Electronic discovery Featured

5:56am EDT September 20, 2006
With the ever-changing world of technology, companies are facing challenges to keep up with electronic storage and preservation of files, information, and documents for possible litigation; and effective Dec. 1, 2006, the Federal Rules of Civil Procedure will now include electronic discovery. Companies must anticipate that electronically stored information, embedded metadata, information systems and networks, and possibly data transmitted in real time, such as phone calls and instant messenger, will be discoverable says Lauren M. Kohn, an associate with Gambrell & Stoltz LLP.

“Companies must take appropriate steps to ensure they are capable of complying with the preservation, organization and storage of electronically stored information,” says Kohn. “To prevent problems in discovery, a business should maintain documents that are relevant to the litigation in their native form, and create a document retention policy to ensure that electronically stored information is not inadvertently destroyed.”

Smart Business spoke with Kohn about the changes in electronic discovery laws and how these laws will affect businesses.

What is electronically stored information and metadata?
Electronically stored information, or ESI, is information that is stored in a medium from which can be reviewed and examined, and includes any type of information stored electronically, such as e-mails, Word documents, and excel spreadsheets. Information and files must be stored in electronic form to qualify as ESI under the new discovery rules.

Metadata is embedded data in electronic format that details the history, tracking, and management of an electronic document. It is typically encoded within the file, created without the author’s knowledge, and is usually invisible unless someone specifically uses tools and commands to access it. For example, in an e-mail, metadata will include such things as the route the e-mail message traveled, the sender’s domain, any delays in transmittal, and the history of e-mail being read, sent, and forwarded.

How have the courts dealt with electronic discovery?
The Sedona Conference in 2005 gathered attorneys and judges together to discuss how to incorporate electronically stored information into the discovery process. The Sedona Conference working guidelines concluded: (1) electronic data and documents were potentially discoverable, and therefore organizations must properly preserve electronic data and documents that can reasonably be anticipated to be relevant to litigation, (2) parties should confer throughout the discovery process regarding the preservation and production of electronic data and documents at issue in the litigation, and agree to the scope of each party’s responsibilities and costs for production and (3) the parties’ obligation to preserve and retain electronic data and documents that may be relevant to a pending or threatened litigation must be reasonable.

Courts have followed these principles in deciding whether to conduct discovery of electronically stored information in its native form with metadata or to allow the parties to produce such ESI in an altered version, eliminating or controlling the discovery of the embedded data to save costs and reduce irrelevant production of information.

What obligations do businesses have to preserve electronically stored information and metadata?
First, a business should identify any possible threats of litigation or pending litigation and issue a hold on all deletion or destruction of electronically stored information. Second, even before suspending document destruction, a business should create a data system to preserve electronically stored information in its native form, including all metadata and embedded information. This management system must include e-mails, instant messenger, Windows programs, networks, deleted files, home and outside computers that access the business, handheld devices, and other technology that uses electronic data. Third, a business must directly instruct its employees on the preservation of ESI, including relevant, active files that may lead to future litigation. Fourth, a business should organize its management system to ensure that data and files stored are identifiable in searches, and create inventories of ESI stored in its system. Finally, a business may want to incorporate a system to save and store both the ESI in native form and a clean version without metadata.

What happens if a company fails to comply with the new laws?
When a business fails to comply with electronic discovery, or cannot show that it has made a routine, good faith, reasonable effort to preserve and produce electronically stored information in its native form, a court may impose sanctions, including monetary penalties and attorneys’ fees, witness exclusion, jury instructions limiting claims, default, or criminal penalties. Courts allow such sanctions for “spoliation,” which is the destruction or significant alteration of evidence, and the failure to preserve property for another’s use as evidence in pending or reasonably foreseeable litigation.

LAUREN M. KOHN is an associate at Gambrell & Stolz LLP. Reach her at lkohn@gambrell.com or (404) 223-2216.