Addressing state e-discovery issues through rulemaking: the case for adopting the 2006 federal amendments.

• Author: Allman, Thomas Y.

SIX YEARS ago, I argued in the pages of this Journal that the authors of the Federal Rules of Civil Procedure should take into account how the significant differences between hard copy and electronic information were impacting "both the litigation process and [the] business world." Since then, of course, the Civil Rules Advisory Committee mounted an intense rule drafting effort (2) resulting in the 2006 Amendments to the Federal Rules of Civil Procedure (the "2006 Amendments"). (3)

This article evaluates the efficacy of the 2006 Amendments and the extent to which they should serve as a model for State and District of Columbia rulemaking. A concerted effort should be made to incorporate the 2006 Amendments, especially in light of the practical compromise reached on preservation issues, including the important "gap filler" role played by the Sedona Principles. (4)

An Appendix details the rulemaking efforts in twenty-six states and the District of Columbia.

1. E-Discovery

   Pre-trial discovery is essential to the litigation process. As the Supreme Court noted in 1947, (4) "[m]utual knowledge of all the relevant facts gathered by both parties is essential to proper litigation. To that end, either party may compel the other to disgorge whatever facts he has in his possession."

   Of course, the Court conceded in the same case that "discovery, like all matters of procedure, has ultimate and necessary boundaries." (5) Those "ultimate and necessary" boundaries have been severely tested in federal courts by the excesses of electronic discovery resulting from a focus on email in discovery and an excessive quest for duplicative and elusive information regardless of the costs or burdens involved. Although the volume of problems reported by state courts is less, there is no reason to believe that e-discovery issues are likely to be any less vexing there in the future.

   No aspect of e-discovery has been more contentious or difficult than the "duty to preserve" as applied to electronic information.

   Federal Amendments and the Duty to Preserve

   The effort to amend the Federal Rules can be traced to the 1999 formation of a Discovery Subcommittee of the Civil Rules Advisory Committee charged with the responsibility to identify issues peculiar to electronic discovery that might justify rules amendments. As part of that effort, mini-conferences on e-discovery were held at Hastings and Brooklyn Law Schools during 2000 where discussion of the challenges of preservation and spoliation took center stage. There was also a certain amount of "rulemaking" fatigue expressed in light of the number of recent discovery rule changes. (6)

   Those of us with ongoing responsibility for major litigation advocated action to identify and clarify preservation obligations. To us, there seemed to be a dangerous disconnection between the way in which courts viewed information management and the way that the business and technical world actually operated. We argued that the fear of sanctions for inadvertent loss of electronically stored information ("ESI") had created an unfair chilling effect and distorted business processes by encouraging over-retention of information. (7)

   In December, 2000, for example, I wrote to (then) Magistrate Judge John Carroll, Chair of the Discovery Subcommittee, (8) to suggest adoption of a rule that a party should not be required to suspend the operation of electronic systems which were operated in good faith without a prior court order. (9) I also suggested that only willful violations of preservation orders should justify imposition of sanctions. As far as I can tell, this was the first explicit suggestion for preservation rules or a safe harbor, which I amplified in subsequent articles. (10)

   The Discovery Subcommittee met numerous times over the next few years and ultimately developed formulations for including preservation obligations in the discovery rules. A proposal drafted for the seminal Fordham E-Discovery Conference (11) in 2004 would have amended Rule 26 or created a new Rule 34.1 to provide that parties need not suspend the "operation in good faith" of "disaster recovery or other [computer] systems" provided that one day's backup was retained. It would also have provided that information in inaccessible form did not have to be preserved unless a court ordered the party to do so. (12)

   The Subcommittee proposal also recommended that Rule 37(f) be added to make it clear that no sanctions should issue for a failure to produce ESI unless the party "willfully or recklessly" deleted or otherwise made ESI unavailable after having been served with a request that described it with reasonable certainty. (13) This rule was described as a "safe harbor," a label which has survived, although heavily criticized because of the inherent limitations and exceptions in the final articulation. (14)

   Only the "safe harbor" provision survived the rulemaking process. (15) Articulation of the duty to preserve was left to the common law as informed by best practice e-discovery guidelines such as the Sedona Principles.

   The 2006 E-Discovery Amendments

   The E-Discovery Amendments of 2006 address e-discovery issues by a series of "technologically neutral" provisions.

   First, parties must discuss preservation and other key issues before the initial scheduling conference. (16) This crucial shift -placing the topic of "preservation" on the agenda in the Federal Rules for the first time - is intended to encourage practical party agreements, as reinforced by the limited preservation "safe harbor" in Rule 37(f). The "good faith" effort required by that rule involves the creative use of reasonable "litigation holds" (17) when parties anticipate or experience commencement of litigation. Thus, it is to existing case law and the Sedona Principles that courts have (18) and will continue (19) to turn to "fill in" the preservation gaps left open by the rulemaking process. (20)

   Rule 26(f) and 16(b) also require that the parties discuss the form or forms of production and the methods by which privileged information and work product are to be accommodated. If the parties cannot agree on how to proceed, a court must assess the issues in light of certain default positions stated in the Rules. (21) Indeed, in order to induce parties to reach agreement, some courts provide draconian provisions to govern the conduct of e-discovery absent agreement. (22)

   Second, under Rule 26(b)(2)(B), 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." (23) A court may ultimately order production for good cause if the requesting party is prepared to pursue the matter and can carry the burden of proving it. Some form of cost shifting remains an option. (24)

   Early experience with the Federal Amendments is encouraging. Attorneys and their corporate clients are reportedly "getting it." Magistrate Judges on the firing line in the federal system report that parties are better prepared for "meet and confers" and that, contrary to the fears expressed by some, (25) corporate entities are meeting their disclosure requirements. There are also signs of a more balanced approach by courts in evaluating the good faith discharge of...