Judicial ediscovery comparisons at CEIC

I did a short summary piece about two of the sessions which I attended at CEIC in Las Vegas (see CEIC comes to an end), promising to expand on them when I got home. I am not quite home, sitting instead in a bus in a traffic jam caused by the dysfunctional UK Highways Agency. Lawyers who create work for themselves by deliberately stringing out the job have nothing to teach the job-creationists who constantly fiddle with road layouts to keep their pay and pension contributions rolling in. “Delays possible until July 2010” says the notice, rather too ambiguously for my taste.

Judge Peck and Patrick Burke at CEICBarely a week after moderating a US-UK judicial panel at IQPC in London (see IQPC the best London e-disclosure conference again), Patrick Burke of Guidance Software was in charge of one at CEIC in Las Vegas. Is it proper to call a judge a “common element”? Probably not, so I will say instead that Master Whitaker took part in both. The home team comprised US Magistrate Andrew Peck and Hon Judge Donald Shelton.

I have already quoted Judge Peck’s uncompromising assertion that incompetence, lying to the court or failing to co-operate are behind most sanctions decisions, and that 80% of sanctions decisions involve failure to preserve. By Rule 26f, parties are supposed to talk about the structure of discovery. The current rules say nothing about preservation except talk about it. That is too late. The recent Duke Conference had reached a consensus about the need to amending rules.

I will spare you the discussion which followed about preservation cases old and new (I refer you, as I have done before, to this article for an analysis of the state of play as between Judge Schiendlin’s Pension Committee and Judge Rosenthal’s Rimkus case. The cases involved different Circuits, different facts, and very different sums in dispute, factors which were more significant than any suggestion that Judge Rosenthal was “smacking down” Judge Schiendlin.

In a sense (and this is me talking, not Judge Peck) the search for some absolute standard (and a correspondingly fixed scale of punishment) sounds objectively desirable but makes little sense in practice. Each case is different, not just in scale and subject-matter but with parties with differing risk profiles and with asymmetrical resources and abilities. I do not mean that some lower standard applies to small companies and small law firms (despite the curious suggestion to that effect in paragraph 67 of the UK case of Hedrich & Anor v Standard Bank London Ltd) but that what is negligent oversight in one case is over-the-top excess in another.

As Judge Peck put it, one must learn to make a risk assessment about preservation and ask how likely it is that litigation will ensue. I would add that one must also make a reasonable assessment as to what documents – whose documents, over what period, with what keywords or other characteristics – might be required. Two days after this panel, Judge Schiendlin issued a yet further amendment to her Pension Committee decision (see Ralph Losey BREAKING NEWS: Judge Scheindlin Amends Pension Committee Again which makes it unnecessary for the rest of us to suggest that the earlier version, even as amended, set an excessively high standard.

Questions as to the scope of the duty of preservation lead inevitably into debates as to where the duty lies. Zubulake, the case which made Judge Scheindlin’s name and set us all off down this track, raised the question whether preservation is a non-delegable duty of outside counsel; the reality was probably not that extreme, Judge Peck said, but it is outside counsel who has the licence for that court. Things go wrong where the duty is delegated to someone who had no clue what to do rather than to an expert – he named Patrick Oot of the eDiscovery Institute as an example of the latter. Inside counsel needs to get on top of the subject and staff should start “getting the culture”.

For UK companies and their lawyers, Earles v Barclays Bank brings the stirrings of a similar debate. We will not, I hope, set off down a hopeless search for absolute measures of compliance in an area which inevitably involves shades of grey, but some of the phrases which I noted down are a better yardstick:

Failure to produce can be remedied but not if you have not preserved is not a suggestion that you keep everything, but is more than a statement of the obvious for those charged with devising document retention policies

The expression a pure heart and an empty head, used by Judge Scheindlin in her discussions on negligence in Pension Committee, is acquiring the status almost of a standard (it is used apparently as a semi-formal standard in an SEC test as to the propriety of certain trades). You do not need a malign motive to be liable for screwing things up, is what it means.

Judge Facciola’s division of the less-than-competent into fools, damn fools, and goddamned fools, invoked by Patrick Burke, may fall short of a formal definition, but it is useful nevertheless, and more meaningful than many attempts at grading conduct – one knows exactly what he means.

Ronald Reagan’s expression trust but verify is another neat encapsulation of a common-sense approach to be taken both inside an organisation and between parties.

This led the panel into a discussion about quality control which, Judge Peck said, was “absolutely essential at all levels”.  His own judgment in William A. Gross Constr. Assocs. v. Am. Mfrs. Mut. Ins. Co.,  used the expression “a wake-up call to the bar” involving careful thought, quality control, testing, and cooperation, whether talking of search or everything through the process. Constant QC review was needed, he said, to “make sure that a person did not fall asleep at the machine or be thinking about something else” – a point worth remembering by those who still think that manual review is the highest standard to apply.

Reduced to one-liners, Judge Peck’s closing comments included:

Talk to the clients – a product may be marketed under one name but developed as “Project D” or whatever.

You need a project leader with authority at the vendor and law firm

Document everything you do – when the spoliation motion comes, the associate may not be at the firm.

Hon Judge Donald SheltonChief Judge Donald Shelton of the Washtenaw County Trial Court in Ann Arbor emphasised that the action is in the state courts – 97% of all litigation takes place there as opposed to the Federal Courts. Each state has a different approach. Many have followed Federal Rules and state judges may choose, but are not bound, to follow Federal interpretation of cases. 16 states have adopted Federal e-discovery rules, with Wisconsin about to follow. California by statute created its own version of federal rules. In the remaining 24 states, the discovery process has to fit to the paper rules.

Master Whitaker and Judge SheltonThe promulgation of rules is by statute in some places, and by the court in others. The state courts are less likely to apply severe sanctions than Federal judges – there is a tradition of using sanctions as a last resort. Sanctions tend to be financial in nature, not those which change the burden of proof. There are virtually no appellate court rulings – Zubulake settled before it reach the appellate court and no-one has to follow Judge Scheindlin – she, along with other thought-leaders like Judges Peck, Waxse, Facciola, Grimm and a few others will be followed, but because what they say makes sense, not through any obligation to do so.

Judge Peck pointed out that Qualcomm was more an ethics case than an eDiscovery case. The cover-up was worse than original defect. He described the late discovery in that case, and said that if the emails had come to light earlier there would have been no litigation, which is why Broadcomm got all its costs.

Before Master Whitaker started telling us about the US-UK differences, I was wryly amused by some of the parallels. We in the UK have a common rule book, but the management of E-disclosure turns largely on whether the judge has ever stumbled upon the practice direction to Part 31 CPR. Many of those who do, I suspect, close it rapidly, hoping that no one will ask them to use it. I have actually heard a judge say that e-disclosure is just like handling paper. Digicel and Earles v Barclays Bank are terra incognita out in the sticks – that is, almost anywhere more than 25 yards from the door of the Commercial Court and some of the other specialist courts. Judge Peck’s observation that Broadcomm got its costs as a result of disclosure failures because there would otherwise have been no litigation, parallels the words of HHJ Judge Simon Brown QC when he reduced Barclays’ costs. It was the actual waste of time and costs which provoked the reduction, not the mere breach of the rules.

Master Whitaker described briefly the similarities and differences between the US and UK jurisdictions. The system in England & Wales had many of the same “fingerprints”, he said, such as the following of judicial precedent unless it can be distinguished, and the adversarial system. The UK does not have sanctions as such, but we are seeing costs-shifting in the form of variations on the “loser pays” system, with adverse costs orders for disclosure failures or a reduction in the costs which would otherwise be awarded.

Patrick Burke and Steven WhitakerThe 2005 practice direction was based on lessons learned from the US, including co-operation and a variant on the meet and confer. Its desuetude followed in part from its obscure position – a four-paragraph practice direction inserted into another practice direction. The proposed new practice direction, due to come into force in October, would remedy some of these defects. Amongst its purposes was the encouragement of effective meet and confers, enhanced in suitable cases by an ESI Questionnaire. The most revolutionary aspect of that was the opportunity to set out what was expected from opponents, in addition to obvious things like date ranges, key players and identification of potential sources of disclosable documents.

There is no settled doctrine of a duty of preservation, and a practice direction cannot be used to import one into the substantive law. There was, nevertheless, sufficient mention of preservation in the new PD to ensure that the parties and the court applied their minds to it. The main question to be asked in the event of preservation failures was whether it was possible to have a fair trial.

Sanctions were seen as no better than closing the door after the horse has bolted, and the practice direction should encourage pre-emptive case management of the kind seen in his own judgment in Goodale v Ministry of Justice. We have had a few decisions which sanctioned parties, whether by making them redo disclosure (Digicel), punishing them in costs (Earles) or through the embarrassment of being dragged into court to explain failures, as happened to the Treasury Solicitor and Provost Marshal in Al-Sweady v Secretary of State for Defence.

Master Whitaker had encountered much US interest in the UK obligation to disclose documents which are adverse as well as supportive to your case and your opponent’s case. One of the reasons why this works, he said, was that the jurisdiction was a relatively small one, and those who engaged in underhand behaviour would be known about, quite apart from the professional implications of a breach of the duty of candour owed to the court as well is to opponents.

Judge Peck gave a well-deserved plug for the Sedona Conference Co-operation Proclamation. This was not, he said (in an expression I have heard used before) a matter of “hands around the campfire and singing kumbaya”. Co-operation was not a matter of giving the other side an advantage, but allowing you to control costs. His other thoughts derived from what Master Whitaker had said included the sequencing of discovery (as suggested in Goodale) and encouraging the idea that IT people should attend meet and confers. Many lawyers are nervous about this, but its benefits include assessing the practicality of a course before agreeing it. “Is it possible to do X” is not a theoretical question – it is no good agreeing to it if it involves closing the company down while you do it.

The closing point was another one applicable equally in both jurisdictions. It really is necessary to make an informed assessment as to the likely costs of any proposed course of action. It is no good, Judge Peck said, just saying “it will cost more than the case is worth” – one must find out what the cost would be and describe what can be done for a reasonable budget. Parties seem to find it in their interests to exaggerate costs. Judge Waxse has a story of outside lawyers predicting costs of $1 million; the in-house lawyers said $.25 million and the outside consultant’s estimate started at $100,000 then went down to $10,000. The party had little credibility left on anything said about discovery after that. If we don’t take charge of this, Judge Peck said, we will “kill the system and people will flee to other methods”.


About Chris Dale

I have been an English solicitor since 1980. I run the e-Disclosure Information Project which collects and comments on information about electronic disclosure / eDiscovery and related subjects in the UK, the US, AsiaPac and elsewhere
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