On December 1, 2006, the Federal Rules of Civil Procedure were amended to formally reflect that electronically stored information, including emails, are discoverable and to set forth various specific obligations of parties in litigation with respect to the preservation and production of electronically stored information ("ESI"). The renewed focus on ESI brings with it new challenges on the proper methods to preserve, review and collect ESI. The amendments emphasize the need for companies to know their own electronic systems and how information is created, retained and deleted on those systems. The challenge of preserving and producing ESI carries with it substantial costs. While these rules apply only in federal cases, the expectations forged by these new rules will creep quickly into state cases as well.
The new rules and the accompanying Federal Rules Advisory Committee notes reflect a number of key points. The Committee understood that electronic information is voluminous and the challenges of reviewing it are enormous. Companies routinely arrange for scores of lawyers to review millions upon millions of electronic records to ferret out irrelevant material and remove privileged or protected materials. The Committee addressed whether the parties might be able to limit or reduce the enormous review costs by entering into voluntary "quick peek" agreements discussed below. The Committee also recognized that the creation of electronic data is accompanied by systems that routinely delete and overwrite data in the interest of saving space and creating room for the creation of more data. The Committee and the rules thus address whether companies can be punished if their routine computer systems result in the deletion and permanent loss of information that might later prove relevant. All of the foregoing issues are reflected in the specific amended rules themselves - Rules 16, 26, 33, 34, 37 and 45.
Rule 16 governs pre-trial conferences. Parties in federal court cases are required to have conferences early in the case to discuss scheduling and other basic issues. The new amendments to Rule 16 require the parties to discuss "disclosure or discovery of electronically stored information" at the initial conferences in the case. The new rules reflect the drafters' knowledge that the hurly-burly world of electronic information productions can often involve mistakes where parties inadvertently turn over information that should have been withheld as privileged or protected. The rules contemplate that parties should discuss this prospect at the outset of the case to see whether they can reach "any agreements for asserting claims of privilege or of protection as trial-preparation material after production."
Rule 26 sets the general rules for civil discovery. Consistent with Rule 16, Rule 26 calls for early disclosure of the sources for discovery, including sources that a party "identifies as not reasonably accessible because of undue burden or cost " This rule and the early disclosure requirements impose a burden on litigants to know their computer systems and to explore whether the data held by each available source is or is not "reasonably accessible." The rule calls on the producing party to identify sources that are NRA. Accessibility is a fluid concept that takes into account whether the information can be more easily obtained from another source.
Typically, the concept of "not reasonably accessible" focuses on backup tapes containing copies of the company's data that are held for some pre-defined period as a disaster protection device. Companies routinely recycle their tapes - for example, a tape used to backup a server on Day 1 may be held for 30 days and re-used or recycled on the 30th day. These tapes are generally expensive to restore and intended only to be used in the event of a disaster. Since they largely duplicate what is on the existing active system, litigants often argue that they are not reasonably accessible and need not be restored. Rule 26 places the burden of proving non-accessibility on the producing party, and leaves the opposing party free to challenge the assertion, with the Court to decide any dispute that arises. The prospect of being challenged on an assertion of NRA requires litigants to consider preparing affidavits to document the assertion that a source is NRA. It should be noted that even if a source is NRA, it may still have to be preserved.
Rule 26(b)(5) contains provisions that specifically govern what happens to inadvertently produced privileged or protected information in the absence of an agreement:
If information is produced in discovery that is subject to a claim of privilege or of protection as trial-preparation material, the party making the claim may notify any party that received the information of the claim and the basis for it. After being notified, a party must promptly return, sequester, or destroy the specified information and any copies it has and may not use or disclose the information until the claim is resolved.
As noted early, the Committee Notes suggest parties enter specific agreements on the subject of privileged documents that are commonly referred to as "quick peek" or "clawback" agreements.
"Quick peek" agreements are agreements to speed up productions and reduce costs by agreeing (1) to let the requesting party take a "quick peek" at ESI without the producing party undertaking the time and expense in advance to review the entire population of ESI to eliminate non-responsive and protected information; (2) during the course of its "quick peek," the requesting party then flags the particular ESI records it wants the producing party to formally produce; and (3) the producing party then limits its responsiveness and privilege review to the set of flagged documents, actually producing only those that are responsive and not privileged, with the requesting party agreeing that it will return, not use and not claim waiver with respect to any non-responsive or privileged information that it saw during the "quick peek."
Most companies, however, likely will be unwilling to accept the central premise of a "quick peek" agreement which involves turning over ESI without any advance review. Even if privileged materials are returned and not used, most companies will not want the opposing side to ever see such material in the first place. Clawback agreements are agreements to return unwittingly produced protected materials without claiming waiver. An important risk with quick peek and clawback agreements is that third parties might claim that any non-waiver agreement does not bind them and they are free to claim that a waiver occurred.
Rule 33 governs interrogatories, and the new amendments to that rule allow parties to refer the opposing side to ESI, rather than providing a narrative response. Electing such an approach, however, brings with it a heightened risk that the opposing side might be entitled to access the company's computer system so that it can manipulate the ESI and search for the precise answer to its interrogatories. Some commentators believe that pointing to ESI as a substitute for a narrative response exposes a company to greater risk of having to give the opposing side access to the company's own system than would producing a usable version of the same ESI in response to a document production request.
Rule 34 governs requests for production of documents. The amendments specifically reflect the discoverability of ESI. Rule 34 has also been amended to allow parties to request samples and tests with respect to ESI. The new version of Rule 34 requires the parties to address the issue of the form in which ESI will be produced (e.g., TIFF, PDF, native, etc.). Rule 34 gives the requesting party the option to specify a preferred form, and gives the producing party the option to object to the requested form and suggest its own preference. In the event of a dispute, the court will be required to resolve it. Interestingly, the new amendments provide that if no form is specified "a 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." "Ordinarily maintained" generally means in its "native" format.
Companies will often want to avoid native production because it creates difficulties in redacting documents, is technically challenging, and enables an opponent to alter the data after production. It also impacts the type of "metadata" that will be available to the opposing side. Indeed, one of the key issues in any electronic production is whether the documents will be produced with all, some or none of the metadata intact. In this context, "metadata" refers to hidden data embedded in an electronic file, such as date of creation, track change edits, size of file, spreadsheet formulas and other such "hidden" information about a particular document. Companies will often agree to produce bibliographic metadata (from, to, date, last edit date, etc.) and seek to redact fields that would be troublesome to review - like prior edits and other such fields. Note, however, that metadata can also refer to system-level information, such as when applications are opened, when employees log on to the network, or when files are purged. For each type of electronic data to be produced in a given case, companies are required to consider what metadata the company is and is not willing to produce.
Rule 37 addresses the thorny issue of information lost due to routine deletion systems. The new amendment specifically provides 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." This safe harbor is not as safe as it looks, however, because companies, once on notice of a claim, may have the obligation to suspend its routine systems in whole or in part depending in part on whether a failure to suspend could result in the knowing destruction of the only copy of potentially relevant evidence.
Rule 45 governs requests for documents and testimony addressed to witnesses and others who are not actual parties to the litigation. The new amendments to Rule 45 simply apply the foregoing ESI amendments to non-party subpoenas. Non-parties thus must be prepared to deal with requests for ESI in the same ways as do parties.
As can be seen, the new amendments bring a renewed focus to electronic discovery. To insure compliance, companies should develop a standard protocol that requires the company for each pending claim or matter to go through a set of repeatable steps that ensure that each of the new rules has been considered and that the company is taking reasonable steps to preserve, collect, analyze, review and produce electronically stored information.
Published March 1, 2007.