After an anticipated wait for the implementation of the amended Federal Rules of Civil Procedure (FRCP), judges and litigators say not much has changed. The amended FRCP changes mainly concern discovery issues: (1) what data needs to be preserved, (2) the amount of discovery reasonably needed in a case, and (3) what happens when electronic stored information (ESI) is lost or destroyed. Although not much has changed, now courts embrace the use of party agreed computer-assisted review methods. To that end, judges advise litigators to continue to work with their clients and adversaries on ESI preservation and discovery.
Effective December 1, 2015, the FRCP were amended to include a section on how discovery should be proportional to the needs of the case and the benefit versus the burden of obtaining the information. Parties no longer need to identify the custodian nor how or where the data was stored.
"The biggest concern has been effective case management by judges to lower the costs of discovery, particularly ESI or other technology," says U.S. District Judge J. Michelle Childs for the District of South Carolina. "Thus, judges are encouraged to assist with proportionality discovery. Obviously, there will not be Rule 16 conferences in every case, but judges will need to identify those cases in which early intervention is necessary and in which significant technology costs will be incurred in the litigation," continues Judge Childs.
As of December 1, discovery responses must state not only any objections but also whether the objections are being asserted as grounds for withholding discovery.
Specifically, gone is the language requiring that discovery requests be "reasonably calculated to lead to the discovery of admissible evidence," which was often used to argue for breadth over confinement. Now, amended Rule 26 simply includes an acknowledgement that "[i]nformation within this scope of discovery need not be admissible in evidence to be discoverable." Rule 26 also now expressly states that discovery must be relevant and "proportional to the needs of the case" and sets out six factors for determining proportionality.
Rule 37 amended language regarding failure to provide ESI to failure to preserve ESI. It is not uncommon for some companies to have policies in place to automatically delete old data after a period of time. A problem arises when a company's policy calls for the routine deletion of data that is discoverable. Amended Rule 37 adds language suggesting punishment for failing to take reasonable steps to halt automatic deletions, including dismissing the action or entering a default judgment.
Notably, the committee notes under Rule 37 state the court should be sensitive to the party's sophistication with regard to litigation in evaluating preservation effectors. Some litigants, particularly individual litigants, may be less familiar with preservation obligations than others who have considerable experience in litigation. Interestingly, several federal magistrate judges across the country note that although the language in objections has been changed from "reasonably calculated" to "proportionality," they have not had any spoliation motions under the new ESI language of the Rule 37. Another magistrate judge notes that although amended Rule 26(b)(2) was quoted in an order denying a motion to quash third-party subpoenas, the "proportionality" question has not yet been in use in discovery cases.
Recent judicial opinions indicate that resistance to using technology in discovery is diminishing. Technology-assisted review (TAR), also known as predictive coding or computer-assisted review, is a method used to strategically and efficiently gather and review the production of relevant electronic data.
In 2012, Da Silva Moore v. Publicis Groupe was the first judicial opinion to endorse the use of predictive coding as a method to review documents. Da Silva Moore involved a gender discrimination class action lawsuit brought by five women against their employer, Publicis Groupe. Because the parties agreed to use predictive coding to tag over 3 million electronic documents as part of the parties' e-discovery, the court agreed. The court reasoned that predictive coding is an appropriate tool in certain cases, but only if it is part of a defensible process that is subjected to the same quality control testing appropriate to any type of document review. Notably, transparency was an important factor to the court. Here, the court also stated it was granting the use predictive coding because the defendant was willing to be fully transparent with the plaintiffs and show them the results of the sampling as well as the results of the metrics to ensure nothing was missing.
In Dynamo Holdings v. Commissioner of Internal Revenue, a tax court approved the use of predictive coding to identify potentially responsive and privileged data contained on two backup tapes, despite objections that the technology was unproven. The court ruled that taxpayers can use predictive coding to selectively pick tax information the IRS needs from electronic backup storage tapes that also contained privileged information. The court reasoned that it saw no reason the companies should not use predictive coding, as long as they hired an electronic discovery expert to help them craft a search that met their needs. The court concluded that the technology provided a "happy medium" between full disclosure and none.
Analysis of several 2015 federal judicial opinions relating to the discovery of ESI revealed that courts dealt with many key issues that the FRCP amendments sought to address. The opinions focused on five major areas: production; preservation and spoliation; cost considerations; procedural issues; and sanctions. Search protocols, cooperation, and privilege issues were presented in 16 percent of the e-discovery cases in 2015, with judges reiterating the benefits and importance of utilizing predictive coding and other e-discovery search methods to winnow discovery sets.
In 2015, in Rio Tinto v. Vale SA, the court approved using predictive coding because the parties mutually agreed to it. The court reasoned that "in the three years since Da Silva Moore, case law has developed to the point that it is now black letter law that where the producing party wants to utilize technology assisted review for document review, the court will permit it."
One area of concern lies with the identification and withholding of privileged information. Many attorneys cringe at the thought of using TAR to identify privileged documents and produce documents without any manual review. To ease fears, an attorney can draft and submit a Federal Rule 502(d) order that protects the party from inadvertent disclosures of privileged materials. To avoid a challenge to the use of TAR, litigators must work with their adversary at the outset of discovery to identify the methods they intend to use to identify relevant electronic information. In determining whether to use TAR for privilege review, litigators should consider several factors: (1) complexity of the privilege designations; (2) sensitivity of potential privileged communications; and (3) volume of potential privilege documents. For example, if the matter involves multiple layers of privilege across relevant material that cannot be flagged by attorney name or time periods, a manual review may be necessary.
The amendments to the FRCP seek to decrease cost and litigation time by increasing transparency during e-discovery. Although not much has changed, judges advise litigators to continue to cooperate and discuss ESI preservation and discovery with their client and adversary. Litigators warn attorneys about using boilerplate objections; rather, they should make specific responses. Additionally, attorneys should be prepared for motion practice regarding proportionality of discovery requests and reasonable steps to preserve data.
Before Da Silva Moore, getting permission to use computer-assisted review from either the judge or the opposition could have presented difficulties. Now courts are embracing the use of party agreed computer-assisted review methods.
