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Electronic Discovery

New Federal Rule Changes

United States Supreme Court Approves Rules Changes Addressing Electronic Discovery

By Jules Shepard

On April 12, 2006 the United States Supreme Court put its seal of approval on the long-awaited draft amendments to the Federal Rules of Civil Procedure which address the discovery of electronically stored information. Unless Congress acts to change or reject this package of amendments – a move thought highly unlikely – these significant rules changes will go into effect on December 1, 2006. It will be incumbent upon businesses to synchronize their management of electronic records with these amendments.

Among these important changes, the rules amendments will require parties to discuss – and attempt to agree on the production of -- electronically stored information prior to initiating the discovery process. Such agreements or differing party demands shall be memorialized and presented to the court via a specialized form.

“Safe Harbor” from certain sanctions and “clawback” agreements regarding inadvertently disclosed privileged information are also contemplated under the rules amendments. Such sweeping changes to the Federal Rules of Civil Procedure will necessarily require legal counsel and computer forensics experts alike to stay ahead of the curve in order to best serve their clients’ interests.

These new rules may be accessed by entering the following link: http://www.uscourts.gov/rules/EDiscovery_w_Notes.pdf

Below is a brief summary of the most noteworthy new amendments:

  • Rule 16(b)(5)& (6): Pretrial Conferences; Scheduling; Management. Under the proposed new rules, a court’s scheduling order may now include provisions for the disclosure or discovery of electronically stored information, as well as any agreements the parties may reach for asserting claims of privilege or of protection as trial preparation material after production. New Form 35 filings will report to the court about the results of Rule 26(f) party discussions, which resulting agreements may now find their way into new Rule 16(b) scheduling orders.

  • Rule 26(a): General Provisions Governing Discovery; Duty of Disclosure; Required Disclosures; Methods to Discover Additional Matter.
    Under this amended rule, a party to litigation must provide other parties with witness information as well as either a copy of, or a categorical description and the location of electronically stored information it may use to support its claims or defenses. This obligation arises without the necessity for a discovery request.

  • Rule 26(b)(2)(B): General Provisions Governing Discovery; Duty of Disclosure; Discovery Scope and Limits; Limitations.
    The amendment to this rule provides that if a party sufficiently demonstrates that certain electronically stored information is “not reasonably accessible because of undue burden or cost,” that party may not be required to produce that information. However, the court may nonetheless order discovery from that party if, after considering the limitations of Rule 26(b)(2)(C) (such as whether the burden of production outweighs the benefit; whether the discovery sought is cumulative, etc.), the court determines that the requesting party has shown good cause.

  • The court may also add conditions to the discovery order, including cost-shifting measures. The responding party must also identify with sufficient detail the sources containing potentially responsive information that it is neither searching nor producing.

  • Rule 26(b)(5)(B): General Provisions Governing Discovery; Duty of Disclosure; Discovery Scope and Limits; Claims of Privilege or Protection of Trial-Preparation Materials; Information Produced.
    This amended rule provides that if information is produced in discovery that is later subject to a claim of privilege or protection as trial preparation material, the party who received this information must promptly return, sequester or destroy the specified information as well as any copies it has and must not use or disclose this information until the claim is resolved (“clawback” provision). In order to expedite a determination of the claim, the receiving party may promptly present the information to the court under seal. If the receiving party had disclosed the information prior to being notified of the claim, it must take reasonable steps to retrieve it.

  • The producing party would also be required to preserve the information until the claim is resolved. This provision does not address whether the asserted privilege or protection asserted after production is waived by the production; this rule merely provides a procedure by which to present and address these issues. The rule works together with amended Rule 26(f) which will now direct parties to discuss privilege issues when preparing their discovery plans. Any such agreements could be made part of a court order via amended Rule 16(b) and later referenced by the court when considering whether a waiver has occurred. Such agreements and orders ordinarily control.

  • Rule 26(f)(3) & (4): General Provisions Governing Discovery; Duty of Disclosure; Conference of Parties; Planning for Discovery.
    This amended rule will require that during any pretrial conferences, the parties shall discuss case-specific issues including the preservation of discoverable information and the disclosure or discovery of electronically stored information (“ESI”). Such discussions must include the form in which electronically stored information should be produced as well as any issues relating to the claims of privilege or of protection as trial-preparation material.

  • In order to minimize cost and delays, the parties may agree to certain protocols minimizing the risk of waiver of privileges. One such protocol is the so-called “quick peek”, wherein a responding party provides evidence for initial review without waiving any claims of privilege.

    The requesting party then designates the specific evidence it wishes to have produced pursuant to Rule 34. At that point, the responding party produces that evidence and screens for privilege of only that evidence, asserting such claims of privilege pursuant to Rule 26(b)(5)(A). Another type of protocol states that production without the intent to waive privilege will not so do, as long as the responding party identifies the documents it mistakenly produced (“clawback”).

    If the parties come to an agreement regarding a procedure for asserting such claims after production, they should decide whether to ask the court to include this agreement in its order pursuant to Rule 16(b). This amendment imposes no additional requirements on the parties during their discovery-planning conference if the case does not involve electronic discovery.

  • Rule 33(d): Interrogatories to Parties; Option to Produce Business Records.
    This amended rule allows a responding party to an interrogatory to specify the electronic records from which the answer may be derived, if the burden of deriving the answer is substantially the same for the responding party as for the requesting party. The responding party to an interrogatory must also provide the requesting party with a reasonable opportunity to examine, copy, audit or inspect such records.

  • Rule 34(a) & (b): Production of Documents, Electronically Stored Information, and Things and Entry Upon Land for Inspection and Other Purposes.
    This amended provision permits a party requesting the production of documents including electronically stored information to also inspect, copy, test or sample such information. The responding party must translate the information, if necessary, into a reasonably usable form. The request for production should specify the form in which electronically stored information is to be produced, although the producing party may object to the requested form for production if it provides the reason for the objection and the form it intends to use instead.

  • If a request does not specify the form for producing electronically stored information, it is incumbent upon the responding party to produce the information in a form or forms which are “reasonably usable” or in which the information is “ordinarily maintained.” A party need not produce the same electronically stored information in more than one form.

  • Rule 37(f): Failure to Make Disclosures or Cooperate in Discovery; Sanctions; Electronically Stored Information.
    This sub-section is entirely new and restricts a court from imposing sanctions under these rules (absent exceptional circumstances) on a party for the non-culpable act of failing to provide electronically stored information which was lost as a result of the “routine, good faith operation of an electronic information system” -- i.e. operating in the ways in which such systems are typically designed, programmed and implemented to meet the party’s technical and business needs. (“Safe Harbor” provision). An examination of a party’s compliance with litigation holds and preservation orders is often necessary to determine that party’s “good faith”. Actions such as exploiting the routine operation of an information system in order to thwart discovery or preservation obligations shall likely not be held as taken in “good faith.” An analysis shall be made of the steps a party has taken to comply with a court order or party agreement requiring preservation.

  • Additionally, courts will consider whether the party reasonably believed the information available on these electronic sources was likely to be discoverable and not otherwise reasonably available. This rule does not affect a court’s ability to apply sanctions using other sources of authority and does not affect counsel’s obligations under any rules of professional responsibility. Similarly, this rule does not limit a court’s ability to adjust discovery obligations (e.g. ordering additional depositions; allowing additional interrogatories, etc.) in an attempt to substitute for the lost information.

  • Rule 45: Subpoena; Form; Issuance.
    This amended rule will add to the subpoena power the requirement that each person to whom it is directed must either attend and give testimony or produce and permit the inspection, copying, testing or sampling of things such as electronically stored information. In addition, a subpoena may now specify the form or forms in which electronically stored information is to be produced.

  • As in the amended Rule 26(b)(2)(B), if a party sufficiently demonstrates that certain electronically stored information is not reasonably accessible because of undue burden or cost, that party may not be required to produce that information. However, the court may nonetheless order discovery from that party if, after considering the limitations of Rule 26(b)(2)(C) (such as whether the burden of production outweighs the benefit; whether the discovery sought is cumulative, etc.), the court determines that the requesting party has shown good cause. The court may also add conditions to the discovery order.

    As in the amended Rule 26(b)(5)(B), if information is produced in response to a subpoena, and that information is later subject to a claim of privilege or protection as trial preparation material, the party who received this information must promptly return, sequester or destroy the specified information as well as any copies it has and must not use or disclose the information until the claim is resolved.

    As in the amended Rule 34, if a subpoena does not specify the form or forms for producing electronically stored information, the responding party will be required to produce the information in a form or forms which are “reasonably usable” or in which the person “ordinarily maintains it.” A party need not produce the same electronically stored information in more than one form.

  • Form 35: Report of Parties’ Planning Meeting. The form will now include the requirement for a brief description of the parties' proposals on handling the disclosure or discovery of electronically stored information, as well as the provisions of any proposed order reflecting the agreement of the parties on post-production claims or waivers of privilege or of protection as trial-preparation material.

    Jules Shepard is in-house counsel for Second Creek Technologies, Inc.

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