Author(s): M. Sean Fosmire

COMING: NEW FEDERAL RULES ON E-DISCOVERY

Executive Summary

Now that e-filing is up and running, the federal courts have moved on to e-discovery and have adopted detailed rules to describe the procedures and parameters of the discovery of electronically stored data. These rules are sched­uled to take effect on December 1, 2006, unless congress takes contrary action. This article provides a summary of the main points of the rules, with which all counsel who practice in the federal courts must be familiar.

The Committee on Rules of Practice and Procedure of the Judicial Conference of the United States (the “Standing Committee”) has accepted the recommendations of the Advisory Committee on the Federal Rules of Civil Procedure on the adoption of amendments to several rules intended to update their provisions pertaining to the retention of electronic docu­ments and to the discovery of docu­ments produced, stored, and main­tained in electronic format. These amendments were approved by the Supreme Court in April 2006, have been transmitted to Congress, and will take effect on December 1, 2006, absent contrary action by Congress.

The affected rules are:
Rule 16 — Initial conferences
Rule 26 — General provisions for discovery
Rule 33 — Interrogatories
Rule 34 — Document production
Rule 37 — Sanctions regarding dis­covery
Rule 45 — Subpoenas

In addition, the Advisory Committee on Evidence Rules is pro­posing a related amendment to Rule 502 of the Federal Rules of Evidence, to address the issue of waiver of attor­ney-client privilege after selective or inadvertent disclosure of privileged information. Since the Federal Rules of Evidence are statutorily-enacted, this amendment will require affirma­tive action by Congress. See 28 USC 2074(b).

Initial conferences and general provisions (Changes to Rules 16 and 26)
The former phrase “data compila­tions” used in Rule 26(a), included in the list of items as to which discovery or disclosure must be allowed, will be changed to the broader phrase “electronically stored information.” That phrase, which can be abbreviat­ed as ESI, is used in all of the amend­ments to the affected rules.

The amendment adds a new sub­section 5 under Rule 16(b) to include “provisions for disclosure or discov­ery of electronically stored informa­tion” as one of the matters to be addressed in the Court’s order.

Rule 26(f), governing mandatory conferences between counsel and dis­closure without discovery requests, adds a reference to require that coun­sel “discuss any issues relating to preserving discoverable informa­tion” as well as any issues relating to disclosure or discovery of ESI, including (importantly) the form in which ESI shall be produced. (See the discussion of rule 34 below for more information on this issue.) It also requires that the parties address any claims of privilege or work product protection.

The amendment recognizes in gen­eral that there cannot be a single solu­tion that can be imposed uniformly in every case and as to every party. It thus directs that the parties discuss the issues of production and transla­tion at the time of their Rule 26(f) conference, and anticipates that the court will resolve any early-recog­nized issues or disagreements at the Rule 16 Conference.

The Committee Notes recognize that the court must try to strike a bal­ance between the need to provide discovery and the need of a party to “continue routine operations critical to ongoing activities.” Thus the issue of the preservation of ESI as it exists (or as it existed at a particular point in time) is another issue that needs to be addressed by the parties under Rule 26(f) and by the court during the Rule 16 Conference. In this context, though, the Committee Notes caution:

    The requirement that the par­ties discuss preservation does not imply that courts should routinely enter preservation orders. A preservation order entered over objections should be narrowly tailored. Ex parte preservation orders should issue only in exceptional cir­cumstances.

The Committee Notes do not men­tion the question of discoverability of secondary and redundant means of storage of ESI, but that is again an issue that should be addressed at both conferences. Unlike paper docu­ments, ESI is routinely copied and duplicated for security and backup purposes, often numerous times, and disputes regarding the extent to which a party should be able to obtain discovery of such archives have arisen in a number of cases. There are in fact at least ten different types of “secondary” data, beyond the primary electronic data itself. The amendment does not purport to address issues relating to where dis­coverable ESI may come from; that is an issue that the courts will have to resolve on a case by case basis.

Interrogatories and document requests (Changes to Rules 33 and 34)
Rule 33(d) (interrogatories) is pro­posed to be amended to allow a party to designate ESI as a source of infor­mation as an alternative to answering interrogatories, in the same fashion as the designation of business records for this purpose.

Under the proposed amendment to Rule 34 (document requests), the scope of production is widely defined to include anything “stored in any medium from which information may be obtained.” The previous pro­visions requiring that the information may be required to be “translated, if necessary, by the respondent into rea­sonably useful form” are preserved.

There is a significant new provi­sion relating to the form that ESI may take. The requesting party may now specify the form of production in his request. The amendment to Rule 34(b) would provide that:

    The request may specify the form or forms in which elec­tronically stored information is to be produced.

The responding party may file an objection to the specified form of pro­duction, and the amendment would require the responding party who objects to state the form or forms it intends to use. It also requires the respondent to designate a form in which the ESI will be produced if the requesting party did not specify a form of production.

The form of production can be a crucial issue. ESI may be kept on a party’s computers or server banks in any number of different formats, on different operating systems and plat­forms, and using different software products. The courts and the parties have to consider not only Windows and MacOS as commonly-used oper­ating systems; many large corpora­tions operate mainframe computers manufactured by Sun Microsystems, running Sun’s Sparc operating sys­tem, or by IBM, which might run any of the numerous flavors of Unix as well as Windows. Many network or internet servers are based on Unix or Linux operating systems.
The questions which might arise when such ESI is at issue include:

• Should a party be required to produce ESI in its original format?
• Should a party be permitted to produce ESI in its original format?
• Should a party be required to produce ESI in a converted electronic format?
• Should a party be required to produce ESI as printed pages?
• Should a party be permitted to produce ESI as printed pages?

Each of the various options has benefits, and each has disadvantages. Responding to a discovery request by printing documents to paper provides a well-recognized product, readable by everyone, but of course this approach sacrifices many of the advantages of using electronic infor­mation. Text on paper cannot be searched and cannot be copied and pasted to other documents. Producing e-documents in their original format maintains the fidelity and usefulness of the data, if the recipient also has the system and the software which can make sense of them, but if it does not, it is no better than electronic gibberish.

In many cases, conversion of the data to a “common denominator” for­mat which can bridge the gap between the producer and recipient is the best solution. Information contained in databases or spreadsheets can often be exported to a comma-delimited or tab-delimited text file, as one example. Printing some forms of data to Adobe Acrobat, as another example, main­tains the usefulness of the machine-readable text and at the same time pro-duces a cross-platform product which can be read on any computer running any operating system. (It will not reli­ably include all “metadata” contained in the original, though, and that meta­data may in some fairly unusual cases be relevant and discoverable.)

There is a logistical issue as well. Although neither the amendment nor the Notes mentions this fact, the pro­visions relating to the “form” in which ESI is produced should include con­sideration of the physical storage media on which the ESI is temporarily stored for transmission and distribu­tion. There are various types of portable media that can be used for these purposes, beyond the familiar CDs and DVDs, but not all will be interchangeable with all systems.

The default method of response (if the parties do not agree, if the court does not enter an order, or if the requesting party does not specify) is that the responding party must pro­duce ESI in a form in which it is ordi­narily maintained, or in a form that is “reasonably useable.”

Lastly, it specifies that a party need not produce the same ESI in more than one form. It is important to note that this restriction relates to the end prod­uct only; the amendment does not restrict the sources from which ESI may be requested, and it does not pro­hibit requesting ESI from several sim­ilar sources. As an example, if a back­up system includes multiple sequen­tial versions of the same document, with changes over time, or if it shows that there were no such changes over time, there is nothing in the amend­ment that restricts the right to secure this information, if it is relevant to the issues involved in the case.

The Committee Notes again observe that sound policy militates against attempting to be too inclusive in defining what comes under the broad definition of ESI. They comment:

The wide variety of computer systems currently in use, and the rapidity of technological change, counsel against a lim­iting or precise definition of electronically stored informa­tion. Rule 34(a)(l) is expansive and includes any type of infor­mation that is stored electroni­cally. A common example often sought in discovery is electronic communications, such as e-mail. The rule cov­ers—either as documents or as electronically stored informa­tion — information “stored in any medium,” to encompass future developments in com­puter technology. Rule 34(a)(l)

    The default method of response (if the parties do not agree, if the court does not enter an order, or if the requesting party does not specify) is that the responding party must produce ESI in a form in which it is ordinarily maintained, or in a form that is “reasonably useable.”

is intended to be broad enough to cover all current types of computer-based information, and flexible enough to encompass future changes and developments.

They also observe that the require­ment that information be “translated . . . into reasonably useful form” relates solely to machine “transla­tion,” and does not include a require­ment that foreign languages be trans­lated into English.

The Rule 34(a) requirement that, if necessary, a party producing elec­tronically stored information trans­late it into reasonably usable form does not address the issue of translat­ing from one human language to another. See In re Puerto Rico Elect. Power Auth., 687 F.2d 501, 504-510(1st Cir. 1989).

Sanctions for non-compliance (Changes to Rule 37)
This rule, which governs sanctions for failure to provide discovery, would be amended to add one very important limitation on the power of the court to sanction a party or its attorney for spoliation of evidence as a result of routine computer mainte­nance. The proposed new subrule 37(f) would specify:

    (f) Electronically stored infor­mation. Absent 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.

The Committee Notes observe:

    [This amendment] focuses on a distinctive feature of com­puter operations, the routine alteration and deletion of information that attends ordi­nary use. Many steps essential to computer operation may alter or destroy information, for reasons that have nothing to do with how that informa­tion might relate to litigation. As a result, the ordinary oper­ation of computer systems cre­ates a risk that a party may lose potentially discoverable information without culpable conduct on its part.

There would be a restriction on the scope of this subsection, however.

    Rule 37(f) applies to informa­tion lost due to the routine operation of an information system only if the operation was in good faith. Good faith in the routine operation of an information system may involve a party’s intervention to modify or suspend certain features of that routine opera­tion to prevent the loss of information, if that informa­tion is subject to a preservation obligation. A preservation obligation may arise from many sources, including com­mon law, statutes, regulations, or a court order in the case. The good faith requirement of Rule 37(f) means that a party is not permitted to exploit the routine operation of an infor­mation system to thwart dis­covery obligations by allowing that operation to continue in order to destroy specific stored information that it is required to preserve. When a party is under a duty to preserve infor­mation because of pending or reasonably anticipated litiga­tion, intervention in the rou­tine operation of an informa­tion system is one aspect of what is often called a ‘litiga­tion hold.’ Among the factors that bear on a party’s good faith in the routine operation of an information system are the steps the party took to comply with a court order in the case or party agreement requiring preservation of spe­cific electronically stored information. . . Whether good faith would call for steps to prevent the loss of information on sources that the party believes are not reasonably accessible under Rule 26(b)(2) depends on the circumstances of each case. One factor is whether the party reasonably believes that the information on such sources is likely to be discoverable and not available from reasonably accessible sources.

Thus, an attorney representing a party which maintains ESI may not use the amended rule to disregard the obligation that would otherwise apply, under the Federal Rules and under the case law which has been developed to interpret and apply them to ESI, to ensure that reasonable steps are taken, particularly after a lawsuit is filed, to maintain the integrity of ESI.

Subpoenas (Rule 45)
The amendment of this rule adds ESI as a class of documents that can be obtained, and specifies “copying, testing, or sampling” in addition to “inspection” as an activity that the party receiving the subpoena (the respondent) must allow. Like Rule 34, it allows the issuing attorney to spec­ify the form in which ESI is to be pro­duced. Subrule 45(C)(2)(A)(b) simi­larly allows the respondent to object to the specified form of production, and for the issuance of an order to resolve the dispute if needed.

Privilege (FRE 502)
We will not attempt a detailed dis­cussion of the proposed amendments governing the release of privileged information. The problems become acute when electronic information is disclosed because the volume of doc­umentation and information is often significantly higher than in the past.

The proposed amendments would modify Rule 502 to provide that

    1. An inadvertent disclosure of privileged material is not deemed a waiver of privilege if the disclosing party took reasonable precautions to safe­guard the confidentiality of the information and if he or she took reasonably prompt action to rectify the error.
    2. A limited disclosure to a gov­ernmental agency is not a waiver as to later use of the information in litigation.
    3. These default provisions may be modified by agreement between the parties or by order of the court.

The Committee notes observe that the circuit courts have issued conflict­ing rulings on these issues, and that the amendment would provide need­ed uniformity and predictability to attorneys and to litigants.

Summary
With the possible exceptions of the “form of production” provisions under Rule 34 and the good faith spo­liation defense added under Rule 37, these changes are evolutionary rather than revolutionary. They reflect the growing need for courts and litigants to deal with the fact that businesses now rely heavily on electronic means of communication and storage of information, and they reflect the real­ity that outsiders sometimes will have to be given access to that infor­mation to the same extent that they may be given access to other records maintained in the course of opera­tions. The amendment and the accompanying notes do recognize a need to reconcile the inherent con­flicts and to balance the need for dis­covery in litigation against the need of a business to keep its operations going forward without undue dis­ruption. The good faith exception under Rule 37 should provide some needed relief from overly enthusias­tic spoliation accusations.

Although the amendments them­selves do not specifically so state, sound practice and the case law men­tioned in recent issues of this publica­tion suggest that it is incumbent upon every attorney to confer with the client as early as possible in order to explore these issues and to formulate a plan of action in advance, so that both attor­ney and the client will be prepared to respond when the discovery requests begin coming in. It may be helpful to take guidance from local rule 26.1 of the Middle District of Pennsylvania, adopted in December 2005, which requires that lawyers:

  • inquire into the computerized information-management sys­tems used by their clients so that they are knowledgeable about the operation of those
  • inform their clients of the need to preserve information stored in computerized information management systems so that information relevant to the claims or defenses in the case is not in any way destroyed.

For those who are interested, the collection of these proposals, the ver­sions as considered by the Committee, and the full text of all Committee notes can be found online at http://www.uscourts.gov/rules/ Reports/ST09-2005.pdf. The report of the Advisory Committee on the pro­posed amendment to FRE 502 dated May 15, 2006 can be found at http://www.uscourts.gov/rules/Re ports/EV05-2006.pdf.

General information about the rules and the rulemaking process can be found at http://www.uscourts. gov/rules/.
Sean Fosmire is a partner in the Marquette office of Garan Lucow Miller, P.C. and a regular contributor to the Quarterly. His email address is sfos­mire@garanlucow.com.