Good news: New e-discovery rules are on the horizon that could make it easier and less costly for companies to search and prepare electronic documents for litigation.
The Advisory Committee on the Federal Rules of Civil Procedure unanimously approved for adoption several proposed changes to the rules that govern the obligations parties have to turn over electronically stored information in the event of litigation, which were last updated in 2006.
Among the changes is new language that narrows the scope of what might be considered relevant and admissible evidence and relief from sanctions when information is lost through routine, good faith information deletion practices with no malicious intent.
The amendments, approved during a public hearing in early April in Portland, Ore., followed the review of more than 2,000 comment letters and three other public hearings held in Dallas, Phoenix, and Washington, D.C. The proposed changes now go to the Standing Committee for final review in May. While lawyers expect them to be approved, the earliest they could take effect is December 1, 2015.
If approved in their current form, the new Rules of Civil Procedure would effectively alleviate some of the e-discovery burdens by limiting the scope of discovery, which would reverse a trend from past amendments that have broadened discovery obligations.
“These changes have broad support from in-house counsel,” says David Cohen, a partner with law firm Reed Smith and head of its global records and e-discovery group. “It's an important step in a positive direction for restoring some balance to the litigation system and reducing future litigation costs.”
The most significant change would be to Rule 26(b), which governs the scope of discovery. The 2006 version of Rule 26(b) states: “Relevant information need not be admissible at the trial if the discovery appears reasonably calculated to lead to the discovery of admissible evidence.”
Since almost any information could potentially lead to relevant and admissible evidence, many plaintiffs' lawyers and judges have interpreted Rule 26(b) to mean that almost anything is discoverable. This often results in corporate defendants having to preserve, process, and produce massive amounts of data for discovery that has no relevance to the particular facts of a case.
“[The changes are] an important step in a positive direction for restoring some balance to the litigation system and reducing future litigation costs.”
—David Cohen,
Partner,
Reed Smith
“There's been a general feeling among many in the legal community that discovery has become so broad and so expensive that it has become counter-productive,” says Cohen. In some cases, companies settle just to avoid the cost of discovery, rather than based on the merits of the case. “We want cases to be decided on the merits, not based on the discovery burden that can be imposed on a party,” he says.
To resolve this problem, proposed Rule 26(b) would include new language that states the scope of discovery must be restricted to information that is “proportional to the needs of the case.” The rule further list a series of factors that judges would have to weigh when deciding how much discovery is allowed in a particular case, including:
The importance of the issues at stake in the action;
The amount in controversy;
The parties' relative access to relative information;
The importance of discovery in resolving the issues; and
Whether the burden or expense of proposed discovery outweighs its likely benefit.
“It's no longer just a question of whether the information bears on a claim or defense, but also whether discovery should be allowed at all,” says David Cross, a partner with law firm Crowell Moring and co-chair of its e-discovery and information management group. The idea is that “discovery shouldn't cost more than the claim itself,” he says.
The rule could limit that ability of plaintiffs to embark on fishing expeditions or to try to tie up defendants with unreasonable discovery requests. “It gives in-house counsel some ammunition to object to overbroad discovery requests, and it gives some comfort that you can practice reasonable preservation without going too far overboard,” says Cohen.
Routine Information Deletion
Another significant rule change concerns Rule 37(e), which governs the imposition of sanctions for failure to preserve electronically stored information (ESI).
In 2006, Rule 37(e) was added to provide protection against sanctions for loss of ESI under certain limited circumstances, but preservation problems have nonetheless increased. Newly proposed Rule 37(e) attempts to addresses the issue of what should happen when a company fails to preserve information “lost as a result of the routine, good-faith operation of an electronic information system.”
A lot of companies have systems today that automatically delete information after a certain period of time. “We were seeing a lot of companies being hit with sanctions where the other side argued that they failed to preserve something that should have been preserved,” says Cohen.
Federal courts across the country dealt with the loss of information from routine deletion practices differently, leaving companies with no way to determine what preservation standards they would have to satisfy to avoid sanctions.
Companies have been trying their best to make reasonable decisions when it comes to document preservation, “but they've been so afraid of sanction that they were over-preserving documents,” says Cohen. “That's one thing that keeps lawyers up at night—the fear of getting sanctioned for something that was unintentional.”
RULE 26
Below is an excerpt from Rule 26: Duty to Disclose; General Provisions; Governing Discovery.
Scope in General. Unless otherwise limited by court order, the scope of discovery is as follows: Parties may obtain discovery regarding any non-privileged matter that is relevant to any party's claim or defense and proportional to the needs of the case, considering the importance of the issues at stake in the action, the amount in controversy, the parties' relative access to relevant information, the parties' resources, the importance of the discovery in resolving the issues, and whether the burden or expense of the proposed discovery outweighs its likely benefit. Information within this scope of discovery need not be admissible in evidence to be discoverable.
Source: Advisory Committee on Civil Rules.
The new rule essentially states that parties will not be sanctioned where they did not act with any malicious intent to conceal evidence. Instead, it calls for curative measures. If information is lost, and is not done with malicious intent, than the rule calls on courts to allow the minimum measures necessary to cure any problem that results, says Cohen. “Only in situations where a party acted intentionally to destroy or conceal evidence would there be the most severe sanctions,” he says.
Industry Support
In a comment letter to the Advisory Committee, 309 general counsels expressed their support of the proposed amendments to Rule 26(b) and Rule 37(e). “Taken together, these proposed amendments will address the burdens of both over-preservation and overbroad discovery,” the letter stated. “More importantly, they will begin to reverse the trend favoring resolution of cases based on costs, rather than on the merits.”
The letter was signed by the general counsels in companies across a wide sector of industries, including 3M, Allstate, Bayer, Bank of America, Chiquita Brands, Dupont, and hundreds more.
Although the proposed rules have wide support, it's too early to say at this point whether more changes are on the way. Many legal experts say, however, that given the extensive comment period the rules have already gone through, it's unlikely any more significant changes will be made.
“The proof is going to be what happens between now and the Standing Committee meeting at the end of May,” says Ariana Tadler, managing partner at the law firm Milberg and head of the firm's e-discovery practice.
Assuming that the Standing Committee gives the go-ahead, the proposed rules will then be submitted to the Judicial Conference of the United States.
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