e-Discovery Team Training

Welcome to Module 2-P.

Sedona Provides Much Needed Guidance on Email Management, Legal Holds and ESI Preservation.

The Sedona Conference has done it again and group-written two more excellent guides: one on Legal Holds, and the other on Email Management. Both were just released for public comment and may be downloaded from the Sedona website for personal use. I use these guidelines all of the time. This is the class to dig deeper into these two key information management tasks. It also has very challenging homework assignments and questions at the end of the module.

The Sedona Conference Commentary on Legal Holds: The Trigger & The Process provides much-needed guidance on an issue very troublesome to most large organizations: when and how to preserve ESI for purposes of litigation. In their words:

The basic principle that an organization has a duty to preserve relevant information in anticipation of litigation is easy to articulate. However, the precise application of that duty can be elusive. Everyday, organizations apply the basic principle to real-world circumstances, confronting the issue of when the obligation is triggered and, once triggered, what is the scope of the obligation. This Article, intended to provide guidance on those issues, is divided into two parts: The “trigger” and the “legal hold.”

Once again, this is a group effort by a special committee of The Sedona Conference called the “Working Group on Electronic Document Retention and Production.” The Working Group includes many well-known experts on this tricky topic. Under the guidance of the group’s editors, Conor Crowley, Eric Schwarz and Gregory Wood, they agreed upon a set of eleven guidelines with detailed commentary on each.

These are common-sense-type principles that will, I predict, be acceptable to most companies, although still challenging for many to implement. It is also likely that these guidelines will often be referred to by courts when reviewing the reasonability of a party’s legal hold activities in litigation. If you can show that your organization made a good faith effort to follow these guidelines, then you will be in a strong position to argue that any loss of data that incurred anyway is not sanctionable.

The eleven guidelines include advice and language such as:

Guideline 1 – notice of a “credible threat” of litigation as the trigger of the duty to preserve;

Guideline 2 – the “adoption and consistent implementation” of a written policy as a key factor to show reasonableness and good faith;

Guideline 3 – the need for established procedures to report potential litigation threats;

Guideline 6 – the need to issue a written legal hold notice in most circumstances; and,

Guideline 10 – the need for legal holds, once issued, to thereafter be “regularly monitored.”

Guideline 7 provides important input on the scope of a hold, including the key “proportionality” criteria, namely the consideration of the amount in controversy and related factors.

Guideline 7: In determining the scope of information that should be preserved, the nature of the issues raised in the matter, experience in similar circumstances and the amount in controversy are factors that may be considered.

The proportionality factor in determining the proper scope of a hold is often overlooked, especially by some plaintiffs’ counsel who still routinely make outrageously overbroad preservation demands.

The comments to Guideline 7 also point out that accessibility is another important factor to consider in determining the proper scope of preservation. In fact, the wording of Guideline 7 in the commentary is slightly different from the wording quoted above that appears at the beginning of the document. They both begin the same, but the version in the comments sections ends with “accessibility of the information” as a factor that may be considered, instead of the first stated “amount in controversy” factor. I think this is just a mistake that will be cleaned up in the final draft.

The comments do, however, make clear that the issue of the costs and burden to try to preserve certain types of data, including, as the comments mention, “voicemail and instant messaging” should be considered. In my view, this means that in many circumstances, not-reasonably-accessible ESI does not need to be preserved. The Sedona comments to Guideline 7 do not, however, go quite that far. They instead make the point, which is not necessarily contrary because it is dependent on the facts, that just because a type of ESI is not-reasonably-accessible, does not mean that it is outside of the scope of a duty to preserve.

We all agree that it depends on the circumstances. In some circumstances, the inaccessibility of ESI will take it outside of the scope of preservation, but in some circumstances it will not. In my view, the general bias should be to exclude not-reasonably-accessible ESI from preservation. As I have mentioned several times previously in this blog, I think Judge Scheindlin got it right in Zubulake IV when she held:

The scope of a party’s preservation obligation can be described as follows: Once a party reasonably anticipates litigation, it must suspend its routine document retention/destruction policy and put in place a litigation hold to ensure the preservation of relevant documents. As a general rule, that litigation hold does not apply to inaccessible backup tapes, for example, typically maintained solely for the purpose of disaster recovery, which may continue to be recycled on the schedule set forth in the company’s policy. (emphasis added)

Zubulake v. UBS Warburg LLC, 220 F.R.D. 212, 218 (S.D.N.Y. 2003). Backup tapes are, of course, a prime example of not-reasonably-accessible ESI.

Guideline 8 is the most detailed guideline:

A legal hold is most effective when it:
(a) Identifies the persons who are likely to have relevant information and communicates a preservation notice to those persons;
(b) Communicates the preservation notice in a manner that ensures the recipients will receive actual, comprehensible and effective notice of the requirement to preserve information;
(c) Is in written form;
(d) Clearly defines what information is to be preserved and how the preservation is to be undertaken;
(e) Is periodically reviewed and, when necessary, reissued in either its original or an amended form.

Guideline 8 comes with a sample Certification of Completion document (Appendix B) designed to serve as a checklist for the recipient to confirm that he or she has complied with a hold notice. It requires the recipient to certify to the general counsel’s office that they have searched a long list of locations where responsive ESI might be located, including the LAN server for their office, laptop and office computer, email, home computers, Blackberries, email trash bin and desktop recycle bin, “removable storage media, such as disks, CDs, DVDs, memory sticks, and thumb drives,” and “files of any administrative personnel working for me.”

Many companies will dislike how extensive and complete this list is, especially the inclusion of home computers, removable storage media and secretarial ESI. The commentary softens the blow somewhat by clarifying that this is not a form; it is only a sample, and may not be appropriate for every case. Still, this long list could put a huge search burden on many employees that is not appropriate for many cases, and so this aspect of the commentary is likely to be controversial.

Another controversial aspect of Guideline 8 is its placement of the burden for search and preservation upon the individual employees themselves, instead of on the company, its IT department or automated procedures. This let-the-employees-do-everything procedure has been the norm in the past, but is beginning to be challenged by many courts, especially where there is inadequate follow-up. See Cache La Poudre Feeds, LLC v. Land O’Lakes Farmland Feed, LLC, 2007 WL 684001 (D.Colo. March 2, 2007).

Email Guidelines

The second commentary on email is a short gem edited by Thomas Y. Allman, The Sedona Conference Commentary on Email Management: Guidelines for the Selection of Retention Policy (August 2007). The Commentary begins with a flurry of statistics showing the prevalence of email today, citing to one study estimating that 183 Billion email messages a day were sent in 2006. This is quite a bit larger than the previous estimates I have seen of 60 Billion a day. Whatever, it is huge, and getting bigger every day, and everyone knows the strongest ESI evidence is usually an intemperate email. (More on this in the next Module.) That is why most litigation today correctly focuses on email, and why this Email Commentary is so important.

The Sedona working group on email was able to agree on four general guidelines:

Guideline 1: Email retention policies should reflect the input of functional and business units through a team approach and should include the entire organization including any operations outside the United States.

As the name of this blog indicates, e-Discovery Team, I obviously think they have it right to emphasize the need for the team approach in forming policies of any kind, not just email. The commentary explains that this should be an interdisciplinary team including Legal, IT and Management, including “Records Management, Compliance, Finance and representatives of major business units.” The commentary also mentions that the internal corporate team may want to utilize outside counsel, consultants and vendors. They also recommend that:

A fully engaged responsible person should be appointed to lead the team to work closely on implementation, including recommendations on budget or funding decisions as well as monitoring the program after implementation.

The next Guideline 2 points to the obvious need to understand the actual practices of the organization, as opposed to its written rules on emails, since in most organizations there is a gap between the two that the team needs to address.

Guideline 2: The team should develop a current understanding of email retention polices and practices actually in use within the entity.

The commentary includes a list of useful questions for the team to ask to explore the organization’s actual practices.

The third Guideline states:

Guideline 3: An entity should select features for updates or revisions of email retention policy with the understanding that a variety of possible approaches reflecting size, complexity and policy priorities are possible.

The commentaries on Guideline 3 point out that it is usually difficult to reach consensus between the different needs of the groups represented in the team, and suggests open discussion of the differences as the best approach. See Osterman, “E-Mail Archiving Dependent upon Corporate Culture,” Network World (March 22, 2005) (describing the resolution of competing views of legal counsel who preferred to purge and a compliance officer who preferred to save email).

To help the team reach a consensus, the Guidelines include an Appendix with two opposite email policy statements. Policy 1 is based on a “short default retention strategy” where emails are only retained for a short period (e.g., 30-90 days) and thereafter are automatically deleted. The user can only avoid this deletion “by taking explicit, affirmative actions” such as moving the email to a dedicated storage area. The other opposite Policy 2 is based on an “indefinite default retention strategy.” In this policy, email is retained on active servers for a time, and then “moved automatically to tiered storage and retained indefinitely” or some other specified period such as three to five years.

The fourth Guideline states:

Guideline 4: Any technical solutions should meet the functional requirements identified as part of policy development and should be carefully integrated into existing systems.

Most e-discovery teams studying these issues find that some kind of software and hardware purchases are needed to implement their recommended email practices. This guideline addresses this reality, and counsels the importance of carefully integrating the new purchases into existing systems. The commentary notes that there are many different software and hardware solutions offered by competing vendors to solve these problems, and no one approach is superior. The commentary then provides a list of practical issues to consider when evaluating competing vendor proposals.

My congratulations and thanks to the hard work of “The Sedona Conference Working Group on Electronic Document Retention and Production, eMail Management and Archiving Special Project Team.” They have a long name, but their short, concise guidelines and commentary are a very practical and useful work. Every e-discovery team in America struggles with email issues and all will benefit from these pioneering guidelines.

Guidance on ESI Preservation

The Sedona Conference has  another very helpful guide on preservation and inaccessible data, entitled: Commentary on Preservation, Management and Identification of Sources of Information that are Not Reasonably Accessible. This is a must read reference for all e-discovery teams, especially when they are setting up initial preservation hold procedures and policies. You can download a copy for individual use for free at The Sedona Conference’s website. For me, the most valuable idea in this commentary is the five-step analysis they call the Decision Tree for Determining ESI Preservation Obligations. It is designed to help you decide what types of ESI you need to preserve upon notice of litigation or likely litigation.  My version of their decision flow chart is shown below. It is worthwhile to take a few minutes to study it.

The editors of this new Sedona publication are, Thomas Y. Allman, William P. Butterfield, Matthew Hagarty, Cecil A. Lynn III, Jon A. Neiditz, Maureen O’Neill, Ira P. Rothken, and Peter B. Sloan. Although this Sedona working group is focused on ESI that is difficult to access, they rightfully claim that the five step approach they developed for preservation decisions is equally applicable to all sources of information, whether accessible or inaccessible.

In addition to the fivefold decision process shown above, this Sedona working group has devised six guidelines to help make preservation decisions. Here is their summary of the six guidelines:

Guideline 1. Where litigation is anticipated but no plaintiff has emerged or other considerations make it impossible to initiate a dialogue, the producing party should make preservation decisions by a process conforming to that set forth in the Decision Tree in Figure 1.

Guideline 2. As soon as feasible, preservation issues should be openly and cooperatively discussed in sufficient detail so the parties can reach mutually satisfactory accommodation and also evaluate the need, if any, to seek court intervention or assistance.

Guideline 3. In conjunction with the initial discussions or where appropriate in the response to discovery requests, parties should clearly identify the inaccessible sources reasonably related to the discovery or claims which are not being searched or preserved.

Guideline 4. A party should exercise caution when it decides for business reasons to move potentially discoverable information subject to a preservation duty from accessible to less accessible data stores.

Guideline 5. It is acceptable practice, in the absence of an applicable preservation duty, for entities to manage their information in a way that minimizes accumulations of inaccessible data, provided that adequate provisions are made to accommodate preservation imperatives.

Guideline 6. An entity should encourage appropriate cooperation among legal and other functions and business units within the organization to help ensure that preservation obligations are met and that resources are effectively utilized.

The bulk of this commentary is devoted to explaining the six guidelines and preservation decision process. This is a much needed work. All e-discovery teams are now struggling with the issue of how much and what ESI needs to be preserved upon notice of a dispute. These decisions are necessarily fraught with vagaries and danger. Anyone who works in this area knows that the preservation selection process is more of an art than a science. For this reason, judges should be slow to impose sanctions for good faith mistakes.

If parties follow the five-step flow chart and make a good faith effort, they should not be subject to Monday morning quarter-backing and sanctions if they guessed wrong. The ESI universe of most companies is so large and complicated that most of the decisions in this process require some educated guesses. For instance, it is often little more than an educated guess to try to determine what ESI might be relevant to a dispute when it first surfaces. This is especially true when a company does not know much about a dispute aside from what is stated in a poorly plead, vague, or boilerplate complaint.

About my only criticism of  Sedona Preservation Commentary is the graphic this group created to illustrate the Decision Tree (shown below). I found their graphic too wordy and busy looking. That is why I went to the trouble to create my own. My graphic follows the same logic flow as the original, but with fewer words and a different layout. Still, this is a matter of personal taste and you may prefer their version. The Sedona Preservation Commentary provides a good explanation of this decision process, and so the chart is just a handy reminder. Here is the original graphic included in the Sedona commentary.

Aside from my minor aesthetics criticism, I think this group pretty much nailed the preservation decision process. It looks both accurate and complete to me. I would be curious to know what you think, so please let your professor know.

SUPPLEMENTAL READING: Study this Commentary and flow chart carefully. Which of the five steps are the most difficult to understand and why. Which do you think would be the most difficult to implement, and why?

EXERCISE: You’ve just been sued! You were driving your car and text messaging on your phone at the same time. You did not see a pedestrian crossing the street until it was too late to avoid hitting him. You were not going fast and you only broke his leg. This happened three months ago. You have now been sued for negligence. The injured pedestrian had called you the day after the accident and left a voice message, but you were busy with finals and forget to return his call. After that, no one ever contacted you about the injuries or any claim, and you were completely surprised by the summons. The day after the accident you texted and emailed your friends about the accident, and made a FaceBook post concerning it and two twitters. You deny any fault because you claim the text message was over by the time of the accident, you were looking at the road, and the pedestrian just stepped right into your path. You also claim you might have been able to avoid hitting him entirely, but for a faulty brake repair job that you set up online four months ago before you went in to have the work done. The repair work was done just a week before the accident. You can’t find any paper work for the brake job, but did have some emails, and you saved the scanned contract with warranty onto your hard drive. You complained online, and then in person, and had the brake work redone a week after the accident. Again, you did not save any paper work, but did have some emails. You normally make meticulous back-up copies of your hard drive onto a CD once a month and your hard drive is also backed up by an online service every other day.

What do you do now to preserve evidence and why? One more thing, when was your duty to preserve triggered, and why? Think about it.

Discretionary Bonus Exercise: Continuing the same scenario, what ESI, if any, that is within your custody or control would you not bother to preserve and why? 

Students are invited to leave a public comment below. Insights that might help other students are especially welcome. Let’s collaborate!

Copyright Ralph Losey 2015