Michigan's New E-Discovery Rules Provide Ways to Reduce the Scope and Burdens of E-Discovery

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1 1 PROFESSIONALS MILLER CANFIELD LAW FIRM B. Jay Yelton III Michigan's New E-Discovery Rules Provide Ways to Reduce the Scope and Burdens of E-Discovery To a large extent Michigan's new e-discovery rules track the federal e-discovery rules. That is good news. Accordingly, if an organization has an effective records management program and a litigation readiness plan, Michigan's new e-discovery rules provide the following ways to reduce the scope and/or burden of e- discovery. E-Discovery Preservation Safe Harbor Michigan Court Rules 2.302(B) and have been amended to state "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 Staff Comment to these new rules explains that "good faith" may be shown by a party's actions to attempt to preserve information as part of an e-discovery "litigation hold" process. Limitation on E-Discovery Michigan Court Rule 2.302(B) has been amended to state that "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." On motion to compel discovery or for a protective order, the party from whom discovery is sought must show that the information is not reasonably accessible because of undue burden or cost. If that showing is made, the court has several options under Rule 2.302(C) to reduce the scope of the discovery and/or shift some or all of the costs of the discovery to the requesting party.

2 2 Electronic Discovery Rules Adopted by Federal Courts Howrey LLP The Federal Rules of Civil Procedure now for the first time explicitly recognize that electronically stored information (or "e-discovery") requires specific rules governing discovery. Amendments to the FRCP that took effect on December 1, 2006, broadly incorporate e-discovery as subject to disclosure requirements and provide a framework for resolving disputes involving it. The amendments aim to strike a balance between the duty to preserve and produce e-discovery while recognizing that certain forms can be too burdensome to retrieve. A safe harbor from sanctions is included for circumstances in which e-discovery is automatically deleted as part of good-faith, routine system operations; in other words, deleted without any intent to destroy evidence. The amendments recognize the increased risk of a party inadvertently disclosing privileged information due to the dynamic and voluminous nature of e-discovery, offering procedures to minimize and resolve such situations. In sum, the e-discovery amendments: Explicitly recognize e-discovery as information that a party has the duty to preserve, search and disclose. Require parties to discuss early on (and alert the court of) anticipated e-discovery issues, including production form, ease of review and potential for inadvertently disclosing privileged documents. Provide a default standard for parties to produce e- discovery as it is "ordinarily maintained or reasonably usable" except when it is shown that such information is "not accessible because of undue burden or cost."

3 3 Create a safe harbor from sanctions when a party fails to preserve e-discovery as a result of routine, goodfaith computer system operations. Add procedures for protecting inadvertently disclosed privileged information, given the increasing risk of producing privileged information in dynamic e- discovery forms. Reasonably Preserved, Searched for and Disclosed The new rules recognize it was becoming "increasingly difficult" to fit all forms of e-discovery into the conventional notion of a "document." The amendments confirm e- discovery stands on an equal footing with discovery of traditional paper documents. Thus, business record searches conducted in response to discovery requests now must include a search of e-discovery. The amendments are intended to reach an expansive and broad range of e-discovery, including , electronic spreadsheets, sound files and material from databases. The concept of e-discovery is flexible so it can be adapted to developing technologies. Parties now are required to produce e-discovery that is relevant, not privileged and reasonably accessible. Procedures for specifying and objecting to particular forms of e-discovery in document requests also are provided. In addition, parties may substitute responses to interrogatories for e-discovery when the burden would be equally burdensome to both the requesting and responding party. Information sought from third parties pursuant to a subpoena now explicitly requires third parties to search for and produce e-discovery when it is not too burdensome.

4 4 Anticipate E-Discovery Issues Parties must hold early discussions regarding any anticipated e-discovery issues, including form and preservation of e-discovery. Such requirements are intended to facilitate e-discovery, ease issues that arise in a particular case and allow the parties and/or the court to develop creative solutions to such issues. For example, to avoid the risk of inadvertent disclosure, the responding party may authorize a "quick peek" in which the requesting party views and designates what electronically stored information it wants produced while the responding party preserves the right to withhold privileged material. If anticipated, the parties also should discuss what form of e-discovery is sought and retrieved; why certain forms of e-discovery are too burdensome to retrieve or access; and concerns about inadvertent disclosure of privileged information. Burdens Are Balanced A party is required to produce e-discovery that is relevant, not privileged and "reasonably accessible." Only when a party shows good cause will a party be required to produce e-discovery that is "not reasonably accessible." Courts should consider the benefits of the information and the cost and burden of obtaining such information when determining obligations to produce e-discovery. Parties responding to discovery now must identify sources of e-discovery that it is neither searching nor producing so the requesting party can evaluate the extent of such burden and, if necessary, the court can decide the issue. Information identified in this manner does not relieve a party's duty to preserve evidence.

5 5 To assist the parties and the court with this process, requesting parties should state the form in which they seek e-discovery, and responding parties should state the form in which e-discovery will be produced. Safe Harbor Electronic data systems often are designed to allow for regularly scheduled, systematic deletions of data based on parameters suitable to internal policies or external requirements. Absent "exceptional circumstances," a safe harbor precludes the imposition of sanctions when deletion of potential evidence was a result of such goodfaith, routine procedures. This amendment recognizes that, given the nature of computer systems, potential evidence may be deleted for reasons unrelated to litigation. Inadvertent Disclosure of Privileged Information Because the likelihood of inadvertently producing privileged information increases given the volume and nature of e-discovery, a procedure is added to allow a party to assert claims of privilege after information is produced. Specifically, if a producing party gives notice within a "reasonable time" that records disclosed are privileged, the receiving party must "return, sequester or destroy" the records, and if the claim of privilege is contested, the receiving party must present the issue to the court to decide. The producing party is obligated to preserve the information "until the claim of privilege is resolved."

6 6 Practical Impact The e-discovery amendments to the FRCP acknowledge and create procedures to deal with the reality that companies are storing more and more information electronically. Companies can take advantage of these new flexible rules by understanding the benefits of storing information electronically and the burdens of electronic searches. While the amendments may increase the time and/or cost of discovery in some instances, storing increasing amounts of data electronically also may serve to potentially reduce the time it takes to conduct a business records search and the costs associated with it. The amendments also take into account the need to prevent the disclosure of privileged information and to protect such information even after inadvertent (or "quick peek") disclosure through e-discovery. E-discovery issues should be identified and addressed with the opposing party early on. Companies also should ensure that their data deletion procedures qualify as routine so as to avoid sanctions for deletion of potential evidence when such deletion was unrelated to the litigation. For more information about the issues covered in this report, please contact Paul Berning in our San Francisco office at or at or contact your Howrey attorney.

7 7 Questions for GVSU Students to Answer Prior to Class: 1. What is E-Discovery? 2. According to the state and federal laws what may you ask for in the e- discovery process from the other side? 3. What is not discoverable in the e-discovery process? 4. What is the safe harbor provision? 5. The articles talk about balancing; what does the court have to balance in regard to e-discovery requests? 6. What data are you required to keep if you believe that you may be sued? 7. If you were Director of HR and you were going to terminate an EE that you were pretty sure was going to advance the case to arbitration what would you do in regard to complying w/the E-Discovery Rules? 8. What should be included in a Data Retention and Deletion Policy? 9. Who should be monitoring this policy in HR?

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