Status Of E-Discovery Law: A Judicial Perspective On The Current State Of E-Discovery

Monday, April 5, 2010 - 01:00

The Editor reports on comments by Hon. Shira A. Scheindlin, United States District Judge, Southern District of New York during a webinar entitled Electronic Discovery Guidance 2009: What Corporate and Outside Counsel Need To Know presented by the Practising Law Institute. To purchase the complete webinar or only Judge Scheindlin's segment visit http://www.pli.edu/product/clenow_detail.asp?id=47794&t=DAJ0_8MCC1 .

Judge Scheindlin wrote the influential Zubulake opinions (as well as, most recently, Pension Committee v. Banc of America. that remain persuasive authority throughout the country today. She was nominated to the bench by President Bill Clinton in 1994. Before taking her seat on the bench she worked as a prosecutor, a commercial lawyer and a special master and magistrate judge in the Eastern District of New York. She was a special master in the Agent Orange Mass Tort Litigation. She has presided over a number of high-profile cases, many of which advance important new positions in the common law. She is also an adjunct professor at Brooklyn Law School and a frequent lecturer on the subject of e-discovery.

Judge Scheindlin has been a member of the Judicial Conference of the United States Advisory Committee on the Federal Rules of Civil Procedure. She is also a member of the American Law Institute, where she is a member of the Advisors' Consultative Group on the Aggregate Litigation Project. She is a prolific author, including a recent case book entitled Electronic Discovery and Digital Evidence : Cases and Materials .

Judge Scheindlin began her one-hour segment of the webinar by mentioning that each time she speaks at this conference she initially considers providing a review of the most interesting cases involving ESI that have been issued during the past year. But as she reviews the cases, she quickly gives up on that idea because some topics leap out as requiring a more in-depth discussion than others. As a result, she always ends up choosing what she believes are the few topics that really deserve careful and full treatment and that this year she has selected three topics.

She began with the thorny issues raised by Federal Rule of Evidence 502, which she reviewed in some detail. Next, she discussed the duty to preserve and the adequacy of litigation holds. Her last topic was cloud computing. There is a thirst for knowledge about what cloud computing is and its potential effect on litigation issues, including cross-border discovery.

Federal Rule Of Evidence 502

In the year following the adoption of 502, which concerns attorney-client and work-product protection, the cases reflect some confusion as to its scope and the protections that it offers and whether it will in the end really be useful in reducing the costs of expensive privilege review. Judge Scheindlin commenced her discussion of the sections of 502 by outlining their effect as follows:

502(a) limits subject matter waiver. If a privileged document is produced in a federal proceeding or to a federal office or agency, any waiver as to that document will generally not extend to undisclosed documents in any federal or state proceeding unless the waiver was intentional, the undisclosed documents concern the same subject matter as the disclosed privileged information, and the documents ought "in fairness to be considered together." 502(a) doesn't eliminate subject matter waiver, but it limits the fear of subject matter waiver where there is inadvertent production of a document.

502(b) is important because it covers inadvertent disclosures. If disclosure of a privileged or protected document is made in a federal proceeding or to a federal office or agency, there will be no waiver of the privilege even as to that document if the disclosure was inadvertent and the holder of the privilege had taken reasonable steps to prevent that disclosure and rectify the error and had acted promptly to get the document back.

502(c) provides that, in determining whether a disclosure of privileged communications in a state proceeding constitutes a waiver, the federal court should apply the federal or state law that is most protective of the privilege. However, 502(c) will not apply where the disclosure in the state court is already subject to a state court's confidentiality order. In such cases, the federal courts will respect the state court's confidentiality order.

502(d) provides that a federal court may order that there is no waiver resulting from a disclosure in a proceeding before the court if that disclosure is involuntary. Judge Scheindlin remarked that, "If the case is in my court and you get a 502(d) order, there won't be any waiver in any other federal or state proceeding from the production in my court. So you can see how strong that protection is."

Finally, 502(e) states that if the parties enter into their own agreement regarding the effect of a disclosure of privileged material in a federal proceeding, it will only bind the parties to that proceeding unless that agreement is incorporated in a court order. For example, if the parties enter into their own clawback or quick peek agreement, it is only going to bind the parties in that particular proceeding and not in any other state or federal court unless the agreement is incorporated in that 502(d) order.

If you don't get a court order, you are losing the protection in other state and federal actions. Judge Scheindlin commented that in this first year after adoption of FRE 502, she was not seeing enough attorneys asking for these 502(d) orders.

Judge Scheindlin then proceeded to discuss issues that arise under each of these subsections and the case law.

Duty To Preserve And The Adequacy Of Litigation Holds

Judge Scheindlin stated that the prelitigation duty to preserve is not and can't be addressed in the Federal Rules of Civil Procedure because by definition that duty arises prior to the onset of a lawsuit. The rules can only govern conduct during a lawsuit so there is no rule. The duty to preserve arises strictly from the common law, and every jurisdiction defines it somewhat differently. The two biggest questions are when does this duty to preserve arise and what is the scope of the duty once it arises. To answer those questions, you have to go circuit by circuit and state by state because all of the laws differ.

She observed that although the language differs, the overarching principles are the same. That is simply that the duty to preserve arises when a party should reasonably anticipate that litigation will ensue. If you have reason to believe that you are going to be sued, there is a duty to preserve. Judge Scheindlin also reminded the plaintiffs attorneys that if you reasonably know that you are going to bring a suit, obviously you have a duty to preserve as a plaintiff. There are many questions that courts have addressed. She went through a list of questions that you should keep in mind when considering when the duty to preserve arises.

She then reviewed some of the recent cases discussing the duty to preserve, including, among others Adams v. Dell, which stands for the proposition that spoliation can be found based solely on poor data retention practices. Judge Scheindlin noted that the Adams v. Dell holding was novel and that the Magistrate Judge's order at issue is on appeal. She also discussed Innis Arden Golf Club vs. Pitney Bowes, in which the court held that a plaintiff's prelitigation duty to preserve evidence arose when it acknowledged it was going to seek remediation costs from parties potentially responsible for soil contamination and when it hired an attorney to consider filing a lawsuit.

Cloud Computing

Judge Scheindlin then turned to cloud computing and its implications. She said that everyone now is talking about cloud computing, but that many people don't know exactly what cloud computing is. She then explained cloud computing and its legal implications.

This new term is slowly but surely making its way into the field of e-discovery. Cloud computing is also called distributed computing. It is the computing industry's term for providing computational power and data storage capacity as instantly available services to millions of simpler devices such as laptops, desktops, PDAs and electronic book viewers. As Wired magazine recently said "All your gadgets can be used to access all your information all the time."

Large information technology companies such as Amazon, Microsoft and Google have created computing centers where thousands of computers are linked into a network and communicate with user devices over the Internet. The term cloud computing has caught on because applications and data are not tied to or stored in any one personal device. Instead they are kept in the cloud and can be pulled down to earth from any device.

You can obtain the information, but it is not stored on your personal electronic device. Cloud computing supports a business model termed Software as a Service, or SaaS. Google's email application, Gmail, provides a simple example of cloud computing. Gmail can be accessed from all sorts of devices. Gmail users install no software in their devices; rather, Gmail software is installed on Google's computers which are kept at Google's data centers.

At the user's request, the Gmail software sends a webpage to the user's personal device. The processing of the email data and the sorting and categorizing of emails and attachments are done at Google's data centers. Gmail messages typically are not kept permanently on the viewing device or on a local network. Instead, like the Gmail software, a user's personal data is stored at a Google facility that you can call up at will.

In cloud computing, the personal device and local network are reduced to little more than an input/output device and communication channel. While creation, processing and storage of electronic records are directed from your user device, these processes occur in the service provider's data center.

The data centers or servers form the heart of a computer cloud containing thousands of individual servers linked together in networks that let them share their computing power. Because they are connected over the Internet, data centers can be built anywhere on earth. Google alone has built at least five facilities across the United States and has dozens of facilities worldwide.

Virtualization software has been a key driver of cloud computing and the rise of data centers. Through virtualization, each physical server can operate as two or more virtual servers running separate applications, and multiple computers can be operated together as though they were a single massive server. With virtualization software there may be no single machine or group of machines at a data center that acts as the permanent server for a user's application. Instead the virtual server may migrate continually as machines are turned on and off in response to demand and energy efficiency practices.

Judge Scheindlin then mentioned some of the implications for e-discovery of cloud computing, particularly with respect to cross-border issues.