Practice Tip: Proposed Changes to the FRCP Regarding Discovery of Electronically Stored Information

Part One of a Two-Part Series

On Dec. 1, 2006, new amendments to the Federal Rules of Civil Procedure addressing discovery of electronically stored information will take effect unless Congress enacts legislation to reject, modify, or defer the amendments. The amendments to Rules 16, 26, 33, 34, 37, and 45, which were approved by the U.S. Supreme Court on April 12, 2006, attempt to bring the discovery rules up-to-date in an Information Age where the majority of new communication and information is now created, disseminated, and stored in electronic media.

These new rules will be of particular significance in product liability litigation, where potentially relevant electronic data relating to the design, development, manufacturing, marketing, distribution, and sale of a single product may be contained in multiple information systems, in different proprietary programs, in different formats, and subject to different protocols, retention policies, and maintenance schedules throughout various divisions, branches, or facilities of a single company.

For example, the company's corporate offices may use an entirely separate operating system from that used by its research labs or its manufacturing facilities. Each plant, in its own right, may have separate or proprietary data systems that vary from other plants. Thus, the task of identifying, preserving, and producing electronic information can be particularly daunting. The new rules will require that the task be faced head-on in an attempt to bring clarity to the process.

Early Attention to Electronic Discovery Issues

The proposed amendments will require the parties and the court to pay early attention to electronic discovery issues:

• Rule 26(f) will require parties 'as soon as practicable' (but in no event later than 21 days prior to the Rule 16 initial scheduling conference) to meet and confer regarding preservation of discoverable information and the discovery of electronically stored information, including the form(s) in which it should be produced and issues relating to claims of privilege or work product. These issues must be in the parties' proposed discovery plan to the court (per amended Form 35 of the Rules).
• Rule 26(a)(1)(B) will require a party to include in its initial written disclosures a description of electronic information, by category and location that may be used to support its claims or defenses.
• Rule 16(b) will provide that the Rule 16 scheduling order for the case may include provisions relating to the discovery of electronically stored information and 'any agreements the parties reach for asserting claims of privilege or of protection as trial preparation material after production.' Rule 26(b)(5)(B), in turn, addresses inadvertent production of privileged or work product information, by providing a mechanism for return of the information to the producing party and continued protection of such information.

These amendments are intended to provide a more efficient approach to the costly and time-consuming search for and review of electronic discovery by defining the parameters of the discovery and addressing any disputes that require resolution at the very beginning of the case. While the intended end-result is a streamlined and open approach to the electronic discovery process, the immediate effect of these amendments may require a company and its legal counsel to engage in additional work at the front-end ' most likely before any specific litigation is actually commenced ' to identify, catalog, and keep a running tab of a company's electronic information systems in all of its corporate offices and manufacturing facilities.

The necessity of such an exercise is evidenced by the new rules' requirement that parties must be prepared to identify, locate, and describe the
electronically stored information that may be relevant to the claims at hand at the outset of the litigation. Indeed, the time frame within which Rule 26 initial disclosures and the required meet and confer regarding electronic discovery must occur is decidedly tight ' within a few weeks or months after litigation is commenced.

This suggests that it would be prudent, either before litigation is pending or immediately upon receiving notice of litigation, for a company and its in-house legal department to take inventory of all of its electronic information systems, the kind of information created and stored, where and how it is stored, how long it is stored, and how it is destroyed or overwritten during the normal course of business. The systems should also be assessed in conjunction with the company's document retention policies to ensure that the management and operation of the electronic information systems are consistent with ' and do not violate ' those policies. Likewise, the company's document retention policies, including its 'litigation hold' provisions, should be inventoried, monitored, and kept up-to-date. Finally, when litigation does arise, it would be helpful to designate an IT officer or employee, or other consultant, to serve as a liaison to in-house and outside counsel to help address electronic discovery questions. The good news is: Once this initial work is done and routinely kept up-to-date, the company will not have to repeat the entire exercise each time it is faced with new federal litigation.

When litigation in federal court does arise, the company will be in the position to draw on these resources and learn relatively quickly (as the rules now require) the nature, categories, and location of electronically stored information that is potentially relevant to a product at issue and that the company will use to support its defenses or claims. The company will also be in the position to articulate the basis for any objections to onerous electronic discovery demands, and to advance its positions regarding the scope and form of electronic discovery for purposes of the initial scheduling order.

Discovery of Electronically Stored Information That Is Not Reasonably Accessible

The proposed amendments ad-dress the preservation and production of electronic information that is not reasonably accessible. Proposed Rule 26(b)(2)(B) provides, in part, that 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.'

The new rule does not define the term 'not reasonably accessible.' However, in its September 2005 report on the proposed amendments, the Judicial Conference of the United States provided some examples of difficult-to-access sources that may not be searchable without 'considerable effort' or 'substantial burden or cost,' including:

• backup tapes intended for disaster recovery purposes that are often not indexed, organized or susceptible to electronic searching;
•  legacy data that remain from obsolete systems and are unintelligible on successors systems; and
• data that were 'deleted' but remain in fragmented form, requiring a modern version of forensics to restore and retrieve.

The sooner a party is able to designate, by category and type (and with enough detail to enable the requesting party to evaluate the burdens and costs of producing such discovery) those sources of electronic information that would be particularly costly or burdensome to access, the sooner the parties may engage in any necessary motion practice to resolve the issue ' either by motion to compel by the requesting party or by motion for a protective order by the responding party. The court can then determine, among other things: 1) whether the 'not reasonably accessible' information must continue to be preserved; 2) if it must be preserved and produced, who will bear the costs of locating, retrieving, and converting the information to an accessible format; and 3) the format in which the information must be produced. The proposed Committee Note makes it clear that the new rule does not relieve a party of its common law or statutory duties to preserve evidence and that '[w]hether a responding party is required to preserve unsearched sources of potentially responsive information that it believes are not reasonably accessible depends upon the circumstances of each case.'

The conclusion of this series will discuss sanctions, safe harbor for loss of electronically stored information, interrogatories, and requests for production.

Jennifer Smith Finnegan is a partner and Aviva Wein is an associate in the litigation department of Herrick, Feinstein LLP in Princeton, NJ. Finnegan concentrates her practice in product liability and can be reached at 609-452-3800.

Part One of a Two-Part Series

On Dec. 1, 2006, new amendments to the Federal Rules of Civil Procedure addressing discovery of electronically stored information will take effect unless Congress enacts legislation to reject, modify, or defer the amendments. The amendments to Rules 16, 26, 33, 34, 37, and 45, which were approved by the U.S. Supreme Court on April 12, 2006, attempt to bring the discovery rules up-to-date in an Information Age where the majority of new communication and information is now created, disseminated, and stored in electronic media.

These new rules will be of particular significance in product liability litigation, where potentially relevant electronic data relating to the design, development, manufacturing, marketing, distribution, and sale of a single product may be contained in multiple information systems, in different proprietary programs, in different formats, and subject to different protocols, retention policies, and maintenance schedules throughout various divisions, branches, or facilities of a single company.

For example, the company's corporate offices may use an entirely separate operating system from that used by its research labs or its manufacturing facilities. Each plant, in its own right, may have separate or proprietary data systems that vary from other plants. Thus, the task of identifying, preserving, and producing electronic information can be particularly daunting. The new rules will require that the task be faced head-on in an attempt to bring clarity to the process.

Early Attention to Electronic Discovery Issues

The proposed amendments will require the parties and the court to pay early attention to electronic discovery issues:

• Rule 26(f) will require parties 'as soon as practicable' (but in no event later than 21 days prior to the Rule 16 initial scheduling conference) to meet and confer regarding preservation of discoverable information and the discovery of electronically stored information, including the form(s) in which it should be produced and issues relating to claims of privilege or work product. These issues must be in the parties' proposed discovery plan to the court (per amended Form 35 of the Rules).
• Rule 26(a)(1)(B) will require a party to include in its initial written disclosures a description of electronic information, by category and location that may be used to support its claims or defenses.
• Rule 16(b) will provide that the Rule 16 scheduling order for the case may include provisions relating to the discovery of electronically stored information and 'any agreements the parties reach for asserting claims of privilege or of protection as trial preparation material after production.' Rule 26(b)(5)(B), in turn, addresses inadvertent production of privileged or work product information, by providing a mechanism for return of the information to the producing party and continued protection of such information.

These amendments are intended to provide a more efficient approach to the costly and time-consuming search for and review of electronic discovery by defining the parameters of the discovery and addressing any disputes that require resolution at the very beginning of the case. While the intended end-result is a streamlined and open approach to the electronic discovery process, the immediate effect of these amendments may require a company and its legal counsel to engage in additional work at the front-end ' most likely before any specific litigation is actually commenced ' to identify, catalog, and keep a running tab of a company's electronic information systems in all of its corporate offices and manufacturing facilities.

The necessity of such an exercise is evidenced by the new rules' requirement that parties must be prepared to identify, locate, and describe the
electronically stored information that may be relevant to the claims at hand at the outset of the litigation. Indeed, the time frame within which Rule 26 initial disclosures and the required meet and confer regarding electronic discovery must occur is decidedly tight ' within a few weeks or months after litigation is commenced.

This suggests that it would be prudent, either before litigation is pending or immediately upon receiving notice of litigation, for a company and its in-house legal department to take inventory of all of its electronic information systems, the kind of information created and stored, where and how it is stored, how long it is stored, and how it is destroyed or overwritten during the normal course of business. The systems should also be assessed in conjunction with the company's document retention policies to ensure that the management and operation of the electronic information systems are consistent with ' and do not violate ' those policies. Likewise, the company's document retention policies, including its 'litigation hold' provisions, should be inventoried, monitored, and kept up-to-date. Finally, when litigation does arise, it would be helpful to designate an IT officer or employee, or other consultant, to serve as a liaison to in-house and outside counsel to help address electronic discovery questions. The good news is: Once this initial work is done and routinely kept up-to-date, the company will not have to repeat the entire exercise each time it is faced with new federal litigation.

When litigation in federal court does arise, the company will be in the position to draw on these resources and learn relatively quickly (as the rules now require) the nature, categories, and location of electronically stored information that is potentially relevant to a product at issue and that the company will use to support its defenses or claims. The company will also be in the position to articulate the basis for any objections to onerous electronic discovery demands, and to advance its positions regarding the scope and form of electronic discovery for purposes of the initial scheduling order.

Discovery of Electronically Stored Information That Is Not Reasonably Accessible

The proposed amendments ad-dress the preservation and production of electronic information that is not reasonably accessible. Proposed Rule 26(b)(2)(B) provides, in part, that 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.'

The new rule does not define the term 'not reasonably accessible.' However, in its September 2005 report on the proposed amendments, the Judicial Conference of the United States provided some examples of difficult-to-access sources that may not be searchable without 'considerable effort' or 'substantial burden or cost,' including:

• backup tapes intended for disaster recovery purposes that are often not indexed, organized or susceptible to electronic searching;
•  legacy data that remain from obsolete systems and are unintelligible on successors systems; and
• data that were 'deleted' but remain in fragmented form, requiring a modern version of forensics to restore and retrieve.

The sooner a party is able to designate, by category and type (and with enough detail to enable the requesting party to evaluate the burdens and costs of producing such discovery) those sources of electronic information that would be particularly costly or burdensome to access, the sooner the parties may engage in any necessary motion practice to resolve the issue ' either by motion to compel by the requesting party or by motion for a protective order by the responding party. The court can then determine, among other things: 1) whether the 'not reasonably accessible' information must continue to be preserved; 2) if it must be preserved and produced, who will bear the costs of locating, retrieving, and converting the information to an accessible format; and 3) the format in which the information must be produced. The proposed Committee Note makes it clear that the new rule does not relieve a party of its common law or statutory duties to preserve evidence and that '[w]hether a responding party is required to preserve unsearched sources of potentially responsive information that it believes are not reasonably accessible depends upon the circumstances of each case.'

The conclusion of this series will discuss sanctions, safe harbor for loss of electronically stored information, interrogatories, and requests for production.

Jennifer Smith Finnegan is a partner and Aviva Wein is an associate in the litigation department of Herrick, Feinstein LLP in Princeton, NJ. Finnegan concentrates her practice in product liability and can be reached at 609-452-3800.