Monday, May 17, 2010

Catching Rules Up With The Times

Just think about it. Courts are struggling with applying the electronic discovery rules fairly based upon the old fashioned technology that existed -- say -- four years ago. Now we are facing a growing movement toward cloud computing, distributed processing, SaaS and Social Media; we are seeing explosive growth of devices like iPhones and iPads and other smart devices. How are the rule makers to keep up with this technological evolution!

There have been extensive discussions about revising the Federal Rules of Civil Procedure to ease the burdens on corporate parties and to bring a greater sense of economic balance to e-discovery. Unfortunately, the extensive body of court decisions which forms much of the backdrop for these discussions is founded upon "old fashioned" corporate technology models: network servers, traditional back-ups, desktop computing and the ever present corporate laptop.

What rulemakers must do is take a careful look at what is happening today in corporate technology, spend a little time with a crystal ball and forecast what might be happening tomorrow and then take a fresh look at the rules. Obviously, the FRCP cannot and should not be framed in terms of specific technology but there needs to be flexibility in the rules and their recognize that what may be a reasonable strategy for collection and preservation of date on traditional media may not be workable, let alone reasonable, for some of the more current forms of media and the applications running on them.

All in favor of returning to the old ways of paper discovery raise their hands!

Saturday, April 3, 2010

Shockwaves from New Jersey

The Supreme Court of New Jersey issued a decision on March 30, 2010, that is sending shock waves through the EDD community and corporate counsel, as well. The case is Stengart v. Loving Care Agency, Inc., an employment discrimination lawsuit.

The defendant Corporation had an explicit written policy declaring that all use of the company's computer systems subject to inspection and review and that employees had no expectation of privacy in their use of company computers. Notwithstanding that policy, Employee used the company's computers to access her Yahoo email account and to exchange privileged email communications with her attorneys. After litigation was commenced, counsel for Corporation conducted a forensic examination of Employee's computer and recovered a record of those privileged email messages on the hard drive. Relying on the company policy, the attorneys deemed the privilege waived and took no steps to return those email messages or notify opposing counsel of the existence until well after they were discovered. The court ordered a lower court review of possible sanctions on defense counsel for violation of a duty to refrain from examining the email.

The New Jersey court has in essence ruled that:

(1) The sanctity of the attorney client privilege trumps the employer's right to impose limits on the use of its own computer system and, despite an explicit written policy to the contrary, the employee is entitled to expect a right of privacy with respect to privileged email.

(2) Attorneys who conduct examination of computers used by employees do so at risk of sanctions if they find privileged communications and fail to take immediate steps to remove those communications from the review process and notify opposing counsel of same.

The first holding goes against a well established school of thought among corporate and computer lawyers that a company has the right to protect itself against improper use of company computers by employees by adopting a well drafted policy declaring the absence of an expectation of privacy. Countless corporations are probably calling counsel right now to review their written policies and practices which now have been called into question in New Jersey.

The court in this case was influenced by the fact that the emails were sent over the Yahoo system, and not over the company owned computer system. One has to wonder whether the result would have been different if the company policy explicitly forbid use of internet based email systems from company computers.

The second holding is a warning to all counsel to be wary in conducting reviews of employee computer records when there is any possibility of discovering material that should not be viewed.

Time will tell whether this New Jersey decision has implications elsewhere.

Friday, March 26, 2010

Seeking Proportionality in e-Discovery

The Sedona Conference Working Group on Electronic Document Retention and Production is readying yet another of its work papers with a goal of bringing some measure of reason to the chaotic world of electronic discovery. This paper (not yet available to the general public) will focus on the need for "proportionality" in electronic discovery. It has long been a challenge to balance the burdens and costs of complex e-discovery requests against the potential benefits to the parties, the process and the court. Far too often the cost of complying with e-discovery requests has overshadowed the true amount in controversy.

The citation to the case is lost somewhere in the recesses of memory, but the "poster child" for the campaign for porportionality might just be the Indiana district court case in which a school district was ordered to comply when an e-discovery request that the parties agreed would cost more have $100,000 to satisfy. The maximum recovery by the plaintiff in that case? Less than $100,000!

One of the challenges faced by the parties and the courts is the difficulty of getting a handle on the cost of e-discovery before undertaking the search and recovery project. As the players gain more experience, better estimates will be coming along but still those estimates are imprecise at best, sometimes nothing more the W.A.G.'s. Vendors will undershoot the estimates hoping to win the business. Trial lawyers will act as advocates for their respective clients with the requesting lawyers claiming the data is vital and the cost estimate is inflated; producing lawyers will try to aim for the high side on the estimates, hoping to resist discovery.

One answer is for the courts to seek advice and counsel from experts with no axe to grind. Special Discovery Masters can be enlisted for the purpose of evaluating competing estimates as well as advising the court on potential middle ground resolutions of such discovery disputes.

Obviously not every case can or should carry the cost of a special master. However, when hundreds of thousands of dollars are at stake (even potentially millions in some even mid-range lawsuits), spending a few dollars in advance to find the right balance may just be the ticket to achieving proportionality in e-discovery.

Tuesday, March 16, 2010

Sanctions 101, a Must Read Article

I had thought of entitling this post "Sanctions for Dummies" in the style of the popular and ever expanding "Dummies" series. (There is even "e-Discovery for Dummies" for those who are so inclined.) That title, however, would demean the scholarship in recent article by Douglas Pepe in the ABA Litigation Journal entitled "Persuading Courts to Impost Sanctions on Your Adversary." Pepe, a litigator with Gregory P. Joseph Law Offices in New York City, has written a thoughtful and easy to understand guide to the numerous avenues by which attorneys seek to sanction their opponents from Rule 11 to the Discovery Rules to the dreaded "inherent power" argument. Anyone considering seeking sanctions -- or defending against a sanctions motions -- should take a look.

What Pepe makes clear is the necessity of hanging your sanctions motion on the right peg. Too often sanctions motions are a murky blend of Rule 11 logic with the discovery sanction rules and frosted with the inherent power argument. When litigators fail to understand the key distinctions among the various sanction powers they may also fail to make the right arguments pro or con to ensure a just result. Particularly with e-discovery and spoliation issues at the forefront in today's litigation, there is a growing blurring of the lines between the various rules and powers.

Sadly, many courts have added to the confusion by something less than a clear analysis of the standards which they are applying in imposing discovery sanctions. Courts may rely on the inherent power argument but cite Rule 37 for the available sanctions. Occasionally they stray into Rule 1 or Rule 11 analyses.

The cause of justice would be well served if litigators adopt Mr. Pepe's advice (1) to chose the right rule for your sanctions motion and (2) seek only the appropriate sanctions designed to fit the wrong.