Gathering digital data: understanding the defendant's computer system and sending clear instructions for preservation can help you get the electronic evidence you need.

'As individuals and corporations increasingly do business electronically--using computers to create and store documents, make deals, and exchange e-mails--the universe of discoverable material has expanded exponentially," stated the U.S. District Court for the Southern District of New York in one of a series of important decisions regarding electronic evidence in Zubulake v. UBS Warburg LLC. (1) Today's breadth of discoverable material, even in cases of modest complexity, makes it more difficult for plaintiff counsel first to ensure that defendants preserve evidence and then to review voluminous discovery responses.

To conduct discovery effectively in the age of digital evidence, you must understand the law applicable to preservation obligations, the defendant's computer and storage system, and what to include in initial communications with the defense requesting preservation of electronic documents.

The discovery rules that apply to paper documents apply equally to electronic evidence. It is well accepted that parties have preservation obligations:

* Independent of a court order, "a litigant is under a duty to preserve evidence which it knows or reasonably should know is relevant to the action." (2)

* "While a litigant is under no duty to keep or retain every document in its possession once a complaint is filed, it is under a duly to preserve what it 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 of a pending discovery request." (3)

* "[A] party is on notice [of a duty to preserve relevant evidence] when it receives a complaint and/or a discovery request." (4) Further, "given notice and understanding of the obligations to preserve all discoverable hard copy and electronic data, one would expect that [the defendant's] next step would have been to implement a comprehensive written document preservation plan with specific criteria for finding and securing ... relevant evidence for the litigation." (5)

The laws and rules prohibiting the destruction of discoverable material apply to electronic data. (6) Indeed, the obligation to preserve electronic documents is greater:

   [I]n the world of electronic data, the
   preservation obligation is not limited simply
   to avoiding affirmative acts of destruction.
   Since computer systems generally have
   automatic deletion features that periodically
   purge electronic documents such as email,
   it is necessary for a party facing litigation
   to take active steps to halt that process. (7)

You must convey these obligations early to defense counsel to ensure that electronic evidence is preserved properly and to make known your own command of information technology and the law of electronic discovery.

When electronic evidence will be an integral part of the litigation, you should gather information about the defendant's computer and storage systems as soon as possible. Seek this information at the initial Rule 26(f) "meet and confer" session, where you and your opponent will develop a discovery plan. This knowledge will allow you to more fully articulate your discovery needs, make intelligent production requests, and help fashion a discovery schedule. It may also be the basis for a request to take more depositions than the 10 allowed by Rule 30.

Argue that defense counsel should provide this information informally; this will give the court an opportunity to streamline the litigation and avoid wasting resources on needless discovery disputes, which can be costly for the defendant. If informal production is not possible for whatever reason, consider deposing the defendant's employee most knowledgeable about its information technology process.

Regardless of how the information is gathered, you need to know

* the identity of all company departments, employees, and outside consultants who had responsibility for the maintenance, expansion, or upkeep of the defendant's computer systems and network

* the defendant's policies and practices concerning the management, backup, deletion, and preservation of electronic data

* the steps taken to identify and preserve any electronic data in connection with the litigation, including communications to the defendant's employees, agents, consultants, and contractors concerning preservation of such data

* the defendant's policies concerning the oil:site use of electronic data by its employees, agents, consultants, and contractors, including policies relating to telecommuting or laptop usage, and the preservation and deletion of data

* the defendant's policies concerning employees' use of e-mail, including but not limited to its management, preservation, and deletion

* any preservation or destruction of electronic media, including the "routine" destruction of replaced computer memories, hard drives, and laptops, and any steps the defendant took to ensure that electronic data was not lost or overwritten or was otherwise protected.

Under proposed changes to Rule 26 (see sidebar on page 22), the parties would be specifically required to discuss "any issues relating to disclosures or discovery of electronically stored information, including the form in which it should be produced" and "whether, on agreement of the parties, the court should enter an order protecting the right to assert privileges alter production of privileged information." (8)

This new requirement dovetails nicely with plaintiff counsel's request for information about the defendant's computer and storage system.

The preservation letter

To ensure that the defendant is aware of its obligations to preserve electronic evidence--and to establish a solid basis for spoliation claims and requests for adverse-inference instructions should the defendant fail to do so (9)--you should send a letter to defense counsel insisting on certain safeguards. In complex litigation, the parties may negotiate and draft stipulated protective orders that incorporate many of the points outlined in the initial letter.

Send the preservation letter as soon as your client is ready to notify the defendant that he or she has hired you to pursue a claim. Request that defense counsel send a copy of the letter to everyone whose job responsibilities cover the matters addressed.

Sending a comprehensive preservation letter to defense counsel gives you tactical as well as procedural advantages. It sets the appropriate tone at the outset of litigation, clearly demonstrating that you understand the technical issues involved in the case.

A well-drafted preservation letter signals a well-informed, aggressive adversary who will not let the defendant "hide the ball." Establishing this credibility up front can encourage early settlement or reasonable concessions in later discovery disputes.

The letter should cover the following points:

* Electronic data to be preserved. The defendant and its subsidiaries, divisions, agents, and employees should preserve electronic mail (including message contents, header information, and logs of e-mail system usage); data in the information management system, containing the indexes of all databases; the databases themselves, including all records and field and structural information in them; logs of activity on any computer system that may have processed or stored electronic data containing litigation information; word-processing files and file fragments; data created by financial, accounting, billing, and spreadsheet programs; files and file fragments from electronic calendars and scheduling programs; and all other electronic data containing information about the litigation.

* Online data storage. The defendant should not modify or delete any pertinent information stored online--generally, "live" data that is actively in use--and in direct-access storage devices, that is, those attached to its mainframe and minicomputer hard drives, personal computers (PCs), and laptops. If the files must be altered, a true and correct copy of each data file pertinent to the litigation should be made, and the copy should be preserved and made accessible.

* Off-line data storage. The defendant should stop any activity that may result in the loss of pertinent data from "off-line," or removable, data storage--such as backups and archives, floppy diskettes, zip drives and zip files, optical disks, tapes, compact disks or diskettes, laptops, handheld devices, disconnected hard drives, and other removable electronic media. The defendant should not perform rotation, destruction, overwriting, or erasure of these media, nor should it dispose of any electronic data storage devices or media that failed or had to be replaced for other reasons.

* Fixed drives. If pertinent information is on the "fixed" (or hard) drives of stand-alone PCs and network workstations, the defendant should not alter or erase data or perform other procedures (such as data compression, disk refragmentation, or optimization routines) without creating and preserving true and correct copies of active files. The defendant should also save true and correct copies of completely restored versions of deleted electronic files and file fragments, as well as directory and subdirectory lists, including hidden files.

* Programs and utilities. The defendant should preserve copies of all application programs and utilities that process pertinent information.

* Logs of system modifications. The defendant should keep an activity log that documents modifications made by employees--as well as contractors, vendors, and any other third parties--to any electronic data-processing system that may affect the system's capability to process data pertinent to the litigation. In the course of business processing, systems are routinely edited for proper business purposes. Keeping a log of modifications prevents a defendant from being hamstrung by preservation obligations--and also provides evidence to the requesting party of how to access pertinent data.

* Evidence created later. The defendant should take appropriate steps to avoid destruction of evidence created after the preservation letter is received.

Requests for production

Once you have determined where electronic evidence might be found, you should use a broad definition of "documents" in your requests for production to explicitly include those that are stored electronically.

If your opponent objects when you request electronic documents, ask defense counsel to clarify the specific bases for the objection. For example, an objection based on overbreadth must substantiate that claim, unless the request "appears overly broad on its face. (10) The defendant must demonstrate that the time or expense involved in responding to the request would be unduly burdensome. (11)

A party opposing discovery on the grounds of undue burden must "provide sufficient detail and explanation about the nature of the burden in terms of time, money, and procedure, which would be required to produce the requested documents." (12) This information enables the court to "balance the burden on the interrogated party against the benefit to the discovering party of having the information." (13) Discovery should be allowed unless the hardship is unreasonable in the light of the benefits to be secured from the discovery." (14)

Here is where discovery costs come into play:

   The presumption is that the responding
   party must bear the expense of complying
   with discovery requests, but [that party]
   may invoke the district court's discretion under
   Rule 26(c) to grant orders protecting
   [it] from 'undue burden or expense' in doing
   so, including orders conditioning discovery
   on the requesting party's payment of
   the costs of discovery. (15)

Applying these discovery rules "is particularly complicated where electronic data is sought because otherwise discoverable evidence is often only available from expensive-to-restore backup media." (16) To determine whether the normal discovery rules apply, the court must assess whether the requested data is "accessible" or "inaccessible."

The cost-shifting analysis

In Zubulake, the court set forth a seven-factor test for discovery cost-shifting. The plaintiff-employee had requested relevant electronic documents, including e-mails that had been deleted and resided only on backup disks. In a series of published opinions, the Zubulake court dealt with the associated discovery disputes. It defined "accessible" and "inaccessible" data, stating that "in the world of electronic data, thanks to search engines, any data that is retained in a machine-readable format is typically accessible" and "whether electronic data is accessible or inaccessible turns largely on the media on which it is stored." (17)

The court explained that "information deemed 'accessible' is stored in a readily usable format." (18) It stated that regardless of whether "the time it takes to actually access the data ranges from milliseconds to days, [accessible] data does not need to be restored or otherwise manipulated to be usable." (19) Examples of "accessible" data include "active, online data" (such as hard drives), "near-line data" (stored on-site on removable media like diskettes, magnetic tape, and CDs), and "off-line storage/archives" (stored off-site on removable media) (20)

"'Inaccessible' data, on the other hand, is not readily usable," the court said. (21) Examples are "backup tapes," which may require a specialized tape reader to retrieve the data, and "erased, fragmented, or damaged data" that "can only be accessed "after significant processing." (22)

The Zubulake court concluded that for "data that is kept in an accessible fop mat, the usual rules of discovery apply" and "the responding party should pay the costs of producing responsive data. A court should consider cost-shifting only when electronic data is relatively inaccessible, such as in backup tapes." (23)

After Zubulake, you may find yourself saddled with substantial discovery costs if the information you seek is deemed to be "inaccessible." To avoid such costs, carefully draft discovery requests that comport with the court's seven-factor cost-shifting test.

The test considered:

1. The extent to which the discovery request is specifically tailored to discover relevant information.

2. The availability of such information from other sources.

3. The total cost of production compared to the amount in controversy.

4. The total cost of production compared to the resources available to each party.

5. The relative ability of each party to control costs, and its incentive to do so.

6. The importance of the issues at stake in the litigation.

7. The relative benefits to the parties of obtaining the information." (24)

The Zubulake court posed the central question this way: "[D]oes the request impose an 'undue burden or expense' on the responding parties? Put another way, How important is the sought-after evidence in comparison to the cost of production?" (25) The seven-factor test, it said, provides guidance in answering these questions but cannot be mechanically applied. It urged judges to weigh the factors according to their importance.

The court noted that the first two factors are the most important--comprising a "marginal utility" test:

   The more likely it is that the backup tape
   contains information that is relevant to a
   claim or defense, the fairer it is that the [responding
   party] search at its own expense.
   The less likely it is, the more unjust it would
   be to make the [responding party] search at
   its own expense. (26)

Likewise, if the information is within the custody and control of the responding party and not available from other sources, the fairer it is to make the responding party search at its own expense.

Factors three to five, addressing how expensive the production will be and who can handle the expense, rank next in importance, according to the Zubulake court.

The sixth factor--the importance of the litigation itself--"stands alone" and is rarely relevant, the court said. "But where it does [come into play], this factor has the potential to predominate over the others." (27)

The court said the last factor--the relative benefits to the requesting and producing parties--is the "least important because it is fair to presume that the response to the discovery request generally benefits the requesting party." (28)

As a practical matter, the court suggested that judges require the responding party to produce a small sample of electronic documents as a factual basis to which the judge will apply the seven-factor analysis.

The state appellate court in Toshiba America Electronic Components, Inc. v. Superior Court of Santa Clara County did not follow the Zubulake court's seven-part test. (29) Instead, the court interpreted a specific state statute to settle a discovery dispute about who should pay to recover material from the defendant's backup tapes.

The statute--California Code of Civil Procedure [section] 2031 (g)(1)--states that "the responding party at the reasonable expense of the demanding party shall, through detection devices, translate any data compilations included in the demand into reasonably usable form." The parties agreed that the backup tapes were "data compilations" but debated whether the phrase "at the reasonable expense of the demanding party" was a mandatory cost-shifting provision. (30)

Applying well-established rules of statutory construction and rejecting the plaintiff's reliance on federal jurisprudence, including Zubulake, the court ruled that [section] 2031 (g) (1) was "unequivocal," requiring the demanding party to pay for the costs of recovery. It stated that while the cost-shifting provision of the section "conflicts with the federal rule," the section is "a legislatively determined exception to the general rule that the responding party should bear the cost of responding to discovery." (31)

The court, however, stated that its conclusion did not mean that the demanding party "must always pay" all the costs associated with retrieving usable data from backup tapes: "Section 2031 (g) (1) is clear that the demanding party is expected to pay only its reasonable expense for a necessary translation. Reasonableness and necessity are purely factual issues (undoubtedly there are others), which, when disputed, are properly submitted to the discretion of the trial court." (32)

Litigants in state court, therefore, need to be aware of any potential cost-shifting state statutes that are contrary to the rules articulated in Zubulake.

The 2003 Zubulake cost-shifting decision hardly settled the matter. Over the next two years, the federal court tot the Southern District of New York issued six more rulings in the case, five of them wrestling with new legal questions related to the emergence of electronic evidence in litigation. In one of the later opinions, it wrote: "The subject of the discovery of electronically stored information is rapidly evolving. When this case began more than two years ago, there was little guidance from the judiciary, bar association, or the academy as to the governing standards. Much has changed in that time." (33)

The court went on to say, "Now that the key issues have been addressed and national standards are developing, parties and their counsel are fully on notice of their responsibility to preserve and produce electronically stored information." (34)

To effectively represent clients in the age of digital evidence, you need to understand the defendant's computer and storage system, draft appropriate preservation letters, tailor discovery requests, and keep abreast of this rapidly changing area of law. Doing so will ensure that you obtain all relevant and discoverable electronic evidence without having to share the cost of production.

RELATED ARTICLE: Civil rules for e-discovery may be changed.

On September 20, as this issue of TRIAL went to press, the Judicial Conference of the United States--the body that governs the federal courts--considered proposed amendments to the Federal Rules of Civil Procedure that would govern electronic discovery.

Throughout the amendment process, ATLA argued strongly that three proposed changes were unnecessary and would give an advantage to discovery-producing parties. The changes also would go beyond procedure into the realm of substance, invade the province of the state courts, and further erode the system of notice pleading and liberal discovery that served plaintiffs so well in the second half of the 20th century.

If adopted, the three proposals would give discovery-producing parties an initial exemption from their current obligation to turn over e-discovery material by claiming that it is "not reasonably accessible" and allow these parties an extra chance to assert claims of privilege for information they have already produced. The amendments would also exempt parties from sanctions in some cases when they destroy electronic files through "routine" use of their document-retention systems--even those systems set up with short time periods for destruction.

The text of the proposed amendments is available at the Judicial Conference's Web site at www.uscourts.gov/ rules/Prelim_draft_proposed_pt2.pdf. Comments regarding the proposed changes (including those of more than 80 ATLA members) are available at www. uscourts.gov/rules/e-discovery.html. The direct link to ATLA's comments is www.uscourts.gov/rules/e-discovery/04-CV-012.pdf.

Any rule amendments the Judicial Conference accepted at its meeting on September 90 will be submitted to the U.S. Supreme Court with a recommendation that they be approved. If the Court approves them, they will be transmitted to Congress for its review, probably in April 9006.

These new rules would then take effect on December 1, 2006, unless Congress enacts legislation to reject, modify, or defer them.

Notes

(1.) 217 F.R.D. 3119, 311 (S.D.N.Y. 2003).

(2.) Baliotis v. McNeil, 870 F. Supp. 1285, 1290 (M.D. Pa. 1994) (citation and internal quotation marks omitted); see also Vazquez-Corales v. Sea-Land Serv., Inc., 172 F.R.D. 10, 13 (D.P.R. 1997) (citation omitted).

(3.) Win. T. Thompson Co. v. Gen'l Nutrition Corp., 593 F. Supp. 1443, 1455 (C.D. Cal. 1984) (citation and internal quotation marks omitted).

(4.) Danis v. USN Communications, Inc., No. 98 C 7482, 2000 WL 1694325, at *36 (N.D. Ill. Oct. 20, 2000) (citation omitted).

(5.) M. at *37.

(6.) Wiginton v. Ellis, No. 02 C 6832, 2003 WL 22439865, at *4 (N.D. Ill. Oct. 27, 2003).

(7.) Convolve, Inc. v Compaq Computer Corp., 223 F.R.D. 162, 175-76 (S.D.N.Y. 2004).

(8.) The report on the proposed amendments by the Committee on Rules of Practice and Procedure of the Judicial Conference of the United States can be viewed at www.uscourts.gov/rules.

(9.) United States v. Philip Morris USA, Inc., 327 F. Supp. 2d 21, 25 (D.D.C. 2004) ("There is no doubt that the court has the authority to impose such a sanction for a discovery violation as serious and irremediable as ]the defendant's] e-mail destruction.").

(10.) Super Film of Am., Inc. v. UCB Films, Inc., 219 F.R.D. 649, 1551 (D. Kan. 2004) (citing Etienne v. Wolverine Tube, Inc., 185 F.R.D. 653, 656 (D. Kan. 1999)).

(11.) Id.

(12.) Black & Veatch Int'l Co. v. Foster Wheeler Energy, Corp., No. 00-2402-JAR, 2002 WL 1071932, at *3, *4 (D. Kan. May 10, 2002) (citing Beach v. City of Olathe, Fan., 203 F.R.D. 489, 493 (D. Kan. 2001)).

(13.) Id. at *4.

(14.) Id. (citing Snowden v. Connaught Labs., Inc., 137 F.R.D. 325, 333 (D. Kan. 1991)).

(15.) Oppenheimer, Inc. v. Sanders, 437 U.S. 340, 358 (1978).

(16.) Zubulake, 217 F.R.D. 309, 316.

(17.) Id. at 318.

(18.) Id. at 320.

(19.) Id.

(20.) Id. at 318-20.

(21.) Id. at 320.

(22.) Id. at 319.

(23.) Id. at 324 (emphasis in original).

(24.) Id. at 322.

(25.) Id. at 322-23.

(26.) Id. at 323 (citing McPeek v. Ashcroft, 202 F.R.D. 31, 34 (D.D.C. 20011).

(27.) Id.

(28.) Id.

(29.) 21 Cal. Rptr. 3d 532 (Ct. App. 2004).

(30.) Id. at 536-37.

(31.) Id. at 540.

(32.) Id. at 541.

(33.) No. 02 CIV. 1243, 2004WL 1620866, at *15 (S.D.N.Y. July 20, 2004).

(34.) Id. at *16.

RICHARD J. ARSENAULT is senior partner at Neblett, Beard & Arsenault in Alexandria, Louisiana. JOHN RANDALL WHALEY is a lawyer with the firm.