New amendments to the Federal Rules of Civil Procedure (FRCP), which came into effect on December 1, 2006, attempt to address the problems associated with the discovery of electronically stored information (ESI). Early this year Laurie Weiss, Partner, Fulbright and Jaworski LLP, hosted a Honeycomb web conference and presented some thoughts on maximising the results of the new legislation1
. Here we take a closer look at the legislation and elaborate on how it affects those parties involved in electronic evidence discovery.
Its been over thirty years since the last amendments to the federal rules that deal with ESI and in many ways the legal industry is still playing catch up with the fast paced technology industry. There are several characteristics of ESI that set it apart from traditional paper records and which the new rules recognise. These include, the exponentially greater volume of information stored electronically, its dynamic nature (easily changeable, easily deleted but at the same time very sticky in that deleted information can be recovered through forensics) and the meaningless of data separated from its application (primarily in the context of Excel spreadsheets which have non-visible data attached to them and databases of information). The new rules make steps towards addressing some of these issues, but are by no means a panacea for all the problems associated with ESI.
The key changes revolve around FRCP rule 26 which clarifies three main points. Firstly, the rule involves a requirement that parties discuss issues relating to e-discovery early in the litigation process (the meet and confer requirement), also the rule codifies the distinction between “reasonably accessible” and “non-reasonably accessible” stating that only the former needs to be produced, and finally the amendments also add a procedure for asserting privilege over materials that have been produced for inspection. Its these privilege issues that are causing many parties involved in litigation sleepless nights, mainly because the increased volume of data means reviewing privilege has become more expensive and more difficult.
The federal rules now provide a protocol for asserting privilege over documents that have been produced inadvertently. The process allows a party to assert a claim of privilege after information is produced in discovery. The receiving party must then return, sequester or destroy the information and may not use the documents until the claim is resolved. The receiving party must also go and seek the information if it has been distributed to third parties, like experts. In addition the receiving party may request a determination of the claimants privilege, after presenting the information to the court under seal. Preservation of the information is mandatory by both parties pending resolution of the claim. The process is not without its problems and many interesting issues arise about the consequences of inadvertently producing privileged information. For example disclosing privileged information without prior review could result in giving your adversary valuable information, in which case should the lawyer involved be disqualified from the representation.
For these, and other, reasons, parties are now instructed to discuss matters pertaining to electronic discovery, such as the preservation of discoverable information, the form in which discoverable ESI should be produced, claims of privilege and how to handle asserting claims of privilege after the materials have been produced. There are two methods or agreements that creative parties are entering into to try to protect privilege. Creative litigants have also created some agreements that help them seek recovery of inadvertently produced information. Where there are large volumes of information, under the quick-peek agreement the producing party provides unreviewed materials for initial examination without waving any privilege protection. The requesting party then designates documents it wishes to have actually produced and the responding party screens only the designated documents asserting privilege claims if they arise. Any disputes can then be resolved at that point. The clawback agreement means parties agree to return inadvertently produced privileged or protected information upon prompt demand by the producing party. If the parties agree on these issues, the court may include these agreements in the scheduling order. But there is a caveat: these agreements may not be enforceable against third parties, who may successfully argue waiver. A proposed rule of evidence would make clawback and quick-peek agreements binding on third parties if included in an order issued by the federal court. At this point the proposed rule, in the comments stage, requires affirmative congressional action to make it binding. It's probable that it will work its way through the system, and sometime in 2008 we may see enactment.
The amendments also create a new frontier for large data producers—and that is disclosing unsearched data. Under the new rules, parties are required to confer and strive to agree on whether sources identified as not reasonably accessible should be searched. In the paper world, defendants would never have thought of saying “we have a warehouse of information that may contain relevant information but were not going to disclose that.” But, under 26(b)(2)(B), as it has been enacted, a party must disclose the whereabouts of information that is not reasonably accessible, but it's not necessarily obliged to search it. Specifically, a party need not provide discovery of electronically stored information from sources that the party identifies as not reasonably accessible because of undue burden or cost. The party must, however, identify the sources containing potentially responsive information, which it is not searching. In a 2003 decision discussing the burdens of producing ESI Judge Scheindlin stated that “information deemed 'accessible' is stored in a readily usable format” (Zubulake v. UBS Warburg LLC, 217 F.R.D. 309, 320 (S.D.N.Y. 2003). Examples of inaccessible data sources include: back-up tapes intended for disaster recovery, legacy data that remains from obsolete systems and is unintelligible on the successor systems and deleted or fragmented data. A party from whom such ESI is being sought has to be able to show that the information is not reasonably accessible because of undue burden. A court may nonetheless order discovery from such sources.
The concepts of “accessible data” and “undue burden” raise their own problems. For example, a company operating an email archiving system that pushes data off to backup tapes but, because workers need access to things stored on those tapes, commonly accesses them anyway may be compromising the inaccessibility of that data. In this instance by taking backup tapes intended for disaster recovery and using them as an office archive system the company opens itself to attack by a requesting party who would have a good argument to say that the inaccessible data source has been made accessible.
Similarly, with new and emerging technology the cost argument is under challenge as courts become more savvy of the technology available that can make data recovery easier. The issue of inaccessible data sources is evolving and producing parties have the task of educating the court about what the overall burdens and costs will be if forced to go to that source of data simply because the technology is available to do it. Just searching the data is only the beginning of the cost components around the electronic discovery lifecycle. Gone are the days when lawyers can stand up and make general arguments to a judge about the evidentiary burden. Today the judge often asks for a technical person to make that argument.
All this marks the end of the “don't ask, don't tell” approach to ESI. Positively, the amendments have made it necessary to discuss discovery obligations concerning ESI early on in the litigation process, but in reality this is what the Sedona Principals have advocated for years. If nothing else the FRCP amendments are a reminder for parties who may be involved in litigation to keep an eye on the evolving law so as to be informed on their obligations concerning electronic discovery.