Courts Start Making e-Discovery Decisions

Corporate lawyers are starting to get their first glimpses into how federal courts will interpret new rules for “e-discovery” in civil litigation.

In the more than six months since the amended rules for civil procedure went into effect, courts nationwide are only just beginning to decide the host of questions and disagreements bound to crop up between litigating parties. Particularly significant is revised Rule 26, which states that a party need not provide electronic data that is deemed “not reasonably accessible because of undue burden or cost”—which the responding party has the burden to prove.

Gordon

Experts tell Compliance Week that the e-discovery cases aren’t anything “earth shattering,” since the duty to preserve and produce information for litigation has always existed. But the new rules do “push these issues [of producing electronic data] to the forefront, says Timothy Gordon, lead e-discovery lawyer at the law firm Holland & Hart.

In fact, says David Kessler, an attorney with Drinker Biddle & Reath, “One could argue that it’s the most unique change in the rules, because there was never any duty prior to these new amendments for responding parties to discuss where they weren’t searching, to identify those places that they weren’t looking for data.”

Miller

Because preserving and producing electronic data is still an unfamiliar duty to many employers, predicting how each court will rule is difficult. “This early in the analysis of the rules, courts are coming out with pretty disparate opinions, which is not altogether surprising given the changing language and the new application of this language across a broad group of cases,” says Parker Miller, a lawyer with the law firm Alston & Bird.

Gordon describes the disputes that have arisen so far as “a mixed bag, with courts looking at the matter really on a case-by-case basis.”

Defining ‘Reasonable’

Two recent cases that address the issue of “reasonably accessible data” are Disability Rights Council of Greater Washington v. Washington Metropolitan Transit Authority argued before the U.S. District Court for the District of Columbia and Guy Chemical Co. v. Romaco AG, a case before U.S. District Court for the Northern District of Indiana.

In the DRC case, the plaintiff alleges that the Transit Authority failed to stop its e-mail system from deleting all e-mails older than 60 days—even two years after the lawsuit was filed. In its defense, the Transit Authority cited new Rule 37(f), which established a safe harbor provision for any electronic data lost as a result of the “routine, good faith” operation of an IT system.

Judge John Facciola, who presided over the case, described the failure as “indefensible,” finding that the Transit Authority did not act in good faith when it continued to destroy the e-mails after the lawsuit was filed.

Furthermore, Facciola agreed with the DRC that good cause existed to require the search and production of data from the Transit Authority’s backup tapes. As Kessler reads it, Facciola’s decision does not discuss whether the backup tapes truly are not reasonably accessible. “He essential assumes that issue and then says, ‘But even if that’s true, there’s good cause to produce them in this case, so there’s no reason to undertake that analysis.’”

The Transit Authority then argued that producing the backup tapes was too much of an undue burden and expense—an argument Facciola rejected. In his opinion, he retorts: “I am anything but certain that I should permit a party who has failed to preserve accessible information without cause to then complain about the inaccessibility of the only electronically stored information that remains. It reminds me too much of Leo Kosten’s definition of chutzpah: that quality enshrined in a man who, having killed his mother and his father, throws himself on the mercy of the court because he is an orphan.”

Kessler

What the DRC case shows, Kessler says, is that “if you end up either destroying accessible data—especially intentionally, but even inadvertently—you’re going to be hard put to then complain about producing inaccessible data that can … mitigate that failure.” Indeed, Kessler continues, “It also may help prove the reverse: that if you have done a good job about preserving your accessible data, then there is no reason to look at inaccessible data, especially if it’s entirely duplicative.”

Parker, who has represented several e-discovery cases, adds that the DRC decision also disproves the general idea that backup tapes are considered not accessible.

In the Guy Chemical case, decided 10 days prior to the DRC decision, “it talks about the ‘not reasonably accessible’ issue but in a different context,” says Kessler.

In Guy Chemical, the company claimed the loss of business by several third parties. In response, Romaco served a subpoena on one of Guy Chemical’s customers to establish the extent of the damages. The third party, however, stored the information electronically at an outside computer firm and argued that to search and produce the records would cost $7,200.

DECISION

Below is an excerpt of the decision in Disability Rights Council v. Washington Metropolitan Transit Area Authority.

Rule 36 of the Federal Rules of Civil Procedure provides that a “party may serve upon any other party a written request for the admission … of the truth of any matters within the scope of Rule 26(b)(1) set forth in the request that relate to statements or opinions of fact or of the application of law to fact …” The rule further provides that, unless the party to whom the request is directed provides an answer or objection within 30 days, the matter is admitted. Once a party has responded to a request with either an answer or an objection, “[t]he party who has requested the admissions may move to determine the sufficiency of the answers or objections.” If the party objected to the request and the court finds that the objection was unjustified, then the court “shall order that an answer be served.”

After an answer has been served, if the court finds that the answer does not comply with Rule 36, then it may order that the matter is admitted or that an amended answer be served. In compliance with Rule 36, plaintiffs provided written objections to WMATA’s requests

Within 30 days of its receipt of the same. WMATA argues, however, that their objections were inappropriate and, therefore, the requests should be admitted. As a threshold matter, WMATA’s request that the matters be deemed admitted is premature. WMATA has skipped an important step required by Rule 36—it did not first move the court to determine the sufficiency of plaintiffs’ objections and order that the requests be answered. Accordingly, it would not be appropriate for me to order the matters admitted at this time.

But, even if WMATA had moved for the appropriate remedy (i.e., an order that the requests be answered), I find that plaintiffs’ objections were entirely appropriate. In most of its requests, WMATA asks plaintiffs to admit or deny that there is no provision of the ADA, the Rehabilitation Act, or the Federal Transit Administration (“FTA”) regulations and guidance applicable to various claims stated in the complaint. For example, Request No. 3 states: “Admit that the FTA has not adopted any regulations nor As another example of this type of request, Request No. 12 states: “Admit that neither the ADA nor the Rehabilitation Act contain standards regarding ‘discourteous drivers’ as referred to in paragraph 38(a) of the Complaint.”

Similarly, in several requests, WMATA asks plaintiffs to admit whether or not various things are required by the ADA, the Rehabilitation Act, and the FTA regulations and guidelines. For example, Request No. 5 states: “Admit that the FTA regulations specifically provide that operational problems attributable to causes beyond the control of a paratransit provider, including, but not limited to weather or traffic conditions may not be considered in determining whether there are capacity constraints.” As another example, Request No. 21 states: “Admit that neither the ADA nor the Rehabilitation Act require that paratransit vehicles be equipped with adequate heat and air conditioning systems as referred to in paragraph 38(a) of the Complaint.” Plaintiffs object to all such requests on the ground that they seek a legal conclusion. I agree.

Source

U.S. District Court For District Of Columbia

Kessler explains that the court goes on to say, “Yes, it’s not reasonably accessible, but the party seeking it has good cause, so the data should be produced.” But the court also found that because the data is coming from a third party with no stake in the litigation, Romaco should have to bear the burden of paying for the search.

According to Kessler, the key finding in the Guy Chemical case is that when a third party does have to produce data that’s not reasonably accessible, “it will probably be easier for [the third party] to argue that the party requesting it should pay the price of that discovery.”

Cost And Accessibility

When it comes to the issue of cost in other cases, some courts are finding that “several thousand dollars—or tens of thousands of dollars—do not make data inaccessible,” says Miller. That was the finding in a recent decision by the Court of Federal Claims, AAB Joint Venture v. United States, a contract dispute between a government contractor and the U.S. government over disputed land development.

In the case, the court required the government to produce e-mails from backup tapes, reasoning that the $85,000 to $150,000 processing cost was a drop in the bucket in light of the $30 million at issue. Specifically, the court reasoned that the government could not be relieved of its duty to produce those documents “merely because defendant has chosen a means to preserve evidence which makes ultimate production of relevant documents expensive.”

To the contrary, in Ameriwood Industries v. Liberman, heard in the U.S. District Court for the Eastern District of Missouri, the court found that the request for “all plaintiff’s documents and communications concerning [the dispute]” was so broad that the responding party’s electronically stored information was not reasonably accessible because of undue burden and cost—even when the defendants narrowed their requests to only six people in charge of that data.

In other words, Miller says, even though the data had been largely collected, the court still found that the burden of reviewing, accessing, and producing the data—even when narrowed to a small subset of employees—was not reasonably accessible.

Another significant case is Cache La Poudre Feeds v. Land O’Lakes. In that dispute, Gordon says, the central issue was when the duty to preserve is triggered.

Land O’Lakes sent a litigation hold notice to key employees days after being slapped with a trademark violation suit. While the court found the timing acceptable, it faulted Land O’Lakes’ in-house and outside counsel for the procedure chosen to preserve and collect the electronic data and for lax follow-up with employees to the hold notice.

The District Court of Colorado, which heard the case, also was not impressed with Land O’ Lakes’ failure to stop the automatic erasing of hard drives of employees who left the company after the suit was filed, explains Gordon. That court found this to be a failure to preserve evidence that constitutes spoliation.

Uncertain Future

In all of these new e-discovery cases, which now seem to be flooding the courts on a daily basis, it’s difficult to predict where these cases are going to lead, because “at the end of the day, you’re getting a lot of different results,” Miller says.

Making the issue of reasonably accessible data even more uncertain is the ever-evolving development of new technology. “It’s quite possible that one of the things that might change is that as technology develops, fewer and fewer things are going to become not reasonably accessible because the systems will make it easier to access data,” Kessler says.

Likewise, he adds, “There’s a possibility that corporations can put everything in more accessible formats just because they want to be able to access the data themselves in the ordinary course of business.”