Construction Claims: Effective Discovery Tactics Best Practices for Document Collection, Review and Production

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WEDNESDAY, JUNE 26, 2013

Presenting a live 90-minute webinar with interactive Q&A

Andrew L. Greene, Partner, Perkins Coie, Seattle

Brendan J. Peters, Partner, Perkins Coie, Seattle

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Brendan Peters 206.359.8132

BPeters@perkinscoie.com

Andrew Greene 206.359.3234

AGreene@perkinscoie.com

June 26, 2013

Effective Discovery Tactics in

Construction Claims

6

Discovery is Discovery

Typically the most expensive part of the case

Rules are the same:

Ground rules – Rule 26

Requests for Production – Rule 34

Depositions – Rules 27, 28, 30, 31, 32

Interrogatories – Rule 33

Note: California Form ROGS– Construction Lit. (Form DISC-005)

Requests for Admission – Rule 36

Expert Discovery – Federal vs. State Rules

Use of Rule 29 (stipulation)

Failure to Make Discovery – Rule 37

So, what's different . . .

7

Construction Discovery is Different

Number and Type of Parties

Variety of Claims and Legal Theories

Different Categories of Documents

Technology Issues

Prevalence of ADR

Volume of Data

E-Discovery Issues

8

Typical Design-Bid-Build Structure Owner/

Developers

Design

Professionals Contractors

Lenders

Owner

Contractor

Sub-contractors

Suppliers

Architect

Sub-consultants

Sub-

consultants

Sureties

9

Issues with Number and Types of Parties

Third Parties Subpoena Issues

"Informal" Discovery

EDGAR

(http://www.sec.gov/edgar.shtml)

FOIA

Contractor licensing online databases

(Example: https://fortress.wa.gov/lni/bbip/)

Secretary of State – online corporations search

Licensing Boards (design professionals, contractors)

PACER / Westlaw docket search

http://www.pacer.gov/

Joint Defense / Common Interest Agreements

Former employees of corporate adversaries

10

Know Your Claim

Contract claims and discovery "Trust but Verify"

Contractual audit or accounting provisions

Required contract submittals

Discovery limits by contract

Jay Brudz & Jonathan M. Redgrave, Using Contract Terms to Get Ahead of Prospective eDiscovey Costs and Burdens in Commercial Litigation, 18 Rich. J.L. & Tech. 13 (2012)

Specific discovery for tort claims Standard of care claims – relevance of performance on

other projects

Damages

Specific discovery for statutory claims E.g., multi-unit residential inspection – ex. RCW 64.55.030

11

Types of Documents

Contracts Entire contracting chain (prime, subs, suppliers, consultants)

General and supplementary conditions

Drawings By Phase (schematic, design development, and construction documents)

Bidding Documents

Shop Drawings

As-Built Drawings

Specifications "Front End" – Divisions 0 and 1

Technical Specifications

"Change Documents" Change Orders

CCDs

Minor Changes in the Work (ASIs)

RFIs

Work Orders / Work Directives

Field Sketches

12

Types of Documents

Submittals

Schedules As-planned schedule

As-built schedule

Fragnets

Cost-loaded

Insurance

Bonds

Payment documents Pay applications and backup

Lien releases

Schedule of values

Progress reports

Meeting minutes

Correspondence

Third-party documents Lender inspections / reports

Government agencies

Practice Tip: Consider early Rule 30(b)(6) deposition

13

Technology Issues

CAD

Multiplicity of software platforms

Layers

Viewers

Models

BIM

Multiplicity of software platforms

Tracking changes (no more clouds?)

Schedules

Viewers

Metadata

Odd-ball file types (ex. surveying data collectors)

Emergence of forensic discovery consultants

The future (the "cloud," tablet project management, etc.)

14

Prevalence of ADR

Mediation Mediation communications

Arbitration AAA Construction Industry Arbitration Rules

Regular Track R-24 – limits discovery

Large, Complex L-4, L-5 – discovery by agreement with arbitrator limits

Fast Track F-9 – virtually no discovery

Discovery as potential waiver of ADR

15

Expert Discovery

Fed. R. Civ. P. 26(b)(4)(B) & (C) Protection for draft reports

Protection for communications between expert and attorney

Work product issues (consulting vs.

testifying experts)

On-site claims consultants

16

Testing and Inspections

Site Inspections under Rule 34(a)(2) – “requesting

party may inspect, measure, survey, photograph,

test, or sample the property or any designated object

or operation thereon”

Destructive testing issues

Testing protocols and use of Rule 29

17

Volume of Data

Where is the data?

How much?

What type?

Triage approach

Early Rule 30(b)(6) deposition to document

custodian

Review of hardcopy documents in person before

scanning

Rule 34(a) – request to "inspect" and "copy"

Rule 34(b) – "party must produce documents as they are

kept in the usual course of business or must organize and

label them to correspond to the categories in the request"

18

E-Discovery

What is E-Discovery?

The production of electronically stored information in civil discovery

And: The process by which electronic data is requested, located,

secured, searched, and produced

19

20

21

E-Discovery

Discovery includes e-discovery 2006 Amendments to the Federal Rules of Civil Procedure

address e-discovery obligations ("electronically stored information" or ESI) explicitly in Rules 16, 26, 33, 34, 37, and 45

Not addressed specifically in many state civil rules—but commonly (if not universally) accepted

E-discovery continues to be a rapidly evolving area of law and can have extreme consequences for non-compliance

22

E-Discovery Decisions

Can Be Extreme

Arthur Andersen, LLP v. United States, 544 U.S. 696 (2005)

Zubulake v. UBS Warburg, LLC (multiple opinions)

Micron Tech., Inc. v. Rambus Inc., 645 F.3d 1311 (Fed. Cir. 2011)

Hynix Semiconductor v. Rambus Inc., 645 F.3d 1336 (Fed. Cir.

2011)

And they continue…

Victor Stanley v. Creative Pipe, Inc. (multiple opinions)

Pension Comm. of Univ. of Montreal Pension Plan v. Banc of Amer.

Sec., 685 F. Supp. 2d 456 (S.D.N.Y. 2010) (Zubulake Revisited)

(reversed in part)

DaSilva-Moore v. Publicas Groupe, 2012 WL 607412

(S.D.N.Y. Feb. 24, 2012 )

23

Construction & E-Discovery William A. Gross Constr. Assoc., Inc. v.

American Manufacturers Mutual Ins. Co. 256 F.R.D. 134 (S.D.N.Y. 2009) (Peck, Mag. J.)

24

Construction & E-Discovery William A. Gross Constr. Assoc., Inc. v. American Manufacturers Mutual Ins. Co.

Defect and delay claims

Non-party (Hill International's documents)

Issue: how to separate project-related e-mails from

unrelated e-mails

Court addressed keyword searching

Lesson learned:

"This problem would have been avoided, of course, if Hill

used a standard 'Re' line in its Bronx Courthouse emails to

distinguish that project from its other work."

25

Construction & E-Discovery Global Aerospace Inc. v. Landow Aviation, L.P.

No. CL 61040, 2012 WL 1431215, at *1 (Va. Cir. Ct. Apr. 23, 2012)

26

Construction & E-Discovery

Global Aerospace Inc. v. Landow Aviation, L.P.

Landow: Moved for protective order authorizing use of

predictive coding

Manual review would cost $2 million and locate at most

60% of documents

Keyword searching would produce possibly 20% of

documents

Predictive coding could locate 75% of potentially relevant

documents "at a fraction of the cost and in a fraction of the

time of linear review and keyword searching."

2012 WL 1419842 (Va. Cir. Ct. Apr. 9, 2012) (motion)

27

Construction & E-Discovery

Global Aerospace Inc. v. Landow Aviation, L.P.

Landow: Proposed Predictive Coding Protocol

"Seed" set of documents

Privilege Log

Sampling program after predictive coding

Court: approved predictive coding "for purposes of the

processing and production of [ESI]"

Without prejudice to question "completeness of the contents

of the production or the ongoing use of predictive coding"

28

Managing Document

Intensive Cases

The lawyers must understand the structure, costs, limitations

and benefits of compiling a large number of documents into a

usable format

The greatest challenge is efficiently and defensibly reducing

the volume of information that will be reviewed (and later

produced) to identify the key documents in the case

Is every document really needed?

Can the volume of data be reduced by agreement on key custodians,

date ranges, search terms, etc.

Can collected data be "de-duped"—some limitations

Electronic searches for key terms help to further refine what documents

are actually reviewed and in what priority

Early case assessment and cooperation are key

29

Review

Hours

Linear Review

Accelerated Review

(Search Terms)

Automated Review

(Predictive Coding)

Automation

E-Discovery Early Case Assessment

30

Identification: Know Your Custodians

and Potential Sources of ESI

Identify key document custodians Review Complaint, demand letters, etc., and attempt to reach

agreement with opposing party on key custodians

Talk with key players

Review project, division, and company org. charts

Interview document custodians In-person is always best (if possible)

Don't forget to interview IT department

Common sources of ESI Corporate and personal email systems

Desktop or laptop computers

External or networked ("shared") drives

Instant messaging systems

Internet and social network sites

Cloud computing sites

Backup systems and applications

31

Preservation: Send Hold Notices;

Track Compliance

Issue Written Document Hold Notices Describe litigation and claims

Make clear what documents are relevant and what ESI must be retained

Ask custodians to acknowledge receipt and compliance

Consider Suspending Data Management Program Automatic email deletion

Backup recycling procedures (sole source of relevant information for key players whose data is not otherwise readily accessible)

Document retention policies

Recycling of IT resources

Manage Document Hold Notices Send periodic reminders

Coordinate with HR department regarding departures

Third-party software is available

32

Collection: Collect

ESI Promptly and Correctly

Once relevant custodians are identified and interviewed . . . Collect documents and ESI quickly

Involve attorneys in the process—non-delegable duty

Document all preservation efforts, decisions, chain of custody, etc.

Collection options Guided collection

Active data collection

Forensic collection

Be wary of metadata "Data about data"

Includes everything from header information in emails to the revision history for documents

Collection method can change certain metadata (such as the last opened date or the last modified date)

Consider using a consultant for collection

33

Processing and Review: Early Case

Assessment is Key

Processing considerations What file types will be excluded?

What search terms will be used? Expert help required?

What other exclusions will apply (date and custodian restrictions, etc.)?

Vertical or horizontal de-duplication, or both?

Highlighting for substance, privilege, etc.

Exception reports (corrupted, password protected, encrypted, foreign language, etc.)

Review considerations Linear review platforms (Concordance/FYI, Relativity)

Strategic review platforms (Attenex, Clearwell)

Use of contract attorneys?

Pricing considerations Vendors: the good, the bad and the ugly

Most favored nation pricing

34

Production: Seek Agreement

When Possible

Cooperation is necessary Volumes of data can be so large, and the cost of review and production

can be so significant, that parties must discuss production issues in advance

Common topics for discovery conference Identity of document custodians

Privilege issues (including clawback agreements)

Potential volume of data

Search strategies to reduce data for review

Realistic timeline for production

Production format

35

Emerging Issues in E-Discovery

Computer-aided review and the use of predictive coding Da Silva Moore v. Publicis Group et. al., 2012 WL 607412 (S.D.N.Y. Feb. 24,

2012)

Proportionality General Electric v. Wilkins, 2012 WL 570048 (E.D. Cal. Feb. 21, 2012)

Pippins v. KPMG LLP, 2011 WL 4701849 (S.D.N.Y. Oct. 07, 2011)

Cost-shifting U.S. Bank N.A. v. GreenPoint Mtge. Funding, Inc., 939 N.Y.S.2d 395 (N.Y. Sup.

Ct. App. Feb. 28, 2012)

Form of production Many options

Common "reasonably usable" production formats

Native, Static TIFF or PDF images—or some combination

If non-native, need load file containing negotiated metadata

Extracted or OCR text (for keyword searching capability)

Inadvertent disclosure of privileged material—claw back rights?

Evolving types of data—Blog posts, Facebook updates, tweets, text messages, calendar entries, etc.