Ask the Magic 8-Ball; “Is Predictive Defensible Disposal Possible?”


The Good Ole Days of Paper Shredding

In my early career, shred days – the scheduled annual activity where the company ordered all employees to wander through all their paper records to determine what should be disposed of, were common place. At the government contractor I worked for, we actually wheeled our boxes out to the parking lot to a very large truck that had huge industrial shredders in the back. Once the boxes of documents were shredded, we were told to walk them over to a second truck, a burn truck, where we, as the records custodian, would actually verify that all of our records were destroyed. These shred days were a way to actually collect, verify and yes physically shred all the paper records that had gone beyond their retention period over the preceding year.

The Magic 8-Ball says Shred Days aren’t Defensible

Nowadays, this type of activity carries some negative connotations with it and is much more risky. Take for example the recent case of Rambus vs SK Hynix. In this case U.S District Judge Ronald Whyte in San Jose reversed his own prior ruling from a 2009 case where he had originally issued a judgment against SK Hynix, awarding Rambus Inc. $397 million in a patent infringement case. In his reversal this year, 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 as well). 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.

Another well know example of sudden retention/disposition policy activity that caused unintended consequences is the Arthur Andersen/Enron example. During the Enron case, Enron’s accounting firm sent out the following email to some of its employees:

This email was a key reason why Arthur Andersen ceased to exist shortly after the case concluded. Arthur Andersen was charged with and found guilty of obstruction of justice for shredding the thousands of documents and deleting emails and company files that tied the firm to its audit of Enron. Less than 1 year after that email was sent, Arthur Andersen surrendered its CPA license on August 31, 2002, and 85,000 employees lost their jobs.

Learning from the Past – Defensible Disposal

These cases highlight the need for a true information governance process including a truly defensible disposal capability. In these instances, 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 consistently followed and has 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.

To successfully automate the disposal of unneeded information in a consistently defensible manner, auto-categorization applications must have the ability to conceptually understand the meaning in unstructured content so that only content meeting your retention policies, regardless of language, is classified as subject to retention.

Taking Defensible Disposal to the Next Level – Predictive Disposition

A defensible disposal solution which incorporates the ability to conceptually understand content meaning, and which incorporates an iterative training process including “train by example,” in a human supervised workflow provides accurate predictive retention and disposition automation.

Moving away from manual, employee-based information governance to automated information retention and disposition with truly accurate (95 to 99%) and consistent meaning-based predictive information governance will provide the defensibility that organizations require today to keep their information repositories up to date.

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Defensible Disposal means never being accused of spoliation for hosting “Shred Days”


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.