Introduction

Electronic mail (e-mail) is fast becoming the most common form of business communication in America.[1]  Forrester Research estimates that commercial email messages will reach 250 billion in 2002.[2]  Statistically, each employee of a company generates between 4 and 11 e-mail messages a day.[3]  Add to that the number of e-mail messages each employee receives, and you can garner the incredible number of e-mail messages companies must contend with annually.[4]

 

Every e-mail message that has ever been generated or received by a company’s employees may be stored, at least once, somewhere within an organization’s information system.[5]  If a company is facing litigation, it may have the daunting, and expensive, task of gathering and analyzing this massive amount of accumulated data before it delivers, what might be, the “smoking gun” to the opposing side.[6] 

 

 

This paper examines the role of electronic evidence in litigation discovery.  Specifically, this paper focuses on discovery issues as they pertain to electronic mail.  I begin by gathering the basic principles of electronic evidence discovery, with an emphasis on e-mail.  Next, I apply the gathered principles. Finally, I conclude with some tips for companies that are facing actual or potential litigation. 

 

Electronic Evidence Discovery

Computers play a predominant role in American business.  Vital business information, traditionally stored on paper, is now created and stored electronically.[7]  As digital documents replace paper, hard copies of this information may never even be generated.[8]  Consequently, electronic evidence discovery (e-discovery) is becoming an important part of litigation.[9]  According to recent surveys, about 30% of discovery requests now include e-discovery.”[10]

 

 

First, in this section, I review federal discovery rules.  Then, I will catalog the types of electronic media that is used to store electronic data.  Next, I will explain why parties might prefer electronic versions of documents to hard copy printouts.  After that, I will clarify the definition of  “document,” and demonstrate that raw data that is never converted to hard copy printouts may still be discoverable under the Federal Rules of Civil Procedure.  Finally, I will look at the dangers of retaining electronic documents too long or destroying them prematurely.

 

 

 

 

Discovery Rules

“[T]oday it is black letter law that computerized data is discoverable if relevant.”[11]  The Federal Rules of Civil Procedure (FRCP) “govern the procedure in the United States district courts in all suits of a civil nature.”[12]  Rules 34 and 26 of the FRCP provide for the discovery of information from opposing parties.[13]  I will address each rule in turn.

 

 

 

(1)            Rule 34 of the Federal Rules of Civil Procedure

 

Under FRCP Rule 34 (a) “[a]ny party may serve on any other party a request  . . . to produce . . . any designated documents.”[14]  Back in 1970 Congress made a small change to FRCP Rule 34(a) “to accord to changing technology.”[15]  The rule change modified the definition of “document” to include "other data compilations from which information can be obtained, translated, if necessary, by the respondent through detection devices into reasonably usable form." [16] 

 

The Advisory Committee Notes to FRCP Rule 34,

 

makes clear that Rule 34 applies to electronic data compilations from which information can be obtained only with the use of detection devices, and that when the data can as a practical matter be made usable by the discovering party only through respondent's devices, respondent may be required to use his devices to translate the data into usable form.[17] 

 

 

 

The rule places the burden on the respondent to make a printout, or otherwise put the data into reasonably usable form.[18]

 

 

 

(2)            Rule 26 of the Federal Rules of Civil Procedure

 

Under FRCP Rule 34 a party must respond to an opposing party’s request for data.  Under FRCP Rule 26(b), however, each party to pending litigation must disclose, before discovery begins and shortly after commencement of the litigation, “a copy of, or a description by category and location of, all documents [and] data compilations . . . that are relevant to disputed facts alleged with particularity in the pleadings."[19] 

 

In 1993, in order to accommodate computer discovery, “data compilations” was included into FRCP Rule 26(b).[20]  To comply with FRCP Rule 26(b), a party to litigation has an affirmative duty to locate and review the content of all existing electronic media devices that are in the party’s “possession, custody, or control” in order to produce all relevant electronic data to the other party, or face possible sanctions.[21]

 

 

 

Electronic Media

 

FRCP Rules 34 and 26 make it clear that electronic data is discoverable.  In order to locate relevant electronic data, when faced with litigation, a company should conduct an inventory of all the electronic media that is used to store business information.[22]  The types of electronic media can be sorted into three categories: system equipment, non-system equipment and archival apparatus.  I will review each category individually.

 

 

 

(1)            System Equipment

 

First, system equipment is equipment that is directly associated with the company’s information system and used almost exclusively for business purposes.[23]  This category includes:

 

(a)            desktop computers and workstations located at the business facility;

 

(b)            laptop computers;

 

(c)             replaced or removed drives;

 

(d)            palmtop/handheld devices (including cellular telephones and organizers);

 

(e)            mainframes;

 

(f)              network file servers; and

 

(g)            Internet servers.[24]

 

 

 

(2)            Non-system equipment

 

The second category of equipment is non-system equipment.  Non-system equipment is a device used for the convenience of the company’s employees for business purposes, but not necessarily part of the company’s information system.[25]  This category includes:

 

(a)            home computers

 

(b)            personal hand held devices (including cellular telephones and organizers)

 

(c)             floppy diskettes;

 

(d)            CDs;

 

(e)            Zip disks;

 

(f)              Internet-based virtual drives;

 

(g)            portable drives; and

 

(h)            other portable media.[26]

 

 

 

 

 

(3)            Archival Apparatus

 

The final category of equipment is archival apparatus.  Archival apparatus is used to avoid the inadvertent destruction or long term storage of business information and is a component of the company’s overall information system.[27]  This category includes:

 

(a)            tape archives;

 

(b)            system-wide back-ups (monthly, weekly or incremental);

 

(c)             disaster recovery back-ups (stored offsite); and

 

(d)            individual employee back-ups (on portable media). [28]

 

 

 

Under the FRCP a respondent has an affirmative duty to search all storage equipment within its “possession, custody, or control” for relevant electronic documents.[29]

 

 

 

Electronic Documents

 

Early on, courts recognized that a discovering party might prefer the electronic versions of documents to the hard copy printout.[30]  There are two reasons why a party might prefer electronic versions.  First, electronic versions of documents are easier to sort and analysis than hard copies.  Second, electronic versions of documents often contain information that hard copies do not. [31]  I will review each reason separately.

 

 

 

(1)            Sort And Analyze 

 

The first reason that a discovering party might prefer an electronic version of a document to a hard copy version is that electronic documents are easier to sort and analyze. The leading case that supports the proposition that electronic versions must be produced, if only to ease the burden of analysis of the data, is National Union Electric Corp. v. Matsushita Electric Industrial Co.[32]

 

In National Union, the discovering party, through interrogatories, requested data concerning sales of television sets.[33]  In answer to the interrogatories, the respondent furnished a computer printout totaling more than “1,000 pages of data containing literally hundreds of thousands of numbers.” [34]

 

After receiving the printout, the discovering party offered to pay to have the same information printed “onto a computer-readable form like magnetic tape” in order to make analyzing the data more effective.[35]  The respondent refused to supply an electronic version, contending, “that the discovery rules do not recognize such a request.”[36]

 

Looking forward,[37] the court concluded that FRCP Rule 34 allowed for the production of the electronic version of the document, even though the hard copy printout was already made available to the discovering party.[38]  Citing the Advisory Committee’s Notes to Rule 34, that the data should be delivered in “usable form,” the court ordered the respondent to provide the electronic versions of the documents, as the discovering party had requested.[39]

 

 

 

(2)            Additional Data

 

Another reason a discovering party might prefer electronic versions of documents is that electronic documents often contain data not contained in hard copy versions.[40]  The additional information found in an electronic version of a document may be critical to the outcome of litigation, or may lead to other critical information.[41]

 

For example, examining the electronic version of an e-mail message will reveal not only the date and time of the transmission, but may also include the exact network terminal that was used to create the message, a list of other recipients, the name of files that were attached (if any), and the text of any comments in the header or footer.[42]  

 

Furthermore, electronic versions of e-mail messages will reveal whether the e-mail was ever opened, the time that the e-mail was last accessed and whether the e-mail was forwarded on to others.[43]  None of this additional information is included in a hardcopy printout.[44]

 

 

 

Raw Data

 

The modified definition of “documents” under the FRCP is broad enough to encompass raw data that is used to produce charts, graphs, summaries and other reports, even if the raw data was never contained in hard copy printouts.[45]  Companies that fail to provide this raw data, subject themselves to sanctions.[46]  “A plaintiff's failure to comply with discovery orders is properly sanctioned by dismissal of the suit, a defendant's by entry of a default judgment.”[47]

 

In Crown Life, Crown Life (Crown) filed suit against the discovering party (Craig).[48]  Craig worked as an agent for Crown.[49]  Crown claimed that Craig wrongfully drew checks on a Crown account.[50]  Craig counterclaimed alleging that Crown owed it renewal commissions.[51]  During discovery, Craig requested that Crown produce “written documents” concerning the renewal commissions.[52]  Crown produced only summaries of raw data,[53] and then claimed, “that all documents responsive to the document requests had been produced.”[54] 

 

Based on the summaries alone, Craig’s expert had “insufficient information” to reach an opinion on the total amount of commissions due Craig.[55]  Later, at trial, Craig learned about a database that contained raw data about each policy Craig sold.[56]  The raw data in this database was never produced to Craig, even though Crown used the data to prepare its own witnesses.[57]  Crown argued that since Craig only requested “written documents,” and the raw data was never put in “hard copy” form, it did not have an obligation to produce the raw data in question.[58] 

 

The court disagreed with Crown’s analysis, holding that “document,” as defined by the FRCP, is broad enough to include raw data even if it had never been printed out.[59]  Therefore, the court imposed sanctions that “amounted to a default judgment on Craig's counterclaim.”[60]

 

 

 

Document Retention and Destruction

 

Most companies have a document retention policy applicable to paper documents.[61]  When it comes to electronic documents, however, few companies have implemented a like policy.[62]  Because electronic data storage costs are relatively inexpensive and electronic media take up little physical space, many companies perpetually backup and archive their information systems.[63]  As a result, it is not uncommon for companies to have electronic documents that date back 10 years or more.[64]  These same companies, when faced with actual or potential litigation, may be tempted to destroy this data.[65]  Both practices (perpetual retention and ad-hoc destruction) can have unexpected and unwanted results.  I will address each practice separately.

 

  

 

1.    Electronic Document Retention

 

Retaining electronic data for an extended period of time can cause problems for a company facing litigation.[66]  The process of searching through electronic data, as required by the FRCP, can be an enormous financial burden.[67]  In In re Brand Name Prescription Drug Antitrust Litigation, the United States District Court for the Northern District of Illinois addressed the discovering parties’ motion to compel a defendant (CIBA) to produce relevant e-mail messages in a complex price-fixing case.[68]  CIBA objected to the motion and contended that production of the e-mail messages would create an “undue burden.”[69]  

 

CIBA estimated that it had “at least 30 million pages of e-mail data stored on its technical back-up tapes.”[70]  Furthermore, it claimed that it would cost “$50,000 to $70,000 in compiling, formatting, searching and retrieving responsive e-mail.”[71]  CIBA admitted, however, that the cost of retrieval was high, partly because of "the limitations of the software CIBA [was] using."[72]

 

The court noted that under FRCP Rule 34 “the normal and reasonable translation of electronic data into a form usable by the discovering party should be the ordinary and foreseeable burden of a respondent.”[73]  Therefore, said the court, it would be unfair to force the discovering party to bear the costs of an expensive storage method over which they had no control.[74]  While the court required the discovering party to narrow their request, it refused to shift the cost of production to the discovering party.[75]

 

 

 

2.    Electronic Document Destruction

 

When facing actual or potential litigation, many companies are tempted to purge their information system, thereby destroying any electronic documents that might be helpful to the opposing side.[76]  This temptation, however, ought not be acted upon.  When courts discover that parties intentionally destroyed evidence, they apply the “spoliation[77] inference doctrine.”[78] 

 

Under the spoliation inference doctrine, "the bad faith destruction of a document relevant to proof of an issue at trial gives rise to an inference that production of the document would have been unfavorable to the party responsible for its destruction."[79]  The doctrine protects "two important goals of the judicial system - truth and fairness."[80]

 

In Procter & Gamble Co. v. Haugen, the discovering party (Amway) moved for sanctions against the respondent (P&G) because P&G destroyed e-mail messages of 5 key employees. [81]  Amway argued that bad faith should be inferred because, even though P&G insisted that Amway save all corporate e-mail, P&G destroyed all of its corporate e-mail.[82]

 

The court refused to infer a general duty to preserve all e-mail messages.[83]  It did, however, find that “P&G's failure to search or preserve the e-mail communications of the five individuals that P&G had itself identified as having relevant information constitute[d] a sanctionable breach of P&G's discovery duties.”[84]  Because P&G knew that the e-mail messages of those specified individuals were relevant, yet destroyed them, the court sanctioned P&G $2,000.00 per individual, for a total sanction of $10,000.00.[85] 

 

 

 

Electronic Mail

 

The most prolific, and often the most damaging, type of electronic evidence is e-mail.[86]  The casual, conversational tone of e-mail messages, the shear number of messages generated, and the misconception of e-mail users that e-mail is a private and temporary communication, makes e-mail a prime target for discovery.

 

In this section I will define what an e-mail message is and how e-mail systems work.  Then I will summarize the basic principles gathered throughout this paper as they apply to e-mail in particular.

 

 

 

What & How

 

In order to appreciate the unique characteristics of e-mail as it relates to litigation discovery, it is necessary to understand what e-mail is and how it operates.[87]

 

 

 

(1)            E-mail Defined

 

The National Archives And Records Administration (NARA) defines e-mail as "[a] document created or received on an electronic mail system including brief notes, more formal or substantive narrative documents, and any attachments, such as word processing and other electronic documents, which may be transmitted with the messages."[88]   An e-mail system is "[a] computer application used to create, receive, and transmit messages and other documents."[89]

 

 

 

(2)            How e-mail works

 

E-mail is transmitted through the Internet, private e-mail service providers or directly through a telephone line.[90]  Then, the message is bounced through a network of computers where, at each bouncing point, the message is stored temporarily, until the message reaches its intended destination.[91] 

 

After the message is received, the e-mail message resides on the hard drive of the sender and the recipient, the local and wide area network servers, the e-mail provider servers, and perhaps a mainframe.[92] Often, the recipient will file the message in a directory, usually in an “ad-hoc” manner.[93]

 

As pointed out in this paper, each of the computers involved in transmitting e-mail messages from the author of an e-mail to its intended recipient, will likely have its data copied in order to back up or archive its contents.  Therefore, when the e-mail is “deleted” from the recipient’s hard drive, several exact copies of the e-mail may still exist elsewhere.

 

Even if a party does not have any backup or archive tapes of e-mail messages, the “deleted” e-mail probably still resides on the hard drive of the recipient and of the author.[94]  This is true because “delete” on a computer system does not mean “erase.”[95]   Rather, deleting data from a computer hard drive merely reallocates the storage area from “stored” to “free.”[96] 

 

Depending on the size of the hard drive, a deleted e-mail message may actually exist for quite some time on both hard drives (not to mention the “bouncing” points).[97]  The e-mail message will “exist” until the computer system writes another file to the “free” space that the e-mail message originally occupied.[98]

 

Even after the space has been reallocated and another file saved in the space once occupied by the e-mail message, remnants of the e-mail message may still be discoverable by a competent computer forensic expert.[99]

 

 

 

e-discovery to e-mail 

 

The basic principles of e-discovery, as discussed in this paper, are applicable to e-mail.  First, hard copy e-mail messages are discoverable.  Second, a discovering party may demand those messages be produced in electronic form in order to more effectively analyze the data and, additionally, to inspect the “hidden data,” available only in the electronic version.  Third, even if an e-mail message was never printed out, the raw data that makes up an e-mail message is discoverable and must be produced, even if the discovering party requested only “written documents.” 

 

Finally, holding on to e-mail messages too long, or alternatively, destroying them too soon, can result in severe repercussions for a company.  If held too long, a company may face large recovery and analysis costs.  Additionally, a company may hold the “digital smoking gun” far longer than the law would require. 

 

If e-mail messages are destroyed too soon, the company may face sanctions in the form of a default judgment, dismissal, an adverse inference and/or a monetary award to the other side.[100]  This may be true even if a company has a valid document retention program in place.[101]

 

In Garreth Shaw v. Hughes Aircraft Co., Shaw, a former Hughes employee, brought a wrongful termination and defamation suit against Hughes.[102]  Shaw sought e-mail messages from Hughes that were relevant to his action.[103]  Hughes, knowing litigation was underway, followed through with their retention program and destroyed all e-mail messages after 90 days.[104]

 

The judge instructed the jury to consider the missing e-mail messages favorable to Shaw.[105]  Thereafter, the jury awarded Shaw $593,000 in damages, $90,000 was directly attributable to the inference of wrong doing from the missing e-mail messages.[106]

 

Conclusion

With all of the e-mail out there, companies must learn about e-mail discovery early, in order to avoid overzealous adversaries willing to disrupt their opponent’s business and force them to sift through large quantities of data, just to force a settlement in case without merit. 

 

If your company is facing litigation or potential litigation, here are some tips:

 

 

 

1.                Do not delete e-mail messages from your information system

 

Chances are, the e-mail will still exist, either on your computer system or another, in whole or in part.  Furthermore, even if you succeed in removing the e-mail message from your system completely, a computer forensic expert can determine that something was destroyed and the court may still sanction your company for destroying evidence (remember Hughes Aircraft?).

 

 

 

2.                Preserve evidence - mirror all hard drives & other storage media

 

Even inadvertent destruction of data may result in sanctions being imposed against your company.  Remember, the court doesn’t know what was destroyed.  So, under the spoliation doctrine, the court will make an adverse inference against you.

 

 

 

3.                Freeze any future document destruction

 

Even if your company has a previously enacted document retention policy, documents should not be destroyed, nor anything that may look like evidence in order to prevent sanctions for being imposed on the company for destruction.

 

 

 

4.                Inventory Storage Devices and Hardware

 

In order to locate relevant electronic data, when faced with litigation, a company should conduct an inventory of all the electronic media storage devices and computer hardware that are used to store business information.[107]  Before you can gather and analyze data to determine its relevance, you have to know where to look.

 

 

 

5.                Analyze all e-mail messages before handing them over

 

It is better to learn early what your opponent will soon come to know.  Therefore, your company should analyze any piece of e-mail from the perspective of your adversary, before sending it out to them. 

 

E-mail discovery is here to stay.  Some of the most newsworthy events in recent years involved e-mail messages thought to be destroyed, but which were, in fact, discoverable.[108]  Today, less than 50% of Americans have access to e-mail.[109]  In a short time, that number is sure to approach 100%.[110]  Is your company ready?