Chapter § 3.02 Management of the Costs and Risks of e-Discovery in Litigation and Investigations
| Jurisdiction | United States |
| Publication year | 2020 |
§ 3.02 Management of the Costs and Risks of e-Discovery in Litigation and Investigations
[1] Impact of Federal Rules of Civil Procedure and Federal Rules of Evidence
[a] Overview
On December 1, 2015, several amendments to the Rules of Civil Procedure went into effect, reshaping the civil discovery process and e-discovery in particular. Indeed, in his Year-End Report on the Federal Judiciary, Chief Justice John Roberts noted that the most recent amendments to the Federal Rules of Civil Procedure were intended to: (1) encourage greater cooperation among counsel; (2) focus discovery on what is truly necessary to resolve the case; (3) engage judges in early and active case management; and (4) address serious new problems associated with vast amounts of electronically stored information.35
The notes to the amended Rules (the Notes) also acknowledge the explosion in information and Electronically Stored Information (“ESI”), as well as advancements in technology. For instance, the notes to amended Rule 26(b)(1) state that “[c]omputer based methods of searching such information continue to develop, particularly for cases involving large volumes of electronically stored information,” and “[c]ourts and parties should be willing to consider the opportunities for reducing the burden or expense of discovery as reliable means of searching ESI become available.”
[b] Scope and Proportionality
Among other amendments,36 Rule 26(b)(1) was amended to make clear that discovery is limited to information that is relevant to any party’s claim or defense and “proportional to the needs of the case.” It thus clarified that the proper scope of discovery does not include the case’s general subject matter or information “that is reasonably calculated to lead to the discovery of admissible evidence.” Thus, the “reasonably calculated to lead to the discovery of admissible evidence” language has been removed from the rule in favor of proportionality language. As the Committee explained, the adjustment to Rule 26(b)(1) is intended to “prompt a dialogue among the parties and, if necessary, the court, concerning the amount of discovery reasonably needed to resolve the case.” Recent cases have discussed this new emphasis on “proportionality” and have noted that the proportionality requirement is not a new one, but pre-existed the 2015 Amendments. Even so, the amendments serve to reinforce the importance of proportionality, or, as one court noted, “it serves to exhort judges to exercise their preexisting control over discovery more exactingly.”37
[c] Failure to Preserve ESI
The 2015 Amendments now provide more guidance for a court on how to craft relief for a failure to preserve ESI. Relief is available only when ESI has been lost because of a party’s failure to take reasonable steps to preserve it, and it cannot be restored or replaced through additional discovery. A court may grant relief only upon a finding that the other party suffered “prejudice” from the loss of information, and the court may order “measures no greater than necessary to cure the prejudice.”38 As for reasonable steps to preserve, and alluding to routine auto-deletion functions that many electronic systems now have, the advisory committee’s note states that
[d]ue to the ever-increasing volume of electronically stored information and the multitude of devices that generate such information, perfection in preserving all relevant electronically stored information is often impossible. As under the current rule, the routine, good-faith operation of an electronic information system would be a relevant factor for the court to consider . . . although the prospect of litigation may call for reasonable steps to preserve information by intervening in that routine operation. 39
The note also states that when information is lost, “substantial measures should not be employed to restore or replace information that is marginally relevant or duplicative.”
A court may impose drastic sanctions (for example, an adverse jury instruction or dismissal) only if it finds that a party acted with an intent to deprive the other party from using the information in the litigation. As the Notes explain, this amendment rejects earlier cases that had authorized adverse-inference instructions on a finding of mere negligence or gross negligence.
[d] Other Discovery Rules
Other significant amendments that affect e-discovery issues are worthy of note.
[i] Early Permissible Document Requests
Rule 26(d)(2) was amended to permit the parties to serve document requests under Rule 34 before the Rule 26(f) conference related to discovery planning. This now allows (but does not require) parties to address issues presented by the document requests at the 26(f) conference. The requests are considered served at the conference and parties must respond within 30 days of the conference. Also at the Rule 26(f) conference, the parties must address on ESI preservation and the form or forms in which it should be produced, and the discovery plan submitted by the parties must address issues of ESI preservation.
[ii] Promotion of Early Case Management
Rule 16 was amended to promote earlier case management and court intervention by encouraging a live scheduling conference with all parties present (rather than by mail, which was allowed under the earlier rule) to occur at the earlier of 90 days after any defendant has been served (reduced from 120 days) or 60 days after a defendant has appeared (reduced from 90 days). To encourage the efficient resolution of discovery disputes without the delay and burdens attending a formal motion, the notes to the amended rules also allow the court to issue an order that “before filing a motion for an order relating to discovery the movant must request a conference with the court.”
More generally, and also consistent with the proposed rules’ emphasis on increasing dialogue between the parties (and early intervention by the court if needed), Rule 1 calls upon the parties and the court to cooperate to ensure that the rules are employed to promote efficiency.
[iii] Objection with Specificity
Rule 34(b)(2), relating to document requests, now provides that a party must make specific (rather than boilerplate) objections, state whether it is withholding any responsive documents based on an objection, state whether it is producing copies of documents or ESI instead of permitting inspection, and specify the reasonable time when production will be completed.
The rules do not altogether eliminate the reality of asymmetric discovery. The Notes acknowledge that one party may have more information than another (“information asymmetry”) and will therefore often bear a heavier burden in responding to discovery. But the amendment’s focus on cooperation and proportionality in e-discovery provides a springboard from which to engage with the other side early in discovery. The Notes also encourage active judicial management of discovery to resolve disputes.
[e] Federal Rule of Evidence 502
Rule 502 was enacted as a result of privilege issues presented by e-discovery. The rule formalizes a subject matter waiver of attorney-client and work product privileges through voluntary disclosure, but includes an exception for “inadvertent disclosure.”40 Rule 502(a) provides that voluntary disclosure of attorney-client privilege or work product information “extends to an undisclosed communication or information in a federal or state proceeding only if: (1) the waiver is intentional; (2) the disclosed and undisclosed communications or information concern the same subject matter; and (3) they ought in fairness to be considered together.”41 A subject matter waiver is imposed in situations in which fairness requires further disclosure of related, protected information, in order to avoid misleading the opposing party to their detriment.42
However, Rule 502(b) provides an exception to this general rule for inadvertent disclosure if (1) the disclosure was inadvertent; (2) the disclosure was made in connection with federal litigation or administrative proceedings; and (3) the holder of the privilege took reasonable precautions to prevent disclosure and prompt measures, once he knew or should have known about the disclosure, to rectify the error.43 Further, Rule 502(c) provides that when the disclosure is made in a state proceeding and is not the subject of a state-court order concerning a waiver, the disclosure does not operate as a waiver in a federal proceeding if the disclosure: (1) would not be a waiver under the rule if it had been made in a federal proceeding; or (2) is not a waiver under the law of the state where the disclosure occurred.44-45
Under Rule 502, clawback and quick peek agreements are binding on third parties who were not a party to the case if the agreement is incorporated into a federal court order.46 Overall, the rule tries to resolve longstanding disputes over inadvertent disclosure and selective waiver and tries to help limit the costs of an ESI discovery review.
[2] Managing the Risks of Privilege Waiver
Reviewing client documents to avoid the production of privileged information has always been part of the discovery process, but the massive proliferation of electronic information has caused privilege review to become an increasingly daunting and expensive task. Even inadvertent production of privileged material can create a risk of waiver of the claimed privilege.47 The costs of conducting a page-by-page privilege review in the new e-world can be astronomical, but there may be no viable alternative to performing a carefully conducted privilege review.
[a] Federal Rule of Evidence 502
As mentioned above, Rule 502 was enacted as a result of privilege issues presented by e-discovery. The rule formalizes a subject matter waiver of attorney-client and work product privileges through voluntary disclosure, but includes an exception for “inadvertent disclosure.”48 Rule 502(a) provides that voluntary disclosure of...
To continue reading
Request your trial