February 28, 2006

When Congress amended the Federal Rules of Civil Procedure in 1970 to add ”data compilations” to the definition of ”documents” in Rule 34(a), no one could have foreseen the explosion of electronic information in the years that followed. While it is clear that electronic documents are discoverable in civil litigation, courts and litigants have struggled with applying the existing rules of discovery to new sources of electronic information, such as e-mail servers, computer disks, backup tapes, ”deleted“ files and handheld devices. Worse still, there have been a number of highly publicized cases in which missteps in the process of producing electronic information have led to a range of sanctions, including the “death penalty” in this area — an “adverse inference” instruction in which the judge directs the jury that it may infer that the destroyed documents were harmful to the party responsible for their disappearance.

In response to the challenges of e-discovery, amendments to the Federal Rules of Civil Procedure on these issues have been formally proposed, and are scheduled to go into effect in December 2006 if they are not modified by Congress or the U.S. Supreme Court before then. Because these proposed rules could soon change the landscape in an area that can involve both substantial expense and significant risk, it is worth becoming familiar with them before they come into effect.

The proposed amendments address the following issues: (1) early attention to e-discovery issues in litigation; (2) discovery of information that is not “reasonably accessible”; (3) assertions of privilege after electronically stored information has been produced; (4) protection from sanctions for the good faith destruction of electronically stored information through the routine operation of a computer system; and (5) application of existing provisions of the Federal Rules to “electronically stored information.” The amendments would create a new category of materials, referred to as “electronically stored information,” which is no longer encompassed within the definition of “document” provided in Rule 34(a). This is consistent with the principle – formally recognized for the first time in these proposed rules – that e-discovery involves considerations that are different from those that applied in a paper-only document world.

“Early Attention”

Proposed changes to Rules 16 and 26(f) would encourage both the court and the parties to plan for electronic discovery at an early stage in the litigation. Rule 16 would invite judges to address the discovery of electronically stored information in the scheduling order, and allow courts to adopt agreements between the parties concerning electronic discovery procedures. Similarly, Rule 26(f) would suggest that the conference held under this rule should include a discussion of electronic discovery issues, including the preservation and inadvertent production of electronically stored information.

“Reasonably Accessible”

e-Documents Proposed revisions to Rule 26(b)(2) would address the issue of e-discovery from sources that are “not reasonably accessible.” However, “reasonably accessible” is not precisely defined in the proposed rule — whether electronic information fits within this category is to be evaluated by considering the burden or cost imposed by searching and producing it. The rule would allow the party responding to a document request to identify sources of information that have not been searched or produced on the basis that they are “not reasonably accessible.” In order to obtain electronic information that has been designated as “not reasonably accessible,” the requesting party would have to file a motion. The responding party would then bear the initial burden of demonstrating that sources of information identified as such are, in fact, not reasonably accessible. If this burden is met, the requesting party would then be required to show “good cause” in order to obtain the information in question.

A Committee Note by the Committee on Rules of Practice and Procedure states that these amendments do not alter any statutory or common law obligations to preserve information. Additionally, the Judicial Conference has cautioned that parties attempting to render information inaccessible in order to avoid producing it in litigation will be subject to sanctions.

Privilege Issues

The proposed changes to Rule 26(b)(5) would provide a mechanism to assert a claim of privilege or work product protection as to electronic information after it has been produced. The Judicial Conference has noted that the sheer volume of electronic information compounds the problem of inadvertent production of privileged documents, because it is far more difficult to review electronic information for the purpose of identifying and removing privileged materials.

Under the proposed amendment, if a party discovers that it has inadvertently produced information that it wishes to claim is privileged or protected by the work product doctrine, the party must notify the receiving party and state the basis for the claim of privilege. After such notification, the receiving party must return, sequester or destroy the identified information. If the receiving party already has disclosed the identified information to third parties, the receiving party would be required to make reasonable efforts to recover the information. The receiving party could submit the identified information to the court to determine if it is privileged or protected as the producing party claims and, if so, whether any privilege was waived. While this amendment would provide a procedure for asserting postproduction claims of privilege and work production protection, it would not alter the substantive law of waiver. Thus, a court could determine that the circumstances surrounding the production of electronically stored information amounted to a waiver, notwithstanding the proposed amendment.

Sanctions Safe Harbor

The proposed amendment to Rule 37(f) would provide limited protection from sanctions for the good faith destruction of electronically stored information through the routine operation of a computer system. This safe harbor was proposed to address problems raised by the dynamic nature of electronically stored information. The Judicial Conference recognized that electronic information systems frequently alter, destroy and overwrite information as part of their regular use, without any affirmative act.

For the safe harbor to apply, the destruction would need to have occurred through the routine operation of a computer system, such as recycling back-up tapes or the regular purging of emails in the ordinary course. Additionally, the destruction of information must have been in good faith. Depending on the circumstances, good faith may require a party to modify or suspend the routine destruction of certain electronic information. Moreover, this new safe harbor would not apply in “exceptional circumstances,” meaning that the court could impose sanctions for the good faith destruction of electronic information through the routine operation of a computer system in particularly egregious cases, such as where the destroyed information is particularly vital to the case.

Minor Adjustments

The proposed amendments also would implement minor modifications of existing rules to clarify their application to electronically stored information. Rule 26(a) would clarify that there is a duty to include electronically stored information in initial disclosures. Rule 33 would allow a party answering an interrogatory to provide access to electronically stored information if the burden on both parties to find the information is equal. Rule 34 would allow the requesting party to specify the form of production of electronically stored information and provide a mechanism for the producing party to object – unless there is a court order, agreement or specific request to the contrary, electronically stored information would be produced in the form in which it is ordinarily maintained or in a reasonably usable form.

These proposed rule changes would not eliminate the expense, uncertainty and anxiety caused by the obligation to produce electronic information in litigation. If implemented, however, they will give the court and the parties a basic framework in which to address these issues in a sensible way for each case.

This article is reprinted with permission from an article written by Henry J. Ricardo and Emilie B. Cooper appearing in the August 22, 2005 issue of New York Law Journal. 2005 ALM Inc further duplication without permission is prohibited. All rights reserved.