New Rules for E-Discovery

Rules of Civil Procedure amendments are effective July 1

The Tennessee legislature has given its approval to the amendments to the Tennessee Rules of Civil Procedure relating to the discovery of electronically stored information that were proposed by the Tennessee Supreme Court on Jan. 8. Thus, the amendments will become effective on July 1, 2009.

Electronically stored information (ESI) is "information that is stored in an electronic medium and is retrievable in perceivable form." Rule 26.02(1). ESI is frequently thought of as that information stored in a computer that is readable on the monitor screen. Common examples are e-mail and Word documents. However, ESI is actually much more than that. As is recognized in the Comments to Rules 26.06 and 34.01, ESI can take many forms and frequently includes embedded data and metadata. The intent is for the definition of ESI to be broad enough to "cover all current types of computer-based information, and flexible enough to encompass future changes and developments." Comment to Rule 34.01.

The new Tennessee ESI rules are patterned from the 2006 amendments to the Federal Rules of Civil Procedure (updated in 2007). The drafters of the new rules also incorporated language and concepts from the Conference of Chief Justices' Guidelines for State Trial Courts Regarding Discovery of Electronically-Stored Information, the National Conference of Commissioners on Uniform State Laws' Uniform Rules Relating to Discovery of Electronically Stored Information, and the Sedona Conference. The end result is a set of rules addressing the unique issues presented by the discovery of ESI in ways that will appear familiar to those who have engaged in ESI discovery under the Federal Rules but containing several differences from the Federal Rules. Another end result of the melding process is that the lengthy Comments to the new rules are generally very helpful in providing guidance but not always internally consistent.

The new ESI rules are attempting to respond to several problems that can result when the discovery of ESI is treated like the traditional discovery of paper documents. For one thing, paper documents are static, whereas computer systems are designed to be dynamic, resulting in the routine altering of electronic data without anyone lifting a finger. Many courts and litigants have been forced to deal with spoliation claims when the dynamic nature of a party's computer system ran afoul of the common law's obligation to preserve relevant information when the party first became aware that litigation was probable. For another thing, the volume of ESI being stored is enormous[1] and sorting through the data to find relevant information that does not also include privileged information can be time-consuming and very expensive.

These issues or problems are addressed is several ways. First, the new rules place a strong emphasis on early planning when litigation involves the discovery of ESI. This emphasis is most clearly found in Rules 16.01(2) and 26.06(1-4) and their associated Comments. The judge and the parties are encouraged to have, but are not required to have,[2] early discovery conferences to discuss the specifics of how ESI discovery will be conducted and how inadvertent disclosure of privileged information will be handled.

Second, rather than require the searching of all sources of data and the production of all relevant information from all sources, Rule 26.02(1) provides for a two-tier approach to ESI discovery. Data that is "reasonably accessible" must be produced. Data from sources the responding party identifies as "not reasonably accessible because of undue burden or cost" does not automatically have to be produced. If the requesting party challenges this designation, the responding party has the burden of convincing the court the data sources really are "not reasonably accessible." Even if this burden is met, the court can still require discovery if the requesting party can show "good cause." However, if good cause is shown, the court must go through a cost-shifting analysis under Rule 26.06(6) to determine what portion of the cost of discovery is to be borne by the requesting party.

Third, the parties are permitted to agree that one party must return, and may not use, any privileged information the other party produced inadvertently. Such a "claw back" agreement can and should be incorporated into the scheduling order under Rule 16.01(2)(C). Even if the parties do not reach an agreement, Rule 26.02(5) provides a procedure to accomplish a forced return of privileged information but allows the claim of privilege to be challenged. It should be noted that, however inadvertently produced privileged information is dealt with in the litigation, the issue of whether its inadvertent disclosure is a waiver of the privilege for other purposes is recognized in the Comment but is not resolved in the new rules.[3]

Fourth, Rule 34.02 now addresses how ESI is to be requested and is to be produced. The requesting party can designate the form or forms in which it wants the information produced (e.g., native, pdf, tiff, paper). If the producing party objects to producing the information in the form(s) requested, or if no form of production is designated, the producing party must state the form(s) of production it intends to use, and this form must either be the form in which the information is ordinarily maintained or be a form that is reasonably usable. Unless the court orders otherwise, the producing party does not have to produce the same information in more than one form.

Fifth, because of the risk that electronic data will be altered or lost before it is produced in litigation, Rule 37.06 has been added to provide some protections for a producing party. If a party claims that ESI has not been produced and a motion to compel discovery is filed, the court, under Rule 37.06(1), is to go through an extensive list of factors and considerations before ordering the discovery and/or awarding sanctions. One noteworthy factor is whether the producing party deleted, discarded or erased ESI after litigation was commenced or after the party was aware that litigation was probable. Rule 37.06(2) provides that, absent exceptional circumstances, the court is not to impose sanctions for the failure to produce ESI lost as a result of the "routine, good-faith operation of an electronic information system." However, "good-faith operation" does not mean allowing the computer system to continue operating normally when a duty to preserve information arises because of the probability or existence of litigation.

Sixth, Rule 45 has been extensively amended to allow for the discovery of ESI from non-parties while at the same time providing comparable protections for non-parties as those found in the other rules for producing parties. More specifically, Rule 45.02 provides that a party serving a subpoena requiring the production of ESI shall take reasonable steps to avoid putting an undue burden or expense on the non-party and provides that a court requiring compliance with a subpoena must provide protection from undue burden or expense.

In a very real sense, Tennessee is now "catching up" with the federal system and with numerous other states in putting some order in the chaos of electronic discovery. ESI has for many years been discoverable under Rule 34 as a "data compilation." But there has been no guidance for the courts and attorneys on how to address the many technical issues that arise in discovery of ESI.

Discovery of ESI will not be required in all cases, going forward. Considering the statistics of how much information is now stored only in electronic form, however, chances are good that many, if not most, cases in the future will involve electronically stored information to one degree or another. It might be tempting to ignore all this computer "stuff" and continue to do discovery in paper form. Admittedly, an attorney needs to know what she is doing to be proficient in electronic discovery, but the benefits of using technology to review and sort large volumes of information is far superior to drowning in banker's boxes of paper documents. And crucial information will never see the light of the court room if ESI is not discovered and used to its full potential.

Notes

1. Just one computer with a 200 gigabyte hard drive can hold the equivalent of 150 million pages of text. If the litigant's computer system consists of several network servers, laptops, pdas (e.g., Blackberry), back-up tapes, desktops, and other devices on which data may be stored, the amount of data potentially to be analyzed becomes almost incomprehensible.

2. This is a significant difference from the federal requirement for an early meet and confer between the parties.

3. Federal Rule of Evidence 502 deals with privilege waiver in this context when the litigation is in federal court.�


LAWRENCE C. MAXWELL LAWRENCE C. MAXWELL is a shareholder in Baker Donelson’s Nashville office and is the chair of the firm’s Electronically Stored Information (ESI) Task Force. He concentrates his practice in matters involving engineering and technology, such as construction law, products liability and intellectual property. For more than 30 years, he has been extensively involved in corporate risk management, giving advice on contract and insurance coverage, and in the resolution of disputes through litigation, arbitration, mediation and/or negotiation. He has handled numerous bench and jury trials in a wide array of civil litigation matters. He consulted with the Advisory Commission\'s subcommittee and provided input on the initial drafts of the proposed rules on electronic discovery.