Total disclosure

Ron Walker: Watch the Video

Length: 14.12 minutes. Type of file: Windows Media Video


The world was a very different place in 1849 when Henry David Thoreau exclaimed – admittedly in a broader context – that “[the] process of discovery is very simple.”

Today discovery is anything but – especially with a digital revolution on our hands. And with legal obligations around “e-discovery” getting increasingly rigorous – in North America at least – enterprises better be getting their act (and their documents) together before it’s too late, cautioned Ron Walker, a litigator with law firm Fasken Martineau DuMoulin LLP in Toronto. Walker was addressing the CIO Executive Council, a professional organization for Canadian CIOs in Toronto last week. (E-discovery refers to the process of seeking, locating and securing electronic data with the intent of using it as evidence in civil or criminal court proceedings).

In a talk peppered with examples and anecdotes culled from more than 25 years of litigation practice, Walker reiterated the vital importance of responsible e-discovery.

The seasoned litigator had a word of caution for his audience: Don’t wait until you are embroiled in a civil suit before taking a hard look at your data retention policies. “Even when you reasonably anticipate a law suit, you have a duty to locate relevant material, preserve it and – if the litigation does happen – to produce and disclose that material in an organized way.”

Following the e-mail trail

With the avalanche of data confronting enterprises today that’s easier said than done – and nobody’s more aware of this than Walker. He cited the example of e-mail, of which “somewhere around 30 billion are sent daily, and around 2.5 trillion annually.”

How do you plough through that electronic morass, separate the wheat from the chaff, and ferret out everything relevant to any future high stakes litigation you may be involved in?

Large U.S. corporations have come up with an answer to that conundrum: outsourcing.

According to Walker, last year in the U.S. large Fortune 500 companies paid outside service providers $1.3 billion to sift through gargantuan volumes of e-mail looking for anything that could potentially be used in the litigation process. “The estimate for next year, for the same task, is about $2 billion,” he said. In Canada there aren’t any reliable numbers on what big companies fork out in e-discovery costs.

Of course, there are aspects to this issue that go beyond financial considerations.

One of these is employee awareness: educating staff on responsible use of all corporate communication channels (phone, e-mail, instant messaging, online chat forums et al), according to Walker. Employers also need to consider how best to audit employee use of company systems within the bounds of applicable provincial and federal law.

A little education and awareness may go a long way in preventing an embarrassing, and potentially ruinous law suit, Walker said.

He cited the Jarmillia Booker vs. Verizon case argued in Kentucky in 2003 to illustrate the havoc an irresponsible employee e-mail can cause.

In that case, Verizon employee had sent an e-mail to a customer that ran thus: “You sir are a grumpy, horrible man who needs to grow up and realize that you are on earth, not some crazy place where everything works out for (Verizon customer’s name) and company.” (The trial court, and later the 6th U.S. Circuit Court of Appeals dismissed the complaint against Verizon holding that employers are not liable for e-mails that employees create and send outside the scope of their employment).

However Walker said in a class action trial, an e-mail of this nature sent by an employee could mean huge trouble for the employer. “Imagine some customer has complained about service levels, about [shabby] treatment and about not getting their money’s worth. It may be the customer is only paying $30 – 40 a month, so normally this would not escalate into litigation. But what if some enterprising lawyer discovers this is a widespread complaint and files a class action [suit]?”

He said in a class action proceeding, an e-mail of the type sent by the Verizon employee would be a spectacular find for the plaintiff. “It may be just one of literally millions of e-mails the company deals with over the course of the year, but [the plaintiff’s lawyer] could blow it up on a 6×4 ft on a piece of cardboard, stick that in front of a jury, and cross-examine the poor, unfortunate author about his or her attitude towards customers. That’s pretty dramatic evidence, and very hard to get over.”

Walker said lawyers would expend a lot of time and effort trying to find such data that incriminates the other side. “They look for the dramatic piece of evidence that would turn the perception of the judge and jury against the other side.”

You haven’t got mail – consequences of spoliation

So what’s the antidote? Should a company obliterate all embarrassing, and potentially incriminating e-mails and other electronic documents before they’re discovered by a third party?

Absolutely not, said Walker, suggesting that such a cure would be even worse than the disease!

He recounted the salient facts in the Laura Zubulake case to make the point. A few years ago, Laura Zubulake filed a suit against UBS Warburg LLC – her former employer – alleging gender discrimination and illegal retaliation.

“While Zubulake produced around 450 pages of internal company e-mails to support her contention that women – and she in particular – had been held back, the company got off on the wrong foot by producing only around 100 pages of e-mails [to back its position].” Zubulake argued that key evidence to support her case resided on various e-mails exchanged among UBS employees and that these e-mails only existed on backup tapes. She petitioned that the backup tapes be restored. UBS objected saying the restoration cost would be $175,000, not counting attorney costs to review those e-mails.

As an initial compromise, he said, the judge had Zubulake’s lawyer specify five time frames for which UBS should retrieve data on back up tapes. “Lo and behold there was very relevant stuff on those tapes.” Walker said the court eventually concluded there was “intentional withholding of information by UBS” and a failure to fulfill their obligation to search diligently and produce the required documentation.

Zubulake, he said, also petitioned that the jury be instructed to infer that anything that could not be found would have gone against UBS. “The judge agreed and instructed the jury accordingly. The jury awarded Zubulake $9 million to compensate her for the economic loss she was able to prove, and awarded $20 million as straight punitive damages against the company for its conduct.”

E-discovery in Canada

While the law and legal precedent relating to e-discovery is much more developed in the U.S., Canadian companies (or firms operating in Canada) also have certain obligations.

In Ontario, some of these are specified in a document published by the Task Force on the Discovery Process. Walker related some of these in his presentation. He said in Ontario every comp

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