Record Management, Electronic
Discovery, and the Changing Legal
Landscape
Dino Tsibouris [email protected]
(614) 228-9707 www.tsibouris.com
1
More Trouble for Morgan Stanley
E-mail ‘destroyed’ in 9/11 attack is found
• $1.5 billion judgment for failing to produce
thousands of backup tapes of digital documents
• Paid the SEC $15 million to settle allegations of email mishandling pursuant to SEC investigations
• NASD accusing Morgan Stanley of failing to provide
millions of e-mail messages to investigators and
plaintiffs and falsely claiming the documents had
been lost in the Sept. 11, 2001 attacks
2
Destruction of E-Mails
$566,838 Mistake
• Samsung destroyed e-mails in patent case
• Mosaid Technologies alleged Samsung
infringed patents for DRAM chips
• Court cited Samsung’s “breathtaking and
absolute spoliation” and “extremely reckless
behavior”
Source: New Jersey Law Journal 09/04
3
Sources of Electronic Data
• 90% of data is created electronically
• 30% is never printed
• Sources:
• Databases - Purchasing, Payables,
Receivables, Email, ERP
• Hard Drives, Network Backup Tapes
• File Slack, Deleted & Encrypted Files
• Meta Data & System Logs
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Is this your “document retention” system?
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THE IMPORTANT SLIDE
• Having a Document Retention Policy and
Process is essential
• A “Cut & Paste” Policy is risky
• Having a Policy / Process that you do not
actually implement & enforce is dangerous
6
Best Practices
• Destruction of records under a RIM plan
estimated to reduce discovery costs by 25
– 30%
• Categorize documents as “business” and
“non-business” communications
• Establish the term for document and data
retention
• Establish uniform indexing procedures
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Records: Asset or Liability?
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Business Drivers
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Sarbanes-Oxley
• SEC Regulation S-X Rule 2-06
• Audit record retention
• Electronic records created, sent or received
in connection with the audit or review
containing conclusions, opinions, analyses or
financial data related to the audit or review
• Retention period of seven years
10
HIPAA
• All paper and electronic records must be part
of a comprehensive records management
program
• 6 year retention period may apply
11
ESIGN LAWS
• If a law requires record retention, may comply
by retaining the records electronically
• The contract or record must be accurately
reflected, remain accessible to all parties
entitled to have access and be in a form that
is capable of being reproduced for future
reference
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Records Management
•
Maintain up-to date records & information
management policies, procedures and
schedules
•
Audit your procedures
•
Modify policy & procedures
•
Document the process
13
Records Management
•
Sedona Guidelines
•
SOX
•
Industry Best Practices
•
Emphasis is on your Processes and
Procedures
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Records Management
•
Maintain and track policies, procedures &
schedules for litigation defense
• Document past RM compliance
• Consistently follow good faith process
• Include documentation of inactive
record keeping systems
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Records Management
•
Maintain and use an in-house glossary of
records management terminology
•
Business units should use common
terms
•
Technology terms must be part of the
glossary
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Records Management
• Know where each record series is stored
• Know what is the general content of each
series
• Available formats or media
• Identify personnel or Experts who can
assist with any large electronic systems
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Records Management
• Be prepared to assist Legal in identifying
and preserving relevant records or
associates within those business units
• System to track all legal holds
• Education/training/tools to preserve
records
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Records Management
• Need to create tools to automatically
suspend all automatic destruction
processes legal hold records
• Need to be able to assist legal counsel
in identifying and protecting attorneyclient information
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Records Management
•
Include a “routine good faith operation”
for destroying records and information
• Different processes for different types
of record systems
• Document the destruction processes
20
Records Management
•
Automate systems where appropriate
•
Will prevent Rule 37 Sanctions
•
“Normal” changes will not protect willful
destruction or unchecked overwriting
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22
The Times They Are A’Changin
• Effective December 1, 2006
• Pretrial planning required
• “Electronically Stored Information”
• Format selection
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The Times They Are A’Changin
• Litigation “holds”
• Safe Harbor
• Failure to comply results in sanctions
• State courts will follow
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IT IS A RECORDS MANAGEMENT ISSUE
• IT Terminology now part of discovery
process
• Where is it stored?
• How is it transmitted?
• What format is used?
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Rule 34
Electronically Stored Information
Any party may serve on ... [an]other party a
request (1) to produce ... inspect, copy, test, or
sample any designated documents or
electronically stored information — including
writings, drawings, graphs, charts,
photographs, sound recordings, images, and
other data or data compilations stored in any
medium from which information can be
obtained — translated, if necessary ... into
reasonably usable form ...
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Rule 34
Electronically Stored Information
• Amended Rule 34(a)
• “Documents” includes ESI unless clearly
distinguished from “documents"
• Requesting party may specify form of
production
• Network access
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Rule 34
Electronically Stored Information
• Amended Rule 34(b)
• Native File Production provision
• Requesting party may specify the form of
ESI production
• Form more important for ESI
• Preserve searchability
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Rule 26
Conference to Plan Discovery
Except [when] exempted ... parties must, ... confer
to ... make or arrange for the disclosures required
by Rule 26(a)(1), to discuss any issues relating to
preserving discoverable information, and to
develop a proposed discovery plan that indicates
the parties’ views and proposals concerning:
...
(3) any issues relating to disclosure or discovery of
electronically stored information, including the form
or forms in which it should be produced;
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Rule 26
Conference to Plan Discovery
• Amended Rule 26(f)
• Early attention to discovery of ESI
• Describe ESI to be sought
• Preservation of relevant data
• Form of ESI disclosure
• Privilege or protection
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Rule 26
Conference to Plan Discovery
• Cost shifting
• Must only preserve relevant data
• No duty to preserve all paper, emails,
backup tapes
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Rule 26
Conference to Plan Discovery
• Collect electronic communication, records
management, retention and legal holds
policies
• Understand the importance of ESI in the
case (or lack of it)
• Prepare to explain to the court your policy:
how it is used and enforced - and gaps
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Rule 26
Conference to Plan Discovery
• Prepare to describe what is a “record” in your
organization (and why other data is not)
• Know where relevant information may be kept
• Know IT staff who can locate where relevant
information is kept
• Can you help determine what is reasonably
accessible and what is not?
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Rule 26
Initial Disclosures
• Amended Rule 26(a)(1)(B)
• Each party must disclose before discovery
begins a copy or description (by category
and location) of all documents, ESI, and
things in the other party's possession,
custody or control that it may use to
support its claims or defenses.
34
Rule 26
Production Issues and Accessibility
• Amended Rule 26(b)(2)(B)
• No need to provide ESI if there is an
undue burden or cost
• Party seeking discovery may move to
compel
• Party claiming undue burden or cost has
burden of proof
35
Rule 26
Production Issues and Accessibility
• Reasonably accessible ESI that is relevant
must be produced
• Do not need to produce ESI from sources
that are inaccessible
• Rule does NOT address duty to preserve
relevant information on those sources
during litigation
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Rule 26
Production Issues and Accessibility
• RM application:
• Help your attorney locate and track
confidential or privileged records
• Be a primary contact to help manage
production
• RM = rules, IT = tools
• Create procedures in advance, where
practical – and update them
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Rule 26
Burden of Proof
• Explanations such as "inactive" or
"backup" unlikely to suffice
• Court can compel party to produce even if
they meet burden of proof when there is
good cause
• Creates a “balancing test”
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Rule 26
Privileged and Trial-Preparation Info
• ESI includes metadata
•
•
Shows the history and context of the
information
Links to other information
• May reveal privileged or confidential
information
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Rule 45
Subpoena Practice
• Amended Rule 45(a)(1) - subpoena may
specify form or forms to produce ESI
• Amended Rule 45(d)(1)(B) - ESI default
form is "a form or forms in which the
person ordinarily maintains it or in a form
or forms that are reasonably usable"
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Rule 45
Subpoena Practice
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Rule 45
Subpoena Practice
• Amended Rule 45(d)(1)(C) - the same ESI
need only be produced in one form
• Amended Rule 45(d)(1)(D) - ESI from
sources identified as not reasonably
accessible because of undue burden or
cost need not be produced
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Rule 37
Safe Harbor
Absent exceptional circumstances, a court may
not impose sanctions under these rules on a
party for failing to provide electronically stored
information lost as a result of the routine, goodfaith operation of an electronic information
system.
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Rule 37
Safe Harbor
• Added Rule 37(f)
• Term "routine operation" refers to the way
systems are "generally designed,
programmed, and implemented to meet ...
technical and business needs"
• Must exercise “good faith”
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Rule 37
Protection is Narrow
• Procedures must be established,
documented and followed
• Incentive for destruction?
• Coordinate with other regulations
• Safe harbor only applies to sanctions
"under these rules"
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Rule 26
Conference to Plan Discovery
• Develop defensible practices
• Consistent application of RM
procedures
• If no overall plan, look for some
patterns of consistency
• Be able to educate and warn your
attorney about “issues”
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Questions & Answers
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