E-discovery rules have caused in-house counsel to take a harder line with some of the e-mails that workers think are private

“Don’t put this in writing, but … ” Those are the opening words of an e-mail that got the writer’s company in legal hot water. And there are plenty more where that came from.

“This is off the record,” started the e-mail that in fact put it all on the record.

How about this one? “We may be in breach of contract, and here’s why.”

These examples of troublesome e-mails general counsel say they’ve run across don’t include the countless off color so-called jokes forwarded to contact lists of colleagues, interested or not, or links to Web sites that are definitely not part of a corporate job description.

The “send” button — together with its evil cousins, “forward” and “reply all” — are causing a world of trouble for corporations as they connect to evidence in legal proceedings and create a new mess for in-house lawyers to clean up.

“We all need to educate ourselves and our clients about the large bucket of problems that come up with e-mails,” said R. Scott Meece, global general counsel, senior vide president and secretary of CIBA Vision Corp. “People send e-mails as though they were having conversations with someone in a bar.”

The problem with e-mails has been a recurring topic recently in GC roundtable discussions and elsewhere — including protracted legal battles.

“We’ve broken open a lot of investigations just because of what we find in the e-mails,” said W. Scott Sorrels, a partner with Powell Goldstein specializing in corporate securities and regulatory matters and a former enforcement attorney with the U.S. Securities and Exchange Commission. He and Jennifer D. Odom, a Powell Goldstein partner specializing in securities, corporate and regulatory litigation as well as electronic discovery, have given a series of presentations on the perils of e-mail.

“We had one example that started out, ‘don’t put this in writing but … ‘” Sorrels said. The writer “then proceeded to shoot himself in the foot, the knee and the elbow.”

It has now become routine even in civil investigations for computers to be subpoenaed so lawyers can look at e-mails and hard drives. And one thing always leads to another. “We have forensic software that shows multiple levels of deletions. It shows thought processes. We can learn far more than from just a document alone,” said Sorrels. “E-mails have taken over the world.”

“You wouldn’t believe the things that people say — as though they’re just talking to a buddy,” said CIBA Vision’s Meece. Yet these e-mails are saved, backed up, forwarded or otherwise preserved — even when people think they’ve deleted them. “They very well can live forever.”

Even worse, sometimes e-mails tell a part of the story, but not all of it. So their continuing existence amounts to a sound bite taken out of context, multiplied and amplified forever.

“My biggest fear with e-mails is not that it can be used against you in some way, but that the assumption is it’s telling the whole story, and it’s not,” said Meece. “It may be the truth but not the whole truth, and there may be some silly stuff in there that’s not ‘nothing but the truth.’”

Ask just about any GC or labor and employment lawyer, and you’ll hear similar concerns. “We deal with this issue all the time — more and more,” said Matthew W. Clarke, a partner in Smith, Gambrell & Russell’s employer services. “The main problem that occurs over and over is that people have such a casual attitude and approach when it comes to writing and sending e-mails.”

The resulting problem is not just a matter of taste but a matter of law — as in harassment or hostile work environment. “People will put something in an e-mail that they would never say in front of other people or in a drafted memo,” said Clarke. “They’ll just put catty comments or frankly inappropriate language. They don’t think the e-mail will ever come back to bite them or ever see the light of day. Now, with e-discovery rules, plaintiffs are dredging up e-mails that go back years. They call people names. They make inappropriate comments.”

These include, Clarke said, “can you believe that [expletive] is complaining about this?” Or, “I can’t believe she’s pregnant at such an inconvenient time at work.” Or, “we need to get rid of the dead wood.”

E-mails, text messages, BlackBerry communications all are potential time bombs if not worded thoughtfully and with discipline. “It just creates the potential for a permanent record for all this type of stuff,” Clarke said. “People don’t realize that to some degree, if it’s in an e-mail, it’s analogous to etching it in stone.”

Clarke’s best advice to in-house counsel is to work with other departments to regularly repeat training in e-mail etiquette. Remind employees that their communications on office computers — and even company cell phones, BlackBerrys and home computers used for work — belong to the company and are not in any way private. If it’s off the record, don’t write it. Pick up the phone or better yet, walk over. Don’t hit the send button in the heat of anger.

And above all, said Clarke, never say anything in an e-mail that you wouldn’t want to see displayed on a giant screen in a court room in front of a judge and jury even years from now. Because that is exactly where it might end up.

June 1, 2007 – Though the U.S. Supreme Court cut back this week on Americans’ rights to sue for equal pay in the real-world workplace, our rights to sue for wrongs visited upon our imaginary selves in imaginary game worlds made some modestly countervailing gains.

“This has been one of the most important weeks in US virtual-world law in memory, perhaps ever,” says S. Gregory Boyd, an intellectual property attorney and games law expert at Kenyon & Kenyon.

First, in a 46-page ruling handed down Wednesday, U.S. District Judge Eduardo Robreno of Philadelphia allowed a player’s suit against Linden Lab, the maker of the popular online fantasy game Second Life, to go forward. In April 2006 Linden Lab seized Marc Bragg’s virtual property and expelled him from the game for allegedly violating its terms of use by using an “exploit” — a software trick, essentially — to buy virtual land in that world on the cheap. In October 2006 Bragg sued to recover the value of his virtual property, which he estimates at $6,000, as well as about $2,000 in U.S. currency that he had in a game-related account controlled by Linden Lab. “While the property and the world where it is found are ‘virtual,’” Judge Robreno wrote, “the dispute is real.” Though the game’s Terms of Use (i.e., the contract to which the user clicks his agreement before starting the game) required that such disputes be handled by arbitration in San Francisco, the judge found those arbitration provisions to be “unconscionable.” This was so, Judge Robreno found, even though Linden Lab offered to move the arbitration to Philadelphia and pay all of Bragg’s upfront fees. It was so, moreover, even though Bragg, who is himself a lawyer, might have seemed unusually well situated to understand the meaning of the Terms of Use.

Then, on the same day that the Bragg ruling came down, a player of Blizzard Entertainment’s wildly popular subscription-based online game, World of Warcraft, filed a nationwide federal class-action suit in Miami, Florida, against a company known as IGE (formerly International Gaming Entertainment). (Blizzard is a unit of Vivendi (VIVEF.PK).) IGE is in the business of facilitating so-called “real-money trade”; that is, it runs online exchanges where players of online games, including World of Warcraft, can buy and sell virtual currency and trinkets that have value in a particular game in exchange for real money, even though such transactions are typically forbidden by most games’ Terms of Use agreements. Plaintiff Antonio Hernandez, represented by G. Richard Newsome of Orlando, Florida, maintains that real money trade causes “pollution and interruption of the fantasy Subscribers paid for.” He alleges that IGE’s low-paid contract laborers in Southeast Asia “strip out scarce and limited virtual world resources,” devalue the in-game currency, and effectively put “honest” players at a disadvantage vis-a-vis unscrupulous ones. Hernandez says he spent more than $50 on the World of Warcraft software, more than $50 on its “Burning Crusade” expansion upgrade, and $15 per month in subscription fees. (World of Warcraft, which launched in North America in November 2004, is probably the most successful so-called “massively multiplayer online role-playing game” (MMORPG) ever marketed, with, currently, an estimated 8.5 million subscribers worldwide, according to Blizzard.)

Defendants IGE and Linden Labs each declined comment on the case against it, stating that it does not comment on pending litigation.

I have written before on the subject of real money trade in virtual worlds, both in a November 2005 Fortune feature story (”From Megs to Riches”), available here, and in a November 27, 2006 blog posting, available here, about the “Anshe Chung,” who is believed to be the first person to accumulate $1 million worth of real value entirely through machinations inside an online world (Second Life).

While some worlds, like Second Life, permit and facilitate real money trade, most, like World of Warcraft, forbid it. Still others, like Sony Online Entertainment’s EverQuest, have attempted to offer subscribers the choice of operating in versions of the world where it is permitted and other versions where it isn’t. (SOE is ultimately owned by Sony (SNE).)

Legally and factually, the more interesting of the two cases is the Hernandez class action. IGE has previously defended its business model by saying that it does not violate any game’s Terms of Use, because its employees do not play the games themselves, and, therefore, never enter into those so-called “click-through agreements.” IGE merely brokers trades between people that do play the game.

In the suit, however, Hernandez alleges that IGE, which is based in Hong Kong but has offices in Miami, Boca Raton, and Beverly Hills, is much more than a mere broker. In World of Warcraft, players can earn in-game currency, called gold, and other virtual items that bestow in-game powers or status by performing certain feats. The complaint alleges that IGE contracts with “hundreds” of “gold farmers” who are “often citizens of developing third world countries who spend up to 14 hours per day, or more, logged onto World of Warcraft collecting resources and World of Warcraft gold.” (Best story I’ve seen on the phenomenon of gold farming in China is a December 2005 New York Times article, available here.) Hernandez’s complaint claims that the IGE’s gold farmers use accounts that “are paid for, or controlled, directly or indirectly,” by IGE. He then accuses IGE of acting in a conspiracy with those gold farmers in ways that violate the consumer protection laws of Florida and the other 49 states, D.C., and Puerto Rico, which generally forbid “unlawful, unfair, unconscionable, deceptive and fraudulent business practices.”

Boyd, of Kenyon & Kenyon, says its hard to comment on the Hernandez case at such an early stage, but does say this: “Traditionally, the players have been harmed by this type of activity and not really had a voice against the people ruining the economies and diminishing the game play experience. Hopefully, this type of legal action will give them that voice.”

February 6, 2007: With the stunning global success of Apple’s iPod music player and iTunes online music store, some have called for Apple to “open” the digital rights management (DRM) system that Apple uses to protect its music against theft, so that music purchased from iTunes can be played on digital devices purchased from other companies, and protected music purchased from other online music stores can play on iPods. Let’s examine the current situation and how we got here, then look at three possible alternatives for the future.

To begin, it is useful to remember that all iPods play music that is free of any DRM and encoded in “open” licensable formats such as MP3 and AAC. iPod users can and do acquire their music from many sources, including CDs they own. Music on CDs can be easily imported into the freely-downloadable iTunes jukebox software which runs on both Macs and Windows PCs, and is automatically encoded into the open AAC or MP3 formats without any DRM. This music can be played on iPods or any other music players that play these open formats.

The rub comes from the music Apple sells on its online iTunes Store. Since Apple does not own or control any music itself, it must license the rights to distribute music from others, primarily the “big four” music companies: Universal, Sony BMG, Warner and EMI. These four companies control the distribution of over 70% of the world’s music. When Apple approached these companies to license their music to distribute legally over the Internet, they were extremely cautious and required Apple to protect their music from being illegally copied. The solution was to create a DRM system, which envelopes each song purchased from the iTunes store in special and secret software so that it cannot be played on unauthorized devices.

Apple was able to negotiate landmark usage rights at the time, which include allowing users to play their DRM protected music on up to 5 computers and on an unlimited number of iPods. Obtaining such rights from the music companies was unprecedented at the time, and even today is unmatched by most other digital music services. However, a key provision of our agreements with the music companies is that if our DRM system is compromised and their music becomes playable on unauthorized devices, we have only a small number of weeks to fix the problem or they can withdraw their entire music catalog from our iTunes store.

To prevent illegal copies, DRM systems must allow only authorized devices to play the protected music. If a copy of a DRM protected song is posted on the Internet, it should not be able to play on a downloader’s computer or portable music device. To achieve this, a DRM system employs secrets. There is no theory of protecting content other than keeping secrets. In other words, even if one uses the most sophisticated cryptographic locks to protect the actual music, one must still “hide” the keys which unlock the music on the user’s computer or portable music player. No one has ever implemented a DRM system that does not depend on such secrets for its operation.

The problem, of course, is that there are many smart people in the world, some with a lot of time on their hands, who love to discover such secrets and publish a way for everyone to get free (and stolen) music. They are often successful in doing just that, so any company trying to protect content using a DRM must frequently update it with new and harder to discover secrets. It is a cat-and-mouse game. Apple’s DRM system is called FairPlay. While we have had a few breaches in FairPlay, we have been able to successfully repair them through updating the iTunes store software, the iTunes jukebox software and software in the iPods themselves. So far we have met our commitments to the music companies to protect their music, and we have given users the most liberal usage rights available in the industry for legally downloaded music.

With this background, let’s now explore three different alternatives for the future.

The first alternative is to continue on the current course, with each manufacturer competing freely with their own “top to bottom” proprietary systems for selling, playing and protecting music. It is a very competitive market, with major global companies making large investments to develop new music players and online music stores. Apple, Microsoft and Sony all compete with proprietary systems. Music purchased from Microsoft’s Zune store will only play on Zune players; music purchased from Sony’s Connect store will only play on Sony’s players; and music purchased from Apple’s iTunes store will only play on iPods. This is the current state of affairs in the industry, and customers are being well served with a continuing stream of innovative products and a wide variety of choices.

Some have argued that once a consumer purchases a body of music from one of the proprietary music stores, they are forever locked into only using music players from that one company. Or, if they buy a specific player, they are locked into buying music only from that company’s music store. Is this true? Let’s look at the data for iPods and the iTunes store – they are the industry’s most popular products and we have accurate data for them. Through the end of 2006, customers purchased a total of 90 million iPods and 2 billion songs from the iTunes store. On average, that’s 22 songs purchased from the iTunes store for each iPod ever sold.

Today’s most popular iPod holds 1000 songs, and research tells us that the average iPod is nearly full. This means that only 22 out of 1000 songs, or under 3% of the music on the average iPod, is purchased from the iTunes store and protected with a DRM. The remaining 97% of the music is unprotected and playable on any player that can play the open formats. Its hard to believe that just 3% of the music on the average iPod is enough to lock users into buying only iPods in the future. And since 97% of the music on the average iPod was not purchased from the iTunes store, iPod users are clearly not locked into the iTunes store to acquire their music.

The second alternative is for Apple to license its FairPlay DRM technology to current and future competitors with the goal of achieving interoperability between different company’s players and music stores. On the surface, this seems like a good idea since it might offer customers increased choice now and in the future. And Apple might benefit by charging a small licensing fee for its FairPlay DRM. However, when we look a bit deeper, problems begin to emerge. The most serious problem is that licensing a DRM involves disclosing some of its secrets to many people in many companies, and history tells us that inevitably these secrets will leak. The Internet has made such leaks far more damaging, since a single leak can be spread worldwide in less than a minute. Such leaks can rapidly result in software programs available as free downloads on the Internet which will disable the DRM protection so that formerly protected songs can be played on unauthorized players.

An equally serious problem is how to quickly repair the damage caused by such a leak. A successful repair will likely involve enhancing the music store software, the music jukebox software, and the software in the players with new secrets, then transferring this updated software into the tens (or hundreds) of millions of Macs, Windows PCs and players already in use. This must all be done quickly and in a very coordinated way. Such an undertaking is very difficult when just one company controls all of the pieces. It is near impossible if multiple companies control separate pieces of the puzzle, and all of them must quickly act in concert to repair the damage from a leak.

Apple has concluded that if it licenses FairPlay to others, it can no longer guarantee to protect the music it licenses from the big four music companies. Perhaps this same conclusion contributed to Microsoft’s recent decision to switch their emphasis from an “open” model of licensing their DRM to others to a “closed” model of offering a proprietary music store, proprietary jukebox software and proprietary players.

The third alternative is to abolish DRMs entirely. Imagine a world where every online store sells DRM-free music encoded in open licensable formats. In such a world, any player can play music purchased from any store, and any store can sell music which is playable on all players. This is clearly the best alternative for consumers, and Apple would embrace it in a heartbeat. If the big four music companies would license Apple their music without the requirement that it be protected with a DRM, we would switch to selling only DRM-free music on our iTunes store. Every iPod ever made will play this DRM-free music.

Why would the big four music companies agree to let Apple and others distribute their music without using DRM systems to protect it? The simplest answer is because DRMs haven’t worked, and may never work, to halt music piracy. Though the big four music companies require that all their music sold online be protected with DRMs, these same music companies continue to sell billions of CDs a year which contain completely unprotected music. That’s right! No DRM system was ever developed for the CD, so all the music distributed on CDs can be easily uploaded to the Internet, then (illegally) downloaded and played on any computer or player.

In 2006, under 2 billion DRM-protected songs were sold worldwide by online stores, while over 20 billion songs were sold completely DRM-free and unprotected on CDs by the music companies themselves. The music companies sell the vast majority of their music DRM-free, and show no signs of changing this behavior, since the overwhelming majority of their revenues depend on selling CDs which must play in CD players that support no DRM system.

So if the music companies are selling over 90 percent of their music DRM-free, what benefits do they get from selling the remaining small percentage of their music encumbered with a DRM system? There appear to be none. If anything, the technical expertise and overhead required to create, operate and update a DRM system has limited the number of participants selling DRM protected music. If such requirements were removed, the music industry might experience an influx of new companies willing to invest in innovative new stores and players. This can only be seen as a positive by the music companies.

Much of the concern over DRM systems has arisen in European countries. Perhaps those unhappy with the current situation should redirect their energies towards persuading the music companies to sell their music DRM-free. For Europeans, two and a half of the big four music companies are located right in their backyard. The largest, Universal, is 100% owned by Vivendi, a French company. EMI is a British company, and Sony BMG is 50% owned by Bertelsmann, a German company. Convincing them to license their music to Apple and others DRM-free will create a truly interoperable music marketplace. Apple will embrace this wholeheartedly.

February 7, 2007: US Senators yesterday introduced a bill that better protects the privacy of citizens’ personal information in the face of data security breaches across the country.

Senators Patrick Leahy (D-Vt.) and Senator Bernie Sanders (I-Vt.) co-sponsored the Personal Data Privacy and Security Act, which was first introduced in 2005 with co-sponsorship from Arlen Specter (R-Pa.) following serious data breaches at ChoicePoint and LexisNexis.

Senator Specter, who is the Ranking Member on the panel, is co-sponsoring the bill again this Congress.

Since then breaches at several other firms and within state and federal governments have exposed millions of Americans to identity theft by leaking or losing their personal data, which included names, addresses, and sometimes Social Security numbers.

Just last week in Vermont there was a serious data breach of a computer system used by the Vermont Agency of Human Services.

The breach jeopardized the financial data of at least 69,000 Vermonters whose personal financial information was stored on the server. In other recent cases, Designer Shoes Warehouse and TJ Maxx Stores both had the personal information of their customers stolen from their computers.

According to the Privacy Rights Clearing House, since February 2005, more than 100 million records containing personal information have been subject to some sort of security breach.

“Today, Americans live in a world where their most sensitive personal information can be accessed and sold to the highest bidder, with just a few keystrokes on a computer, yet our privacy laws haven’t kept pace,” said Leahy, who has championed privacy protections in his more than three decades in the United States Senate. “This comprehensive bill not only deals with the need to provide Americans with notice when they have been victims of a data breach, but also deals with the underlying problem of lax security and lack of accountability to help prevent data breaches from occurring in the first place. Reforms like these are long overdue.”

He said the bill also can serve as a model for states in enacting laws covering state-kept data.

“This legislation is a critically important tool to protect the privacy of Americans’ personal information. Companies who collect personal information have a serious responsibility to safeguard it and this bill would make sure they do that,” said Sanders. “In addition, we need to treat the theft of personal information as the serious crime that it is. This bill sends the message loud and clear that those who engage in identity theft are going to face increased criminal penalties. I look forward to working with Senator Leahy – who has been at the forefront of the effort to protect Americans’ privacy rights — to advance this important legislation.”

Key features of the bipartisan legislation include increasing criminal penalties for identity theft involving electronic personal data and making it a crime to intentionally or willfully conceal a security breach involving personal data, giving individuals access to, and the opportunity to correct, any personal information held by commercial data brokers, requiring entities that maintain personal data to establish internal policies that protect the personal data of Americans, requiring entities that maintain personal data to give notice to individuals and law enforcement when they experience a breach involving sensitive personal data and requiring the government to establish rules protecting privacy and security when it uses information from commercial data brokers, to conduct audits of government contracts with data brokers and impose penalties on government contractors that fail to meet data privacy and security requirements.

Advocacy group Center for Democratic Technology welcomed the legislation, particularly the provision in the measure that strengthens oversight of the government’s use of commercial databases to collect information about citizens.

It’s not often that Science contains an analysis penned by a lawyer. But the lawyer in question, Michael R. Samardzija of the M.D. Anderson Cancer Center’s Intellectual Property office, suggests that the US Supreme Court is weighing an issue that may pit parts of Science’s readership against each other. At issue are cases where a patent covers a development that is obvious, and the analysis suggests that while the health care industry (including biotech) likes the current system, high-tech firms such as chipmakers are finding it a barrier to innovation.

The subset of patents in question are those that combine features that are separately unpatentable due to prior art. One of the key standards these combinations are subjected to is whether they are “obvious.” The legal definitions by which obviousness is evaluated are complex, but Samardzija suggests that they boil down to weighing whether a development was inexorable, while avoiding determining obviousness via 20/20 hindsight.

Samardzija indicates that the high-tech industry is feeling restricted by the current use of the obviousness standards, a conclusion consistent with our previous coverage of the issue. He cites figures showing that, by 2002, over 90,000 patents had been issued that cover various aspects of CPUs, and he suggests that many of these covered incremental improvements. As a result of this density of patents, he notes that figures from 1991 indicate that US companies spent approximately $300 million on R&D, but over three times that on patent-related legal maneuvers. The net result is that high-tech industry feels that its innovations are commonly running into expensive legal hurdles. As a result, they’d be happy to see far more patents denied on obviousness grounds.

In contrast, the healthcare industry has consistently fought for extended and strong patent rights, and has argued for maintaining the status quo in this case. Samardzija cites a number of cases where drug companies have patented either new uses of existing compounds, or combinations of drugs which had previously been patented separately. To the drug companies, changing the obviousness rule would not only mean a potential end of patents for products already on the market, but would presumably eliminate the chance of protection for a number of drugs in their pipelines.

Somewhat oddly, the case (KSR v. Teleflex) that started two of the leading technology industries scrambling dealt with a patent for pedal controllers for electronic throttles that were smaller, less complex, and cheaper than anything on the market. The holder of the patent has sued a competitor, who claimed in defense that such a device was an obvious evolution of those already on the market and should not be provided patent protection. As the case made its way through appeals, it became apparent that it would be determined on grounds of obviousness, and provide the Supreme Court with an opportunity to revisit this issue. As a result, alliances of chipmakers and health care industries have both pushed for their vision of obviousness to be adopted (the EFF has chimed in, too). Whichever industry walks away unhappy when the decision is released may be facing a very different economic landscape in the future.

Introduction

Effective December 1, 2006, amendments to the Federal Rules of Civil Procedure place new obligations on attorneys using electronically stored information (“ESI”) in federal courts. The amendments force parties to address, early in the case, issues of how to best preserve, collect, and produce ESI.

The amendments were created in response to recognition that ESI raises different issues from conventional paper discovery. Characterized by an exponentially greater volume than hard copy documents, ESI presents a substantial risk of inadvertent production of privileged material. Preservation of ESI also raises an issue, since computer information, unlike paper, is dynamic; computers continuously overwrite, delete, and change stored information. In addition, ESI may become incomprehensible when separated from the system that created it. In response to these problems, the proposed amendments require counsel to address ESI issues from the outset of litigation.

The Ninth Circuit Federal District Courts and State Courts in California will soon revise their rules to address ESI. Accordingly, counsel should be aware of the new duty to properly communicate with clients and ensure discovery of all sources of relevant ESI.

Summary of Amended FRCP

Amended Rule 16: Pretrial Conferences; Scheduling; Management

• Invites the court to address ESI in the Rule 16 scheduling order.
• Gives the court discretion to enter an order adopting any agreements reached by the parties regarding privileges for material inadvertently produced in discovery.

Amended Rule 26(a)(1)(E): Duty of Disclosure

• Requires a party to disclose, without awaiting a discovery request, all “electronically stored information. . . which the disclosing party may use to support its claims or defenses.”
• At the early stage of initial disclosures, each party must disclose, by category and location, all potential sources of ESI that it may want to use in litigation.

Amended Rule 26(b)(2): Discovery Scope and Limits

• Provides that a party need not produce electronically stored information that is not “reasonably accessible” because of undue burden or cost.
• For example: deleted information, information kept on backup systems for disaster recovery purposes, and legacy data from systems no longer in use.

Amended Rule 26(b)(5): Claims of Privilege or Protection of Trial Preparation Materials

• Allows a party to assert privilege after inadvertent production.
• If a party has produced information in discovery that it claims is privileged or protected as trial-preparation material, it may notify the receiving party of the claim, stating the basis.
• After receiving notification, the receiving party must return, sequester, or destroy the information, and may not use or disclose it to third parties until the claim is resolved.

Amended Rule 26(f): Meeting of Parties

• Requires the parties to discuss, at their initial meeting, three issues relating to discovery of ESI:

1. The form of producing electronically stored information (paper or electronically)
2. Preservation of discoverable ESI; and
3. Approaches to asserting claims of privilege or work-product protection after inadvertent production in discovery.

• In order to be adequately prepared to discuss these matters at the conference, counsel must investigate and discuss with the client the best way for the client’s ESI to be preserved, collected, processed, and produced.
• Amended Form 35 (“Report of Parties’ Planning Meeting”) requires that counsels’ Rule 26(f) reports cover ESI issues and any agreements counsel made about post-production privilege assertion.

Amended Rule 33: Interrogatories to Parties

• Allows a party to answer an interrogatory involving review of business records by providing access to the information, so long as the interrogating party can find the answer as readily as the responding party.

Amended Rule 34: Production of Documents and Things

• Authorizes requesting party to specify form of production. For example, the discoverable emails may be produced in their original Outlook format, or Word files can be produced in searchable PDF format.
• If no format is requested, the responding party may provide the information in any format that is reasonably usable.

Amended Rule 37(f): Failure to Make or Cooperate in Discovery; Sanctions

• “Absent exceptional circumstances, a court may not impose sanctions under these rules on a party for failing to provide ESI lost as a result of the routine, good-faith operation of an electronic information system.”
• This amendment provides a safe harbor for information lost due to the “routine operation of an electronic information system,” i.e., the ways in which such systems are generally designed to meet the party’s technical and business needs.
• Recognizes that electronic information systems are designed to recycle, delete, and overwrite information in routine operation.
• Does not provide a shield for a party that intentionally destroys specific information because of its relationship to litigation.

Amended Rule 45: Subpoena

• Recognizes that electronic discovery may be obtained from third parties.
• Conforms the provisions for subpoenas to changes in other discovery rules related to discovery of ESI.

Conclusion

The volume and complexity of electronic evidence requires proactive planning to allow clients and counsel to manage potentially discoverable facts and data before litigation. In order to prevent discovery battles, sanctions, or, even worse, avoidable adverse verdicts as a result of those sanctions, litigants who anticipate use of ESI should keep several things in mind. First, counsel has a duty to become familiar with the client’s document retention policies. Although not required by the FRCP, other jurisdictions (federal district courts in Delaware, Kansas, and Wyoming) require interaction between counsel and an IT liaison who has knowledge of the client’s information management system. Second, do not blindly accept a client’s assertion that no ESI exists. Hidden data may remain somewhere in the system, despite the client’s belief that the information was deleted. Third, before the meet and confer conference, counsel should meet with their clients and prepare a robust data management system, which creates a method for preserving, collecting, processing, and producing the client’s ESI. Finally, both parties should work cooperatively to prepare for all likely ESI issues before discovery spats get out of control.

A federal judge in Detroit has rejected the Bush administration’s argument that the National Security Agency’s wiretap program, which has been conducted for nearly five years, is allowed by the U.S. Constitution.

In a sharply worded statement that cites precedents from as far back as the late 18th century, and quotes extensively from the Framers of the Constitution, Judge Anna Diggs Taylor of the U.S. District Court for the Eastern District of Michigan, said: “We must note that the Office of the Chief Executive has itself been created, with its powers, by the Constitution. There are no hereditary Kings in America, and no powers not created by the Constitution.”

The suit was brought by a range of plaintiffs under the auspices of the American Civil Liberties Union. Other plaintiffs included the Council on American Islamic Relations, Greenpeace and the National Association of Criminal Defense Lawyers.

The judge rejected the administration’s claims that the defendants did not have the standing to sue the government, saying that they had each suffered in their ability to carry on communications protected by the First Amendment. She also rejected the administration’s claims that the activity was protected because it was a state secret. She said that the information provided by the President of the United States in a series of public statements about the NSA surveillance program was itself sufficient for the plaintiffs to make their case.

Finally, the court rejected the administration’s claims that the current law that provides for a secret court to handle warrants in espionage cases, which was set up by the Federal Information Security Act, is unconstitutional. She noted that in a number of instances, the federal courts have upheld the constitutionality of such courts as a needed balance between protecting constitutional rights and the government’s need for secrecy.

In her findings, Judge Taylor said that the administration’s actions in conducting the NSA wiretapping violate the Administrative Procedures Act, the Separation of Powers doctrine, the First and Fourth Amendments to the Constitution, and statutory law. The judge did reject a portion of the plaintiff’s case relating to data mining of the information recovered by the wiretaps because it would require the revealing of state secrets.

However, in her decision, the judge granted the plaintiff’s request for a permanent injunction against continuing the NSA wiretapping. She said that the government’s actions caused “irreparable injury,” and that the government could accomplish its ends by obeying the law and remaining in compliance with the Constitution.

“Plaintiffs have prevailed and the public interest is clear, in this matter. It is the upholding of our Constitution.”

The U.S. Department of Justice has said that it will appeal Judge Taylor’s ruling.