e-discovery 2.0

David Isom and I have collaborated a number of times over the years on a variety of electronic discovery presentations and articles.  So, when I saw that California was proposing new state electronic discovery rules that had some interesting variances vis-à-vis the FRCP, I thought David might be able to give us the benefit of his unique and sage perspective.

1. David, as the author of the definitive piece about inaccessibility under the Federal Rules of Civil Procedure (The Burden of Discovering Inaccessible Electronically Stored Information: Rules 26(b)(2)(B)& 45(d)(1)(D)), how many litigators do you think really understand and use these provisions?

I sense that litigators with a basic understanding of the new electronic discovery rules know that the inaccessibility rule exists and provides some protection for parties against unduly burdensome discovery.  Few seem to have noticed that Rule 45 contains an inaccessibility provision whose language is similar to the Rule 26(b)(2)(B) inaccessibility protection for parties, but whose protections as applied to subpoenaed nonparties are greater than the protections for parties.  Here are the three most basic and exciting (or excruciating, depending upon your side of the fence) impacts of the new inaccessibility rules:

(1) The inaccessibility rule has completely changed a nonparty’s leverage to narrow subpoenas seeking electronically stored information (ESI).  Subpoenaed nonparties now have protection against fishing expedition subpoenas that did not exist before — to narrow subpoenas, or to require the payment of costs and attorney fees in responding to broad subpoenas.

(2) Cost-shifting, for parties as well as nonparties, is now controlled by the inaccessibility rules.  Several federal courts have recently held that discovery cost-shifting is allowed only if these inaccessibility rules provide for cost-shifting under the circumstances.

(3)  The inaccessibility rules must be asserted and asserted timely if they are to provide protection.  For example, after counsel for nonparty Office of Federal Housing Enterprise Oversight spent $6 million of our money responding to a subpoena in In re Fannie Mae Securities Litigation, 552 F. 3d 814 (D.C. Cir. 2009), counsel tried to recover the money on an inaccessibility cost-shifting argument.  To which the United States District Court and the Court of Appeals for the District of Columbia said, in essence:  you might have had a good idea, and saved your client $6 million, had you raised the arguments before agreeing to produce the documents and spending all that money.  But you agreed to produce the ESI and cannot come back now and get any protection.  You should have studied the inaccessibility rule.

2. So, assuming we’re still early in the learning curve, do you think these FRCP provisions are really gaining traction either in practice or in the case law?

Judging by the number of reported decisions, the inaccessibility rules are receiving as much attention as the other new features of the federal electronic discovery rules.  Which, I suppose, is damnation by faint praise — a large percentage of the reported cases are about what should happen because lawyers didn’t understand or apply the rules properly. Cason-Merenda v. Detroit Medical Center, 2008 U.S. Dist. LEXIS 51962 (E.D. Mich. July 7, 2008) is a good example.  There, defendant’s counsel produced ESI without any objection and without pre-identifying the ESI as inaccessible.  After production, counsel tried to get their opponents to share the cost of producing the allegedly inaccessible ESI.  The court correctly held that the ESI must be identified as inaccessible in advance of the production to give the seeking party the option to decide whether the discovery is really worth the candle, especially given the prospect that the cost of production might be shifted to the seeking party.

3. What are your thoughts on the new California state provisions regarding “inaccessible” ESI where they’re proposing a different treatment and slightly different burden?  And, will this approach ultimately weaken responding parties abilities to make “inaccessible” claims successfully?

I am not an expert on California law, but am keenly interested in what the states are doing with electronic discovery.  As of this writing (May 2009), it appears that California Assembly Bill No. 5 has not yet been enacted.  Yet, here are some thoughts about how the inaccessibility provisions of this bill, if enacted, would compare to the federal rules of inaccessibility.  The bottom line is that the California bill is remarkably similar to the federal rules on inaccessibility issues.

Under the federal rules, a party seeking protection for inaccessibility initiates the process by “simply” (so far, the courts have tolerated fairly sparse identifications as satisfying this requirement) identifying the sources of information claimed to be not reasonably accessible because of undue burden or cost.  The subpoenaed nonparty seeking protecting can initiate by identifying the ESI sought as not reasonably accessible in an objection, motion to quash or motion for protective order.  In the federal system, either the seeking party or the protecting party or nonparty can move to test the issue (one by a motion to compel, the other by a motion for protective order).

The California bill is nearly identical to the federal process.  The bill provides that a person resisting a subpoena for ESI on inaccessibility grounds may “oppose” the subpoena.  If this means that such a person can either object or move to quash or move for a protective order, it appears to be the same as the federal rule.  The California bill specifies that a party resisting a production request on inaccessibility grounds initiates protection by identifying the types or categories of sources of electronically stored information that it asserts are not reasonably accessible.  This is similar to the federal rule, whose text requires identification of “sources”, but whose committee notes clarify that merely “types or categories of sources” of inaccessible, responsive ESI need be identified.  The California’s Legislative Counsel’s Digest indicates that the process for protecting inaccessible ESI, apparently for both parties and subpoenaed nonparties, can be initiated by moving for a protective order, or by opposing or objecting to the subpoena or request.

Even if there are any distinctions in the above processes, the two processes appear to merge thereafter.  In both systems, the motions to test inaccessibility must be preceded by a conference of counsel to attempt in good faith to resolve the issue, together with a certificate that such an attempt has been made.  In both, the person seeking protection has the burden of proving inaccessibility (this is even true in the federal system where the process is initiated by the seeker’s motion to compel).  In both systems, if the holding party proves inaccessibility, the burden shifts to the seeking party to show good cause for producing the ESI, despite its inaccessibility.

And in both, if good cause is shown, the court may still impose conditions upon production, including cost-shifting.  In both, the factors that the courts are to consider in determining good cause are similar — more accessible, less burdensome sources; cumulativeness of the discovery; whether the burden or expense of the discovery would outweigh the likely benefit of the discovery, considering such things as the importance of the issues, the amount in controversy and the resources of the parties.  One possible difference between the California bill and the federal rules on good cause is that the California bill requires the court to limit discovery if any of the listed factors exists, where the federal rules and committee notes seem to envision a pure balancing.

In sum, the California bill essentially adopts the federal approach.

Some confusion has arisen because California commentators have drawn a distinction between the California bill and a misinterpretation of the federal rules.  One commentator, for example, stated that “under the federal rules, if ESI is inaccessible, the responding party simply doesn’t need to produce such documents.”  This ignores the affirmative identification duty that I discussed above.

4. With the rapid advancements in ESI restoration technologies, which the Comments to the Rule anticipated, are backup tapes in your mind still “inaccessible”?

The rules make it clear that inaccessibility cannot be measured by technology category alone.  The test does not depend upon the type of technology involved, but upon the balancing of need, technology, importance, spoliation, relevance, alternative sources and potential benefit against overbreadth, burden and cost.  So, if backup tapes are the only source available for important, relevant information because more accessible relevant sources have been spoliated, backup tapes will not be deemed inaccessible.  Without spoliation, if relevant ESI is available on active sources, backup tapes may not be discoverable.

Perhaps the main reason that categories of technology cannot be deemed per se accessible or inaccessible is that the technology is changing so fast.  Many search tasks that were expensive and difficult five years ago are much more doable now.

5. Finally, what do you think the future holds for these FRCP sections?

The inaccessibility rules will continue to be the main battleground where the great debates about the value and cost of electronic discovery will be fought, since these rules are specifically tailored to balance all of the interests in that debate.

Some groups are claiming that electronic discovery is wasteful and expensive, and that the new rules exacerbate the problem.  Of course, the federal rules ought always to be analyzed for problems and need for improvement, but I haven’t heard informed, thoughtful, helpful suggestions for improvements to the federal rules in the recent debate.  Overall, I see the adoption of the federal rules as having helped reduce the cost of electronic discovery, not increased the cost.

Similar to the TV show, “Who Wants To Be A Millionaire” this blog entry features the “lifeline” option. Sure, I could’ve gone solo on the post, but when my friend and legal discovery guru David Isom chimed in with his usually insightful analysis, I couldn’t resist the temptation to add his comments about e-discovery.

Ok, so on to the discussion… There’s been no shortage of fodder about the impact of early meet and confer conferences on the e-discovery process. In Mikron (Mikron Ind., Inc. v. Hurd Windows & Doors, Inc., 2008 WL 1805727 (W.D. Wash. Apr. 21, 2008)) the court roundly rejected the Defendant’s petition for a protective order when they asked the Court to shift the costs of electronic discovery to the plaintiff because “searching through their electronically stored information (ESI) would generate substantial costs and yield cumulative results.”

The court used a two-part approach to deny the petition. First, the court held that “defendants failed to discharge their meet and confer obligations in good faith, as required by Fed.R.Civ.P. 26(c).” Elaborating on the purpose behind the Rule:

“[C]ompliance with the Rule would have involved a more substantive discussion regarding defendants’ difficulty in producing responsive ESI, the extent to which defendants have searched ESI to date, and the foundation for defendants’ belief that a more thorough search of ESI, including backup tapes, would yield only information that has already been produced. Plaintiff’s counsel stated that no meaningful discussion of these issues took place before the motion was filed, and defendants have submitted no evidence to dispute this fact. Instead, plaintiff’s counsel received no response when it identified specific “gaps” in production and reasonably asked defendants to articulate the foundation for their assertion that unsearched ESI would produce “little additional responsive information.” … A conversation with opposing counsel does not become a “meet and confer” conference simply because a party has attached that label to the discussion.”

As if that trouncing wasn’t enough, the court went on to conclude that even if the defendant had overcome its meet and confer burden, it would have failed on the merits because they didn’t sufficiently address the “inaccessibility” provisions of (Rule 26(b)(2)(B)).

“In alleging that continued discovery of their ESI would be unduly burdensome, defendants offer little evidence beyond a cost estimate and conclusory characterizations of their ESI as “inaccessible.” Defendants have not provided the Court with details regarding, for example: (1) the number of back-up tapes to be searched; (2) the different methods defendants use to store electronic information; (3) defendants’ electronic document retention policies prior to retaining an outside consultant; (4) the extent to which the electronic information stored on back-up tapes overlaps with electronic information stored in more accessible formats; or (5) the extent to which the defendants have searched ESI that remains accessible. Beyond the estimated costs, defendants have not demonstrated an unusual hardship beyond that which ordinarily accompanies the discovery process.”

Now, on to the lifeline…as usual, David’s insight into this ruling was right on, which is not surprising since he’s the co-chair of Greenberg Traurig’s national e-Discovery & e-Retention Practice Group. His response (with a bit of editorializing) was:

Even this short opinion denying a motion for protective order has important implications for e-discovery. Mikron is significant for the following reasons:

1. It demonstrates the level of facts needed to meet the burden to get a protective order limiting the discovery of ESI
2. It shows the diligence needed to make a litigation hold worth the paper that it is not written on
3. It’s a useful explication of the burden-shifting of the new inaccessibility provision – Rule 26(b)(2)(B)
4. It limits what might have been seen as free-ranging cost-shifting (ala Zubulake and Rowe) to rules-based factors such as in Rule 26(b)
5. Finally, it’s a good discussion of the types of information that will be needed to meet the initial burden of establishing inaccessibility

In sum, David points out that a big gap exists between the mere comprehension of both the new meet and confer provisions and the “inaccessibility” section. Like so many areas of the law, just knowing the rules doesn’t mean you have the facts to support your position. So, work with your internal IT folks, vendors, partners, etc. to get a “lifeline” of your own. Failure to do so will probably leave you looking for answers.

For those interested in really being able to comply with these new standards, please see another collaboration with David, which delves into the nuances of Rule 26(b)(2)(B).