Gregory P. Joseph*

     The Advisory Committee on the Federal Rules of Civil Procedure has drafted proposed amendments addressing electronic discovery.  The proposals extend beyond electronic discovery in some respects.  The proposals will take effect on December 2006, if approved by the Standing Committee on Rules of Practice and Procedure, the Judicial Conference, and the Supreme Court.

     The initial draft of the  electronic discovery amendments were circulated for public comment last year and analyzed in two earlier articles (G. Joseph, Electronic Discovery — Parts I and II, NATIONAL LAW JOURNAL Oct. 4 and Dec. 6, 2004).  This article addresses the revised form that these proposals now take, noting changes from the earlier, public-comment version.

     Parties’ Initial Discovery Conference (Rule 26(f)).  Rule 26(f), which governs the parties’ initial discovery conference, would be amended to add three topics to the discussion:

(1) “issues relating to preserving discoverable information;”

(2) “any issues relating to disclosure or discovery of electronically stored information, including the form or forms in which it should be produced;” and

(3) “any issues relating to claims of privilege or protection as trial-preparation material, including — if the parties agree on a procedure to assert such claims after production -whether to ask the court to include their agreement in an order.”

*      Gregory P. Joseph Law Offices LLC, New York.  Fellow, American College of Trial Lawyers; former Chair, American Bar Association Section of Litigation (1997-98), and former member, U.S. Judicial Conference Advisory Committee on the Federal Rules of Evidence (1993-99).  Author, MODERN VISUAL EVIDENCE (Supp. 2004); SANCTIONS: THE FEDERAL LAW OF LITIGATION ABUSE (3d ed. 2000; Supp. 2004); CIVIL RICO: A DEFINITIVE GUIDE (2d ed. 2000).  Editorial Board, MOORE’S FEDERAL PRACTICE (3d ed.).  ©2004-05 Gregory P. Joseph.

     The proposed amendments to Rule 26(f) are sound.  Preservation (or spoliation), electronic discovery, and privilege issues should be addressed in the initial discovery conference, and the draft amendments remind counsel to do so.  Two aspects of the draft amendment to Rule 26(f) merit particular attention.

     First , items (1) and (3) are not limited in impact to electronic discovery.  Item (1) addresses spoliation generally and applies equally, for example, to the tangible product at issue in a products liability action as to electronically stored design data for that product.  Item (3) governs the commonly-entered agreement that inadvertent production of a privileged document will not effect a waiver as well as the more esoteric agreements that permit the intentional disclosure of potentially-privileged electronic data without waiver.

     Second , item (2) assumes that a party may specify a particular format when requesting production of electronically stored information.  Proposed Rules 34(b) and 45(a)(1) confer this right on the requesting party.

     Initial Court Conference (Rule 16(b)).  Parallel to Rule 26(f), proposed Rule 16(b) adds two optional topics for the scheduling order entered at the initial pretrial conference:

• “provisions for disclosure or discovery of electronically stored information” (this is identical to the earlier draft), and

• “any agreements the parties reach for asserting claims of privilege or protection as trial-preparation material after production.”

     This should be uncontroversial.  Electronic discovery and non-waiver agreements are important subjects, and reminding the court (like counsel) to consider them at the inception of the litigation is prudent.

     “Reasonably Accessible” Electronic Information (Rule 26(b)(2)).  Rule 26(b)(2) would be amended to permit a party to object to a discovery request that calls for electronically stored information which is not “reasonably accessible,” requiring a motion to compel to obtain the data:

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 .  On motion to compel discovery or for a protective order, the party from whom discovery is sought must show that the information is not reasonably accessible because of undue burden or cost .  If that showing is made, the court may nonetheless order discovery from such sources if the requesting party shows good cause, considering the limitations of Rule 26(b)(2)(C).  The court may specify conditions for such discovery.

This proposal has at least four important features.

     First , it focuses solely on access - whether electronically stored information is “reasonably accessible.”  There are many other costs and burdens associated with electronic discovery apart from inaccessibility - most prominently, those generated by the sheer volume of data, which often are in active use and fully “accessible.”  To the extent that current Rule 26(b)(2)(iii) is deemed adequate to address all issues concerning the burden and expense of electronic discovery other than accessibility, it raises the question why a new provision is necessary to deal solely with accessibility.  One answer could be that a different standard is needed to decide burden issues raised by inaccessibility.  As discussed below, however, no new or different standard is being introduced.

     Second , when an earlier draft of Rule 26(b)(2) was published for comment, critics complained that the new standard— “reasonably accessible” — must presumably be different from the criteria currently contained in Rule 26(b)(2)(iii) or there would be no reason to introduce it.  This difference was not explained in the text of the Rule, and it was not entirely clear from the Committee Note.  A persuasive argument was made, based on the Note, that the two standards were substantially the same, and that there is no need for the new locution.

     Rule 26(b)(2)(iii) excuses production when “the burden or expense of the proposed discovery outweighs its likely benefit, taking into account the needs of the case, the amount in controversy, the parties= resources, the importance of the issues at stake in the litigation, and the importance of the proposed discovery in resolving the issues.”  Litigants frequently collapse these factors into an objection that responding to a particular discovery request would be “unduly burdensome,” echoing the “undue burden” language of Rules 26(c) and 45(c)(1).

     The final text of Rule 26(b)(2) makes it clear that there is no meaningful difference between “reasonably accessible” and the undue burden prong of Rule 26(b)(2)(iii).  “Reasonably accessible” is the converse of “undue burden or cost.”

     Consider the objection of a responding party who complains of the burden and expense of:  (i) accessing back-up tapes, legacy data, and deleted data, and (ii) retrieving, converting and producing millions of pages’ worth of electronic data in current use (and thus “accessible”) from around the world.  As far as the responding party is concerned, time and money are the issue with respect to both prongs of this objection.  Rule 26(b)(2)(B) focuses solely on accessibility of data and thus serves as the ground for objecting to data of the first type.  Nothing, however, prevents a responding party from relying on existing Rule 26(b)(2) (including but not limited to Rule 26(b)(2)(iii)) in resisting a burdensome request for data of the second type.

     Third , the proposal’s exclusive focus on access is a product of the present state electronic information storage.  Just as the current proposals are deleting references to “phonorecords,” it may be that this proposal will soon be dated.

     Fourth , this proposal creates a two-tiered approach to deciding “accessibility” issues, which has the virtue of procedural clarity.  Electronically stored information that is “reasonably accessible” is subject to discovery through a simple request.  Electronically stored information that is not “reasonably accessible” is discoverable only by court order on a motion to compel production.  On the motion to compel, the responding party carries the burden of proving that the information is “not reasonably accessible.”  (Of course, absent discovery on that issue, only the responding party has knowledge of the relevant facts.)  If the responding party convinces the court that the information is not “reasonably accessible,” the requesting party must show “good cause” to obtain an order requiring production.

     As a matter of procedure (putting aside the new, “reasonably accessible” standard), this change to a two-tiered approach is more apparent than real, but the amendment nicely clarifies respective burdens.  Under current practice (and as regards all types of discovery), there is in effect a two-tiered approach — a motion to compel is always required whenever a responding party objects to production on grounds of undue burden or expense.  On the motion to compel, once the movant has demonstrated sufficient relevance, the responding party carries the burden of proving that discovery should be limited under Rule 26(b)(2) or 26(c).  The new rule crystallizes current practice and clarifies, with the new “good cause” standard for overcoming presumptive non-production, an important part of the calculus currently employed by the courts in deciding whether, or on what terms, to grant discovery.

Given the desirable clarity of this aspect of the amendment, one is tempted to ask why the Committee limits its reach to disputes over the accessibility of electronic discovery.  It would be a useful paradigm for deciding Rule 26(b)(2) (and Rule 26(c)) issues generally, regardless of whether the “reasonably accessible” locution survives the amendment process.

     Claw-Back of Privileged Information (Rule 26(b)(5)).  The proposed amendment to Rule 26(b)(5) renumbers the existing provision Rule 26(b)(5)(A) (Information Withheld), and adds a new Rule 26(b)(5)(B):

     Information produced.  If information is produced in discovery that is subject to a claim of privilege or protection as trial-preparation material, the party making the claim may notify any party that received the information of the claim and the basis for it.  After being notified, a party must promptly return, sequester, or destroy the specified information and any copies it has and may not use or disclose the information until the claim is resolved.  A receiving party may promptly present the information to the court under seal for a determination of the claim.  If the receiving party disclosed the information before being notified, it must take reasonable steps to retrieve it.  The producing party must preserve the information until the claim is resolved.

     The most notable features of this proposal are:  (1) it is not limited to instances of inadvertent production; (2) it extends beyond electronic discovery to all documents and things; and (3) it does not address whether a waiver of privilege has been effected (in fairness, it cannot do so because 28 U.S.C. § 2074(b) bars the Supreme Court from adopting a rule that modifies a privilege without affirmative Congressional approval).  This is quite significant because, in some jurisdictions, the fact of production of privileged information ordinarily effects a waiver, regardless of intent.  This draft Rule requires the return of information even in such jurisdictions, subject to subsequent decision of the court.

     The final text significantly differs from the public comment version in two respects.

     First, there is no requirement that the producing party demand return of the inadvertently produced material “within a reasonable time” (a phrase that has been deleted).  The demand may now be on the eve of trial, after discovery is closed and after the opponent has no ability to prove the point in any other way.  This change is a bit mystifying.  The Committee is of the apparent view that, since the Rule cannot affect the substantive law of waiver, a belated demand might give rise to a valid waiver defense.  True, it might.  Then again, it might not.  The omission of the reasonable time requirement is an invitation to mischief.

     Second, the final text makes it clear that the recipient of the data is not limited to returning, sequestering or destroying it in response to a demand for its return.  A new sentence has been inserted:  “A receiving party may promptly present the information to the court under seal for a determination of the claim.”

     Consider four different scenarios to which the proposed amendment would apply:

(1) The producing party grants the requesting party access to a computer database (or other voluminous set of documents or data) and allows the requesting party to review it first to identify what it wants produced.  Only then does the producing party conduct a privilege review of the data that the requesting party wants produced, identifying those documents it deems privileged from among those sought by the requesting party.  This approach, at a minimum, requires a court order to avoid waiver.  Even with a court order, a waiver may have been effected as to third parties in other actions.

(2) The producing party inadvertently produces a privileged document as part of a large production.  Whether a waiver has been effected depends on the circuit.

(3) The producing party intentionally produces a document after review by counsel who did not appreciate that the document was privileged.  Again, whether a waiver has been effected depends on the circuit and proof of inadvertence.

(4) The producing party demands back a damaging document claiming that it is privileged even though there is no basis for the claim apparent on the face of the document.  The Rule applies to this scenario, subject to a subsequent judicial determination.

     Interrogatories (Rule 33).  Rule 33 would be amended to make it clear that a party may answer an interrogatory by referring to specific “electronically stored information,” just as it may with any other business records.  The draft does so by providing that “electronically stored information” is included within the definition of “business records.”  This effects no change in practice because, for years, parties have considered that the phrase “business records” is not limited to paper.  It is interesting that Rule 33 expands the phrase “business records” to encompass “electronically stored information” while, at the same time, draft Rule 34 distinguishes “electronically stored information” from “document.”

     Document Requests (Rule 34).  Rule 34 would be amended in several ways:

     First , Rule 34(a) merges together, yet maintains a distinction between, electronically stored information and “documents.”  Unlike the public comment version, the final text no longer expressly distinguishes between “electronically stored information” and “documents” but, while it merges the two into an undifferentiated mass, it maintains a distinction between them by use of the disjunctive “or.”  Rule 34(a) would read:

     Any party may serve ... a request (1) to produce and permit the party making the request ... to inspect copy, test, or sample any designated documents or electronically stored information  - including writings, drawings, graphs, charts, photographs, sound recordings, images and other data or data compilations in any medium ...-...or to inspect and copy, test, or sample any designated tangible things....

     The drafting is needlessly problematic.  For example, the illustrative list illuminating the phrase “designated documents or electronically stored information” includes “data or data compilations stored in any medium.”  How can “electronically stored information” include data stored in non-electronic media?  Presumably, such data must still be “documents” only.  But other items in the list, such as “sound recordings” and “images” are electronically stored.  Are these not “documents” but “electronically stored information?”  Are they both?  What is the point of a list that is intended to illuminate a disjunctive phrase, where different entries on the list fit only with one or the other of the disjoined items?

     Any distinction between “electronically stored information” and “documents” is a solution in search of a problem.  Present practice is to include electronic data within the definition of “document” in Rule 34 requests for production and Rule 45 subpoenas.  Some local rules do so, negating any need for the parties’ document requests to include any such definition.  See, e.g., S.D.N.Y. and E.D.N.Y. Local Rule 26.3(c)(2).  The draft Advisory Committee Note observes that “[i]t is difficult to say that all forms of electronically stored information fit within the traditional concept of a .document.”  Whatever the “traditional concept” might be, it is not the concept entertained by bench or bar for the past decade or so.

     If promulgated in this form, the disjunctive between “documents” and “electronically stored information” militates in favor of rewriting Rule 34 requests so that “electronically stored information” is distinctly requested — because the word “or” suggests that a “document” is different from “electronically stored information.”  But, while a request for “documents” alone may not encompass electronically stored information any longer, nothing precludes a party from defining “document” to include electronically stored information.

     Second , Rule 34(b) would be amended to provide that:  “The request may specify the form or forms in which electronically stored information is to be produced,” and the response may include an “objection to the requested form or forms for producing electronically stored information....”  This codifies present practice.  Query whether, as a drafting matter, these sentences should be limited to electronically stored information.  It is common for document requests to specify, e.g., an electronic production format for hard copies.  This provision presumably should not be read as limiting that practice.

     A new Rule 34(b)(ii) will provide that, absent a court order or stipulation:

     if a request for electronically stored information does not specify the form or forms of production, a responding party must produce the information in a form or forms in which it is ordinarily maintained or in a form or forms that are reasonably usable.

     The phrase “reasonably usable” replaces “an electronically searchable form” in the public-comment version.  This is noteworthy.  Almost anything is “reasonably usable” — certainly a non-searchable TIF image qualifies, since it is the electronic equivalent of paper and paper has for decades been deemed “reasonably usable.”  Indeed, nothing in the text prevents a responder from printing out paper copies and providing those as “reasonably usable.”

     Note that the first alternative is to produce information in “a” form — not “the” form — in which the information is ordinarily maintained.  This affords the responding party some latitude.  If the data are maintained only in a malleable form (e.g., Word or WordPerfect, Power Point or Excel), production in that form is often undesirable.  Such data are more difficult to authenticate — or even maintain the integrity of —because they are subject to easy alteration (intentionally or unintentionally).  An electronically-immutable image (e.g., searchable PDF) has many practical advantages.

     A new Rule 34(b)(iii) will provide that, absent a court order or stipulation, “a party need not produce the same electronically stored information in more than one form.”  (This is equivalent to the last sentence of the public comment version of Rule 34(b)(ii).)  Electronic information and hard copies are not equivalent in the information they convey.  Sometimes, electronic data provide more information than hard copies — e.g., reflecting edits or the date/time of creation, editing, receipt or opening.  Sometimes, hard copies provide more information than electronic data — e.g., association by rubber bands, staples or clips.  These are factors that the courts will have to consider and that requesting parties must bear in mind in deciding on the form of production to request.

     Sanctions Safe Harbor.  The new Rule 37(f) has been entirely rewritten and bears no resemblance to the public comment version.  It now provides:

Absent exceptional circumstances, a court may not impose sanctions under these rules on a party for failing to provide electronically stored information lost as a result of the routine, good faith operation of an electronic information system.

There are at least three important aspect of this proposal.

     First, the “exceptional circumstances” standard is extremely difficult to satisfy.  It appears only three places in the Federal Rules of Civil Procedure (Rules 11(c)(1)(A), 26(b)(4)(B) and 32(a)(3)(E)), and it is rarely met.  Therefore, when the safe harbor is triggered, it is highly unlikely that sanctions will issue.

     Second, the exclusive focus on routine deletion of data is problematic.  This will change commercial behavior.  Parties who are routinely sued will accelerate the routine deletion of data.  Insurance companies will insist on it.  It is far from clear why a rule should encourage data destruction.  Moreover, there are many other reasons why data disappears over time, and this proposal could be read to suggest that, if a party fails to provide electronic information for any other reason, sanctions might be appropriate.  Suppose that, early in the litigation, all relevant data have been housed on special servers but the servers are destroyed through no fault of the producing party (Hurricane Frances).  That certainly is not sanctionable.

     Third, there is no clear need for this safe harbor.  No cases have been cited showing that anyone has ever been sanctioned as a “result of the routine, good faith operation of an electronic information system.”  Is the failure to comply with a corporate policy requiring retention of data once a litigation has commenced or a subpoena served evidence of bad faith, or just negligence?  Does the “routine operation of an electronic information system” include the programmers who set the routines?  Does it include the human actions of taking old backup tapes and recycling them?

     Note that this safe harbor will not protect against the imposition of sanctions for falsely certifying compliance with a Rule 34 request (in a response) or with a Rule 37(a) order compelling production.  These are the provisions under which sanctions ordinarily issue.

     Form 35 (Report of Parties’ Planning Meeting).  Form 35 would be updated to parallel changes to Rule 26(f) are to form part of the discovery plan presented to the court before the initial pretrial conference.

     Subpoenas (Rule 45).  Rule 45 would be amended to capture the principal changes to Rules 26 and 34.