What Non-Delaware Lawyers Need to Know About e-Discovery in Delaware
Many non-Delaware lawyers will, at some point in their careers, find themselves practicing in a Delaware court after being admitted pro hac vice. For those that do, it is important to note that the Delaware courts take e-discovery seriously and have a sophisticated understanding of it. The body of e-discovery law in Delaware continues to grow, tackling issues as broad as document collection and as narrow as records review and privilege logging. This article serves as a primer on conducting e-discovery in the Delaware courts.
The Court of Chancery and the Superior Court are the two state courts in Delaware. In 2013, the Court of Chancery included e-Discovery Guidelines as part of the Court of Chancery’s broader set of guidelines. The e-Discovery Guidelines tackle such topics as: document collection; privilege log analysis; and cooperation among counsel. In addition, the court also offers standard Confidentiality Stipulations that govern the production of data and contain sample claw-back provisions. The e-Discovery Guidelines and sample Confidentiality Stipulations can be found on the Court of Chancery’s website at http://1.usa.gov/1U6IqIg.
The Corporate and Commercial Law Division of the Superior Court (CCLD; http://1.usa.gov/1LWEGGD) was created on May 1, 2010, and is designed to handle business disputes. The CCLD has a detailed sample document entitled, “E-Discovery Plan Guidelines,” which provides a template for parties to agree on topics such as preservation, production format, and privilege logging. See, http://1.usa.gov/1Rc8qvm.
Finally, the District Court for the District of Delaware has adopted the Default Standard for Discovery, which includes electronically stored information (ESI). This document provides guidelines for federal practitioners on similar topics tackled in the state court analogues, with a particular emphasis on production format. See, http://1.usa.gov/1RDUdba.
Most of the case law related to discovery emerging from Delaware courts comes from the Court of Chancery. Much of it is gleaned from hearing transcripts rather than opinions. Hearing transcripts are often cited in briefs filed by Delaware counsel, and thus can be a treasure trove for the court’s views on a variety of topics. As the CCLD is the law court to Chancery’s equity, it typically follows those cases.
Emphasis on Technology Competence and Efficiency
Delaware takes technology competence very seriously, and has adopted Comment 8 to Model Rule 1.1 which states that “a lawyer should keep abreast of changes in the law and its practice, including the benefits and risks associated with relevant technology… .” The Delaware Supreme Court has also established a Commission on Law and Technology, which offers best practices in such areas as e-discovery, social media, and cloud computing. See, http://1.usa.gov/1UYkF4z.
As such, a claim by a practitioner that he or she does not “understand” technology will not carry great weight during a discovery dispute.
Sustainable Biofuels v. Tekgar, C.A. No. 8741-VCP (Del. Ch. Jan. 28, 2014), demonstrates the court’s emphasis on competency with regard to technology. The court made clear that the majority of cases in the court involve electronic discovery and the searching of records custodians. The court emphasized that if the attorney does not understand the process, then that attorney must associate him- or herself with people who do.
The important takeaway from the case is that counsel who are unfamiliar with e-discovery should rely on their co-counsel, particularly their Delaware counsel, in addition to non-legal actors in the data space.
The CCLD has also weighed in on this subject in Gatz, et al. v. Blank Rome LLP, et al., C.A. No. N13C-02-089 EMD (Del. Sup. Jan. 6, 2014), stating: “I hope everyone’s on notice right now that it’s not always the client that gets sanctioned if E-Discovery isn’t done appropriately. It’s no longer, ‘I don’t understand technology.’ There’s an ethical rule now that says you have to maintain the ability to understand the technology.”
The Court of Chancery’s emphasis on understanding technology is illustrated by an instance in which the court ordered, sua sponte, the use of predictive coding by both the plaintiffs and the defendants. See, EORHB, et al. v. HOA Holdings LLC, et al., C.A. No. 7409-VCL (Del Ch. Oct. 15, 2012). The court stated that: “This seems … to be an ideal non-expedited case in which the parties would benefit from using predictive coding … if you do not want to use predictive coding … show cause why this is not a case where predictive coding is the way to go.”
This case demonstrated the Court of Chancery’s willingness to push the e-discovery ball forward, and to insert itself into the discovery process to promote efficiencies. A similar situation occurred in the 112359 Factor Fund, LLC, et al. v. Flux Carbon Starter Fund, LLC, et al., C.A. No. 9568-VCL (Del. Ch. June 20, 2014), matter, in which the Court of Chancery ordered the parties to use an early data assessment tool. At the hearing on the motion to compel, the court stated that the parties, particularly in an expedited case, need to think about an approach to document review other than “old school attorney-by-attorney review.”
These cases also show that the Delaware courts are serious about the promotion of cooperation among counsel. The Court of Chancery Guidelines emphasize the usefulness of the meet and confer, and the CCLD E-Discovery Plan requires that one occur 21 days before the first scheduling conference.
Responsibility of Counsel
Unlike some other jurisdictions in which out-of-town counsel practice, Delaware counsel is not to be seen as a simple mail drop. As stated in the Guidelines, Delaware counsel is to remain actively involved in the discovery process.
This view was illustrated in James v. National Financial, C.A. No. 8931-VCL (Del. Ch. Dec. 5, 2014), in which Delaware counsel did not actively participate in discovery and the associated issues, and was found to be responsible in not taking a more active role. The court made clear that there is no place for purely “local counsel” in the Court of Chancery.
Beginning in 2010, the court has increasingly disapproved of collections by clients that have not been performed at the direction of counsel. In Roffe v. Eagle Rock Energy GP, et al., C.A. No. 5258-VCL (Del. Ch. April 8, 2010), the court stated that: “First of all, you 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.”
The court again questioned the validity of a self-collection in ISN Software Corporation Appraisal Litigation, C.A. No. 8388-VCG (Del. Ch. Sept. 12, 2014). Here, a self-collection occurred but the client collected “everything” at the direction of counsel. The court was dubious that the client indeed captured everything, and ordered a forensic collection by a neutral vendor.
These views can best be summarized in the Guidelines, which state that: “The Court expects Delaware counsel to play an active role in the discovery process, including in the collection, review and production of documents, and in the assertion of privilege.” A collection process that is not overseen by Delaware counsel will carry with it a presumption of self-selection bias.
Text Messages and Personal e-Mail
The discoverability of emerging forms of communication also continues to evolve. The court has recently weighed in on the discoverability of text messages and personal e-mail accounts.
Kan-Di-Ki, LLC v. Robert Suer, C.A. No. 7937-VCP (Del. Ch. Sept. 24, 2014), involved alleged spoliation of text messages. The court made it clear that cell phones and the potentially relevant data on them must be preserved, just as any other discoverable information is preserved once the reasonable anticipation of litigation attaches.
Personal e-mail used for the purpose of business was recently discussed in a Section 220 books and records action, Amalgamated Bank v. Yahoo!, Inc., C.A. No. 10774-VCL (Del. Ch. Feb. 2, 2016). Similar to the Kan-Di-Ki case, the court determined that it is not the source of a document that should govern whether it is rightly subject to inspection, but rather whether the document is essential to satisfy a proper purpose. The implication is clear — if a personal account is discoverable in a Section 220 action, in which the scope of discovery is narrower than in Rule 26, then such accounts are clearly discoverable in a plenary action.
Document Review and Privilege Logs
While Delaware courts have concerned themselves with big picture discovery questions such as preservation and collection, they have also addressed aspects of discovery that are often left to be performed by associates and contract attorneys, such as document review and privilege logging.
The Court of Chancery has repeatedly tackled the drafting of logs in hearing transcripts and opinions. In Mechel Bluestone v. James C. Justice Cos., C.A. No. 9218-VCL (Del. Ch. Dec. 12, 2014), in which a deficient privilege log was the subject of a motion to compel, the court found that Delaware “senior lawyers” need to be involved in the making of privilege calls and the drafting of the privilege log.
The court has also spoken on privilege analysis; for example, how a privileged e-mail does not automatically mean that an attachment is also privileged. See, AM General Holdings, LLC v. The Renco Group, Inc., C.A. No. 7639-VCN, 7668-VCN (Del. Ch. April 18, 2013).
The cases above demonstrate that the assumption that jurists do not understand e-discovery does not apply in Delaware. They show that the court has an agenda, which is making discovery affordable through education and the promotion of efficient techniques, but that it has a high standard for the lawyers appearing before it. This standard extends to out-of-state attorneys’ technology and e-discovery competence.
Reprinted with permission from the April 2016 edition of the “Legal Tech Newsletter®" 2016 ALM Media Properties, LLC. All rights reserved. Further duplication without permission is prohibited. ALMReprints.com - 877-257-3382 - firstname.lastname@example.org.