The Modern Archivist

Obama’s Records Initiative: The Challenges Ahead

By Linda G. Sharp, ESQ., MBA

A new era is dawning for records management within federal agencies. In November of last year, the Obama Administration announced the “Managing Government Records” Memorandum, which calls for complete digitization of all government records by 2019 and specified records management plans from each federal agency by December 2013. Designed to reduce costs and modernize government infrastructure, the initiative will have a great impact on government operations once complete. However, like many private companies looking to implement a records management strategy, there is a long road ahead. With 2013 just around the corner, federal agencies have some important points to keep in mind.

A united front. All stakeholders need to be involved. Although one senior official is to be in charge of the initiative for each agency, the needs of records, legal, and compliance need to be addressed. Just as with private companies, everyone needs to be at one table.

A transition period. The next few years are going to be a time of transition as agencies implement new information management software and migrate their data. However, that doesn’t mean existing obligations, such as legal holds, can be ignored. As we have seen in plenty of cases through 2012, such at the recent ruling in U.S. ex rel. Baker v. Cmty. Health Sys., Inc., 2012 WL 5387069 (D.N.M. Oct. 3, 2012) , the courts will not accept a change in data management policies as an excuse for spoliation. Preservation holds are intended to be an ongoing process. Agencies, therefore, need to consider what disparate data repositories they possess and ensure all data is secured every step of the way.

Think efficiency. One of the most ubiquitous complaints people hear is that the government is “inefficient” and difficult to navigate. While these complaints are unlikely to disappear as a result of Obama’s memorandum, the records’ initiative does present an opportunity for federal agencies to streamline their processes. By taking steps such as consolidating all data into one repository or reducing the amount of data movement required for eDiscovery, officials will not only cut costs but also improve the overall operations of their agencies. With this objective in mind, agencies will not only fulfill their obligations but make Obama’s records initiative a success.

Sanctions and Federal Rule 37(e): It’s All about Defensibility

By Linda G. Sharp, ESQ., MBA

At the end of the day, what most concerns litigators, in house counsel and eDiscovery professionals alike, is risk. Risk of litigation, risk of spoliation, and, most importantly, risk of sanctions. I can’t think of any member of the bar that wants to wear the “Scarlet Letter” on their back. However, what many fail to realize is that sanctions can be avoided in many cases by implementing and deploying viable information management policies and practices. By having your house in order, not only are you reducing the potential risk of spoliation claims, by knowing exactly what you have and where it is, you can more appropriately invoke a legal hold when necessary, thus, reducing the need to argue about whether the safe harbor provision should apply at all. p>

Federal Rule 37(e), the so called “safe harbor” provision, states that, “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.” This clause, in theory, provides companies with protection from sanctions in certain situations, and it has been successfully applied in some recent cases. For example, in Viramontes vs. U.S. Bancorp et al (N.D. Ill. Jan. 27, 2011), Judge Coleman ruled that the deletion of e-mail after 90 days, pursuant to the corporation’s archiving policy yet, prior to anticipation of litigation, did not constitute spoliation. Therefore, sanctions were not warranted.

While this provision may sound like a get out of jail free card, there are some important caveats:

1. 1. You need to have a defensible information management strategy in place in order to defend yourself from charges of spoliation! Work with all of the key players in your organization to craft retention policies that fulfill the various stakeholder’s needs. To accomplish this task, you will need a robust solution that can manage the ever growing volumes of data. Be sure to consider not only the data types that you are using today, but those that you anticipate seeing in the next few years. These solutions can be expensive and timely to implement. Make sure that you aren’t looking at yesterday’s technology to resolve a today and tomorrow problem.
2. 2. The safe harbor ends once litigation is reasonably anticipated. Make sure the solution you select can easily apply defensible legal holds, and ensure policies are in place to promptly notify custodians about preservation requirements. But more importantly, actually be able to apply a hold on the data.

By implementing defensible policies and practices, you can not only reduce operational risk, but curtail the costs associated with litigation, more pointedly, discovery. I repeatedly hear that there is no budget to implement these processes. Well, it is all about realigning how you are spending your resources. The reality is, you can work harder or work efficiently.

Mandatory Predictive Coding? What EORHB, Inc. v. HOA Holdings, LLC Could Mean for eDiscovery

By Linda G. Sharp, ESQ., MBA

Predictive coding is on fire. Touted by many as the latest and greatest technology, legal teams are increasingly utilizing it, and members of the bench are more frequently voicing their opinions on its merits. However, even if predictive coding leads to a quicker, more accurate review process, can the court actually compel counsel to use it? Vice Chancellor Laster’s recent order in EORHB, Inc. v. HOA Holdings, LLC, No. 7409-VCL (Del. Ch. Oct. 15, 2012) raises exactly that question and could have far-reaching implications for eDiscovery.

EOHRB, Inc. v. HOA Holdings, LLC is a commercial indemnity dispute revolving around the sale of the Hooters restaurant chain. On October 15, the court convened to hear arguments for a partial summary judgment and motion to dismiss. Vice Chancellor Laster denied the motions but surprised both parties when he proceeded to order them to use predictive coding, instructing the plaintiffs and defendants to agree on one vendor with “wonderful discovery super powers.” If either party did not wish to use predictive coding, counsel would have to argue why it was inappropriate under the particular circumstances. It is worth noting that neither party had previously mentioned the issue of predictive coding nor had they discussed it amongst themselves throughout the progression of the case.

Vice Chancellor Laster’s shocking order raises many issues. Firstly, what does this mean for principle 6 of Sedona? Cited by Judge Nolan in Kleen Products earlier this year, principle 6 asserts that responding parties are best-suited to choose their own eDiscovery methods. If one or both of the parties wish not to use predictive coding, will principle 6 prevail? Also, if the parties in fact do carry out predictive coding, will it lead to similar orders in future cases? One thing is for sure, this will be a case to watch.

Carrillo v. Schneider Logistics, Inc.: How a Data Management Initiative Could Have Prevented Sanctions

By Linda G. Sharp, ESQ., MBA

It is hard to imagine that six years have passed since the Amendments to the Federal Rules of Civil Procedure were adopted., yet, we still can’t seem to get it right. While much has changed and standards continue to evolve, it is surprising that we still read how companies have failed to implement proper processes to manage their information. By implementing better controls over the data companies would reap defensible eDiscovery processes. . On a regular basis we are enlightened about this company or that which has yet again failed to properly handle some portion of the eDiscovery process. The problem seems to span companies large and small. . One recent wage and hour case, Carrillo v. Schneider Logistics, Inc., 2012 WL 4791614 (C.D. Cal. Oct. 5, 2012 illustrates this point and serves as a reminder of eDiscovery best practices.

The parties in Carrillo v. Schneider Logistics, Inc. have been sparring over the eDiscovery process for several months now. The defendants originally produced what they asserted were all responsive documents in April 2012. However, the plaintiffs alleged that the defendants’ search had been insufficient, and the court ordered the defendants to supplement their efforts. The defendants ultimately produced an additional 23,000 documents. In July, the plaintiffs deposed two Schneider employees who were supposed to have detailed knowledge of the defendants’ discovery procedures. Both employees were unable to answer many of the counsel’s questions and admitted documents had been deleted. The plaintiffs subsequently filed a motion on August 23rd, alleging substantial gaps in Schneider’s production. Judge Bristow ruled in favor of many of the plaintiffs’ objections in his October 5th opinion. Citing Schneider’s lack of good faith effort, he ordered the parties select a 3rd party vendor to carry out the defendants’ discovery procedure and applied sanctions.

This case serves as a good reminder of the best practices companies should be following for data management and eDiscovery will benefit:

1. 1. Implement viable processes for managing corporate data, such as an archive solution. If all of your corporation’s electronic content is stored in one, easily searchable location, finding and culling down large amounts of data becomes a much simpler, faster process.
2. 2. Ensure you have a defensible legal hold in place. Given the volume of data that is created on a daily basis in most companies today, this becomes a very daunting task, especially in light of the fact that much data resides outside of the organization. However, implementing data management initiatives will go a long way in ensuring that proper holds are implemented and released as appropriate. Bottom line, know where your data is.
3. 3. Document your data management initiative as well as your eDiscovery processes. Know who is the right person for the 30(b)(6) and have them prepared to answer all of the questions that are identified. By demonstrating to the court that your company had a defensible procedure in place, you may avoid sanctions in the event that something does go awry.

Most importantly, keep in mind that effective eDiscovery is just as much about what you do before litigation arises. Take control of your data, and both legal and your entire organization will reap the benefits.

Bringing eDiscovery in House: Wrangling Your Data, Not Just eDiscovery Costs

By Linda G. Sharp, ESQ., MBA

Reducing eDiscovery costs is a hot topic in today’s world of ever-multiplying digital content. According to the 2011 Chief Legal Office Survey, CLOs ranked wrangling-in legal costs as their number one concern. This desire has led many companies to bring portions of the eDiscovery process in house in order to eliminate the high fees paid to outside counsel and service providers during the review and analysis stages. Bringing a portion of the eDiscovery process in house will reduce costs, however, to make a significant impact requires, taking control over your data across the enterprise.

Companies are struggling with ways to manage these large volumes of information. Unfortunately, until companies embrace that they need to communicate with and actually work with the other stakeholders in the organization, we will not see any major cost savings by merely bringing in a point solution. It is time to sit down at the table with all of the stakeholders in the organization. Identify what data is actually needed and implement processes and solutions to eliminate the information that no longer has a useful business purpose. Then, evaluate solutions that allow for business units to leverage the same information without replication of the data. Imagine, a solution that could:

1. 1. single instance all of your data
2. 2. allow for each stakeholder to have access to the information that is important to them
3. 3. implement automated processes by which retention policies can be carried out
4. 4. provide the ability for legal to implement and track legal holds, conduct ECA and review all without ever processing, moving or copying information or incurring any processing, ECA or hosting charges
5. 5. return documents to their retention lifecycle at the conclusion of the case or as information is tagged “non-responsive”.

Where do we start? As we look for ways to “wrangle” our data, we need to understand that data management is not just a legal problem, it is an enterprise wide problem. The first, most vital step is getting the stakeholders to talk. The next step is implementing an effective data management solution that will allow for appropriately corralling the information and providing each stakeholder control of the reins.

Legal Hold and Chin v. Port Authority: A New Standard?

By Linda G. Sharp, ESQ., MBA

Does failure to issue a legal hold equal spoliation? Up until recently, this was one of the easiest questions to answer in the often complicated arena of eDiscovery. Following Judge Scheindlin’s decision in Pension Comm. of Univ. of Montreal Pension Plan v. Banc of Am. Secs., LLC, 685 F. Supp. 2d 456, 465 (S.D.N.Y. 2010), failure to place a legal hold was considered gross negligence per se and merited sanctions. There was no defense for such a failure regardless of the information’s relevancy (or lack thereof) to the matter at hand. However, given the 2nd Circuit’s July 10th ruling in Chin v. Port Authority of New York & New Jersey, 685 F.3d 135 (2d Cir. 2012) , there may now be some wiggle room for parties that find themselves having done less than a stellar preservation.

In Chin v. Port Authority, a group of Asian American police officers sued the Port Authority of New York and New Jersey for violation of Title VII, alleging racial discrimination in promotional decisions. During the original trial, in which the jury ruled in favor of seven of the plaintiffs, it came to light that the Port Authority had destroyed promotion folders from the late 1990s and 2000s. The court declined to impose sanctions, a matter that one of the plaintiffs raised during the Port Authority’s appeal before the 2nd Circuit. Going against the standard set by Pension Committee, the 2nd Circuit held up the lower court’s ruling. Judges McLaughlin, Cabarnes, and Livingston ruled that rather than failure to apply a legal hold being gross negligence per se but instead is also dependent upon the relevance of the information that was lost to the matter at hand. Since the promotion folders were not considered to be of great importance to the case, it was correct for the lower court not to prescribe sanctions.

This surprising judgment leaves many wondering: what does this mean for eDiscovery practice? Is it safe for companies to be a bit less conservative with their use of legal holds if they’re fairly certain the information is irrelevant? In short, Chin v. Port Authority provides yet another look into an already complex debate.

BYOD: Opening a Can of Worms for eDiscovery

By Linda G. Sharp, ESQ., MBA

I guess I’m really dating myself. In the college days, it was called BYOB (bring your own booze). The new acronym of the day is BYOD (bring your own device). In today’s technology-driven business environment, companies are increasingly allowing their employees to use their own devices, such as laptops, iPads, and smartphones, to perform business functions. Some have lauded these “bring your own device” policies as a revolutionary development, arguing that they actually increase productivity by allowing employees to tailor their work hours to their personal schedules and easily remain connected to the workplace 24/7. However, while BYOD may benefit employee satisfaction and performance, it also has enormous implications for eDiscovery that must be addressed.

For the courts, it doesn’t matter whether relevant data is on an organization’s easily accessible file share or dozens of iPads that IT must track down and image—it must be produced. By adding possibly hundreds or even thousands of devices that may contain business records, BYOD by nature increases the number of locations counsel must search for eDiscovery purposes. This leads to higher discovery costs and a more time consuming collection process. Preservation also becomes a problem as ensuring that employees are not deleting data off of their personal devices is extremely difficult to guarantee.

In addition to these logistical difficulties, BYOD also poses many legal and corporate policy questions. For example, what should organizations do to guard against data loss when employees leave the company? Can they ask to see employees’ personal devices to check for sensitive files they may be inadvertently taking with them? Also, with the flexibility mobile devices provide employees to access their data 24/7, how can employers verify how many hours people are working? This point becomes especially salient in the case of wage and hour litigation. Without some sort of supervision mechanism in place, organizations may unknowingly be violating labor laws.

Despite all of these potential hazards and uncertainties, it is unlikely that the corporate world will completely abandon BYOD practices. Companies, therefore, must take steps to mitigate the associated risks. For example, organizations should have explicit BYOD policies in place that stipulate what type of devices are allowed, security requirements, and protocols for obtaining data from departing employees. Software that can capture data from these devices must also be adopted in order to ease the eDiscovery process when litigation does arise. While BYOD is a less than ideal practice from a legal perspective, establishing the correct policies can help make an organization’s data management strategy more defensible and the eDiscovery process smoother.

Well, I think that I like the former, BYOB. It looks like as the world continues to evolve, we might need to have a few more of those BYOB parties to just deal with the BYOD problem.

Social Media and Smartphones: Spurring New Case Law and Market Growth

By Linda G. Sharp, ESQ., MBA

Not too long ago, Y2K was on everyone’s minds. This potentially catastrophic event encouraged many companies to move their technology forward. Now as we all know, not much occurred as the clock rolled over, however, many things did change in the business world as a result. One of the largest changes occurred in the manner in which we communicate within organizations. As a part of the “new technology” that was introduced to handle Y2K, came e-mail at everyone’s desktop which developed into an everyday necessity for business functions. Unsurprisingly, e-mail’s importance for communication within companies also meant that it often contained messages pertinent for litigation, a fact that the court recognized with the 2006 Electronic Discovery amendments to the Federal Rules for Civil Procedure (FRCP). In the past six years, however, new technological developments, such as smartphones and social media, have multiplied at a seemingly accelerating rate. This ever growing number of data sources has made the e-Discovery process increasingly difficult and has interesting implications for the question: what is discoverable?

With the widespread use of social media for both private and business purposes, lawyers have begun to demand with increasing frequency that opposing counsel produce data from these sources as part of the discovery process. Such requests often lead to conflicts over what is discoverable. For example, in the recent case Thompson v. Autoliv ASP, Inc., No. 2:09 Civ. 01375–PMP–VCF. (D. Nev. June 20, 2012) , the Defendants filed a motion for access to unredacted copies of the Plaintiff’s Facebook and Myspace accounts. The Defendants argued that these profiles were relevant as the Plaintiff was suing them because of injuries she sustained, and her social network profiles would provide information on her mental and emotional status and social activities. Judge Ferenbach ultimately ruled in the Defendants favor but attempted to ensure the Plaintiff’s privacy by only allowing defense counsel to examine the profiles, saved on electronic storage device, for seven days and forbidding that any copies be made.

Although some have heralded Judge Ferenbach’s decision as confirming that social media is in fact discoverable, it is worth noting that the circumstances of the case were rather unique, involving an injured consumer suing a manufacturer for negligence. There are many other scenarios where the discoverability of social media is still not clear and will likely be the subject of future court decisions. For example, can opposing counsel examine the social networking profile of an employee suing a corporation for sexual harassment? These questions become even more complicated when an employee uses social networking sites for both private and business purposes simultaneously. Does running a Facebook fan page for a company using his or her private account make that employee’s profile discoverable if litigation arises? It will be interesting to see how members of the bench rule in such cases in the future.

Regardless of how future case law develops, one thing is clear: the explosion of data from social media and other emerging sources makes eDiscovery more challenging and dictates that companies understand and remain vigilant as to the new technology that the industry brings. IBISWorld, a Santa Monica-based market research firm, recently reported that the rise of social media and mobile technologies has helped spur an average 9.4% annual growth rate of revenue in the eDiscovery consulting industry from 2007-2012 despite the economic recession. Revenue growth is expected to continue through 2017, albeit at a lower rate. The growth of new data sources will also provide opportunities for software developers as companies are going to need technology that can capture data from social media and external devices, such as smartphones and tablets. The endless march of technology will ensure that that the eDiscovery field will continue to evolve.

The Evolving Standards of FOIA in the Digital Age

By Linda G. Sharp, ESQ., MBA

When the Freedom of Information Act (FOIA) was first passed in 1966, no one could have foreseen the explosion of digital content that would inundate government agencies decades later. Back in those days of paper records, judging whether or not an agency had performed an “adequate” search based on the technology available at the time was rather simple. Employees or counsel manually read through all documents they suspected may be pertinent. However, with today’s mountains of digital content, the criteria for what fulfills the search obligations under FOIA are increasingly stringent and continually evolving. Judge Scheindlin’s recent opinion in
National Day Laborer Org. Network et al. v. U.S. Immigration and Customs Enforcement Agency 10 Civ. 3488 (S.D.N.Y. Feb. 7, 2011) illustrates how decisions under the Federal Rules of Civil Procedure (FRCP) regarding e-Discovery impact FOIA obligations and vice versa.

National Day Laborer Org. Network centered around a group of organizations that sought information from five federal agencies on Secure Communities, a government program in which local law enforcement agencies would run suspects’ fingerprints through an immigration database. The plaintiffs alleged that the defendants’ searches were inadequate due to the exclusion of custodians who were possibly involved in discussions of the program as well their overall search methods. In response, each defendant submitted an affidavit explaining their search processes. Based upon these reports, Judge Scheindlin ruled that several sub-agencies’ searches were in fact unsatisfactory and made several points that are applicable to both future FOIA cases and interpreting the FRCP in general.

Firstly, Judge Scheindlin declared that the defendants had to provide detailed explanations of their document identification and review processes in order to prove that they had fulfilled their obligations. For example, the FBI’s affidavit merely noted that they had performed a “manual review” of all pertinent documents. Without any supporting evidence explaining the review process, Judge Scheindlin ruled that the agency had not carried out its burden. Furthermore, noting which key words had been utilized without explaining how they were combined and their deployment methods did not allow the court to assess if a search was in fact adequate. Only a few of the defendants fulfilled this obligation. In order to avoid the pains of a complete repeat of the search process, Judge Sheindlin ordered that the plaintiffs and the defendants that had not carried out their burden, work together to decide search terms and a way to test them on a subset of the already collected data. Governmental agencies will need to keep these requirements in mind for future FOIA cases.

Judge Scheindlin also expressed dissatisfaction with Defendant’s use of self-collection methologies, a topic which has already been ruled against in several other cases, such as Pension Comm. of the Univ. of Montreal Pension Plan v. Banc of Am. Sec., LLC No. 05 Civ. 9016 (S.D.N.Y. Jan. 15, 2010) . As Judge Scheindlin explained, “most custodians cannot be ‘trusted’ to run effective searches because designing legally sufficient electronic searches in the discovery or FOIA contexts is not part of their daily responsibilities.” She further indicated that while attorneys need not be involved in 100% of the search process, they at least need the opportunity to review and spot check such endeavors. Without at least some oversight, adequacy of searches cannot be guaranteed. Some analysts have speculated that this ruling may in fact be the final death knoll for self-collection, bringing an end to the practice for FOIA cases.

Interestingly, National Day Laborer Org. Network may also have implications for the practice of predictive coding, a technology that has been increasingly on the radar with cases such as Kleen Products, LLC, et. al. v. Packaging Corporation of America. Judge Scheindlin noted that “parties can (and frequently should) rely on latent semantic indexing, statistical probability models, and machine learning tools to find responsive documents.” While this ruling does not make the use of predictive coding a requirement for FOIA discovery obligations, it will be interesting to see what the future brings.

Predictive Coding v. Boolean Search: Out with the Old, In with the New?

By Linda G. Sharp, ESQ., MBA

Recently, e-Discovery experts have focused a great deal of their attention upon the developing case of Kleen Products, LLC, et. al. v. Packaging Corporation of America, et. al. and its implications for predictive coding. Initially your run-of-the-mill anti-trust suit, Kleen Products transformed into a case about e-Discovery when the Plaintiffs challenged the quality and thoroughness of the Defendants’ discovery process. The Plaintiffs contend that Defendants’ use of a typical Boolean keyword search was insufficient and more cutting-edge methods, namely predictive coding, must be utilized in order to ensure that all pertinent data is produced.

Some experts posture that, if Judge Nolan rules in the Plaintiffs’ favor, this case could mean the death of the keyword search as we know it and even result in the mandatory use of predictive coding. However, based upon Judge Nolan’s statements in court transcripts, such a judgment seems unlikely. Judge Nolan emphasized that she is a “believer of principle 6” of that Sedona Best Practices Recommendations & Principles for Addressing Electronic Document Production, which states, “[r]esponding parties are best situated to evaluate the procedures, methodologies, and technologies appropriate for preserving and producing their own electronically stored information.” Furthermore, to Plaintiffs’ request for the Defendants to redo their discovery process with different technology, Judge Nolan repeatedly called for a compromise that would satisfy both parties and allow the Defendants to utilize the data that they had already produced.

Since Judge Nolan is set to retire at the end of September, and a compromise appears to be months away, the final outcome of this saga may unfold with yet another member of the bench. We shall have to wait and see how this drama plays out. Will Kleen Products be the next big newsworthy event to hit the world of eDiscovery? I think that many will be waiting with bated breath.