Proposed amendments to the Federal Rules of Civil Procedure will become effective on December 1, 2006. The amendments introduce a new category of discoverable information - electronically stored information, sometimes referred to by the acronym 'ESI.' They support even greater involvement by courts in the oversight of routine discovery processes and additional early disclosure and discussion requirements among counsel. They provide limited shelter from the storm for parties fearful of spoliation sanctions, and they also define a process for addressing inadvertent waivers of privilege.
Electronically stored information [Amended Rule 34(a)]
The starting point for the changes in the discovery rules is Rule 34. Originally Rule 34(a) covered discovery of'documents' and 'things.' Developments in computer technology have changed the way information is created, communicated and stored in ways that could not be conceived by the original drafters. The category of 'electronically stored information' should permit the discovery rules to keep pace with developments in information technology for many years into the future.
Test or sample [Amended Rule 34(a)]
Under amended Rule 34(a), a reviewing party has the right to 'test or sample' electronically stored information.The explicit option to test or sample as part of the initial production process should help counsel obtain useful responses to requests more quickly and economically than through a succession of broad document requests and Rule 30(b)(6) depositions.
Form of production [Amended Rule 34(b)]
Amended Rule 34(b) permits a requesting party to specify the form for producing electronically stored information.
The same information can be stored and produced in different forms. For example, particular electronically stored information can be produced as a paper printout, as a word processing file, exported to various other computer-readable file formats, or imaged in TIFF or PDF formats. The different formats may have varying utility to the requesting party. Thus, an email message from Microsoft's Outlook program produced as a paper printout will not display the background information and linkages to other messages that would appear if it were produced as a .PST computer file. A format such as TIFF (Tagged Image File Format) may include some or all of this information, depending on how it is generated, what the source information is and what the requesting party is looking for. Williams v. Sprint/United Management Company , 230 F.R.D. 640 (D. Kan. 2005) has an excellent discussion of the impact of different forms of production on discovery.
If the responding party objects or if no form is specified, the responding party must state the form or form it intends to use. The default forms are those (1) 'in which [the electronically stored information] is ordinarily maintained' or (2) 'that are reasonably usable.'
It would be easy for a requesting party to subject a producing party to extra work with demands for multiple forms of the same discovery information. Amended Rule 34(b) protects a producing party from the burden of extra work by stating that 'a party need not produce the same electronically stored information in more than one form.'
Production as answer [Amended Rule 33(d)]
Rule 33(d) is amended to include the right to produce electronically stored information in answer to an interrogatory if the burden of deriving the answer will be substantially the same for both parties.
This option should be used with caution. The producing party must provide 'sufficient detail to permit the interrogating party to locate and to identify, as readily as can the party served, the records from which the answer may be ascertained,'and must afford the party serving the interrogatory 'reasonable opportunity to examine, audit or inspect' the records that are identified. This degree of disclosure can raise concerns when sensitive confidentiality and privacy interests are involved. A responding party may be wise to 'derive or ascertain and provide the answer itself' rather than produce electronically stored information to answer an interrogatory.
Initial disclosures [Amended Rule 26(a)(1)(B)]
The amendment to Rule 26(a)(1)(B) adds the new category of electronically stored information to the list of what each party must disclose during the opening stages of a case.
Production issues and accessibility [Amended Rule 26(b)(2)(B)]
Among the many issues that can plague a party attempting to collect, review and produce responsive electronically stored information are ones that affect a party's threshold ability to review and ascertain whether a source even contains any discoverable information. Rule 26(b)(2)(B) addresses this difficulty by providing that electronically stored information need not be produced if the source is not reasonably accessible on account of either undue burden or undue cost. What this means is still uncertain, but it is something more than simply being inactive or a backup. Many enterprises routinely use their backup tapes as an archive and can readily spool up and restore a tape to search for and retrieve particular files. What the tests may be and how they evolve with changing technology will be closely watched as courts start to apply the amended rule.
The party seeking the discovery need not accept the objection of the party from whom the discovery is requested, and may move to compel the discovery in question. In the motion practice that follows, the burden is on the party from whom the discovery is sought to demonstrate undue burden or cost.
A court may still compel production from sources that are not reasonably accessible if the party requesting the information can show good cause. The good cause inquiry invokes the balancing provisions of Rule 26(b)(2)(C). Factors that may be considered include: (1) the specificity of the discovery request, (2) the quantity of information available from other and more easily accessed sources and the likelihood of finding it, (3) predictions as to the importance and usefulness of the further information, (4) the importance of the issues at stake in the litigation, and (5) the parties' resources.
Under Rule 26(b)(2)(C), a court may set limits on the permitted scope of discovery or shift some of the production costs to the requesting party. See, for example, Zubulake v. UBS Warburg , LLC , 217 F.R.D. 309, 324 (S.D.N.Y. May 13, 2003).
Privileged and trial-preparation information [Amended Rule 26(b)(5)(B)]
Electronically stored information may include layers - often invisible - which show the history and context of the information and links to other information. Electronically stored information is also often voluminous. A thorough effort to find and remove all of the privileged or trial-preparation material can add substantially to the time and cost of discovery, and mistakes still can be made. Many courts are now moving toward a balancing test on whether and to what extent a particular disclosure of privileged information waives the privilege. See Hopson v. Mayor and City Council of Baltimore , 232 F.R.D. 228, 235-37 (D. Md. 2005).
Amended Rule 26(b)(5)(B) creates a process and procedure to stop the spread of an initial disclosure - figuratively, a 'litigation hold' for privilege waivers - so that the parties and the supervising court have an unimpeded opportunity to address the consequences of the disclosure, without expressing any position on whether a waiver has occurred. A party that has received allegedly privileged information is required, upon receipt of a notice of a claim of privilege, to 'promptly return, sequester, or destroy the specified information and any copies it has' and 'take reasonable steps to retrieve' any information it has already distributed. The receiving party 'may not use or disclose the information until the claim is resolved.'
The receiving party may bring the issue to the court's attention for determination, and the producing party must preserve the information until the claim of non-waiver is resolved.
Conference of parties to plan discovery [Amended Rule 26(f)]
Amended Rule 26(f) adds several items to counsel's agenda for their Rule 26(f) pretrial planning conference. These include (1) preservation of discoverable information, (2) issues relating to disclosure or discovery of electronically stored information, including the form in which it should be produced, and (3) issues regarding claims of privilege or protection as trial-preparation material, including whether to ask the court to include an agreement on non-waiver in an order. There are several reasons why counsel should engage in the extra planning needed to take full advantage of this opportunity to discuss the weaknesses and strong points of their clients' records systems. First, courts will expect it. Many are enacting local rules that make their expectations explicit.
Second, an agreement regarding non-waiver of privilege is best reached before any disclosures have taken place. It is critically important to incorporate the agreement in an order if it is to be effective against third-parties. See Hopson , 232 F.R.D. at 239.
Third, the planning conference is probably the best opportunity counsel will have to control the direction and, therefore, the cost and duration of discovery.
Counsel may have difficulty adjusting to the emphasis on collaboration between adversaries in the amendment to Rule 26(f). Local rules and standing orders will help by putting strong pressure on counsel. For example, see Electronic Discovery Default Standard by the District of Delaware (available under 'Policies and Procedures' at www.ded.uscourts.gov/ OrdersMain.htm ), which begins with the affirmative statement that: 'It is expected that parties to a case will cooperatively reach agreement on how to conduct e-discovery.'
Scheduling order [Amended Rule 16(b)]
Current Rule 16(b) requires the court to enter a scheduling order at an early stage of the case to limit the time to complete discovery and cover other matters pertinent to the administration of the case. The amendment to Rule 16(b) adds 'provisions for disclosure or discovery of electronically stored information' and 'any agreements the parties reach for asserting claims of privilege or protection as trial preparation materials after production' to the subjects the court may include in the scheduling order.
Safe harbor [Amended Rule 37(f)]
The amendment to Rule 37 is sometimes referred to as the 'safe harbor' rule. It provides that '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.'
Counsel and parties should be careful not to expect too much from amended Rule 37(f). It is directed very narrowly to information that has been lost due to the 'routine operation of an electronic information system,' and then only if the operation of the system was in good faith. Many obligations of a party may affect what constitutes good faith, including the general obligation to preserve information that is relevant to current or reasonably anticipated litigation and specific preservation obligations under common law, statutes, regulations and court orders. These obligations may well require a party to make reasonable efforts to stop an electronic information system from overwriting specific stored information. Whether a party has made a good faith effort is a case-specific inquiry.
The amendment to Rule 37 also applies only to sanctions 'under these rules.' Sanctions under other rules, statues and regulations, such as the SEC regulations regarding preservation of broker-customer communications, are not affected by the amendment.
Amended Rule 45 conforms the procedures for subpoenas to the other discovery rules, including adding the category of electronically stored information, providing for the form of production, protecting sources that are not reasonably accessible, and setting forth the procedures for claims of inadvertent production of privileged or trial-preparation material.
Taken as a whole, the amended discovery rules provide courts, counsel and parties with a great deal of flexibility as they take on the challenges presented by advances in computer technology.
Published September 1, 2006.