Trial-Bound Companies Learn Lesson: Save E-Mail

A number of recent high-profile lawsuits suggest that companies must preserve important email documents on their computer systems, or risk major court sanctions. Increasingly, companies are turning to outside vendors to ensure they don't accidentally destroy electronic documents that could come up in a lawsuit.

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MADELEINE BRAND, host:

This is DAY TO DAY. I'm Madeleine Brand.

ALEX CHADWICK, host:

And I'm Alex Chadwick.

Coming up, taking a gamble on the house. Buyers and sellers across the country worry that the bubble in housing prices is about to burst. We'll have a report on the real estate market in one of the nation's fastest growing cities, Las Vegas.

BRAND: First though, e-mail and the law. A number of big corporations have found out the hard way that they face big sanctions if they don't save crucial e-mails. So in the coming months federal courts will release new rules on how e-mails and other electronic evidence can be used in civil suits.

NPR's Larry Abramson explains.

LARRY ABRAMSON reporting:

Unless you're a legal nerd or a litigator, you probably have not heard of Laura Zubulake, but her lawsuit against UBS Warburg is a milestone in the world of civil litigation. In 2002, Zubulake sued UBS for gender discrimination and demanded that the company produce all relevant e-mails. UBS came up with some, but not all. A judge told UBS to dig deeper into their archives. That's when Zubulake's attorney James Batson knew he'd been handed the smoking gun in the case.

Mr. JAMES BATSON (Attorney): And it was when we got those e-mails that we were able to see that managers, after having been told to save e-mails, had not saved them.

ABRAMSON: The judge in the case found that UBS had a duty to preserve those e-mails. She told the jury they could assume that any missing messages would have supported Zubulake's case. The jury came back with a $29 million judgment for Zubulake. That made James Batson a legend for the plaintiff's bar, and he says the case showed him how to deal with recalcitrant defense attorneys.

Mr. BATSON: What I find that happens with less experienced opposing counsel is that they try and stonewall me and then I have to pursue and pursue and pursue. And if I'm faced with that stonewalling and then I ultimately find it, then I'm often able to get the kinds of sanctions that will end a litigation.

ABRAMSON: The Zubulake decision is now regarded with awe by plaintiff's attorneys. The author of that decision, Judge Shira Scheindlin of the Southern District of New York, says Zubulake and other cases put companies on notice. They could get slapped by a judge if they fail to disclose important documents.

Judge SHIRA SCHEINDLIN (Southern District of New York): Phillip Morris was sanctioned in a high profile case. Morgan Stanley was sanctioned in a high profile case. UBS Warburg was obviously sanctioned in a high profile case. And companies don't want that press either. So they've balanced their instinct to not cooperate with their desire to not be publicly whipped.

ABRAMSON: Growing confusion about how to handle electronic evidence has led the Judicial Conference of the United States to revise its rules for so-called e-discovery. Those rules, set to take effect December 1st, will clarify that companies must take special steps to prevent information from being destroyed.

George Paul is chair of the Digital Evidence Project for the American Bar Association. He says too many corporate lawyers don't fully understand how their computer systems work.

Mr. GEORGE PAUL (American Bar Association): These systems are so complex that even when you try to destroy information, there will often be telltale signs of the destruction of the information, which of course then gets you in trouble with the court way more than if you just produced the harmful information in the first place.

ABRAMSON: Corporate attorneys are learning. They depend heavily on their computer guys to preserve documents, especially since many systems automatically trash data unless programmed to do otherwise. That creates an enormous challenge, Paul says, when you consider all the places those documents can be hiding.

Mr. PAUL: The information, rather than being neatly organized in file rooms, is distributed or smeared all over the organization on servers, desktops, laptops, palm pilots, home computers.

ABRAMSON: Some corporate attorneys fear that recent decisions and the upcoming rules will encourage plaintiffs to make unreasonable demands, knowing that some companies will settle a suit rather than paying the huge costs of rooting through all that data. Stephanie Middleton is chief counsel of litigation for Cigna. She says companies have to weigh the huge costs of e-discovery.

Ms. STEPHANIE MIDDLETON (Chief Counsel, Cigna): You do that economic analysis, and if it's going to be cheaper to settle it than to spend millions of dollars on electronic discovery, the rational choice typically would be to settle it.

ABRAMSON: Plaintiff's attorneys have been accused of demanding every possible document, while defense lawyers stereotypically refuse to give up any data without a fight. The new rules try to avoid such discovery battles by telling both sides to work together early in the process. The question now is: will that happen or will the new rules launch new litigation over just what the rules mean? Larry Abramson, NPR News, Washington.

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