Impact of Three Amendments to the Federal Rules related to e-discovery Copyright 2015 by K&L Gates LLP. All rights reserved. Tom Kelly K&L GATES LLP e-discovery Analysis & Technology Group November 16, 2016
Tom Kelly s Bio Tom is a partner in the Seattle office of K&L Gates LLP. He practices in his firm's e-dat (Electronic Discovery and Technology) group. He also serves as an Assistant General Counsel for his firm. Tom is active in the area of legal ethics. He served on the Character & Fitness Committee of the Washington State Bar Association ("WSBA") (chair 2009-10); on the WSBA Rules of Professional Conduct Committee (several terms); on the WA "Ethics 2003 Committee;" and as the lawyer member of Washington's Judicial Ethics Advisory Committee (several terms). He is a member of the King County Bar Association. He served as its secretary (1993), on its Board of Trustees (1994-96), as a vice president (2001-03), and then as its president in 2003-04. klgates.com 2
The Usual Disclaimers This presentation is for informational purposes and does not contain or convey legal advice, nor establish an attorney-client relationship. The information herein should not be used or relied upon in regard to any particular facts or circumstances without first consulting a lawyer. Mr. Kelly is speaking in his individual capacity as a lawyer and not on behalf of his firm. Mr. Kelly would like to acknowledge the assistance of two of his colleagues at K&L Gates -- Bree Kelly and Daniel Miller -- in preparing these slides. klgates.com 3
www.ediscoverylaw.com klgates.com 4
Today s Topics FED. R. CIV. P. 26(b)(1): Scope of Discovery and Proportionality FED. R. CIV. P. 34(b)(2)(B) and(c) : Responses and Objections to Discovery FED. R. CIV. P. 37(e): Preservation and Sanctions klgates.com 5
Why you should read the current Rules In Fulton v Livingston Financial, LLC, No. C15-0574 JLR, 2016 WL 3976558 (W.D.WA, July 25, 2016), the court imposed sanctions on a lawyer for, among other things, analyzing outdated standards under the pre-amendment Rule 26(b)(1). The court called this approach inexplicable and inexcusable where the December 1, 2015 amendments [to Rule 26(b)(1)] dramatically changed what information is discoverable. 6
FED. R. CIV. P. 26(b)(1): SCOPE OF DISCOVERY AND PROPORTIONALITY klgates.com 7
Rule 26(b)(1): Scope of Discovery Unless otherwise limited by court order, the scope of discovery is as follows: Parties may obtain discovery regarding any nonprivileged matter that is relevant to any party s claim or defense and proportional to the needs of the case, considering [1] the importance of the issues at stake in the action, [2] the amount in controversy, [3] the parties relative access to relevant information, [4] the parties resources, [5] the importance of the discovery in resolving the issues, and [6] whether the burden or expense of the proposed discovery outweighs its likely benefit. 8
From the Advisory Committee Notes to Rule 26(b)(1) The present amendment restores the proportionality factors to their original place in defining the scope of discovery. This change reinforces the Rule 26(g) obligation of the parties to consider these factors in making discovery requests, responses, or objections. Restoring the proportionality calculations to Rule 26(b)(1) does not change the existing responsibilities of the court and the parties to consider proportionality, and the change does not place on the party seeking discovery the burden of addressing all proportionality considerations. Nor is the change intended to permit the opposing party to refuse discovery simply by making a boilerplate objection that it is not proportional. 9
Three Cases Discussing Rule 26(b)(1) In Noble Roman s, Inc. v. Hattenhauer Distrib. Co, No. 1:14-cv-01734, 2016 WL 1162553 (S.D. Ind. March 24, 2016), the court granted Plaintiff s motion for a protective order and prohibited Defendant from obtaining the discovery sought in a subpoena to Plaintiff s shareholder. The court noted that while Defendant s response to the motion beat[] the drum of relevancy, it never attempt[ed] to demonstrate that the discovery was in any way proportional to the need of the case. 10
Cases Discussing Rule 26(b)(1) The defendant in Gilead Sciences, Inc. v. Merck & Co., Inc., No 5:13-cv-04057, 2016 WL 146574 (N.D.Cal. Jan. 13, 2016), sought discovery regarding the contents of certain tubes of compounds pictured in a photograph produced by Plaintiff s expert in related Canadian litigation, claiming that it should not have to take [plaintiff s] word as to what exactly was in those tubes. The court denied defendant s request, stating that it was precisely the kind of disproportionate discovery that Rule 26 -- old or new -- was intended to preclude. It analogized the request to requiring GM to produce discovery on Buicks and Chevys in a patent case about Cadillac simply because all three happen to be cars. 11
Cases Discussing Rule 26(b)(1) The court in First Niagara Risk Management, Inc. v. Folino, No. 2:16-cv-01779, 2016 WL 4247654 (E.D.Pa August 11, 2016), a case involving breach of contract and of fiduciary duty claims against a former employee, authorized the search of Defendant s electronic devices, to be conducted by an independent e-discovery vendor utilizing search terms proposed by the Plaintiff. The court analyzed the factors set out in Rule 26(b)(1) and concluded that, while the search was rather broad, the request was proportional to the needs of this case. The court also rejected Plaintiff s argument that the Sedona principles, which state that the responding party is presumed to be in the best position to choose an appropriate method of searching data, should apply. The court noted that the principles were not binding. 12
FED. R. CIV. P. 34(B)(2)(B) AND (C): RESPONSES AND OBJECTIONS TO DISCOVERY 13
Rule 34(b)(2)(B) (B) Responding to Each Item. For each item or category, the response must either state that inspection and related activities will be permitted as requested or state with specificity the grounds for objecting to the request, including the reasons. The responding party may state that it will produce copies of documents or of electronically stored information instead of permitting inspection. The production must then be completed no later than the time for inspection specified in the request or another reasonable time specified in the response. 14
Rule 34(b)(2)(C) (C) Objections. An objection must state whether any responsive materials are being withheld on the basis of that objection. An objection to part of a request must specify the part and permit inspection of the rest. 15
From the Advisory Committee Notes to Rule 34(b)(2) The specificity of the objection ties to the new provision in Rule 34(b)(2)(C) directing that an objection must state whether any responsive materials are being withheld on the basis of that objection. An objection may state that a request is overbroad, but if the objection recognizes that some part of the request is appropriate the objection should state the scope that is not overbroad. Examples would be a statement that the responding party will limit the search to documents or electronically stored information created within a given period of time prior to the events in suit, or to specified sources. When there is such an objection, the statement of what has been withheld can properly identify as matters withheld anything beyond the scope of the search specified in the objection. 16
A Case Discussing Rule 34(b)(2)(c) In Rowan v. Sunflower Electrical Power Corp., No. 15-cv- 9227, 2016 WL 3743102 (D.Kan. July 13, 2016), denied Plaintiff s motion to compel, concluding that the objections made by Defendant complied with Rule 34(b)(2)(c): 1. Where Defendant responded to certain RFPs by objecting and stating that [Defendant] has limited its search to the e-mail.pst files for project management for the subject project, and has produced all non-privileged e-mails and attachments identified therein relating to the subject project, the court found that the response complied with Rule 34(b)(2)(C). 2. Where Defendant responded to requests for documents reflecting [Defendant s] bid analyses of subcontractors who submitted bids for the project by stating in relevant part that it limited its search for responsive documents to all bid proposals [Defendant] received for the project dated July 25 and November 1, 2013, and to the evaluation and recommendation letters submitted for those bid proposals, the court again found that the response complied with Rule 34(b)(2)(C). 17
Rowan, cont. 3. Where Defendant responded to a request seeking all documents reflecting an investigation of the incident surrounding Plaintiff s injuries with a statement that it limited its search to OSHA s investigation, its own investigation report, Track s investigation report, and email.pst files for project management for the subject project, the court found that [u]nder Rule 34, [Defendant] ha[d] provided a sufficient response. 4.Where Defendant responded to a very broad request seeking any documents regarding internal meetings related to specified topics by objecting to the overbroad nature of the request and stating that it limited its search to the email.pst files for project management for the project, the court found that the response complied with Rule 34. 18
FED. R. CIV. P. 37(e): Preservation and Sanctions 19
Fed. R. Civ. P. 37(e) (e) Failure to Preserve Electronically Stored Information. If electronically stored information that should have been preserved in the anticipation or conduct of litigation is lost because a party failed to take reasonable steps to preserve it, and it cannot be restored or replaced through additional discovery, the court: (1) upon finding prejudice to another party from loss of the information, may order measures no greater than necessary to cure the prejudice; or (2) only upon finding that the party acted with the intent to deprive another party of the information's use in the litigation may: (A) presume that the lost information was unfavorable to the party; (B) instruct the jury that it may or must presume the information was unfavorable to the party; or (C) dismiss the action or enter a default judgment. 20
FED. R. CIV. P. 37(e) Was ESI lost that should have been preserved? N Rule does not apply. Were reasonable steps to preserve taken? Y Can the information be restored or replaced through additional discovery? Y Court should order additional discovery. Did prejudice result from the loss? Was the loss intentional, to deprive another party of the information s use in the litigation? Y Was the loss intentional, to deprive another party of the information s use in the litigation? N Court may order measures no greater than necessary to cure prejudice. No prejudice and no intention results in no remedy. Court may order serious sanctions identified in Rules 37(e)(2)(A)-(C). 21
From the Advisory Committee Notes re Subdivision (e) Safe harbor: Because the rule calls only for reasonable steps to preserve, it is inapplicable when the loss of information occurs despite the party s reasonable steps to preserve. Reasonableness perfection: This rule recognizes that reasonable steps to preserve suffice; it does not call for perfection. Proportionality counts: Another factor in evaluating the reasonableness of preservation efforts is proportionality. So does sophistication: The court should be sensitive to the party s sophistication with regard to litigation in evaluating preservation efforts... Restoration or replacement is sufficient: If the information is restored or replaced, no further measures should be taken. [E]fforts to restore or replace should be proportional to the apparent importance of the lost information... 22
From the Advisory Committee Notes re Subdivision (e)(1) Establishing prejudice: Importance: An evaluation of prejudice from the loss of information necessarily includes an evaluation of the information s importance in the litigation. Burden: The rule does not place a burden of proving or disproving prejudice on one party or the other. No greater than necessary: May must: But authority to order measures no greater than necessary to cure prejudice does not require the court to adopt measures to cure every possible prejudicial effect. Limitations on discretion: Care must be taken, however, to ensure that curative measures under subdivision (e)(1) do not have the effect of measures that are permitted under subdivision (e)(2) only on a finding of intent to deprive 23
From the Advisory Committee Notes re Subdivision (e)(2) Negligence or gross negligence adverse inference No prejudice required: This is because the finding of intent can support not only an inference that the lost information was unfavorable but also an inference that the opposing party was prejudiced... Remedy should fit the wrong : Requisite finding does not require a court to adopt any of the measures listed... 24
Two Cases Discussing Rule 37(e) In Nuvasive, Inc. v. Madsen Medical, Inc., No. 13-cv- 2077, 2016 WL 305096 (S.D.Cal. Jan. 26, 2016), the court granted Plaintiff s motion to reconsider a prior order imposing an adverse inference for Plaintiff s failure to preserve text messages, in light of the new standards under Rule 37(e). The court had not earlier made a finding that the failure to preserve was intentional and the record does not support a finding of intentional spoliation. As an alternative to the adverse inference, the court allowed the parties to present evidence to the jury regarding the loss of electronically store information and will instruct the jury that the jury may consider such evidence along with all other evidence in the case in making its decision. 25
Cases Discussing Rule 37(e) In Living Color Enterprises, Inc. v. New Era Aquaculture, LTD. et al., No. 14-cv-62216, 2016 WL 1105297 (S.D.Fla. March 22, 2016), one of the Defendants deleted his text messages. Many of them were produced through other discovery sources but some could not be located. The Court went through each of the steps in the Rule 37(e) decision tree, which led it to have to make determinations regarding the last two steps. It held that Plaintiff failed to demonstrate prejudice suffered by it. The Court also did not find any direct of evidence of either an intent to deprive or bad faith. The Court concluded that the Defendant simply acted negligently in erasing the text message. It noted that Rule 37(e) does not permit an adverse inference instruction or other severe sanction for negligence. 26
QUESTIONS? 27