April 04, 2006

It’s everyone’s nightmare: you receive a lengthy document request that asks for what seems like every single piece of information your company has generated in the last 20 years. While half of the information is stored in warehouses scattered around the country, the other half is stored safely on your company’s servers, ready to be collected, reviewed, and produced in what you assume is a matter of keystrokes. You start to draft the response, carefully crafting your objections to the substance of the request. Buried at the end of the request is a short paragraph specifying that the documents are to be produced electronically in some specified format. The words sound vaguely familiar and you skim over it thinking that it is something your IT department can surely handle, and you’ll worry about that later. Eventually, the judge overrules your substantive objections. Because you didn’t address the specified form of production, she orders you to produce your information in the format specified in the request. You schedule a meeting with your IT manager who looks at you with horror and explains that your company’s information is stored in a proprietary, uncommon, and very complex database format. He’s not sure if you can even translate that information to the specified form, and, even if you can, your company will have to spend tens of thousands of dollars and probably won’t have the production ready for weeks. If you had specified earlier that you would only produce in PDF form, then the expense and burden probably could have been avoided.

After a development process spanning more than five years, the Judicial Conference’s Advisory Committee for the Federal Rules of Civil Procedure has approved proposed amendments to the Rules which will fundamentally alter how electronic discovery is conducted in federal courts. The proposed changes await expected Supreme Court and congressional approval, and likely will take effect on December 1, 2006. While several changes simply bring the Rules in line with actual practice in the “electronic age,” there are some new provisions – in particular amendments to Rules 26, 34, and 37 – which could greatly impact businesses of any size.

Proposed Amendments to Rule 26

Proposed changes to Rule 26 set limits that may help businesses facing requests for voluminous electronic discovery. First, a new provision at amended Rule 26(b)(2) will establish an explicit procedure by which a party may object to unduly burdensome or costly e-discovery. The objecting party initially will need to identify only the sources from which the information could be gathered with significant burden, but, upon a motion to compel, may have to explain in detail why the sources are not “reasonably accessible.”[fn1] This proposed amendment might reduce the amount of electronically stored information to be produced and allow businesses to avoid some particularly burdensome or costly e-discovery when appropriate.

Second, a new subsection at amended Rule 26(b)(5)(B) was crafted with e-discovery in mind, but is applicable to all forms of produced information. It specifically allows a party to “claw back” privileged or attorney work-product information that was inadvertently produced during discovery. Under the new subsection, the producer must notify the recipient of the inadvertently produced material and state the basis for any protection claim. The receiver then has two choices: (1) return, sequester, or destroy the protected material, or
(2) ask the court to rule on the protection claim and/or whether there has been a waiver of the protection. While this approach is similar to ethical standards in most states, it provides greater clarity and focus for enforcement by federal courts.

Proposed Amendment to Rule 34(b)

The proposed amendment to Rule 34(b) allows a requesting party to specify the form (or forms) in which electronically stored information is to be produced.[fn2] If the producing party objects to the requested form, the producer must so state in its response and identify the form it will use to produce the desired information. Furthermore, if no particular form is requested, the producing party still must identify the form it will use for production, and that form must be the “ordinarily maintained” form or one that is “reasonably usable.”[fn3] These changes to Rule 34(b) should prove helpful by spurring early resolution of debates over production forms for electronically stored information. This should avoid any excess time and cost of duplicate productions that is sometimes required when requesting parties object to production forms only after the actual production. This also requires producing parties to focus on the structure and capabilities of their IT resources early in the discovery process.

Proposed Amendment to Rule 37(f)

Finally, the new rules add a provision at Rule 37(f) which limits sanctions for certain losses of electronic data. The Advisory Committee has recognized that electronically stored information and traditional paper information differ because destruction of electronic data is sometimes vital to the continuing proper operation of a party’s business systems. As such, the new Rule 37(f) states, “Absent exceptional circumstances, a court may not impose sanctions under these rules on a party for failing to provide electronically stored information lost as the result of the routine, good-faith operation of an electronic information system.”[fn4] However, the Committee Note to follow the amended rule provides that “good faith may require that a party intervene to suspend certain features of the routine operation of an information system to prevent loss of information subject to preservation obligations.” Thus, ignorance of or indifference to the destruction of information known to have possible relevance to litigation probably will not be insulated from sanction. Also important, the Advisory Committee’s Notes emphasize that there is no link between Rule 37(f) and the new Rule 26(b)(2) discussed above. Thus, just because a party believes that a source of electronically stored information is not “reasonably accessible” under Rule 26(b)(2) does not necessarily mean that the party can allow routine deletion of that information without potentially incurring sanctions.

Footnotes

¹ The Advisory Committee provided examples of information for which it might be proper to invoke this procedure:

(1) back-up tapes intended for disaster recovery purposes that often are not indexed, organized, or susceptible to electronic searching;

(2) legacy data from obsolete systems that is unintelligible on current systems;

(3) “deleted” data that remains in fragmented form but would require forensic specialists for reconstruction; or

(4) databases designed to create information only in certain ways not easily amenable to production.

² The amended Rule specifically provides, however, that a party need not produce the same electronically stored information in more than one form.

³ The Committee Note following the Rule suggests that it would be improper to downgrade significantly the form of electronically stored information, even if the end result would be a form that is reasonably usable. A useable form often includes word search capability.

⁴ The Advisory Committee’s report provided specific examples of some routine practices that could come within the scope of the new Rule 37(f):

(1) Programs that recycle storage media kept for brief periods against the possibility of a disaster that broadly affects computer operations;

(2) Programs that change metadata to reflect the latest access to electronically stored info;

(3) Programs that automatically discard information that has not been accessed within a defined period; and

(4) Database programs that automatically manipulate information without the user being aware.