By: Andrew Bartholomew
The e-discovery world has been abuzz of late regarding forthcoming changes to the Federal Rules of Civil Procedure (FRCP). In a meeting held in Portland, Ore., earlier this month, the Civil Rules Advisory Committee approved official FRCP amendment proposals, which have been submitted for review by the Standing Committee in May. If approved, the Judicial Conference of the United States, the Supreme Court and finally Congress will review the amendments before they are officially adopted. If the proposed amendments pass all necessary hurdles, they would be incorporated into the FRCP in December 2015. Read more
Air Date: April 17, 2014
On April 10-11, the Advisory Committee on Civil Rules held a two-day meeting in Portland, Oregon in which they officially adopted proposed amendments to the Federal Rules of Civil Procedure (FRCP). The Committee’s recommended amendments must be reviewed by the Standing Committee, the Judicial Conference of the United States, the Supreme Court, and Congress before becoming final.
In this webcast, chair of this advisory committee, Judge David Campbell (D. Arizona), and committee member John Barkett (Partner, Shook Hardy Bacon) provide viewers with an insider’s look into the Advisory Committee meeting in Portland and explain the reasoning behind the proposed amendments.
- The public comment period elicited more than 2,000 comments from a variety of stakeholders which helped to shape the final amendment proposals.
- Changes to Rule 26 (b)(1) derived from a conference at Duke University in 2010 in which participants felt that the principle of proportionality needed to be more forcefully addressed in the FRCP.
- Changes to Rule 37 (e) were intended to clarify preservation requirements and provide greater uniformity throughout the federal circuits on standards of culpability.
By Mike Hamilton, J.D.
The over-preservation of electronically stored information for e-discovery has been a major theme in 2014. Because of the antiquated “collect/preserve-everything” approach, organizations are feeling the time and cost burden of searching, storing and managing millions of documents. A good starting point for solving this problem is to actually release legal holds. Simple as it may sound, releasing a legal hold requires a repeatable, consistent process that accounts for numerous IT and legal factors.
Ed Hallock, Director, Product Marketing at RSD, is an experienced IT professional with expertise in enterprise content management including document archive & retrieval, web content presentment, e-mail archiving, records management and information governance. Ed recently presented on Exterro and RSD’s complimentary webcast, Clean Up the E-Discovery Leftovers: Learn how to defensibly release legal holds to avoid costly over-preservation of data. I had the chance to speak with Ed about this recent emphasis on reducing this over-preservation syndrome and how developing a legal hold release process fits in. Read more
By Bob Rohlf, Esq.
Following is a guest post by Bob Rohlf, Exterro’s Director of E-Discovery Strategies, who attended the Advisory Committee on Civil Rules meeting last week in Portland, Oregon.
I am the first to admit that technology won’t solve all of the problems facing e-discovery practitioners. But I will point out that changes to the Federal Rules of Civil Procedure (FRCP) move at a glacial pace, while technology advances at light speed. Last week’s meeting of the Advisory Committee on Civil Rules, which I attended, made this abundantly clear. Although the Committee has been examining change proposals for over four years, the new rules still face uncertainty in four more stages of review before they can be enacted. I applaud the Committee members’ diligence and perseverance. However given the spectrum of panel participants and the scope of issues facing them, I was surprised that all votes for acceptance were unanimous. I can’t help but to wonder if the lack of dissent arose either from sheer exhaustion or surrender to an understanding that the proposals were the best that could be done under the circumstances.
The one area that technology cannot address is behavioral problems such as an unwillingness of the parties to cooperate, purposeful abuse of the rules to attempt manipulation of the case outcome or intentional destruction of case-relevant information. Rules changes to handle misbehavior may very well be in order. But much of the discussion around Rules changes centers on the cost of e-discovery – preservation costs, disproportionate discovery demands and costs for sanctions. Technology readily addresses both cost and workflow management, perhaps in a manner superior to (and certainly, quicker than) Rules changes.
It’s no surprise that the proliferation of smart electronic devices and tools has given rise to vast amounts of data, much of which becomes subject to discovery activities. This growth in data has generated a lot of e-discovery pain for organizations involved in litigation. Recognizing this, vendors have applied technology to reduce, to work with, or in some cases, to eliminate the problem. Workflow based tools, such as Exterro’s Fusion platform integrate the various e-discovery tools used by a legal team, facilitate team communication, standardize routine e-discovery activities, and document process transactions. The result is a great reduction in the risk that something will be overlooked or miscommunicated in managing e-discovery. A workflow platform can virtually eliminate the risk of sanctions arising from negligence.
Technology has also made great strides in reducing the cost of e-discovery. Tools that did not exist four years ago help legal teams to aggressively combat legal costs today. In the past many e-discovery processes had to be managed by specialists. Today legal teams can use cloud-based or in-house tools to perform their own work. Here are some of the benefits the use of technology can have in e-discovery:
- Readily available, easily understood technologies enable an organization to proactively index and search its data sources.
- Ready access to the information helps the team to efficiently scope and plan their case at an early stage. Since most cases settle, having this information early on can greatly reduce related costs.
- Technology makes it easier to identify, notify, interview and track prospective custodians.
- Collection is no longer the burden it used to be. Data can be held in place, or selectively collected and stored.
- Analytics greatly facilitate an understanding of the data content.
- Predictive coding significantly reduces the cost of reviewing large volumes of documents while meeting or exceeding the results of a human-based review.
Technology continues to drive towards a decreased e-discovery cost. One complaint commonly expressed during the Rules meetings has been the cost of over-preservation. This is driven by a fear that a party would be sanctioned for spoliation. Facing unknowns in a case, everything is saved. And, if the truth be known, many organizations do not get rid of case evidence after the case is finished, further exacerbating the data retention problem. But proper use of software can help a legal team to defensibly narrow the scope of data held for a case, flag it for hold and collection, and upon case termination, provide notice that it can be safely deleted.
While the Rules Committee needs to address much of the behavior-based problems arising from the 2006 Rules changes, I fear that, with respect to cost control, it is solving yesterday’s problem. Although rapid data growth has created a lot of problems for discovery practices, technology has come a long way in the last 4+ years to resolving the attendant cost issues and reducing risk litigation profiles.
ON-DEMAND WEBCAST WITH CHAIR OF RULES COMMITTEE
For a more in-depth, insider’s peek into the nuances of the new amendments watch Exterro’s complimentary webcast, “Countdown to the FRCP Amendments from Portland,” Chair of the Rules Advisory Committee, Judge David Campbell (D. Arizona), and committee member John Barkett, Partner at Shook Hardy Bacon, reviewed the amendments that passed and their potential impact on e-discovery practices.
By Scott Giordano, Esq.
Following is a guest post by Scott M. Giordano, Exterro’s corporate technology counsel, who attended the Advisory Committee on Civil Rules meeting last week in Portland, Oregon.
I was very privileged to attend the Advisory Committee on Civil Rules meeting in Portland, Oregon last week. The Advisory Committee is a sub-committee of the Judicial Conference’s Committee on Rules of Practice and Procedure (“Standing Committee”), which advises the Supreme Court’s Judicial Conference on the promulgation of rules of procedure. In this post, I address the most contentious proposed amendment, that to Rule 37(e), sometimes referred to as the Safe Harbor rule. Before I discuss the proposed rule (which was changed again by the Advisory Committee on April 10), some background is in order.
The Federal Rules of Civil Procedure were amended in December of 2006 to both establish the legitimacy of so-called electronic discovery and address the challenges inherent in requesting the production of electronic data. One amendment was Rule 37(e):
Failure to Provide Electronically Stored Information. 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.
Commentators sometimes referred to this as the Safe Harbor rule; however, as a practical matter, it saw little use and provided little safety when potentially responsive ESI was destroyed before or during litigation. A 2002 2nd Circuit case, Residential Funding Corp. v. DeGeorge Fin. Corp., held that when a party could not produce electronically stored information (ESI) (either it was lost or destroyed), ordinary negligence was sufficient grounds for an adverse inference instruction. This is in contrast to other circuits, which used a gross negligence or bad faith standard. Corporations have suggested that, as a consequence, they have pursued a policy of broad preservation (owing to the cross-jurisdictional nature of litigation) and such measures have resulted in excessive cost. The impetuous of revising Rule 37(e) was to create a national standard of culpability for determining sanctions in the event that requested ESI could not be produced. The Advisory Committee’s first draft of amendments to the rule received about 2,000 responses, prompting an additional round of changes. Those changes were further amended on April 10th by the Committee and distributed on April 11th. They appear here:
(e) FAILURE TO PRESERVE ELECTRONICALLY STORED INFORMATION. If electronically stored information that should have been preserved in the anticipation or conduct of litigation is lost because a party failed to take reasonable steps to preserve the information, and the information cannot be restored or replaced through additional discovery, the court may:
(1) Upon a finding of prejudice to another party from loss of the information, order measures no greater than necessary to cure the prejudice;
(2) Only upon a finding that the party acted with the intent to deprive another party of the information’s use in the litigation,
(A) presume that the lost information was unfavorable to the party;
(B) instruct the jury that it may or must presume the information was unfavorable to the party; or
(C) dismiss the action or enter a default judgment.
Noteworthy among the changes are the following:
- No strict liability. The “because a party failed to take reasonable steps” language of section (e) sets the foundation for culpability; there is no strict liability for inability to produce ESI.
- Opportunity to search. Using the “though additional discovery” language of section (e), the court can order the producing party to try to find duplicates of the requested ESI elsewhere, perhaps in backup tapes. This is similar to the “court may nonetheless order discovery from such sources” language of Rule 26(b)(2)(B).
- Residential Funding rejection. The “intent to deprive” language of section (e)(2) was designed to reject the negligence standard used in Residential Funding.
- ESI only. This rule only applies to electronic evidence, rather than tangible evidence. As a consequence, it would not apply in a matter such as Silvestri v. General Motors Corp., where the matter was dismissed for spoliation when a key piece of evidence (an automobile airbag) was lost or destroyed.
- Not mandatory. Judges are not required to use this rule; they still have the ability to draw on the inherent power of the court to address issues of spoliation.
Final notes from the meeting:
The events leading up to the amendment as well at the text of proposed Rule 37(e) were very expertly and succinctly summarized by Judge Paul Grimm. The process to amend this rule began about four years ago, and the Committee members indicated that was a particularly arduous one. For one thing, it was tough to create this rule without running afoul of the Rules Enabling Act, which restricts changes to those addressing procedural law.
Another was getting consensus on setting a standard for culpability. The Committee acknowledged the growth of ESI and the need to address preservation but still wished to maintain the discretion of the court in fashioning remedies in disputes over alleged spoliation. It also acknowledged that there was a dichotomy between the originally proposed amendment and the way the real world worked; it is impossible to preserve all possible ESI and a loss isn’t automatically prejudicial. Attempts to borrow remedies from Rule 37(b) were not fruitful because there is (typically) no court order that has been violated in these matters. While one Committee member stated that this amendment represents a huge improvement over the current state of the law, another cautioned it will still be tough to apply it.
This proposed amendment has further hearings ahead of it. The next Committee meeting will be in Washington, D.C. in late October, followed by a hearing with the Standing Committee in May and then one with the Judicial Conference in September.
For a more in-depth, insider’s peek into the nuances of the new amendments watch Exterro’s complimentary on-demand webcast, “Countdown to the FRCP Amendments from Portland.” Chair of the Rules Advisory Committee, Judge David Campbell (D. Arizona), and committee member John Barkett, Partner at Shook Hardy Bacon, review the amendments that passed and their potential impact on e-discovery practices.