In This Issue:

	RECENT E-DISCOVERY AND COMPUTER FORENSIC COURT DECISIONS
	PRACTICE POINTS: THE IMPACT OF ESI IN ARBITRATION
	NEWS & EVENTS: KROLL ONTRACK LAUNCHES ESI CONSULTING PRACTICE

RECENT E-DISCOVERY AND COMPUTER FORENSIC COURT DECISIONS

Court Orders Requesting Party to Pay Production Costs Incurred by Non-Party
Guy Chem. Co. v. Romaco AG , 2007 WL 1521468 (N.D.Ind. May 22, 2007). In a suit alleging breach of contract, the defendant motioned the court for a third party subpoena, seeking information establishing the extent of the plaintiff's damages. Upon receipt of the subpoena, the third party estimated the cost of production at approximately $7,000 since all documents were stored electronically. The third party did not object to producing the material, but requested that the defendant pay the production costs. The defendant argued the third party was unreasonable by requiring payment before they would produce. The court held that while the defendant established good cause for the materials, they had to pay the costs of production. The court reasoned, "[N]ot only is it fundamentally unfair for non-parties to bear the significant litigations costs of others, but also if this Court were to allow litigating parties like [the defendant] to impose such a burden on non-parties, then the likelihood of cooperation by non-parties in the future would be placed in jeopardy." The court determined a third party may have to bear its own costs of production when they are de minimis, but the burden of proof is placed on the requesting party to show that the costs are de minimis.

Court Orders Defendant to Restore Backup Tapes Based on Good Cause Showing
Disability Rights Council of Greater Wash. v. Wash. Metro. Transit Auth., 2007 WL 1585452 (D.D.C. June 1, 2007). In a suit alleging violations of the Americans with Disabilities Act, inter alia, the plaintiff motioned the court to order the defendant to restore and search backup tapes for discoverable information. The plaintiff claimed discovery of the backup tapes was necessary because the defendant's e-mail system was programmed to automatically delete all e-mails after 60 days, and the defendant did nothing to stop the obliteration since the filing of the law suit, over three years earlier. The defendant argued that such an order would create undue burden and expense, and that there was little reason to suppose that the backup tapes would produce relevant information. The court granted the plaintiff's motion noting that while, "[T]he newly amended Federal Rules of Civil Procedure initially relieve a party from producing electronically stored information that is not reasonably accessible because of undue burden and cost, I am anything but certain that I should permit a party who has failed to preserve accessible information without cause to then complain about the inaccessibility of the only electronically stored information that remains." The court also ordered the parties to meet and confer to reach an agreement as to how the backup tape restoration, search, review, and production would be conducted. The court suggested concept searching as opposed to keyword searching as a more efficient search method, likely to produce more comprehensive results.

Court Orders Defendant to Preserve and Produce Server Log Data Stored in RAM
Columbia Pictures Industries v. Justin Bunnell, No. 06-1093 FMC (JCx) (C.D.Cal. May 29, 2007). In a suit alleging copyright infringement, specifically claiming the defendant enables, encourages, and induces profit from online piracy, the plaintiff sought preservation and production of the IP addresses of users of the defendant's Web site and the dates and times of the users' requests. The defendant argued that this server log data was not stored on its Web site or in any form from which it could be retrieved. Instead, this data was temporarily stored in random access memory (RAM) on servers located in the Netherlands and routed through a contracted server. The defendant also argued the data did not constitute ESI, was not within their possession, custody or control, that preservation and production was tantamount to requiring the creation of new data, and such an order would be unduly burdensome. Additionally, the defendant argued that the preservation and production of their Web site user IP addresses raised privacy issues. Disagreeing with the defendant and ordering preservation and production of the data stored in RAM, the court found that the data was extremely relevant, did constitute ESI, was within the defendant's possession and control, and the IP addresses should be masked to protect the privacy of the Web site users. The court also rejected the defendant's arguments as to violation of the Stored Communications and Wiretap Acts, holding that compliance with this order provides a complete defense to any civil or criminal action predicated on either statute. Lastly, the court refused to sanction the defendant or require them to pay plaintiff's attorney's fees and costs.

Defendant Not Required to Create Index of Printed Documents But Must Re-Produce in Electronic Form
3M Co. v. Kanbar , 2007 WL 1725448 (N.D.Cal. June 14, 2007). In this trademark infringement case, the defendant motioned the court to order the plaintiff to organize or itemize its production in some useful way. The plaintiff produced over 170 boxes of printed documents, as organized by electronic storage methods in the ordinary course of business. The court held while in most situations the producing party has the option to produce documents either in the usual course of business or organized by categories, there are some instances where special factors justify the requesting party selecting the method, however, volume alone is insufficient for a finding of special circumstances. In this case, the court determined the large volume was due to the defendant's broad document requests and lack of demand for electronic production, and therefore of defendants own making. However, the court found the plaintiff's printed production format concerning and ordered the plaintiff to produce all previously produced responsive ESI in an electronic and reasonably usable format. The court noted that although the electronic production did not provide the defendant quite what it asked for, it should enable the defendant to utilize commercially available software to manage and review the production.

OTHER NEW CASE SUMMARIES ADDED TO THE ONTRACK DISCOVERY CASE LIST THIS MONTH:

• Plaintiff Ordered to Fully and Accurately Index Boxes of Documents and Ensure None are Non-responsive — Oklahoma v. Tyson Foods Inc., 2007 WL 1498973 (N.D.Okla. May 17, 2007).

• Court Refuses to Issue Adverse Inference but Finds Defendant Entitled to Reimbursement for Expenses Incurred in Bringing Motion — De Espana v. American Bureau of Shipping, 2007 WL 1686327 (S.D.N.Y. June 6, 2007).

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

PRACTICE POINTS: THE IMPACT OF ESI IN ARBITRATION

As expected, the effects of the December 1, 2006 changes to the Federal Rules of Civil Procedure are being felt across the entire legal community. Not only are judges, attorneys and litigation support professionals grappling with the new rules relating to ESI, but the ramifications will likely influence the alternative dispute resolution forum as well.

There are a number of reasons a party may chose arbitration as a means of dispute resolution, among them are finality, speed and cost savings. One large cause of the decreased expense and time associated with arbitration as opposed to litigation is that it normally has less extensive discovery. Parties may specify in their contract that disputes will be arbitrated, and may also designate the rules that will apply. Parties also may determine how extensive the discovery process will be at the outset. While, the Federal Rules of Civil Procedure do not apply to disputes in arbitration (absent agreement of the parties), the issues relating ESI may be just as prevalent.

Production - One of the biggest issues an arbitrating party faces is the production of electronic documents. While the volume will be substantially less than in a litigation matter, arbitrating parties will likely make requests or be obligated to produce e-mail, spreadsheets, word processing documents, or databases of ESI. Akin to litigating parties, arbitrating parties should seek agreement in advance of some of the following important issues.

• Will the ESI be produced in a paper or electronic format?

• What metadata fields will be produced?

• Who will bear the costs of gathering and producing the information?

• Will a computer forensic investigation be necessary to uncover deleted information?

Privilege Waiver - Another issue arbitrating parties face concerns waiver of the attorney-client and work-product privileges. Similar to litigating parties, arbitrating parties must be careful to avoid waiver of these privileges through inadvertent disclosure of protected information. Parties in arbitration may have an advantage though, as arbitrators are usually not required to conform to common or statutory laws regarding waiver, and arbitrators tend to be more familiar with the special concerns of the parties. Additionally, since arbitration is a private proceeding, it may be beneficial for parties and the arbitrator to agree that inadvertent disclosure will not waive privilege, relieving them from pre-production privilege review.

Preservation and Spoliation - A final issue parties in arbitration must be aware of is spoliation. Spoliation is the destruction or significant alteration of evidence, or failure to preserve evidence in a pending or reasonably foreseeable litigation. In litigation, judges have a wide range of sanctions available for ESI spoliation, including monetary fines, evidence or testimony preclusion, adverse inferences, and default judgment or dismissal. While many of these sanctions may not be appropriate in the alternative dispute forum, arbitrators will likely place great weight on spoliation — just like their counterparts on the judicial bench. As such, parties in arbitration should take great efforts to ensure that ESI is properly preserved at first notice of a dispute.

In conclusion, ESI is here to stay. Whether a party is facing a dispute in federal or state court, or under an alternative dispute provider's arbitration rules, practitioners must educate themselves about the intricacies of ESI in order to provide the best advocacy for their clients in the modern age.

NEWS & EVENTS: KROLL ONTRACK LAUNCHES ESI CONSULTING PRACTICE

Kroll Ontrack recently announced the launch of Ontrack Consulting, a new team of consultants that will help corporations and outside counsel navigate through technical intricacies and legal standards associated with the accessibility of ESI and other technical issues relating to electronic discovery. Ultimately, this service will help attorneys establish best practices for data management and for all stages of the electronic discovery process. The December 2006 amendments to the Federal Rules of Civil Procedure underscore the important role of ESI in modern litigation, while requiring a heightened level of discovery readiness. Leveraging Kroll Ontrack's ESI expertise and the experience of the company's consultants, attorneys can be confident they are prepared to manage e-discovery and effectively advocate on behalf of the parties they represent. Specifically, the new consulting group provides services in the following areas: data accessibility assessment, collection strategies, case management, litigation readiness, litigation cost mitigation strategies, pre-trial conference preparation, and expert witness services. For more information about Ontrack Consulting, please visit http://www.krollontrack.com or call 800 347 6105.

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WE REQUEST YOUR INPUT

This newsletter is written by Michele C.S. Lange, a 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, please call 800 347 6105 or visit www.krollontrack.com.