New Electronic-Discovery Rules Specify New Duties for BusinessFebruary 2007 – Alerts Litigation and Corporate Department Alert
For the past several years litigants and judges have been addressing electronic discovery concerns through rules designed for paper discovery disputes. In response to this problem, the Supreme Court of the United States approved amendments to the Federal Rules of Civil Procedure which took effect on December 1, 2006, in recognition of the importance of electronic data, and to address the growing expense of responding to e-discovery requests.
As a result of the new amendments to the Federal Rules of Civil Procedure, every company has a new obligation to ensure that it preserves and manages its electronically stored information (“ESI”). In addition to the preservation requirements, all companies also have new duties for the production of their ESI.
Under the Federal Rules, ESI, including e-mails, graphs, charts, photographs, sound recordings, images, and other data-compilations from which information can be obtained, is discoverable in litigation. Litigants must preserve potentially relevant ESI, which includes not only the file created, such as a letter or report, but also the “metadata” about that file, such as where it is located in the computer, its size, who created it, and its history.
Any company may be asked to produce the preserved ESI in a particular form, or to produce it as the company ordinarily maintains the information in its business operations. In addition, the company may be asked for the inspection, copying, testing, or sampling of its ESI. The new amendments to the rules impose a burden on a company to collect, preserve, manage, find, review and copy relevant ESI. Failure to do so appropriately can result in sanctions that can critically impact the case and/or be expensive to the company.
Consequently, companies must learn to better manage their ESI in order to respond to discovery requests in a timely, yet least expensive and burdensome manner. A records retention and destruction policy and schedule, with key ingredients shaped to the individual needs of the company, is necessary. Waiting until a subpoena is received will be too late.
The pertinent provisions of the new discovery rule amendments can be summarized as follows:
- Fed. R. Civ. P. 16(b) now contains optional provisions for initial disclosure, including the option for agreement between the parties for asserting privilege or work product after production;
- Rule 26(b)(2) has been added to excuse a party from providing electronic discovery that is "not reasonably accessible because of undue burden or cost";
- Rule 26(b)(5) adds a procedure for a party to maintain a claim of privilege, even after production;
- Rule 26(f) has been added to ensure that Rule 26 conferences include a discussion of any issues relating to discovery of ESI and related claims of privilege or protection as trial-preparation material;
- Rule 33 has been amended to specify that interrogatory answers may refer to ESI;
- Rule 34(b) has been amended to add ESI to requests for production of documents, and it supplies a procedure for specifying and objecting to the form in which electronic information is to be produced. The default form for production is the one that is normally used or maintained, and the rule specifies that a party need not produce the same information in more than one form;
- Rule 37(f) addresses ESI lost due to routine operation of computer systems, and sets a higher standard for sanctions; and
- Rule 45 has been amended to apply the amendments to third party subpoenas (i.e., require companies who are not part of a lawsuit to produce their electronic data on short notice).
So what does this mean to the average business?
Develop a plan:
- if your business does not have a data retention and destruction policy; then create one that addresses in a good faith manner, both retention and disposition of paper and electronic records;
- perform an “electronic records inventory” that identifies the type and location of your company’s ESI;
- classify data as either accessible or non-accessible;
- implement a thorough “litigation hold” program for ESI and make sure all relevant employees expressly acknowledge if they receive this instruction;
- train staff on importance of litigation hold policies and data management policies;
- be prepared to demonstrate the foregoing efforts in the event ESI is either inadvertently destroyed or cannot be located.
HOW DOES YOUR COMPANY SCORE?
- Do you have a records retention policy that includes paper and electronic data, ESI and records?
- Do you have a records destruction policy that includes paper and electronic data, ESI and records?
- Do you have a records retention schedule that includes paper and electronic data, ESI and records?
- Do you have a protocol for paper, electronic data, ESI and records?
- Do you have a software program that assists in efficiently and timely responding to production requests?
- Is your policy, schedule, protocol and software program organized and coordinated?
- Do you have a plan for sound management?
- Do you have a response for “rush” orders from the court?
- Have you trained your employees to deal with records retention, destruction, and management?
If you have any questions regarding e-discovery or the new rules, we can help. Please contact any member of Fox Rothschild's E-Discovery Group:
*Gerald E.Arth, Dorothy M. Bollinger, Thomas A. Cunniff, James P. Dawson, Beth L. Domenick, Philip L. Hinerman, Steven K. Ludwig, Sharon Oras Morgan, *Francis G.X. Pileggi, Stephanie Resnick, Ronald J. Shaffer, Mark Soifer, *COMMITTEE CO-CHAIRS