The 2006 F.R.C.P. E-Discovery

Amendments:A Look One Year Later

Laurence Z. ShiekmanPepper Hamilton LLP

January 5, 2008

Why Are We Here?

• E-Discovery amendments became effective December 1, 2006

• Affected Rules:– Rule 16, Rule 26, Rule 33, Rule 34, Rule

37, Rule 45 and Form 35

Why Are We Here?

• What did the 2006 Amendments actually change?– Not Much– Institutionalized and defined the role of ESI

in the discovery process– Provided a mechanism for the Court to

approve clawback agreements-Rule 16(b)(5)

Special Problems With ESI

• But why am I spending my Saturday discussing electronic discovery?– The growth of Electronically Stored

Information has caused dramatic changes in the discovery process

– Corporate email users send and receive an average of 133 email messages per day

• Mail, telephone, faxes

Special Problems With ESI

• In 2006, the world created 161 exabytes of information

• 161 exabytes of information equals:– 12 stacks of paper stretching from the

earth to the sun

• Between 2002 and 2006, there was an 800% annual growth in the amount of ESI produced in the world

Overview

• The Rule Changes

• The Litigation Hold

• The Duty to Preserve ESI

• The Production of ESI

• Special Issues With Privileged Material

• What’s the Deal With Metadata?

Rule Changes-Rule 26(a)

• Fed. R. Civ. P. Rule 26(a)(1)(B): Initial Disclosures

– Except in categories of proceedings specified in Rule 26(a)(1)(E), or the extent otherwise stipulated or directed by order, a party must, without awaiting a discovery request, provide to other parties:

• (B) a copy of, or a description by category and location of, all documents, electronically stored information, and tangible things that are in the possession, custody, or control of the party and that the disclosing party may use to supports its claims or defenses, unless solely for impeachment…

Rule Changes-Rule 34(a)

• Any party may serve on any other party a request (1) to produce …electronically stored information – (including writings, drawings, graphs, charts, photographs, sound recordings, images, and other data or data compilations stored in any medium from which information can be obtained…

• Rule Changes-

Rule Changes-Rule 26(b)(2)

• 26(b)(2) Discovery Scope and LimitsA party need not provide discovery of ESI if

not reasonably accessible because of undue burden or cost

• Good cause exception

Rule Changes-Rule 34(b)

• Rule 34(b)– The request may specify the form or

forms in which electronically stored information is to be produced

• Native format– Web-based production

• PDF, TIFF, JPEG– Tagged Image File Format

Rule Changes-Rule 34(b)

• Rule 34(b)(ii)– If a request does not specify the form or

forms for producing electronically stored information, a responding party must produce the information in a form or forms in which it is ordinarily maintained or in a form or forms that are reasonably usable.

Rule Changes-Rule 26(b)(5)(B)

• If information is produced in discovery that is subject to a claim of privilege or of protection as trial-preparation material, the party making the claim may notify any party that received the information of the claim and the basis for it. After being notified, a party must promptly return, sequester, or destroy the specified information and any copies it has and may not use or disclose the information until the claim is resolved.

The Litigation Hold

• “Once a party reasonably anticipates litigation, it must suspend its routine document retention/destruction policy and put in place a ‘litigation hold’ to ensure the preservation of relevant documents.”

Zubalake v. UBS Warburg LLC, 220 F.R.D. 212, 218 (S.D.N.Y. 2003)(“Zubulake IV”)

When Must the Hold Begin?

• No clear definition for “reasonably anticipated”– No need to wait for a complaint to be filed– Mere knowledge may be enough

• Doe v. Norwalk Community College, 2007 U.S. Dist. LEXIS 51084 (D. Conn. July 16, 2007)

Scope of the Litigation Hold

• “Corporations are not obligated, ‘upon recognizing the threat of litigation,’ to ‘preserve every shred of paper, every e-mail or electronic document. . . .”

• “. . . It is under a duty to preserve that it knows, or reasonably should know, is relevant in the action, [or] is reasonably calculated to lead to the discovery of admissible evidence . . .”– Samsung Electronics Co. v. Rambus, 439 F. Supp. 2d 524,

542-543 (E.D. Va. 2006)

Scope of the Litigation Hold

• Ever-increasing list of discoverable data-types– Data in RAM is electronically stored

information under Rule 34• Columbia Pictures Industries v. Bunnell, 2007 WL 2080419 (C.D. Cal.

May, 29 2007)

– Rule 34 is to be read expansively to cover future developments in computer technology

• Columbia Pictures Industries v. Bunnell, 2007 WL 2702062 (C.D. Cal. Aug. 24, 2007)

Duty to Preserve ESI

• “Must a corporation, upon recognizing the threat of litigation, preserve every shred of paper, every email or electronic document, and every backup tape? The answer is clearly ‘no.’ Such a rule would cripple large corporations, like UBS, that are almost always involved in litigation.”

Zubulake IV, 220 F.R.D. 212, 217 (S.D.N.Y. 2003)

Duty to Preserve ESI

• Rule 26(a) limited to documents that “are in the possession, custody, or control of the party”

• “Control comprehends not only possession, but also the right, authority, or ability to obtain the documents”

Tomlinson v. El Paso Corp., 2007 U.S. Dist. LEXIS 64783 (D. Colo. Aug. 31, 2007)

Duty to Preserve ESI

• “[A] party and her counsel must make certain that all sources of potentially relevant information are identified and placed ‘on hold,’ . . . To do this, counsel must become fully familiar with her client’s document retention policies as well as the client’s data retention architecture.”

Zubulake V, 229 F.R.D. at 433 (footnotes omitted)

Duty to Preserve ESI

• “[C]ounsel should communicate directly with the ‘key players’ in the litigation, i.e., the people identified in a party’s initial disclosure and any subsequent supplementation thereto. Because these ‘key players’ are the ‘employees likely to have the relevant information,’ it is particularly important that the preservation duty be communicated clearly to them.”

Zubulake V, 229 F.R.D. at 433-34 (footnotes omitted)

Duty to Preserve ESI

• “A party’s discovery obligations do not end with the implementation of a ‘litigation hold’ – to the contrary, that’s only the beginning. Counsel must oversee compliance with the litigation hold, monitoring the party’s efforts to retain and produce the relevant documents.”

Zubulake V, 229 F.R.D. at 433.

Duty to Preserve ESI

• “Finally, counsel should instruct all employees to produce electronic copies of their relevant active files. Counsel must also make sure that all backup media which the party is required to retain is identified and stored in a safe place.”

Zubulake V, 229 F.R.D. at 434 (footnotes omitted)

Duty to Preserve ESI

Failure to properly preserve ESI can have severe consequences for both client and counsel

Duty to Preserve ESI

• Possible penalties– Default Judgment

Krumwiede v. Brighton Assoc., 2006 U.S. Dist. LEXIS 31669 (N.D. Ill. May 8, 2006)

– Monetary sanctions against both client and counsel

In re September 11th Liab. Ins. Coverage Cases, 234 F.R.D. 114 (S.D.N.Y. 2007)

The Production of ESI

• Court can limit discovery of ESI where it would place an undue burden on the producing party

• Burden of proof is on the party attempting to prevent production

The Production of ESI

• Is the ESI Reasonably Accessible?

• Three factors the Court will weigh:– (i) Less burdensome and less expensive

alternative sources– (ii) Previous opportunity to obtain the

information through discovery– (iii) Does the burden or expense outweigh

the likely benefit

The Production of ESI

No clear standard for “reasonablyaccessible”

Reproduction of e-mails at a cost of $37,500 was reasonably accessible

PSEG Power N.Y., Inc. v. Alberici Constructors, Inc., 2007 U.S. Dist. LEXIS 66767 (N.D.N.Y. Sept. 7, 2007)

Production that would cost $80,000 not reasonably accessible

W.E. Aubuchon Co. v. Benefirst, 2007 U.S. Dist. LEXI 44574 (D. Mass. Feb. 6, 2007)

The Production of ESI

• “[I]t is not a valid ground for objection that relevant, non-privileged, electronic data can be produced in paper form, when the requesting party has specified production in an electronic format.”

Auto Club Family Ins. v. Ahner, 2007 U.S. Dist. LEXIS 63809, at *10 (E.D. La. Aug. 29, 2007)

The Production of ESI

• Must show diligence in producing ESI

• Failure to institute a litigation hold can force a party to undertake time-consuming and expensive multiple productions

• Be careful when selecting an E-discovery vendor

The Production of ESI

• Questions of botched productions– Court will not look kindly upon mishandled

productions• “It reminds me too much of Leo Kosten’s

definition of chutzpah: ‘that quality enshrined in a man who, having killed his mother and his father, throws himself on the mercy of the court because he is an orphan.”

Disability Rights Council of Greater Washington v. Washington Metro. Transit Auth., 242 F.R.D. 139, 147 (D. D.C. 2007)

Special Issues Regarding Privileged Material

• The problem of inadvertent disclosure of privileged material

• Use of clawback agreements sanctioned by Rules 16(b)(5) & (6) and 26(f)

– Post-production claims of privilege

• Procedure provided by Rule 26(b)(5)

Special Issues With Privileged Material

• Sheer volume of electronic discovery may result in inadvertent disclosures

• “inadvertent disclosure of privileged information does not automatically result in waiver of the privilege.”

Pinnacle Pizza Co. v. Little Caesar’s Enter., Inc., 2007 U.S. Dist. LEXIS 48845 (D. S.D. July 3, 2007)

Inadvertent Disclosure Balancing Test

• Most courts use a five factor balancing test to determine whether the privilege has been waived

• The five factors are:– The reasonableness of the precautions taken – The number of inadvertent disclosures– The extent of the disclosures– The promptness of measures taken to remedy the

problem– Whether justice is served by relieving the party of

its error

Special Issues With Privileged Material

• Proposed FRE 502:– Inadvertent disclosures would not

constitute a waiver if:• The disclosure was inadvertent • The holder of the privilege or protection took

reasonable steps to prevent disclosure; and• The holder promptly took reasonable steps to

rectify the error

Clawback Agreements

• Authorized by:– Rule 26(f)(4)

• Requiring parties to confer to “discuss any issues relating to preserving discoverable information”

– Rule 16(b)(5) and (6)• Scheduling order may include clawback

agreements and provisions for ESI

Clawback Agreements

• Proposed FRE 502(d)– If a federal court orders that a privilege is

not waived by an inadvertent disclosure in that case, the disclosure would also not be a waiver in any other:

• Federal proceeding• State proceeding

Clawback Agreements

• Prior agreement between the parties over procedures following inadvertent disclosures

• Can take many forms

Clawback Agreements

• Problems:– Cannot unring the bell– Even if the document is returned, other

party has still seen it– Problem of agencies and state courts

Clawback Agreements

• Problems:– “[E]ven if [clawback agreements] are

enforceable as between the parties that enter into them, it is questionable whether they are effective against third-parties.”

Hopson v. Mayer and City Council of Baltimore,

232 F.R.D. 228, 235 (D. Md. 2005)

Clawback Agreements

• Problems:– Advisory Committee Notes states that

courts do not have the authority to require a clawback agreement

– But, the court is free to enter a discovery schedule that without a clawback agreement would be impossible to meet

What’s the Matter with Metadata?

• “Metadata, commonly described as ‘data about data,’ is defined as ‘information describing the history, tracking, or management of an electronic document.’”

Williams v. Sprint/United Management, 230 F.R.D. 640, 646 (D. Kan. 2005) (quoting Amendment to F.R.C.P. Rule 26(f))

What’s the Matter with Metadata?

• Rule 34(a)(1) states that ESI “includ[es] writings, drawings, graphs, charts, photographs, sound recordings, images, phonorecords, and other data or data compilations stored in any medium from which information can be obtained. . . .”

• The Committee Note states that “Rule 34(a)(1) is expansive and includes any type of information that is stored electronically.”

What’s the Matter with Metadata?

• “[T]he producing party should produce the electronic documents with their metadata intact, unless that party timely objects to production of metadata, the parties agree that the metadata should not be produced, or the producing party requests a protective order.”

Williams, 230 F.R.D. at 652

What’s the Matter with Metadata?

• “[E]merging trends of electronic discovery appear to articulate a general presumption against the production of metadata.”

Kentucky Speedway, LLC v. Nat’l Assoc. of Stock Car Auto Racing, 2006 U.S. Dist. LEXIS 92028 (E.D. Ky. Dec. 18, 2006)

What’s the Matter with Metadata?

• However, recent cases have held that metadata must be produced when it is relevant

In re Payment Card Interchange Fee & Merchant Discount Trust Litig., 2007 U.S. Dist. LEXIS 2650 (E.D.N.Y. Jan. 12, 2007)

What’s the Matter with Metadata?

• TIFF documents do not satisfy discovery requests because they lack metadata

– Hagenbuch v. 3B6 Sistemi Elettronici Industrali, 2006 U.S. Dist. LEXIS 10838 (N.D. Ill. Mar. 8, 2006)

Practical Pointers Summary

• Develop document retention/destruction policy with clients

• Initiate litigation hold to all key players as soon as litigation can be reasonably anticipated

• Remember that counsel is responsible for the production of ESI

• Discuss possibility of Clawback Agreement with other side and client in the event of an inadvertent disclosure

• Research the caselaw in your jurisdiction with respect to whether metadata must be produced