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Current E-Discovery Hot Topics and 2012 Year-End E-Discovery Report Moving Beyond Sanctions and Toward Solutions to Difficult Problems March 7, 2013

Webcast Slides--Gibson Dunn 2012 Year-End Report and Hot Topics

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These are the slides from our Webcast on the Gibson Dunn 2012 E-Discovery Year-End Report. Watch for our 2013 Mid-Year E-Discovery Report around the end of June.

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Page 1: Webcast Slides--Gibson Dunn 2012 Year-End Report and Hot Topics

Current E-Discovery Hot Topics and 2012 Year-End E-Discovery Report

Moving Beyond Sanctions and Toward Solutions to Difficult Problems

March 7, 2013

Page 2: Webcast Slides--Gibson Dunn 2012 Year-End Report and Hot Topics

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2012: Year In Review• Less attention to:

– Sanctions

• More attention to:– Predictive coding– International e-discovery– Cooperation– Social networking

• A sign of things to come?

Page 3: Webcast Slides--Gibson Dunn 2012 Year-End Report and Hot Topics

Sanctions

Jenna Musselman Yott

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SanctionsLess Dramatic, More Pragmatic, But Still Troubling

• No major dramatic opinions in 2012 like those seen in prior years

• Still a significant threat hanging over litigants and counsel– Sanctions awarded in 69 of the 120 cases found

where sanctions were sought (57.5%)– Similar rate (though fewer in number) when

compared to 2011 (sanctions granted in 90 of 150 cases, or 60%)

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SanctionsLess Dramatic, More Pragmatic, But Still Troubling

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20

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Monetary AdverseInference

Evidence Preclusion

Terminating Other

Type and Percentage of Reported Cases Where Sanctions Granted (January 1 –December 31, 2012)

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SanctionsLess Dramatic, More Pragmatic, But Still Troubling

• Monetary Sanctions still most common– e.g., fees and costs

• Adverse Inference & Evidence Preclusion – right to impose often “reserved” until entry of evidence

• Terminating Sanctions for egregious conduct– e.g., willful destruction of evidence expected to be

relevant

• Other possibilities to fit specific situations– e.g., reopening discovery or re-deposing witness

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SanctionsLess Dramatic, More Pragmatic, But Still Troubling

• Rambus cases reveal inconsistencies in different courts’ treatment of similar conduct

• Micron v. Rambus (D. Delaware)– January 3, 2013: case dispositive sanctions

imposed; patents declared unenforceable

• Hynix v. Rambus (N.D. California)– September 21, 2012: validity of patents

recognized; spoliation punished with monetary formula

Page 8: Webcast Slides--Gibson Dunn 2012 Year-End Report and Hot Topics

Proposed Rule Reform

Catherine Brewer

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Proposed Rule Reform• The cost and burden associated with discovery have resulted

in a recognition that changes need to be made to the Federal Rules of Civil Procedure

• Three main themes guiding reform efforts of the Federal Rules Civil Advisory Committee and the Discovery Subcommittee:– Early, hands-on case management– Cooperation– Proportionality/Scope of Discovery

• Goal to present comprehensive discovery rule changes for public comment later this year

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Proposed Rule Reform• Proposed Change to Rule 37(e)– Current Rule: “Absent exceptional circumstances, a court may not impose sanctions

under these rules on a party for failing to provide electronically stored information lost as a result of the routine, good-faith operation of an electronic information system.”

– Proposed Rule:• Absent a finding that the failure to preserve “irreparably deprived a party of any

meaningful opportunity to present a claim or defense” sanctions will only be justified when the failure to preserve was willful or in bad faith and caused substantial prejudice

• Seeks to have a court rely on the Federal Rules as the basis for issuing sanctions, not the court’s inherent power

• Sets forth five factors for a court to consider when evaluating if the failure to preserve was willful or in bad faith: (1) notice of pending litigation/preservation duty; (2) reasonableness of the party’s efforts to preserve; (3) was there a request to preserve and good-faith consultation regarding the scope of preservation; (4) proportionality of preservation to the scope of litigation; (5) did the preserving party seek timely guidance from the court regarding preservation

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Proposed Rule Reform• Additional changes being considered – Early case management

• Promote early conferences with the court on discovery issues• Potentially permit Rule 34 requests for production to be served before

Rule 26(f) conference– Cooperation

• Amend Rule 1 to more clearly articulate goal of cooperation– Proportionality

• Proposal to modify scope of discovery under Rule 26• Potential inclusion of the concept of proportionality as part of Rule 26• Presumptive limit to 15 interrogatories instead of 25• Presumptive limit to 25 requests for admission (excluding document

authenticity) and 25 requests for production • Presumptive limit of 5 depositions instead of 10 depositions with a

proposal to shorten the permitted length of depositions

Page 12: Webcast Slides--Gibson Dunn 2012 Year-End Report and Hot Topics

Search Methodology

Colin Davis

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Search Methodology Has Predictive Coding’s Time Finally Come?

• Predictive Coding Terminology– “Seed set”– “Recall” vs. “precision”– “Stabilization” / “iterative review”

• Five considerations from Da Silva Moore v. Publicis GroupeSA, No. 11 Civ. 1279(ALC)(AJP), 2012 WL 607412, at *11 (S.D.N.Y Feb. 24, 2012)– The parties’ agreement;– The amount of ESI to be reviewed;– The superiority of computer-assisted review to available

alternatives;– The need for cost-effectiveness and proportionality; and– The transparency of the process.

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Search Methodology Has Predictive Coding’s Time Finally Come?

• Predictive coding beyond Da Silva Moore– Global Aerospace Inc. v. Landow Aviation, L.P., Consol. Case. No.

CL 61040 (Va. Cir. Ct. Apr. 23, 2012) (approving defendants’ use of predictive coding without prejudice to plaintiffs’ raising an issue as to the completeness of defendants’ production).

– Kleen Products LLC v. Packaging Corp. of America, Case No. 1:10-cv-05711 (N.D. Ill. Mar. 28, 2012) (denying plaintiffs’ motion for an order requiring defendants to use predictive coding).

– In Re: Actos (Pioglitazone) Prods. Liab. Litig., MDL No. 6:11-md-2299 (W.D. La. July 27, 2012) (approving defendants’ use of predictive coding pursuant to stipulated protocol).

– EORHB, Inc. v. HOA Holdings LLC, Civil Action No. 7409-VCL (Del. Ch. Oct. 15, 2012) (sua sponte ordering the use of predictive coding and a single discovery vendor).

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PrivilegeWaiver Is Such Sweet Sorrow

• Waiver battles under Federal Rule of Evidence 502(b)– What are “reasonable efforts to prevent disclosure”?– What are “reasonable efforts to rectify” an inadvertent disclosure?

• No fault “claw-back” orders under Federal Rule of Evidence 502(d)– May allow parties “to conduct and respond to discovery expeditiously, without

the need for exhaustive pre-production privilege reviews, while still preserving each party’s right to assert the privilege.’” Adair v. EQT Prod. Co., Nos. 1:10CV00037, 1:10CV00041, 2012 WL 2526982, at *5 (W.D. Va. June 29, 2012).

• Privilege and work computers– Employees who have privileged communications on work computers, in

violation of employer policies, generally waive privilege because they have no objectively reasonable expectation of confidentiality regarding those communications. See, e.g., Chechele v. Ward, No. CIV-10-1286-M, 2012 WL 4481439 (W.D. Okla. Sept. 28, 2012).

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Proportionality

Brooke M. Wallace

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ProportionalityAn Increasingly Important Principle

• Proportionality concept reflected in e-discovery pilot projects, standing orders and proposed amendments to the Federal Rules of Civil Procedures Rules26 (scope of discovery) and 37 (sanctions)

• Sedona Conference® issued post-public comment version of its Commentary on Proportionality in Jan. 2013

• Courts continue to engage in mediating discovery disputes

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ProportionalityThe Sedona Conference® Commentary on Proportionality

• Sedona Principle One: The burdens and costs of preserving potentially relevant information should be weighed against the potential value and uniquenessof the information when determining the appropriate scope of preservation.

• Sedona Principle Four: Extrinsic information and sampling may assist in the analysis of whether requested discovery is sufficiently important to warrant the burden and expense of its production.

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ProportionalityNeither one size, nor one precedent, fits all

• Detailed assessment of benefit and cost are required– Expert testimony can be helpful

• Overbroad discovery requests should not (and will not) be enforced

• Cooperation and open communication with opposing counsel is encouraged– or required, in some courts

Page 20: Webcast Slides--Gibson Dunn 2012 Year-End Report and Hot Topics

Preservation

Matthew Kahn

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PreservationData Sources Proliferate While Case Law Provides Little Specific Guidance

• Companies facing challenges to preserve ever-increasing number of data sources

• Cases continue to provide little guidance on this issue

• Instead, major case law focuses over past year:– Oral vs. written preservation notices– Trigger for preservation obligations– Post-notice follow-up obligations– “Discovery about discovery”

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PreservationData Sources Proliferate While Case Law Provides Little Specific Guidance

• Oral vs. written preservation notices– Continued rejection of Pension Committee’s bright-line

rule (e.g., Chin)– Recognition that oral holds may be appropriate in some

instances…– …but in practice courts still very critical of oral holds– Best practice: written preservation notice

• Trigger– “Reasonably foreseeable” still the test– Applies to plaintiffs as well as to defendants

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PreservationData Sources Proliferate While Case Law Provides Little Specific Guidance

• Post-notice follow-up obligations– Consensus that “mere circulation of a litigation hold is

insufficient . . . a party must take affirmative steps”– Other than suspending autodeletion, little clarification of

what particular follow-up steps courts expect – Some best practices have been developed (e.g., Sedona

commentary legal holds, Sedona principles)

• “Discovery about discovery”– Court continue to shield information based on privilege…– …but “growing trend among courts to find the attorney-

client privilege is lost when spoliation has occurred”

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E-Discovery as a “Cost”

Heather L. Richardson

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E-Discovery As A “Cost”Statutory Background

• What are “costs” that may be awarded to a prevailing party?– Fed. R. Civ. Pro. 54(d)(1): “[C]osts... should be

allowed to the prevailing party”– 28 U.S.C. 1920: including as a cost “fees for

exemplification and the costs of making copies.”

• What is “exemplification”? What is “making copies”?

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E-Discovery As A “Cost”Recouping vendor fees and other e-discovery charges as a prevailing party

• Race Tires America, Inc. v. Hoosier Racing Tire Corp., 674 F.3d 158 (3d Cir. 2012)– “Making copies” includes:• Scanning• File format conversion (native to TIFF)• Converting VHS to DVD

– “Exemplification” does not include:• Electronic vendor discovery work (including

keyword searches, preservation and collection)

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E-Discovery As A “Cost”Recouping vendor fees and other e-discovery charges as a prevailing party

• After Race Tires…– Country Vintner of North Carolina v. E. & J. Gallo Winery,

Inc., No. 5:09-CV-326-BR, 2012 U.S. Dist. LEXIS 108905 (E.D. N.C. Aug. 3, 2012)

– Johnson v. Allstate Ins. Co., No. 07-cv-0781-SCW, 2012 U.S. Dist. LEXIS 148282 (S.D. Ill. Oct. 16, 2012) (awarding “costs of converting data into readable format”)

– El Camino Resources, Ltd. v. Huntington Nat’l Bank, No. 1:07-cv-598, 2012 U.S. Dist. LEXIS 146037 (W.D. Mich. May 3, 2012)

– Gabriel Techs., Corp. v. Qualcomm, Inc., No. 08CV1992, AJB (MDD), 2013 WL 410103 (S.D. Cal. Feb. 1, 2013)

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Social Media

Elizabeth Doisy

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Social Media Courts Adapt Traditional Discovery Rules to New Technology

• As use of social media by individuals and companies proliferates, the number of cases involving discovery of social media continues to grow

• Courts have become more successful at adapting discovery rules and procedures to social media

• Some examples:– Preservation and spoliation– Authentication– Collection of data

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Social Media Courts Adapt Traditional Discovery Rules to New Technology

• Preservation & Spoliation– Dynamic nature of social media makes preservation

difficult– At least one court has ordered a party to recreate a

Facebook page as it previously existed (Katiroll Co. v. Kati Roll & Platters)

• Authentication– Some courts require a showing of authentication such as

searching the individual’s hard drive or seeking information from the commercial host

– Others are less strict

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Social Media Courts Adapt Traditional Discovery Rules to New Technology

• Collection of data– Four approaches:

• requiring account holder to produce the information themselves• appointing a neutral expert to review and collect the

data• permitting requesting party access to the social media

account• third party subpoena to commercial host

– The trend is moving toward requiring the account holder to review his own account and produce any relevant information

Page 32: Webcast Slides--Gibson Dunn 2012 Year-End Report and Hot Topics

Cooperation

Jennifer Rearden

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CooperationMore Than Just Nice Words

• More than just a lofty ideal; courts are actually taking steps to foster cooperation.

• The idea is increasingly becoming the subject of pilot programs, standing orders, proposed rule changes (Rule 37(e)), and other broadly-applicable policies.

• Courts are focusing on the specifics of cooperation—getting parties to agree on custodians or form of production; imposing cost-shifting or sanctions when parties do not cooperate—rather than just issuing generalized calls for cooperation.

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CooperationCourts Taking the Initiative

• Pilot programs, standing orders, meet-and-confer requirements, other policies (District of Delaware default standards; Nassau County, NY Guidelines)

• “Forcing cooperation”: courts requiring parties to discuss e-discovery issues, including form of production, and attempt to seek agreement before coming to court (Northern District of California checklist)

• More than just Rule 26(f).

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CooperationFormat of Production

• Courts expect parties to agree on the form of production (metadata, native vs. TIFF files, etc.)

• Courts may set basic production parameters and look to the parties to work out the rest. Da Silva Moore v. Publicis Groupe, No. 11 Civ. 1279 (ALC) (AJP), 2012 WL 607412, at *22 (S.D.N.Y. Feb. 24, 2012); Navajo Nation v. United States, No. 06–945L, 2012 WL 5398792, at *3 (Fed. Cl. Oct. 17, 2012).

• As predictive coding and other forms of technology-assisted review become more prevalent, courts may increasingly expect parties to resolve many, if not most, review protocol-related issues consensually.

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CooperationThe Threat of Sanctions

• Courts do not seem to be sanctioning litigants for failing to cooperate, per se.

• However, courts have taken such a failure into account when resolving discovery disputes, commenting negatively on one or both parties’ failure to cooperate. See, e.g., Vasudevan Software, Inc. v. Microstrategy Inc., No. 11-cv-06637-RS-PSG, 2012 WL 5637611, at *6 (N.D. Cal. Nov. 15, 2012).

• And in at least one case, a party used the other side’s failure to cooperate as a defense against sanctions. Borwick v. T-Mobile West Corp., No. 11-cv-01683-LTB-MEH, 2012 WL 3984745 (D. Colo. Sept. 11, 2012).

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International E-Discovery

Gareth T. Evans

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International E-DiscoveryThe Cross-Border Conundrum

• Increasingly common need to preserve, collect and review ESI located in foreign jurisdictions.

• In many non-U.S. jurisdictions data privacy is viewed as a fundamental right and personal data is afforded greater protection than we are accustomed to in the U.S.

• U.S. courts, however, usually will not accept the operation of foreign data privacy law as an “excuse” for failing to produce relevant information located in a foreign jurisdiction.

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International E-DiscoveryThe Cross-Border Conundrum

• In litigation and investigations, foreign data privacy laws, “blocking statutes,” and other laws (e.g., China’s state secrets law) may impact several aspects of the e-discovery life cycle:– Preservation– Collection– Review– Transfer out of the jurisdiction– Production

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International E-DiscoverySolutions

• Foreign data privacy laws typically apply to “processing” of “personal data”

• Compliance can often be achieved through taking steps to render processing “legitimate” under data privacy law.

• Notification to the Data Protection Authority (“DPA”) and Obtaining Consent of DPA may be necessary.

• The Sedona Conference’s International Principles (Dec. 2011) provides guidance for a “legitimization plan:”– Confidentiality Order in U.S. litigation– Processing, Culling and Review in Foreign Jurisdiction– Redact Personal Information if Possible

• EU DPAs reacted positively to the InternationalPrinciples in 2012.

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