanctions or damages. Accordingly, while the overall responsibility of creating an ESI policy lies largely with the in-house legal department, ESI is a business issue that affects nearly every department. A cross-development approach to ESI involving in-house counsel, the Board, the Executive team, IT division and the Compliance department is thus crucial. If a cooperative approach is taken, accountability and responsibility will be shared by all those involved. Furthermore, the best written policy means nothing if it is not enforced, and making enforcement a shared responsibility will better ensure compliance.

Lastly, the survey revealed that when it comes to ESI, consequences, barriers and challenges abound. One consequence cited by nearly three-quarters of in-house counsel in the US and UK is the lost time due to inefficient or non-existent ESI procedures. Lost time is lost money! This truism was reinforced when the majority of respondents in both the US and UK cited the financial impact of inefficient ESI procedures. Barriers in executing ESI policies were also cited. The lack of time and ownership – both internal in nature – were the top two barriers found in both countries. In addition, US and UK respondents cited several ESI challenges. Most notably, the biggest challenge cited in the US is unmanageable volume, while the UK cited insufficient training. In a hastily evolving area of law and technology, this reiterates the multi-faceted nature of these issues and the vital importance of implementing a cooperative approach to manage all aspects of ESI – from volume and budget, to technology and training.

Incorrect handling of ESI in litigation and investigations leads to a number of serious consequences for organizations. Despite the incumbent threat to our organizations, research shows that corporations are still failing to take the threat of data mishandling seriously and are not implementing company-wide policies to adhere to their duties under the law. The bottom line is that the senior decision makers within organizations need to take ownership of this issue and ensure that a multi-disciplinary ESI team works together to develop a policy and enforce it within the organization. Organizations that choose to take control of their ESI practices are emerging stronger and better equipped to protect informational assets, increase operating efficiency and realize cost savings.

News & Events

Kroll Ontrack Offers Redesigned Certification Course for 2008
The industry's legal technology thought leader has revamped its E-Discovery Certification Course for 2008 with updated topics, additional speakers, and dual track, customizable sessions to appeal to beginner, intermediate and advanced learners. The redesigned course curriculum is ideal for legal and technical professionals of all levels, including in-house counsel, law firm attorneys, litigation support professionals, paralegals and IT staff. The June 2008 course is already full, so plan ahead and register early for the August 2008 course offering. For more information and to register, visit http://www.krollontrack.com/certification-courses/.

Sedona Conference Publishes Commentary on Non-Party Production & Rule 45 Subpoenas
Working Group One of the Sedona Conference, focused on Electronic Document Retention and Production, recently released a commentary on Non-Party Production and Rule 45 Subpoenas. The paper addresses changes to Federal Rule of Civil Procedure 45 governing third party subpoenas, how the case law has addressed ESI production duties and best practices. The Sedona Conference is a non-profit organization that strives to serve the legal community as a knowledge repository where academia, attorneys, judges and others can debate issues and exchange information. This publication can be downloaded at http://www.thesedonaconference.org/dltForm?did=ESI_Commentary_0308.pdf.

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This newsletter is written by Joni Shogren and Gina Jytyla, Kroll Ontrack staff attorneys, with assistance from Kelly Kubacki and Meridith Socha, law clerks. Please contact Ms. Jytyla at gjytyla@krollontrack.com.

For more information about electronic discovery and computer forensics services, contact Kroll Ontrack at 800 347 6105 or visit http://www.krollontrack.com.