Electronic Discovery and the New Amendments to the Federal Rules of Civil Procedure: A Guide For In-House Counsel and Attorneys

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1 Electronic Discovery and the New Amendments to the Federal Rules of Civil Procedure: A Guide For In-House Counsel and Attorneys By Ronald S. Allen, Esq. As technology has evolved, the federal courts have worked to incorporate technology into its proceedings and procedures. In order to address issues of preservation, review and production of electronically stored information ( ESI ) and its use in discovery, the Judicial Conference has adopted amendments to the Federal Rules of Civil Procedure. These rules which are related to e-discovery become effective December 1, 2006, barring no objection from Congress. These rules illustrate, among other things, how to prevent and address spoliation of evidence, which arose in the judicial decision of Zubulake v. UBS Warbug, LLC, 217 F.R.D. 309 (S.D.N.Y. 2003) and present counsel with a guide to what is expected when dealing with ESI and discovery. ESI includes information from a variety of sources. For example, ESI would potentially include s from a plaintiff employee, an employee s supervisor or other key players such as human resource representatives. Additionally, this information may include statistical data regarding the demographics of the workforce. This information may be available on a number of sources, including but not limited to employee computers, company servers, back-up tapes, removable storage media (e.g. CDs and floppies), and archival/off-site storage. Therefore, it is important for both human resource representatives and corporate counsel to have a working knowledge of their company s IT systems and how and what information is retained on such systems. The new amendments of most importance to the Federal Rules of Civil Procedure address Rule 16 (pretrial conferences); Rule 26(a)(1) (initial disclosures); Rule 26(b) (discovery scope and limits); Rule 26(b)(5)(B) (inadvertent production); Rule 26(f) (pretrial conferences); Rule 33 (interrogatories); Rule 34 (production of documents); Rule 37 (the Safe Harbor Provision); and Rule 45 (subpoenas). These new amendments are summarized individually below: Rule 16 Pretrial Conferences Rule 16 addresses pretrial conferences and the need for parties to confer at the commencement of litigation about potential electronic discovery issues that may arise. While the rule does not require discussion if the parties expect that no electronic discovery will be at issue, the Comments to the rule state that its purpose is designed to alert the court to the possible need to address the handling of discovery of electronically stored information early in the litigation if such discovery is expected to occur. 1 In addition, the rule provides that 1 F.R.C.P. 16(b)(5). 1

2 the scheduling order may include any agreement the parties reach for asserting claims of privilege after inadvertent production. 2 According to the Comments, this provision demonstrates that the parties may enter into agreements that do not waive privilege and also demonstrates that the enforcement of these agreements will serve to minimize the costs and extent of a privilege review. Rule 26(a)(1) Initial Disclosures Rule 26(a)(1) provides that in its initial disclosures a party must provide 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 support its claims or defenses, unless solely for impeachment. 3 This rule requires the counsel to identify any ESI that will be used by his client in litigation. Therefore, it is important that counsel have a good knowledge of his client s electronic information system in order to address the availability of any necessary disclosures of ESI. Rule 26(b) Discovery Scope and Limits The Comments to Rule 26(b) separate the discovery of ESI into two categories: ESI that is reasonably accessible and ESI that is not reasonably accessible. 4 If ESI is reasonably accessible, a party must produce it. However, if the ESI is not reasonably accessible, the responding party must identify it as such. The opposing party and court will then determine whether the ESI need not be produced provided that the responding party provide enough detail [about the ESI which is not reasonably accessible in order] to enable the requesting party to evaluate the burdens and costs of providing the discovery and the likelihood of finding responsive information on the identified sources. 5 If the requesting party does not agree with the assessment that the ESI is not reasonably accessible, it can file a motion to compel discovery. On a motion to compel discovery, the party from whom discovery is sought must show that the information is not reasonably accessible because of undue burden or costs. 6 Most likely, the court will require that the responding party produce testimony or an affidavit from an individual with intimate knowledge of the responding party s electronic information system (e.g. an IT professional) to demonstrate that the ESI sought is not reasonably accessible. 2 F.R.C.P. 16(b)(6). 3 F.R.C.P. 26(a)(1). 4 See Comments to F.R.C.P 26(b); see also F.R.C.P. 26(b). 5 See Comments to 2006 Amendment to F.R.C.P. 26(b)(2). 6 F.R.C.P. 26(b). 2

3 If a court finds that the ESI sought is not reasonably accessible, the court may, nonetheless, order production upon good cause shown. In determining whether good cause has been shown, the court will examine the following factors: (1) the specificity of the request; (2) the availability of the information from other sources; (3) the failure to produce from other sources; (4) the likelihood of finding relevant, responsive information available only from this source; (5) the importance or usefulness of the requested information; (6) the importance of issues at stake in the litigation; and (7) the parties resources. Even if a court determines that a party must produce ESI that is not reasonably accessible, the court may limit the scope or place conditions upon the production. The Comments discuss that this may include a possible order that the requesting party pay part or all of the reasonable costs of obtaining information from sources that are not reasonably accessible. 7 In addition, the Comments discuss that a party s burden in reviewing the information for relevance and privilege may weigh against permitting the requested discovery. 8 Rule 26(b)(5)(B) Inadvertent Production Rule 26(b)(5)(B) addresses the assertion of privilege in the post-production of documents. The discovery of ESI will lead to a much larger paper trail as most people store an enormous amount of information on their computers, not knowing that this information may sometime be subject to disclosure in litigation. Due to the advancement of discovery and production of ESI, it can be expected that the volume of ESI produced will result in inadvertent production of documents that may be subject to privilege and/or work production exemptions. If a party discovers that it has inadvertently produced a document that is privileged it may request within a reasonable time after production, that the opposing party return, sequester or destroy the inadvertently produced document. In addition, the opposing party is under an obligation not to produce the information to a third party. As discussed previously, while Rule 26(b)(5)(B) deals with inadvertent production, the amendments to Rule 16 also provide that parties should agree upon how inadvertent disclosures and claims of privilege will be resolved. Without counsels pre-determination of 7 See Comments to 2006 Amendment to F.R.C.P. 26(b)(2). 8 Id. 3

4 how these issues will be resolved, a court is left to resolve these issues, thereby yielding uncertain results for the parties. Rule 26(f) Pretrial Conferences This rule seeks to identify possible disputes regarding ESI that may arise prior to trial. It requires opposing counsels to discuss any issues relating to preserving discovery information. This includes the form and production of ESI and claims of privilege. The Comments identify that the parties discussion should include discussion upon (1) the time period for discovery; (2) the sources of ESI to be examined; (3) the accessibility of the information; and (4) the burden or cost of retrieving and reviewing the ESI. As the Comments state, the parties discussion should pay particular attention to the balance between the competing needs to preserve relevant evidence and to continue routine operations critical to ongoing activities. 9 Rule 33 Interrogatories Prior to the new amendments, a party s interrogatories would include a definition of business records that distinguishes between paper and electronic business records. The new amendment to Rule 33 obviates the need for this distinction and provides that any review of business records should necessarily include a search of a party s ESI. Rule 34 Production of Documents Rule 34 provides a broad definition of ESI and, in short, provides that anything not in paper form may be discoverable under Rule 34. Rule 34 states that the requesting party can specify the form in which it wants the ESI produced. It also states that the opposing party may object to the requested form. If (1) the parties have not agreed to a form in their prior conferences; (2) the requesting party has not requested a form; and (3) the court has not ordered that the ESI be produced in a particular form, the producing party may produce the ESI in the form which it is ordinarily maintained, or in an electronically searchable form. If there is no court order as to form, the producing party may choose the form. Rule 45 Subpoenas Rule 45 addresses subpoenas duces tecum and the production of ESI. The rule provides that a subpoena can designate a form for production of ESI. It also provides that the entity or person served with the subpoena may object to the form as unduly burdensome or excessively costly. If the subpoena does not specify the form for the production of ESI, 9 See Comments to F.R.C.P. 26(f). 4

5 the responding party must produce the ESI in a form that it is usually maintained or that is reasonably useable. Finally, the rule provides that once the responding party produces the information, it does not have to produce the information in another form, unless so ordered by the court for good cause. Rule 37 - The Safe Harbor Provision Finally, Rule 37 addresses sanctions that may be imposed by a court if a party cannot or will not produce ESI information that is reasonably accessible or, in the case of ESI information that is not reasonably accessible, information that does not pose an undue burden or excessive costs due to production. Most importantly, Rule 37(f) provides a safe harbor for the inadvertent destruction or unavailability of discoverable ESI. Specifically, the rule states that [a]bsent 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. It should be noted that in order to utilize the safe harbor provision, a party is going to need to produce evidence and/or testimony of why the ESI is not available; and, more importantly, to demonstrate good-faith, the party is going to need to show how its electronic information system works. This will most likely require testimony from an individual with substantial knowledge of the operation of the party s electronic information systems (i.e. an IT professional). Considerations for Human Resource Representatives and Corporate Counsel Human resources representatives and corporate counsel should become familiar with the various requirements for discovery of ESI. Most importantly, they should become familiar with the their company s IT system and the company s records retention policies, including at what stage a litigation hold should be placed upon these records and which records should be within that hold. Employer s may want to consider designating an IT professional who will be able to clearly and concisely communicate any details and concerns about the employer s IT system to a court if testimony is necessary. Additionally, when producing ESI, it is important to consider the form that the information will be produced. If not specified by the plaintiff, it is best to produce the ESI in paper form, as this form is less suspect to manipulation. For further reference, the rules in black lined form may be found at (click on Pending Rules Amendments ). For further information about these rules and their effect upon your business, please contact Morgan, Brown & Joy at or go to 5

6 Ronald S. Allen is an attorney with Morgan, Brown & Joy, LLP, which focuses exclusively on representing employers in employment and labor matters. Ron may be reached at or This publication, which may be considered advertising under the ethical rules of certain jurisdictions should not be construed as legal advice or a legal opinion on any specific facts or circumstances by Morgan, Brown & Joy LLP and its attorneys. This newsletter is intended for general information purposes only and you should consult an attorney concerning any specific legal questions you may have. 6