1. The Federal Civil Rules & Electronic Discovery: What's It to Me? 2007 Legal Breakfast Briefing Presented to Employers Resource Association by Robert Reid, Esq. Partner, Labor and Employment Law Department Dinsmore & Shohl LLP July 17, 2007 © 2007 Dinsmore & Shohl LLP

3. Zubulake v. UBS Warburg Why is Electronic Discovery an Issue? –Zubulake v. UBS Warburg LLC, 229 F.R.D. 422 (S.D.N.Y. 2004) –Zubulake v. UBS Warburg is a prime example of what the amended Federal Rules of Civil Procedure seek to prevent -- spoliation of relevant evidence. This case illustrates the potential harm improper discovery practices can have on an employer defendant.

4. Zubulake v. UBS Warburg In Zubulake, a female employee filed a lawsuit against her former employer (UBS) alleging gender discrimination, failure to promote, and retaliatory discharge. When Zubulake brought an EEOC charge in August 2001, UBS counsel gave instructions to UBS employees to preserve relevant materials (including e-mails). It was not until August of 2002, however, that Zubulake requested e-mails stored on backup tapes. UBS counsel then issued instructions to preserve backup tapes.

5. Zubulake v. UBS Warburg Over time, without proper structure, e-mails, backup tapes, and relevant evidence were destroyed. While some evidence was recovered through expensive technologies, other evidence was lost for good. The Zubulake Court held that UBS violated its discovery duties to preserve, protect, and disclose relevant evidence.

6. Zubulake v. UBS Warburg The Court ordered UBS to: –(1) pay for the re-deposition of relevant UBS personnel and key players, limited to the subject of newly discovered e-mails over time; –(2) restore and produce relevant documents from relevant backup tapes; and –(3) pay plaintiffs reasonable expenses, including attorneys fees related to these issues.

7. Zubulake v. UBS Warburg Additionally, and extremely costly to any employer defendant, the Court permitted the jury to draw a negative inference against UBS for lost documents if the jury found UBS to be at fault for such losses.

8. Zubulake v. UBS Warburg Consequences in the wake of Zubulake v. UBS Warburg: –To avoid court sanctions for failing to produce relevant electronic information, be aware of the implications of the amended Federal Rules of Civil Procedure regarding discovery of electronically stored information ("ESI"). –Take steps to identify and preserve ESI if litigation may be reasonably anticipated.

9. II. Changes to the Federal Rules of Civil Procedure Pertaining to Discovery of Electronically Stored Information ("ESI") The December 1, 2006 amendments to the Federal Rules of Civil Procedure change the way the discovery rules are applied to electronically stored information ("ESI").

10. Federal Rule Changes Rule 26 - mandatory disclosures, pretrial disclosures, discovery scope and Rule 26 conference. Rule 16 - scheduling order Rule 34 - scope of document requests Rule 37 - sanctions and safe harbor

11. Rule 37 Failure to Make or Cooperate in Discovery; Sanctions. 37(f) Electronically Stored Information –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, good-faith operation of an electronic information system.

12. III.What Is "ESI"? "ESI" is electronically stored information, including e- mails, web pages, word processing files, and databases stored in the memory of computers, magnetic disks, optical disks, and flash memory. The volume of "ESI" is generally exponentially greater than paper information, and it may be located in multiple places. A single paper memorandum may be stored on the computer hard drives of the document's creator, reviewers, and recipients; on the company server; on lap tops and home computers; and on back up tapes.

13. III.What Is "ESI"? The dynamic nature of "ESI" makes it vital that a data producer institute a document retention policy to address creation, identification, retention, retrieval, and ultimate disposition of information and records. A company's retention policy must require the suspension of ordinary destruction practices to comply with preservation obligations related to reasonably anticipated litigation.

14. III.What Is "ESI"? Know your own technology infrastructure and information storage systems. Because deleted or backup information may be available, parties may request its production, even though restoring, retrieving, and producing it may require expensive and burdensome computer forensic work that is disproportionate to the discovery needs of the requesting party.

15. III.What Is "ESI"? It is important to know your own stuff: Type of internal network and hardware used Software used, including email programs Computer files on network servers Computer files on desktop or local hard drives Laptop computers, home computers, and other satellite locations

16. III.What Is "ESI"? Hardware which contain records that may have been deleted, but are recoverable using reasonable efforts Backup and archival methods and retention Who maintains the system - IT personnel inside or outside Rules and policies regarding use and retention (and whether they are followed) Security procedures

17. IV.Implement Effective Document Retention Policies Every company should have a document retention policy that limits how long to keep information and sets forth the procedures for uniform and timely destruction of both paper documents and electronic data. The policy should define what types of information are to be retained and destroyed, where retained information is to be stored, and who shall have access to retained information.

18. IV.Implement Effective Document Retention Policies Do's and Don'ts of document retention policies: –Do reserve the right to delete e-mail messages saved in users' folders because of e-mail storage limits or other improper content, especially large graphic files, interactive greetings and/or offensive materials. –Do print e-mail that is important enough to be saved and keep e-mail that should be retained in specially- designated files.

19. IV.Implement Effective Document Retention Policies –Do locate and preserve all relevant e-mail as soon as you know the e-mail may be needed for litigation, audit, or investigation. –Don't destroy e-mail evidence that may be relevant to pending or future litigation.

20. IV.Implement Effective Document Retention Policies E-mail document retention policies should be consistent with other document retention policies. E-mail retention/destruction policies should not be intended to lessen exposure to investigation or litigation. The proper justification is the high cost of retaining and storing unneeded e-mail. Information and records retention policies and practices should be documented.

21. IV.Implement Effective Document Retention Policies The policy should inform employees about the company's "litigation hold" procedure and that they should not continue to follow the document retention/destruction policy when a "litigation hold" comes into effect. Consider attaching a sample "litigation hold" letter to the document retention/destruction policy so recipients recognize the letter and know what to do if they receive a similar letter.

22. IV.Implement Effective Document Retention Policies Be able to show good faith compliance with a reasonable document retention policy. Consider conducting periodic compliance reviews of the company's information and records management policies and procedures and responding to the findings of those reviews as appropriate. Safe harbor is the key here.

23. IV.Implement Effective Document Retention Policies E-mail Document Retention Policy: –E-mail messages may be temporary communications, which are non-vital and may be discarded routinely. –E-mail messages, depending on their content, may also be considered a more formal record and should be retained pursuant to a companys record retention schedule.

24. IV.Implement Effective Document Retention Policies Employees should be aware that when they delete a message from their mailbox, it may not be deleted from the e-mail system. The message may be residing in the recipient's mailbox or forwarded to other recipients. Furthermore, the message may be stored on the computer's back-up system.

25. V.Be Aware of Obligations to Preserve Documents and Data Identifying the boundaries of the duty to preserve information articulated in Zubulake v. UBS Warburg involves two related inquiries: when does the duty to preserve attach, and what evidence must be preserved?

26. V.Be Aware of Obligations to Preserve Documents and Data Once a party reasonably anticipates litigation, it must suspend its document retention/destruction policy, and put in place a "litigation hold" to ensure the preservation of relevant documents. The filing of an EEOC charge or even a letter from an attorney threatening litigation on behalf of an employee are events that can trigger litigation hold procedures, and thus a company should institute these procedures whenever it reasonably anticipates litigation, even before the filing of a lawsuit.

27. V.Be Aware of Obligations to Preserve Documents and Data As a general rule, the litigation hold does not apply to inaccessible backup tapes (e.g., those typically maintained solely for the purpose of disaster recovery), but if the back up tapes are accessible (i.e., actively used for information retrieval), then such tapes would likely be subject to the litigation hold.

28. V.Be Aware of Obligations to Preserve Documents and Data –A party's failure to implement a "litigation hold" may deprive the party of safe harbor under Rule 37(f) (i.e., 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, good-faith operation of an electronic information system). –If the company followed its document retention policies prior to identifying the likelihood of litigation, there is no sanction for lost information.

29. V.Be Aware of Obligations to Preserve Documents and Data –Despite the protection of Rule 37(f), an employer's blind continuance of a routine document destruction policy might provide grounds for sanctions where the employer acted in bad faith or knew, or had reason to know, about potential litigation.

30. VI.Create an Effective Litigation Preservation/Collection Work Plan Once the obligation to preserve documents and electronic data arises, the company should take the initiative to create an effective work plan. The first steps for all types of litigation preservation/collection work plans should be:

31. VI.Create an Effective Litigation Preservation/Collection Work Plan Meet with the IT staff immediately to make them aware of the preservation obligation, and identify an IT Staff project manager. Identify the scope of assistance, if any, needed by outside e-discovery specialists in the preservation/collection efforts. Identify any automatic deletion processes, planned system upgrades or equipment replacements for electronic data in any form.

32. VI.Create an Effective Litigation Preservation/Collection Work Plan Halt automated destruction/wiping/overwriting of any media where relevant data resides. This commonly requires a halt to back-up tape recycling at least until the opposing parties have reached agreement on initial preservation obligations.

33. VI.Create an Effective Litigation Preservation/Collection Work Plan Identify potential storage media both internally and externally. In addition to the company's internal computer data and storage systems, become familiar with any external means and mechanisms of storing and backing up information.

34. VI.Create an Effective Litigation Preservation/Collection Work Plan The company should have procedures in place to track ESI that may exist outside the company's storage systems. Relevant ESI may appear in many transient media, including an employee's office computer, laptop, and PDA or other media storage device.

35. VI.Create an Effective Litigation Preservation/Collection Work Plan Use a checklist for system administrator review. Collect any and all documents associated with the project and consider the following sources of stored information: e-mail, desktop HDD, laptops, CDs, DVDs, flash drives, hard copies, notebooks, file cabinets, notes, presentations, voice mails, documents you have at home, calendars, planners, day timers, instant message logs, and mapped drives.

36. VII.Litigation Hold Memos and Data Preservation Letters Litigation hold memos to employees notify recipients of their legal obligation as employees of the company to preserve relevant documents and data relating to the matter, transaction, business unit, and product from all sources. Data preservation letters from counsel notify recipients of the duty to preserve relevant electronic information stored within the technology infrastructure and information assets of the company.

37. VIII.Have Litigation Hold Procedures In Place –Distribute the litigation hold to custodians: Provide instructions regarding preservation Identify key topics, issues, and events for preservation Consider the kinds of information people are creating, using, and saving (e-mail, Word files, Excel, hard copies, calendars, voice mail, multiple computers) Identify IT personnel for employees to contact if employees have questions. Communicate importance of retention and potential sanctions if information is altered or deleted.

38. VIII.Have Litigation Hold Procedures In Place Develop a Litigation Action Plan for IT Personnel. Identify IT personnel, including all custodians of stored information and back-up systems. Key IT personnel can assist with issues that arise in future litigation by keeping counsel apprised of the most recently acquired technologies that affect data storage or relate to the company's document-retention program.

39. CONCLUSION Now, heres another type of letter you hope you do not see: