What Every Lawyer and Judge Should Know About E-Discovery

WDC Journal Edition: Spring 2007
By: Roger Flores, Esq. - American Family Mutual Insurance Co.

Since 1993 a new body of law has been evolving in Federal Courts on the subject of electronic discovery. There are currently nine Federal Court decisions that address issues involving electronic discovery.[i] All lawyers and judges should become familiar with these cases as a back drop for dealing with electronic discovery issues. Although this article does not discuss the nine cases in detail, they generally address electronic discovery issues regarding the preservation of electronic data; the form of production of electronic data; failure to produce electronic data; costs associated with the production of electronic data; inspection of parties’ computer systems; and when to shift the cost associated with electronic discovery from one party to another.

On December 1, 2006 the new amendments to the Federal Rules of Civil Procedure on electronic discovery went into effect. Although state courts have yet to affect similar rules of civil procedure, they too are dealing with electronic discovery issues. To guide state courts through the burgeoning maze of electronic discovery, the Conference of Chief Justices recently published guidelines for State Trial Courts Regarding Discovery of Electronically-Stored Information.[ii] This article will discuss the recently published guidelines.

Most documents in today’s business environment are produced in electronic form. The term electronic document refers to information created, stored, or utilized with computer technology. There are several differences between electronic documents and paper documents. Some important differences include the volume, number of locations, and data volatility. Electronic documents also differ from paper documents in that they contain non-traditional types of data that are unique to electronic documents. This data includes metadata, system data and deleted data. Electronic documents also differ from paper documents in relation to the cost of production of these documents. These costs are usually related to the restoration of backup tapes for the production of documents versus handing over copies of paper documents stored in filing cabinets.

The guidelines published by the Conference of Chief Justices are meant to serve as a reference for state trial court judges confronted by disputes over electronic discovery. The guidelines are intended to help bring clarity to the issues related to electronic discovery and also help to determine the decision-making factors to be applied in resolving disputes. Again, the guidelines are intended to help in identifying the issues and determining the decision-making factors to be applied in the circumstances presented in a specific case.

The guidelines are broken out into ten separate sections which include: definitions; responsibility of counsel to be informed of all clients electronically–stored information; agreements by counsel and pre-trial conference orders; initial discovery hearing or conference; with scope of electronic discovery; form of production; reallocation of discovery costs; inadvertent disclosure of privileged information; preservation orders; and sanctions.


1. DEFINITIONS

The guidelines define electronically-stored information as any information created, stored, or best utilized with computer technology of any type. Electronically-stored information includes data; word‑processing documents; spread sheets; presentation documents; graphics; animations; images; e-mail and instant messages (including attachments); audio, video, and audio-visual recording; voice mail stored on data bases; networks; computers and computer systems; servers; archives; back‑up or disaster recovery systems; disks, CDs, diskettes, drives, tapes, cartages and other stored media; printers; the Internet; personal digital systems; handheld wireless devices; cellular telephones; pagers; fax machines; and voice mail systems.[iii]

The guidelines define accessible information as electronically-stored information that is easily retrievable in the ordinary course of business without undue costs and burden.[iv] According to the guidelines, what constitutes an undue cost or burden should be determined on a case by case basis. Examples given of information that may not be reasonable accessible include data stored on back-up tapes or legacy systems; material that has been deleted; and residual data.


2. RESPONSIBILITY OF COUNSEL TO BE INFORMED OF ALL CLIENTS ELECTRONICALLY-STORED INFORMATION

The guidelines encourage the voluntary resolution of issues involving electronically-stored information. To this end, it is suggested that in anticipation of issues involving the discovery of electronically‑stored information; counsel for the parties should be become familiar with the operation of the relevant information management system. In other words, how information is stored and retrieved. When seeking the production of electronically‑stored information, counsel should make the request to opposing counsel as soon as possible. In addition, counsel should clearly identify the categories or types of information sought. This way counsel for the producing party may confer with its clients about the sources of such information and their preservation obligations pursuant to the discovery requests. Federal Rules of Civil Procedure 26(f) places a responsibility on counsel, when appropriate and reasonable, to learn about their client’s data storage and management systems and policies at the earliest stages in litigation in order to facilitate the smooth operation of the discovery process.


3. AGREEMENTS BY COUNSEL AND PRE-TRIAL CONFERENCE ORDERS

In cases where the production of electronically-stored information may become an issue, the guidelines suggest that courts encourage counsel to reach a voluntary agreement on the disclosure of any electronically-stored information. The guidelines also suggest that courts should encourage counsel discuss the manner of the disclosure and any deadlines, and that is be memorialized in any pre-trial or scheduling order.

The guidelines also encourage courts to exchange any information that will enable the discovery process to move forward when counsel have not reached an agreement on the details of production. This information should include:the names and responsibilities of the people most knowledgeable about the subject computer system; the names and responsibilities of the custodians of relevant electronic information; a brief summary of the of the electronically-stored information in the custodian’s custody and control; a list of the electronic systems in use during the time period relevant to the matter in dispute along with a general description of each system; notice of whether the accessibility of electronically-stored information is limited in any way; a description of electronically-stored information that is stored somewhere other than on-site; the form or format of the production preferred by the requesting party; and advance notice of any known problems that may arise in connection with the production of the electronically-stored information. The guidelines suggest that while not all of the former items may be needed in every case, the list provides a court with the elements to craft an appropriate order.


4. INITIAL DISCOVERY HEARING OR CONFERENCE

The guidelines suggest that either before or shortly after the exchange of information, counsel should advise the court of whether the parties have reached an agreement on such matters as: the electronically-stored information to be exchanged; form of production; the preservation of electronically-stored information; procedures in the event of an inadvertent disclosure of privileged information; and the allocation of costs related to the production of electronically-stored information.


5. THE SCOPE OF ELECTRONIC DISCOVERY

The guidelines suggest that in the event of a motion to compel or protect electronically-stored information, courts should determine whether the electronically-stored information is subject to production under the current discovery rules. In the event the information is subject to production, the guidelines suggest that courts weigh the benefits to the requesting party against the burden and expense of the discovery for the responding party. The guidelines suggest that courts consider such factors as: the ease of accessing the requested information; the ultimate cost of production in comparison to the amount in controversy; the materiality of the information to the requesting party; the availability of the information from other sources; the complexity of the case and the importance of the issues addressed; the need to protect privileged, proprietary, or confidential information. The guidelines suggest that the former six factors will arise in most disputes over the scope of electronically stored information. Other factor to be considering include whether the information or software needed to access the requested information is proprietary or confidential business information; the breadth of the request; the ability of the parties to control costs and incentives to do so; the resources of each party compared to the cost of production; whether the requesting party is willing to share the cost of producing the information; whether the manner of storage of the electronic information makes it more costly or burdensome to access than is reasonably warranted under the circumstances; and whether the responding party has destroyed electronic information following the commencement of litigation or the party was aware that litigation was probable.


6. FORM OF PRODUCTION

Unlike the conventional discovery of paper documents, electronically-stored information may be produced in multiple forms. The guidelines suggest that in the absence of an agreement on the form of production, courts should require electronically-stored information to be produced in one format. The guidelines and Federal Rules also suggest that the producing party default to the format the information is ordinarily maintained or in a reasonably usable format.


7. REALLOCAITON OF DISCOVERY COSTS

With respect to the reallocation of discovery costs, the guidelines suggest that cost shifting and/or the sharing of costs should only be considered when the electronically-stored information is not accessible and/or when the restoration and production of responsive data from a small sample of the requested information is not sufficient. Under these circumstances, the guidelines suggest that courts consider: the extent to which the request is specifically tailored to discover relevant information; the availability of such information from other sources; the total cost of production compared to the amount in controversy; the total cost of production compared to the resources available to each party; the relative ability of each party to control costs and its incentive to do so; the importance of the issues at stake in the litigation; and the relative benefits of obtaining the information. With respect to the reallocation of discovery costs, the guidelines mirror the analysis conducted in the leading federal case on this issue. See Zubulake v. UBS Warburg LLC, 216 F.R.D. 280 (S.D.N.Y. 2003) (Zubulake III).


8. INADVERTENT DISCLOSURE OF PRIVILEGED INFORMATION

The guidelines also address instances of the inadvertent disclosure of privileged information. When deciding whether a party has waived the attorney-client privilege because of an inadvertent disclosure of attorney work-product or other privileged electronically-stored information, the guidelines suggest that courts consider: the total volume of information produced by the responding party; the amount of privileged information disclosed; the reasonableness of the precautions taken to prevent inadvertent disclosure of privileged information; the promptness of the actions taken to notify the receiving party and otherwise remedy the error; and the reasonable expectations and agreements of counsel.


9. PRESERVATION ORDERS

The guidelines also address preservation orders. The guidelines suggest that when an order to preserve electronically-stored information is sought, a court should require a threshold showing that the continuing existence and integrity of the information is threatened. The guidelines suggest that upon such a showing, a court should consider the following factors in determining the nature and scope of any order: the nature of the threat to the continuing existence or integrity of the electronically-stored information; the potential for irreparable harm to the requesting party absent a preservation order; the capability of the responding party to maintain the information sought in its original form, condition, and content, and; the physical, technological, and financial burden created by ordering preservation of the information.

The guidelines also suggest that when issuing an order to preserve electronically-stored information, a court should tailor the order so that it is no broader than necessary to safeguard the information at issue. The guidelines also urge that in issuing a preservation order, the order should be drafted as narrowly as possible to accomplish it purpose so as to limit its impact on the responding party’s operations.


10. SANCTIONS

Lastly, the guidelines also address sanctions in relation to the production of electronically-stored information. The guidelines suggest that absent exceptional circumstances, a court should impose sanctions because of the destruction of electronically-stored information only when there was a legal obligation to preserve the information at the time it was destroyed; the destruction of the material was not the result of the routine, good faith operation of an electronic information system; and the destroyed information was subject to production under a state’s existing rules of civil procedure for discovery. This guideline tracks the Federal Rule of Civil Procedure 37(f).

In the absence of state rules of civil procedure addressing issues related to the production of electronic-information, the guidelines suggested by The Conference of Chief Justices for State Trial Courts should help guide state courts through the burgeoning maze of electronic discovery.


[i] Armstrong v. Executive Office of the President, 1 F.3d 1274 (D.C. Cir. 1993); Crown Life Insurance Co. V. Craig, 995 F.2d 1376 (7th Cir. 1993); In re Brand Name Prescription Drugs Antitrust Litigation, 1995 WL 360526 (N.D. Ill. June 15, 1995); Sattar v. Motorola, Inc., 138 F.3d 1164 (7th Cir. 1997); Playboy Enterprises, Inc. v. Welles, 60 F. Supp. 1050 (S.D. Cal. 1999); Rowe Entertainment, Inc. v. William Morris Agency, Inc., 205 F.R.D. 421 (S.D.N.Y. 2002); Zubulake v. UBS Warburg LLC, 217 F.R.D. 309 (S.D.N.Y. 2003) (Zubulake I); Zubulake v. UBS Warburg LLC, 216 F.R.D. 280 (S.D.N.Y. 2003) (Zubulake III); Zubulake v. UBS Warburg LLC, 220 F.R.D. 212 (S.D.N.Y. 2003) (Zubulake IV); Zubulake v. UBS Warburg LLC, 229 F.R.D. 422 (S.D.N.Y. 2004) (Zubulake V); Arthur Anderson LLP v. United States, 544 U.S. 696 (2005).

[ii] Richard Van Duizend, Guidelines for State Trial Courts Regarding Discovery of Electronically-Stored Information. Conference of Chief Justices, (Approved August 2006).

[iii] Ibid.

[iv] American Bar Association Standards Relating to Civil Discovery, Section 29 (August 2004).