E-Discovery Strategies for Rule 45 Subpoenas and Non-Party...

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E-Discovery Strategies for Rule 45 Subpoenas and Non-Party Production

presents

Today's panel features:

Christopher J. Garvey, Partner, Goodwin Procter, New York

Todd L. Nunn, Partner, K&L Gates, Seattle

Grant J. Esposito, Partner, Morrison & Foerster, New York

Wednesday, May 20, 2009

The conference begins at:1 pm Eastern12 pm Central

11 am Mountain10 am Pacific

The audio portion of this conference will be accessible by telephone only. Please refer to the dial in instructions emailed to registrants to access the audio portion of the conference.

A Live 90-Minute Audio Conference with Interactive Q&A

1

Introduction to Rule 45 and ESI

Todd L. Nunne-DAT GroupK&L Gates, Seattle

2

Rule 45

§ Rule 45 deals with testimony and document requests to non-parties – subpoenas

§ ESI Amendments December 2006§ Mirrors amendments to Rule 26, 34§ ESI§ Format of production§ Two Tier§ Claw Back

§ I will discuss overview – my co-presenters will go into more detail about many of these subjects

3

§ (C) Combining or Separating a Command to Produce or to Permit Inspection; Specifying the Form for Electronically Stored Information. A command to produce documents, electronically stored information, or tangible things or to permit the inspection of premises may be included in a subpoena commanding attendance at a deposition, hearing, or trial, or may be set out in a separate subpoena. A subpoena may specify the form or forms in which electronically stored information is to be produced.

4

Rule 45(d)(1)

§ (d) Duties in Responding to a Subpoena.§ (1) Producing Documents or Electronically

Stored Information. These procedures apply to producing documents or electronically stored information:

5

Rule 45(d)(1)(A)

§ (A) Documents. A person responding to a subpoena to produce documents must produce them as they are kept in the ordinary course of business or must organize and label them to correspond to the categories in the demand.

6

Rule 45(d)(1)(B)

§ (B) Form for Producing Electronically Stored Information Not Specified. If a subpoena does not specify a form for producing electronically stored information, the person responding must produce it in a form or forms in which it is ordinarily maintained or in a reasonably usable form or forms.

7

Rule 45(d)(1)(C)

§ (C) Electronically Stored Information Produced in Only One Form. The person responding need not produce the same electronically stored information in more than one form.

8

Rule 45(d)(1)(D)§ (D) Inaccessible Electronically Stored Information. The person

responding need not provide discovery of electronically stored information from sources that the person identifies as not reasonably accessible because of undue burden or cost. On motionto compel discovery or for a protective order, the person responding must show that the information is not reasonably accessible because of undue burden or cost. If that showing is made, the court may nonetheless order discovery from such sources if the requesting party shows good cause, considering the limitations of Rule 26(b)(2)(C). The court may specify conditions for the discovery.

9

Rule 45(d)(2)(A)§ (2) Claiming Privilege or Protection.§ (A) Information Withheld. A person withholding subpoenaed

information under a claim that it is privileged or subject to protection as trial-preparation material must:

§ (i) expressly make the claim; and§ (ii) describe the nature of the withheld documents,

communications, or tangible things in a manner that, without revealing information itself privileged or protected, will enable the parties to assess the claim.

10

45(d)(2)(B)§ (B) Information Produced. If information produced in response to a

subpoena is subject to a claim of privilege or of protection as trial-preparation material, the person making the claim may notify anyparty that received the information of the claim and the basis for it. After being notified, a party must promptly return, sequester, or destroy the specified information and any copies it has; must not use or disclose the information until the claim is resolved; must take reasonable steps to retrieve the information if the party disclosed it before being notified; and may promptly present the information to the court under seal for a determination of the claim. The person who produced the information must preserve the information untilthe claim is resolved.

11

Rule 45(e)

§ (e) Contempt. The issuing court may hold in contempt a person who, having been served, fails without adequate excuse to obey the subpoena. A nonparty's failure to obey must be excused if the subpoena purports to require the nonparty to attend or produce at a place outside the limits of Rule 45(c)(3)(A)(ii).

12

Initial Matters - Meet and Confer

§ Meet and confer required before serve subpoena§ Rule 26(d) requires that “a party may not seek discovery from

any source before the parties have conferred as required by Rule 26(f).”

§ Courts have concluded that the requirements of Rule 26(d) apply to subpoenas issued to non-parties. Crutcher v. Fidelity Nat'l Ins. Co., 2007 WL 430655 (E.D. La. Feb. 5, 2007).

§ Parties can show good cause to serve subpoena before 26(f). UMG Recordings, Inc. v. Doe, 2008 WL 2949427 (N.D. Cal. July 30, 2008)

13

Meet and Confer

§ Opportunity to discuss§ Need for third party discovery – one or both parties§ Timing relative to motions, other case activities§ Cost/volume – cost sharing§ Admissibility – stipulation or other agreement

§ Make court aware in discovery plan§ Impact on court dates

14

Conference with third party

§ Good practice to confer with third party (or if you are third party, to confer with issuer of subpoena)

§ Probably required to comply with 45(c)(1)(Avoid undue burden)

§ Should discuss:§ anticipated volume/timing/cost issues§ form of production of ESI§ privilege/trade secret/privacy issues§ handling admissibility issues

15

Next Steps

§ Objections§ Motion to Quash or Modify§ Motion for Protective Order§ Production

§ Conference could make sense at any point

16

Objections

§ Timeline: Serve within 14 days of receipt of requests, or before time for responding if less than 14 days. FRCP(C)(2)(B).

§ Failure to timely object may result in waiver of the objection.

§ Must be written.§ Serving timely objections forces a motion to compel.

17

Objections

§ Scope§ Overbreadth§ Relevance§ Privilege§ Control§ Confidentiality/privacy§ Undue expense§ Violation of Law

§ Format of production§ Inaccessible data

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Motion to Quash§ The court MUST quash if the

discovery request:

§ Fails to allow a reasonable time for compliance

§ Requires a person to travel more than 100 miles

§ Requires disclosure of privileged information without exception or waiver

§ Subjects a nonparty to undue burden

§ 45(c)(3)(A).

§ The court MAY quash if the discovery requests:

§ Requires disclosure of trade secret or other confidential information

§ Requires disclosure of an unretained expert’s opinion

§ 45(c)(3)(B).

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Motion for Protective Order

§ FRCP 26(c)

§ Should be made when confidential information is requested, even where motion to quash has been filed.

§ Easier to obtain on behalf of nonparties.

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Motion for Protective Order

§ As appropriate, request the following protections:§ Limiting access to specified persons (i.e. attorneys’ eyes only)§ Limiting use to the particular lawsuit§ Prohibiting reproduction or copying§ Obtaining a bond to protect against risk or disclosure§ Designating one person as custodian of all confidential records§ Requiring persons who will see the information to sign a

confidentiality agreement§ Requiring return of protected documents at the end of the case§ Requesting that deposition transcripts be sealed§ Redact personal/private information

21

Admissibility issues

§ ESI admissibility should be dealt with early with third parties if possible

§ ESI subject to same requirements for admission as hard copy:§ Relevant § Authentic§ Hearsay/exception§ Original/duplicate§ Unfair prejudice

22

Authenticity

§ Courts increasingly demanding that proponents of evidence obtained from ESI pay more attention to the foundational requirements than has been customary for introducing evidence not produced from ESI. Lorraine v. Markel Am. Ins., 241 F.R.D. 534, 543 (D.Md. 2007).

§ Standards for authentication vary. Id. at 558.§ Ninth Circuit most demanding at present. Id. (citing

In re Vee Vinhnee, 336 B.R. 437 (9th Cir. 2005).

23

Professor Imwinkelried Foundation1. The business uses a

computer2. The computer is reliable3. The business has developed

a procedure for inserting data into the computer

4. The procedure has built-in safeguards to ensure accuracy and identify errors

5. The business keeps the computer in a good state of repair

6. The witness had the computer readout certain data

7. The witness used the proper procedures to obtain the readout

8. The computer was in working order at the time the witness obtained the readout

9. The witness recognizes the exhibit as the readout

10.The witness explains how he or she recognizes the readout

11. If the readout contains strange symbols or terms, witness explains the meaning

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ESI Admissibility

§ This is the kind of information you would want to gather at the time of production if possible

§ Work with third party to provide declaration or identify witness when production made§ Can support self authentication of business record

under ER 902(11)§ Discuss stipulation with opposing party

© 2009 Morrison & Foerster LLP All Rights Reserved

Duties of Non-Parties

Grant J. EspositoMorrison & Foerster LLP

Non-Parties

Non-Parties

I. How Rule 45 Affects You:

• Is there a duty to preserve? When?

• What is your obligation?

• Consequences for failure to comply.

A Duty To Preserve?

§ Absent a voluntary assumption of duty or a contractual obligation, the duty to preserve evidence, electronic or otherwise, adheres only to those who have been or reasonably expect to be sued.

§ The existence of litigation between others does not obligate a non-party to implement preservation efforts.

Ø See, e.g., Capricorn Power Co. Inc. v. Siemens Westinghouse Power Corp., 220 F.R.D. 429, 436 (W.D. Pa. 2004); Broussard v. Lemons, 186 F.R.D. 396, 398 (W.D. La. 1999).

§ In a majority of jurisdictions a duty to preserve will ordinarily not arise until a non-party has received notice of litigation.

Ø See, e.g., MetLife Auto & Home v. Joe Basil Chevrolet, Inc., 775 N.Y.S.2d 754 (N.Y.,2004).

A Duty to Preserve With a Subpoena?

• The focus is on compliance, not preservation.

Ø See, e.g., Chase Manhattan Bank v. T&N PLC, 156 F.R.D. 82, 85 (S.D.N.Y. 1994).

• Napster Dictum: subpoena creates a legal duty to preserve.

Ø In re Napster, Inc. Copyright Litigation, 462 F.Supp.2d 1060, 1068 (N.D. Cal. 2006).

• “Consider immediately issuing a preservation notice/legal hold.”

Ø The Sedona Conference© Commentary on Non-Party Production & Rule 45 Subpoenas (April 2008).

Your Obligation

• To the Court: satisfy the subpoena, usually by negotiation.

• To your constituents: minimize cost and business disruption.

Ø Prepare a letter to counsel that sets out the format and limitations of your preservation and production (know and use the Zubulake factors!)

Ø Pick the easiest format

Ø Get enough time to comply

Ø Clarify that when you’re done, you’re done

The Format Battle

§ “Reasonably Usable” Form

§ No agreed-upon definition of “reasonably usable”Ø At the least, it probably means searchable – require OCR (Optical

Character Recognition)

Ø How much metadata to include?

Ø Best to negotiate with your opponent (and your IT people)

§ Courts Are Split On Whether “Native Format” Is Required

The Format Battle

§ Nova Measuring Instruments Ltd. v. Nanometrics, Inc.,417 F. Supp. 2d 1121 (N.D. Cal. 2006)Ø Defendants failed to offer relevant reasons why documents should

not be produced in native format

§ Hagenbuch v. 3B6 Sistemi Elettronici Industriali S.R.L.,2006 U.S. Dist. Lexis 10838 (N.D. Ill. Mar. 8, 2006) Ø TIFF production did “not contain all of the relevant, non-privileged

information,” lacked metadata, e-mail attachments and recipients, and was not produced in the “usual course of business”

§ Treppel v. Biovail Corp., 233 F.R.D. 363 (S.D.N.Y. 2006) Ø Native production was appropriate in that defendant failed to offer

a substantive basis for its objection to native format

Some Courts Have Favored Native Format

The Format Battle

“Reasonably Usable” Form May Be Non-Native§ Static Control Components, Inc. v. Lexmark Int’l Inc.,

2006 U.S. Dist. LEXIS 16662 (E.D. Ky. Apr. 5, 2006) Ø Company ordered to produce database in a reasonably useful

form rather than simply making the database available for reviewat the company’s facilities

§ CP Solutions PTE, Ltd. v. General Elec. Co., 2006 WL 1272615 (D. Conn. Feb. 6, 2006) Ø Request for production of .pst files in native format denied, but

court required that that information be produced in a readable, usable format

Consequences?

§ While a duty to preserve will not ordinarily arise prior to notice, some jurisdictions do recognize negligent and/or intentional third-party spoliation as an actionable independent tort where a duty to preserve was established by contract, voluntary assumption of duty, a particular law or some other special circumstance.

Ø See, Pikey v. Dr. William C. Bryant, 203 S.W.3d 817, 822-824 (Mo. App. S.D. 2006).

§ Failure to preserve discoverable documents and data after subpoena may give rise to contempt of court.

Ø See Fed. R. Civ. P.45(e).

1


Christopher J. GarveyJoseph SchwartzTanya PohlGoodwin Procter LLP ©2009 Goodwin Procter LLP

2

Issues Facing Non-Parties

• Undue burden or cost• Cost shifting• Information in “possession, custody or

control”• Accessibility, sampling and privilege• Form of Production

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Undue Burden or Cost

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Non-parties should not have same burdens or costs as parties:

• FRCP 45(c)(1) requires the party issuing a subpoena to avoid imposing undue burden or expense upon a non-party

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Undue Burden or CostGeneral Factors

Non-parties should not have same burdens or costs as parties – courts will consider:

• Relevance of requested information• Party’s need for documents• Breadth of request• Time period• Particularity of description• Burden imposed on non-party

E.g., North Carolina Right to Life, Inc. v. Leake, 231 F.R.D. 49 (D.D.C. 2005)

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Burden imposed on non-party:

• “Although discovery is by definition invasive, parties to a lawsuit must accept its travails as a natural concomitant of modern civil litigation. Accordingly, concern for the unwanted burden thrust upon non-parties is a factor entitled to special weight in evaluating the balance of competing needs.”

E.g., In re Cusumano, 162 F.3d 708, 717 (1st

Cir. 1998).

7


Procedural considerations:

• FRCP 45(c)(2)(B) – non-party need only serve an objection to the subpoena

• FRCP 45(c)(2)(B)(i-ii) – party must then move to compel compliance

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Procedural considerations:

• Non-party:– bears the burden of establishing “undue

burden”– must come forward with affirmative evidence

and proof– cannot simply rely on ipse dixit

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Undue Burden or CostESI Considerations

• Is party-produced ESI insufficient?• Accessibility of data – i.e., backup tapes• Legacy data• Sampling & search protocol

10

Undue Burden or CostCases

• Braxton v. Farmer’s Ins. Group, 209 F.R.D. 651, 653 (N.D. Ala. 2002) (requiring a showing that party-produced ESI is insufficient)

• United States v. Amerigroup Illinois, Inc., 2005 WL 3111972 (N.D. Ill., Oct. 21, 2005) (holding restoration from backups to be undue burden)

• Auto Club Family Ins. Co. v. Abner, 2007 U.S. Dist. Lexis 63809 (E.D. La., Aug. 29, 2007) (finding availability of hard copies insufficient to quash non-party subpoena for ESI)

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Undue Burden or CostCases

• Malkin v. Cont’t Cas. Co., 2008 U.S. Dist. Lexis 97573, (E.D.Mo. Dec. 2, 2008) (document request to non-party was overbroad but would not be unduly burdensome if limited to the only two relevant custodians during the relevant time period)

• Cf. Burlodge Ltd. v. Standes Int’l Corp., 2009 U.S. Dist. Lexis 35649, (D.D.C. quashing subpoena for deposition against non-party and stating that district courts should be especially sensitive to the costs imposed on third parties)

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Burden of proof:• Suggested best practices

– Submit an affidavit of IT or other business professional(s) withknowledge of:

• The specific ESI burdens• The information and storage systems• The media on which the data exists (e.g., active servers, legacy,

back-up tapes, etc.)• The volume of data (gigabytes, terabytes, etc.)• The amount of time needed to restore and review • The resources (equipment, personnel, etc.) necessary to perform

these tasks• Any other considerations that contribute to burden (e.g., existence

of potentially privileged or confidential information)

• See also The Sedona Conference® Commentary on Non-Party Production & Rule 45 Subpoenas – available at: www.thesedonaconference.org

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Undue Burden or CostESI Considerations

• Open issue: “significant expense” v. “undue burden or cost”

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ESI considerations

• FRCP 45(c)(3) – the Court MUST quash or modify the subpoena where it subjects the non-party to undue burden

• FRCP 45(c)(2)(B)(ii) – any order enforcing the subpoena “must protect a person who is neither a party nor a party’s officer from significant expense resulting from compliance.”

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Cost Shifting – Who Pays

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• Generally non-party producer pays• R. 45(c) & 45(d)(1)(D) offer protection from

significant expense & undue burden or cost• Courts may require production but shift cost to

requesting party if documents are necessary to litigation but expensive to locate & produce

See, e.g. The Sedona Conference®Commentary on Non-Party Production & Rule 45 Subpoenas

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• A party’s offer to pay non-party’s costs in responding to subpoena is not necessarily dispositive of the undue burden issue.

• “Expense is but a part of the burden. As [non-party’s] uncontested affidavit indicates, the process of retrieving emails also entails extensive use of equipment and internal manpower. . . . That burden, which is undeniably substantial, exists independently of the monetary costs entailed.”

United States v. Amerigroup Illinois, Inc., 2005 WL 311972 (N.D. Ill. 2005)

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• FRCP 45(c)(2)(B) order compelling subpoena compliance must protect non-party from “significant expense.”

• “Protection from significant expense does not mean that the requesting party necessarily must bear the entire cost of compliance.”

Linder v. Calero-Portocarrero, 183 F.R.D. 314 (D.D.C. 1998), citing In re Exxon Valdez, 142 F.R.D. 380 (D.D.C. 1992)

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• Factors:– Scope of the request– Invasiveness– Need to separate privileged material– Non-party’s financial interest in the litigation– Whether the party seeking production of documents

ultimately prevails– The relative resources of the party and non-party– The reasonableness of the costs sought– The public importance of the litigation

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• Viacom Int’l, Inc. v. YouTube Inc., 2009 U.S. Dist. Lexis 4220 (N.D. Cal. Jan. 14, 2009) (granting non-party’s request for cost shifting for the production of documents related to other non-parties of the litigation)

• Cf. Aguilar v. ICE, 255 F.R.D. 350 (S.D.N.Y. 2008) (shifting cost of production to plaintiff where defendant had already produced and documents in second production would likely have little relevance)

• Linder v. Calero-Portocarrero, 183 F.R.D. 314 (D.D.C 1998) (granting request of two federal agencies that plaintiffs requesting extensive documents in non-party subpoenas pay one-half of non-parties’ production costs without regard to the party’s ability to pay)

• Compare In re Exxon Valdez, 142 F.R.D. 380 (D.D.C. 1992)

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• “Generally, attorneys’ fees and overhead costs are not permitted.” Tessera, Inc. v. Micron technology, Inc. 2006 WL 733498 (N.D. Cal. 2006)

• But see In re Automotive Refinishing Paint, 229 F.R.D. 482 (E.D. Pa. 2005) (“[a] non-party’s legal fees, especially where the work benefits the requesting party, have been considered a cost of compliance reimbursable.”)

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Information in “Possession, Custody or Control”

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Information in “possession, custody or control”

• Sometimes non-party data is under party control: In re NTL, Inc. Sec. Litig., 244 F.R.D. 179, 191 (S.D.N.Y. 2007) (holding that documents in non-party’s possession were in party control, where both were entities evolving out of a single bankruptcy)

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Information in “possession, custody or control”

• Privacy policies• State & federal privacy law• Contractual obligations (offsite storage,

streaming data)• International data protection laws• Special requirements for ISPs, webmail

providers

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Accessibility, Sampling and Privilege

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• Counsel should meet and confer in good faith• Produce & review active and reasonably

accessible data first• Test sampling protocols to assess volume &

nature of responsive and privileged documents • Notify recipient of privileged information &

basis per R. 45(d)(2)(B)• Agree on timetable for asserting privilege

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• Caveats:– Some courts have suggested that decisions

regarding the selected methodology of searching for relevant and privileged or confidential documents may require expert support per FRE 702

– The same expert support may be required to establish the statistical integrity and reliability of sampling methods chosen

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– See William A. Gross Constr. Assocs. V. Am. Mfr. Mut. Ins. Co., 256 F.R.D. 134 (S.D.N.Y. 2009); Victor Stanley, Inc. v. Creative Pipe, Inc., 250 F.R.D. 251 (D. Md. 2008); Equity Analytics, LLC v. Lundin, 248 F.R.D. 331 (D.D.C. 2008)

– See also The Sedona Conference ® Best Practices Commentary on the Use of Search and Information Retrieval Methods in E-Discovery, available at www.thesedonaconference.org

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– Quick peek and claw-back provisions• See Victor Stanley, Inc. v. Creative Pipe,

Inc., 250 F.R.D. 251 (D. Md. 2008); Hopson v. Mayor of Baltimore, 232 F.R.D. 228 (D. Md. 2005)

– Fed. R. Evidence 502• Enacted Sept. 19, 2008 ( Pub. L. No. 110-

322, 122 Stat. 3537)

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– FRE 502 (b) Inadvertent Disclosure• Does not operate as a waiver if:

– (1) the disclosure is inadvertent;– (2) the holder of the privilege or protection took

reasonable steps to prevent disclosure; and– (3) the holder promptly took reasonable steps to

rectify the error• See Rhoads Indus. Inc. v. Building Materials

Corp., 254 F.R.D. 216, 226-27 (E.D.Pa. Nov. 14, 2008 (analyzing a party’s inadvertent disclosure of privileged electronic documents under Rule 502).

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Form of Production

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Form of Production

• Non-parties want to use least costly (existing) form

• Parties want form most easily reviewable• R. 45(d)(1)(C): “One bite” provision• Seek agreement on format• Parties should consider paying for

production in other formats• Request for ESI may trump non-party’s

choice

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Form of ProductionCases

• Viacom Int’l, Inc. v. YouTube Inc., 2009 U.S. Dist. Lexis 4220 (N.D. Cal. Jan. 14, 2009) (party and non-party should meet and confer to agree on reasonable format for production)

• Cf. Aguilar v. ICE, 255 F.R.D. 350 (S.D.N.Y. 2008) (requiring party to produce metadata where doing so would not be unduly burdensome)

• Auto Club Family Ins. Co. v. Abner, 2007 U.S. Dist. Lexis 63809 (E.D. La., Aug. 29, 2007) (“[I]t is not a valid ground for objection that relevant, non-privileged electronic data can be produced in paper form, when the requesting party has specified production in an electronic format.”)

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