ANN ARBOR – Litigation, at least in the United States, is a fact of life for all corporations. So it?s important to know that electronic data held at companies must be preserved for litigation, a company has clear instructions on how to proceed with its electronic data to comply with discovery, lawyers continually monitor efforts to retain and produce electronic data, and a company understands how a litigation hold impacts the retention of electronic data.
Maintain electronic data requires a new mindset regarding the implications of virtually every piece of litigation. You now have to link the universe of company data to the subject matter of the litigation. Media like CDs, and floppies, pose special problems in tracking down since they are so portable.
Then there is the expense of litigation production to consider. The cost of producing responsive data in litigation usually falls on the responding party. In Zubulake IV, the court clarified that this traditional paradigm is fine, if the data is ?accessible?. If the data is not accessible, then the costs of production could arguably be shifted to the requesting party. Inaccessibility could apply to back up tapes (but not optical disk systems ? where retrieval is more efficient than most backup systems) and deleted files or damaged files.
Zubulake V (Zubulake v UBS Warburg, No 02 CIV 1243, July 20, 2004) is the fifth opinion from Hon. Scheindlin, and it is establishing standards for lawyers and corporations. Here the Court is now looking for lawyers to actively ensure that electronic data is preserved for litigation, that a company has clear instructions on how to proceed with its electronic data in order to comply with its duties in discovery, that lawyers continually monitor efforts to retain and produce electronic data, and that a company understands how a ?litigation hold? impacts the retention of electronic data.
There are consequences for ?failures to communicate? can be expensive as the lawyers for Philip Morris discovered this summer. A preservation order for six (6) days of email was issued in October 1999. In February of 2002 the lawyers for Philip Morris learned that the autodelete function of the email program was set to 60 days and left on for 2 years after the order. Hon. Kessler was not very understanding.
He ruled that ?that the corporate and legal community understand that such conduct will not be tolerated, and that the amount of the monetary sanction fully reflect the reckless disregard and gross indifference displayed? toward their discovery and document preservation obligations.? A $2.75 million sanction was due to the Court Registry, and, any fact witness or expert who failed to comply with the internal record retention policy was precluded from testifying at trial. The clear message from Hon. Kessler ? attorneys cannot hide behind their lack of understanding of technology. You can?t monitor discovery if you don?t know how to ask the right questions of the right people in an organization. $2.75 million is an expensive lesson.
There is a new energy emerging from the Federal Courts on electronic data. You need to get familiar with how data is maintained ? on the servers, and by employees. Understand the detail of the backups performed. Understand what data is captured. Understand the functionality of your corporate applications. And, most importantly, your legal team must be understanding these conversations!
Carol Romej is co Carol Romej is co-chair of Butzel Long?s Technology and E-Commerce Practice Group. You can reach her at (248) 593.2098 or email her at [email protected]
