Discovery Requests for Electronic Documents

The Significance of Zubulake

The importance of the decision rendered by the court in Zubulake cannot be understated. (This case is commonly referred to as Zubulake V, since there were four prior reported decisions rendered in the case.) The case arose after a female equities trader sued her former employer for gender discrimination, failure to promote, and retaliation under federal, state, and city law.

In Zubulake V, the court considered whether to grant plaintiff Laura Zubulake's motion for sanctions against UBS due to its failure to produce requested relevant information in its discovery responses, as well as its late production of such documents. In considering the question of whether UBS “fail[ed] to preserve and timely produce relevant information and, if so, did it act negligently, recklessly, or willfully,” the court discussed in great detail the obligations of counsel to make sure that his or her client preserves relevant information and how such preservation instructions are to be communicated to the client. Id. at 424. The court noted that there was a total breakdown of communication between both outside and in-house counsel and the client which ultimately led the court to impose harsh sanctions against UBS and its counsel.

The Duty to Communicate Between Counsel and Client

Most significant for counsel in Zubulake V is the court's discussion of what steps counsel should take to make sure that his or her client properly complies with requests for production of electronic documents propounded in any litigation. First, the court addressed the duty of counsel to ensure that a client has authorized a “litigation hold” to make certain that any and all relevant documents are preserved. As a general rule, a party must implement a “litigation hold” to preserve relevant documents once a party “reasonably anticipates” litigation will occur. Id. at 431. Regarding electronic data, a “litigation hold” generally applies only to backup tapes which are accessible. Once a client-party has put an internal “litigation hold” in place, counsel is required to supervise the party's attempts to gather, preserve and ultimately produce documents which are relevant to the document requests made by opposing counsel. Id. at 432. Moreover, counsel must “make certain that all sources of potentially relevant information are identified and placed 'on hold,' to the extent required in Zubulake IV.” Id. Especially in cases when counsel is representing a large corporation which may have offices in different cities or even different countries, it becomes all the more important for counsel to fully understand his or her client's document retention policies as well as the operations of the company's information technology systems in order for counsel to properly monitor the search for and presentation of potentially relevant electronic documents.

To guarantee compliance with electronic discovery requests, counsel may run system-wide keyword searches and then maintain copies of each “hit” in order to retain all potentially relevant documents prior to later determining which documents may or may not be relevant to comply with discovery requests. In other words, counsel must go beyond making sure the client has issued a “litigation” hold; rather, counsel must actively “monitor compliance so that all sources of discoverable information are identified and searched.” Id.

Counsel's Continuing Duty to Monitor Retention and Production of Relevant Electronic Documents

Counsel's duty to identify documents that are potentially relevant evolves into such counsel's duty to supplement those responses in accordance with Rule 26. See Fed.R.Civ.P. 26(e). The court in Zubulake V expressly noted that, “A lawyer cannot be obliged to monitor her client like a parent watching a child.” Id. at 433. Despite this acknowledgement, the court did recognize that it is unlikely that a client can be expected to receive a “litigation hold” only one time and thereafter be expected to fully comply with the hold request without continued supervision from counsel. Id.

Fortunately, the court took it upon itself to provide explicit guidance to counsel as to what steps counsel should be taken to ensure compliance with the rules of discovery. First, counsel should issue a “litigation hold” as soon as it becomes apparent that litigation is likely to occur or at the beginning of any litigation. Id. at 433, citing Zublake IV, 220 F.R.D. at 218. Second, counsel must communicate with the “key players” in the litigation as these are the employees who are most likely to have the relevant information sought by the opposing party in the litigation. Id. at 433-434. Finally, counsel must advise all of the company's employees of their duty to produce electronic copies of their relevant active files. Counsel should also communicate with the client's information system personnel to make sure that any potentially relevant backup tapes are retained and safely stored during the pendency of the litigation. Id. at 434.

These guidelines are extremely useful and should serve as an outline for counsel involved in complex litigation to ensure proper compliance with discovery requests for electronic materials. Other professional groups including the American Bar Association and The Sedona Conference' have promulgated guidelines for counsel to help navigate the tricky road involving the discovery of electronic documents. The Sedona Principles are discussed later in this article.

Failure to Properly Supervise Document Production May Result in Sanctions Against Counsel

Unfortunately for the attorneys representing Qualcomm Inc. in the matter of Qualcomm Inc. v. Broadcom Corp., 2008 WL 66932 (S.D. Cal.) (Jan. 7, 2008), their failure to take the guidelines of the Zubulake decisions to heart exposed their client and themselves to severe sanctions. In the Qualcomm case, a patent infringement case, it was revealed to Broadcom (and the court) for the first time during the examination of a witness at trial that at least 21 relevant e-mails existed but were not produced during discovery. These 21 e-mails were directly relevant to Broadcom's waiver defense at trial. In fact, once the existence of these e-mails was revealed during cross-examination by an employee at trial, it became apparent that at least 46,000 other relevant e-mails and documents had not been produced during discovery. Id. at 6. The failure to produce the 21 relevant e-mails was aggravated by the fact that following the exposure of such failure at trial, Qualcomm continued to dispute that the e-mails were relevant and responsive to Broadcom's discovery requests. The court found that there was “clear and convincing evidence” that Qualcomm intentionally engaged in conduct designed to prevent Broadcom from discovering key evidence which undercut Qualcomm's theory of the case. Id. Finding that Qualcomm had engaged in intentional misconduct in identifying key witnesses and locating relevant evidence, the court ordered monetary sanctions in the form an award to Broadcom of all of its attorneys' fees and costs incurred in the litigation to the tune of over $8 million. Id. at 17.

Of even more concern to attorneys should be the findings the court made of attorney misconduct based upon the role that Qualcomm's attorneys appeared to have played in facilitating the withholding of relevant electronic documents during discovery. What the court found is that “one or more of the retained lawyers chose not to look in the correct locations for the correct documents, to accept the unsubstantiated assurances of an important client that its search was sufficient, to ignore the warning signs that the document search and production were inadequate, not to press Qualcomm employees for the truth, an/or to encourage employees to provide the information (or lack of information) that Qualcomm needed to assert its non-participation argument and to succeed in this lawsuit.” Id. at 13. The results of these actions allowed Qualcomm to withhold thousands of relevant documents and “to assert numerous false and misleading arguments to the court and jury.” Id. For these reasons, the court sanctioned certain of Qualcomm's attorneys by referral to the California State Bar. Id. at 18.

Obviously, this outcome is one that counsel should take any and all necessary steps to avoid at all costs. Fortunately, various court decisions, the recently amended federal and various local rules and professional organizations have issued guidelines to assist parties and their counsel in navigating the murky waters of electronic discovery compliance.

The Sedona Principles

In June 2007, The Sedona Conference' Working Group on Best Practices for Electronic Document Retention and Production issued The Sedona Principles: Best Practices Recommendations & Principles for Addressing Electronic Document Production, Second Edition (June 2007). While this is a lengthy document, the serious litigator should attain a working knowledge and understanding of the 14 principles set forth therein.

In discussing each of the principles, the authors thoroughly review each principle in terms of the recently amended FRCP to which it relates. The underlying concept for the authors is the understanding that the discovery of electronic information is different from the discovery of traditional paper documents, both in terms of the sheer volume of electronic documents (and e-mails), the difficulty in disposing of electronic documents and the unintended information (e.g., metadata) which may exist within e-mails and other electronic documents. While the FRCP only apply once litigation has begun, The Sedona Principles present “best practices” for preserving documents prior to the commencement of litigation. For example, Principle No. 1 states, “Electronically stored information is potentially discoverable under Fed.R.Civ.P. 34 or its state equivalents. Organizations must properly preserve electronically stored information that can reasonably be anticipated to be relevant to litigation.” Id. at 11. Such a directive is clearly aimed at both counsel and parties to establish comprehensive document retention policies. Other principles deal with the costs and burdens of the discovery of electronic documents, as well as encouraging parties to communicate early in the discovery process to resolve any electronic discovery issues at the outset of litigation. See, e.g., Principles 2 and 3.

Conclusion

Attorneys owe it to their clients and to themselves to become intimately familiar with their clients' document retention policies and computer systems. Once litigation commences, counsel's duties require that he or she actively participate in the client's search for and retention of relevant documents. Fortunately, counsel can turn to the guidelines set forth by various courts, the Federal Rules and local rules and The Sedona Conference' Principles to assist with satisfying these obligations.

Stacy Edelstein Hyken is a Senior Attorney with the Atlanta law firm of Arnall Golden Gregory LLP and a member of the Real Estate Practice Group. She previously practiced for more than 12 years as a litigator. She can be reached at [email protected].

The definitive case of Zubulake v. UBS Warburg LLC , 229 F.R.D. 422 (S.D.N.Y. 2004), involving claims for gender discrimination and retaliation by a female employee, should be of concern to law firms and their clients regarding their duties to preserve evidence and in particular the duty of lawyers to supervise clients in producing discovery responses.

Since an employment discrimination or employment claim-related case will generally involve primarily internal company or firm documents, especially e-mails, the duty of firm attorneys where a firm is the defendant and the duty of counsel to supervise firm clients is especially heightened in the employment litigation context. However, while the Zubulake case arose in the employment context, the principles espoused therein have a broad application to any law firm or lawyer supervising clients in the litigation context.

In recent years, the rise in the use of electronic documents, especially e-mail, has unquestionably changed the face of discovery in all types of types of litigation. As a result, the obligations counsel has in responding to discovery requests for electronic documents have been rapidly evolving. These obligations have been clarified by several recent court decisions, as well as the recent amendments to the Federal Rules of Civil Procedure (FRCP) and the principles set forth by The Sedona Conference'. This article discusses the duties of counsel when representing a client who has been propounded with requests for electronic materials. Obviously, the more complex the case and the more sophisticated and global the client, the greater is the importance for counsel to fully understand his or her legal and ethical obligations when overseeing discovery production.

The Significance of Zubulake

The importance of the decision rendered by the court in Zubulake cannot be understated. (This case is commonly referred to as Zubulake V, since there were four prior reported decisions rendered in the case.) The case arose after a female equities trader sued her former employer for gender discrimination, failure to promote, and retaliation under federal, state, and city law.

In Zubulake V, the court considered whether to grant plaintiff Laura Zubulake's motion for sanctions against UBS due to its failure to produce requested relevant information in its discovery responses, as well as its late production of such documents. In considering the question of whether UBS “fail[ed] to preserve and timely produce relevant information and, if so, did it act negligently, recklessly, or willfully,” the court discussed in great detail the obligations of counsel to make sure that his or her client preserves relevant information and how such preservation instructions are to be communicated to the client. Id. at 424. The court noted that there was a total breakdown of communication between both outside and in-house counsel and the client which ultimately led the court to impose harsh sanctions against UBS and its counsel.

The Duty to Communicate Between Counsel and Client

Most significant for counsel in Zubulake V is the court's discussion of what steps counsel should take to make sure that his or her client properly complies with requests for production of electronic documents propounded in any litigation. First, the court addressed the duty of counsel to ensure that a client has authorized a “litigation hold” to make certain that any and all relevant documents are preserved. As a general rule, a party must implement a “litigation hold” to preserve relevant documents once a party “reasonably anticipates” litigation will occur. Id. at 431. Regarding electronic data, a “litigation hold” generally applies only to backup tapes which are accessible. Once a client-party has put an internal “litigation hold” in place, counsel is required to supervise the party's attempts to gather, preserve and ultimately produce documents which are relevant to the document requests made by opposing counsel. Id. at 432. Moreover, counsel must “make certain that all sources of potentially relevant information are identified and placed 'on hold,' to the extent required in Zubulake IV.” Id. Especially in cases when counsel is representing a large corporation which may have offices in different cities or even different countries, it becomes all the more important for counsel to fully understand his or her client's document retention policies as well as the operations of the company's information technology systems in order for counsel to properly monitor the search for and presentation of potentially relevant electronic documents.

To guarantee compliance with electronic discovery requests, counsel may run system-wide keyword searches and then maintain copies of each “hit” in order to retain all potentially relevant documents prior to later determining which documents may or may not be relevant to comply with discovery requests. In other words, counsel must go beyond making sure the client has issued a “litigation” hold; rather, counsel must actively “monitor compliance so that all sources of discoverable information are identified and searched.” Id.

Counsel's Continuing Duty to Monitor Retention and Production of Relevant Electronic Documents

Counsel's duty to identify documents that are potentially relevant evolves into such counsel's duty to supplement those responses in accordance with Rule 26. See Fed.R.Civ.P. 26(e). The court in Zubulake V expressly noted that, “A lawyer cannot be obliged to monitor her client like a parent watching a child.” Id. at 433. Despite this acknowledgement, the court did recognize that it is unlikely that a client can be expected to receive a “litigation hold” only one time and thereafter be expected to fully comply with the hold request without continued supervision from counsel. Id.

Fortunately, the court took it upon itself to provide explicit guidance to counsel as to what steps counsel should be taken to ensure compliance with the rules of discovery. First, counsel should issue a “litigation hold” as soon as it becomes apparent that litigation is likely to occur or at the beginning of any litigation. Id. at 433, citing Zublake IV, 220 F.R.D. at 218. Second, counsel must communicate with the “key players” in the litigation as these are the employees who are most likely to have the relevant information sought by the opposing party in the litigation. Id. at 433-434. Finally, counsel must advise all of the company's employees of their duty to produce electronic copies of their relevant active files. Counsel should also communicate with the client's information system personnel to make sure that any potentially relevant backup tapes are retained and safely stored during the pendency of the litigation. Id. at 434.

These guidelines are extremely useful and should serve as an outline for counsel involved in complex litigation to ensure proper compliance with discovery requests for electronic materials. Other professional groups including the American Bar Association and The Sedona Conference' have promulgated guidelines for counsel to help navigate the tricky road involving the discovery of electronic documents. The Sedona Principles are discussed later in this article.

Failure to Properly Supervise Document Production May Result in Sanctions Against Counsel

Unfortunately for the attorneys representing Qualcomm Inc. in the matter of Qualcomm Inc. v. Broadcom Corp., 2008 WL 66932 (S.D. Cal.) (Jan. 7, 2008), their failure to take the guidelines of the Zubulake decisions to heart exposed their client and themselves to severe sanctions. In the Qualcomm case, a patent infringement case, it was revealed to Broadcom (and the court) for the first time during the examination of a witness at trial that at least 21 relevant e-mails existed but were not produced during discovery. These 21 e-mails were directly relevant to Broadcom's waiver defense at trial. In fact, once the existence of these e-mails was revealed during cross-examination by an employee at trial, it became apparent that at least 46,000 other relevant e-mails and documents had not been produced during discovery. Id. at 6. The failure to produce the 21 relevant e-mails was aggravated by the fact that following the exposure of such failure at trial, Qualcomm continued to dispute that the e-mails were relevant and responsive to Broadcom's discovery requests. The court found that there was “clear and convincing evidence” that Qualcomm intentionally engaged in conduct designed to prevent Broadcom from discovering key evidence which undercut Qualcomm's theory of the case. Id. Finding that Qualcomm had engaged in intentional misconduct in identifying key witnesses and locating relevant evidence, the court ordered monetary sanctions in the form an award to Broadcom of all of its attorneys' fees and costs incurred in the litigation to the tune of over $8 million. Id. at 17.

Of even more concern to attorneys should be the findings the court made of attorney misconduct based upon the role that Qualcomm's attorneys appeared to have played in facilitating the withholding of relevant electronic documents during discovery. What the court found is that “one or more of the retained lawyers chose not to look in the correct locations for the correct documents, to accept the unsubstantiated assurances of an important client that its search was sufficient, to ignore the warning signs that the document search and production were inadequate, not to press Qualcomm employees for the truth, an/or to encourage employees to provide the information (or lack of information) that Qualcomm needed to assert its non-participation argument and to succeed in this lawsuit.” Id. at 13. The results of these actions allowed Qualcomm to withhold thousands of relevant documents and “to assert numerous false and misleading arguments to the court and jury.” Id. For these reasons, the court sanctioned certain of Qualcomm's attorneys by referral to the California State Bar. Id. at 18.

Obviously, this outcome is one that counsel should take any and all necessary steps to avoid at all costs. Fortunately, various court decisions, the recently amended federal and various local rules and professional organizations have issued guidelines to assist parties and their counsel in navigating the murky waters of electronic discovery compliance.

The Sedona Principles

In June 2007, The Sedona Conference' Working Group on Best Practices for Electronic Document Retention and Production issued The Sedona Principles: Best Practices Recommendations & Principles for Addressing Electronic Document Production, Second Edition (June 2007). While this is a lengthy document, the serious litigator should attain a working knowledge and understanding of the 14 principles set forth therein.

In discussing each of the principles, the authors thoroughly review each principle in terms of the recently amended FRCP to which it relates. The underlying concept for the authors is the understanding that the discovery of electronic information is different from the discovery of traditional paper documents, both in terms of the sheer volume of electronic documents (and e-mails), the difficulty in disposing of electronic documents and the unintended information (e.g., metadata) which may exist within e-mails and other electronic documents. While the FRCP only apply once litigation has begun, The Sedona Principles present “best practices” for preserving documents prior to the commencement of litigation. For example, Principle No. 1 states, “Electronically stored information is potentially discoverable under Fed.R.Civ.P. 34 or its state equivalents. Organizations must properly preserve electronically stored information that can reasonably be anticipated to be relevant to litigation.” Id. at 11. Such a directive is clearly aimed at both counsel and parties to establish comprehensive document retention policies. Other principles deal with the costs and burdens of the discovery of electronic documents, as well as encouraging parties to communicate early in the discovery process to resolve any electronic discovery issues at the outset of litigation. See, e.g., Principles 2 and 3.

Conclusion

Attorneys owe it to their clients and to themselves to become intimately familiar with their clients' document retention policies and computer systems. Once litigation commences, counsel's duties require that he or she actively participate in the client's search for and retention of relevant documents. Fortunately, counsel can turn to the guidelines set forth by various courts, the Federal Rules and local rules and The Sedona Conference' Principles to assist with satisfying these obligations.

Stacy Edelstein Hyken is a Senior Attorney with the Atlanta law firm of Arnall Golden Gregory LLP and a member of the Real Estate Practice Group. She previously practiced for more than 12 years as a litigator. She can be reached at [email protected].