Lawyers Journal

Federal discovery rules are wired for litigation beginning Dec. 1

Absent a last minute block by Congress, amendments to the Federal Rules of Civil Procedure regarding discovery of electronically stored information will take effect on Dec. 1, thereby bringing the federal rules into line with the realities of business and litigation in an era of rapid communications technology advancement.

"The drafters of the federal rules didn't contemplate the complexity of electronic storage data systems, and a lot of electronic data which contains information technically is not a 'document' and therefore could possibly escape discovery under our traditional discovery rules," said Edward C. Bassett Jr., chair of the Personal Injury Practice Group at Mirick, O'Connell, DeMallie & Lougee LLP, Worcester.

Under the traditional rules, the closest approximation to "electronic discovery" was a "data compilation" as defined under old rules, according to attorney Douglas M. Bean, president and CEO of CaseData Corp., a full-service litigation support provider. "That was clearly not adequate to address the host of different kinds of electronic data facing litigators these days," said Bean.

With these amendments to the Federal Rules, "We have a better understanding of what 'electronically stored information' is... now we have rules, better structure and better predictability. Those are huge," he explained.

Several changes reflect the principle that many electronic discovery disputes can be prevented, managed or resolved through early and direct communication between the parties and their technology experts.

Amended Rule 16 addresses pretrial conferences and scheduling management
Under Amended Rule 16, the scheduling order entered under this rule may now include provisions for disclosure or discovery of electronically stored information and may include any agreements between the parties for asserting claims of privilege or protection as trial-preparation material after production.

Amended Rule 26 contains a duty of disclosure and avoids inadvertent waivers of privilege and burdensome production
Under Rule 26(a)(1)(B), a party must, without awaiting a discovery request, provide to other parties a copy of, or description by category and location of, electronically stored information.

Under Rule 26(f)(3) & (4), when the parties confer pursuant to this rule, they are required to discuss any issues relating to preserving discoverable information and any issues related to disclosure or discovery of electronically stored information. This would include the form in which electronically stored information should be produced, and any issues relating to claims of privilege or protection as trial-preparation material. If the parties agree on a procedure to assert such claims after production, the parties should discuss whether to ask the court to include this agreement in an order.

Bean believes the early meet and confer rules are the most important of the rule changes. "From a practical standpoint, from a pure efficiency standpoint, the requirement that parties meet and confer early in discovery process to hopefully iron out issues will be important to efficient litigation and hopefully cost efficient for client," he said.

But Bean pointed out that some may consider these disclosure provisions more plaintiff-friendly. "The rules require the parties to meet and confer about electronic discovery at the beginning of the discovery process. The requirement to meet and confer imposes a requirement to disclose how they store electronic information to the other side so the other side can make intelligent decisions about what to request and in what form. Generally speaking, large corporate defendants don't want to disclose a map to their internal IT system," said Bean.

Electronically stored information can be difficult to retrieve and may have been discarded as part of routine system operation. Under amended Rule 26(b)(2)(B), a party need not produce electronically stored information "from sources that the party identifies as not reasonably accessible because of undue burden or cost." On both a motion to compel discovery or for a protective order, the burden would be on the responding party to show that the information is not reasonably accessible because of undue burden or cost. Even if that showing is made, the court may nonetheless order discovery from that party if the requesting party shows good cause. The court may also specify conditions for the discovery.

Rule 26(b)(5)(B) will be amended to provide that if information is produced in discovery that is subject to a claim of privilege or 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 would be required to promptly return, sequester or destroy the specified information and any copies it has and would not be able to use or disclose the information until the claim is resolved. A receiving party could promptly present the information to the court under seal for a determination of the claim. If the receiving party disclosed the information before being notified, it would be required to take reasonable steps to retrieve it. The producing party would be required to preserve the information until the claim is resolved.

Amended Rule 33 provides an option to produce business records in response to interrogatories
This rule would be amended to provide that where the answer to an interrogatory may be derived from electronically stored information, and the burden of deriving the answer is substantially the same for the responding party and the requesting party, it is a sufficient answer to the interrogatory to specify the records from which the answer may be derived or ascertained. The responding party would be required to allow the requesting party reasonable the opportunity to examine, audit or inspect such records and make copies, compilations, abstracts or summaries.

Amended Rule 34 addresses the form for producing stored information
Rule 34(b) provides that the requesting party "may specify the form or forms in which electronically stored information is to be produced." The producing party can object to the requested form and must state the form it intends to use. Where a request does not specify a particular form, it must be produced in a form in which it is ordinarily maintained or that is reasonably usable.

Amended Rule 35 changes planning reports
The planning meeting form will be amended to require inclusion of a brief description of the parties' proposals on handling the disclosure or discovery of electronically stored information. It will also require inclusion of a brief description of any provisions of a proposed order reflecting the agreement of the parties regarding claims of privilege or protection as trial-preparation material asserted after production

Amended Rule 37(f) protects information lost during routine, good-faith operations
The new rules also include a safe-harbor component, which provides that, absent "exceptional circumstances," a court may not impose sanctions when a party has failed to produce electronic information that was lost as a result of the routine, good-faith operation of an electronic information system.

Bassett thinks this rule change will raise the most issues when put into practice.

"Although the rule talks about not sanctioning businesses, if a document is destroyed, the rules committees said it has to be 'good faith' deletion. If I know litigation is about to occur, I have an obligation to change the routine practice if know the routine process will destroy key evidence. Someone might say, 'Great, I've got nothing to worry about, just keep destroying data every couple of weeks.' But if litigation is threatened, I need to take affirmative steps to protect the documents. This obviously leaves room for interpretation as to whether a company is acting in good faith."

Amended Rule 45 contains a "clawback" provision
Similar to Rule 26(b)(5)(B), if information is produced in response to a subpoena that is subject to a claim of privilege or 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 would be required to promptly return, sequester or destroy the specified information and any copies it has and may not use or disclose this information until the claim is resolved.

In regard to the provisions for returning inadvertent discovery materials, Bean commented, "It's hard to unring the bell."

Practitioners should be aware that as these are federal rules of civil procedure, they aren't necessarily enforceable in state court.

"If you waive the attorney-client privilege but argue the materials are subject to the clawback provisions of the federal rules, state courts don't have to honor that," said Bean. "Some state case law contravenes that. So there is a potential conflict between the clawback provisions and statell these changes affect discovery practice?

As a result of these amendments, attorneys should be aware that they have a requirement to discuss and plan electronic discovery issues much earlier in the litigation process.

While attorneys won't need a degree in information technology, they will have to broaden their skill set. Bean said, "If you're an attorney and are going to sign discovery affidavits, my opinion is you have to understand what you're signing, just like any other requirement for a lawyer."

Both Bean and Bassett believe attorneys now have an obligation to have a better understanding of electronic discovery in general, as well as a firm grip on their clients' methods of storing information.

"The last thing you want to have happen is to be in litigation, be asked for a document and have a client say they deleted that last week, then have the client turn to you and say 'Why didn't you tell me I need to save that?'" said Bassett.

Bassett predicts that lawyers will have to work more closely with the IT staff for corporate clients so the IT staff understands what the company's responsibility is for retaining or deleting information.

Bean cautions that attorneys should be familiar with implications of the different kinds of electronic files. "It is common in Microsoft Word documents to retain different iterations of documents. Those can become visible to opposing counsel if you are not aware of them. Spreadsheets often contain hidden formulas, proprietary or attorney-client information. You need to understand the ins and outs of these different file formats to represent your client properly," said Bean.

Lastly, Bean pointed out that lawyers seeking new corporate clients need to demonstrate skill with electronic discovery. "It will be required," said Bean. "If you're trying to impress a new corporate client, you need to demonstrate you know what you're doing when it comes to electronic discovery."

The new electronic discovery rules will apply to all cases filed after Dec. 1, 2006, and to all cases then pending to the extent practicable.

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