1. AMENDED FEDERAL RULES OF CIVIL PROCEDURE ON ELECTRONICALLY STORED INFORMATION or “THE TALE OF RIP VAN LAWYER” PASBO ANNUAL CONFERENCE March 6, 2008 Hershey, Pennsylvania Howard L. Kelin, Esq. Kegel Kelin Almy & Grimm LLP 24 North Lime Street Lancaster, PA 17602 Phone number: 717-392-1100 Facsimile: 717-392-4385 E-mail: kelin@kkaglaw.com

2. Sleeping Through 20 Years of Dramatic Change Rip Van Lawyer

3. SINCE 1985 Local and Wide Area Networks Local and Wide Area Networks Email Email Internet Internet 1985 PC used primarily for document preparation, not communication PC used primarily for document preparation, not communication Communication by phone, U.S. mail, overnight delivery or facsimile Communication by phone, U.S. mail, overnight delivery or facsimile

4. Practical Impact on Discovery Greater Volume of Data Greater Volume of Data Access: Documents No Longer Maintained Primarily in File Cabinets Access: Documents No Longer Maintained Primarily in File Cabinets Expense of Discovering Electronically Stored Information Expense of Discovering Electronically Stored Information Email is Sought in Discovery, in Part Due to Harmful Candor Email is Sought in Discovery, in Part Due to Harmful Candor

5. FRANKENSTEIN’S MONSTER ATTACKS MORGAN STANLEY! RESULT –

6. Coleman (Parent) Holdings, Inc. v. Morgan Stanley & Company, 2005 WL 679071 (Fla. Cir. Ct., 15th Cir. March 1, 2005) and 2005 WL 674885 Fla. Cir. Ct., 15th. March 23, 2005) Alleged that Morgan Stanley fraudulently failed to identify irregularities in stock valuation Alleged that Morgan Stanley fraudulently failed to identify irregularities in stock valuation Morgan Stanley missed deadlines to produce electronic documents Morgan Stanley missed deadlines to produce electronic documents Effort to find, recover, analyze and produce files from THOUSANDS of disaster recovery backup tapes stored throughout the country Effort to find, recover, analyze and produce files from THOUSANDS of disaster recovery backup tapes stored throughout the country Wrongly certified production complete Wrongly certified production complete Perceived lack of good faith led to severe sanctions Perceived lack of good faith led to severe sanctions

7. CHANGES TO THE FEDERAL RULES OF CIVIL PROCEDURE The Supreme Court amended Fed. R. Civ. P. 16, 26, 33, 34, 37 and 45 effective December 1, 2006 The Supreme Court amended Fed. R. Civ. P. 16, 26, 33, 34, 37 and 45 effective December 1, 2006 Changes can be addressed through eight topics Changes can be addressed through eight topics

8. 1. Redefined Scope of Information Subject to Discovery Amended Rule 34(a) includes “electronically stored information” within scope of discovery Amended Rule 34(a) includes “electronically stored information” within scope of discovery Production requests may include “writings, drawings, graphs, charts, photographs, sound recordings, images, and other data or data compilations stored in any medium from which information can be obtained, translated, if necessary, by the respondent into reasonably usable form.” Production requests may include “writings, drawings, graphs, charts, photographs, sound recordings, images, and other data or data compilations stored in any medium from which information can be obtained, translated, if necessary, by the respondent into reasonably usable form.” The foregoing description also includes “metadata” containing information about documents, emails, instant messages and anything else that is recorded and stored electronically. The foregoing description also includes “metadata” containing information about documents, emails, instant messages and anything else that is recorded and stored electronically.

9. 2. Early Discussion Among Counsel The need to preserve electronically stored information that may become subject to discovery The need to preserve electronically stored information that may become subject to discovery Form in which to produce that information Form in which to produce that information How to protect privileged information stored electronically How to protect privileged information stored electronically

10. TIMING LOGISTICS Rule 16 – Court schedules pretrial and scheduling management conference within 120 of service of complaint Rule 16 – Court schedules pretrial and scheduling management conference within 120 of service of complaint Rule 26(f) – at least 21 days before conference, counsel must confer Rule 26(f) – at least 21 days before conference, counsel must confer –Address preservation of discoverable materials (a “litigation hold”) –Discovery schedule and plan –Submit a written discovery plan to the Court 14 days before the Rule 16 conference

11. TIMING LOGISTICS Within 14 days of Rule 26(f) conference - initial disclosure of information pursuant to Rule 26(a) without the need for discovery requests Within 14 days of Rule 26(f) conference - initial disclosure of information pursuant to Rule 26(a) without the need for discovery requests Rule 16(b) modified – Court order issued after initial pretrial conference may address the discovery of information & agreements by parties to protect privileged materials inadvertently disclosed Rule 16(b) modified – Court order issued after initial pretrial conference may address the discovery of information & agreements by parties to protect privileged materials inadvertently disclosed Default standard for discovery of electronically stored information issued by U.S. District Court for the Northern District of Ohio Default standard for discovery of electronically stored information issued by U.S. District Court for the Northern District of Ohio

12. 3. Two-Tiered System Based on “Accessibility” of Data Amended Rule 26(b)(2)(B) provides special rule for electronically stored information in data source that is “not reasonably accessible because of undue burden or cost” Amended Rule 26(b)(2)(B) provides special rule for electronically stored information in data source that is “not reasonably accessible because of undue burden or cost” –Discovery may occur only for “good cause” –Court has discretion to impose cost-shifting or other conditions Accessible electronically stored information subject to normal rules of production Accessible electronically stored information subject to normal rules of production

13. Zubulake v. UBS Warburg LLC, 217 F.R.D. 309 (S.D.N.Y. 2003) Defendant company produced 100 printed pages of emails Defendant company produced 100 printed pages of emails Plaintiff presented evidence of additional emails on backup tapes Plaintiff presented evidence of additional emails on backup tapes Defendant objected arguing excessive cost Defendant objected arguing excessive cost Court ruled that data maintained in format not reasonably accessible - apply 7 part test Court ruled that data maintained in format not reasonably accessible - apply 7 part test

14. Not Reasonably Accessible – 7-part test Request tailored to discover relevant data Request tailored to discover relevant data Availability of such data from other sources Availability of such data from other sources Total cost of production relative to amount in controversy Total cost of production relative to amount in controversy Cost of production relative to resources available to each party Cost of production relative to resources available to each party Relative availability & incentive for each party to control its own costs Relative availability & incentive for each party to control its own costs Importance of issues at stake Importance of issues at stake Relative benefits to the parties in obtaining data Relative benefits to the parties in obtaining data

15. Amended Rule 26(b)(2)(B) Provides that if electronically stored information “is not reasonably available because of undue burden or cost,” discovery is available only for “good cause” and based on considerations identified at Rule 26(b)(2)(C) Provides that if electronically stored information “is not reasonably available because of undue burden or cost,” discovery is available only for “good cause” and based on considerations identified at Rule 26(b)(2)(C) –Discovery sought is unreasonably cumulative or duplicative – or is obtainable from more convenient source –Burden and expense outweighs likely benefit, taking into account the needs of the case, the amount in controversy, the parties’ resources, the importance of the issues at stake in the litigation, and the importance of the proposed discovery in resolving the issues.

16. The Committee Notes from the 2006 Amendments to the Federal Rules explain as follows the reason for this two-tiered approach The volume of – and the ability to search – much electronically stored information means that in many cases the responding party will be able to produce information from reasonably accessible sources that will fully satisfy the parties’ discovery needs. In many circumstances the requesting party should obtain and evaluate the information from such sources before insisting that the responding party search and produce information contained on sources that are not reasonably accessible.

17. 4. No New Duty Imposed to Preserve Data/Safe Harbor Rule Amended Federal Rules do not create any special duty to preserve electronically stored information Amended Federal Rules do not create any special duty to preserve electronically stored information What and how to preserve information left to individual parties to decide What and how to preserve information left to individual parties to decide –Subject to document retention laws or regulations applicable to particular industries or types of information –Also subject to common law duty to impose “litigation hold” in the event of litigation (or reasonably anticipated litigation) to avoid “spoliation” problem –Must decide which type of email deletion and archival policy system best serve its needs –The more information stored, the greater the volume of information to be searched and restored

18. New Rule 37(f) provides as follows: 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. 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.

19. 5. “Form” of Production Amended Rule 34 permits requesting party to specify form - producing party may object Amended Rule 34 permits requesting party to specify form - producing party may object Absent Agreement – Default to Rule 34 Absent Agreement – Default to Rule 34 –Electronically produced “in a form or forms in which is it ordinarily maintained, or in a form or forms that are reasonably usable.” –Need not produce the information in more than one form

20. 6. Answering Interrogatories with Electronically Stored Information Rule 33(d) applies Rule 33(d) applies –Available when cost to derive answer to interrogatory from records is substantially equal for both parties –Responding party may require requesting party to analyze records in lieu of providing written answer to interrogatory –Danger regarding electronic information – difficult to address issues of security, confidentiality and privilege

21. 7. PRIVILEGE SCREENING – Inadvertent Production of Privileged Documents Amended Rules 16(b) and 26(f) encourage parties to reach agreements for asserting claims of privilege or work product with respect to inadvertently produced discovery materials Amended Rules 16(b) and 26(f) encourage parties to reach agreements for asserting claims of privilege or work product with respect to inadvertently produced discovery materials Rule 26(b)(5) provides that inadvertent disclosure of materials later claimed privileged – receiving party must “return, sequester, or destroy the specified information” pending resolution of privilege claim Rule 26(b)(5) provides that inadvertent disclosure of materials later claimed privileged – receiving party must “return, sequester, or destroy the specified information” pending resolution of privilege claim Amended rules do not provide guidance on how courts should resolve claims of privilege Amended rules do not provide guidance on how courts should resolve claims of privilege

22. 8. Discovery of Electronically Stored Information from Non- Parties Rule 45 has been revised to specify that non-parties may be directed to produce electronically stored information Rule 45 has been revised to specify that non-parties may be directed to produce electronically stored information Rule 45(c) specifies that requesting party shall take reasonable steps to avoid imposing undue burden or expense on person subject to subpoena Rule 45(c) specifies that requesting party shall take reasonable steps to avoid imposing undue burden or expense on person subject to subpoena

23. Some Cases Applying the Amended Federal Rules Cenveo Corp. v. Slater, 2007 WL 442387 (E.D. Pa., Jan. 31, 2007) Cenveo Corp. v. Slater, 2007 WL 442387 (E.D. Pa., Jan. 31, 2007) –Plaintiff alleged former employees used its computerized confidential information and trade secrets to divert business to competitor. –Court approved discovery plan: (a) plaintiff’s data recovery expert will produce digital image of all defendants’ computers; (a) plaintiff’s data recovery expert will produce digital image of all defendants’ computers; (b) expert will provide both parties report describing computers inspected and steps taken to create digital image; (b) expert will provide both parties report describing computers inspected and steps taken to create digital image; (c) expert will recover all documents from digital image and provide them to defendants; (c) expert will recover all documents from digital image and provide them to defendants; (d) defendants review materials for privilege and responsiveness; (d) defendants review materials for privilege and responsiveness; (e) defendants will produce all non-privileged responsive documents and a privilege log (e) defendants will produce all non-privileged responsive documents and a privilege log

24. Scotts Co., Inc. v. Liberty Mutual Ins. Co., 2007 WL 1723509 (S.D. Ohio, June 12, 2007) Scotts Co., Inc. v. Liberty Mutual Ins. Co., 2007 WL 1723509 (S.D. Ohio, June 12, 2007) –Court denied same type of discovery plan approved in Cenveo on the basis that the plaintiff had not established the information being sought was within the usual scope of discovery or that the responding party had not already produced all responsive information: [W]ithout a qualifying reason, plaintiff is no more entitled to access to defendant’s electronic information storage systems than to defendant’s warehouses storing paper documents. * * * * This court is therefore loathe [sic] to sanction intrusive examination of an opponent’s computer as a matter of course, or on the mere suspicion that the opponent may be withholding discoverable information. Such conduct is always a possibility in any case, but the courts have not allowed the requesting party to intrude upon the premises of the responding party just to address the bare possibility of discovery misconduct. –Id. at 2.

25. In re Genetically Modified Rice Litigation, 2007 WL 1655757 (E.D. Mo., June 5, 2007) In re Genetically Modified Rice Litigation, 2007 WL 1655757 (E.D. Mo., June 5, 2007) –This is an agreed upon order identifying steps the parties shall take to preserve documents, electronically stored information and tangible objects (i.e., modified rice) that is the subject of litigation.

26. Disability Rights Council of Greater Washington v. Washington Metropolitan Transit Authority, 2007 WL 1585452 (D.D.C, June 1, 2007) Disability Rights Council of Greater Washington v. Washington Metropolitan Transit Authority, 2007 WL 1585452 (D.D.C, June 1, 2007) –Defendant failed to place a “litigation hold” on relevant employee emails – court ordered defendant to restore back up tapes even though they were not reasonably accessible: While the newly amended Federal Rules of Civil Procedure initially relieve a party from producing electronically stored information that is not reasonably accessible because of undue burden and cost, I am anything but certain that I should permit a party who has failed to preserve accessible information without cause to then complain about the inaccessibility of the only electronically stored information that remains. It reminds me too much of Leo Kosten’s definition of chutzpah: “that quality enshrined in a man, who, having killed his mother and his father, throws himself on the mercy of the court because he is an orphan.” Id. at 8.

27. Krause v. United States, 2007 WL 1597937 (Bkrtcy. D. Kan., June 4, 2007) Krause v. United States, 2007 WL 1597937 (Bkrtcy. D. Kan., June 4, 2007) –Court granted Trustee summary judgment against debtor due to debtor’s deliberate spoliation of electronically stored information: So was Krause obligated to preserve each and every e-mail or electronic document he generated or existed on his hard drive? Not necessarily. He was, however, “under a duty to preserve what [he] knows, or reasonably should know, is relevant in the action, is reasonably calculated to lead to the discovery of admissible evidence, is reasonably likely to be requested during discovery and/or is the subject to a pending discovery request.” Id. at 19, quoting Zubulake v. UBS Warburg, LLC, 220 F.R.D. 212, 217 (S.D.N.Y. 2003) (Zubulake IV).

28. Practical Tips for School Districts School District should confer with its legal counsel about amended Federal Rules and the District’s document retention practices and policy – School District should confer with its legal counsel about amended Federal Rules and the District’s document retention practices and policy –PROMPTLY!

29. Practical Tips for School Districts Special focus regarding “litigation hold” to preserve electronically stored information Special focus regarding “litigation hold” to preserve electronically stored information

30. Practical Tips for School Districts School Districts should contact their solicitor early in process when litigation appears to be reasonably likely – and engage IT personnel in the process School Districts should contact their solicitor early in process when litigation appears to be reasonably likely – and engage IT personnel in the process

31. Practical Tips for School Districts School Districts should adopt a policy that – taking into account operating needs and budget – identifies rules for (1) archiving of email backup tapes, and (2) document retention. School Districts should adopt a policy that – taking into account operating needs and budget – identifies rules for (1) archiving of email backup tapes, and (2) document retention.

32. Practical Tips for School Districts School Districts should identify the type and location of its electronically stored information School Districts should identify the type and location of its electronically stored information

33. Practical Tips for School Districts School Districts should train ALL employees on importance of complying with policies on acceptable computer and email use – do not say anything in an email you would not want to be cross- examined on School Districts should train ALL employees on importance of complying with policies on acceptable computer and email use – do not say anything in an email you would not want to be cross- examined on

34. Practical Tips for School Districts School Districts need to ensure their IT systems are capable of addressing the challenges of managing electronically stored information School Districts need to ensure their IT systems are capable of addressing the challenges of managing electronically stored information

35. NEW PSBA POLICY 800 On Records Management and Document Retention