Q & A: Preparing for Discovery of Electronically Stored Information (Sept. ’08)

Executive Summary

This Q&A provides an overview to the relevant federal rules and discusses some important considerations when dealing with electronically stored information.æ

Preparing for Discovery of Electronically Stored Information 
Produced by Jane Perkins
National Health Law Program
September 2008 
Q:  We are preparing to file a lawsuit against our state Medicaid agency. I am struck by the amount of information that is created electronically.  What steps should I take to make sure that we obtain relevant electronic information through discovery?  
A:  You should prepare an e-discovery plan. This Q&A provides an overview to the relevant federal rules and discusses some important considerations when dealing with electronically stored information.  
Twenty years ago, information was communicated and stored on paper.  Personal computers and e-mail were novelties.  Today, over 90 percent of all information is created using electronic formats.  See The Sedona Conference Working Group Series, The Sedona Principles, Second Edition:  Best Practices, Recommendations & Principles for Addressing Electronic Document Production at 1 (2d Ed. 2007) (The Sedona Principles, Second Edition).  
The emerging and ever-evolving electronic communication and storage mediums are revolutionizing how litigation must be conducted.  A federal court judge in Colorado recently observed:
Courts now face the challenge of overseeing discovery at a time when potential access to electronically stored information is virtually limitless, and when the costs and burdens associated with full discovery could be more outcome-determinative, as a practical matter, than the facts and substantive law.
Cache La Poudre Feeds v. Land O'Lakes, Inc., 244 F.R.D. 614, 620 (D. Colo. 2007).  
The features of electronic information create special discovery challenges.  These include, first, the sheer volume of electronic information.  As compared with paper documents, electronic information is created, replicated and stored at significantly greater volumes.  A single email can be replicated and sent to multiple recipients, who in turn forward the message.  Information that can be stored on a single CD-ROM would fill a bank of file cabinets if stored on paper.
Second, electronically stored information (ESI) is persistent.  ESI is more difficult to destroy than paper, which can be shredded.  When a PC user deletes a file, the document is not destroyed.  The influential case, Zubulake v. UBS Warburg, 217 F.R.D. 309 (S.D.N.Y. 2003), explains this feature of ESI as follows:
The term ?deleted? is sticky in the context of electronic data. ?Deleting? a file does not actually erase that data from the computer?s storage devices.  Rather, it simply finds the data?s entry in the disk directory and changes it to a ?not used? status?thus permitting the computer to write over the ?deleted? data.  Until the computer writes over the deleted data, however, it may be recovered by searching the disk itself rather than the disk?s directory.  Accordingly, many files are recoverable long after they have been deleted?even if neither the computer user nor the computer itself is aware of their existence.  Such data is referred to as ?residual data.?  Deleted data may also exist because it was backup up before it was deleted.  Thus, it may reside on backup tapes or similar media. 
Id. at 313, n. 19 (internal quotes and citations omitted).
Third, ESI contains metadata.  Metadata is additional information about the document that is not shown on the computer screen.  Sometimes described as ?data about data,? metadata can be important in some cases because it includes information about who created the document and when and how the document was stored within the computer system.  Examples of metadata for electronic documents include:  a file?s name, location (e.g. path name); file format and size; file dates (e.g. creation date, date last modified); and file permissions (e.g. who can read the document, who can modify the document).  
Fourth, ESI raises issues with dispersion.  For instance, when state Medicaid agencies receive requests for production of paper documents, they may achieve compliance by placing the documents in a cardboard box or file cabinet and then allowing the requester to review them.  ESI on the other hand typically resides in multiple places?desktop hard drives, laptops, network servers, thumb drives, CD-ROMS, DVDs, and disaster back-up tapes.  Moreover, the ESI may differ somewhat or significantly from one storage ?bin? to another. 

Finally, ESI raises issues with vocabulary.  The creation and management of digital information has a vocabulary all its own.  To put it another way, the phrase ?computer geek? was not created in vacuum.  
Practice tip:  Get familiar with the jargon, for example: 
ambient data, backfiles; boolean search; checksum; comic mode; dirty text; encoding; ethernet; forensic copy; jaz; legal hold; lossy compression; marginalia; metadata; off-line data; phase change; PDA, PMS (no, not that); RAID; slack space; spoliation; thin client; twiki (aka WikiWiki); yottabyte
If, by chance, you need help, then obtain:  The Second Conference Glossary:  E-Discovery & Digital Information Management (Second Ed. Dec. 2007): http://www.thesedonaconference.org/dltForm?did=TSCGlossary_12_07.pdf.
The Federal Rules of Civil Procedure and E-Discovery
The Federal Rules of Civil Procedure were amended in 2006 explicitly to address electronically stored information:  
A party may serve on any other party a request . . . to produce . . . the following items in the responding party?s possession, custody, or control: ? any designated documents or electronically stored information?including writings, drawings, graphs, charts, photographs, sound recordings, images, and other data or data compilations?stored in any medium from which information can be obtained either directly or, if necessary, after translation by the responding party into a reasonably usable form 
Fed. R. Civ. P. 34(a)(1)(A).  
According to the civil rules advisory committee, this amendment is ?intended to be broad enough to cover all current types of computer-based information, and flexible enough to encompass further changes and developments.?  Fed. R. Civ. P. 34 advisory committee?s note (2006).  Currently, this includes email (with attachments), web pages, word processing files, spreadsheets, presentations, voicemail, audio and video files, images, computer databases, and ?virtually anything that is stored on a computing device,? including on servers; desktops; laptops; networks; hard drives; flash drives; tapes, discs, and cartridges; back up or disaster recovery systems; mobile telephones; and PDAs (personal digital assistants, or small hand-held computers).  The Sedona Principles:  Second Edition at 1.
Rule 34 allows the parties to designate the form in which ESI is to be produced.  See Fed. R. Civ. P. 34(b)(1)(C).  If the request does not specify a format, the information is to be produced in a form or forms in which it is ?ordinarily maintained or in a reasonably usable form or form.?  Id. at 34(b)(2)(E).  Compare Fed. R. Civ. P. 34 advisory committee?s note (2006) (?If the responding party ordinarily maintains the information it is producing in a way that makes it searchable by electronic means, the information should not be produced in a form that removes or significantly degrades this feature.?).
Federal Rule of Civil Procedure 26 has also been amended to account for ESI.  The Rule now includes ESI within the initial disclosures that the parties should make without awaiting a pretrial conference (see Rule 16).  The Rule establishes a unique approach that requires the responding party to provide a copy or description of relevant ESI but excuses production of ESI that the responding party identifies as ?not reasonably accessible because of undue burden or cost.?  See Fed. R. Civ. P. 26(b)(2)(B).  If the requesting party wants the information and cannot reach a compromise with the responding party, the requesting party has the burden of proving ?good cause? for the court to order the disclosure.  Id.   
The following rules were also amended to account for ESI:  Fed. R. Civ. P. 16(b)(3)(B)(iii) (pretrial scheduling order); Fed. R. Civ. P. 33 (interrogatories); Fed. R. Civ. P. 37 (failure to cooperate in discovery and sanctions, providing that absent ?exceptional circumstances,? a court may not impose sanctions for failing to provide ESI lost as a result of the ?routine, good faith operation? of the system); Fed. R. Civ. P. 45 (subpoenas and discovery from third parties).
Recommendations for E-Discovery 
1.  Be prepared.   Not all cases call for discovery of ESI (and you risk infuriating your judge if you propound e-discovery in a case that clearly turns on an issue of law, without material facts).  That said, the surge in electronic information is sure to affect how discovery is conducted in cases where facts are at issue.  Therefore, it is important to be prepared.  Attend CLE sessions.  Become familiar with important resources, including:
Federal Rules of Civil Procedure.   As noted above, the rules were amended in 2006 specifically to address ESI.  
American Bar Association, Civil Discovery Standards (Aug. 2004), at http://www.abanet.org/litigation/discoverystandards/2004civildiscoverystandards.pdf (accessed Aug. 25, 2008).  The Standards were revised in 2004 to address ESI.  For example, Standard 29 suggests checklists for identifying electronic information, factors for deciding what ESI to request, and considerations for deciding a motion to compel.  Standard 31 suggests the content for an initial discovery conference between the parties.  Id. at 57-70.
The Sedona Principles, Second Edition:  Best Practices, Recommendations & Principles for Addressing Electronic Document Production (2007), at http://www.thesedonaconference.org/content/
miscFiles/TSC_PRINCP_2nd_ed_607.pdf (accessed Aug. 25, 2008).  The Sedona Conference is a nonprofit legal research and education organization which sponsors work groups on emerging issues of law.  The Sedona Principles offer suggestions to individuals who are facing e-discovery issues.  Unlike the Federal Rules of Civil Procedure, which are rules that apply after a case is filed, the Sedona Principles discuss best practices that are both procedural and substantive in nature.  A number of courts have cited the Sedona Principles with favor when deciding e-discovery disputes.  See, e.g., Regan-Touhy v. Walgreen Co., 526 F.3d 641, 649 n.5 (10th 2008); Cache La Poudre Feeds, 244 F.R.D. at 620; In re Seroquel Products Liability Litigation, 244 F.R.D. 650, 656 (M.D. Fla. 2007) (?A leading resource on dealing with electronic discovery is the Second Edition of the Sedona Principles.?). 
2.  Send opposing counsel a ?legal hold? letter.  The legal hold letter informs the defendant or potential defendant of the current or anticipated litigation and establishes the sender?s expectation that the normal disposition of electronic records will be suspended.  The legal hold should preserve data that is easily accessible, as well as metadata and stored data (e.g. archived or backup data).  If you are sending a demand letter prior to filing the case, include the legal hold notice.  
3.  Develop a discovery plan that refines requests for information that may be electronically stored.  Requests for production of documents should specifically state whether ESI is being sought and, if so, whether the information should be produced in hard copy and/or in electronic form.  Otherwise, the federal rules give the responding party the choice of how to comply:
Unless otherwise stipulated or ordered by the court, ?[i]f a request does not specify a form for producing electronically stored information, a party must produce it in a form or forms in which it is ordinarily maintained or in a reasonably usable form or forms; and ? A party need not produce the same electronically stored information in more than one form.  
Fed. R. Civ. P. 34(b)(2)(E).  Compare Autotech Tech. v. Automationdirect.com, 248 F.R.D. 556, 558-59 (N.D. Ill. 2008) (refusing to require production of metadata when requesting party did not specify a form for production or specify that it wanted metadata as a part of the document production) with Williams v. Sprint/United Mgmt. Co., 230 F.R.D. 640, 652 (D. Kan. 2005) (?[W]hen a party is ordered to produce electronic documents as they are maintained in the ordinary course of business, the producing party should produce the electronic documents with their metadata intact, unless that party timely objects to the production of metadata, the parties agree that the metadata should not be produced, or the producing party requests a protection order.?).
Due to the volume of ESI, requests for production can easily become overly broad and burdensome and result in protracted discovery disputes.  For example, lawyers should try to avoid requests that seek ?any and all emails that refer or relate to Medicaid nursing facility services.?  See, e.g., The Sedona Principles, Second Edition at 21 (?So-called ?any and all? discovery requests that lack particularity in identifying the responsive time period, subject area, or people involved, should be discouraged, along with blanket objections of ?overbreadth.??) Regan-Touhy, 526 F.3d at 649 (noting that the burdens and costs associated with e-discovery, such as those seeking ??all email,? are by now well known?).  
Thus, requests for information that is ESI should be carefully tailored.  Initial requests for production may inquire how data are organized and stored and request the software needed to retrieve or read the e-information.  See ABA, Civil Discovery Standards, at 58-59.  In addition, requests can be restricted to documents containing specified key terms, dates, and/or names.  Development of these limiting terms can take time and should be considered as early as possible in the litigation.  See, e.g., John B. v. Goetz, 531 F.3d 448, 453 (6th Cir. 2008) (describing e-discovery process that included electronic searches with key words and a survey of individuals identified by defendant as record custodians to certify whether they preserved ESI over the course of the litigation); Zubulake, 217 F.R.D. at 324 (requiring the responding party to restore and produce responsive documents from a small sample of the requested backup tapes where the backup tapes were not easily accessible).
Consider an early Rule 30(b)(6) deposition of the person(s) most familiar with the defendant?s ESI systems.  This includes knowledge of the types of PC/laptops being used, databases, data retention policies (e.g. how long are emails retained before they are ?deleted? and policies for archiving emails), networks, servers, archives, backup and recovery systems.  
4.  Confer early in discovery with opposing counsel to establish e-discovery agreements.  Principle 3 of The Sedona Principles states, ?Parties should confer early in discovery regarding the preservation and production of electronically stored information when these matters are at issue in the litigation and seek to agree on the scope of each party's rights and responsibilities.?   The Sedona Principles, Second Edition at 21; see also Fed. R. Civ. P. 16(b)(5); 26(f)(3) (requiring that ESI be a topic of the initial meet and confer).  
At the early discovery conference, counsel should confer about the e-discovery that they anticipate, including:  (i) subject matter of the request; (ii) time period; (iii) description of the employees or contractors from whom discovery may be sought;  (iv) identification of current or former employees who are familiar with the information systems, (v) types of software and technology being used (including the platforms on which the data exist and where the data may be found); (vi) identification of data sources that will be subject to preservation and  discovery;  (vii) whether responsive data will be preserved and produced in electronic form or hard copy; (viii) whether metadata will be preserved and produced; (ix) key search terms for obtaining potentially responsive data for discoverable information; (x) whether any forms of data are not reasonably accessible;  (xi) which expert witness materials need to be preserved and exchanged;  and (xii) how to handle potential privilege and inadvertent disclosure problems.   
The following resources provide helpful suggestions for issues to be discussed when discovery of ESI is anticipated:   Fed. R. Civ. P. 26 advisory committee?s note (2006) (listing considerations and stating discussions should ?pay particular attention to the balance between the competing needs to preserve relevant evidence and to continue routine operations critical to ongoing activities?); ABA, Civil Discovery Standards at 66-67; The Sedona Principles, Second Edition at 21; Fed. Jud. Ctr., Manual for Complex Litigation ¶ 40.25 (4th ed. 2004).
5.  In complex cases, get help from a technology expert.  The expert can assist with drafting discovery requests and reviewing and assessing document production.  
6.  Conduct discovery in a manner that anticipates the factors the court will apply to resolve any disputes.  While jurisdictions apply varying factors to decide a motion to compel or request for a protective order, the standards and cases cited in this Q&A reflect some of the factors that are commonly assessed by courts when deciding e-discovery disputes.  Be mindful of these factors during the discovery process and, when possible, tailor your requests and conduct to address them:
? Ease of accessing the requested information;
? Materiality of the information to the party requesting it;
? Expense of e-discovery, considering both absolute cost and the estimated costs of implementing the requested relief;
? Relative ability of each party to control costs and its incentive to do so;
? Need for discovery, including the availability of the information from other sources;
? Complexity of the case and its importance;
? Burden of production, including disruption of normal operations and routines.  See, e.g., John B. v. Goetz, 531 F.3d 448, 459-61 (6th Cir. 2008) (reversing that part of the district court?s order that provided for the U.S. Marshall to make forensic copies of designated state- and privately-owned computers, noting federalism concerns, civil litigation should not be approached as a ?crime scene,? and that less intrusive enforcement mechanisms existed (e.g. sanctions).)
? Need to protect attorney-client privilege, attorney work product, and trade secrets;
? Whether the responding party?s ESI is stored in a manner that is designed to make discovery difficult or unnecessarily costly;
? Whether the responding party has ?deleted, discarded or erased electronic information after the litigation was commenced or after the responding party was aware that litigation was probable and, if so, the responding party?s state of mind in doing so.?  ABA, Civil Discovery Standards at 60-61.
The dramatic increase in ESI introduces new challenges to achieving efficient and successful discovery.  If disputes arise, courts will resolve them by assessing the reasonableness of the requests and the good faith efforts of the parties.  Thus, counsel should be prepared and execute a well-developed e-discovery plan. 
1  Produced with grants from the Training Advocacy Support Center (TASC) and the Nathan Cummings Foundation.  TASC is sponsored by the Administration on Developmental Disabilities, the Center for Mental Health Services, the Rehabilitation Services Administration, the Social Security Administration, and the Health Resources Services Administration.  TASC is a division of the National Disabilities Rights Network (NDRN).

2   For more in-depth discussion and additional ESI features, see The Sedona Principles, Second Edition at 2-5.
3  Lawyers should also consult their local rules.  State court cases will be governed by the state rules of civil procedure.  State courts ruling on discovery disputes are influenced by the Guidelines adopted by the Conference of Chief Judges, Guidelines for State Trial Courts Regarding Discovery of Electronically-Stored Information (2006).  See, e.g., Bank of Am. Corp. v. SR Int?l Bus. Ins. Co., No. 05-CVS-5564, 2006 WL 3093174 (N.C. Super. Nov. 1, 2006) (relying on Guidelines and reprinting them in an appendix).  
4   See also, e.g.,  Keir v. Unumprovident Corp., No. 02-Civ-8781, 2003 WL 21997747, at *12 (S.D.N.Y. Aug. 22, 2003) (finding defendant?s failure to timely notify its IT vendor of preservation order caused responsive data to be lost).

5   See, e.g., Silvestri v. Gen. Motors Corp., 271 F.3d 583, 591 (4th Cir. 2001) (finding that duty to preserve arises when party knows or reasonably should know that the evidence may be relevant to pending or anticipated litigation); 7 Moore?s Federal Practice § 37A.12[5] (3d ed. 2006) (?The routine recycling of magnetic tapes that may contain relevant evidence should be immediately halted on commencement of litigation.?).
6  Fed. R. Civ. P. 26 advisory committee?s note (2006) (?A party?s identification of sources of electronically stored information as not reasonably accessible does not relieve the party of its common-law or statutory duties to preserve evidence.?).
7  See, e.g., Trigon Ins. Co. v. United States, 204 F.R.D. 277, 282 ((E.D. Va. 2001) (finding government has duty to preserve correspondence between experts, including drafts of reports).
8  See The Sedona Principles, Second Edition at 51 (suggesting that parties consider ?nonwaiver agreements? that outline ?clawback? procedures if confidential or privileged information is inadvertently disclosed).

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