Spring Training 2007

1. Spring Training 2007 Trying A Case From First Base to Home Plate Dallas Bar AssociationTort & Insurance Practice SectionMarch 9, 2007Dallas, Texas

2. E--Discovery The Impact of E S I(Electronically Stored Information) on Litigation in the 21st Century David C. Kent Sedgwick, Detert, Moran & Arnold LLP Dallas, Texas

3. Why is understanding ESI important? Why Is Understanding ESI Important?

4. Why is understanding ESI important? “In today’s world … virtually all cases [involve] electronic data.” Zubulake v. UBS Warburg,217 F.R.D. 309 (S.D.N.Y. 2003).

5. The inexorable growth of information Information is growing at the rate of 30% per year

6. Paper is the tip of the iceberg 90 - 99% of all information is created electronically Paper Digital

7. The ease of e-mail More e-mails are sent in 1 day than the total volume of mail handled by the U.S. Post Office in 1 year

8. Digital archives 70% of all corporate records are stored electronically

9. The declining need to print 30 - 50% of all digital information is never printed In some corporations, 97% is never printed

10. Why is ESI important? Electronic Evidence is Often the Smoking Gun

11. Smoking Guns – Computer Back-up Tapes 5,750 secret e-mails deleted byOliver North and Admiral Poindexterfound on White House back-up tapes

12. Smoking Guns – Voice Mail Systems Altered voice mail message from Martha Stewart’s stock broker unmasked by copy of original voice mail stored on back-up system

13. Smoking Guns – Voice Mail Systems Altered voice mail message from Martha Stewart’s stock broker unmasked by copy of original voice mail stored on back-up system

14. Smoking Guns – Antitrust Litigation “Do we have a clear plan on what we want Apple to do to undermine Sun?” -- Bill Gates

15. Smoking Guns – Securities Litigation Merrill Lynch stock brokers pushed stock its analysts refer to in e-mails as “pieces of crap,” “junk,” and “a disaster” Result: Fraud charges and $100 million fine levied by NY Attorney General

16. Smoking Guns – Pharmaceutical Litigation “Do I have to look forward to my waning years writing checks to fat people worried about a silly lung problem?” E-mail (recovered by computer forensics experts): Result: Fen-Phen litigation settled for approx. $3.75 billion

17. Smoking Guns – Workplace Accidents BP Refinery Explosion in 2005 • Chief Executive of Refining and company director sent email complaining of losing day of vacation to visit refinery shortly after incident • Questioned about it during deposition AND aired nationally on “60 Minutes”

18. Smoking Guns – Bad Press FEMA & Katrina • Response to warning that situation was “past critical”: “Thanks for the update. Anything specific I need to do or tweak?” • Help me with “problems finding a dog-sitter.” • “Can I quit now? Can I come home?” • “Rescue me!” • “Did you see my FEMA attire? . . . I’m a fashion god.”

19. Smoking Guns – Bribery Probes Government Contracts Contractor’s wife: "Please don't forget to bring the money you promised Jim and Dawn” Contractor: "Don't you ever send this kind of message to me! Erase this message from your computer right now!"

20. Why is ESI important? Consequences can be disastrous

21. Consequences for ESI Malfeasance Discovery Sanctions • Monetary Sanctions • Adverse Inference Instruction • Witnesses Struck • Pleadings struck • Entry of judgment

22. Relevance of ESI to a Tort Practice Why is this important to me? • Everyone uses computers! • “It’s the Law” (in federal court) • Where the Feds go, the States may soon follow

23. May 2005 -- Advisory Committee recommended Sept. 2005 -- U.S. Judicial Conference approved April 2006 -- U.S. Supreme Court adopted Dec. 1, 2006 -- Effective History of Federal Rule Amendments

24. What is ESI? What Is “Electronically Stored Information”?

25. What is “ESI”? Electronically Stored Information • Rule 34(a): Party may request “documents or electronically stored information” • Includes data or data compilations “stored in any medium from which information can be obtained.” • “ESI” is: • “expansive and includes any . . . information . . . stored electronically” • “broad enough to cover all current types of computer-based information” • “flexible enough to encompass future changes and developments” • Advisory Committee Notes, Rule 34(a)

26. Forms of ESI • Emails, Text Messages & Instant Messages (IM) • Voice Mails • Word Docs, Excel Spreadsheets & PowerPoint • PDFs • Metadata

27. Locations of ESI • Desktops • Laptops • Blackberries & other handheld wireless devices • Cell Phones • Personal Digital Assistants • Home Computers (if used for business purposes)

28. Locations of ESI • Networks, servers & databases • Tapes, discs, drives, cartridges & other storage media • Backup, archives & disaster recovery systems

29. When Do I Have to Worry About It? Immediately! When do I have to worry about it?

30. When Do I Have to Worry About It? Immediately! • PRE-SUIT • Institute a “Litigation Hold” as soon as litigation is reasonably foreseeable • POST-SUIT: The First 100 Days • Rule 26(f) “meet and confer” scheduling conference • Rule 26(a)(1) mandatory disclosures • Rule 16(b) scheduling order

31. How Do I Have to Produce It? How (in what form) Do I have to produce it?

32. Rule 34(b): Procedures for producing ESI How Do I Have to Produce It? • Requesting Party may specify form of production -- PDF, TIFF, native format (MS-Word, Excel, etc.) • Responding Party may object and specify alternate form of production • Respondent has burden to prove request is inappropriate or burdensome • Court can shift costs of production

33. How Do I Have to Produce It? Rule 34(b): Procedures for producing ESI • If no form is specified, respondent can produce either • In form in which ESI is “ordinarily maintained” OR • In form that is “reasonably usable” • No duty to produce the same ESI in more than one form

34. How Do I Have to Produce It? Rule 33(d): Interrogatories • Business records offered in place of answering interrogatories may include ESI • Answering party has burden to prove the burden of finding the answers in ESI is substantially the same for both sides • Requesting party can obtain access to the ESI system in order to find the answer • So -- think twice before using 33(d) to avoid the trouble of answering interrogatories

35. How Much Do I Have to Produce? How much do I have to produce?

36. How Much Do I Have to Produce? Two-Tiered Discovery Under Rule 26(b) • Parties must produce ESI that is relevant, not privileged, and “reasonably accessible.” • Parties must also identify sources of potentially responsive ESI that are not being searched because the data is “not reasonably accessible” – Rule 26(b)(2)(B) • Must provide enough information to allow evaluation of the “not reasonably accessible” claim • Court can decide whether data is “reasonably accessible” • Court can order production of “inaccessible” data for good cause

37. What If It’s Gone? What if it’s gone?

38. What If It’s Gone? Rule 37(f): “Safe Harbor” from Discovery Sanctions Absent exceptional circumstances, a court may not impose sanctions under these rules on a party for failing to provide ESI lost as a result of the routine, good faith operation of an electronic information system. After duty to preserve arises, alter routine operation of information systems to demonstrate “good faith” effort to preserve ESI

39. What About Privileged Information? What about privileged information?

40. What About Privileged Information? Rule 26(b)(5)(B): The Privilege “Clawback” • Party can assert privilege after producing ESI • Duty to return is automatic • Recipient must promptly • Return • Sequester • Destroy • Retrieve • Includes the originals and any copies • May not use or disclose until claim of privilege is resolved • Recipient may request court ruling before returning the ESI

41. What About Privileged Information? Rule 26(b)(5)(B): The Privilege “Clawback” • “Clawback” is procedural only, not substantive • Privileged status and waiver determined separately • Amended Rules are silent on substantive law • Proposed FRE 502 amendment to attorney-client privilege rule would protect inadvertent productions • Rules 16(b) and 26(f) permit private “clawback” agreements or orders

42. Does this apply to third parties? Does this apply to third parties?

43. Does this apply to third parties? Rule 45 Subpoenas • Subpoena may specify form for ESI production • Respondent can object to form specified • Procedures generally follow 34(b) requests for production to parties .

44. State Court Analogs State Court Analogs

45. State Court Analogs Texas Was Ahead of the Game -- Rule 196.4 • ESI must be produced – IF Requested • Parties can specify and object to form of production • Only produce ESI that is “reasonably available . . . in the ordinary course of business” * * * “through reasonable efforts” • Also see Rule 192.4 “balancing test” • Court can shift costs of production

46. State Court Analogs Texas Was Ahead of the Game -- Rule 196.4 • Rule 193.3(d) is the “Texas Clawback Rule” • Rule 205.3 governs documents from nonparties BUT • No “safe harbor” provision for lost or destroyed ESI

47. Will Paper Disappear? Will Paper Disappear?

48. Will Paper Disappear? Even though paper is a small percentage of all information generated, its total volume will continue to increase as information growth accelerates “Paper has staying power”