Inadequate Information Management Policy Leads to Third Party eDiscovery


Many organizations have adopted an Information Governance policy of “not having a policy” for many reasons such as to save on costs associated with managing information or… to frustrate eDiscovery requests, i.e. if I can’t find it, then I can’t produce it.

The policy of purposely deleting (not retaining) business records is not necessarily illegal, unless you put that policy in place to thwart eDiscovery or you have federal or state retention requirements. The “no information governance” policy can have unforeseen consequences. Case in point: Peter Kiewit Sons’, Inc. v. Wall Street Equity Group, Inc., No. 8:10CV365, 2012 WL 1852048 (D. Neb. May 18, 2012).

 The case involves claims by the Plaintiff Peter Kiewit Sons’, Inc. against Defendants Wall Street Equity Group, Inc., Wall Street Group of Companies, Inc., Shepherd Friedman, and Steven West for the alleged violation of various aspects of federal and state trademark law, unfair competition, and commercial misrepresentation including the misuse of the “Kiewit” brand.

The Defendants assist business owners in marketing their businesses to prospective buyers. One strategy the Defendants allegedly use is to suggest to some of their potential clients that Kiewit may be a potential buyer of the client’s business

During the course of discovery, the defendants had objected to a number of the plaintiff’s interrogatories and requests for production on the grounds that the requests are “not reasonably calculated to lead to admissible evidence” – that is, the information requested in not relevant. The Defendants also argue that many of the requests are meant solely to harass the defendants (The court found no merit to that claim). This case has many interesting aspects but the one piece that interested me was the part where the defendants record retention policy and practices were called out.

In a section of the court’s memorandum titled “Defendant’s Inability to Serve as a Reliable Source of Discovery”, the Judge remarks;

 “The corporate defendants claim that, consistent with their standard practice, they do not retain any correspondence unless it results in a completed sale. Thus, the defendants claim they would have no documents showing how often and to what entities they sent proposals (to include any proposals using the Kiewit mark for marketing). The record itself includes evidence of this practice; specifically, defendant West acknowledges that he submitted a proposed merger to the plaintiff concerning a company called Agra, but the defendants have produced no documents regarding that proposal, presumably because it did not result in a sale.

 Since the defendants have a document retention practice of destroying all marketing records unless a closing occurs, to obtain a complete picture of the extent to which the Kiewit mark may have been used by the defendants, records identifying those who received the defendants’ marketing must be obtained. As a result of the defendants’ own document destruction practices, the only remaining sources for information regarding the content of defendants’ marketing materials are the recipient third parties. Information regarding the identity of these third party business contacts, whether obtained by a third party subpoena or in response to written discovery served on the defendants, is relevant to determining the extent of defendants’ use of the Kiewit service mark.

 There is nothing necessarily improper about a company’s reasonable pre-litigation document retention policy whereby documents are disposed of in periodic intervals. Generally speaking, spoliation arguments are unsuccessful if relevant documents were destroyed in accordance with the business’ reasonable document retention policy and/or practices.

 However, even a reasonable practice of destroying documents may have unintended consequences. By failing to retain any documentation, a defendant may lose its ability to credibly defend claims asserted against it, and it may open avenues of third party discovery which would have been closed had the defendant retained documents consistent with standard business practices, and thereby been considered a reliable and complete source of the relevant discovery.”

 As the Judge stated, there is nothing potentially improper about deleting records on an on-going basis, but those who choose this policy should be aware of the third part consequences. Do you really want opposing attorneys causing your customers and suppliers to have to respond to your eDiscovery?

In this case the Judge granted the plaintiff’s request to identify the defendant’s contacts and client lists to and to proceed with third party discovery on some or all of these clients. The Judge also ordered the defendants to turn over financial information, such as the defendants’ accounts receivable and record of its various completed business transactions to further help in identifying potential targets of third party discovery.

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Successful Predictive Coding Adoption is Dependent on Effective Information Governance


Predictive coding has been receiving a great deal of press lately (for good reason), especially with the ongoing case; Da Silva Moore v. Publicis Groupe, No. 11 Civ. 1279 (ALC) (AJP), 2012 U.S. Dist. LEXIS 23350 (S.D.N.Y. Feb. 24, 2012). On May 21, the plaintiffs filed Rule 72(a) objections to Magistrate Judge Peck’s May 7, 2012 discovery rulings related to the relevance of certain documents that comprise the seed set of the parties’ ESI protocol.

This Rule 72(a) objection highlights an important point in the adoption of predictive coding technologies; the technology is only as good as the people AND processes supporting it.

To review, predictive coding is a process where a computer (with the requisite software), does the vast majority of the work of deciding whether data is relevant, responsive or privileged to a given case.

Beyond simply searching for keyword matching (byte for byte), predictive coding adopts a computer self-learning approach. To accomplish this, attorneys and other legal professionals provide example responsive documents/data in a statistically sufficient quantity which in turn “trains”the computer as to what relevant documents/content should be flagged and set aside for discovery. This is done in an iterative process where legally trained professionals fine-tune the seed set over a period of time to a point where the seed set represents a statistically relevant sample which includes examples of all possible relevant content as well as formats. This capability can also be used to find and secure privileged documents. Instead of legally trained people reading every document to determine if a document is relevant to a case, the computer can perform a first pass of this task in a fraction of the time with much more repeatable results. This technology is exciting in that it can dramatically reduce the cost of the discovery/review process by as much as 80% according to the RAND Institute of Civil Justice.

By now you may be asking yourself what this has to do with Information Governance?…

For predictive coding to become fully adopted across the legal spectrum, all sides have to agree 1. the technology works as advertised, and 2. the legal professionals are providing the system with the proper seed sets for it to learn from. To accomplish the second point above, the seed set must include content from all possible sources of information. If the seed set trainers don’t have access to all potentially responsive content to draw from, then the seed set is in question.

Knowing where all the information resides and having the ability to retrieve it quickly is imperative to an effective discovery process. Records/Information Management professionals should view this new technology as an opportunity to become an even more essential partner to the legal department and entire organization by not just focusing on “records” but on information across the entire enterprise. With full fledged information management programs in place, the legal department will be able to fully embrace this technology to drastically reduce their cost of discovery.