1. NASP 2008 Annual Conference Subro Goes Hollywood!
DOTTING AND CROSSING YOUR E’s: E-Discovery and Subrogation
NASP 2008 Annual Conference
Hollywood, Florida
Tuesday, November 4, 2008

2. E-Discovery is Discovery
Begins Upon First Investigation of a Claim
• Informal Discovery
Often Pre-Litigation Investigation (Interviews, Document Collection, Expert Consultants)
• Formal
Generally Post-Suit (Authorized by Statute)
Ends at Settlement or Trial
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3. A Few Billion Words About E-Mail
210,000,000,000 s are generated per day worldwide.
13,125,000,000 s are generated every 90 minutes.
70% of all s are Spam.
60% of U.S. Internet users prefer reading their s than reading “snail” mail.
34% of U.S. Internet users prefer to send an than make a telephone call.
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4. Documents 98% of documents are kept in electronic form.
80% of documents are never converted to paper.
90% of documents in circulation began as something else!
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5. Format of Presentation
Overview of Federal and State E-Discovery Rules
What It Means for Subrogation
Practical Applications of E-Discovery
The Consequences of the Failure to Preserve and Produce Electronically Stored Information
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6. FRCP E-Discovery Amendments
Why the Amendments?
To address growing computer-based discovery problems
To keep pace with information technology developments
To better define the scope of electronic data and information that parties are entitled to discover
• The Focus of the Amendments: Electronically Stored Information

7. Electronically Stored Information (“ESI”)
• Refers broadly to any type of information that can be stored electronically
Examples of ESI Media:
Networks • Voice Mail
Computer Files/Data • Cell Phones
Hard Drives • Videos
Flash Drives • Tapes
Thumb Drives • mP3
Portable Storage • Metadata
Devices

8. Rules 33 and 34 Interrogatories [Rule 33]
• Specification and summary of ESI in lieu of written
answer
• Production of ESI in lieu of written answer
Production of Documents [Rule 34]
• Form of Production of ESI
Party may specify the form
If not specified, ESI must be produced in the form “ordinarily maintained” or in a “reasonably usable form”
Testing and Sampling of ESI

9. Rule 26 Initial Disclosures [Rule 26(a)(1)]
A copy or description by category and location of all ESI must be provided without request
Production of Documents [Rule 26(b)(2)(B)]
ESI need not be provided if the source is “not reasonably accessible” due to undue burden or undue cost

10. Rule 26 - Continued Privileged Information [Rule 26(b)(5)(B)]
The “Litigation Hold”
Receiving Party and Producing Party Obligations
Discovery Plan Conference [Rule 26(f)]
Counsel for the parties develop a plan for ESI
discovery
Considerations:
Preservation of ESI
Issues relating to the discovery and production of ESI (including costs and expenses)
ESI privilege/waiver of privilege issues

11. Other Important New FRCP Rules
Scheduling Order [Rule 16(b)]
ESI-related party agreement(s) to be included in Order
Safe Harbor [Rule 37(f)]
No sanctions “absent exceptional circumstances” for failure to provide ESI lost due to the “routine, good faith operation of an electronic information system”
Subpoenas [Rule 45]
ESI may be specifically sought by subpoena, with the provisions of Rules 33, 34 and 26 applicable

12. E-Discovery: State Law Trends
State E-Discovery Rules
• FRCP Remains the Model
• Some states adopt
• Some states write their own
• Many states have done nothing
• Departures from FRCP
• Early meetings
• Specific definitions
• Cost shifting; reasonable accessibility

13. Uniform Rules
• Created by the National Conference of Commissioners of Uniform State Laws
Drafted as a model for states to follow
Substantially similar to the Federal Rules

14. The Lone Star State: Texas
Texas Rule of Civil Procedure §196.4
Circa 1999
Regulates Discovery of “Electronic or Magnetic Data”
Requesting party must specifically request and state the form of the production
Responding party must produce all data reasonably available
If extraordinary steps are required, court must order Requesting Party to bear the cost

15. The Golden State: California
Pending Revisions to the California Code of Civil Procedure
Will amend the code to include E-Discovery rules
Largely tracks the FRCP
No early meeting requirement, no equivalent to the Rule 26 exchange
Follows traditional discovery timetables
Information not reasonably accessible must still be produced

16. What it Means for Subrogation
Some form of Early Meeting is the norm
E-Discovery should be considered at the investigation stage of an action
Possibly more expensive and protracted discovery
• Litigation budgets should contain E-Discovery line items
Could be helpful and/or harmful to a subrogation action – Case-By-Case Analysis
Potentially greater settlement opportunity

17. Using E-Discovery: Pre-Litigation
Determine from whom ESI may be sought - the insured and/or the Insurer
Thoroughly evaluate the scope of available ESI
Ensure preservation of existing ESI, in compliance with the company’s retention policy
Minimizes the prospect of adverse consequences in litigation – especially a spoliation of evidence defense
Allows Plaintiff to take the “high road” in demanding ESI production from the defendant(s)

18. Using E-Discovery: Pre-Litigation – Continued
Learn the company’s ESI retention, management and use policy(s)
Analyze the company’s practice of compliance or non-compliance with the policy(s)
Evaluate the potential impact of the company’s ESI and related policy(s) on a subrogation action
Assess potential costs and expenses associated with potential production of the company’s ESI
Consultant with the appropriate computer specialist(s)
Consider the impact of ESI on forum and venue for suit

19. Using E-Discovery: Litigation
Initial Rule 26 Disclosures (if applicable)
Specify the form of ESI to be produced
Image versus Native formats
Other considerations
Rule 16 Conference (if applicable)
Request the Order to require the defendant(s) to identify: all electronic systems and ESI, the means to access it, ESI retention policies, and the most knowledgeable employees/custodians
Assess potential costs and expenses associated with ESI discovery, develop a budget and advise the client

20. Using E-Discovery: Litigation - Continued
WRITTEN DISCOVERY
Generally
Define “ESI”
Include instructions for preservation of ESI
Consult with computer specialist and/or retained expert(s)
Interrogatories
Ask for the identity of all relevant ESI (past and present), ESI electronic systems/media, and ESI management, use and retention policies
Ask for names, employers, titles/positions and responsibilities of all ESI-relevant persons most knowledgeable, custodians, supervisors, etc.
Requests for Production of Documents
Request production of ESI documents in desired format(s)
Request production of ancillary equipment, tools, etc. to retrieve the ESI

21. Using E-Discovery: Litigation - Continued
DEPOSITIONS
Rule 30(B)(6) Deposition(s) – Defendant’s “ESI PMK”
Identify and depose PMK on topics relating to scope of ESI (past and present), including ESI electronic systems/media and location
Identify and depose PMK on ESI records retention, management and use
Identify and depose PMK on retrieval of ESI
Identify and depose PMK on ESI topics relating to third parties and other knowledgeable persons
Fact Witness Depositions
Particularly useful for establishing retention non-compliance and spoliation
SUBPOENAS – THIRD PARTIES
Use information obtained from written discovery and Rule 30(B)(6) deposition(s)
Focus on inconsistencies in testimony and/or documents

22. Using E-Discovery: Litigation - Continued
MEDIATION/SETTLEMENY CONFERENCE
Costs and Expenses factor
“Smoking gun”–type ESI materials
ESI records retention and/or production deficiencies
Waiver of privilege and/or Spoliation of Evidence claim
ARBITRATION/TRIAL
Same as above, PLUS:
Potential Public embarrassment factor (works both ways!)
POST-LITIGATION
Consultation and recommendations regarding future handling of company’s ESI (“preventative maintenance”)

23. E-Discovery: Pitfalls and Consequences
Waiver of Privileges
Spoliation of Evidence
Sanctions
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24. Sanctions - A Train Wreck
Zubulake Decision (NY)
Phoenix Decision (NY)
Martin Decision (FL)

25. Sanctions in California: A Yard Sale
Qualcom Decision
U.S. v. Krause
Arthur Anderson - Enron

26. Conclusion FRCP and State Courts’ E-Discovery Rules Summary
Learn Your Company’s “ESI Universe”
Ensure the preservation of your company’s ESI
Assess costs and expenses & benefits and burdens of ESI discovery – Both Ways!
If practical, aggressively use ESI Rules from the outset of litigation throughout discovery in order to:
1) Build and strengthen the subrogation case, and
2) Facilitate settlement
Always be mindful of the consequences if your company fails to keep and produce ESI - Take precautionary measures!

27. FORAN GLENNON PALANDECH & PONZI PC
George D. Pilja Kevin J. Price
150 South Wacker Drive S.E. Bristol Street
Suite Suite 300
Chicago, IL Newport Beach, CA 92660
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