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Custodian Self-Collection - The Challenges and Consequences

When faced with an investigation or threat of litigation, counsel has a duty to preserve potentially relevant data.  When this duty arises, counsel's first reaction may be to ask individual custodians to collect their own data.  While custodian self-collection seems logical, as custodians should know where their documents and electronically-stored information (ESI) are located, unfortunately it has not found much favor in the courts.  To address the challenges and consequences associated with custodian self-collection, counsel should consider employing a systemized, repeatable and defensible enterprise-wide process to reduce the risk of spoliation during collections.

Self-Collection in the Courts
A central theme in custodian self-collection cases is the preservation of ESI.  The December 2006 amendments to the Federal Rules of Civil Procedure (FRCP) dramatically changed the requirements for managing and preserving ESI for litigation.  The Judicial Conference Commentary on the Amendments stated that "[t]he proposed amendments to Rule 16, Rule 26(a) and (f) and Form 35 present a framework for the parties and the court to give early attention to issues relating to electronic discovery, including the frequently-recurring problems of the preservation of the evidence…."

Even prior to the 2006 amendments, courts were beginning to question and address the challenge of custodian self-collection.  For example, the Zubulake court stated that "it is not sufficient to notify all employees of a legal hold and expect that the party will then retain and produce all relevant information.  Counsel must take affirmative steps to monitor compliance so that all sources of discoverable information are identified and searched."  Zubulake v. UBS Warburg LLC, 2004 WL 1620866 at *8 (S.D.N.Y. Jul. 20, 2004).

In another case, a post-2006 amendment case involving custodian self-collection, the court held that "[i]t is not sufficient . . . for a company merely to tell employees to ‘save relevant documents.'"  The court further remarked that "this sort of token effort will hardly ever suffice" and criticized "the lack of specificity in defining what documents would be relevant to litigation."  Samsung Electronics Co., Ltd. v. Rambus, Inc., 439 F.Supp.2d 524, 565 (E.D. Va. 2006).

Another matter where the court also spoke to the challenge of self-collection was in Cache La Poudre Feeds, LLC v. Land O'Lakes, Inc., 244 F.R.D. 614 (D.Colo. 2007).  In this matter, the court faulted the defendant for directing employees to produce relevant information while relying on those same employees to exercise their discretion to determine what ESI was relevant.

Additionally, in Wachtel v. Health Net, the court highlighted not only the importance of issuing a proper legal hold, but also the importance of monitoring employee compliance to preservation orders.  "Health Net relied on the specified business people within the company to search and turn over whatever documents they thought were responsive, without verifying that the searches were sufficient."  The court deemed the process "utterly inadequate," as it was "one of looking for selected specific documents by a specific person rather than all responsive documents from all Health Net employees who had such documents."  This case also highlighted the inherent risk of custodian self-collection in that "employee-conducted searches managed to exclude inculpatory documents that were highly germane to Plaintiffs' requests."  Wachtel v. Health Net, Inc., 2006 WL 3538935 at *8 (D.N.J., Dec. 6, 2006).

Potential Consequences of Self-Collection
Monitoring employee compliance with legal holds is essential, as the courts have held organizations liable for the bad faith of individual employees despite counsel's own good faith efforts.  In United Medical Supply Company v. United States, the court ruled against the United States as the court rejected the government's argument that spoliation sanctions require a finding of bad faith.  "Aside perhaps from perjury, no act serves to threaten the integrity of the judicial process more than the spoliation of evidence…To guard against this, each party in litigation is solemnly bound to preserve potentially relevant evidence."  United Medical Supply Company v. United States, 2007 WL 1952680 (Fed.Cl. June 27, 2007). 

In another case highlighting the potential consequences of self-collection, a principle witness in the lawsuit received a legal hold notice and responded by deleting relevant evidence.  The court issued an adverse inference instruction against the company because it "simply told [the custodian] to preserve all evidence and trusted him to comply," rather than taking reasonable steps to prevent spoliation.  The company was held to have facilitated the misconduct even though the custodian acted in bad faith.  In re Hawaiian Airlines, Inc., 2007 WL 3172642 (Bkrtcy. D.Hawaii October 30, 2007).

Issues with Custodian Self-Collection
The legal hold notice alerts custodians of their duty to preserve potentially relevant ESI, but custodian self-collection takes the process a step further as it places the burden of determining relevance and ESI collection on the custodian.  Technical limitations, lack of legal understanding and improper preservation techniques such as "drag-and-drop" are all grounds for potential errors in self-collection efforts.  Even with proper instruction and training, employees may lack expertise to determine relevance, to preserve ESI and to collect ESI in a defensible manner.  Furthermore, some employees may not understand or remember that relevant ESI may be stored as sent e-mail messages or drafts of documents. 

Custodian self-collection is inherently risky because it is usually not conducted in a systemized, repeatable or defensible manner.  First, self-collection is not systemized; different criteria and search techniques are typically used by different custodians across the same case.  Second, it is not repeatable; individual custodians must use their best judgment for preservation, leading to inconsistent results across multiple cases.  Third, self-collection is inherently risky because it is not defensible; counsel who rely on self-collection cannot have confidence in the accuracy and thoroughness of the process or determine how much relevant information custodians may have failed to produce or even intentionally delete as the case law has shown.

Building a Better Process:  The Case for Automation
The amendments to the Federal Rules suggest the need for a systemized, repeatable and defensible process toward e-discovery and ESI preservation.  Custodian self-collection is rarely systemized, repeatable, or defensible and the courts are becoming increasingly impatient with companies that fail to comply with their preservation duties.

However, counsel can eliminate the risks inherent in custodian self-collections and mitigate the associated spoliation risks by employing an enterprise search and collection solution.  While there are many enterprise-enabled, automated search, collection and preservation solutions available today, choosing the right technology can enable legal teams to successfully address the challenges of self-collection.   By objectively searching, monitoring compliance and ensuring proper ESI preservation across the enterprise, legal teams can also avoid the consequences associated with custodian self-collections. 

These enterprise search and collection solutions also bring an objectivity and defensibility to the process that custodian self-collection cannot.  This objectivity and defensibility helps to eliminate the challenges of custodian self-collection while mitigating the risk of spoliation.  These solutions also enable counsel to monitor the preservation process by providing extensive reporting features that allow tracking the progress of a preservation effort.  Further, an added benefit of these enterprise search and collection solutions is they can provide an organization with a repeatable, defensible and systemized process in compliance with the Federal Rules.

Conclusion
In seeking to address the challenges and potential consequences of custodian self-collection, in-house counsel should seek to develop an e-discovery process that preserves ESI in a systemized, repeatable and defensible manner.  An e-discovery process that uses enterprise search and collection tools for responsive data collection from all prospective custodians will assist counsel in limiting their organizations' exposure to spoliation sanctions and penalties while facilitating compliance with the Federal Rules.

About our author :: :: ::

Jack Halprin, Esq. is Guidance Software's Senior Product Marketing Manager for e-discovery.  He drives product development, creates integrated marketing efforts for EnCase eDiscovery, speaks frequently on e-discovery-related topics and leads the EDRM Metrics 2 working group.  With a BA in Chemistry from Yale University and a JD from the University of California, Los Angeles, his varied expertise lends itself well to both the legal and technical aspects of e-discovery.  Prior to Guidance Software, Jack was a corporate electronic discovery consultant and a litigation associate.  He can be reached at Jack.Halprin@guidancesoftware.com.

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