Preparing for Construction Litigation in a Electronic Age

Preparing for Construction Litigation In an Electronic Age By: Karen Groulx D +1 416 863 4697 [email protected]

22 May 2013

Dentons Canada LLP

http://www.dentons.com/karen-groulx

eDiscovery:

17 May 2013 Dentons Canada LLP Document reference # 2

• Single most significant change to the legal system in the last half century.

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• Email, Twitter and text messaging…

ESI = Volume


• 294 billion emails are sent each day. That’s 2.8 million emails per second.

• In the time it takes you to read this sentence, some 20 million emails entered cyberspace.

• In 2012, the average corporate user will send and receive about 110 email messages per day (Source: Radicati Group, Inc.)

Why do we care about ESI?


• 90% of ESI never gets printed

• You may be missing 90% of the relevant data!

Document Types and Sources


• A typical construction project generates ESI from numerous different sources • Email, Word, Excel, financial & accounting data, often in proprietary databases • AutoCAD drawings, Primavera P3, Expedition and other construction industry

programs • ESI stored in the on-board computer of heavy equipment

What is an Electronic Document?


• Electronically stored information (“ESI”): only readable through the use of computers

What is different about ESI?


• Volume

• Disorganization

• Duplication

• Transient in nature

• Hidden information (metadata)


The average hard drive can store a million

pages or more

=

Volume


“He who must search for a needle in a haystack is likely to end up with the attitude that the needle is not worth the search.”

-Justice Robert H. Jackson (1892-1954)

Duplication


• An email sent or cc’d to five people will reside in five email boxes as well as that of the sender

• If forwarded to additional recipients, or responded to several times, there may be more versions

Duplication


• Deleted doesn’t mean gone

• An email deleted from Trash will still be in Sent Items, recipient’s Inbox, email server, backup tapes

What is metadata?


• Data about data

• Evidence stored electronically that describes the characteristics, origins, usage and validity of other electronic evidence

When is metadata significant?


• If the origin, use, distribution, destruction or integrity of ESI is in issue, the digital “DNA” of metadata is essential evidence that needs to be preserved.

Connect Individual to ESI


• Oracle case: An email allegedly sent by a manager when cell phone records showed “sender” was elsewhere and on the phone; “wrongfully terminated” employee had his password

If hidden, is it really gone?


• Washington Post publishes Washington Sniper’s letter with easily removable pdf redactions

• Facebook/ConnectU confidential settlement revealed by removing pdf redactions from published hearing records

Locations of ESI


Sent to Offsite Storage

Send email to laptop

Backed up to Memory Card

Mobile Device

Memory Card

Synced with Workstation

Laptop

Home Computer

Router

Offsite Storage

Tape Library

Backup Tape

Server Server Backup

Stored in Tape Library

Slide courtesy of C. Rothman, Wortzman Nickle

Sedona Principles


Duty to Preserve


• Sedona Principle #3: As soon as litigation is reasonably anticipated, parties must take reasonable and good faith steps to preserve potentially relevant ESI

• Automatic overwriting of backup tapes

• Records management policies that automatically destroy data (emails) after a certain period

When does Duty to Preserve Arise?


• Reasonable anticipation of litigation

Timing


• Preservation obligation can arise prior to litigation, but analysis is fact-specific

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Clarity is Essential


• If you intend to create a preservation obligation, make the threat of litigation explicit

Case Study Example


• Claim by GC, Bemar, against City for breach of contract and damages due to counterclaim by City for deficiencies and delay

• Arguable that numerous disputes between Bemar Ont. and City were sufficient to trigger preservation obligations

• But upon termination of Bemar, City is obligated to issue an internal notice to management and employees re procedures for litigation hold

• Bemar Ont should do same

Principle of Proportionality in Canadian Law


• Sedona Principle #2: Steps taken are to be proportionate, taking into account: • Nature and scope of litigation; • Importance and complexity of issues; • Relevance of available ESI; • Its importance to the court’s adjudication; • Cost, burden & delay that may result

Proportionality and the CLA


• Proportionality is the governing principal in the Construction Lien Act (Ex: Lecompte v. Doran)

• Affidavits of Documents or Examinations for Discovery require leave of Court (Section 67(2))

• Proportionality principle: relevance is not the only determining factor; cost & importance & money at stake matter

The Litigation Hold


• Commentary to Sedona Principle #3: • Prominent notice and clear instructions of the legal hold should be provided to

recipients • Sufficient detail • Whether there is a need to preserve in multiple locations • Caution not to alter, delete or destroy the ESI

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A Preservation Notice Should:


• Summarize key issues

• Explain duty to preserve both paper and electronic records

• Explain how to comply

Principle of Proportionality in Canadian Law


• How much is too much? Is it just a fishing expedition? • Richelieu Hardware (2008) Ont. S.C. • Bishop v. Minichiello (2009), BCCA

Need for and Scope of Preservation


• Consider: • Whether to use electronic search tools • Whether backup media is needed • Whether forensic mirror copies should be taken • What is actively being used and how to take a “snapshot” of this information • Whether documents created on older systems are still accessible • Whether forensic consultants or other experts are needed

Failing to Preserve


• Spoliation= Destruction, mutilation, alteration or concealment of evidence

Spoliation


• Sedona principle #11: Sanctions should be considered where a party will be materially prejudiced by failure to preserve, collect, review or produce ESI

The High Cost of Failure


• Two kinds of failure • Failure to preserv • Over-preservation

Consequences


• Monetary sanctions

• Adverse inference instructions

• Dismissal of case • Brandon Heating & Plumbing v. Max Systems

The Process


Case Scenario


• Voluminous design documentation, scheduling data, routine project records and email are hosted in a collaborative project management database

• All data are in electronic form, but involve a number of different software and hardware platforms

Case Scenario


• During performance, there are significant delays and changes to the work

• Claims are submitted.

Framing the Issues


• At what point do you have to “hold” electronic data?

• What data has to be held?

• How do you organize your electronic records for production?

• Who owns or is responsible for collaborative data?

• In what format should you produce records?

• How to you satisfy your obligations in a reasonable and cost-effective way?

Documents Types and Sources


• Interview IT • Systems in place • Backup procedures • Document retention/records

management policies • Automated processes

Working with IT


• Client may wish their own IT to collect the data • More cost-effective • Preserve confidentiality • Security concerns

• Why this may not be the best idea • Clients often underestimate resources required • IT do not understand forensic aspects of data collection • Identification/collection process may be subject to examination

Where is it?


• Data Map: a “map of the forest”

• Used by counsel to prepare for meet & confer

• Organizations should have a general data map and keep it up to date

Data Maps: user and group file shares


• Server systems used

• Size of current shared network files

• Where work product is saved

• Central access to desktop work files

Talk to the people who know



• Interview key custodians • Network / username / email addresses • Peripherals (PDA, cell, etc.) • What files are on their workstations? • Personal network storage • Shared network storage • Remote access

The Collection Plan


• Preserve all ESI in the format in which it is generated

• Production of design and schedule data in their proprietary format is standard

• The format for production of their data ought to be discussed and negotiated

Meet & Confer


• Sedona Principle # 4 • “Rule 29.1 is a new rule which establishes an obligation to meet, confer

and to create a discovery plan before production and discovery get underway… Discovery planning is intended to permit the parties to map out the most efficient and effective way to organize the production and discovery needs of the particular action having regard to the complexity of the records, the issues in dispute and the amounts at stake. It cannot be an adversarial exercise. Planning is also intended to minimize the need for court intervention” • Lecompte v. Doran, 2010 ONSC 6290

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Work it Out


• eDiscovery Rules are unique in explicit recognition that you can agree to limits on the process

• Judges want parties to work issues out and are adopting parties’ agreements as “the rules”

• Opportunities are greatest at the beginning of a case • Times are changing

Best Practices to Contain Costs


• At pleadings stage, focus on what information is needed to resolve the dispute

• Some facts more difficult to prove than others: more expense while not contributing much to resolution

• Time-consuming issues should be considered in deciding what claims/defences to advance

Sampling


• Keyword searches: run a test search • If lots of irrelevant or duplicate documents, revise search terms

Practice Pointers


• Keyword searching can be used as a relevance screen

• Keyword search methodologies must be: • Methodically designed • Tested • Refined

• Hot issue: use of keywords for privilege review

• Cooperation will reduce costs and disputes

Keywords


• Dispute re construction of Bronx Hall of Justice: issue involved production of non-party email of construction manager • Difficult to segregate relevant from irrelevant e-mail • One party proposed a handful of search terms • The other requested “thousands of additional search terms”

Difficulty of Keyword Searches


• On construction projects, must ensure that keywords are neither over- nor under-inclusive

• “Power” project or “nuclear” plant will be over-inclusive for a design engineer working on many projects in that area

• The name of a specific project (ie “Project Bronx”) will be under-inclusive as many responsive documents may not include project name

• Can craft search terms to exclude non-responsive documents


“This case is just the latest example of lawyers designing keyword searches in the dark, by the seat of the pants, without adequate (indeed, here, apparently without any) discussion with those who wrote the emails.”

William A. Gros Constr. Assocs. V. Am. Manufacturers Mutual Ins.

Keywords


“This opinion should serve as a wake up call to the Bar in this District about the need for careful thought, quality control, testing and cooperation with opposing counsel in designing search terms or ‘keywords’ to be used to produce emails or other electronically stored information (ESI)”.

William A. Gros Constr. Assocs. V. Am. Manufacturers Mutual Ins.

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Other Keyword Decisions


• SEC v. Collin & Aikman – Court rejected SEC’s blanket refusal to discuss keyword search

Costs of ESI Review


• Adopt best practices around lawyer review (the largest chunk of cost in discovery)

• Lawyer review of ESI can represent up to 70% of litigation costs, with electronic discovery search and retrieval exceeding $30,000 per gigabyte. (Accounting for the Costs of Electronic Discovery, by David Degnan, 12 Minnesota Journal of Law, Science, & Technology 1, Winter 2011, pg 151)

Cost Containment Policies


• Use automated tools where appropriate • Where a substantial portion of discoverable documents are ESI

• Early case assessment technology • Allows for front-end look at ESI • Can generate an analysis of information sources, overall volumes, cost

estimates

Cost Containment Policies


• Linear review v. clustering technologies • Streamlines review process by grouping together documents relating to

identical or similar topics • Example: email trace – provides user with an instant view of an email threat

communication to determine when and to whom emails were sent

Costs of ESI Review


• Use of clustering review tools can reduce cost associated with lawyer review time. • Linear review of 500,000 docs @ $65/hr (50 docs/hr) = $650,000 • Conceptual review of 500,000 docs @ $65/hr (200 doc decisions/hr) =

$162,500 (U.S. figures)

• A combination of electronic tools and trained lawyers is most effective and efficient

The Discovery Plan


• Think of the Discovery Plan as an Action Plan

• Rule 29.1 gives Court power to refuse to grant any relief if parties failed to make or update a Discovery Plan

• Discovery Plan should be in proportion to the size and nature of the case

The Discovery Plan

00 Month 2013 Dentons Canada LLP Document reference # 60

• Great Canadian Gaming Corporation v 1632842 Ontario Limited, 2011 ONSC 6414 : Strong example of a Discovery Plan • The Plan covers the Scope of Production, the Data Set for Review, the Review

Process, the Production of Documents (including agreement about standard field metadata and the coding conventions), Costs (and how tracked), among other details

• Model eDiscovery and eTrial precedents available online at Ontario Bar Assoc. website and eDiscovery Portal

The Discovery Plan


• Discovery plans can evolve as circumstances change • Kariouk v. Pombo, 2012 ONSC 939 : The plaintiff had proposed a

discovery plan, but the defendant had refused to formally sign off pending agreement on an electronic format for exchanging documents. The court points out that discovery plans can be modified as more information is received

• Canplas v. McKee, 2012 ONSC 1416: • Discovery Plan was established, however the agreement did not restrict

disclosure and production of information in any way • Defendant sought an order to protect the confidentiality and secrecy of certain

information • The court notes that the timing coincides with when the confidentiality issue

was raised in the defendant’s litigation in Federal Court and is not unreasonable.

The Discovery Plan


• Lecompte v. Doran, 2010 ONSC 6290: • Motion for further and better Affidavit dismissed • Parties had not reached any agreement as to form and terms of

production • In the absence of such agreement, not proper to attack Affidavit that

complies with the Rules

Form of Production


• ESI is producible and compellable in discovery

• Walter Construction v. Catalyst: Court ordered production of electronic documents even though plaintiff objected as documents had been produced in hard copy

• Agree to format in Discovery Plan

Judicial Analysis of Defensibility


• Did counsel follow a reasonable response process? • Did counsel act promptly? • Did counsel act comprehensively? • Did counsel consult with relevant stakeholders? • Did counsel involve technical experts? • Did counsel actively manage process? • Did counsel use the meet & confer process?

Questions? By: Karen Groulx D +1 416 863 4697 [email protected]

Dentons Canada LLP

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http://www.dentons.com/karen-groulx

The preceding presentation contains examples of the kinds of issues companies dealing with Construction Litigation could face. If you are faced with one of these issues, please retain professional assistance as each situation is unique.

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Preparing for Construction Litigation in a Electronic Age

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