Preparing for e-discovery requires coordination between various offices and individuals on any college or university campus, including counsel’s office, the IT department, and faculty and staff members. This Note will focus on the practical aspects of preparing for e-discovery in state or federal court litigation and will offer suggestions for ways that colleges and universities may reduce risks and control costs in tackling the new challenges.
“Discovery” is the phase of state and federal court litigation in which parties seek information from each other to investigate the facts of the case and to develop claims and defenses in preparation for trial. Discovery can come in numerous forms, including interrogatories (a set or series of written questions answered in writing under oath), requests for admission (written statements to either admit or deny key facts), depositions (oral testimony), and requests for production of documents. The term “documents” has now been construed by the courts and/or legislatively defined to explicitly include electronically stored information.
E-discovery involves the identification, retention, and production of ESI during litigation. ESI consists of dynamic data and information that, in most instances, would be incomprehensible if separated from the system that created it. As explained in an advisory committee report to the Federal Rules of Civil Procedure, ESI will exist in exponentially greater volume than the hard-copy documents that parties have traditionally produced in response to litigation discovery requests .
ESI resides many places, including:
The two critical responsibilities that arise with respect to electronic discovery are (1) the duty to preserve ESI and (2) the duty to produce pertinent portions of that information to the other parties to the litigation. Document preservation obligations generally arise once an institution reasonably anticipates that it is likely to be a party to private litigation or a government investigation. The preservation obligation, therefore, may arise even before a case is filed or an investigation is commenced. Once a preservation obligation is triggered, an institution has the obligation to preserve all information – including ESI – that may potentially be relevant to the dispute. The amount of information preserved will likely be far greater than the amount of information ultimately turned over to the other parties in the litigation. It should also be noted that constantly evolving technology is available that may assist counsel, IT personnel, and records managers in retaining, searching, and reviewing information for the purposes of e-discovery. Although utilizing such technology may create upfront costs for an institution, it may be needed in certain cases and could also ultimately help reduce costs in major pieces of litigation.
Failure to comply with e-discovery obligations can have disastrous consequences. Institutions could face adverse jury inferences, which, in the much publicized Zubulake case , resulted in a $29 million jury award to the plaintiff. In addition, courts can impose stiff monetary penalties against parties that do not adequately preserve discovery materials, as seen in a recent $15 million fine imposed by the Securities and Exchange Commission (SEC) against Morgan Stanley . Additional potential civil penalties may include dismissal of claims or defenses and orders to pay opposing counsel’s attorneys’ fees and costs. In government investigations, egregious failure to meet e-discovery obligations can result in charges of obstruction of justice charges and criminal prosecution, as seen in the highly publicized Arthur Andersen case . Finally, failure to treat confidential consumer information appropriately through institutional records management and e-discovery policies and procedures can result in regulatory violations under the Health Insurance Portability and Accountability Act (“HIPAA”) and other privacy laws, including the Gramm-Leach-Bliley Act.
II. Preparing for E-Discovery
E-discovery can be daunting, and preparing for e-discovery requires expenditure of considerable resources—including personnel time and money. Indeed, as e-discovery becomes a regular part of most litigation, many institutions are now finding that the cost can be staggering, and it has not generally been included in either counsel or IT budgets. Pro-active preparation for e-discovery, however, can help you reduce risks, control costs, and efficiently and effectively respond to discovery once litigation arises.
A. Records Management
Effective records management practices can help limit the universe of ESI ultimately at issue in any future litigation. Institutions are encouraged to review their records management policies and procedures to ensure that they encompass ESI and satisfy all legal, business, and regulatory obligations. A retention schedule should be in place identifying the institution’s key categories of records and the corresponding retention periods. As a part of the ordinary course of business, records should be destroyed at the expiration of the retention period, unless subject to a preservation notice. Before records are destroyed pursuant to an established records management policy, the destruction should be authorized in writing by an appropriate manager or other administrator and the actual destruction of the records should be certified by the responsible individual or entity (e.g., mail room personnel or outside shredding vendor).
B. Back-up Tapes
Owing to the excessive costs associated with restoration and attorney review of back-up tapes, which can contain data amounting to millions of pages each, institutions should do everything possible – keeping in mind any pre-existing litigation preservation obligations – to limit their inventory of back-up tapes. Back-up tapes are intended to be used for disaster recovery, and, as the name “back-up tapes” suggests, the tapes go stale as soon as a new set of back-up tapes is made. Once stale, back-up tapes can and should be disposed of or recycled, absent an existing preservation notice on the tapes.
To justify an institutional back-up tape retention policy in any future litigation, a back-up tape retention policy should be established. The policy should:
As with any written policy, a back-up tape retention and disposal policy will be effective only to the extent that it is properly implemented and followed. Administrators, university counsel, and IT personnel should work closely in developing such a policy and should not put anything in writing that the institution cannot effectively implement and consistently follow.
C. IT Infrastructure
Institutions should consider creating schematics of their IT architecture. Identifying all servers and applications will provide a roadmap of where to apply preservation notices and collect relevant ESI once litigation is threatened or commenced. In fact, many courts are now requesting such schematics when addressing discovery disputes. Schematics can be created by either internal IT departments or outside vendors.
To ensure a consistent process that is defensible in future court proceedings and to avoid spoliation allegations, institutions should have an effective preservation notice policy in place. The policy should:
Institutions may choose to create a template preservation notice as part of this policy. The notice should be amended as needed for each dispute. The preservation notice should include sufficient information to allow the key player custodians to identify potentially relevant information that is subject to preservation, including a description of the matter, relevant dates, and likely sources and locations of information (including ESI) .
III. Ways to Reduce Risks and Control Costs
In addition to the practices and policies discussed above, institutions may take additional measures in preparing for e-discovery to reduce risk and control costs once litigation actually commences. Institutions may want to evaluate, based on the size of the litigation matters they generally face, the posture of any actual or threatened litigation they are facing, and their internal IT capabilities, whether the collection of ESI should be done internally or by an outside vendor. If outside vendors are being considered, in-depth research on any potential vendor should be conducted, and discounts should be aggressively negotiated.
To limit the scope of e-discovery in any future dispute, institutions may want to consider setting policies and limitations on the use of developing technologies by faculty and employees (instant messaging, Voice over Internet Protocol (VOIP), blogs) or the use of personal computers for business purposes, or at least require that such technology be implemented centrally rather than on an ad hoc basis. Administrators and in-house counsel may also consider meeting with their institution’s IT department to understand the litigation implications of new technologies before such technologies are purchased and implemented.
Institutions should also consider providing training to faculty and employees on issues of e-discovery, preservation notices, and records management. No matter what course of action your institution chooses in implementing an e-discovery preparation program, all steps taken should be documented by memorandum or meeting minutes and the program should be periodically audited to ensure compliance.
Issues relating to the litigation meet-and-confer process and the actual production of ESI during discovery are not within the scope of this article. Institutions should be aware, however, that the federal rules of civil procedure and many state rules require the parties to meet early in the course of litigation to discuss discovery, including the preservation and production of ESI. Institutions that have been proactive in addressing issues of records management, IT infrastructure, back-up tapes, and information preservation will be in the best position to aggressively negotiate preservation and discovery agreements with opposing counsel. The more your institution understands its own practices and policies, IT infrastructure, and ESI capabilities the more effective it will be at educating and addressing the concerns of opposing counsel and the court, and the better armed it will be to accurately speak to the costs and burdens associated with any proposed discovery in a given case.
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