Federal Courts Adopt Electronic Discovery Rules

For the first time, the Federal Rules of Civil Procedure (FRCP) explicitly recognize electronically stored information (or "e-discovery") as requiring specific rules governing discovery.  The amendments, effective December 1, 2006, broadly incorporate e-discovery as subject to disclosure requirements, and provide a framework for resolving related issues.

The amendments aim to strike a balance between the duty to preserve and produce e-discovery while recognizing that certain forms can be too burdensome to retrieve.  A safe harbor from sanctions is also included for circumstances in which e-discovery is automatically deleted as part of "good-faith" "routine" system operations; in other words, deleted without any intent to destroy evidence.  The amendments recognize the increased risk of a party inadvertently disclosing privileged information due to the dynamic and voluminous nature of e-discovery, offering procedures to minimize and resolve such situations.

In sum, the e-discovery amendments:

• Explicitly recognize e-discovery as information in which a party has the duty to preserve, search and disclose;

• Require parties to discuss early on (and alert the court of) anticipated e-discovery issues, including production form, the ease of review, and potential for inadvertently disclosing privileged documents;

• Provide a default standard for parties to produce e-discovery as it is "ordinarily maintained or reasonably usable," except where it is shown that such information is "not accessible because of undue burden or cost;"

• Create a safe harbor from sanctions where a party fails to preserve e-discovery as a result of routine, good-faith computer operations systems; and

• Add procedures for protecting inadvertently disclosed privileged information, given the increasing risk of producing privileged information in dynamic e-discovery forms.

The new rules recognize it was becoming "increasingly difficult" to fit all forms of e-discovery into the conventional notion of a "document."  The amendments confirm e-discovery stands on equal footing with discovery of traditional paper documents.  Thus, business records searches conducted in response to discovery requests must now include a search of e-discovery.  The amendments are intended to reach an expansive and broad range of e-discovery, including e-mail, electronic spreadsheets, sound files and material from databases.  The concept of e-discovery is flexible to adapt to developing technologies.

Parties are now required to produce e-discovery that is relevant, not privileged and reasonably accessible.  Procedures for specifying and objecting to particular forms of e-discovery in document requests are also provided.  Additionally, parties may substitute responses to interrogatories for e-discovery where the burden of deriving such responses would be equally burdensome to both the requesting and responding party.

Information sought from third parties pursuant to a subpoena also now explicitly require third parties to treat e-discovery as that which ought be searched for and produced where it is not too burdensome.

Parties must hold early discussions regarding any anticipated e-discovery issues, including form and preservation of e-discovery.  Such requirements are intended to facilitate e-discovery and ease whatever related issues may arise in a particular case, and allow the parties and/or the court to develop creative solutions to solve such issues.

For example, to avoid the risk of inadvertent disclosure, the responding party may authorize a "quick peek" whereby the requesting party views and designates what electronically stored information it wants produced, while the responding party preserves the right to withhold privileged material.

If anticipated, the parties should also discuss what form e-discovery is sought and retrieved; why certain forms of e-discovery are too burdensome to retrieve and/or access; and concerns about inadvertent disclosure of privileged information.

A party is required to produce e-discovery that is relevant, not privileged, and "reasonably accessible."  Only where a party shows good cause will a party be required to produce e-discovery that is "not reasonably accessible."  Courts should consider the benefits of the information and the cost and burden of obtaining such information when determining obligations to produce e-discovery. 

Parties responding to discovery must now identify sources of e-discovery that it is neither searching or producing so the requesting party, and if necessary, the court, may evaluate the extent of such burden.  Information identified in this manner does not relieve a party's duty to preserve evidence. 

To assist the parties and the court with this process, requesting parties should state the form in which they seek e-discovery, and responding parties should state the form in which e-discovery will be produced.

Electronic data systems are often designed to allow for regularly scheduled, systematic deletions of data based on parameters suitable to the internal policies or external requirements.  Absent "exceptional circumstances," a safe harbor precludes the imposition of sanctions where deletion of potential evidence was a result of such "good-faith" "routine" procedures. 

This amendment recognizes that, given the nature of computer systems, potential evidence may be deleted for reasons unrelated to litigation.

Because the likelihood of inadvertently producing privileged information increases given the volume and nature of e-discovery, a procedure is added to allow a party to assert claims of privilege after such information is produced.  Specifically, if despite production a producing party gives notice within a "reasonable time" that records disclosed are privileged, the receiving party must "return, sequester or destroy" the records, and if such privilege is contested, present to the court to decide.  The producing party is obligated to preserve the information "until the claim of privilege is resolved."   

The e-discovery amendments to the FRCP acknowledge and create procedures to deal with the reality that companies are shifting more and more to storing information electronically.  Companies can take advantage of these new flexible rules by understanding the benefits of storing information electronically and the burdens of electronic searches.  While the amendments may increase the time and/or cost of discovery in some instances, storing increasing amounts of data electronically may also serve to potentially reduce the time it takes to conduct, and costs associated with, a business records search. 

The amendments also take into account the need to prevent the disclosure of privileged information, and protect such information even after inadvertent (or "quick peek") disclosure through e-discovery.  E-discovery issues should  be identified and addressed with the opposing party early on.  Companies should also ensure their data deletion procedures qualify as "routine," so as to avoid sanctions for deletion of potential evi

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