300 Attend SHB's E-Discovery Forum

Speaking before a capacity crowd of some 300 lawyers, U.S. District Judge Lee Rosenthal recently provided an overview of the new Federal Rules of Civil Procedure on e-discovery that take effect, absent congressional intervention, December 1, 2006.  During the September 12 “National Forum on E-Discovery and Electronic Records Management” hosted in Kansas City, Missouri, by Shook, Hardy & Bacon L.L.P. and the University of Kansas School of Law, Judge Rosenthal called e-discovery “an ongoing process” that will require judges to get into “the discovery pit” with counsel.

She highlighted the differences between e-discovery and traditional document discovery to explain why the Federal Rules Advisory Committee, which she chairs, felt compelled to change the rules.  In particular, Judge Rosenthal discussed the dynamic nature of electronically stored information and the unique issues relating to its preservation and production.  Thus, the new rules will require attorneys to meet and confer early in the litigation process to decide what to do about the discovery of electronically stored information.  The rules contemplate active judicial participation in e-discovery and provide a framework for addressing a number of recurring issues, including inaccessible data, the form of production, privilege and work product claims, and sanctions.

Judge Rosenthal, noting that the rules will encourage production before full-scale review may have taken place, pointed to committee notes addressing agreements among counsel, often referred to as “claw back” or “quick peek” agreements, that will protect privileged information from waiver due to inadvertent or pre-review disclosure.  These agreements, if incorporated into the court’s scheduling order, will not override contrary substantive law on waiver.  But Judge Rosenthal told the audience to monitor proposed changes to Rule 502 of the Federal Rules of Evidence and legislation that would change waiver law so that a court order incorporating a waiver agreement will be effective as to third parties.

Referring to the issues surrounding inaccessible data, Judge Rosenthal said that the rules take a “low-hanging fruit approach.”  Thus, in deciding issues of accessibility, courts will first determine what information is reasonably accessible and may fully satisfy the discovery needs in the case and then will evaluate whether discovery of information not reasonably accessible is required.  Rule 26(b)(2) makes it clear that the responding party need not provide e-information that is “not reasonably accessible” because of undue burden or cost, unless the requesting party secures a court order to compel production for “good cause.”  A good cause determination will be controlled by the proportionality factors set forth in Rule 26(b)(2)(C).    Judge Rosenthal posited that some discovery may be needed in this process, and the committee notes refer to “a sampling of information” and “depositions of witnesses knowledgeable about the responding party’s information systems.”  What is new about the e-discovery rules is that the responding party must tell the requesting party what is not being produced due to inaccessibility and must provide with some specificity information about the type and category of the sources that contain potentially responsive information.  Also new is the potential for shifting the costs of production to a requesting party.

While the rules do not address a party’s duty to preserve electronically stored information, Judge Rosenthal suggested that, as appropriate, the parties reach some agreement about this issue during the meet and confer to avoid “spoliation” issues that could arise later in the litigation.  She did note that Rule 37(f) provides some protection by prohibiting the imposition of sanctions for the loss of electronically stored information “as a result of the routine, good-faith operation of an electronic information system,” absent “exceptional circumstances.”  According to Judge Rosenthal, the committee proposed this rule, recognizing that computer systems automatically overwrite, delete and recycle data, but she acknowledged that drafting this provision was contentious.

Addressing “coming attractions,” Judge Rosenthal reported that the committee has revised every procedural rule as part of its “style project” to make the rules clearer, simpler and easier to read.  The Judicial Conference is expected to adopt the proposed changes in late September, and they could become effective in December 2007.  The committee is also in the midst of a “time counting project” that will make every federal rule consistent in terms of calculating filing and other deadlines.  These proposed changes should be published for comment in August 2007.  Other revisions under consideration include expert-report disclosures, expert/attorney communications disclosures, improvements to the “notice” pleading framework to provide for more specificity, and modifications to the summary judgment rules.

Additional presentations were made by in-house counsel for Bayer HealthCare LLC, Lorillard Tobacco Co., Sprint Nextel Inc., the Cola-Cola Co., and Miller Brewing Co.  They provided insight into how corporations that are not in the litigation business are attempting to address their potential e-discovery obligations both before and after litigation is filed.  They also discussed the document retention and compliance policies they have developed and implemented.  Luncheon speaker Robert Byman, who was counsel for the plaintiff in the fraud litigation that resulted in a $1.45 billion verdict against Morgan Stanley, made a captivating presentation that eloquently illustrated why due diligence in e-discovery and production is critical.  The risk of drawing adverse inference or default orders in high-stakes litigation is all too real when due diligence is allegedly in short supply.  The case is currently on appeal.

Panels of scholars and lawyers who face e-discovery issues daily, including (i) University of Kansas Law Professor Laura Hines; the (ii) Honorable David Waxse, a federal magistrate judge and former Shook, Hardy & Bacon partner; and (iii) Shook, Hardy & Bacon lawyers John BarkettDave ChaumetteChris CottonLaura FeyBill MartucciMadeleine McDonough, Denise Talbert, and Arlen Tanner, discussed questions about the new rules, electronic records management, and what litigators and their clients must do once the rules are in place.  There was general agreement that the key to best practices in an e-discovery era is to have your IT house in order, with written protocols for document retention and destruction based on sound business, legal and regulatory principles that will justify to a judge why some e-records do not exist.  Targeted requests for information will have to become “the norm,” because “any-and-all” requests will inundate the requester with irrelevant material that will have to be reviewed.

During a panel discussion, Judge Rosenthal indicated that the Federal Judicial Center is preparing a pocket guide for judges and will be incorporating e-discovery training into continuing education courses.  Judge Waxse recalled that he first encountered electronically stored information issues shortly after he was appointed to the bench and found himself in the curious position of suggesting to an Internet provider where it might find such information when it responded to an motion to compel by indicating that it had no electronic information, a situation the judge found “implausible.”  He also cautioned participants that litigators will need a “change of mindset” and will have to look further to find where electronic information is stored, including on PDAs, laptops and home computers.  He observed that companies must have an effective method for ensuring that a litigation hold is placed on electronic information when litigation is reasonably anticipated and that the hold “happens.”  Judge Waxse concluded by advising lawyers to provide ethical, competent representation, to be truthful and to recognize that the new rules “will change the legal culture” by requiring negotiation.  He urged participants not to file motions regarding e-discovery disputes because litigants cannot waste time and resources litigating these issues.