|An Overview of the E-Discovery Rules Amendments|
|Lee H. Rosenthal, Thursday, 30 November 2006 [View as PDF]|
Editor's Note: This is the first of seven installments on the electronic discovery rules. To view an index of the installments, click here.
The electronic discovery amendments are an interrelated package. The amendments address five broad areas: (1) the parties’ obligations to meet and confer about electronic discovery early in litigation; (2) discovery of information that is not reasonably accessible and allocating costs of that discovery; (3) privilege review; (4) form of production; and (5) sanctions. An overarching change is the introduction of the term “electronically stored information” to the rules. This new term describes a distinct category of information subject to discovery rights and obligations, in addition to “documents” and “things.” The word “documents” no longer has to be distorted to accommodate the myriad ways in which computers create and store information, many bearing no resemblance to words fixed on pieces of paper. The amendments distinguish documents from electronically stored information because the categories are different in ways important to managing discovery. The distinction allowed the rules drafters to write provisions specifically addressing electronic discovery.
I. Meeting and Conferring
The amended rules require parties to include electronically stored information in initial disclosures, the mandated early discovery-planning conference of counsel, the report to the court, and the pretrial scheduling conference with the judge. The Rule 26(f) amendments require the parties to discuss electronic discovery in general at the early meet-and-confer and to discuss three issues in particular: the form of production, data preservation, and privilege waiver. Each of these three aspects of electronic discovery presents problems different from, and more complicated than, conventional discovery.
The form of production should be discussed in the meet-and-confer because parties can produce electronically stored information in a variety of forms, requiring choices and judgments that were not present in paper discovery.
The parties should discuss preservation in the meet-and-confer because electronically stored information is dynamic, unlike static words on paper, which complicates decisions about what has to be retained and how. Affirmative steps are necessary to preserve electronically stored information; passivity often leads to alteration, deletion, or destruction of information. By contrast, passivity preserves paper; affirmative steps are necessary to destroy a paper or similar physical record of information. The ordinary operation of computers—including the simple act of turning a computer on or off or accessing a particular file—can alter or destroy associated electronically stored information. Computer systems automatically create, alter, discard, or overwrite data as part of their routine operation, often without the operator’s direction or awareness. Computers further complicate preservation and production because electronically stored information may be “deleted” yet continue to exist in ways that are difficult to locate, retrieve, or review and may become progressively less accessible over time. Although the Civil Rules do not define preservation obligations—statute, regulation, or common law supplies the substantive standards—the rules recognize that applying preservation obligations to electronically stored information is uncertain and risky.
To meet preservation obligations, parties who reasonably anticipate litigation or who have been sued generally use litigation holds to prevent the loss of information that may later be demanded in discovery. An overbroad litigation hold may be costly and burdensome; any litigation hold presents the risk of not including information that will later be asserted as discoverable. To minimize the risk of later problems—which often take the form of spoliation allegations and sanctions motions—the meet-and-confer amendments require the parties to discuss early what sources of information should be preserved and in what form, and what information may be allowed to be recycled, overwritten, deleted, or discarded. The amendments encourage the parties to reach agreements and identify disputes for the court to resolve at an early stage, when the issue to be resolved is more likely to be planning the electronic discovery protocol rather than ruling on sanctions.
Privilege waiver should be discussed in the early meet-and-confer for two primary reasons. First, the sheer volume of electronically stored information makes privilege review expensive and time-consuming. Second, electronically stored information is stored and displayed in a variety of ways, which adds to the difficulty of review and makes it more likely that protected or privileged information will be inadvertently produced. Information such as metadata, embedded data, system data, attachments, and e-mail threads may not be revealed on a computer screen or on a printed piece of paper but may contain privileged or protected information that escapes detection, even if the producing party reasonably believes that it has a robust and carefully implemented review system. Identifying and segregating privileged and protected information is more difficult, costly, and time-consuming than was true of paper discovery and inadvertent disclosures are more likely to occur, even after a lengthy and expensive preproduction privilege review. Because a failure to screen out even one privileged item may result in an argument that there has been a waiver of all other privileged materials related to the same subject matter, The undersigned magistrate judge is only five years removed from private practice. He is acutely sensitive to the fact that, as a practical matter, requiring each e mail within a strand to be listed separately on a privilege log is a laborious, time intensive task for counsel. And, of course, that task adds considerable expense for the clients involved; even for very well financed corporate defendants such as those in the case at bar, this is a very significant drawback to modern commercial litigation. But the court finds that adherence to such a procedure is essential to ensuring that privilege is asserted only where necessary to achieve its purpose, e.g., in the case of the attorney client privilege, protecting disclosures made to obtain legal advice which might not have been made absent the existence of the privilege. In any event, the court strongly encourages counsel, in the preparation of future privilege logs, to list each e mail within a strand as a separate entry. Otherwise, the client may suffer a waiver of the attorney client privilege or work product protection (and the lawyer may later draw a claim from the client). Id. at 674. In addition to potential privilege review problems presented by such “hidden” information as metadata, embedded data, or system data, or presented by e-mail attachments and “threads,” another example of unfamiliar presentations of privileged or protected information is that databases may themselves be privileged or protected. See, e.g., Jaffe Pension Plan v. Household Int’l, 2006 WL 1898151 (N.D. Ill. July 6, 2006) (noting that an outside auditor inadvertently produced a database used to estimate the party’s litigation reserves).',BUBBLETYPE, 'roundcorners',ADJBUBBLE,TEXTSIZE,2,FGCOLOR,'#FFFFCC',WIDTH,400,ABOVE,TEXTPADDING,10,NOFOLLOW);return false;" onmouseout="nd();">parties may feel it necessary to engage in ever-more rigorous preproduction privilege reviews, adding to the cost, time, and burden of discovery. Amended Rules 26(f) and 16 respond to the privilege-waiver problem by directing parties to discuss approaches to asserting claims of privilege or work-product protection after production. If the parties agree on protocols that facilitate faster and less expensive discovery, they may ask the court to include such arrangements in a case-management or other order.
Each of these three areas—form of production, preservation, and privilege waiver—is also addressed in detail in other parts of the rules. The changes to Rule 16, Rule 26, and Form 35 dovetail with these later amendments by requiring the parties to discuss these problems early in the case, establish protocols tailored to the case, and seek early judicial involvement if agreements cannot be reached.
II. Not Reasonably Accessible Information and Allocating Discovery Costs
Rule 26(b)(2) is amended to address another key difference separating electronic from conventional discovery: electronically stored information, unlike words on paper, may be incomprehensible when separated from the system that created it. The way that the information is created and stored may introduce a new obstacle to parties seeking to access it, in addition to the familiar obstacles of distance and dispersion. Rule 26(b)(2) clarifies the obligation of a responding party to produce electronically stored information that is not reasonably accessible because of undue costs and burden.
The amendment to Rule 26(b)(2) applies a two-tier structure to this distinctive and recurring problem of electronic discovery. The first tier is party-managed discovery; the second tier is available only on court order and under court supervision. A party must provide discovery of the first tier—relevant, reasonably accessible, electronically stored information—without a court order. A party need not review or provide discovery of electronically stored information that it identifies as “not reasonably accessible.” Information contained on such sources is in the second tier, subject to discovery if the requesting party can show good cause for a court to order production.
The amendments to Rule 26(b)(2) mesh with the requirement for the expanded meet-and-confer. The parties are to discuss the likelihood that potentially responsive information exists on sources that are not reasonably accessible and to attempt to agree on whether that information must be searched and produced, or, if not, preserved. The Committee Notes encourage the parties to explore information stored on sources that are easier to access before pressing for production that would require forensic steps to restore and retrieve information stored on sources that are not reasonably accessible.
If a party seeks production of electronically stored information that has been identified as not reasonably accessible and the parties cannot agree, the issue can be brought to the court by a motion to compel or for protection. Regardless of who files the motion, the party responding to the discovery request must first show that the information sought is indeed not reasonably accessible. The party requesting the discovery then has the burden of demonstrating good cause for the production. If good cause is shown, the court may order discovery and may impose terms and conditions. In deciding whether to compel production and what terms or conditions should apply, the court is to consider the proportionality limits of Rule 26(b)(2)(C)—which have been part of Rule 26 since 1983, as Rule 26(b)(2)(B)—including whether the costs of the discovery is worth the likely benefits. The terms and conditions may include requiring the requesting party to absorb some or all of the costs of production.
In sum, this new rule requires parties to identify sources of information that are not searched because they are not reasonably accessible and allows discovery from such sources on a showing of good cause, subject to judicial supervision. It provides both a procedure and guidance for applying the proportionality limits that govern all discovery to the distinctive features of electronic discovery.
III. Privilege Review
Rule 26(b)(5)(B) dovetails with the changes to Rule 16 and Rule 26 that address privilege waiver. The costs and burdens of reviewing vast electronic files for privilege are widely perceived as a major problem. The amendments offer relief in two ways. The first is to require the parties to discuss in their meet-and-confer whether they can agree on procedures for asserting privilege claims after production without risk of waiver and, if so, to request the court to include the agreement in a court order. The second is the creation in Rule 26(b)(5)(B) of a consistent and predictable procedure to apply if the parties cannot reach an agreement for postproduction privilege assertion. Both rules are carefully crafted to leave to the court the substantive questions of whether the information produced was privileged as asserted and, if so, whether that privilege was waived by the circumstances of the production.
Under Rule 26(b)(5)(B), if a party has produced information in discovery that it claims is privileged or protected as trial-preparation material, the party may notify the receiving party of the claim, stating the basis for the assertion. After receiving notification, the receiving party must return, sequester, or destroy the information and may not use it or disclose it to third parties until the claim is resolved. The receiving party has the option of submitting the information directly to the court to decide whether the information is privileged or protected as claimed and, if so, whether a waiver has occurred. A receiving party that has disclosed or provided the information to a nonparty before getting notice must take reasonable steps to obtain the return of the information. The producing party must preserve the information pending the court’s ruling on whether the information is privileged or protected and whether any privilege or work-product protection has been waived or forfeited by the production. The goal of this Rule is to preserve the status quo until the court can decide the disputed privilege or work-product questions.
IV. Form of Production
The proposed amendments to Rule 33 and Rule 34 clarify how these rules apply to electronically stored information. The proposed amendment to Rule 33 clarifies that the electronic-discovery equivalent of answering an interrogatory by referring to business records is for the responding party to provide the interrogating party access to electronically stored information if the interrogating party can find the answer as readily as the responding party can. The amendment to Rule 34(b) clarifies the application of the document production rule to electronically stored information. This amendment dovetails with the meet-and-confer requirement for parties to discuss the form of production by providing a procedure for a court to resolve the form of production if the parties cannot agree.
Amended Rule 34(b) allows but does not require requesting parties to specify the preferred form of production in their requests and allows responding parties to object. If a request does not specify a form or forms of production or if the parties have not reached an agreement and the court has not ordered a specific form, the rule gives responding parties two default options. The options are the form or forms in which the information is “ordinarily maintained” or “a form or forms that are reasonably useable,” whether they be electronic or paper, indexed or word-searchable, or useable in any other reasonable way for the litigation. These options are intended to be roughly analogous to the rule provisions for paper records: producing documents labeled to correspond to the categories in the request, or as they are maintained in the ordinary course of business. Those default options, intended to prevent “document dumps” in the world of paper litigation, do not apply easily to electronically stored information. The amendment bridges that gap.
Even if the parties are able to agree on preservation protocols in the meet-and-confer sessions, and especially if they are not, the risk of losing information that may later be demanded in discovery is an acute problem in electronic discovery. Anxiety about preservation is particularly high among large data producers who are repeatedly and frequently the subject of a variety of claims. Such data producers complain that fear of spoliation accusations and resulting sanctions leads them to preserve far more information than is likely to be necessary to meet reasonable discovery demands of particular cases, leading to overproduction, which in turn increases the cost, burden, and time required to review and produce information. Even relatively small data producers and data producers who are infrequently sued complain about the uncertain boundaries of preservation obligations and sanctions threats. Rule 37(f) is a new rule that limits a court’s authority to sanction a party under the civil rules for the failure to produce information in discovery, if the information has been destroyed or made inaccessible as the result of the routine operation of an electronic information system, as long as that operation is in good faith and absent exceptional circumstances.
Rule 37(f) responds to a distinctive feature of electronic information systems, the routine modifying, overwriting, and deleting of information that attends normal use. The Rule is short and simple. It states that “[a]bsent exceptional circumstances, a court may not impose sanctions under these rules 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.” The “routine operation of the party’s computer system” encompasses the ways in which information systems are generally designed, programmed, and implemented to meet a party’s business and technical needs, rather than to respond to litigation. “Good faith” is not specifically defined in the Rule but the Notes provide guidance by stating that good faith “may require that a party intervene to modify or suspend certain features of the routine operation of a computer system to prevent the loss of information, if that information is subject to a preservation obligation.” The Notes also give an example of what “good faith” is not. A party may not exploit the routine operation of an information system to thwart discovery obligations by allowing the operation to continue in order to destroy specific stored information that it is required to preserve.
Rule 37 does not set preservation obligations but does tell judges that a spoliation claim involving electronically stored information has to be analyzed with an understanding and recognition of the distinctive dynamic features of such information. These claims cannot be analyzed in the same way as similar claims involving static information stored on paper that requires affirmative human action to alter or destroy.
The rules are an interrelated set of provisions that begin with the early meet-and-confer discovery planning sessions, establish procedures for addressing disputes about the form of production, information that is not reasonably accessible, and privilege waiver, and provide guidance if electronically stored information cannot be produced in discovery because of features distinctive to electronic information systems. Rule 45 extends the amendments to discovery sought from third parties.
The rules and the cases that are already applying them make one effect of electronic discovery clear. The rules continue the trends toward requiring the parties and their lawyers to raise problems early to try to reach agreement and toward facilitating judicial involvement and supervision when needed. The rule amendments, and, more importantly, the features of electronic discovery that made the amendments necessary in the first place, will place increasing demands on litigants, lawyers, and judges to manage discovery earlier, more often, and in more detail than conventional discovery required. District judges in particular have enjoyed a relative holiday from the hard and detailed work of discovery management. That holiday may be ending. A few specific examples of problems likely to emerge under the new rules illustrate the nature and extent of the new demands on litigants, lawyers, and on judges. I turn to these examples in my next installment.
Lee H. Rosenthal is a United States District Judge for the Southern District of Texas. Rebecca Bolin, Yale Law School ‘06, provided helpful assistance and suggestions.
Preferred Citation: Lee H. Rosenthal, A Few Thoughts on Electronic Discovery After December 1, 2006, 116 Yale L.J. Pocket Part 167 (2006), http://thepocketpart.org/2006/11/30/rosenthal.html.