Article by Bobby Malhotra, Esq., Senior Project Manager, Professional Services Group, Encore Legal Solutions, posted on Encore Legal Solutions:

Introduction

Until a few years ago, most lawyers were able to get by without a solid understanding of electronic discovery. That is no longer the case, as discovery of electronically stored data has become a critical aspect of almost all litigation and internal investigations. In addition to the expense, time and energy typically expended on it, settlement tactics, trial strategy, damages, and even outcomes may all be influenced by the participants’ ability to manage their electronic discovery.

There are important reasons why all involved must be up to speed on e-discovery. Lawyers are getting sanctioned for not educating themselves on and eventually mishandling electronic data.  Most legal professionals are familiar with Coleman v. Morgan Stanley. While that mammoth sanction for mishandling emails was ultimately reversed, it still should serve as a wake up call for litigators everywhere. And while the numbers aren’t quite as big, another more recent case sounds the alarm even louder. The Qualcomm Inc. v. Broadcom Corp. decision sternly reinforces the fact that lawyers must educate themselves about e-discovery or face harsh consequences.

Qualcomm Inc. v. Broadcom Corp.

In a highly publicized battle between chip manufacturers, the underlying issue was whether Qualcomm had waived the enforceability of its patents by failing to disclose information about its patent rights to an industry standard-setting body. If Qualcomm was found to have intentionally failed to notify, it would have waived their enforceability.

During discovery, trial, and post-trial proceedings, Qualcomm had fervently denied any association with the standard-setting organization. However, as it turned out, the court found “by clear and convincing evidence” that the attorneys for Qualcomm had participated in an organized program of litigation misconduct and concealment throughout discovery, trial, and post-trial.” Among other things, the court specifically mentioned Qualcomm’s production of over 200,000 pages of relevant emails and other electronic documents four months after the jury trial and noted that there was “constant stonewalling, concealment, and repeated misrepresentations concerning existing corporate documentary evidence.”  The court went on to find that Qualcomm’s misconduct permeated every aspect of the litigation, including the post-trial period.

In light of the court’s findings, a subsequent Order to Show Cause was entered naming 14 attorneys, “and any and all other attorneys who signed discovery responses, signed pleadings and pre-trial motions, and/or appeared at trial on behalf of Qualcomm,” to appear in court to show cause why sanctions should not be imposed against them.

The court stressed that it is “apt to consider the imposition of any and all appropriate sanctions on Qualcomm’s attorneys, including but not limited to, monetary sanctions, continuing legal education, referral to the California State Bar for appropriate investigation and possible sanctions, and counsel’s formal disclosure of this Court’s findings to all current clients and any courts in which counsel is admitted or has litigation currently pending.”

The lesson learned is quite simple.  Delegating e-discovery tasks to consultants and legal support staff is not an adequate replacement for education. Qualcomm adamantly argued that its production of emails after jury trail was unintentional and not committed in bad faith, but the court did not buy this argument.  Ultimately, it is the attorney who signs his name on discovery responses attesting to the accuracy and it is the attorney who will be held accountable by the court for mishandling e-discovery.  An attorney who takes a proactive approach to e-discovery matters and educates himself on the specifics of electronic data involved can avoid these types of discovery problems.

The ramifications of this ruling extend well beyond the Southern District of California.  Legal professionals around the country are anxiously waiting to see what sanctions are actually imposed. Not only are there large monetary sums at stake, but some of the other potential sanctions, such as the mandatory disclosure notice would be detrimental to the public image of many law firms. All and all, this case is poised to trump Zubulake v. UBS Warburg and Coleman v. Morgan Stanley as being the main catalyst behind attorneys reevaluating their e-discovery practices.

What “e” is

One of the challenges for any attorney wise enough to heed the warnings of Qualcomm and attempt to gain a clear understanding of electronic discovery is that the law is changing fast and the technology even faster. Courts are, in many cases, just now defining what types of information must be produced. In another recent decision, Columbia Pictures v. Brunneli, the courts take a big step toward determining what “e-discovery” actually is. While most lawyers understand that the “e” in e-discovery stands for “electronic” and represents electronic information, many wrongly assume this is limited to electronic mail. While in many cases the lion’s share of time and expense is related to the preservation, review, and production of  key custodians’ e-mail messages, electronically stored information encompasses much more, including electronic documents, spreadsheets, databases and even voice mails–and as the Columbia decision illustrates, even the most evanescent data, such as Random Access Memory.

Columbia Pictures Industries v. Bunnell

In another highly publicized matter, the Columbia motion picture companies brought an action for copyright infringement against TorrentSpy, operators of a website that includes a popular search engine that indexes materials made publicly available via the “Bit Torrent” file sharing protocol.   The motion picture companies alleged that TorrentSpy knowingly encouraged, induced, and profited from massive online piracy of their copyrighted works through the operation of the TorrentSpy website.

The motion picture companies sought access to TorrentSpy’s server log data, which is temporarily stored in random access memory in order to establish infringement.  Currently, under Rule 34 of the Federal Rules of Civil Procedure, parties are allowed to obtain discovery of data described as electronically stored information.  As a result, the issue at hand was whether computer-generated log data, kept in RAM temporarily until overwritten or until the computer is powered off, is considered electronically stored information under the Federal Rules of Civil Procedure, as amended in 2006.

In what is being called groundbreaking ruling, the court held that the contents of a computer’s RAM are discoverable.  The court ordered TorrentSpy to preserve and produce server log data temporarily stored in random access memory, which is usually considered transient and ephemeral.

This decision has been scrutinized for expanding the scope of the legal duty to preserve and produce electronic information to the most intangible of data that is held in a computer’s temporary memory.  It is the first decision under the amended Federal Rules that specifically states information stored in random access memory is electronically stored information that is subject to Rule 34 preservation and production requirements.

It is important to point out that this ruling was based on a unique set of facts and after careful evaluation of the importance of the computer-generated log data in this specific case. Thus, the preservation and production of information stored in RAM will likely only be applicable in special cases that warrant production.  For example, the holding in this case may be applied in special cases where dispositive information, that is not available via other sources, is held in random access memory and the production of this information would not be an undue burden.  Nevertheless, the decision illustrates the importance for lawyers to think beyond just e-mails when evaluating litigation requests to produce documents and drafting discovery requests and responses.

Conclusion

The world has changed. The majority of documents created today are electronic and the bulk of these documents are never printed to paper.  Due to the explosive growth of electronic data and the amended Federal Rules of Civil Procedure, legal professionals face many new hardships and increasing liabilities pertaining to their electronic discovery decisions. The two recent decisions summarized above illustrate the potential liabilities associated with the mismanagement of electronic data and the importance of having a proactive approach to e-discovery. As a result, legal professionals should develop (and understand) a strong e-discovery process that encompasses all forms electronic data.

Bobby Malhotra, Esq. is National Project Manager for Encore Legal Solutions, Professional Services Group. In this role, he manages large-scale electronic discovery, paper discovery and web hosting projects. During his career Mr. Malhotra has served both as an information technologist–both in and out of the legal industry–and a litigation attorney. He has been a frequent speaker on electronic discovery and records management and can be reached at bmalhotra@encorelegal.com.

© 2007 ENCORE LEGAL SOLUTIONS

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