Today, the discovery of information in most litigation involves large amounts of digital documents and data. Corporate counsel goes through a painful hand wringing ritual every time they think about data preservation versus spoliation versus data destruction. You can hear the pain flow down from the corporate inner wards every time a lawsuit is filed and they must think about collections, cullings and productions.
Are things really that bad for corporate America? Not really. Particularly when you consider it is they who have done this to themselves, or at least participated in it. Now, they have enlisted a cadre of corporate friends to change the rules of the game to better protect them from the alleged overwhelming costs of lawsuit discovery.
Corporations are exposed to a variety of different types of litigation or similar types of actions from, including:
- Securities and Exchange Commission;
- US Department of Justice
- Internal Revenue Service;
- Boards of directors;
- Auditors, both internal and external;
- Insurance companies;
- Company vs company litigation
- And, many others
So, all the wringing of hands when it comes to having to produce documents and data to “small-time” plaintiffs, is not so much the cost or time – they don’t want to have to do it. That is the reason that Corporate America has gotten so solidly behind recent recommended rule changes to the Federal Rules of Civil Procedure. They have called out their lawyers, their law professors and their corporate officers all to talk about their vast experience with eDiscovery and the monumentally unfair burden placed on corporations by the current rules.
How did Corporate America do this to itself? Email and electronic document creation, that’s how and we reveled in it! I mean how great is it that you and I can now carry on a complete conversation thousands of miles apart without having to hang on the phone? Of course, today that is what is called a record to be preserved.
In the “old days”, you and I might hammer out the details of an agreement over the phone or maybe in person. With the exception of our notes (which we may or not ultimately keep) there is no record of those agreements except the draft of the agreement that you and I begin to circulate and make revisions to; with those revisions quite often made on the face of the documents. Those documents may have been mailed or, maybe even faxed, but unless we made copies, there were still minimal records of what we discussed, agreed to, disagreed to and changed our minds about. At the end of the day, really minimal documents survived.
Today, we communicate incessantly by email. We email back and forth maybe dozens of times to reach agreements. All of the time, we are forwarding, copying or blind copying those emails to others and they to others, and etc. We trade agreements and make revisions using comment and markup tools. We forward the various draft stages of the agreements to our legal departments, our production departments to see if we comply, and to our peers to determine if we are doing the right thing. When we have finished our trading back and forth and all our sharing, we may have conservatively generated hundreds of emails; many of which we are unaware of their existence, their entire content or who has copies.
When lawsuits begin to fly is the time when everyone begins to worry about all those cc’s, forwards and bcc’s. It is actually surprising that we have not come all that far since the Arthur Anderson case, when the ABA held a conference with the description of one of the panels as: “Enron, Arthur Andersen, Sarbanes-Oxley, flash drives . . . all contribute to concern about what documents to create and retain. What is the law on document retention and destruction for lawyers, during and after representation? And what kind of policies and practices make practical sense in this new environment?”
Although, I would hope that Corporate America has moved beyond the negligence displayed in the Coleman vs. Morgan Stanley (2005WL 679071) case and the missteps of the Zubulake v UBS Warburg [220 F.R.D. 212 (S.D.N.Y. 2003)} case, I am satisfied we have moved well beyond the Micron vs. Rambus cases.
The Rambus case is just one of those “fun” cases to talk about because it is a perfect example of the ignorant taking action without giving thought to either the consequences or the technology of the situation. Rambus was essentially a patent infringement case in which Rambus, prior to the suit, was able to sense growing problems and the precursors to a lawsuit being filed. So, Rambus took action such as:
- Altering “back up” policies to provide for the destruction of emails and other data;
- Retention policies were changed to maintaining backups for no longer than (3) months;
- Demagnetization of all back up tapes, except one;
- Selectively preserved data and documents that would help Rambus’ case;
- And, then came the “shred parties”.
Rambus organized a series of “shred days” and on the first of these days over 400 bankers boxes of documents were shredded. There were reports of pizza, refreshments and a party atmosphere while they carried out and shredded away.
This, of course, is an extreme example of what can happen to Corporate America when they “take the bull too firmly by the horns”. Today, corporations are permitted to have regularly followed destruction policies and follow them, without the threat of spoliation; as long as they cease those practices when notified of threatened litigation or when they reasonably know.
Let’s face it, if 300 of your widgets begin to kill and maim people and your design engineers’ start telling you they think there may be a problem, you have to stop shredding physically and digitally. You have to preserve that information. If you are in the corporate world, the threat of the SEC, the IRS or another regulator is always there and the requirement to provide them with documents and data.
So, let’s face it, other than the digital age allowing us to produce hundreds more documents than we used to, how is it so very different today than it was in the past?