Impact of New E-Discovery Rules
“E-Discovery” is a term that refers to finding and producing documents stored in electronic form in response to litigation or regulatory requirements. In the United States, there has been an increase in the use of electronic media in the workplace. Electronic media includes more than e-mails and internet programs; it includes computer systems, e mails, internet, telephones, facsimiles, PDA’s, cellular telephones, pagers, instant messaging, etc., and all documents or programs created or associated therewith. Recently, changes in the Federal Rules of Civil Procedure have been implemented which address the growing use of electronic media in the workplace. The changes were needed considering about 95 percent of all information created at work is done so electronically and because employers were struggling to reconcile traditional notions of record retention and production obligations with the task of retaining and locating all of the ephemeral data created electronically. The changes to the Federal Rules of Civil Procedure regarding electronic media went into effect on December 1, 2006. Employers should be aware of these changes so as to prevent future litigation, defend current litigation and reduce litigation costs.
Summary of the Key Changes
Federal Rules of Civil Procedure (FRCP) 33 and 34 now defines what constitutes “electronically stored information” (“ESI”), and what sort of ESI is discoverable. FRCP 33 and 34 define discoverable ESI as anything from e-mails and word documents to voicemail, instant messaging, backup tapes, database files, thumb drives, digital camera media, TiVos, etc. It should be noted, that FRCP 33 and 34’s definition of discoverable ESI encompasses more than just the “plain text” of the document. An “e-mail record,” for example, includes all of the following components: (1) the structure of the message (physical appearance, including headings, body and signature blocks); (2) the content of the message (subject matter of the message); (3) its’ related contextual information (origin of record, date/time created, network paths, and other “metadata,” “Metadata” is information regarding when the document was created, accessed, modified, deleted, etc.); and (4) attachments (self-contained document files).
Furthermore, now, under FRCP 16 and 26, before the scheduling conference, lawyers are to discuss any issues relating to disclosure or discovery of electronically stored information, including the time necessary to produce it, whether the data exists in a searchable form, and any relevant data retention policies of either party. The purpose of this rule is to avoid the loss of relevant information and to ensure production in usable formats. Moreover, FRCP 16 and 26 instituted a “claw-back provision” regarding ESI. The provision states that if a party notifies his/her opponent of inadvertent disclosure within a reasonable amount of time, the opponent must promptly return, sequester, or destroy the specified information and any copies. A thorough, page-by-page review is often impossible, so the likelihood of privileged information slipping through is much greater than during the days of paper production. Moreover, now, under FRCP 37, there is a “safe harbor” for certain types of ESI deletions, ensuring parties that they will not be sanctioned for losing some ESI. FRCP 37(f) provides that:
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.
As noted, to qualify for the safe harbor, the electronic information must have been lost or destroyed as a result of routine operation of the party’s computer system and the party must have taken reasonable steps to preserve the information after it knew the information to be relevant (acted in “good faith”). Good faith might require a party to intervene and suspend certain aspects of routine operations to prevent loss of information subject to preservation obligations. It may also require a litigation hold, which is a directive for corporate employees to preserve records and data that might be relevant to litigation.
Lastly, under FRCP 26, a party is relieved of his/her duty to retrieve and produce ESI that is not readily accessible, for burden or cost reasons. Data may be deemed irretrievable if it was created using outdated software or hardware; if it is stored on backup tapes; or, if it is fragmented data. However, technical developments that reduce the cost and burden of searching these media may, in the future, transform them from “inaccessible” to “accessible.” Furthermore, when the responding party claims that ESI is not retrievable, it must identify, by category and type, the sources of information that it has not searched or produced because of the costs and burdens of production. The requesting party may then move for the production of such information. The responding party then has the burden of showing that such information is not reasonably accessible. To show this, the responding party must know where all of this ESI is stored and they must demonstrate that it has taken reasonable steps to preserve the evidence, even if it is inaccessible. However, the court may still order discovery for good cause and specify the conditions for such discovery, which may include requiring the requesting party to bear part of the cost. Accordingly, a court must look at seven factors when determining if data is “inaccessible”:
- The specificity of the discovery request
- The quantity of information from other, more easily accessed sources
- The failure to produce relevant information that seems likely to have existed but is no longer available from more easily accessed sources
- The likelihood of finding relevant, responsive information that cannot be obtained from other, more easily accessed sources
- Prediction as to the importance and usefulness of the requested information
- The importance of the issues at stake in the litigation
- The parties’ resources
Adapting to the New Federal Rules
Employers should formalize or modify their policies related to electronic media. First, an employer should institute a document retention/destruction policy. A party’s strict compliance with a well-defined document retention and destruction policy may insulate it from sanctions under FRCP 37(f). At the minimum, an organization’s record retention policy should be realistic, practical and tailored to the circumstances of the organization. The policy must also apply to all possible storage media, including hard drives, network drives, laptops, PDA’s, Blackberrys, back-up tapes, disaster recovery, and traditional paper files. Such policies will improve an employer’s litigation readiness and streamline its discovery responses.
Employer’s should also draft a policy regarding acceptable internet use-coined an Acceptable Use Policy (“AUP”). An AUP is a written agreement that should be signed by employees, which sets out the permissible workplace uses of the Internet. Additionally, an AUP should specifically set out prohibited uses, rules of online behavior, and access privileges. The AUP should spell out the penalties for violations of the policy, including security violations and vandalism of the system. Anyone using a company’s Internet connection should be required to sign an AUP, and know that it will be kept on file as a legal, binding document. A well drafted AUP should include the following elements:
- A definition of the internet and a description of its features, functions and capabilities;
- A statement that internet usage is a privilege, not a right;
- A code of conduct governing the behavior of persons accessing and using the internet;
- A statement making false or misleading statements about the employer or its employees a violation of the employer’s policies;
- A statement regarding s person’s potential unintentional exposure to obscene or objectionable material;
- A statement specifically forbidding an employee from accessing or transmitting any message of a sexual nature, or transmitting any material which violates the employer’s policies on harassment and discrimination;
- A specific statement that e-mail accounts and file materials, in general, are public and not private in nature and remain subject to monitoring by the employer;
- A specific statement that privacy is not guaranteed and that users are advised not to reveal their personal addresses or telephone numbers, nor the addresses or telephone numbers of other employees;
- A statement regarding the penalties for failure to abide by the rules contained in the AUP:
(b) Violations may trigger discipline; and
(c) Criminal sanctions under Wis. Stat. Â§ 947.0125 for threatening, intimidating, abusive or harassing messages sent to another person through electronic mail or other computerized system.
- A specific disclaimer regarding absence of all warranties by the employer for Internet services
- A statement and signature reflecting an employee’s consent to monitoring and interception of e-mail or other electronic messages sent by the computer
- A statement that the employer reserves the right to review any material obtained by users from the Internet and to make determinations on whether specific uses of the Internet are inappropriate
- A signed statement that the employee agrees to abide by rules and code of conduct established by the AUP and all other applicable laws
As noted earlier, employers also have a duty to preserve ESI when litigation is reasonably anticipated. Once litigation is “reasonably anticipated,” an employer should issue a “Litigation Hold” Memo as soon as possible. The Memo should identify the legal dispute, describe the ESI that must be preserved, and detail how that information should be maintained, stored and preserved. Moreover, recipients of the Memo should acknowledge receipt of the Memo and their understanding of it. Such a policy will reduce delays and costs in producing information during discovery; it may also insulate an employer from possible court sanctions for failing to produce discoverable information.
The preservation and production of electronic media is complex and is rapidly evolving. Implementing disaster recovery and pending litigation policies may insulate companies from sanctions related to litigation discovery. Similarly, establishing policies regarding acceptable employee internet and e-mail use, will not only increase employee productivity, but may shield employers from employee’s inappropriate or illegal internet use. It is critical that companies develop policies and procedures in order to minimize the expenses and the burdens associated with e discovery.
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