This question comes up a lot, especially from non-attorneys. The thought is that if something is discoverable, then it must be admissible; the assumption being that a Judge will not allow something to be discovered if it can’t be used in court. The other thought is that everything is discoverable if it pertains to the case and therefor everything is admissible.
Let’s first address what’s discoverable. For good cause, the court may order discovery of any matter (content) that’s not privileged relevant to the subject matter involved in the action. In layman’s terms, if it is potentially relevant to the case, you may have to produce it in discovery or in other words, anything and everything is potentially discoverable. All discovery is subject to the limitations imposed by FRCP Rule 26(b)(2)(C).
With that in mind, let’s look at the subject of admissibility.
In Lorraine v. Markel Am. Ins. Co., 241 F.R.D. 534, 538 (D. Md. 2007), the court started with the premise that the admissibility of ESI is determined by a collection of evidence rules “that present themselves like a series of hurdles to be cleared by the proponent of the evidence”. “Failure to clear any of these evidentiary hurdles means that the evidence will not be admissible”. Whenever ESI is offered as evidence, five evidentiary rules need to be considered. They are:
- is relevant to the case
- is authentic
- is not hearsay pursuant to Federal Rule of Evidence 801
- is an original or duplicate under the original writing rule
- has probative value that is substantially outweighed by the danger of unfair prejudice or one of the other factors identified by Federal Rule of Evidence 403, such that it should be excluded despite its relevance.
Hearsay is defined as a statement made out of court that is offered in court as evidence to prove the truth of the matter asserted. Hearsay comes in many forms including written or oral statements or even gestures.
It is the Judge’s job to determine if evidence is hearsay or credible. There are three evidentiary rules that help the Judge make this determination:
- Before being allowed to testify, a witness generally must swear or affirm that his or her testimony will be truthful.
- The witness must be personally present at the trial or proceeding in order to allow the judge or jury to observe the testimony firsthand.
- The witness is subject to cross-examination at the option of any party who did not call the witness to testify.
The Federal Rules of Evidence Hearsay Rule prohibits most statements made outside of court from being used as evidence in court. Looking at the three evidentiary rules mentioned above – usually a statement made outside of the courtroom is not made under oath, the person making the statement outside of court is not present to be observed by the Judge, and the opposing party is not able to cross examine the statement maker. This is not to say all statements made outside of court are inadmissible. The Federal Rule of Evidence 801 does provide for several exclusions to the Hearsay rule.
All content is discoverable if it potentially is relevant to the case and not deemed privileged, but discovered content may be ruled inadmissible if it is deemed privileged (doctor/patient communications), unreliable or hearsay. You may be wondering how an electronic document can be considered hearsay? The hearsay rule refers to “statements” which can either be written or oral. So, as with paper documents, in order to determine whether the content of electronic documents are hearsay or fact, the author of the document must testify under oath and submit to cross-examination in order to determine whether the content is fact and can stand as evidence.
This legal argument between fact and hearsay does not relieve the discoveree from finding, collecting and producing all content in that could be relevant to the case.
Federal agencies are under more scrutiny to resolve issues with responding to Freedom of Information Act (FOIA) requests.
The Freedom of Information Act provides for the full disclosure of agency records and information to the public unless that information is exempted under clearly delineated statutory language. In conjunction with FOIA, the Privacy Act serves to safeguard public interest in informational privacy by delineating the duties and responsibilities of federal agencies that collect, store, and disseminate personal information about individuals. The procedures established ensure that the Department of Homeland Security fully satisfies its responsibility to the public to disclose departmental information while simultaneously safeguarding individual privacy.
In February of this year, the House Oversight and Government Reform Committee opened a congressional review of executive branch compliance with the Freedom of Information Act.
The committee sent a six page letter to the Director of Information Policy at the Department of Justice (DOJ), Melanie Ann Pustay. In the letter, the committee questions why, based on a December 2012 survey, 62 of 99 government agencies have not updated their FOIA regulations and processes which was required by Attorney General Eric Holder in a 2009 memorandum. In fact the Attorney General’s own agency have not updated their regulations and processes since 2003.
The committee also pointed out that there are 83,000 FOIA request still outstanding as of the writing of the letter.
In fairness to the federal agencies, responding to a FOIA request can be time-consuming and expensive if technology and processes are not keeping up with increasing demands. Electronic content can be anywhere including email systems, SharePoint servers, file systems, and individual workstations. Because content is spread around and not usually centrally indexed, enterprise wide searches for content do not turn up all potentially responsive content. This means a much more manual, time consuming process to find relevant content is used.
There must be a better way…
New technology can address the collection problem of searching for relevant content across the many storage locations where electronically stored information (ESI) can reside. For example, an enterprise-wide search capability with “connectors” into every data repository, email, SharePoint, file systems, ECM systems, records management systems allows all content to be centrally indexed so that an enterprise wide keyword search will find all instances of content with those keywords present. A more powerful capability to look for is the ability to search on concepts, a far more accurate way to search for specific content. Searching for conceptually comparable content can speed up the collection process and drastically reduce the number of false positives in the results set while finding many more of the keyword deficient but conceptually responsive records. In conjunction with concept search, automated classification/categorization of data can reduce search time and raise accuracy.
The largest cost in responding to a FOIA request is in the review of all potentially relevant ESI found during collection. Another technology that can drastically reduce the problem of having to review thousands, hundreds of thousands or millions of documents for relevancy and privacy currently used by attorneys for eDiscovery is Predictive Coding.
Predictive Coding is the process of applying machine learning and iterative supervised learning technology to automate document coding and prioritize review. This functionality dramatically expedites the actual review process while dramatically improving accuracy and reducing the risk of missing key documents. According to a RAND Institute for Civil Justice report published in 2012, document review cost savings of 80% can be expected using Predictive Coding technology.
With the increasing number of FOIA requests swamping agencies, agencies are hard pressed to catch up to their backlogs. The next generation technologies mentioned above can help agencies reduce their FOIA related costs while decreasing their response time.
From safeguarding the privacy of patient medical records to ensuring every staff member can rapidly locate emergency procedures, healthcare organizations have an ethical, legal, and commercial responsibility to protect and manage the information in their care. Inadequate information management processes can result in:
- A breach of protected health information (PHI) costing millions of dollars and ruined reputations.
- A situation where accreditation is jeopardized due to a team-member’s inability to demonstrate the location of a critical policy.
- A premature release of information about a planned merger causing the deal to fail or incurring additional liability.
The benefits of effectively protecting and managing healthcare information are widely recognized but many organizations have struggled to implement effective information governance solutions. Complex technical, organizational, regulatory and cultural challenges have increased implementation risks and costs and have led to relatively high failure rates. Ultimately, many of these challenges are related to information governance.
- Making business associates directly liable for data breaches
- Clarifying and increasing the breach notification process and penalties
- Strengthening limitations on data usage for marketing
- Expanding patient rights to the disclosure of data when they pay cash for care
Effective Healthcare Information Governance steps
Inadvertent or just plain sloppy non-compliance with regulatory requirements can cost your healthcare organization millions of dollars in regulatory fines and legal penalties. For those new to the healthcare information governance topic, below are some suggested steps that will help you move toward reduced risk by implementing more effective information governance processes:
- Map out all data and data sources within the enterprise
- Develop and/or refresh organization-wide information governance policies and processes
- Have your legal counsel review and approve all new and changed policies
- Educate all employees and partners, at least annually, on their specific responsibilities
- Limit data held exclusively by individual employees
- Audit all policies to ensure employee compliance
- Enforce penalties for non-compliance
Healthcare information is by nature heterogeneous. While administrative information systems are highly structured, some 80% of healthcare information is unstructured or free form. Securing and managing large amounts of unstructured patient as well as business data is extremely difficult and costly without an information governance capability that allows you to recognize content immediately, classify content accurately, retain content appropriately and dispose of content defensibly.
Last week at LegalTech New York 2013 I had the opportunity to moderate a panel titled: “Defensible Disposal: If it doesn’t exist, I don’t have to review it…right?” with an impressive roster of panelists. They included: Bennett Borden, Partner, Chair eDiscovery & Information Governance Section, Williams Mullen, Clifton C. Dutton, Senior Vice President, Director of Strategy and eDiscovery, American International Group and John Rosenthal, Chair, eDiscovery and Information Management Practice, Winston & Strawn and Dean Gonsowski, Associate General Counsel, Recommind Inc.
During the panel session it was agreed that organizations have been over-retaining ESI (which accounts for at least 95% of all data in organizations) even if it’s no longer needed for business or legal reasons. Other factors driving this over-retention of ESI were the fear of inadvertently deleting evidence, otherwise called spoliation. In fact an ESG survey published in December of 2012 showed that the “fear of the inability to furnish data requested as part of a legal or regulatory matter” was the highest ranked reason organizations chose not to dispose of ESI.
Other reasons cited included not having defined policies for managing and disposing of electronic information and adversely, organizations having defined retention policies to actually keep all data indefinitely (usually because of the fear of spoliation).
One of the principal information governance gaps most organizations haven’t yet addressed is the difference between “records” and “information”. Many organizations have “records” retention/disposition policies to manage those official company records required to be retained under regulatory or legal requirements. But those documents and files that fall under legal hold and regulatory requirements amount to approximately 6% of an organization’s retained electronic data (1% legal hold and 5% regulatory).
Another interesting survey published by Kahn Consulting in 2012 showed levels of employee understanding of their information governance-related responsibilities. In this survey only 21% of respondents had a good idea of what information needed to be retained/deleted and only 19% knew how information should be retained or disposed of. In that same survey, only 15% of respondents had a general idea of their legal hold and eDiscovery responsibilities.
The above surveys highlight the fact that organizations aren’t disposing of information in a systematic process mainly because they aren’t managing their information, especially their electronic information and therefore don’t know what information to keep and what to dispose of.
An effective defensible disposal process is dependent on an effective information governance process. To know what can be deleted and when, an organization has to know what information needs to be kept and for how long based on regulatory, legal and business value reasons.
Over the coming weeks, I will address those defensible disposal questions and responses the LegalTech panel discussed. Stay tuned…
LegalTech just concluded in New York and one of the popular hot buttons many vendors were talking about was the idea that too much corporate, especially valueless, ungoverned, unstructured information is both risky as well as costly to organizations… I agree. The answer to this “infobesity” (the unrestricted saving of ESI because storage is supposedly cheap and saving everything is easier than checking with others to see if its ok to delete) is a defensible process to systematically dispose of information that’s not subject to regulatory requirements, litigation hold requirements or because it still has business value. In a 2012 CGOC (Compliance, Governance and Oversight Counsel) Summit survey, it was found that on the average 1% of an organization’s data is subject to legal hold, 5% falls under regulatory retention requirements and 25% has business value. This means that 69% of an organization’s ESI can be disposed of.
Several vendors at LegalTech were highlighting Defensible Disposal solutions, also known as defensible disposition and defensible deletion, as the answer to the problem of infobesity. Defensible Disposal is defined by many as a process (manual, automated or both) of identifying and permanently disposing of unneeded or valueless data in a way that will standup in court as reasonable and consistent. The key to this process is to be able to identify valueless information (not subject to regulatory retention or legal hold) with enough certainty to be able to actually follow through and delete the data. This may sound easy… its not. Many organizations are sitting on huge amounts of data because their legal department doesn’t want to be accused of spoliation, so has standing orders to “keep everything forever”. Corporate legal has to be convinced that the defensible disposal processes and solutions billed as being the answer to infogluttony can actually tell the difference, accurately and consistently, between information that should be kept and that information that’s truly valueless.
To automate this defensible disposal process, the solution needs to be able to be able to understand and differentiate content conceptually; that an apple is a fruit as well as a huge high tech company. The automated classification/categorization of content cannot accurately or consistently differentiate the meaning in unstructured content by just relying on keywords or simple rules.
An even less consistent approach to categorization is to base it on simple rules such as “delete everything from/to Bill immediately” or “keep everything to/from any accounting employee for 3 years”. This kind of rules based retention/disposition process will quickly have your GC explaining to a Judge why data that should have been retained was “inadvertently” deleted.
To truly automate disposal of valueless information in a consistently defensible manner, categorization applications must have the ability to first, conceptually understand the meaning in unstructured content so that only content meeting your intended intentions, regardless of language, is classified as “of value” to the organization not because it shares a keyword with other records but because it truly meets your definition of content that needs to be kept. Second, because unstructured data by definition is “free-flowing” (not structured into specific rows and columns) extremely high categorization accuracy rates and defensibly can only be achieved with defensible disposal solutions which incorporate an iterative training processes including “train by example” in a human supervised workflow.
Do organizations really have formal information disposal processes…I think NOT!
Do organizations regularly dispose of information in a systematic, documented manner? If the answer is “sure we do”, do they do it via a standardized and documented process or “just leave it to the employees”?
If they don’t…who cares – storage is cheap!
When I ask customers if they have a formal information disposal process, 70 to 80 percent of the time the customer will answer “yes” but when pressed on their actual process, I almost always hear one of the following:
1. We have mailbox limits, so employees have to delete emails when they reach their mailbox limit
2. We tell our employees to delete content after 1,2, or 3 years
3. We store our records (almost always paper) at Iron Mountain and regularly send deletion requests
None of these answers rise to an information governance and disposal process. Mailbox limits only force employees into stealth archiving, i.e. movement of content out of the organization’s direct control. Instructing employees to delete information without enforcement and auditing is as good as not telling them to do anything at all. And storing paper records at Iron Mountain does not address the 95%+ of the electronic data which resides in organizations.
Data center storage is not cheap. Sure, I can purchase 1 TB of external disk at a local electronics store for $150 but that 1 TB is not equal to 1 TB of storage in a corporate data center. It also doesn’t include annual support agreements, the cost of allocated floor space, the cost of power and cooling, or IT resource overhead including nightly backups. Besides, the cost of storage is not the biggest cost organizations who don’t actively manage their information face.
The astronomical costs arise when considering litigation and eDiscovery. A recent RAND survey highlighted the fact that it can cost $18,000 to review 1 GB of information for eDiscovery. And considering many legal cases include the collection and review of terabytes of information, you can imagine the average cost per case can be in the millions of dollars.
So what’s the answer? First, don’t assume information is cheap to keep. Data center storage and IT resources are not inexpensive, take human resources to keep up and running, and consume floor space. Second, information has legal risk and cost associated with it. The collection and review of information for responsiveness is time consuming and expensive. The legal risks associated with unmanaged information can be even more costly. Imagine your organization is sued. One of the first steps in responding to the suit is to find and secure all potentially responsive data. What would happen if you didn’t find all relevant data and it was later discovered you didn’t turn over some information that could have helped the other side’s case? The Judge can overturn an already decided case, issue an adverse inference, assign penalties etc. The withholding or destruction of evidence is never good and always costs the losing side a lot more.
The best strategy is to put policies, processes and automation in place to manage all electronic data as it occurs and to dispose of data deemed not required anymore. One solution is to put categorization software in place to index, understand and categorize content in real time by the conceptual meaning of the content. Sophisticated categorization can also find, tag and automatically dispose of information that doesn’t need to be kept anymore. Given the amount of information created daily, automating the process is the only definitive way to answer ‘yes we have a formal information disposal process’.
U.S District Judge Ronald Whyte in San Jose reversed his own prior ruling from a 2009 case where he issued a judgment against SK Hynix, awarding Rambus Inc. $397 million in a patent infringement case. In his reversal this month, Judge Whyte ruled that Rambus Inc. had spoliated documents in bad faith when it hosted company wide “shred days” in 1998, 1999, and 2000. Judge Whyte found that Rambus could have reasonably foreseen litigation against Hynix as early as 1998, and that therefore Rambus engaged in willful spoliation during the three “shred days” (a finding of spoliation can be based on inadvertent destruction of evidence). Because of this recent spoliation ruling, the Judge reduced the prior Rambus award from $397 million to $215 million, a cost to Rambus of $182 million.
Two questions come to mind in this case; 1) why did Rambus see the need to hold “shred days”?, and 2) did they have an information governance policy and defensible disposal process? As a matter of definition, defensible disposal is the process (manual or automated) of disposing of unneeded or valueless data in a way that will standup in court as reasonable and consistent.
The obvious answer to the second question is probably not or if yes, it wasn’t being followed, otherwise why the need for the shred days? Assuming that Rambus was not destroying evidence knowingly; the term “shred-days” still has a somewhat negative connotation. I would think corporate attorneys would instruct all custodians within their companies that the term “shred” should be used sparingly or not at all in communications because of the questionable implications.
The term “Shred days” reminds many of the Arthur Andersen partner who so famously sent an email message to employees working on the Enron account, reminding them to “comply with the firm’s documentation and retention policy”. The Andersen partner never ordered the destruction or shredding of evidence but because anticipation of future litigation was potentially obvious, the implication in her email was “get rid of suspect stuff”. The timing of the email message was also suspect in that just 21 minutes separated Ms. Temple’s e-mail message to Andersen employees on the Enron account about the importance of complying with the firm’s document retention policy from an entry in a record of her current projects in which she wrote that she was working on a case involving potential violations of federal securities laws.
The Rambus case highlights the need for a true information governance process including a truly defensible disposal strategy. An information governance process would have been capturing, indexing, applying retention policies, protecting content on litigation hold and disposing of content beyond the retention schedule and not on legal hold… automatically, based on documented and approved legally defensible policies. A documented and approved process which is religiously followed, and with proper safeguards goes a long way with the courts to show good faith intent to manage content and protect that content subject to anticipated litigation.