eDiscovery Update: Proposed FRCP Changes – Proportional and Reasonable

This article was originally posted on The Daily Record.

Earlier this month, some of the foremost legal authorities on electronic discovery gathered at the annual Advanced eDiscovery Institute, sponsored by Georgetown Law. This annual CLE event draws jurists, lawyers, litigation support professionals and it is quickly becoming the must attend event for those seeking to stay abreast of technical and legal issues related to electronically stored information. This year proved no different. Predictive coding (or Computer Assisted Review) was a hot topic as expected, but there was also some buzz around proposed changes to the Federal Rules of Civil Procedure.

All-star panel

Much of that buzz resulted from the responses of a panel of judges sitting on the last panel session. The panel was composed of a judicial who’s who of eDiscovery all-stars. Two of those on the panel were Federal Judges Shira Scheindlin (SDNY) and Paul Grimm (Maryland). One of the questions posed to the panel was “If you could change or create one Rule what would it be?”

Judge Grimm remarked that he “would change the scope of discovery in 26(b)(1) on initial disclosures. He would like the rule to be revised to require mandatory disclosure of documents that a party intends to rely upon to prove case, not just defend. He also advocated for changing the outdated definitions of relevancy in the rules.

He also observed that many attorneys do not know what documents they need to prove their case, a theme that many judges piled on about and agreed with,” (“Georgetown Part Two: New Rules Are Coming!” R. Losey, Dec. 14).

Scheindlin weighed in and stated that she was “disappointed that the Rules Committee did not have the courage or vision to write a rule on preservation.” She said the committee should have given comfort to litigants by guidance on preservation. She also said it was too early to change the rules, that there had not been enough time since the last amendment in December 2006, (Losey).

The committee that Scheindlin criticized is the Advisory Committee on Rules of Practice and Procedure. The Supreme Court first established a rules advisory committee in June 1935 to help draft the Federal Rules of Civil Procedure, which took effect in 1938. The committee includes not only federal judges, but also practicing lawyers, law professors, state chief justices, and high-level officials from the Department of Justice and federal public defender organizations (U.S. Courts Committee Membership Selection [2012]).

Preservation

Indeed it may have been surprising to many to find that proposed rule changes did not include specific guidance on preservation, an issue that has plagued many litigants. Changes to the rules to address preservation “took root in May 2010 at the Duke University School of Law Civil Litigation Conference, where judges, lawyers, experts and professors discussed whether preservation and sanction challenges in e-discovery warranted amendments to the FRCP,” (“Implications Of Proposed Changes To FRCP On E-Discovery,” K. Wetzel, April 23).

If you are an attorney representing corporate clients or an in-house attorney, you are well aware of the struggles that can arise from preservation efforts in litigation. This is due to the growth in data volumes, not knowing what to preserve, when to preserve it or when the data can be expunged. The Advisory Committee on Rules of Practice and Procedure met twice in 2011, and in March 2012, the committee issued a 644-page report outlining the proposed changes and answering commentary behind its actions.

“Although its original objective was to create more extensive preservation rules through amendments to Rule 26, the eventual outcome reflected a shift in the Committee’s thinking toward centralizing proposed amendments to the FRCP via clarification of Rule 37 primarily,” (Wetzel).

Currently, two rule changes have been proposed. The first is Rule 26 and it addresses proportionality, which may offer some direction with regards to preservation.

26(1) Scope in General

Unless otherwise limited by court order, the scope of discovery is as follows: Parties may obtain discovery regarding any non-privileged matter that is relevant to any party’s claim or defense and proportional to the needs of the case considering the amount in controversy, the importance of the issues at stake in the action, the parties’ resources, the importance of the discovery in resolving the issues, and whether the burden or expense of the proposed discovery outweighs its likely benefit. Information [within this scope of discovery] {sought} need not be admissible in evidence to be discoverable.

Proportional can be interpreted broadly. If a case is only worth a few thousand dollars, is it proportional to undertake an eDiscovery and preservation effort that may cost an organization hundreds of thousands of dollars? In my opinion the answer is no.

Does that relieve the corporation of undergoing any effort to identify, preserve and produce relevant information? Again, I think the answer is no. The proposed change does allow for the organization and its legal counsel to approach the matter in an organized and thoughtful manner that is proportional to the amount in controversy, resources, and issues at stake.

A careful preservation effort and plan goes hand in hand with overall corporate data management. It does not mean that an organization must halt all data destruction policies and preserve every bit of data in its possession when it’s facing litigation.

In my opinion, this goes to Judge Grimm’s point about relevancy. What are the most relevant documents related to the claims and defense of the matter? More importantly, where are they located in an organization’s systems? What if those systems are outside of the control of the organization such as documents stored in the cloud or at a third-party data storage provider? Can the rules keep up with the fast-paced world of technology and increasing volume of data?

Rule 37 — Safe Harbor

The second proposed rule change addresses Rule 37 (safe harbor provision) — Failure to make disclosures or to cooperate in discovery; sanctions.

37(e) Failure To Provide Electronically Stored Information.

Absent exceptional circumstances, a court may not impose sanctions under these rules on a party for failing to provide electronically stored information lost as a result of the routine, good-faith operation of an electronic information system.

The proposed change: (e) Failure To Preserve Discoverable Information.

If a party fails to preserve discoverable information that reasonably should be preserved in the anticipation or conduct of litigation, (

1) The court may permit additional discovery, order the party to undertake curative measures, or require the party to pay the reasonable expenses, including attorney’s fees, caused by the failure.

(2) The court may impose any of the sanctions listed in Rule 37(b)(2)(A) or give an adverse-inference jury instruction only if the court finds:

  • (A) that the failure was willful or in bad faith and caused substantial prejudice in the litigation; or
  • (B) that the failure irreparably deprived a party of any meaningful opportunity to present a claim or defense.

(3) In determining whether a party failed to preserve discoverable information that reasonably should have been preserved, and whether the failure was willful or in bad faith, the court should consider all relevant factors, including:

  • (A) the extent to which the party was on notice that litigation was likely and that the information would be discoverable;
  • (B) the reasonableness of the party’s efforts to preserve the information, including the use of a litigation hold and the scope of the preservation efforts;
  • (C) whether the party received a request that information be preserved, the clarity and reasonableness of the request, and whether the person who made the request and the party engaged in good-faith consultation regarding the scope of preservation;
  • (D) the party’s resources and sophistication in litigation;
  • (E) the proportionality of the preservation efforts to any anticipated or ongoing litigation; and
  • (F) whether the party sought timely guidance from the court regarding any unresolved disputes concerning the preservation of discoverable information, (U.S. Courts Committee On Rules Of Practice And Procedure. [n.d.])

Again we see the word proportionality. Another used often is reasonable. What reasonable steps did the party take to address ESI and its preservation? Regardless of what Rule changes occur, a party that takes a proactive approach to the management of its data, issues hold notices to appropriate parties, takes steps to preserve relevant ESI and actively engages its adversary in an open discussion about preservation issues will be looked upon favorably by courts if missteps do occur.

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