Louisiana Banker's Association Ediscovery for Bank Counsel Jay Gulotta and Justin Van Alstyne Stone Pigman Walther Wittmann L.L.C. 546 Carondelet Street New Orleans, Louisiana 70130

Rule 34 FRCP Rule 34(b)(2)(e)(i-iii) incorporates Electronically Stored Information (ESI) into the federal rules: "Unless otherwise stipulated or ordered by the court, these procedures apply to producing documents or electronically stored information": (i) "A party must produce documents as they are kept in the usual course of business or must organize and label them to correspond to the categories in the request"; (ii) "If a request does not specify a form for producing electronically stored information, a party must produce it in a form or forms in which it is ordinarily maintained or in a reasonably usable form or forms"; and (iii) "A party need not produce the same electronically stored information in more than one form."

Rule 26 FRCP Rule 26(b)(2)(b) sets specific limits on the discovery of electronically stored information: "A party need not provide discovery of electronically stored information from sources that the party identifies as not reasonably accessible because of undue burden or cost. On motion to compel discovery or for a protective order, the party from whom discovery is sought must show that the information is not reasonably accessible because of undue burden or cost. If that showing is made, the court may nonetheless order discovery from such sources if the requesting party shows good cause, considering the limitations of Rule 26(b)(2)(C). The court may specify conditions for the discovery."

Three Areas to Focus On Duty to Preserve Prior to Litigation Reasonable Anticipation of Litigation Litigation Hold Defensible Collection Process is key Costs are the main driver Sanctions are prohibitive Production Mountains of documents exist Paradigm has shifted (or eventually will) to cooperation

Duty To Preserve Duty has two basic phases Phase 1: Prior to Litigation: Must have a defensible document retention policy For a financial institution, this means abiding by statutory requirements, but also having an OBJECTIVELY REASONABLE policy with respect to regularly scheduled destruction of communications and documents. Phase 2: Litigation Imminent or Commenced Must issue a litigation hold Must halt regular electronic document destruction process

Duty to Preserve: Prior to Litigation What is "objectively reasonable"? This is a fact intensive question The larger the business, more information will generally be expected to be preserved, for longer. Regardless of size, you MUST have: A written document retention policy that clearly spells out: 1. Reasonable time frames for automatic deletion/destruction 2. The procedure for a litigation hold (more on that later)

Duty to Preserve: Prior to Litigation Not Reasonable: Eon-Net LP v. Flagstar Bancorp, 653 F.3d 1314 (Fed. Cir. 2011): The Federal Circuit Court of Appeals allowed the prevailing defendant to collect attorney’s fees. IP case. Court found that the plaintiff ignored its duty to preserve documents, because plaintiff’s principal testified “I don’t save anything so I don’t have to look” and that his companies “have adopted a document retention policy which is that we don’t retain any documents.” This is obviously the wrong strategy. Key takeaway is that the company needs to have clearly articulable reasons for its policy beyond hating litigation.

Litigation Hold What is a litigation hold? Consists generally of two parts Part 1: Suspend the document retention policy.  Contact your IT department and inquire how to stop the automatic purging of documents and communications. Part 2: Issue a document hold to all potentially relevant custodians Refer to samples of litigation hold letters in the appendix included in the handout materials.

Duty to Preserve: Litigation Hold Notice, usually via email, must direct appropriate custodians to do the following: Describe what information is relevant Preserve all relevant information (electronic, paper) Cease auto deletion and rewriting over documents/emails Explain the consequences of not preserving

Duty to Preserve: Litigation Hold Requires Thought. Examine who key players are, what forms of media may be relevant. Make the notice personal. Mass emails tend to get ignored. Send out each email to each individual, even if the emails are identical. YOU MUST FOLLOW UP DURING COURSE OF LITIGATION. One email is not enough.

Duty to Preserve: Litigation Hold New Area of Concern: Mobile Devices Devices issued by company: must collect/image if there is any reason to believe it contains relevant information. Not issued by company: may want to collect/image to avoid spoliation. Remember: there is more than one copy of this.

Defensible Collection As Lisa said, this might not be your IT Department's strong suit. Raise your hand if you know how your IT department conducts a search for relevant documents in response to discovery. How many of you ever reduce this procedure to writing? Of those who raised your hands, how many of your IT departments collected using the "find" command on a drive or in outlook?

Defensible Collection Sloan Valve Co. v. Zurn Industries, Inc., 2012 WL 1886353 (N.D. Ill. May 23, 2012). Court sanctioned Zurn due to the method it used to search its network storage drive, which was conducted at the folder level by using the “find” function. According to the court, the use of this method meant that the defendant did not actually look at the contents of individual files and documents and Boolean searching could not be performed, which was particularly important given the size of the directory. (Boolean = search with operators, and, or, etc.)

Defensible Collection Takeaway: Being a sophisticated entity (like Zurn) does not mean that your IT department knows how to conduct a reasonable search. Best practice is to use a third party vendor early in the process to manage the collection

Defensible Collection E.I. Du Pont De Nemours and Co. v. Kolon Indus., 2011 WL 1597528 (E.D. Va. April 27, 2011); also 2011 WL 2966862 (E.D. Va. July 21, 2011). Court sanctioned company where employees deleted these documents, after a hold notice was issued, without knowledge of the company, from the employees' own computers. While there was no company-wide conspiracy to delete files, there was intentional and bad faith deletion of relevant files and emails by key employees. Court imposed an adverse inference instruction and further sanctions in the form of attorneys’ fees, expenses and costs related to the motion.

Defensible Collection Remember: There are many copies. Someone will find them. And if your search didn't, questions will arise.

Production Two buzzwords you've probably been hearing more of: Metadata - Index information, added by the original program to describe the document (date created, author, etc.) Native Format – Electronically stored information in its original format. We are obligated to preserve documents in their native format, with the metadata intact, but are required to produce in a "reasonably useful" format. (Rule 34, Federal Rules of Civil Procedure).

Production "Reasonably useful" only goes so far. As a general practice, we MUST produce spreadsheets and other documents that lose their functional utility in image format. Arguably, this includes any document that is not searchable (word, powerpoint, .pdf, etc.). It is almost always acceptable to produce in native.

Production HOWEVER: documents requiring special, proprietary programs to access (typical exs. are CAD-type proprietary programs) SHOULD be produced as images because of the cost of obtaining the proprietary software. Can be altered by agreement of counsel. E.g. Counsel can agree to produce in any format. Important to reduce any such agreement to writing.

Production Change in Paradigm Previously, many times entities would enter litigation attempting to be legally and ethically responsive without being overly cooperative with the other side. The problem now is that there are so many copies of every relevant document, located in so many different places, there is no place to hide information. The costs of discovery can easily eclipse that of the amount in controversy if we are not more cooperative with the other side and selective with what we request.

Conclusion The businesses most successful at limiting their ediscovery costs are those which take a proactive approach to managing those costs. Have a clear, well thought out document retention policy. Issue personal litigation hold notices that reflect an understanding of the potential issues at stake, the key players involved, and the possible location of all relevant data. Follow up on those notices repeatedly. Unless you can independently verify that your IT department is trained in forensic collection of data, hire a third-party vendor to assist you in collection.

Conclusion Think carefully about how you will search for information. A vendor can help in this process. Cooperate with the other side on the production of data. Most important: there is no use attempting to hide anything. There are many copies. The best strategy is to attempt to know as much about the dispute as quickly as possible.