Self-Identification and Self-Preservation: A Fool for a Client?

“Self-preservation” is the ESI equivalent of “do-it-yourself” home repair.  If successful, it can save money.  If not, it can lead to bigger problems.  Recent decisions arising out of self-preservation disasters have posed the question of whether it is ever a viable technique to preserve and review ESI. A well-known commentator and The Sedona Conference suggest a nuanced approach to self-preservation based on proportionality principles.

The recent decision in Green v. Blitz U.S.A., Inc., 2011 WL 806011 (E.D. Tex. Mar. 1, 2011), has energized the debate over self-preservation.  There, a litigant placed its own, interested employee in charge of preservation efforts, with disastrous results. This led one commentator to note that while “[m]y conclusion up until now has been that this collection methodology (where employees manually select and potentially harvest their own data) could be defensible if properly executed. . . the pendulum has swung far enough to proclaim that this approach is far too dangerous for most enterprises, except those perhaps that are extremely risk tolerant,” D. Gonsowski, “Self Collections in E-Discovery – Just too Risky for Prime Time,”(Apr. 20, 2011).

When the duty to preserve ESI is triggered, it is tempting to use the paper paradigm of requesting that a client or client’s employee search for and preserve ESI.  After all, it would appear that permitting someone familiar with the data to search and preserve it would be the most cost-effective approach.  This is generally described as “self-identification,” “self-preservation,” or “self-collection.”

THE KNOWN DANGERS OF SELF-PRESERVATION

There is nothing new about self-preservation, and its dangers are well-documented.  In Zubulake v. UBS Warburg, LLC, 216 F.R.D. 280, 287 (S.D.N.Y.  2003), “all UBS employees were instructed to save documents relevant to [the] case.” Mr. Matthew Chapin, “Zubulake’s immediate supervisor and the alleged primary discriminator,” however, failed to save a “potentially useful email. . . .”  In United States v. Philip Morris USA, Inc., 327 F.Supp.2d 21, 24 (D.D.C. 2004)(subsequent history omitted), corporate employees were given preservation instructions and the court found it “astounding” that employees at the highest corporate levels failed to follow a “’print and retain’ policy which, if followed, would have ensured the preservation of those emails which have been irretrievably lost.”   And, in Cache La Poudre Feeds, LLC v. Land O’Lakes, Inc., 244 F.R.D. 614, 629-30 (D. Col. 2007), “Land O’Lakes directed employees to produce all relevant information, and then relied upon those same employees to exercise their discretion in determining what specific information to save,” however, “Land O’Lakes’ General Counsel took no independent action to verify the completeness of the employees’ document production,” resulting in spoliation. The court stated that lay employees do not have sufficient knowledge to make relevancy determinations and noted that they may have an incentive to fail to produce information.

CASES SUGGESTING THAT SELF-PRESERVATION IS PROHIBITED

Given the dangers, it has been suggested that self-preservation is not permitted.  For example, in Jones v. Bremen High School District 228, 2010 U.S.Dist.Lexis 51312 *8 (N.D.Ill. May 25, 2010), the “individuals most involved in the alleged discriminatory actions, were tasked by the district to search through their own electronic mail (and no one else’s) and cull out relevant documents” without supervision by counsel. The court wrote:

“It is unreasonable to allow a party’s interested employees to make the decision about the relevance of such documents, especially when those employees have the ability to permanently delete unfavorable email from a party’s system.”

The court concluded that the litigant was grossly negligent in relying on “its employees — the same employees whose conduct was at question in the lawsuit — to select the documents they felt were relevant.  Those employees had no legal training” and could have a motive for concealing evidence.

In Northington v. H&M International, the court stated that “defendant never tasked anyone other than the custodians themselves to search their computer hard drives, hard copy documents, or other sources for potentially relevant evidence. . . .” 2011 WL 663055 *17 (N.D.Ill. Jan. 12, 2011).  It described this process as grossly negligent and unreasonable.  In Phillip M. Adams & Associates, LLC v. Dell, Inc., the court wrote that: “ASUS’ practices invited the abuse of rights of others, because the practices tend toward loss of data.  The practices place operations-level employees in the position of deciding what information is relevant to the enterprise and its data retention needs,” 621 F.Supp.2d 1173 (D. Ut. 2009).

Similarly, in Pension Committee of the University of Montreal Pension Plan v. Banc of America Securities, LLC, the court reiterated that it is not sufficient to simply notify employees of a litigation hold and expect that relevant data will be preserved:  “I note that not every employee will require hands-on supervision from an attorney.  However, attorney oversight of the process, including the ability to review, sample, or spot-check the collection efforts is important.  The adequacy of each search must be evaluated on a case by case basis. . . .” 685 F.Supp.2d 456, 473  n. 68 (S.DN.Y. 2010); Id. at  484 (“Hardman should have been taught proper search methods. . . .”), 489 (“Lombardi delegated the search for records to his assistants, but failed to provide any meaningful supervision.”).  Finally, when the Delaware Chancery Court was advised that a litigant was relying on that technique, the court stated: “This is not satisfactory. . . . [Y]ou are not doing what you should be doing.  First of all, you do not rely on defendant to search their own e-mail system. . . .  There needs to be a lawyer who goes and makes sure the collection is done properly. . . .” Roffe v. Eagle Rock Energy Gp, L.P., C.A. 5258-VCL (Apr. 8, 2010), 9-10; see also Intel Microprocessor Antitr. Litig., 229 F.R.D. 422 (S.D.N.Y. 2004)(one in a series of decisions)(Intel’s fail safe process did not work); see generally GFI Acquisition, LLC v. American Federated Title Corp., 2010 WL 1418861 *2 (Bankr. S.D.N.Y. Apr. 7, 2010)(counsel directed “company-wide” search without adequate information); John B. v. Goetz, 2007 WL 4198266 *2 (M.D. Tenn. Nov. 26, 2007)(“the Governor’s ESI suffers the same problems of self-collection and preservation that have been previously documented.”).

THE ROLE OF PROPORTIONALITY

It is tempting, therefore, to conclude that self-preservation is impermissible.  It is important, however, to recall that all ESI decisions should be governed by concepts of proportionality.  Recently, one commentator, Ralph Losey, Esq., compared self-preservation to the fox guarding the henhouse, but noted that:

“Unlike some commentators, I think that reliance on self-collection is sometimes justified. It depends on the case and proportionality principles. It also depends on whether legal counsel is supervising the effort. . . .  In the right case, where you have no reason to suspect a fox is in your midst, and you have a legal watchdog around, there may be no need to incur the additional expense of full IT collection and attorney review.”

R. Losey, “Another “Fox Guarding the Hen House’ Case Shows the Dangers of Self-Collection” (Mar. 20, 2011). Offering a more nuanced option, Mr. Losey suggested a “dual protection system” in which “the key custodians still search, identify, and self-collect what they think are relevant emails, but, as a fail safe, IT also collects all of the key custodians’ emails.”

Mr. Losey’s nuanced approach comes with a pedigree not often recognized. It has been authoritatively stated that:  “Self-collections by custodians may give rise to questions regarding the accuracy of collections if directions and oversight are poor or non-existent.” The Sedona Principles: Second Edition, Best Practices Recommendations & Principles for Addressing Electronic Document Production, (June 2007), 58 (emphasis added).  According to The Sedona Guidelines:

“Under its policy, a potential producing party enlists the assistance of its employees or agents who are identified as possibly having relevant information by informing them of the nature of the controversy and the time frame involved, and by providing them with a method of accumulating and updating (where disputes are ongoing) copies of the relevant information. The appropriate  individuals are instructed to preserve relevant information for the duration of the controversy and steps are established to follow up with the identified individuals and secure the information. The organization has likely fulfilled its obligations.”

“Best Practices Guidelines & Commentary for Managing Information & Records in the Electronic Age,” (2d ed. 2007), 49 (emphasis added).

In sum, Mr. Losey, The Sedona Conference, and some of the language in the cited decisions suggest that an absolutist position may not be the best solution.  There should be situations where self-preservation is permissible.

PRACTICE TIPS

“Proceeding chronologically, the first step in any discovery effort is the preservation of relevant information,” Pension Committee, 685 F.Supp.2d at 464.  There is ample authority that supports a proportionality analysis in the context of the duty to preserve.  P. Grimm, et al., “Proportionality in the Post-Hoc Analysis of Pre-Litigation Preservation Decisions,”   37 U.Balt.L.Rev. 381, 403 (2008).  Therefore, a primary factor in deciding whether self-preservation is permissible should be the size, value, and needs of the case, and resources of the litigant, See Mancia v. Mayflower Textile Servs. Co., 253 F.R.D. 354, 364 (D.Md. 2008)(discussing a “discovery budget”).

Another key factor is to precisely define what “self-preservation” means. “A word is not a crystal, transparent and unchanged, it is the skin of a living thought and may vary greatly in color and content according to the circumstances and the time in which it is used,” Towne v. Eisner, 245 U.S. 418, 425 (1918).  Self-preservation may include no, or varying degrees of, involvement by counsel.  It could be performed by a self-described “computer illiterate,” as in Green v. Blitz, or by sophisticated personnel. It could center on a case involving allegations of dishonesty or one presenting a commercial argument over virtually undisputed facts among people of unquestioned integrity.  And, the person conducting the search might, or might not be, the target of the allegations of wrong-doing.

Additional key safeguards would be some form of quality control to reasonably assure that there was, in fact, client compliance.  This could include protocols, spot checks, and Mr. Losey’s “dual protection system.”  Attorney supervision in a case-specific, appropriate and reasonable form, as suggested in Pension Committee and other authorities, appears crucial.  Finally, self-preservation undeniably presents elevated risk and the decision should be one made by a client based on sufficient discussion of the risks and advantages.

POSTSCRIPT

L. Levy, “The Hidden Costs of Self Collection” (Applied Discovery June 2, 2011).

W. L. Wescott,  To Self Collect or Not to Self Collect (Daily Record July 7, 2011).

M. Diamond, “New ruling shouldn’t force use of outside e-discovery vendors” (Inside Counsel June 20, 2011).

Advanced Discovery, “The Dangers of Self Collections in E-Discovery” (May 20, 2011).

Phoenix Four, Inc. v. Strategic Resources Corp., 2006 U.S.Dist.Lexis 32211 (S.D.N.Y. May 23, 2006)(“[Counsel]  simply accepted the defendants’ representations that because SRC was no longer in operation, there were no computers or electronic collections to search.”).

“Collection Concerns – Should You Collect ESI by Yourself or Seek Outside Assistance?,” Chap. 5 in B. Olson and T. O’Connor, “Electronic Discovery for Small Cases” (ABA 2012)(describing two software tools and concluding “it is possible for a lawyer who understands the process to engage in self-collection methods using hte appropriate tools.”), 34.

UPDATE Feb. 12, 2021

See “[I]t is no longer amateur hour.“