(This article was published in Advocate, the Journal of the Consumer Attorneys Associations for Southern California, Volume 37, No. 12 (December 2010) Copyright © 2010 Consumer Attorneys Association of Los Angeles.
All rights reserved. Reprinted with permission.)
In the fall of 2008, I tried a case before the Hon. Ann I. Jones. When I saw her at a recent conference, she didn’t remember me, which I expected, and I took no offense because she at least remembered the case.
But it’s what she said about e-discovery that I remember. I asked Her Honor if, because of budget cuts, she was seeing more criminal cases in her courtroom. She told me no, because she was currently sitting in Complex Civil. I had been there. Then you must be seeing a lot more Law & Motion regarding e-discovery disputes, I surmised. “No, not really,” she said. That shocked me. I asked why. She said she didn’t know, but that she suspected that the lawyers were agreeing not to engage in it, probably because of the expense.
This exchange led me to write this article. How could anyone, especially plaintiffs’ counsel, agree to not engage in e-discovery? We live in a world of electronically stored information (ESI). We are swimming in it. You use it every day, when you write documents and send e-mails. It is our present; and it is our future, too, isn’t it?
There are two primary characteristics of ESI: its volume, which is already immense, and the rate at which it is growing, which is exponential.
This much is obvious by now. Businesses generate mountains of data every day and it is clearly the case that their use of ESI is growing each year, and growing fast. But ESI is not paper. In fact, ESI is very different:
- It comes in many forms, e.g., e-mails, voice-mail messages that appear as e-mails, and spreadsheets, to name only a few.
- It is known by many file names, some of them well known, e.g., .doc, .wpd, .pdf., .jpg and .tif, and some of them not so well known, such as .docx, .pst., .nsf, .pif., and .gif.
- It is stored in a wide variety of devices, such as hard drives in desktops and laptops (both in the office and at home), flash drives (including the backup flash drive you probably have), the digital memories in machines that photocopy and scan hard copy documents, and cell phones; it’s in “the cloud,” and so on.
So it is not hard to believe what the academics have been telling us: ESI is somewhere between 95% and 99% of all the information that we generate.
Is ESI a problem? No. It’s not a problem. It is a blessing. This particular innovation is doing for the world, and for litigation in particular, what Gutenberg did for the spread of knowledge with his invention of the printing press. The fact that ESI is now so much of all the information we create is a testament to the proposition that Electronically Stored Information – ESI – has been broadly accepted.
There are at least three reasons for this: (1) Personal computers have become almost ubiquitous: There are over a billion of them in the world today. (2) The price per unit of memory has “declined by an average of 32 percent per year.” (Source: Congressional Budget Office, “The Rule of Computer Technology in the Growth of Productivity,” Ch. III, Prices of Computers and Components (May 2002).) (3) The speed of processing data has gone way up.
What’s the bottom line? By storing information electronically, information is more accessible now than ever before.
You should like the fact that ESI is accessible, because that’s where you’ll find the facts that supports your cases, and because there have been both legal and technological advances permitting you to review the information in the defendants’ possession, custody or control. If data is stored electronically, you can use computer-based tools to access and search that data electronically. Count your blessings: Having to learn about and use ESI is a darn sight better than being told, “Of course, you can review those documents you requested; you can find them in, oh, I think it was something like 10,000 boxes. We put them in a number of conveniently located warehouses for you. Ready for those addresses?”
But the plaintiff’s bar appears to be ignoring ESI. In a recent article (Deutchman, L., “E-Discovery Sanctions: Not for Defendants Only,” Law Technology News (September 16, 2010)), the author wrote: “the plaintiff[] bar knows far, far less about e-discovery than does the defense bar.” Why? There are many reasons:
- The defense bar has taken notice and educated itself about ESI, and they have been assisted by software vendors who saw that corporate America and its outside counsel could pay their bills. Why has the defense bar taken the initiative? In 2005, a jury awarded a single plaintiff in a sex discrimination case $9 million in compensatory damages and $20 million for punitive damages because the defendant spoliated potentially relevant evidence and the court decided to give the jury an “adverse inference instruction.” (Zubulake v. UBS Warburg LLC, 2004 U.S. Dist. LEXIS 13574, 2004 WL 1620866 (S.D.N.Y. July 20, 2004)). And in that same year, a jury awarded $600 million in compensatory damages and $850 million in punitive damages in a securities fraud case, largely because the defendants failed to properly handle e-discovery and also went to trial facing an adverse inference instruction. (See Coleman (Parent) Holdings, Inc. v. Morgan Stanley & Co., Inc., 2005 WL 679071 (Fla.Cir.Ct. Mar. 1, 2005) (subsequently reversed on other grounds).)
- Plaintiff attorneys generally believe they have little digital evidence to produce, and that the process is expensive. As a result, they have failed to learn how to identify, collect, preserve, and produce digital evidence; but more than that, they have failed to learn how to ask for it or how to analyze the data when it comes in.
Is it too expensive? Is ESI overwhelming? Should you agree with defense counsel that neither side will request ESI from the other?
No. “Electronic evidence is frequently cheaper and easier to produce than paper evidence because it can be searched automatically, key words can be run for privilege checks, and the production can be made in electronic form obviating the need for mass photocopying.” Zubulake v. UBS Warburg, 217 F.R.D. 309 (S.D.N.Y. May 13, 2003). It is a mistake to turn data into the near-paper equivalents of image files like TIFFs and PDFs. Without further manipulation, such files are not searchable and, to make matters worse, the costs are more than three times greater than with native files. (See Diane E. Barry, Esq., Madison Spach, Jr., Esq., and Hon. James L. Smith (J., Ret., JAMS ADR), Keeping Up with E-Discovery, National Business Institute, at 4 (September 2010).
To reiterate: ESI is a blessing. Instead of being overwhelmed by tens of thousands of pages (in thousands of boxes of documents), computer-based technologies make it possible to search through much, much more than that. And quickly too. Not long ago, our favorite search engine ingested 60,000 documents, consisting of 351,000 pages (which is approximately five gigabytes), in about 45 minutes. After it “clustered” the documents automatically (with “concept search,” clustering may precede key word search), we were searching and finding relevant documents in about an hour.
The cost? Well, twice as much, say ten gigabytes (about 750,000 pages) of basic Microsoft Office type ESI would cost between $6,000 and $10,000. Remember, the costs a plaintiff faces after receiving a defendant’s production are much lower, because the processing and filtering have already been done, and a plaintiff need only pay for concept searching, hosting, and review. Dealing with 100 gigabytes would scale up linearly, because the charges are per gigabyte, to about $60,000; but how many cases involve seven and a half million pages?
In fact, now you can see that ESI is a real time-saver. You could get your arms around 750,000 pages in a year if you reviewed about 2,000 pages every single day without stopping. But what is the value of that time?
This is why plaintiffs’ counsel need not feel overwhelmed when they are on the receiving end of an electronic document production. ESI is a Treasure Chest. The keys to open it do exist, and they have come way down in price.
So, by learning about the tools and how to use them; with some good old-fashioned persistence; and with a healthy dose of curiosity, you can use ESI to win your case. When defense counsel makes or agrees with a suggestion that both sides not request ESI from each other, you are right to be nervous. ESI can be expensive, depending on the volume and type, but you must know that any such offer from the defense is self-serving. If you agree to limit yourself to documents kept as paper, you are acting like the drunk who is looking for his car keys only by searching under the streetlight. If your vision is limited to less than 5% of the available information, the defense will happily lead you to miss the other 95%.
ESI offers too much to ignore. Indeed, there are many reasons to focus on it.
Let’s skip the problem of learning how to ask for e-discovery. (Hint: Always ask for native files with metadata intact.) Let’s start with the idea of finding the evidence that supports your client’s case when the data arrives. That’s a key part of your job, to play “Sherlock Holmes.” Can you do this, even though you may be presented with ten gigabytes of data? Yes, you can.
In fact, you can find that “smoking gun” e-mail, an e-mail which turns a defense contention into a lie. A jury will devour such evidence because it was made so contemporaneously with the conduct in question that it takes on the mantle of being the concrete truth. For a plaintiff, such an e-mail has the potential of destroying the credibility of a key defense witness. Any piece of evidence that can do that is indeed a powerful weapon. You want this.
In fact, the entire process can be a friend to a plaintiff’s counsel who understands this new world and is persistent. Take, for example, the case of Doppes v. Bentley Motors, Inc. (2009) 174 Cal.App.4th 967. In this “lemon law” case about a Bentley with an oil-wax stink, the appellate court held that the trial court abused its discretion when it denied plaintiff’s request for terminating sanctions against Bentley. Imagine that — an appellate court ordering the imposition of terminating sanctions. It happened, and the Supreme Court denied review.
The lesson is in why it happened. In Doppes, defendant Bentley violated four discovery orders or discovery referee determinations prior to trial, such that the trial court was persuaded to give an adverse inference instruction. But then, during trial, plaintiff’s counsel discovered impeaching e-mails and the deletion of potentially relevant e-mails, so that Bentley’s discovery violations was found to have been worse than had been previously known. Still, the trial court would not grant terminating sanctions and instead gave another adverse inference instruction. On appeal (after jury verdicts in favor of plaintiff), the appellate court affirmed the verdicts on two causes of action, and then ordered terminating sanctions and a default judgment on a cause of action which the jury had rejected — for fraud. Not only that, the appellate court ordered an increase in the amount of attorney fees the trial court had awarded to plaintiff for having to make the successful discovery motions (from $344,600 to $402,187), with the potential for more on remand.
But take heed: Sanctions can be visited upon plaintiffs, too, and that is why it is critical for you to know when your identification, collection, and preservation duties arise, so that you are not caught spoliating potentially relevant evidence.
As you may know, there may be no statutory obligation for parties to preserve evidence, but the law is clear: parties must preserve all potentially relevant evidence when the facts and circumstances make it reasonable to expect that a dispute will ensue. (See Cedars-Sinai Medical Center v. Superior Court (1998) 18 Cal.4th 1.) And while there is no separate tort for destroying (spoliating) evidence in California, our discovery statutes authorize a range of penalties for “misuse of the discovery process.” (Id. at 12.)
So, don’t be surprised to learn that your preservation obligation attaches to you before a complaint is filed. It attaches to you because you are an attorney and you know when your client has authorized you to write and file a complaint. Once a client engages plaintiffs’ with the intention of moving forward with pre-litigation negotiations or simply filing the complaint, the preservation obligation attaches. Yes, a plaintiff has an obligation to preserve ESI, and your duty is to explain this obligation to your client; to find out about your client’s IT environment and any document destruction policies and practices; to put a “hold” or “suspension” on these policies and/or practices as to the relevant custodians, subject matter, and time frames; and to do so in writing, and then to monitor and update the “hold” as the case develops.
Do you want defense counsel to ask you for ESI when you did not take reasonable steps to preserve it? Do you want to be subject to sanctions for spoliation? No. But when you follow through on your obligations, you will want to hold the other side accountable. Defense counsel has the same obligations and they can also attach before they receive the complaint. The general rule is this: the preservation duty attaches when litigation can be reasonably anticipated.
So plaintiff’s counsel should never ignore ESI: it’s where to find most of the potentially relevant evidence, whether the case is large or small. Here are three examples: First, suppose you have a car crash. The injuries might be large or small. Either way, don’t you want to know which one of the drivers was “texting” just before the crash? Or suppose you have train wreck, like the tragic and fatal crash when the Metrolink and Amtrak trains collided in Chatsworth. The fact that the engineer was texting just before the crash was critical evidence, wasn’t it? Or suppose you are plaintiff’s counsel in a “slip and fall.” The ESI is in the surveillance tapes, the e-mail messages the plaintiff or any witnesses sent to friends or family, the medical ESI, and the photos or statements posted on social networking websites.
It is for this reason that ESI cannot be ignored. How can you practice competently (and comply with Rule 3-110 of the Rules of Professional Conduct) if you ignore ESI, where such a high percentage of potentially relevant evidence may reside?
Are we consigned to be swamped by this tsunami of ESI? No. Our technologies may have succeeded in making ESI ubiquitous, but it is also true that our technologies make it possible for us to search it. We can find those needles in this enormous electronic haystack. We adjusted when published opinions were turned into electronic databases, and we can adjust to ESI, too.
But we must learn to use new tools. In the mid-1970s we learned to search a case law database with key words, and we are used to doing this. But a dataset consisting of e-mails and spreadsheets is quite different; it is unstructured and contains “metadata.” New tools are needed – and they exist.
But, as I said, ESI is different. Let me dwell on this point for a moment, because we are fooling ourselves into thinking that key words will do the trick. Not so. Let me test you. Here’s the proposition: Key words using Boolean connectors will find only about 25% of the relevant documents. True or false?
True! One of the founders of the “information retrieval” field, M. E. Maron (now professor emeritus, UC Berkeley) reported as long ago as 1985 that attorneys were over-estimating the efficacy of their searches. The attorneys thought they were identifying 75% of the relevant documents, but they were wrong: they were finding only about 20%. More recently, studies show that key word searches are, even today, only a little more successful. Tomlinson and others reported in 2008 that Boolean searches identified only 22% of the relevant documents, while Oard and others reported in 2009 that Boolean searches pinned only 24% of the relevant documents. (These reports come from the Legal Track of the Text Retrieval Conference (TREC), which is administered by the U.S. National Institute of Standards and Technology.)
Is there an answer? Yes. First, recognize that ESI is data. Agree with defense counsel on the ways they want to receive your data (if they want print-outs, say yes, realizing that as such, paper is not searchable electronically), but seek ESI from the other side in its native form, with metadata intact. When you receive it (and you will likely receive gigabytes of it), treat it as data. “Hash” the data (which means to give each “page” a unique number), and process out the exact duplicates (“de-duplication”) and system files. Then use software tools that go beyond key words and the Boolean search techniques, e.g., “concept search.” Then ask the concept search engine for “more like these,” and iterate the process. Next, promote the “clustered,” potentially relevant documents to a database, and then use key words and Boolean connectors. Cull the data for eyes-on review down to the point where it is manageable. This is the way to reduce the cost of e-discovery, always remembering that the goal is to find admissible evidence that you can use in deposition, mediation, or trial.
But to persuade you that choosing to grapple with ESI is worthwhile, let me approach the issue from four different perspectives. In the first scenario, a plaintiff fails to preserve ESI and suffers the consequences. In the second scenario, a plaintiff mishandles requests for ESI and the defendants happily under-produce the documents that the plaintiffs were seeking. In the third scenario, I present three instances where the plaintiffs discover that the defendants have failed to preserve potentially relevant documents, and they make the most of it. In the final scenario, I describe how plaintiffs used “concept search” to find the “smoking guns.”
Scenario 1. A Plaintiff fails to preserve evidence. In Medcorp, Inc. v. Pinpoint Technologies, Inc., 2010 WL 2500301 (D.Colo. June 15, 2010), the plaintiff intentionally destroyed 43 hard drives which contained information relevant to the dispute by failing to “stop the presses” on their ordinary recycling schedule, but not with a motive to destroy evidence because at least some of the information that was lost was re-produced. Although finding that a terminating sanction would be too severe, the district court was tough nevertheless, and decided to award reasonable attorney fees and costs in connection with the motions to compel and/or for sanctions ($89,365.88), and to issue an “adverse inference” instruction, to the effect that the jury could infer from the evidence that the lost evidence was favorable to the defendant. Ouch.
Scenario 2. Defense counsel snookers a plaintiff. In a different case, the plaintiff requested documents from the hard drives of 26 employees. The defendants used de-duplication to narrow the documents to be produced down from 423,835 to 129,000, and then used search terms to narrow the actual production down to 4,000 documents. The plaintiff objected, and wanted more, but the magistrate dismissed the plaintiff’s objections, stating “To the extent Plaintiff contests the adequacy of the search terms, it has not set forth an alternative search methodology; moreover, no specific challenge to the search terms has been brought and briefed before the Court.” (In re CV Therapeutics, Inc. Sec. Litig., 2006 WL 2458720 (N.D.Cal. Aug. 22, 2006).)
Scenario 3. Plaintiffs uncover a defendant’s spoliation. Laura Zubulake (pronounced “Zoo-boo-lake”) was a highly compensated executive who worked for UBS Warburg. In April of 2001, UBS Warburg knew that Zubulake was contemplating a sex discrimination lawsuit. She served an EEOC complaint in August. She filed her lawsuit in February of 2002. UBS Warburg failed to begin preserving documents until August of 2001, after receiving the EEOC complaint, but then botched the process after that, initially giving only oral instructions to key employees telling them not to delete or destroy materials that might be potentially relevant, and failing to mention that the preservation efforts applied to ESI as well as to paper documents. Then, when a follow-up memorandum was issued, it failed to mention back-up tapes. To make a longer story shorter, Zubulake discovered that key employees had deleted relevant e-mails, and that e-mails on the back-up tapes were lost because the tapes were overwritten. The court not only imposed monetary sanctions but finally agreed to issue an adverse inference instruction, which indicated that the jury could infer that the lost evidence could have either been beneficial to Zubulake or harmful to UBS Warburg. (See Zubulake v. UBS Warburg, 229 F.R.D. 422, 424 (S.D.N.Y. 2004) (the fifth in a series of seminal pre-trial e-discovery decisions by the Hon. Shira Scheindlin). The result: in a single-plaintiff sex discrimination case, the jury awarded $9 million in compensatory damages and $20 million in punitive damages.
In the second case, Magana v. Hyundai Motor Am., 2009 WL 4070952 (Wash. Nov. 25, 2009), the plaintiffs won a terminating sanction. In response to discovery requests, Hyundai’s in-house counsel had searched for responsive documents, but only in its own legal department. In the end, the trial court found that (1) the parties had not agreed to limit discovery in this way; (2) the defendant falsely responded to plaintiff’s request for production of documents and interrogatories; (3) the plaintiff was substantially prejudiced in preparing for trial; and (4) the potentially relevant evidence was lost forever. The trial court considered lesser sanctions, but concluded that the only just remedy was the entry of a default judgment, for $8 million. The appellate court reversed, but the Washington Supreme Court reinstated the trial court’s ruling and, in addition, awarded attorney fees to the plaintiff pertaining to both the trial and appellate proceedings.
Is there a similar case in California? Yes. In OZ Optics Limited v. Hakimoglu (2009) 2009 Cal.App. LEXIS 2952, an executive ran a “scrubbing” program on a company laptop prior to handing it over, which a forensic examiner was able to detect. A $90,000 sanction was ordered. The trial court refused to give a terminating sanction but only because there was no evidence that a claim or defense had been lost.
Scenario 4. Plaintiffs find the smoking e-mails. In a stock option back-dating case, a concept search pointed to documents whose common denominator (pattern) was the phrase “Let it roll.” Now, technology plus a little curiosity is a powerful combination. Why would key words associated with “back-dating” surface a cluster of documents related to “Let it roll”? Remembering that concept search is designed to seek out hidden meanings, the consultants involved in the case called the “Let it roll” group to the attention of the litigators. Sure enough, when these documents were reviewed, this phrase turned out to be the “go” signal the executives were using to authorize the back-dating. Unless a power key word searcher made a lucky guess, the “Let it roll” documents – the key needles in a very large haystack – would have gone undetected. As you might expect, the case (which is confidential) settled.
Most of these e-discovery decisions have been made in federal court cases over the past five to seven years, but the plaintiffs’ bar must not ignore them, despite their strong preference to litigate in state court. After all, California’s e-discovery statutory changes, effective on June 29, 2009, were modeled on the changes to the Federal Rules of Civil Procedure, which became effective on December 1, 2006. The federal cases will be influential.
But in California, e-discovery issues will arise more quickly than in federal court. You have to start thinking about e-discovery when you are writing the complaint because Plaintiffs’ counsel must be prepared to discuss “any” issues relating to the discovery of ESI, pursuant to Rule 3.724(8) and (9) of the California Rules of Court (effective August 14, 2009) at least 30 days before the Case Management Conference. This deadline means that you must first address the issues with your client within the first 30 to 60 days after the complaint is filed, if not sooner. And if you (or the other side) come to the “meet and confer” process or CMC unprepared, and so fail to participate in good faith, then you (or the other side) is engaging in a discovery abuse. (Code of Civil Procedure section 2023.010(i); see Liberty Mutual Fire Ins. v. LCL Administrators, 163 Cal.App.4th 1093, 1104 (2008) (repeatedly ignoring “meet and confer” letters is a separate ground for discovery sanctions).)
The lesson is to come prepared with a list of custodians (yours and theirs); the search terms you wish to propose; the time frames you care about; and the format(s) you want the data in when it is produced.
What’s the bottom line? ESI is here. Compliance with the rules pertaining to ESI is mandatory. Show the defendants you know what ESI is about. And make it work to your advantage.
# # #
- After graduating with a B.S. in engineering systems from the University of California at Los Angeles (U.C.L.A.), Nick Brestoff earned an M.S. in environmental engineering science from the California Institute of Technology (Caltech) and graduated from the Gould School of Law at the University of Southern California (U.S.C.). During his litigation career, Mr. Brestoff litigated business tort, employment, environmental, and other civil disputes in state and federal court, winning 8 figures in one federal court case and succeeding in his only trip to the California Supreme Court. He is currently the Western Regional Director, Discovery Strategy & Management, of International Litigation Services (www.ilsTeam.com). Mr. Brestoff’s email address is nbrestoff@ilsTeam.com.
