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SPECIAL ALERT
CONSUMER FINANCE HEADLINES & DEADLINES FOR OUR CLIENTS AND FRIENDS
New Electronic Discovery Amendments
Effective December 1, 2006
New electronic discovery amendments (e-discovery Amendments) to the Federal Rules of Civil Procedure (FRCP) go in effect today, representing the most significant change in federal civil litigation discovery since at least 1970. The e-discovery Amendments apply to all proceedings commenced after today, in addition to all pending cases to the extent it is “just and practicable.”
The e-discovery Amendments, which were approved without comment or dissent by the United States Supreme Court on April 12, 2006, include revisions and additions to Rules 16, 26, 33, 34, 36, and 45, as well as Form 35. The changes concern the discovery of “electronically stored information” (“ESI”), the term which the FRCP has adopted to refer to any information stored on computer hard drives, databases, email servers, voicemail systems, Blackberries, PDAs, or any other electronic medium. ESI also includes “metadata” – a term which the Advisory Committee Notes refer to as “automatically created identifying information about the history or management of an electronic file” and “information describing the history, tracking or management of an electronic file…usually not apparent to the reader viewing a hard copy or a screen image.”
Summary of Major Changes
- Production of “Electronically Stored information”: Rule 26, which contains general provisions governing discovery and the duty of disclosure, is amended to use “electronically stored information” (ESI) instead of “data compilations” as a category of required initial disclosures in discovery. Rule 26(a)(1)(B). A party may be excused from providing ESI that is “not reasonably accessible because of undue burden or cost,” but the burden is on the producing party to show this undue burden or cost before being excused by the court. Rule 26(b)(2)(B). Though the producing party initially only needs to identify the information sources and the associated burden, a motion to compel would require the party to explain in detail why the sources are not “reasonably accessible.”
Rule 26(f) has been amended to require parties to discuss any issues relating to "disclosure or discovery of electronically stored information," and "claims of privilege or of protection as trial-preparation material." Form 35 (Report of Parties’ Planning Meeting) is amended to reflect the 26(f) changes.
- “Claw Back” Provision for Inadvertent Production of Privileged Material: Subsection 26(b)(5)(B) was added to address the issue of privilege when material is inadvertently produced, an increased concern with e-discovery. It allows a party to “claw back” privileged or attorney work-product information that was inadvertently produced. The party that produced the information must notify the opposing party of the inadvertent production and state the basis for asserting privilege. The opposing party may either return, sequester, or destroy the material, or ask the court to rule on the asserted privilege claim and whether the privilege has been waived by the production.
- Acceptable Data Formats: Rule 34(b) is amended to allow a requesting party to specify the format in which ESI is to be produced (the producing party may object to the requested format.) Therefore, organizations that store ESI in native or customized formats (on their database servers, email servers, etc.) may be required to translate their ESI into a format that can be used by the requesting party. This amendment therefore mandates that companies establish processes whereby they can readily produce any discoverable ESI in universally-usable formats.
- Safe Harbor for Routine Destruction of Data: Rule 37 is amended to include a safe harbor provision limiting sanctions for certain data losses. The new rules recognize that destruction of ESI is important to continuing efficient business processes. Rule 37(f) now states that “[a]bsent 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.” However, the Advisory Committee Note explains that “good faith” may require a party to intervene to suspend such routine destruction to prevent loss of information subject to preservation obligations. The Note also explains that Rule 26(b)(2) and Rule 37(f) are not related, thereby clarifying that a party cannot routinely destroy information that it believes is not reasonably accessible.
- Early Meet-and-Confer on E-Discovery Plan: Rule 16 is amended to provide that the scheduling order may address discovery of electronically stored information and any agreements for asserting privilege or protection of attorney work-product. This rule change requires parties to be prepared at the time of pretrial conferences to explain their electronic information management systems to the court and to the opposing parties.
Discovery Preparedness - Managing Electronically Stored Information
The e-discovery Amendments have the operational effect of requiring large companies to develop consistent processes for information management to address discovery of ESI. Of particular operational concern for information management purposes are the following elements of the e-discovery Amendments:
- Pre-discovery conferences now require organizations, within weeks of service of a complaint, to have thorough awareness of their information management systems in order to negotiate electronic discovery issues and report to opposing counsel and the court on their data’s availability, format, and costs of production.
- The safe harbor rule for routine electronic data deletion now renders the “save everything” philosophy obsolete from a litigation readiness perspective; coupled with general e-discovery production requirements, there is a clear necessity for companies to maintain comprehensive and up-to-date information management programs for business efficiency and litigation readiness purposes.
- Preservation duties for ESI create a de facto requirement for companies to establish internal processes to issue enterprise-wide “litigation holds” that would prevent destruction of data that may be subject to preservation duties.
- Information security, storage and format concerns mandate that companies address the native file production requirements, the complexity of dealing with metadata, and issues concerning privilege and inadvertent production of electronic data.
- The threat of opponent access to computer systems for inspection and copying exists where Courts are not convinced that a party’s ESI production process allows it to be able to timely and reasonably comply with its ESI production obligations. One federal case has already acknowledged this right before the amendments are even effective – in Diepenhorst v. City of Battle Creek, 2006 U.S. Dist. LEXIS 48551 (W.D. Mich. June 30, 2006) the Court stated that “[i]n the absence of a showing that plaintiff has destroyed evidence or has otherwise failed in her discovery obligations, the court is unwilling to…order examination of the computers maintained by either party,” thereby implying that a failure to meet “discovery obligations” could have resulted in a court order to allow the opponent’s expert to have direct access to their internal computer system.
The e-discovery Amendments thus mandate an early and complete understanding of one’s data on an enterprise-wide basis. Companies need to ensure that there is harmonious interaction between legal, IT, and business departments to establish electronic data management programs that address this changing landscape of electronic discovery.
For more information on the impact of the new e-discovery Amendments and managing electronic data to prepare for potential civil litigation, please contact:
202.349.8090
202.349.8050
202.349.8024
202.349.8056
© Buckley Kolar, LLP 2006. INFOBYTES is not intended as legal advice to any person or firm. It is provided as a client service and information contained herein is drawn from various public sources, including other publications.
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