What is E-Discovery?
Litigation involves discovery, the process of obtaining and exchanging evidence, or information that might potentially become evidence. Parties are bound to the legal procedure of information and evidence exchange with one another in state and federal courts. While it is primarily described in the context of litigation, the discovery process is essential to many other areas of investigations, arbitrations, and other forms of dispute resolution. e-Discovery, also known as Electronic discovery is an updated process of discovery to address the challenges and complications in the procedure of identifying, collecting, preserving, and producing electronically stored information (ESI) in electronic formats to act as evidence in a lawsuit or investigation. ESI includes, but is not limited to, common data sources such as emails, documents, presentations, voicemail, audio and video files, to more modern ones, like websites, social media, company-specific databases, instant messaging, and smartphone applications.
The electronic data produced and stored in e-discovery goes through complex processes and technologies just because of its large volume. Unlike hard copy evidence, electronic documents are dynamic. They often contain metadata such as time-date stamps, information about author, recipient, and file properties. Thus, the metadata of the ESI and original content should be preserved such that it is possible to eliminate spoliation or tampering with evidence claims later in the litigation.
After the potentially relevant data is identified (including both electronic and hard-copy materials) by the parties of the legal case, it is then placed under a legal hold. It means now the data cannot be deleted, modified, or otherwise destroyed. Further, the relevant data is first collected, and then extracted and indexed, to be placed into a database. The data is then analyzed to cull or segregate the documents and emails that are clearly non-relevant. At this point, the data is ready to be hosted in a secure environment, such that it is accessible to the reviewers for encoding the documents to the legal matter for their relevance (contract attorneys and paralegals often work with reviewers in this phase of the document review).
For production, static formats like TIFF or PDF are mostly used to convert the relevant documents such that it makes redaction of information possible. Analytical software like Computer-assisted review (also known as “C.A.R.” or Technology-Assisted Review, “T.A.R.”) and predictive coding are often used for e-discovery to reduce the number of documents required for review by attorneys and allows prioritization of the reviewed documents. This helps in achieving the ultimate goal of e-Discovery, to produce a core stack of evidence for litigation in a defensible manner. Also, the number of documents is reduced resulting in fewer hours and thus fewer costs.
E-Discovery And The Federal Rules Of Civil Procedure
Understanding the Federal Rules of Civil Procedure makes it easier to understand e-Discovery. The rules keep on updating to address the specific concerns of electronic discovery.
The procedure for civil lawsuits at the federal level in the United States district courts is governed by the Federal Rules of Civil Procedure (FRCP). Whereas at the state level, there are specific statutes and rules of each state that govern the procedure for civil lawsuits in state court. However, most jurisdictions model their rules after the FRCP, hence we will discuss it in detail.
In December 2006, significant amendments were made to the FRCP that shaped the landscape for future e-Discovery works. The important ones, among other changes, were - redefining discoverable material; encouraging early attention to the issues related to e-Discovery; introduction of the concept of “reasonably accessible”; a procedure to assert claims of privilege and work product after production; and a mechanism for "safe harbor" limits on sanctions related to loss of ESI as a result of computer system operations.
The inclusion of the words “electronically stored information” on the list of information that is discoverable throughout the discovery process was the most important amendment of 2006. The FRCP Rule 34, dictated specifically the discovery and disclosure related to “producing documents, electronically stored information, and tangible things or entering onto land, for inspection and other purposes.” The phrase “electronically stored information” was broad and flexible enough to cover computer-based information of all current types and encompass future technological developments.
In December 2015, the Rules were amended again. The change of Rule 37 got the most attention. The amendments to Rule 37(e) allow sanctions for failure to preserve ESI. Whereas it limits sanctions for failure to preserve so that negligence will not be sufficient for imposition of most severe penalties.
Perhaps the major change was to FRCP 26(b)(1) regarding the scope of discovery and its proportionality. The rewritten Rule 26(b)(1) limits the discovery to that which is “proportional to the needs of the case” and provides five factors for courts to consider. The scope of discovery was redefined due to this Amendment such that parties now can address concerns about whether it is reasonably necessary to resolve a case fairly with a certain amount of discovery.
E-Discovery Rules
Rule 26(b)(1): Keep It In Proportion
The old rule 26(b)(2)(C)(iii) allows the court to limit discovery when the burden outweighed the benefit. However, amendments made on December 1, 2015, implemented the new Rule 26(b)(1), in a way that takes the factors in these old requirements and puts them at the center of any discussion about the scope of discovery.
Rule 26(d)(2): There's More Than One Way To Do e-Discovery
Don't let opposing counsel or judges impose particular patterns on the process. Simply because an approach worked for them in the past, doesn't suggest that it's always right to process in that way. Additionally, the other party's timeline shouldn’t get in the way of what you need to do. The rules clearly state that “methods of discovery may be used in any sequence,“ and “discovery by one party does not require any other party to delay its discovery.”
Rule 26(f): Setting The Ground Rules
The actual negotiation will begin with what's referred to as the 26(f) Conference, mandatory to happen before any discovery can occur. It was made clear by the courts that these conferences should happen as early as possible and parties are required to agree on foundational principles just like the sorts of production. If parties can't agree within a fortnight, they face the judge for what's referred to as the Rule 16 Conference. The responding party may object, under Rule 26(c) and 37(a) after an actual discovery request is issued.
Rule 26(g): A Reasonable Inquiry
The Federal Rules of Civil Procedure mandates a typical standard of care, including “that to the best of the person's knowledge, information, and belief formed after a reasonable inquiry: with respect to a disclosure, [the response] is complete and correct as of the time it is made.” However, “reasonable” may be a matter for the court to decide on the totality of the circumstances.
Rule 34(b): Get Data How You Want It
A requesting party is benefitted by Rule 34(b) which allows deciding how a requesting party wants information and lets the responding party object if impractical. A failure in specifying a form for producing data by the requesting party gives the producing party an option to either produce the information in an electronically searchable form or in an ordinarily maintained form. The parties that produce data in printed or other non-native formats are aggressively rebuked by the Courts.
Rule 37(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 it, and it cannot be restored or replaced through additional discovery, the court:
upon finding prejudice to another party from loss of the information, may order measures no greater than necessary to cure the prejudice; or
only upon finding that the party acted with the intent to deprive another party of the information’s use in the litigation may:
presume that the lost information was unfavorable to the party
instruct the jury that it may or must presume the information was unfavorable to the party; or
dismiss the action or enter a default judgment"
Foundational E-Discovery Case Laws
1. Zubulake v. UBS Warburg L.L.C. (“Zubulake V”)
U.S. District Court, Southern District of New York
May 2004
Zubulake is considered the mother of eDiscovery case law. The parties were not mandated for the first in this case to make a reasonable inquiry, to identify the sources of information or the likely custodians. However, a series of long, detailed opinions with detailed balancing tests written by Judge Shira Scheindlin was so thoughtful, complete, and persuasive that it was an impossible issue to ignore. The defendant’s initial arguments were that it would be expensive to recover and review ESI from backup tapes. However, the seven-factor test of Judge Scheindlin's compelled the defendants to produce the evidence, even when the costs were shared by both parties.
2. Coleman (Parent) Holdings, Inc. v. Morgan Stanley & Co.,
U.S. District Court, Florida
March 2005
It was associated with a lawsuit alleging accounting fraud and misrepresentation within the sale of stock, where the plaintiff had filed a motion for sanctions and an adverse inference jury instruction for the defendant's destruction of emails. The defendant practiced a habit of overwriting emails after twelve months, although the SEC required to retain the emails for 2 years. The court’s orders to the defendant were to review backup tapes, conduct searches, produce emails and a privilege log, and certify compliance with discovery obligations. The defendant failed to review more than 1,400 backup tapes and even then certified the discovery as complete. Later, the court revoked the pro hac vice license of the defendant's trial lawyer in its order on March 23, 2005, and disqualified the law firm. The defendant was forced to seek substitute counsel two weeks before trial. The sanctions within the case were reversed ultimately, but it became a scary lawsuit for its threat of punishment in this suit that scared many lawyers straight when it involved e-Discovery.
3. Arthur Andersen, LLP v. the United States
United States Supreme Court
May 2005
The famous criminal action against the Arthur Andersen firm due to the collapse of Enron concluded in the Supreme Court overturning Arthur Andersen's conviction. Arthur Andersen was accused of criminal obstruction of justice for shredding documents prior to receiving a subpoena from the SEC. It was determined by the Supreme Court that the trial court's instruction to the jury didn’t include the essential element of scienter—actual knowledge of a proceeding (in contrast to the “reasonable anticipation of litigation” standard in civil actions) and the intent to obstruct that proceeding.
4. Mancia v. Mayflower Textile Services Co.
U.S. District Court, District of Maryland
October 2008
U.S. Magistrate Judge Paul Grimm was involved in eDiscovery in this wage-and-hour case brought by several employees of Mayflower. Grimm said that the biggest reason for the costs of eDiscovery skyrocketing was the failure of opposing counsel to cooperate and work out disputes on their own. His strong advice to the counsel of both the parties was to work together and make the e-Discovery move more smoothly. After almost one year, the parties settled in November 2009. This case leads many judges to follow Grimm by advising attorneys of the cases before them to cooperate and hold regular conferences before even setting foot into court. Later, the amendments to the Federal Rules of Civil Procedure were made that added a duty to cooperate.
5. Rimkus Consulting Group Inc. v. Cammarata
U.S. District Court, Southern District of Texas
February 2010
After one month of Pension Committee, U.S. District Judge Lee Rosenthal refused to follow Scheindlin's jurisprudence during a case where a consulting group tried to enforce a non-compete agreement with some of its former employees. Rimkus said that its ex-employees intentionally deleted relevant emails and asked for sanctions. Rosenthal had an opinion that highlighted a major split among federal circuits on when sanctions were appropriate. Such a split could be resolved only by the U.S. Supreme Court or the proposed new federal rules. Further, the case was resolved in June 2010, when a permanent injunction was imposed by Rosenthal that prevented the ex-employee from using facts and methods that they had obtained while they were at Rimkus.
6. Da Silva Moore v. Publicis Groupe & MSL Group
U.S. District Court, Southern District of New York
February 2012
U.S. Magistrate Judge Andrew Peck approved protocols to permit each side to use predictive coding in conducting e-discovery. However, the case soon got caught up in a setback as the attorneys representing Da Silva Moore filed a petition against Peck to leave the case, accusing him of being biased because of his previous public comments in favor of using predictive coding. The appellate courts backed Peck, and the U.S. Supreme Court declined to intervene in October 2013.
References
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