Let's face it: We live in a society that loves to sue. Because much evidence is created or stored on computers, lawsuits involving companies invariably require work by its IT staff. I understand that most of you are IT pros, not lawyers. However, if your company becomes involved in a lawsuit, chances are you will have to work with lawyers, even if the matter doesn't involve something you personally did or failed to do. Below are 10 terms that you might encounter during that process, along with their meanings.
To help put these terms in the proper context, let's say that as part of a "reduction in force" initiative at your company, Stan, a manager there, laid off John, one of his employees. Convinced that his layoff was unlawful, John now has retained an attorney and has filed a suit against the company.
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#1: Discovery (electronic discovery, e-discovery)
Discovery is the process by which parties to a lawsuit (i.e., the sides in conflict) show each other the evidence they have and identify the witnesses they're going to call. You know how, when playing poker, everyone lays down their cards after they're all finished with their bets? The same principle applies with discovery, except it occurs at the beginning rather than at the end. In other words, that stuff you see in the movies or on television about the "surprise witness" is a total myth.
In our example, John might be seeking copies of his performance reviews, e-mail messages between managers in your company (including Stan) that discussed him, and other information. Because much of this information exists in electronic form, the discovery process is also called "electronic discovery" or "e-discovery."
#2: Litigation hold
Most companies have a policy regarding retention and destruction of documents. Their IT departments have policies and practices regarding how often they back up computer data and the amount of time before backup tapes are reused, thus destroying data already on that tape.
A litigation hold is a notice to the company that these normal policies should be suspended because litigation is reasonably expected. Continuing our earlier example, suppose a backup tape contained an e-mail from Stan to the director of human resources, and it discussed John's firing. Suppose that the tape was scheduled to be recycled, thereby erasing that e-mail. The attorney for your company might issue a litigation hold specifying that that particular tape be set aside and kept separate from the normal backup cycle.
A major objective of a litigation hold is to prevent spoliation (see below).
What did we say when we were in grade school about why we didn't have our homework? "The dog ate it."
Spoliation refers to the loss of or damage to information that was requested via discovery or that was subject to a hold. Suppose John has asked for particular electronic document. However, for whatever reason, that document can't be produced, even though everyone knows it existed at one time. As you can imagine, the judge and John will be upset if you tell them that spoliation has occurred. If the spoliation was done in bad faith (that is, a party destroyed evidence despite knowing it wasn't supposed to), a judge could take even more severe measures, such as imposing sanctions (see below).
A sanction is an action that a judge takes (such as imposition of a fine) to punish a side that fails to comply with that judge's orders. During the O.J. Simpson murder trial, Judge Lance Ito issued a sanction against prosecutors Marcia Clark and Christopher Darden, and immediately afterward, both of them were seen opening their checkbooks and writing checks payable to the court.
Another sanction is the "adverse inference instruction," which a judge can give to a jury in certain cases where spoliation has occurred. In such an instruction, the judge tells the jury that it may infer that that evidence did exist, and that it can make decisions based on such an inference. This type of instruction is adverse to one side because it goes against that side's interests.
Suppose that in the earlier example, Stan kept a diary as a Word document, and it contained an entry that said, "Great! I can use the reduction in force as an excuse to get rid of John next week. I know it's illegal to do so, but I want to fire John because I don't like his kind." Stan then learns of the litigation hold but successfully deletes the diary before John's attorney can get it. Suppose further that there are no backups and no way to recover the diary electronically -- in other words, there's no "smoking gun."
Even under these circumstances, John might be able to establish the existence of the diary, using legal rules and principles. For example, John's former co-worker or a peer of Stan's could testify that he or she saw the diary entry (and such testimony is admissible because the diary itself is no longer in existence). They could also testify that Stan talked to them about this diary entry. Because such a statement is an "admission by a party-opponent," it is considered by definition to be "not hearsay" -- an important factor because hearsay generally is inadmissible.
John also could introduce e-mail or other documents that referred to this diary -- for example, an e-mail from the human resources director to Stan that said, "Don't delete that diary entry in which you wrote you were going to fire John." Under these circumstances, if the judge believed the testimony and evidence, and if the judge also believed the spoliation of the diary occurred in bad faith, he or she could give the jury an instruction such as the following:
Even though you never saw the diary, you can infer that it did exist, and you can infer that it said that Stan knew that firing John was unlawful.
Having the jury receive an adverse inference instruction like this one would be the proverbial kiss of death for the company. In this case, the company often will simply settle, rather than have the jury actually proceed to deliberations with such an instruction. To use an analogy from sports: if I commit goaltending while playing basketball, the referee will call it and give the other side the points they would have scored had I not been goaltending.
#5: Attorney-client privilege
Under certain conditions, communications between an attorney and the attorney's client are privileged. Those conditions are the following: There actually must be communications, the communications must be made for purpose of giving or receiving legal advice, and the communications must have been intended to be confidential and must in fact have been kept confidential. If those conditions exist with regard to the communication, a court can't compel its disclosure, meaning that the opposing party is not entitled to see it.
Suppose that prior to writing his diary entry, Stan sent an e-mail to the company attorney (and no one else) to ask whether this entry was a good idea. Suppose the attorney responded to Stan that this diary entry, from a legal standpoint, was a horrible idea. Under these conditions, the two e-mails are probably privileged.
If you are responding to a discovery request, be sure to consult with the attorneys for your company as you are doing so. The last thing you want to do is send privileged material to the other side.
Sometimes, privileged communications do unintentionally get sent to the other side. One way of addressing this issue is for the parties and their attorneys to enter into a clawback agreement. The parties agree that if one discloses information inadvertently, the other will return or destroy the information and provide verification of the latter. In addition, the receiving party agrees that the disclosure does not constitute a waiver of attorney client privilege.
Consider the e-mail example from the previous section, in which Stan and the company attorney exchange messages regarding the diary. Suppose that even though these two e-mails are privileged, the company inadvertently sent those e-mails to John as part of his discovery request. If a clawback agreement existed between John and the company, John would need to return the e-mails.
Even though you might have such an agreement, you still need to be careful about what you send to the other side. In other words, don't say to yourself, "Well, if we mess up, it's no big deal, because we can just use the clawback to get it back." A judge might rule that because you were careless in what you sent, the clawback doesn't apply.
#7: Electronically stored information (ESI)
Electronically stored information (ESI) exists within a computer or on storage media associated with a computer (e.g., a CD, DVD or a jump drive). It is distinguished from hardcopy information, that is, information that appears on paper.
Be aware that ESI can exist in at least two forms: native format and image format. The key difference lies in the underlying information about the document, known as "metadata" (see below).
Metadata are "data about data," such as details about when a file was created, who created it, and when the last modification was made. In the case of an Excel spreadsheet, for example, the underlying formula of a cell would constitute metadata. When reviewing files with Windows Explorer, the file properties are also metadata.
#9: Native format
Suppose John has requested a report, as ESI, that was created using Microsoft Word. This document, in native format, would probably be a file with a ".doc" extension, that is, one that a person could modify using Word.
Be careful when sending native format documents to the other side or to the court. Those documents could contain more information than you realize, such as earlier revisions and corrections to a document. Suppose Stan sent a softcopy Word document to the company lawyer regarding the layoff, and the lawyer inserted a comment: "This argument is really weak, but our judge is so stupid he might just believe it." If the lawyer then sent that document in native format to the judge, and the judge (or his clerk) knew how to view comments and actually saw that comment, it might hurt the company's case.
#10. Image format
The other alternative for this document would be image format, such as a PDF or TIFF. In this format, the document still could be stored on a computer. However, changes to such a file would be significantly harder to make. In addition, documents in image format generally contain less metadata than documents in native format.
But even in image format, metadata may still exist. As with native format documents, you should be aware of what else you might be sending to the other side. Also, the other side might be dissatisfied with getting files in image format. For example, if you sent them a PDF of a spreadsheet, chances are they would see only the actual numbers, rather than any underlying formulas. They might argue that in this case, you should give them native format rather than image format.
#11: FRCP 34 and the "usual course of business" requirement
Suppose that John's company used spreadsheets to keep track of employees, and Stan used such a spreadsheet to determine which employees to lay off. Let's say that this spreadsheet had, for each employee, information about salary, years of service, performance rating, and other data. Furthermore, this spreadsheet contained certain formulas that used this information to produce a ranking of employees. Do you think John would want to see this spreadsheet? Of course. John would want to review the formulas to see whether they made sense and whether they really did justify his layoff.
On the other hand, the company probably would prefer that John not be able to see the formulas. What if the company converted the spreadsheet file to a TIFF file and sent that TIFF instead? Or what if the company printed out the spreadsheet and sent the information as hardcopy? If the company tried either of these methods, John would object, and most likely the court would agree.
Trials in federal courts are governed by the Federal Rules of Civil Procedure (FRCP). One particular rule, Rule 34, governs how ESI is to be "produced" in response to a discovery request. Under this rule, ESI generally must be produced "as they are kept in the usual course of business." John would cite this rule, arguing that because it's unlikely the company keeps spreadsheets as hardcopy and TIFF files, he should not have to receive the information that way. Rather, he should be receiving the files in native format.
Understanding these concepts and working closely with your own attorneys is essential when dealing with electronic discovery.
Calvin Sun works consults with organizations and currently is a third-year student at Temple University Beasley School of Law. He wishes to thank his instructor, Dorothy Bollinger, Esq., of Fox Rothschild LLC, for reviewing this article. However, any errors are strictly his responsibility. This article does not constitute legal advice and does not form an attorney-client relationship. Please consult a qualified professional if you have a specific legal situation.
Calvin Sun is an attorney who writes about technology and legal issues for TechRepublic.