Highlights (Day 2) from the Third Public Hearing on Proposed Amendments to the Federal Rules of Civil Procedure

On February 11-12, 2005 in Washington, D.C., the Civil Rules Advisory Committee heard testimony from over 45 witnesses. This was the third and final set of public hearings on the proposed amendments to the Federal Rules of Civil Procedure relating to electronic discovery. Following are some highlights of the testimony from day two of the hearing, when the committee heard from 13 witnesses. The complete testimony for this hearing, and the previous hearings, can be found here.

Theodore B. Van Itallie, Jr., on behalf of Johnson & Johnson
-“We are in courts on a regular basis, and our reputation precedes us and follows us. And our standing in courts before the judiciary is critical to us. We abhor discovery battles. We are allergic to the prospect of a sanctions motion, and we work really extraordinarily hard to try to avoid … any basis on which any adversary could make those kind of accusations against us. But we are also an extraordinarily complex company with almost 200 operating companies worldwide. We have a blindingly complex information architecture. …[W]e have…essential business needs to recycle back-up tapes in appropriate circumstances, to run programs like Mail Manager that do purge outdated e-mail. …[Given those] circumstances, combined with the developing patchwork of local federal rules and uncertainty about what the standards are, meeting this fundamental obligation and protecting our reputation is…increasingly [and] crushingly difficult. So the development of these new rules and the prospect for uniform development of a body of law for people in our position I think is going to be extraordinarily valuable.” (p5-6)
-Spoke in favor of the two tier approach to discovery. (p6-24)
oRegarding the provision in Rule 26(b)(2) for two tier discovery, “…[T]here is no question that…[this] will not simply serve the needs of data producers…. [T]here’s a very strong prospect that that will accelerate…discovery and therefore the progress towards the merits of the accessible data.” (p6-7)
-Expressed concern that the rules not be construed to encourage the entry of broad protective orders (p24-30), and suggesting that language be added to the notes “conveying the concern about … broad, in effect, knee jerk or thoughtless protective orders…” (p25)
-Voiced support for the Rule 26(f) provision requiring early discussion of preservation issues. (p30-31)
o”I think from our standpoint, we’re better off having things clarified. And I fundamentally feel that if there is going to be an effort made to stop the ordinary management of data systems, the recycling of back-up tapes,…that really the party that is proposing that has an affirmative obligation to bring that to the fore at the earliest opportunity…encouraging the presentation of that issue and a more rapid resolution of it is significant.” (p30-31)

Al Cortese, on behalf of the United States Chamber of Commerce Institute of Legal Reform and the Lawyers for Civil Justice
-Spoke in support of the proposed rule amendments generally.
-Voiced support for two tier discovery, but suggested improving the description of reasonably accessible, and recommended the addition of language establishing a presumption of cost sharing. (p39-42; 56)
-Argued that the proposal should include a presumption of cost sharing:
o”…the two-tier approach is extremely important and could be beneficial if it’s properly enforced. Obviously, one of the ways to enforce that, in effect, is essentially what you’ve heard before, the presumption of cost sharing. …in Texas[,] California and New York,… cost sharing, either on a presumptive or…mandatory… or… factor basis, has tended to decrease the disputes. …there have to be some incentives to direct the parties to concentrate on the needs of the case.” (p39-40)
-Discussed where the rules and/or notes could use some clarification.
o”…you don’t just get the protection by declaring something inaccessible, but…that’s the natural implication…it needs a little more clarification and…explanation that ties these two components together.” (p59-60) “…I think this is what should be clarified – that unless you have knowledge of unique information on back-up systems or inaccessible data… that you can permit the regular operation of your inaccessible information.” (p61)
-Spoke in favor of the safe harbor provision (p43-51; 56), but recommended adding language that would tip parties off “to the fact that there ought to be an explanation of what you need in terms of tailoring preservation orders to the needs of the case and the claims in the case…” (p46)
-Regarding the provisions requiring early discussion of preservation issues, expressed concern over mentioning preservation in the text of the rules, recommending that it instead be included in the accompanying notes. (p52-56)
-On the interplay between two tier discovery, safe harbor, and litigation holds:
o”I think these rules are all about balance and proportionality in approaching discovery – that the balance is struck when you are able to permit a company to run its processes in a business-like way and manage its data in a business-like way, but still preserve the information that’s necessary for the litigation on both sides. And that’s how the litigation hold, I think, works together with the safe harbor and… two-tier [discovery].” (p58-9)

Ariana Tadler (of Milberg Weiss)
-“… I am a huge advocate of the meet and confer process.” (p70)
-Spoke about the need to sometimes look at “inaccessible” data, and the decision to request this information is not one she makes lightly. (p65-74)
o”…I want everybody to remember that as much as there is a cost and burden component to the responding party, there is a cost and burden component to the requesting party in terms of education, dedication of resources, [and] hiring of vendors. We don’t just have…inherent knowledge that when you give me your back-up tape I know what to do with it. There’s a cost issue on my side, too.” (p71)
-Argued against the two tier discovery provision, particularly because it potentially shifts additional burden to the requesting party (p77-84) and argued that this shift in burden is exacerbated when the requesting party is not knowledgeable about e-discovery issues.
o”…we need to be very careful about the kinds of burdens or presumptions or standards that we’re creating when we have a… [substantial] population that really… [does not] understand these issues, and the burden is actually, therefore, increasing for them because of the lack of knowledge.” (p84)

Ted Kurt (of Rohrbachers Light Cron & Trimble)
-Expressed concern about the appropriateness of the phrase “electronically stored information,” and suggested the committee consider using a different term such as “digitally stored information,” “digitized information,” or “optically stored information.” (p87-90)

Craig D. Ball (of the Law Offices of Craig D. Ball)
-Spoke about the general challenges created by electronically stored information. (p93-95)
o”…as there has been a rush to automate, really willy-nilly over the course of the last roughly 20 years since the introduction of the personal computer, we’ve seen that the cost savings and the increases in productivity have often come on the backs of giving up all of the sensible records management techniques that were part and parcel of business operations for most of my career and, in fact, most of all of our careers.” (p94)
-Discussed the drawbacks of the two tier and safe harbor provisions. (p95-116)
oAgainst the two tier discovery provision:
���”…will the end of the reasonably accessible test be, in any way, to engender broader access to relevant information? Is there any way that that test or that hurdle is going to result in better quality,…more probative information coming before the tryers of fact[?]… And I think the answer has to be, no, it’s not set up for that purpose. It’s intended as a way to make it harder to get to relevant evidence.” (p95-96)
���”I’m concerned that we are fashioning a rule that is essentially going to be designed to protect people… [It says] that…we are so inept in our business practices, we are so confused in how we do business[,] that…special rules to protect us from our own ineptitude [are required].” (p100)
���”I honestly do not like the two-tier [approach]. I think that it gets us no further down the road. I believe the system is not broken…The reasonably accessible test really has no meaning, and the closer you get to the data, the less meaning it acquires.” (p109)
���”…how do you separate the concept of accessibility or inaccessibility from undue burden and cost? Isn’t that really what you’re saying? Since undue burden and costs are already effectively built into the rule, since the common law already shows us a number of decisions that apply those in a way that lawyers can look to instructively, why do we add another term that really doesn’t define anything… [and] that creates, I believe, a greater sense of confusion or another excuse… [if abused, for] why you’re not going to get… relevant evidence?” (p111)
���”…once you say, ‘We deem it inaccessible,’ it appears with the way the rules are structured that you have no obligation to preserve that information…” (p115)
-Recommended altering the wording of the proposed Rule 34(b) to refer to “forms” of production, rather than referring to a single “form” of production (p117-18)

Cheri A. Grosvenor (of King & Spalding)
-Supported two tier discovery (p119-29), but expressed concern that accessibility not be confused with the issue of burden – and supported the addition of language that would remind readers that the proportionality test still applies to accessible information.
o”Our concern relates to the amendment to Rule 26(b)(2), and we fully support the inclusion of the two-tier approach. However, we have some concern that with all of the focus on what constitutes reasonably accessible information and how are you going to handle inaccessible information and that process, that the balancing test that appears in … Subsection iii of Rule 26(b)(2) may become pushed to the background with the treatment of reasonably accessible information. We frequently in our practice hear the argument that if it’s reasonably accessible, that must mean it’s quick, easy, and cheap to produce it, and that [has]…not been our experience.” (p119-20)
-Spoke in favor of the provisions requiring early discussion of e-discovery issues, including the requirement that the parties discuss preservation issues up front. (p129-32)
o”…[Early discussion] focuses both parties because it makes both the requesting and the producing party aware of the circumstances. And I think it can help the counsel for the responding party get a handle on what their client’s situation is and get their client focused on it so that appropriate steps are taken early in the litigation.” (p132)

Michael Ryan (of Krupnick Campbell Malone)
-Noted his incentive when requesting information not to be overbroad in his requests.
o”… I don’t want too much information. My goal is not to get 10 million pages of images. I can’t manage that….I don’t want that.” (p135)
-Expressed concerns about the two tier provision, saying that he felt it would increase motions practice and noted what he saw as the burden and preservation issues it may cause. (p135-145; 153-59)
o”I think there are two tiers of information. That’s clearly the case….[There is a concern that] we [would be] causing more motion practice because up front there is an incentive for people to say… [that something] is inaccessible because we don’t utilize it often.” (p145)
-Strongly supported the provisions requiring early discussion of e-discovery issues. (p136; 145-149)
o”…up-front discussion and court involvement early on this very serious issue will solve much of what we’re debating on reasonably accessible, on preservation, on claw back, [and] on the other issues” (p136)
o”I am a strong advocate for this meet and confer process. I think it works, and I have experienced it. When you get the technological people sitting around the table, you eliminate the lawyers’ plausible deniability, and 99 percent of the problems that people are talking about get solved.” (p145)
-Voiced support for the idea of a claw back provision for inadvertently produced privileged information, but expressed doubt that parties would utilize it much (p150-52)

Keith Altman (of Finkelstein & Partners)
-Discussed at length the concepts of accessible versus inaccessible data (p168-78), and argued the importance of preserving both accessible and inaccessible information.
-On his practice of seeking a very strong preservation order signed at the same time as the complaint is filed:
o”Part of the problem with negotiating preservation orders…[is that it] take[s] too long.” (p162) “In the very short term, I think you need to do something so that the other side comes to the table to work with you to negotiate a more reasonable preservation order that is consistent with the goals of that particular case.” (p166)
-On backup tapes: “…in all the litigation I’ve been involved in, I’ve never asked to go to back-up tapes. It’s never happened. Not even once. That doesn’t mean they shouldn’t be saved.” (p175)
-On the two tier discovery provision: “I think that trying to put this concept of accessibility or inaccessibility is just too subjective to be workable.” (p168)
-Voiced strong support for provisions requiring early discussion of e-discovery issues.
o”I truly believe that the meet and confer process is really the solution to many of the problems raised by these issues….I think that discussing preservation protocols in those meet and confers are very, very valuable.” (p180)

Rudy Kleysteuber (law student)
-Discussed how he felt technology would affect the cost of e-discovery in the future (p181-87)
o”…as our computers get cleverer and as we make programs that can better understand what we’re looking for, the problem of filtering out privileged information, the problem of finding the relevant records is actually…going to go away, I think.” (p185)
-Voiced concerns with the two tier provision and the concepts “accessible” and “inaccessible.” (p192-95)
o”I personally still take the use of the term “reasonably inaccessible” as too easy of a label to grab onto. I think the work that’s being done in Rule 26(b) is in the balancing test – (b)(2). And that is what really needs to be focused on. And when you add a term following it, like reasonably inaccessible, that people can grab onto [that] and say, “Well, that’s really what it’s trying to say. It’s not trying to say balancing test. It’s trying to say reasonably inaccessible,”…that’s where the focus is going to be.” (p193-94)
-Argued against the safe harbor provision: “I think that crafting the safe harbor provision, as it’s written at least, is dangerous partly because it really creates a big loophole for people to walk through.” (p196)

Mike Heidler (law student)
-Spoke in favor of the two tier provision: “I like the proposed amendment to Rule 26(b)(2) because I think it’s necessary to balance the interests of requesting and responding parties.” (p199-200)
-Expressed concern over the proposed amendment to Rule 34(b) addressing form of production, suggesting that the rule require the requesting party to specify at least one data format. (p208-09)
o”As I read the proposed amendment to that rule, it might allow a responding party to produce data in a cumbersome format because the rule does not require the requesting party to specify a data format. So if the requesting party does not specify a data format, then the responding party may produce the data in a form in which it is already maintained.” (p208)

Steven Shepard (law student)
-Spoke in support of the two tier provision. (210-13)
o”The advantages of the reasonable accessibility standard in the Rule 26(c) context would be to keep the conversation not necessarily on the type of technology used, but on the cost that…the responding party…would incur in accessing the data.” (p211-12)
-Suggested the provision regarding the Rule 26(f) conference be amended slightly so that it brought the technical experts in as early as possible, citing as an example the New Jersey District rule that requires lawyers to consult with their clients on technical issues prior to the 26(f) conference. (p213)
-Expressed concern over use of the phrase “electronically stored information,” suggesting that the word “information” be replaced with the word “data.” (p214-17)

Joseph Masters (law student)
-Voiced concern over the current wording of Rule 34(b) – that electronically searchable was not adequately explained, and that the rule might allow parties to produce information in a format that would be difficult or expensive for the requesting party to read. (p217-226)
-Regarding deleted data: “…my experience, actually, is that deleted data is harder to retrieve than it has been represented this morning.” (p233)

David Tannenbaum (law student)
-Expressed disagreement with the idea that the new costs associated with e-discovery warranted changes to the rules. (p236)
-Opposed the two tier and safe harbor provisions, expressing concern that the provisions would encourage parties to make decisions regarding how and/or whether they retain data based not on business reasons, but on litigation considerations. (p237-46)
o”…I’m concerned that some features of the rules as proposed will seriously affect the decisions that people make when they’re deciding how much data should be retained[,]… in what format it should be retained and how easily it could be retrieved. So let me just turn to two specific parts of the rules. The first one is in 37(f), the safe harbor provision….There is language referring to the routine operation of the system and also to the nature of the system. The notes say that determinations about culpability would be different based on the nature of the system….it doesn’t seem to make sense to let defendants or responding parties off the hook simply because of the nature or the design of their system.” (p237-38)
-Stated that the rules adopted by the committee would have an effect on the market and the types of software that would be developed in the future. (p248-50)