Electronic Discovery Proposal Influencing Judges

The U.S. Judicial Conference recently took an important step toward addressing electronic discovery issues by approving proposed amendments to the Federal Rule of Civil Procedure that will force e-discovery issues to be addressed early in the litigation process and protect companies from having to dig up data that is not reasonably accessible.

Although the amendments will not be formally in place for another year, experts tell Compliance Week that they have already become very influential and are being referred to by litigants and judges. One federal judge in Kansas specifically cited the proposed rules in a recent case involving metadata (see related opinion at left).

Isom

“People should study [the proposed rules] on the assumption that they already apply,” notes David Isom, who chairs the e-Discovery & e-Retention Practice Group of the law firm Greenberg Traurig in Denver. “Anybody in the business who has been watching has really been watching these rules—they have been so hotly debated. People know about them and will cite them because they will think they’re persuasive if not authoritative.”

Although changes to the proposed amendments are still possible, Isom says they already “carry their own authority—the authority that thoughtful people have looked [at the issues] extensively and, on some issues, there really is no precedent.” He notes that state courts are likely to be “strongly influenced” by what the federal courts have to say about electronic discovery.

“Judges are starting to self-direct their opinions and conduct among [the] lines [of the proposed amendments],” says Michelle Lange, a staff attorney in the Legal Technologies department of Kroll OnTrack, a Minnesota-based company offering electronic discovery and computer forensics for corporations, law firms and others. She notes that some federal courts have already adopted local rules “forcing parties to meet earlier in the cases—they’re already directing parties’ conduct in [the] direction” of the proposed amendments.

A Litigation Sea Change

Under the amendments to the Federal Rules, discovery rules related to electronic information would be impacted in several ways:

Early Discussions—Parties will be required to discuss electronic discovery issues—including preservation matters and the appropriate format for producing information—at the early stages of litigation.

Accessibility—Defendants will not be required to produce electronic information that is “not reasonably accessible” unless the requesting party can demonstrate good cause.

Privilege—Inadvertent production of information covered by the attorney-client privilege or work product protections will not automatically destroy the privilege or protection.

Good Faith—Companies cannot be sanctioned for the loss of electronic data resulting from the routine “good faith operation” of computer systems.

Isom says requiring electronic discovery to be discussed up front will constitute a “sea change” in litigation. “Right now, lawyers can hope or pretend—if it’s in their interest—that computers haven’t been invented and produce only paper [documents].”

Cadle

Amy Cadle, a lawyer with Squire Sanders & Dempsey in Cleveland, agrees that forcing parties to address electronic-discovery issues at the earliest possible opportunity in the process “is going to change current practice in a major way.”

Under the present system, “electronic-discovery issues are sometimes not addressed until a problem arises,” Cadle notes. “Under the proposed amendments, parties will be able to define obligations for maintaining records at the discovery conference.”

And that’s a good thing, says Cadle, because most problems in this area arise “not because parties intentionally ignored the rules, but because the rules aren’t clear or parties don’t have the technical background to know that certain information is being created or destroyed.”

A Practical Approach

By focusing on what is reasonably accessible, Cadle says, the proposed amendments “take a practical approach” to electronic discovery issues that will help prevent situations in which one party attempts to “cripple the other side” with voluminous document demands.

“In determining whether information is reasonably accessible, the court will look at such issues as how relevant the information is to the litigation, how difficult it is to retrieve and what’s at stake in the litigation,” Cadle says. “If it’s not much more than a fishing expedition, the court’s not going to allow that.”

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Praise From Microsoft Lawyer

Gregory McCurdy, a senior attorney for Microsoft who testified before the committee drafting the amendments to the Federal Rules of Civil Procedure, says the proposals regarding electronic discovery “are very balanced and should be very helpful in helping to educate lawyers and judges. They will bring the rules into the 21st century.”

McCurdy says he doesn’t think the amendments will have much of an impact on how companies operate. “I don’t think companies will have to do anything differently,” he says. “We have not changed our operations, nor do I think the rules require us to change anything about our operations. We run everything according to our business needs. The great thing about these rules is they recognize that.”

Because a lot of the technology used by corporate America is still relatively new, “many judges and lawyers are not really familiar with how systems operate,” McCurdy notes. “So there have been some people who have taken extreme positions—for example, that you cannot ever recycle or delete anything. It’s impossible to operate a modern business [that way]. Information has to be deleted. There’s a need to keep what we keep for litigation purposes. But for business purposes many things do not have to be kept.”

McCurdy admits that Microsoft, as the world’s largest computer company, may have an edge when it comes to addressing electronic discovery issues. “But if you’re a lawyer, it doesn’t matter whether you’re working for a manufacturing company, a financial services company or a software company, you have to understand how your computer systems work, where data is located, how it’s preserved and where to go looking for it.”

For Microsoft’s part, the company’s product groups “are trying to include and improve features [in certain applications] that will make discovery easier—that will help companies maintain data for their business and litigation,” McCurdy says.

Determining what is reasonably accessible will “primarily be an economic judgment,” says Isom. “But if you want to try to get the benefit of [the] rule, you have to identify the data that you’re claiming is inaccessible.” He notes that “technology is changing so fast that what is economically inaccessible one day may not be the next.”

Lange

Lange, who sat in on the discussions of the proposed amendments, says there was some concern expressed that companies might try to make information less readably accessible by moving all their data into complex offline storage. But she notes that “judges are going to look at that—they’ll see through these kinds of ploys.”

Protecting companies from sanctions for inadvertent losses of information is also important, according to Isom.

“[That] provision seems to say that, ‘If you lose some information in good faith because you were befuddled by the number of computers you had and didn’t know what they were doing, we’re giving you some protection’,” says Isom, noting that lost information still must be identified. “You can’t just hide behind the log.”

Lange notes that this anti-sanction provision—sometimes called a “safe harbor”—provoked considerable discussion among the members of the committee that drafted the amendments.

“There was concern that people were going to try to [use] this to protect themselves,” she notes. “So the committee gave judges the power to impose sanctions based on the facts of the case, if there are exceptional circumstances—if something crazy is going on the case.”

Best Practices Roadmap

Dawson

Martha Dawson, who heads the Document Analysis Technology Group at the law firm Preston Gates & Ellis in Seattle, says the proposed rules amendments provide “a good opportunity for people to be thinking about [electronic discovery issues]. They can make sure their house is in order before they get hit with their first e-discovery [case].”

According to Dawson, the emphasis on early discussion of electronic discovery matters makes it incumbent on companies to “have some basic understanding of [their] systems. You no longer can say, ‘I don’t know.’ You have to do some due diligence to find out some basic information about your systems in order to talk intelligently to the other side.”

Dawson says the proposed rules are “almost like a roadmap in terms of what the issues they should be thinking about … One could think of it as best practices.”

In light of the “two-tier discovery”—whereby information is discoverable if it is reasonably accessible and not discoverable if not reasonably accessible—Dawson says it’s important to “make sure [the company’s] back-up tape policy is consistent with [its] document retention policy.”

Companies need to be prepared to show that their back-up systems are “really being used for disaster recovery,” Dawson says. “If you’re using it for purposes other than disaster recovery, that may move them from the first tier [non-discoverable] to the second tier [discoverable].”

Another consideration for companies is to ensure that they don’t lose the protection of the “safe harbor” provision, Dawson notes. “That’s [another] area where backup tapes and routine recycling of backup tapes come into play,” she says. “It’s something to look at to make sure you have consistent routine operations and are sticking to them—so you have the ability to walk into court and say, ‘We have these standard procedures … and therefore we’re protected.’”