The volume of e-discovery and its costs continue to rise for corporations, law firms and even solo attorneys. This phenomena has triggered a plethora of articles on the pitfalls and potential problems in EDD for the uninitiated or unaware. Frequently missing from the discussion, however, is practical experience and analysis from the trenches. This article addresses key EDD issues and pitfalls in a particular case involving 44 million pages of electronic records and a jury verdict of approximately $570 million, with a focus on the consequences of retaining too much electronic information and ways to solve problems that plague large companies in e-discovery.
JUST THE FACTS
Jeffer, Mangels, Butler & Mitchell represented Gary Michelson, M.D., a spine surgeon and prolific inventor, with hundreds of patents and patent applications worldwide, primarily in the field of spinal fixation and surgical implants, instruments and methods. Our adversary, Medtronic Sofamor Danek Inc., a subsidiary of Medtronic Inc., manufactures and markets medical devices used to treat spinal conditions. In May 2001, Medtronic sued Dr. Michelson, alleging that he had breached certain contracts from 1994 that Medtronic claimed gave it rights to virtually everything Dr. Michelson invented in the field, even new inventions conceived after the 1994 contracts. Dr. Michelson counterclaimed that Medtronic wrongfully claimed rights to more than it was entitled to under the contracts, infringed certain patents on inventions not covered by the contracts and breached the contracts in a variety of ways, including failing to pay royalties and failing to provide proper patent marking and name attribution on the products and literature that incorporated the Michelson technology.
KEY EDD ISSUES
Discovery was extensive. We virtually reviewed 44 million pages of e-data. We served 10 sets of document requests and thousands of requests for admission, and, in all, there were nearly 70 depositions taken in the case. Medtronic produced more than 2 million pages of paper documents and over 500 gigabytes of electronic data — but not without a fight. There were dozens of discovery disputes and motions, particularly with respect to e-discovery. We met and conferred for months regarding the scope of search terms, the form of production and who would bear the cost of review and production. Ultimately, we filed a motion to compel and obtained a ruling from the magistrate judge on May 13, 2003. Medtronic Sofamor Danek Inc. v. Michelson, 229 F.R.D. 550, 56 Fed.R.Serv.3d 259 (W.D. Tenn. 2004).
The magistrate judge’s May 13 order dealt with the burden of EDD in two principal ways. First, she reduced the number of backup tapes Medtronic was to produce from approximately 996 down to around 124, for which she had provided a flat fee estimate of almost $5,000 per tape. These were the year-end backups for 1997 through 2002, which was the most critical period in the case. Second, the magistrate judge allocated to Dr. Michelson 40 percent of the costs of the restoration, search and de-duplication of the backup tape data prior to our inspection of it. All other costs were borne by Medtronic, including all costs of producing in electronic form data harvested from individual users as opposed to backup tapes, all costs of producing the backup tape data in electronic form during the production phase, i.e., after inspection and all costs of conducting electronic privilege searches and attorney reviews of the produced materials for privilege and relevance.
THE SEARCH IS ON
Under the May 13 Order, the production occurred in two rolling phases — an inspection phase followed by a production phase. Because the inspection phase permitted us to look at the documents before Medtronic had done a comprehensive review, the Special Master set up some strict security measures. First, we were not allowed to download or copy any of the data — we could only review and search it online and select files for production. Second, we were not allowed to load the data onto our own network, since this could lead to unrestricted access. Instead, we had to build a secure, independent network server and dedicated workstations in a secure conference room in our office. This setup included a server with a transparent server housing and a series of workstations with black flat screens, all lined up along one side of a large conference table. We nicknamed the setup “Death Star.”
Third, the Special Master hired a data security company as neutrals to deliver and supervise the inspection of Medtronic’s data. Whenever the neutral left the Death Star, the hard drive had to be removed from the server and locked in a safe in the conference room until he returned.
Because we needed to review 44 million pages of data in less than six months, we had to find a way to complete a thorough and comprehensive review in a short amount of time — without using hundreds of contract attorneys who knew nothing about the case. We decided to assemble a group of 10 lawyers at our firm (and some who had left our firm but were willing to work on a contract basis) to review the documents. We assigned each member of the review team specific issues in the case and had weekly meetings to make sure that there was routine exchange of information and that all members of the litigation team were kept up to speed on critical issues and documents. Finally, we used Attenex Patterns E-Discovery Software that enabled reviewers to group documents together using conceptual search strategies.
The “Death Star” process uncovered critical evidence. From emails to spreadsheets, we were able to make our case with Medtronic’s own records, showing a knowing pattern of contract breaches and patent infringement. Over 100 of the trial exhibits came directly from Medtronic’s electronic production.
After three years of litigation and shortly before trial, the court dismissed Medtronic’s affirmative claims (totaling approximately $800 million) and granted our motion to reverse the order of proof, allowing Dr. Michelson to present his case first. Following a trial that spanned over four months, the jury awarded Dr. Michelson approximately $170 million in compensatory damages and $400 million in punitive damages.
PREVENTING THE EDD DISASTER
Medtronic estimated at one point during the litigation that the EDD processing and review would cost approximately $16 million to $22 million dollars — all to find, retrieve and review evidence that was helpful to our side. Medtronic’s problems stemmed from the sheer volume of data that it retained, including vast amounts of email stored on backup tape. How to avoid the problem? Don’t keep so much electronic data.
As technology advances, there are more and more tools available to manage electronic data, from enterprise content management solutions to email archiving software. But even with these solutions in place, the proper categorization of documents as records is an overlooked process.
With paper, most companies have policies and procedures in place that allow them to categorize documents as records of the company and store them under a document retention policy — other, temporary records are routinely discarded. With electronic information, there is little guidance on identifying records from among various electronic file formats, e.g., spreadsheets, databases and email. Hence, companies and employees struggle to designate records as documents and err on the side of keeping too much.
Although training and educating employees on the proper management of electronic records is critical, there are also email tools that can be used to designate certain messages as records. Tools such as RPost allows users to send registered email messages (similar to certified mail) with an electronic receipt verifying delivery, message content and official time sent and received. RPost provides an easy way for users to differentiate between email that should be treated as a record and email that should be discarded, while providing the sender with complete email accountability and protection from subsequent challenges. Such an approach provides evidentiary searches as well. Indeed, from the perspective of a mediator, arbitrator or judicial officer, one looks first at the evidentiary value of what is submitted to gauge its trustworthiness. Evidential weight is about reducing uncertainty surrounding the evidence. The party with the greater evidential weight will win in most cases, or at least mitigate its liability.
EDD is a growing strain on companies, law firms and solo attorneys. Better electronic record management is critical to keeping costs under control — and all companies should remember to “take out the trash.” If a company does not need the ESI for business, regulatory or litigation reasons, it should be discarded.
Stanley M. Gibson is a partner at Jeffer, Mangels, Butler & Mitchell and an experienced trial lawyer, focusing on high-stakes cases involving complex technology. As part of his practice, Gibson concentrates on the intricacies of document retention in the electronic age, from counseling and advising clients on best practices for records retention, preserving and retrieving e-documents efficiently and cost effectively to the mechanics of conducting EDD through the litigation process and trial.