Showing 24 posts in Best Practices.

Delaware District Court Interprets Amended FRCP

The first Delaware opinion that has been issued that addresses either sanctions or proportionality under the new Federal Rules is GN Netcom, Inc. v. Plantronics, Inc.[1] Plaintiff GN Netcom, Inc. (“GN”) filed a motion for sanctions against defendant Plantronics, Inc. (“Plantronics”) after a long discovery dispute that centered around the “intentional and admitted deletion of emails” by one of Plantronics’s senior executives and his directives to other members of his team to delete emails. More ›

Looking Back on 2015: The 6 Most Important eDiscovery Cases in Delaware - Part 1

This is the first in a series of posts summarizing the 6 most important eDiscovery cases in Delaware in 2015.

In re: ISN Software Corporation Appraisal Litigation, C.A. No. 8388–VCG, Oral Argument on Petitioners Motion to Compel and Partial Rulings of the Court, April 27, 2015. More ›

Looking Back on 2015: The 6 Most Important eDiscovery Cases in Delaware

2015 saw continued interest by the Delaware courts in various aspects of eDiscovery.  The courts dealt with broad issues, such as spoliation and general discovery misconduct, while also focusing on narrower issues, such as document review and redactions.

This blog will be summarizing these 6 cases in more depth throughout the rest of 2016.  The 6 cases that will be summarized are below: More ›

Looking Back on 2014: The 7 Most Important eDiscovery Cases in Delaware - Part 7

This is the seventh in a series of posts summarizing the 7 most important eDiscovery cases in Delaware in 2014.

Mechel Bluestone v. James C. Justice Cos., C.A. No. 9218-VCL(Del. Ch. Dec. 12, 2014).

My colleague, Thomas Hanson, previously summarized Mechel Bluestone in an article written on December 23, 2014 which discussed the need for senior Delaware counsel to guide and be closely involved in the preparation of privilege logs and to promptly respond to deficiency letters.  The article can be read in its entirety here: http://www.morrisjames.com/newsroom-articles-357.html.

To recap, here are the seven most important eDiscovery cases in Delaware in 2014 (in chronological order) along with their key takeaways: More ›

Looking Back on 2014: The 7 Most Important eDiscovery Cases in Delaware - Part 6

Posted In Best Practices, Cases, Sanctions

This is the sixth in a series of posts summarizing the 7 most important eDiscovery cases in Delaware in 2014.

Gloria James v. National Financial LLC, and Loan Till Payday LLC, C.A. No. 8931–VCL, December 5, 2014.

Ian McCauley previously summarized James v. National Financial in our blog post of December 29, 2014 which highlighted Delaware Counsel's discovery obligations as well as the sanctions that may be imposed for not complying with those obligations.  The original post can be read in its entirety here: http://www.morrisjames.com/blogs-Delaware-eDiscovery-Report,court-of-chancery-clarifies-delaware-counsels-role-in-discovery.

The three key points made by Vice Chancellor Laster in his opinion were: More ›

Looking Back on 2014: The 7 Most Important eDiscovery Cases in Delaware - Part 5

Posted In Access to ESI, Best Practices, Cases, Collection, Duty to Preserve

This is the fifth in a series of posts summarizing the 7 most important eDiscovery cases in Delaware in 2014.

Kan-Di-Ki, LLC (d/b/a Diagnostic Laboratories) v. Robert Suer, C.A. No. 7937–VCP, Oral Argument on Various Outstanding Motions, Pre-Trial Conference and Rulings of the Court on Motion for Summary Judgment, September 24, 2014.

While various motions were addressed at this hearing before Vice Chancellor Parsons, the most relevant to eDiscovery was the Plaintiff’s Motion for Sanctions for suppression or spoliation of evidence, including the deletion of relevant emails and the loss of unpreserved text messages which the Plaintiff argued pointed to a “pattern of suppression” on the part of the Defendant.  Plaintiff requested that the Court draw broad adverse inferences against the Defendant and afford his testimony no weight.  Additionally, the Plaintiff requested fees and costs associated with the motion. More ›

A Summary of the Upcoming FRCP Amendments

Earlier this year, proposed amendments to the Federal Rules of Civil Procedure were submitted to the United States Supreme Court for review following a years long process that began in 2010.  The proposed amendments will become effective on December 1, 2015 barring any action by either the Supreme Court or Congress to modify them.

Circuit splits and a lack of uniform standards have plagued eDiscovery for some time. The proposed amendments attempt to bring uniformity to the body of eDiscovery law that has been developing since the early 2000s.  The proposed amendments also seek to address litigants’ concerns that eDiscovery has in the past been used as a weapon to force settlement upon those who cannot afford to engage in the process.  To that end the proposed amendments address proportionality and the scope of discovery.  

These amendments will most likely eventually be adopted by various States as well.  For a full discussion by the Advisory Committee on Federal Rules of Civil Procedure and a list of all of the Committee’s proposed amendments, see the March 2014 and September 2014 Reports of the Judicial Conference Committee on Rules of Practice and Procedure, available here [http://www.uscourts.gov/rules-policies/records-and-archives-rules-committees/committee-reports]. More ›

Looking Back on 2014: The 7 Most Important eDiscovery Cases in Delaware - Part 4

This is the fourth in a series of posts summarizing the 7 most important eDiscovery cases in Delaware in 2014.

In re ISN Software Corporation Appraisal Litigation, C.A. No. 8388–VCG, Oral Argument on Petitioners' Third and Fourth Motions to Compel and Partial Rulings by the Court, September 12, 2014. More ›

eDiscovery: What Are Judges Thinking?

This summer one current and one former United States District Court Judge took to the interview circuit on the topic of eDiscovery.  The most common theme was that lawyers have the obligation to understand both the law and technology. More ›

Looking Back on 2014: The 7 Most Important eDiscovery Cases in Delaware - Part 3

This is the third in a series of posts summarizing the 7 most important eDiscovery cases in Delaware in 2014.

Herbert Chen and Derek Sheeler v. Robert Howard-Anderson, Steven Krausz, Robert Abbott, Robert Bylin, Thomas Pardun, Brian Strom, Albert Moyer, Jeanne Seeley, and Occam Networks, Inc., C.A. No. 5878–VCL, Oral Argument on Plaintiffs' Motion to Compel Production of Documents by Defendants and Jefferies and for Sanctions Against Defendants and the Court's Rulings, September 4, 2014.

While the Chen v. Howard-Anderson case has been discussed in the corporate arena as an important case relating to Delaware fiduciary law, 102(b)(7) exculpatory provisions, and Revlon duties, the case also highlights the importance of transparency in the discovery process.  Chen is a reminder of how seriously the Courts in Delaware treat counsel’s discovery obligations. More ›

Looking Back on 2014: The 7 Most Important eDiscovery Cases in Delaware – Part 2

This is the second in a series of posts summarizing the 7 most important eDiscovery cases in Delaware in 2014.

The second case is 112359 Factor Fund, LLC and Five Nine Group, LLC v. Flux Carbon Starter Fund, LLC, Mary Carroll, Kevin Kreisler, and James L. Sonageri, C.A. No. 9568–VCL, Telephonic Oral Argument on Plaintiffs' Motion to Compel and Rulings of the Court, 06/20/2014.

In response to Plaintiffs' Motion to Compel, the Defendants claimed they did not have sufficient time or resources to review all 73,000 documents yielded by the search terms used.  Vice Chancellor Laster was not swayed by these arguments.  An Order had been entered earlier in the case requiring the parties to not only meet and confer regarding search terms, but to also "do more than the standard" and "confer regarding the use of an early data assessment tool…to focus on the custodians and time periods most likely to have responsive electronic documents”.  Defendants’ reasons for missing the production deadline included delays in collecting the documents from their clients and insufficient manpower to properly review them.  The Vice Chancellor found these explanations to be insufficient.  The Court explained that in an expedited case, the parties need to think about approaches other than the “old school attorney-by-attorney review”.  Had an early data assessment tool been appropriately used, as instructed, the number of search hits would not have come as a surprise and counsel could have thought ahead and planned appropriately to meet the discovery deadlines.  The Court ordered that a copy of the transcript be given to Defendants clients, to help them understand that not complying with a discovery order will have serious consequences. More ›

Looking Back on 2014: The 7 Most Important eDiscovery Cases in Delaware - Part 1

The Court of Chancery continued to focus on eDiscovery throughout 2014.  During the next few weeks we will be recapping 7 cases that covered various topics including preservation, designation of confidential material and the drafting of privilege logs.  We will cover the cases in chronological order.

The first case is Sustainable Biofuels Solutions, LLC v. Tekgar, LLC and Michael Catto, C.A. No. 8741--VCP, Oral Argument on Plaintiff’s Motion to Compel and for Sanctions, Defendants’ Motion to Dismiss, and Rulings of the Court, 01/28/2014

In this dispute between a joint venture entity and one of its founding members, Plaintiff filed a Motion to Compel based on Defendants’ untimely production of emails, their blanket designation of 21,000 produced documents as Attorneys’ Eyes Only in violation of a Confidentiality Order, and lack of transparency throughout the eDiscovery process.

Before addressing the Motion to Compel, Vice Chancellor Parsons first reminded the parties of the Supreme Court case Christian v. Counseling Resources Associates, where the Supreme Court put litigants on notice that if they act without Court approval in modifying a scheduling order, they do so at their own risk.  By choosing not to involve the Court, the party waives its right to dispute the opposing party’s late filings going forward.  The Supreme Court advised that the best way to still “avoid motion practice and ill-will by agreeing to reasonable extension requests…[is to] promptly file a proposed amended scheduling order for the trial court’s signature.”

The court next found that the Defendants had failed to comply with their obligations under the confidentiality order by designating over 21,000 documents as Attorneys' Eyes Only.  Under the order, designation required review by an attorney and a good faith basis for such designation.   The court stated that "there is no way that an attorney could have looked at these documents and made a reasonable determination that there was a good faith basis for designating them as Confidential - Attorneys' Eyes Only..."  The Defendants stated that they received the documents from their client at a late date and thus were rushed in their review.  This necessitated the overdesignation of the documents.

Given that Vice Chancellor Parsons felt the Plaintiff had notified the Court “pretty promptly” of the discovery issues and that the Defendants had failed to comply with their obligations under the Confidentiality Order, the Court imposed sanctions of $10,000 in attorneys’ fees against the Defendants and gave them a strict deadline to complete any necessary dedesignations.  The Defendants were further ordered to answer the Plaintiff’s questions regarding how they unilaterally refined the agreed-upon search terms and exactly what files were searched and to generally operate with a greater degree of transparency.

Three key takeaways can be taken from this case. First, if an attorney is unsure of who to proceed on eDiscovery issues, he or she should reach out to a colleague or vendor for guidance and assistance. The Vice Chancellor wrote that “It’s not unusual in cases of this type and in many, probably the majority, of the cases in the Court of Chancery that electronic discovery is proceeding by way of search terms and searches of custodians.  That’s the way it’s usually done.  If it’s a surprise to any attorney…then that attorney needs to associate himself or herself with people who know what they’re doing and are more familiar with it.”

The second takeaway is that the court should be promptly informed of any agreement regarding changes to a CMO.

Finally, parties need to factor in the time it takes to actually review documents in order to avoid situations such as confidentiality or privilege overdesignations.  Parties should give themselves more than enough time to factor in the perhaps most important step between collection and production...attorney review of documents.

The entire transcript can be found here: Transcript of Sustainable Biofuels v. Tekgar

Dealing with High Risk Data

When people think of high risk data, most think of Personal Health Information and Personally Identifiable Information as it relates to HIPAA and the health care industry, but Steve Shebest's very informative article "High Risk Data: Have a Plan!" explains how high risk data can also be found in the financial, commercial, transportation, industrial, and other highly regulated sectors.

The cost of a breach, which is more likely to occur during the discovery process, can be high and can take the form of not only monetary costs, but also indirect costs such as reputational loss and diminished goodwill among customers and the public.  In order to mitigate the risk of data breach, it is critical to understand the three weak points of the discovery process (at collection, at data transfer, and once in the hands of third parties such as vendors and partners) and proactively implement a plan, both internally and with business partners, to minimize the risks.

Some of the strategies suggested are performing targeted collections to either eliminate the need to collect high risk data or at least reduce and identify it (in order to subject it to a different workflow), making sure data is encrypted during transfer, and having in-depth discussions with partners and vendors that address any potential weak points in the way they process, host, review, and produce the data.  All of these strategies should be used proactively, at the outset of an engagement, rather than waiting for a breach to occur.

The ultimate lesson is that in the midst of sometimes frantic eDiscovery, counsel cannot lose sight of the importance of data transfer security, having a strong contract with a vendor outlining security duties, and an awareness of what is actually being harvested from the client.

[UPDATE] In Defense of Genger, Part II

UPDATE:

I hate to say I told you so, but...wait, no I don't.

Yesterday, the Delaware Supreme Court issued its opinion in this matter affirming the Court of Chancery's spoliation finding. The Court held the spoliation finding proper, because Genger took affirmative steps to overwrite unallocated space, saying:

We do not read the Court of Chancery’s Spoliation Opinion to hold that as a matter of routine document-retention procedures, a computer hard drive’s unallocated free space must always be preserved. The trial court rested its spoliation and contempt findings on more specific and narrow factual grounds—that Genger, despite knowing he had a duty to preserve documents, intentionally took affirmative actions to destroy several relevant documents on his work computer. These actions prevented the Trump Group from recovering those deleted documents for use in the Section 225…

Compare with my statements below that

The [Court of Chancery] opinion in this case does not require preservation of all unallocated space in every case. Genger was sanctioned because he took affirmative steps to overwrite unallocated space, in violation of the Court's order... [T]here is nothing in this opinion that creates any requirement to preserve unallocated space. Rather, the opinion only says you shouldn't go out of your way to destroy it.

I feel quite vindicated in my defense, considering there were some persons and organizations of import in the eDiscovery community lined up on the other side. Obviously, reasonable minds can disagree, especially in interpreting court decisions. Ultimately, I am thankful that the Supreme Court's decision should allay any fears created by certain interpretations of the Court of Chancery's spoliation decision.

ORIGINAL POST (2011-03-11 13:20:45):

I had almost given up on writing this post considering how long it has been since I posted In Defense of Genger, Part I and (more importantly) how long it has been since the publication of the posts I am taking issue with.  However, the ongoing confusion about this case has prompted me to action.

If you have read Part I, you are familiar with the Court of Chancery's decision in TR Investors LLC v. Genger, C.A. 3994-VCS (December 9, 2009) and with the allegations made by Leonard Deutchman, General Counsel at LDiscovery LLC, in a two-part post hosted by Law.com. <!--You also understand why there's a picture of Austin Powers.--> For those who are not familiar, Mr. Deutchman asserts that the Court got the decision wrong because it (1) does not understand the technology involved (Part 1) and (2) does not understand the law of eDiscovery (Part 2).

It's sufficient to say that I respectfully disagree with Mr. Deutchman on both charges. Rebutting his posts was a fun, interesting exercise for me, but it didn't seem terribly important. I saw it as an esoteric debate between eDiscovery geeks. That has changed, because, today, a prominent media outlet has published a post that elevates the confusion about this opinion and will cause unnecessary fear among corporate counsel.

The latest case of hand-wringing and confusion over this decision comes to us from none other than Forbes by way of Daniel Fisher's post "Delaware Ruling Would Require Massive Data Backups."  Mr. Fisher opens his post stating that:

A little-noticed decision by a Delaware court has the potential to impose huge costs on companies unless it is reversed, computer-security experts say...[e]xperts say retaining such data would be prohibitively expensive since the unallocated space is essentially a trash bin that is altered each time a key is tapped.

<!--Scary, huh?-->

Despite the fact that Mr. Fisher twice refers to "experts" (plural) as the source for these hyper-ventilations, his lone identified source for the post is Daniel Garrie, a lawyer and managing director at Focused Solution Recourse Delivery Group LLC , a computer consulting firm in Seattle. <!--Garrie and Deutchman are both lawyers with eDiscovery vendors. Is there anything to that?--> Mr. Fisher's post continues:

“It’s almost impossible for large companies with massive amounts of equipment to comply,” said Garrie... “I don’t even know if it’s possible,” said Garrie. “I mean, anything’s possible with enough money,” but companies would have to take bit-level images of their hard drives on a regular basis and store them somewhere, to be retrieved each time they are sued. That means all the time for most large companies. The costs would be “exponentially larger,” than current electronic discovery measures. “Several large global companies,” clients he declined to name, “have expressed concern.”

Let me clear up the confusion: The opinion in this case does not require preservation of all unallocated space in every case. Genger was sanctioned because he took affirmative steps to overwrite unallocated space, in violation of the Court's order and without first telling anyone. The routine, passive overwriting of unallocated space was NOT the cause for any sanctions here, so there is nothing in this opinion that creates any requirement to preserve unallocated space. Rather, the opinion only says you shouldn't go out of your way to destroy it. Big, BIG difference. <!--If there are doubts about the Court of Chancery's understanding of eDiscovery, please see their recently released "Guidelines for Preservation of Electronically Stored Information" that clearly embraces the principles of cooperation, reasonableness, and proportionality.-->

To Mr. Garrie's credit, he is consistent—he is co-author of an article in the Northwestern Journal of Technology and Intellectual Property that makes the same mistaken arguments, and he filed a brief with the Delaware Supreme Court arguing for reversal of the Genger opinion. I obviously disagree with Mr. Garrie's opinions on this matter, but I am here to help, so I say:

Mr. Garrie, for the “[s]everal large global companies [that] have expressed concern,” please send them a link to this post and tell them not to worry.

I don't actually expect Mr. Garrie will do that, but perhaps some of his clients will stumble upon this post, in which case here is my advice to them:

If you act cooperatively and transparently, you will be fine. If you find yourself in a similar position to Mr. Genger's, share your concerns with opposing counsel and the court before you do anything. Don't take matters into your own hands and violate a court order by wiping a hard drive in the middle of the night—it's bad form and will only get you in trouble.

Stayed tuned for the decision of the Delaware Supreme Court—I may have a lot of words to eat...

<!--Thanks to flickr user cliff1066™ for the Austin Powers pic.-->

[UPDATE] Self-Collection Prohibited in Delaware

Posted In Best Practices, Collection, Search Methodology, Top Cases

UPDATE:

A colleague recently spoke to Vice Chancellor Laster about this opinion, and the Vice Chancellor reportedly said, "No self-collection in my Court."  I'm not sure that statement addresses my distinction between collection and review, but it does reinforce the Vice Chancellor's opposition to unsupervised custodian document collection.

Also, below is the presentation I made for use in briefing this case for the Herrmann Technology Inn of Court:

[embed]http://prezi.com/bin/preziloader.swf[/embed]

 

ORIGINAL POST:

Recently, Vice Chancellor Laster gave some of us a jolt with a bench ruling on a discovery dispute in Roffe v. Eagle Rock Energy GP, et al., C.A. No. 5258-VCL (Del. Ch. Apr. 8, 2010). The ruling addresses the issue of client self-collection and a lawyer's oversight duties.

The Association of Corporate Counsel's (AAC) website carried a summary of the ruling authored by Morgan Lewis & Bockius LLP that stated:

Vice Chancellor Laster ruled from the bench that confirmatory discovery—like formal discovery—requires the defendant’s attorney to be physically present during the collection of electronically stored information from his/her client; self collection by the client is not permitted.

Well-known eDiscovery expert, Kevin Brady of Connolly Bove in Delaware, explained that the ruling:

[P]ointed out that lawyers have an affirmative duty to be actively engaged in the collection process to the point that a lawyer should meet in person with the client to physically review his or her electronic information repositories wherever they may be located (including, if necessary, personal computers if that is where relevant information is stored).

I think Kevin's summary is much closer to the mark, and I'll explain why in a minute. First, the language causing concern is on lines 12-19 on page 10 of the attached transcript and reads as follows:

[Y]ou do not rely on a defendant to search their own e-mail system... There needs to be a lawyer who goes and makes sure the collection is done properly... we don't rely on people who are defendants to decide what documents are responsive, at least not in this Court.

The AAC article suggests there are two things implicated by this, and other supportive, language in the ruling: (1) client self-collection is not allowed, and (2) an attorney must be present during data collection. I think that interpretation assumes the worst and goes too far.

On the issue of self-collection, when the Court says not to "rely on a defendant to search their own e-mail system" and "we don't rely on people who are defendants to decide what documents are responsive," I believe the Court refers specifically to the practice of a client acting as document reviewer and sole arbiter of responsiveness. That is well understood to be a bad practice, so there is nothing shocking about this pronouncement.

I do not think the Court, in this ruling, has said that client bulk self-collection is impermissible. I see nothing in this ruling that would prohibit a client from gathering a mass of potentially responsive documents, e.g. full email accounts for all custodians, with guidance from counsel and turning them over to counsel for review. Counsel must review all potentially responsive documents and make final responsiveness determinations.

On the issue of requiring counsel's physical presence during collection, I again think the AAC article's interpretation of the Court's ruling goes too far. The AAC article seems to rely on the word "goes" in the Court's statement that "[t]here needs to be a lawyer who goes and makes sure the collection is done properly" for the proposition that counsel must 'go' and be physically present for collection. I think we get the spirit of the Court's statement by removing the 'go' part: "[t]here needs to be a lawyer who... makes sure the collection is done properly." That is well understood to be a best, if not required, practice, so there is nothing shocking about this pronouncement either.

To be fair, there are other references in the ruling to lawyers 'getting on a plane' to get data, but these suggestions seem to be case specific.  In this case, Plaintiff was supposed to be conducting confirmatory discovery on three board directors but only collected from two.  The third was a Mr. Smith. So the Vice Chancellor suggests that someone get on a plane to go get Mr. Smith's documents ("And you certainly need to put somebody on a plane to go out and see Mr. Smith." page 10, line 20; "So the question for me would be, one, how fast can you do this right? And that means not only the e-mails from Mr. Smith. As I say, somebody should have been on a plane a long time ago to go through his e-mails. And if he chose to use his personal computer, well, that was his bad choice. All right? And if he has it mixed in other stuff that he gets, 150 e-mails a day, or whatever, that was his bad choice. That makes it all the more essential that a lawyer get on a plane, and go and sit down with Mr. Smith, and go through his e-mail and make sure that what is produced is -- what is responsive is appropriately produced." page 12, lines 1-13). This seems to be a specific issue with Mr. Smith in this particular case requiring the physical presence of counsel to ensure collection of, perhaps, an unwilling participant.

I think my reading of this transcript aligns with Kevin Brady's in that lawyers need to be engaged in the discovery process and may need to be physically present during data collection. If, however, my interpretation is wrong and a lawyer is required to be present during collection that may only be conducted by a vendor, the cost of discovery in Delaware may be on the rise.