On Dec. 1, the Federal Rules of Civil Procedure will be revised dramatically to address increasingly complex issues in the area of e-discovery. As e-Discovery Law & Strategy has reported, these amended rules represent a sea change in the practice of discovery, specifically addressing electronic discovery, and will affect a wide range of cases.
A long-arm effect of the changes is that data created by many thousands of employees and stored electronically may well be subject to discovery under the amended rules. Now is the time to anticipate and prepare for litigation and, perhaps, modify business practices by which electronic information is generated, stored and deleted.
Understanding a client's data-retention and data-management practices up front will help determine whether information sought is "not reasonably accessible" under new Rule 26(b)(2), and will help to quantify labor and other costs to demonstrate the production burden and, maybe, to urge either the sharing of discovery costs with the requesting party or shifting the entire expense to that party — or even providing grounds to object to the discovery in its entirety. (For an in-depth discussion of the accessibility of electronically stored information under the proposed rules, see, "Navigating The Nascent 'Accessibility' Standards: A Proposed Best Practices Framework," e-Discovery Law & Strategy, June 2006, p. 1.)
New Rules, New Obligations
Some states, including California, Kansas, Delaware, Mississippi, Texas, New Jersey, Wyoming and Arkansas, and a few federal districts, have already adopted specific guidelines for handling e-discovery. But recently, the Judicial Conference Committee on Rules of Practice and Procedure's Advisory Committee on Civil Rules proposed revisions to the federal discovery rules, which were approved by the Judicial Conference of the United States on Sept. 20. The Supreme Court approved the rules on April 12, and unless Congress vetoes the rules or suggests revisions, the rules will go into effect on Dec. 1. The Full Report of the Committee on Rules of Practice and Procedure, including the revised federal rules and advisory committee commentary and notes are on the Internet at www.uscourts.gov/rules/Reports/ST09-2005.pdf.
Early Focus on E-Discovery
The proposed amendments encourage addressing e-discovery issues early in litigation. For example, proposed Rule 26(f) now mandates that the parties discuss issues "relating to discovery of electronically stored information, including the forms in which it should be produced" prior to the Rule 16 conference with the trial judge. The amendment also requires the parties "to discuss any issues relating to preserving discoverable information in preparing a discovery plan to propose to the trial court." Particular emphasis is placed on issues relating to the preservation of electronic records because, as the Committee noted, "[t]he ordinary operation of computers involves both the automatic creation and the automatic deletion or overwriting of certain information. Failure to address preservation issues early in the litigation increases uncertainty and raises a risk of disputes."
At the Rule 16 conference, therefore, counsel must be prepared to speak knowledgeably about electronic- discovery issues with the trial judge, including special burdens faced by the client in seeking to comply with self-executing disclosure obligations and discovery contemplated by adverse parties, or its inability to comply because the data is unavailable, "not reasonably accessible" under new Rule 26(b)(2), or for some other reason. So, before the Rule 16 conference and, indeed, well in advance of the meeting contemplated with the adversary under Rule 26(f), counsel must begin a dialogue with the client to explore not only what electronic information exists to satisfy Rule 26 self-disclosure requirements, but also the time, cost and burdens involved in retrieving such data that the adversary may request.
Get Informed About Your Client's E-Data
Understanding your client's electronic-storage protocols and procedures, and being familiar with what data is, and is not, reasonably accessible will provide a distinct advantage to counsel at the Rule 16 conference. It will also help in framing preservation agreements and any subsequent motions for a protective order to limit or preclude electronic discovery, or in responding to a motion to compel. Once a responding party has identified information as not reasonably accessible, that party may move for a protective order — or the requesting party may file a motion to compel. But even if the responding party has established that the electronic information is not reasonably accessible, the court may decide to allow the discovery on a showing of "good cause." Here's what proposed Rule 26(b)(2)(C) says on the matter: "Good cause, which is the burden of the requesting party, may be shown if the information sought:
- Is not duplicative or unreasonably cumulative;
- Cannot be obtained from alternative sources that are less expensive, less burdensome or more convenient;
- Has been available to be obtained for a reasonable period by the party seeking discovery; and
- Does not present a burden and expense that outweighs its likely benefit, "taking into account the needs of the case, the amount in controversy, the parties' resources, the importance of the issues at stake in the litigation, and the importance of the proposed discovery in resolving the issues."
Prepare to Defend Your E-Data Choices
To deflect or reduce the chances of a motion to compel or to set a foundation and framework for cost-shifting, the responding party should elaborate on the search undertaken for the data requested, the difficulties in obtaining responsive information, or explain that there can be no assurance that such information even exists. Because the court may order "focused discovery," which may include a sampling of the sources, it may be wise for responding counsel to have taken the initiative by anticipating this possibility and furnishing in its response to the requested discovery some persuasive reasons for why sampling or further discovery would not satisfy the Rule 26(b) (2)(C) criteria.
Faced with potentially huge masses of electronically stored data and information, litigants receiving requests to produce face a conundrum. They can, for instance, blitz the requesting party with a "document dump" or they can arduously review each item to ferret out relevant and responsive material, and items protected from disclosure by the attorney-client or work-product privilege, or other privilege. Electronically stored information, however, frequently is significantly more difficult to review for relevancy and privilege and, accordingly, the proposed amendment to Rule 26(b)(5) establishes a procedure to assert privileges and work-product protections following production.
'Clawback' for Inadvertently Produced Privileged Data
Under the so-called "clawback amendment," a party producing electronically stored information has the right to assert at some point after production that certain material is privileged or protected from disclosure, requiring the receiving party to return, sequester or destroy the information, and not to use or disclose it to any third party. If the receiving party disputes the validity of the producer's privilege or work product claims, or believes the producing party has waived either or both of these privileges, then he or she may file a motion to have the trial court resolve the issue. Until the dispute is resolved, the receiving party may not use or disclose the contested information. If such information has been disclosed prior to the receipt of the producing party's privilege claim, then the receiving party "must take reasonable steps to retrieve it." The attempted clawback has to satisfy traditional privilege criteria and be timely.
Is Client-Deleted E-Data Under Safe Harbor?
Another way in which the proposed amendments address current technology can be found in proposed amended Rule 37(f). The so-called "safe harbor provision" says that "[a]bsent exceptional circumstances, a court may not impose sanctions … on a party for failing to provide electronically stored information lost as a result of the routine, good-faith operation of an electronic information system." Obviously, any preservation order will have to be carefully drafted to avoid the inadvertent destruction of electronically stored information subject to preservation. Whether, and under what circumstances, the loss or destruction of information subject to a litigation hold is sanctionable is left open by amended Rule 37(f). The Committee stated: "The proposed rule provides protection from sanctions only for the good faith routine operation of an electronic information system." While the actions taken by a party possessing information subject to preservation bear on that party's good faith if that information is later lost, amended Rule 37 contains no litmus test of culpability since any sanction determination will depend on multiple factors such as the steps taken by the party to implement a litigation hold, whether the information is stored on the party's own system or that of a third party, and whether the lost information is discoverable and relevant. Clearly, if the destruction of the electronically stored information at issue was not pursuant to a computerized storage system's "routine operation," or the party with control over the information is found to have acted recklessly or intentionally in failing to preserve the information, then a court may conclude that the imposition of sanctions is appropriate.
Pick the Form in Which E-Data Are Produced
Amended Rule 34(b) allows the party requesting electronically stored information to specify the form to be used in its production: The party of whom the request is made may object to the suggested form; or, if no form was specified in the request, state the form or forms it intends to use in its response. Unless the parties agree on the form, the court, on motion by either the requesting or responding party, can order that:
- If the request fails to specify the form in which the electronically stored information is to be produced, then the responding party "must produce the information in a form or forms in which it is ordinarily maintained or in a form or forms that are reasonably usable"; and
- The responding party "need not produce the same electronically stored information in more than one form."
Setting the Bar for E-Data
In September, the Sedona Conference, a nonprofit research and educational institute, published its long-awaited Best Practice Guidelines and Commentary for Managing Information and Records in the Electronic Age (available at www.thesedonaconference.org).
The Best Practice Guidelines contains specific recommendations and commentary related to the generation, management, cycling and harvesting of electronic information in the context of business, statutory, regulatory and legal needs. It's likely that trial judges will refer to the highly respected Guidelines in evaluating discovery requests for electronically stored information. The Guidelines are certain to have an impact on such issues as whether respondents have complied in "good faith" with their preservation and discovery obligations, whether electronically stored information is reasonably accessible, and whether the party seeking the information has demonstrated "good cause" for its production. Compliance with the Guidelines may also lessen the risk of sanctions for deleted or destroyed information.
Alan Klein is a partner, and Michael Zullo is an associate, at Duane Morris LLP in Philadelphia.
© e-Discovery Law & Strategy. Reprinted by permission.