Document Production in Practice: Strategies and Tips from U.S. and Swiss Counsel

Transcription

1 Document Production in Practice: Strategies and Tips from U.S. and Swiss Counsel 1 March 2016 Basel, Switzerland, ASA Group Basel Jim Nickovich, Counsel (U.S. Attorney at Law), VISCHER AG Dr. iur. Reto Marghitola, Swiss Attorney at Law, VISCHER AG

2 Early Consideration is the Key Image from The Guardian via Like a chess player, a skilled arbitration practitioner thinks several steps ahead Document Production in Practice 2

3 Opportunities to Influence the Extent of Document Production I. Selection of Arbitrators II. Influencing the Procedural Rules III. Drafting and Answering Document Production Requests Document Production in Practice 3

4 How To Request Document Production Image from Civil law Image from Common law Images from Arbitration Document Production in Practice 4

5 The Risk of a Boomerang Effect Image from Document Production in Practice 5

6 How to Answer Document Production Requests I. Completeness II. Respect of the hierarchy of objections III. No contradictions to own document production requests Document Production in Practice 6

7 Strong Objections to Document Production Requests Requested categories of documents are - not narrow and specific - not material to the outcome of the dispute - non-existing - privileged Image from Legal consequence of technical/commercial confidentiality: Redactions (principle), non-production (exception) Document Production in Practice 7

8 Weak and Controversial Objections to Document Production Requests Weak objections: Document production request is - overly burdensome - not proportional Image from Controversial objection: Requesting party does not bear the burden of proof for the facts that should be proven with the requested documents Document Production in Practice 8

9 Document Production and Guerrilla Tactics Image from Cass County Government Document production requests Image from Barnhart Investment Advisory Destruction of material documents Production of irrelevant documents Image from InGeocCouds Document Production in Practice 9

10 Model Clause for Parties Expecting Typical Arbitration Proceedings The Arbitral Tribunal shall use the IBA Rules on the Taking of Evidence in International Arbitration (2010) ( IBA Rules ) with the following modifications as guidelines, but shall be bound neither by the IBA Rules nor by the following modifications: 1. As a rule, the recovery of deleted data and the restoration of back-up tapes are considered unreasonably burdensome. 2. As a rule, document production requests must not include search terms. 3. There is no duty to preserve all potentially relevant documents. The parties can continue to apply their document retention policies. Document Production in Practice 10

11 Model Clause for Parties with Civil Law Expectations The Arbitral Tribunal shall use the IBA Rules on the Taking of Evidence in International Arbitration (2010) ( IBA Rules ) with the following modifications as guidelines, but shall be bound neither by the IBA Rules nor by the following modifications: 1. A party does not have a duty to produce internal documents. Internal documents are defined as documents that the requested party did not communicate to other parties, nor were communicated from another party to the requested party. However, internal notes of external meetings and of external conversations are not considered to be internal documents. 2. As a rule, the recovery of deleted data and the restoration of back-up tapes are considered unreasonably burdensome. 3. As a rule, document production requests must not include search terms. 4. There is no duty to preserve all potentially relevant documents. The parties can continue to apply their document retention policies. Document Production in Practice 11

12 Model Clause for Privileges The Arbitral Tribunal shall use the IBA Rules on the Taking of Evidence in International Arbitration (2010) ( IBA Rules ) with the following modifications as guidelines, but shall be bound neither by the IBA Rules nor by the following modifications: 1. As a minimum standard, the Arbitral Tribunal shall take into account the following privileges: a) Legal professional privilege b) Settlement privilege c) Medical privilege d) Psychotherapist-patient privilege e) Priest-penitent privilege f) Journalists privilege g) Self-incrimination privilege h) Spousal privilege 2. The legal professional privilege also extends to in-house counsel. 3. All employees of a party are considered to be clients in the attorney client relationship. 4. At request of a party, the arbitral tribunal may apply more favourable privilege rules under national laws of one of the parties or their advisors home jurisdictions to all parties. The arbitral tribunal can apply more favourable privilege rules also at its own motion, but is not obliged to do so. Document Production in Practice 12

13 Relevance of United States Laws on Document Productions in International Arbitration Today s U.S. perspective focuses on the Federal Rules of Civil Procedure (FRCP) as applied in U.S. lawsuits in federal courts (not, e.g., the Federal Arbitration Act) May be relevant for international arbitration disputes involving U.S. companies, MNCs or US arbitrators Multi-party disputes involving both U.S. federal lawsuits and claims in international arbitration Benefit of "knowing where U.S. counsel may be coming from" regarding approach to document production Document Production in Practice 13

14 FRCP Are Predictable and Favor Robust Discovery In U.S. litigation, rules for document production set by FRCP Rules not created on a proceeding by proceeding basis FRCP increase predictability proceeding to proceeding FRCP (likely to) dictate more cumbersome document production obligations than Arbitral Tribunal procedural order Principle in United States that more discovery gets at "truth" and encourages settlement Not acceptable to go to trial in the United States with one party sitting on a "smoking gun" document Document Production in Practice 14

15 United States Judges Bound by FRCP In federal court in the United States, parties and the judge are bound by the FRCP relating to document production (e.g., Rules 26(b), 34, 37, and 45) FRCP 26(f) affords parties right to a conference to set a discovery plan, but the rules by which document requests and production will be governed are not up for discussion Contrast with first Case Management Conference in arbitral proceeding Document Production in Practice 15

16 Rule 34 FRCP 34 provides in part that: a party may serve on any other party a request within the scope of Rule 26(b) to produce and permit the requesting party or its representative to inspect, copy, test, or sample the following items in the responding party s possession, custody, or control: any designated documents or electronically stored information the request must describe with reasonable particularity each item or category of items to be inspected Document Production in Practice 16

17 Comments on Rule 34 No limits on number of document requests Request must only describe with reasonable particularity each item or category of items to be inspected. FRCP 34(b)(1)(A) Courts expansively interpret documents or ESI ( Must cross-reference Rule 26(b) to understand responding party s obligations Document Production in Practice 17

18 Rule 26(b) FRCP 26(b) provides in part that: parties may obtain discovery regarding nonprivileged matter that is relevant to any party s claim or defense and proportional to the needs of the case, considering the importance of the issues at stake in the action, the amount in controversy, the parties relative access to relevant information, the parties resources, the importance of the discovery in resolving the issues, and whether the burden or expense of the proposed discovery outweighs its likely benefit. Information within this scope of discovery need not be admissible in evidence to be discoverable Document Production in Practice 18

19 Comments on Rule 26(b) Relevant to any party s claim or defense Not "necessary" or "integral" or "required for" Vague pleading (including general denials) allowed in United States provides room for expansive interpretation of "relevant to a party s claim or defense" Documents can be requested even if they could never be used in trial (viz., not be admissible in evidence to be discoverable) Propounding party entitled to counterparty s internal documents (unless privileged) Document Production in Practice 19

20 U.S. Courts Have No Right to Issue Document Requests No authority for United States federal courts to issue requests for production of documents on own initiative United States is adversarial, not inquisitorial, legal system Contrast with power of Arbitral Tribunals asking for specific documents or categories of documents Document Production in Practice 20

21 When Propounding and Responding Party Disagree Responding party commonly objects to producing documents as: unduly burdensome overbroad repetitive more readily accessible in propounding party s files attorney-client privileged work-product doctrine protected etc., etc., etc. Document Production in Practice 21

22 Settling Disagreements In the first (and hopefully second, third, etc.) instance, the parties are supposed to settle any disagreement as to what documents a responding party will or will not produce without involving the court "Meet and confer" conferences. FRCP 26(f) Can be telephonic or in-person Followed up with detailed letters framing what the parties did and did not agree to (basis for motions for protective order/to compel) Document Production in Practice 22

23 Court Involvement Responding party may file motion with the court for a protective order to prevent the propounding party from accessing documents (e.g. privileged). FRCP 26(c)(1) Propounding party may file motion to compel. FRCP 37(a)(1) Meet and confer efforts must have been exhausted Exhibits are attached to memorialize meet and confer efforts Process can take many months to resolve In large cases, may involve Magistrate Judge or Special Discovery Master appointed by Federal Judge Document Production in Practice 23

24 Resolutions on Disputes Over Document Requests Parties, and if need be courts, generally find a balance between documents a propounding party needs and what a responding party can reasonably produce, e.g.,: date range limits on requested categories of documents limiting files to be searched to relevant custodians designating specific search terms to cull through vast amounts of electronically stored information third-party vendors going into business near law firms across the United States with special software to search for, and review, vast numbers of documents Document Production in Practice 24

25 Reality of the Age of E-Discovery in the U.S. Businesses store an enormous number of e-documents Searching for responsive documents is time consuming and expensive "Privilege review" often equally cumbersome U.S. law firms annointing "discovery attorneys" to handle enormous reviews internally U.S. companies facing repeat litigation sometimes outsourcing document review abroad to save expense Document Production in Practice 25

26 Metadata Metadata on a document may include a history of the document, file names, dates, authors, recipients of the file, printout dates, changes and modification dates, etc. Documents generally requested produced with metadata Documents can be produced with metadata scrubbed or locked, but doing so can waive the right to attorneyclient privilege and work-product protection of that scrubbed/locked information. Williams v. Sprint/United Mgmt. Co., 230 F.R.D. 640 (D. Kan. 2005) Document Production in Practice 26

27 Privilege Logs Claiming attorney-client privilege or work-product are surest ways responding party can withhold documents Requires producing costly privilege logs, citing: description of document dates, pages, identities of persons who prepared/received document specific privilege being asserted document by document basis Individual documents may require (time consuming and costly) redacting Document Production in Practice 27

28 Allocation of Resources on Document Request Disputes in the United States Motions for protective orders and to compel discovery are far more common (and costly) in United States litigation than international arbitration [document reviews for relevance and privilege even more costly] The effort spent on discovery battles often swallows the effort spent on the substantive dispute Tactically, a party with a superior economic position may tie the counterparty up with costly document production disputes to force counterparty to drop claim/settle Document Production in Practice 28

29 Rule 45 Rule 45 provides an avenue for a propounding party to issue subpoena and request documents from a non-party to a lawsuit. FRCP 45(a)(1)(C) and FRCP 45(e) Compare, more difficult to obtain documents from non-party in arbitration context Rule 45 subpoenas commonly directed at major players (not presently involved in litigation) sitting on incipient claims Raises interesting questions about obligation to produce, and also cost-shifting Non-party can ask for costs for responding to Rule 45 subpoena when it may in fact be preparing its case Document Production in Practice 29

30 Rule 37 Rule 37 contemplates sanctions for failure to cooperate Losing parties on motions to compel/for protective order may be ordered to pay costs of motion. FRCP 37(a)(5) Failure to perserve electronically stored information (an increasingly common issue in era of voluminous e-discovery) is sanctionable. FRCP 37(e) When responding party acts with intent to deprive counterparty of information, adverse inferences are an available sanction. FRCP 37(e)(2)(A) & (B) Also, dismisall of action/default judgment. FRCP 37(e)(2)(C) Document Production in Practice 30

31 Document Production Issues in the Appellate Context Expansive document production rules and liberal discovery in United States litigation minimize appellate issues regarding lack of access to information Document production issues not often a significant factor in appeals of United States court judgments Compare with annulment and enforcement proceedings in arbitration context Document Production in Practice 31

32 Benefits of U.S.-Styled Approach to Document Production in International Arbitration Drawbacks (cost, time, distraction to merits of case, disruption to parties business) commonly cited But the U.S. approach can offer benefits: large up front production makes annulment less likely meet and confers helps parties see merits of each others cases and aid settlement efforts privilege logs yield transparency neutrals forced to exercise restraint formulaic rules and commentary for dealing with ESI prioritizes "the facts" in a dispute Document Production in Practice 32

33 Reminder of International Arbitration Strategic Considerations In the international arbitration context, early consideration of whether document productions will most benefit your client or the counterparty is paramount: selecting arbitrators more/less likely to order robust productions advocating for procedrual rules more/less open to robust production more/less time in procedural rules for producing documents more/less time in procedural rules for settling disagreements Document Production in Practice 33

34 Different Strategic Approach in U.S. Litigation Specific U.S. federal judge/court has little influence over standardized document production rules, timetables, etc. A court s reputation for handling document production issues rarely a consideration in choosing where to file suit Consider requesting Special Discovery Master to ensure document production issues are given due consideration Consider how delay/cost of document production can benefit client/adversary in overall proceeding If case turns on "smoking gun" document in adversary s possession, courts will always welcome specific, narrowly tailored "arbitration-styled" document request Document Production in Practice 34

35 Further Detail For a deeper dive into any element of the presentation, contact: Jim Nickovich jnickovich@vischer.com Dr. Reto Marghitola rmarghitola@vischer.com Document Production in 35

36 Thank you. Zürich Schützengasse 1 Postfach 1230 CH-8021 Zürich Tel Fax Basel Aeschenvorstadt 4 Postfach 526 CH-4010 Basel Tel Fax Document Production in Practice 36