New FRCP Rules: What Does it Mean for You -- Michele C.S. Lange, Esq.

New FRCP Rules: What Does it Mean for You    

Michele C.S. Lange, Esq.   

On December 1, 2006, the way in which we handle computer documents in discovery changed dramatically. After more than five years and countless hours of work by Advisory Committee members, proposed changes relating to electronically stored information (ESI) in the Federal Rules of Civil Procedure (FRCP) recently took effect. The changes to Rules 16, 26, 33, 34, 37 and 45 offer guidelines for counsel as they make decisions about the relevance, discoverability, production and costs associated with email, word processing documents, spreadsheets, databases and more.

The adoption of these new rules makes electronic discovery a reality for all practitioners. As a modern lawyer, are you up to speed on the new FRCP rules so you can confidently implement these changes? Do you know:

• How you should change your approach to pre-trial conferences?
• Whether the new rules affect your obligation to preserve ESI?
• Whether the new rules require native productions?
• How much safety is provided by the “safe harbor” provision?

This article will address these questions, examine some of the key changes to the FRCP as they relate to ESI and highlight the impact these changes will have on day-to-day legal tasks. Specific amendments to the text of key rules are included, with newly added text underlined and in bold type and eliminated text in strikethrough type.

Definition of ESI

Rule 34(a) contains what may be the most important--albeit fundamental—e-discovery amendment. The Rule now provides that litigants in federal courts may request computerized data during legal discovery with the assurance that ESI will be recognized as a type of discoverable information. In addition, requesting parties now have the ability to “test or sample” materials sought under the rule, which is an addition to the former right to “inspect and copy.” Specially, the new rule requires parties “to produce and permit the party making the request, or someone acting on the requestor’s behalf, to inspect, and copy, test, or sample any designated documents or electronically stored information…” Together, these provisions formalize practices that have already been occurring in some cases and bring new focus for judges and practitioners that have previously avoided exchanging electronic documents.

While Rule 34(a) expressly clarifies that ESI is discoverable, requesting parties should beware. This new language does not open the door for “fishing expeditions” of your opponent’s IT architecture. Practitioners should be certain to craft electronic discovery requests that do not extend beyond what is “reasonable.” Narrowly tailored document requests will increase counsel’s chances of identifying and actually receiving the most pertinent information relevant to the claims and defenses associated with the case.   

Early Case Assessment   

When ESI is involved in civil litigation, parties cannot over-plan or over-communicate. Accordingly, Rule 26(f) was amended to require early discussion of issues relating to ESI, and Rule 16(b) was amended to call for the results of such discussions to be reported to the judge.   

These “early case assessment” rules do not dictate a precise formula for e-discovery. Instead they establish a timeframe for discussing ESI issues early on in the case and outline a high-level checklist of discussion topics while leaving room for the parties to work out the details of their own discovery plan.   

Specifically, Rule 26(f) states that parties must confer “to discuss any issues relating to preserving discoverable information and to develop a proposed discovery plan that indicates the parties’ views and proposals concerning: … (3) any issues relating to disclosure or discovery of electronically stored information, including the form or forms in which it should be produced; (4) any issues relating to claims of privilege or protection as trial-preparation material, including – if the parties agree on a procedure to assert such claims after production – whether to ask the court to include their agreement in an order; …”   

Practitioners should use these conferences as an opportunity to ensure the opposing party and court understand the potential technological issues involved in collecting, reviewing, processing and producing any electronic data requested. Counsel should clarify expectations regarding document preservation, search strategies, collection, keyword lists, processing and cost-allocation. Each side also should establish which sources of data it expects to receive from their opponent, and the format in which they expect to receive it. Moreover, the conference affords counsel an opportunity to raise concerns about their opponent’s preservation protocols. Since certain sources of crucial data can be inadvertently destroyed simply by booting a computer, attorneys must protect their clients by ensuring any case-supporting evidence in their opponents' possession is properly preserved.   

Limited Obligation to Produce Data That is Not Reasonably Accessible   

Rule 26(b)(2)(B) is an entirely new addition to the Federal Rules of Civil Procedure. It recognizes some of the special features of ESI, namely the volume of information and the many locations in which it can be found. This amendment allows a producing party to not produce inaccessible ESI unless the requesting party can demonstrate good cause for production in spite of the burden and cost.   

Specifically, the rule states:   

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 may nonetheless order discovery from such sources if the requesting party shows good cause, considering the limitations of Rule 26(b)(2)(C). The court may specify conditions for the discovery.   

How does this new rule impact discovery practices? Attorneys should familiarize themselves with their clients’ ESI to ensure that they are able to make educated decisions about its accessibility. This means asking these important questions:   

• Location - Where does the data exist? How hard is it to access that data?   
• Hardware/Software - What is the condition of the media on which the data resides? Is any special software needed to access the data?   
• Time/Cost – What efforts must be undertaken to retrieve the data?   

Most importantly, counsel must recognize that accessibility determinations vary on a case by case basis and that data that is deemed inaccessible today might be deemed accessible tomorrow because of changing technology. Savvy practitioners will engage an e-discovery expert to assist in quantifying accessibility and demonstrating technical burdens and costs to the court.   

Inadvertent Production of Privileged Information   

Because of the large volume and high degree of complexity associated with ESI, there is an increased risk of inadvertent disclosure of privileged information. To that end, Rule 26(b)(5)(B) adds a framework for producing parties to notify the opposing party and court and retrieve the information should privileged information be inadvertently produced.   

Specifically, the rule states:   

Information Produced. If information is produced in discovery that is subject to a claim of privilege or 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. A receiving party may promptly present the information to the court under seal for a determination of the claim. If the receiving party disclosed the information before being notified, it must take reasonable steps to retrieve it. The producing party must preserve the information until the claim is resolved.   

Rule 26(b)(5)(B) is intended to work in conjunction with Rule 26(f), which directs the parties to discuss privilege issues in the early meet and confer sessions, perhaps entering into a non-waiver agreement (including so-called “clawback” and “quick peek” agreements). However, counsel should fully discuss these agreements with the opposing party and enter into them with caution. Further, the litigation team should conduct a through privilege review and utilize cutting-edge technology solutions, such as online document review tools, to reduce the risk of inadvertent production.   

Production Format for ESI   

Another important issue associated with e-discovery is production format. Parties must consider how and in what format responsive documents will be exchanged in discovery. The amendment to Rule 34(b) permits the requesting party to designate the format for production. If the production format is not specified by the requesting party, the responding party can state the format it intends to provide and produce the ESI either as it is ordinarily maintained or in a reasonably usable format.   

Specifically, the rule states:   

Unless the parties otherwise agree, or the court otherwise orders:   

(i) a party who produces documents for inspection shall produce them as they are kept in the usual course of business or shall organize and label them to correspond with the categories in the request; 
 

(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; and   

(iii) a party need not produce the same electronically stored information in more than one form.

Attorneys for the producing party should be knowledgeable enough about their client’s ESI, and the advantages and disadvantages of the various production formats, to object to a specified production format if necessary. Likewise, attorneys for the requesting party should be knowledgeable enough about the associated benefits and drawbacks to ensure they receive the information they are requesting in an optimal format.    

Today, four formats exist for review and production of ESI and paper documents alike:   

• Online repository tools containing responsive documents   
• Native files   
• Litigation support load files, TIFF images, metadata and extracted text   
• Printed paper   

The default production format in Rule 34(b) will allow for either a native production (since that is the ordinarily maintained format of ESI) or a “reasonably useable” format such as litigation support load files or online repositories. Paper document productions are likely on the decline because of usability limitations (e.g., not easily searched or transported).   

No single production format is the perfect solution for every situation. Making informed production format decisions will avoid frustrating the litigation support team while increasing efficiency and decreasing overall client expense. In short, attorneys must consider the expense associated with both production and review as well as the type of information sought during the case in order to select the right production format.   

Safe Harbor for Routine Destruction of Electronic Data   

Electronic data is inherently fragile, and thus easy to lose or destroy. New provisions in Rule 37(f) (so-called the “safe harbor from sanctions”) offers limited protection against sanctions for a party’s inability to produce lost ESI.   

Specifically, the rule states:   

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 Rule does not expressly clarify what is meant by the term “routine, good-faith operation of an electronic information system” but the Committee Note offers that it refers to “the ways in which such systems are generally designed, programmed, and implemented to meet the party’s technical and business needs.” The Committee Note explains that steps taken by a party “to comply with a court order in the case or party agreement requiring preservation of specific electronically stored information” should be considered but the Committee Note does not flesh out a list of other factors.

It should be noted that Rule 37(f) only limits sanctions issued pursuant to the Federal Rules of Civil Procedure and does not alter the court’s ability to impose sanctions derived from the court’s inherent authority or any other source. Moreover, even when information is lost due to a party’s good-faith routine operation of a computer system, the amendment allows for sanctions under the Federal Rules in “exceptional circumstances.”   

Both client and counsel have a duty to ensure that data that is reasonably likely to become subject to discovery is not inadvertently destroyed. Good faith steps to preserve discoverable ESI may require suspension of document destruction systems to prevent loss of electronic information. To that end, upon notice or reasonable anticipation of litigation, counsel should communicate directly with key players within the client organization to ensure that a litigation hold is put in place. Once a hold is in place, counsel should actively monitor suspension measures and personally ensure compliance by periodically re-communicating and re-issuing notices, especially during protracted litigation. The hold should remain in effect until a final judgment and award is entered and all appeals deadlines have passed; a final settlement agreement has been reached and a formal release has been signed by all parties; or the case is dismissed with prejudice and no outstanding related claims remain.

Conclusion

These changes will impact almost every case in federal court, and a vast majority of state court cases as state legislatures adopt the new FRCP provisions in full or in part. E-discovery is no longer a best practice; it is the required practice and could lead to malpractice for incorrect application of the new Rules. The new Federal Rules of Civil Procedure are here. Are you ready?

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Michele C.S. Lange, Esq. is a staff attorney in the Legal Technologies business line at Kroll Ontrack Inc. Kroll Ontrack provides electronic discovery, paper discovery and computer forensics services to law firms, corporations, government agencies and individuals.