Electronic Discovery & Information Governance: 2013 Tips of the Month - A Compilation - Civil Law

As we move further into 2014, Mayer Brown's Electronic Discovery & Information Governance Practice (f/k/a Electronic Discovery & Records Management) would like to extend its best wishes for a prosperous New Year. We hope you found our Tips of the Month series to be a valuable resource to your organization in 2013. To begin the new year, we wanted to take an opportunity to recap some of the major E-Discovery trends in 2013, and to present a compilation of the previous year's tips for easy reference. We hope that you continue to take advantage of our monthly updates, and as always encourage your comments and suggestions for future Tip of the Month topics in 2014. Your feedback is very important to us, and we sincerely thank you for your continued interest.

E-Discovery 2013 Trends

The year 2013 continued many of the e-discovery trends observed in 2012. Perhaps most significantly, the lack of additional blockbuster cases or profound changes in technology suggests that e-discovery is quietly maturing and integrating into the day-to-day realities of modern litigation practice. Although fewer watershed events limit the fodder available for commenters, the stabilization of e-discovery practice is only a good thing for litigants and practitioners alike. As e-discovery litigation practice advances toward the twin goals of predictability and uniformity, businesses should become more attuned to e-discovery responsibilities before, during, and after litigation.

Notwithstanding the lack of headline-worthy events in 2013, a number of important trends continue to shape the contours of e-discovery practice. First, the ongoing efforts to amend the Federal Rules of Civil Procedure ("FRCP") reached an important milestone with the release of several new provisions for public comment. The eventual implementation of these rules will change the landscape of federal practice and will likely have a ripple effect on state court rules and practices over time. Second, e-discovery case law continued to develop, especially in connection with the issues of cost recovery and court-imposed sanctions. Although the overall trend in e-discovery decisions is convergence around a single standard, many significant areas of divergence remain. Therefore, practitioner awareness of local trends and procedures remains essential. Third, advances in everyday technology continue to drive changes in e-discovery practice. Experience has shown that changes in personal communications technology and platforms are yoked with expansions in the application of e-discovery.

E-Discovery Under the Federal Rules of Civil Procedure

The ongoing process of amending discovery provisions of the FRCP reached an important milestone in 2013 with the August 15 release of a package of proposed amendments for public comment. While the amendments cover a wide variety of topics, certain amendments will likely have a broad impact. Of particular note is the proposed deletion of the current provision of Rule 26(b)(1) permitting a court to order discovery of any matter "relevant to the subject matter" of the action. The proposed amendments would revise Rule 26(b)(1) to include the proportionality standards currently described in Rule 26(b)(2)(C)(iii).

Related to this narrowing of the scope of available discovery is the proposal to remove the language that relevant information need not be admissible at trial as long as it appears "reasonably calculated to lead to the discovery of admissible evidence." Many practitioners will welcome the removal of this longstanding ambiguous provision, which often functions as a catch-all for extraordinarily broad discovery requests. If these amendments are implemented, material will only be discoverable when it is "relevant to a party's claim or defense and proportional to the needs of the case." While the precise impact of the change cannot be known in advance, any narrowing of the scope of permissible discovery should correlate with a reduction in litigation costs.

The inconsistent application of e-discovery-related sanctions remains an issue throughout the state and federal courts. A proposed revision to Rule 37(e) is designed to create a national standard for spoliation sanctions and to make clear that sanctions may not be imposed based upon simple negligence. Under the proposed Rule 37(e), upon a finding that a party failed to preserve discoverable material "that should have been preserved," a court may order "curative measures" including expanded discovery and the payment of expenses and attorneys' fees. These "curative measures" may be imposed even without a showing of culpability of the responding party or of prejudice to the requesting party.

In order to impose more severe sanctions under Rule 37(b)(2)(A), including evidence preclusion, claim preclusion, dismissal, or an adverse inference instruction, the court would be required to find that the responding party's actions either (a) "caused substantial prejudice" and were "willful or in bad faith," or (b) that they "irreparably deprived a party of any meaningful opportunity to present or defend against the claims." The proposed rule also includes a list of factors that courts should consider in determining whether the failure to preserve was "willful or in bad faith." Those factors include, inter alia, "the extent to which the party was on notice that litigation was likely and that the information was discoverable;" "the reasonableness of the party's efforts to preserve information;" and "the proportionality of the preservation efforts."

A public hearing on the proposed amendments took place in November of 2013 and additional hearings are scheduled in early 2014. The deadline for public comments on the proposed amendments is February 15, 2014. The earliest the proposed amendments would take effect, if approved by the Judicial Conference, the Supreme Court, and Congress, is December 1, 2014.

Developing Case Law: Cost Recovery and Sanctions

As courts continue to issue e-discovery decisions, increasingly consistent results provide the important benefit of predictability to litigants. When used appropriately, provisions for cost recovery in the e-discovery context can reinforce the proportionality requirements under the FRCP and can create positive incentives to reasonably limit discovery. Similarly, the judicious application of sanctions can deter discovery abuse, as well as ameliorate the effects of discovery misconduct. Both aspects of e-discovery practice were frequently litigated in 2013 and, while many courts are reaching consistent outcomes as to these topics, there are still outlier decisions that can be pitfalls for practitioners.

Cost Recovery

The current FRCP provide that a prevailing party is entitled to recover costs, including "fees for exemplification and the cost of making copies of any materials where the copies are necessarily obtained for use in the case." See FRCP 54(d) and 28 U.S.C. § 1920(4). Obviously this rule was enacted when discovery took place on paper, but many courts have adapted it for use in the modern era of e-discovery. In a widely-discussed 2012 decision, the Third Circuit Court of Appeals interpreted Section 1920 to limit cost recovery to the conversion of native files to .tiff and the scanning of documents to create digital duplicates. Race Tires III, No. 11-2316, 2012 WL 887593 (3d Cir. Mar. 16, 2012). In 2013, the Fourth Circuit Court of Appeals followed the Third Circuit's cost recovery rationale in Country Vintner of N.C., LLC v. E. & J. Gallo Winery, Inc., No. 12-2074 (4th Cir. Apr. 29, 2013). This approach was also recently followed in the Southern District of Illinois, where a court held that the cost for the conversion of documents into .tiff images was recoverable. Phillips v. Wellpoint, No. 3:10-cv-00357 (S.D. Ill. May 16, 2013). However, other jurisdictions, including the Northern District of Texas and the Northern District of Iowa, interpret Section 1920(4) more broadly to permit the recovery of a wide range of additional e-discovery-related expenses. It is unclear whether the proposed amendments to the FRCP will address this divergence of opinion on cost recovery.

Sanctions

Given the high stakes of litigation, the effective use of discovery sanctions is necessary to ensure fair and balanced discovery among all parties to a lawsuit. However, under the current case law regime, identical conduct can result in vastly different sanctions depending on the jurisdiction. For instance, different courts in the Southern District of New York have recently reached varying results in determining whether grossly negligent conduct in conducting discovery requires the imposition of an adverse inference instruction.

Federal appellate courts are similarly all over the map on the standards for the imposition of sanctions. Specifically, the Second, Fourth, Seventh and Eighth Circuit Courts of Appeal have inconsistent standards as to whether an adverse inference instruction requires a finding of bad faith, of prejudice to the requesting party, or willful misconduct.

As noted above, the proposed amendments to the FRCP may significantly advance the goal of uniformity in the standards of sanctions imposed for e-discovery misconduct in the federal courts.

Technology Changes: Keyword Searches and Discovery Through Mobile Devices

The rise of technology-assisted review, namely in the form of predictive coding, has been an e-discovery development that seems to remain "right around the corner." Although commenters and e-discovery vendors continue to exalt its benefits and its potential to revolutionize the manner by which documents are reviewed, there were few reported cases in 2013 discussing the use of predictive coding. Instead, many practitioners are utilizing technological advances to improve the effectiveness of the old stand-by: keyword searches.

As discussed in Mayer Brown's November 2013 Tip of the Month, the appropriate use of keyword search terms remains a defensible and effective strategy for identifying documents potentially responsive to document requests. The negotiation of keyword search terms also remains a part of the preliminary e-discovery conference requirements imposed by many state and federal courts. With the appropriate selection of targeted search terms and a robust use of data analytics, keyword searching remains a useful e-discovery tool. Perhaps most importantly, its intuitive nature avoids the lack of understanding and "black box" concerns that continue to impede the spread of predictive coding.

As reliance on mobile communications technology continues to expand, mobile devices, and the data they contain, are increasingly the subject of e-discovery demands. Text messages, in particular, have become commonplace in business and personal communications and, as such, courts are grappling with the application of preservation and production rules.

Most recent decisions remain consistent with the 2011 guidance from the Sedona Conference that there is no duty to preserve instant or text messages if a party does not routinely save those messages and litigation is not anticipated. However, once a party is on notice of litigation, text messages will increasingly be treated as merely another data population subject to preservation obligations.

In 2013, the district court for the Southern District of Illinois imposed nearly $1 million in sanctions for, inter alia, a defendant's failure to suspend auto-delete systems as applied to text messages on company-issued smart phones. In Re Pradaxa (Dabigatron Exterilate) Prods. Liab. Litig., MDL No. 22385, 2013 WL 6486921 (S.D. Ill. Dec. 9, 2013). In an important practical aside, the court noted that the plaintiffs had expressly included text messages in the definition of "document" in their document requests. Given the rapid changes in mobile technology, a close review of once-static "boilerplate" definitions in documents requests, both incoming and outgoing, is a prudent exercise.

Finally, the increasing prevalence of Bring Your Own Device (BYOD) programs, which allow employees to use their personal devices for business purposes, creates a significant grey area between personal and work data. While BYOD programs may increase efficiency and employee satisfaction, robust program policies that are rigorously enforced are essential to avoiding discovery problems in the event of litigation.

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This Mayer Brown article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.