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"And They're Off!":

How Federal Courts are Implementing the December 2006 Amendments to the Federal Rules of Civil Procedure: Allocating Burdens and Costs and Access to Opponents' Systems and Equipment in Electronic Information Discovery

Edited version published as "How the courts are applying new rules"
National Law Journal, March 19, 2007

By George B. Murr

On December 1, 2006, the most recent amendments to the Federal Rules of Civil Procedure were enacted and make clear that electronically stored information ("ESI") is subject to discovery - if relevant and not unduly burdensome to produce. To address the extraordinary increase in information spawned by information technology, the Rules Committee sought to develop rule amendments that would address the differences between paper and ESI as well as difficulties that are presented by ESI that do not exist with paper. According to the Rules Committee, two critical issues addressed by the 2006 amendments to the Federal Rules are: (1) the exponential increase of information arising out of the migration from paper to ESI, and (2) the precarious nature and longevity of this extraordinary increase. The efforts by the Rules Committee to resolve these difficulties are already being addressed in the case law.

In the first few months since the enactment of the 2006 amendments, these two issues have emerged already in the case law. How the federal courts construe and apply the 2006 amendments in the very early cases, and whether the courts are in agreement regarding their construction of the 2006 amendments, will shape the future of discovery of electronic information. To see how this process is progressing, we will first address issues relating to the burdens and costs of producing ESI and reviews recent case law considering the burdens and costs. Next, we will focus on whether courts are giving an expansive or narrow reading of the change to Rule 34 which permits a requesting party to gain access to his opponent's systems and/or equipment.

Assessing and Allocating the Burdens and Costs of Electronic Information Discovery

The amended federal rules provide courts with better guidance by which they may assess the relevance and importance of certain ESI by formalizing a procedure to weigh the burden and costs of ESI discovery, and allocate those costs between the parties when necessary.

"Two Tier" Discovery Under Rule 26(b)(2)(B) and Allocating Burden and Costs

The newly-amended Rule 26(a)(2)(B) allows a party to designate certain types of ESI as "not reasonably accessible" and refrain from production absent an order from the court. See Fed. R. Civ. P. 26(b)(2)(B). Rule 26(b)(2)(B) effectively creates a new presumption that electronic information that is unilaterally designated as "not reasonably accessible" is not discoverable, absent further motion filing and showing. However, even if the producing party succeeds before the court in demonstrating that the sources of electronic information at issue are "not reasonably accessible," the court may still order the production and allocate the burden and costs of production between the parties.

From the text of Rule 26, it is apparent that the meaning of the term "reasonably accessible" is inexorably linked to the "undue burden" and "cost" of producing ESI. See Fed. R. Civ. P. 26(b)(2)(B) ("[a] party need not provide discovery of electronically stored information from sources that the party identifies as not reasonably accessible because of undue burden or cost."). Even the watershed opinions on ESI authored by members of the Rules Committee makes this clear. See Zubulake, 318 F.R.D. 309, 318 ("Thus, cost-shifting should be considered only when electronic discovery imposes an 'undue burden or expense' on the responding party. The burden or expense of discovery is, in turn, 'undue' when it 'outweighs its likely benefit, taking into account the needs of the case, the amount in controversy, the parties' resources, the importance of the issues at stake in the litigation, and the importance of the proposed discovery in resolving the issues.'"). Accordingly, whether the court will consider certain types of ESI "reasonably accessible" is, in large part, a function of the burden and cost of producing the electronic information at issue. See id.

Assessing and Allocating the Burdens and Costs of Electronic Information Discovery

The test under Rule 26(b)(2)(B) for determining whether to allocate the burden and costs of the discovery of ESI is made up of the same factors used for making the determination for paper discovery under Rule 26(b)(2)(C). See Fed. R. Civ. P. 26(b)(2)(B) ("If [the showing of undue burden or cost] is made, the court may nonetheless order discovery from such sources if the requesting party shows good cause, considering the limitations of Rule 26(b)(2)(C). The court may specify conditions for discovery."); see Cenveo Corp. v. Slater, 2007 WL 442387 (E.D. Pa. 2007) (applying the Rule 26(b)(2)(C) factors in deciding whether to limit ESI discovery). The Rules Committee, in drafting 26(b)(2)(B), was simply adapting the existing practice of searching sources that were reasonably accessible and likely to contain responsive, relevant information; but, it improved the existing practice by requiring the responding party to identify the sources of information that were not searched. (See Report of the Judicial Conference Committee on Rules of Practice and Procedure, May 27, 2005 (Revised July 25, 2005). Under 26(b)(2)(B) and (C), the same three-factor test used to determine whether certain documents sought in discovery are discoverable now also applies to the question whether certain systems possibly containing relevant information are sufficiently available to be subject to discovery.

In a case that began prior to the effective date of the 2006 amendments, the Magistrate Judge, in Apsley v. Boeing Co., 2007 WL 163201 (D. Kan. 2007), was faced with determining whether a request for the defendants to produce e mail was overly broad and unduly burdensome. The plaintiff, in this age discrimination case, sought to compel the production of all of the defendants' e mails meeting a specific protocol submitted to the court. Apsley v. Boeing Co., 2007 WL 163201 at *3-*4 (D. Kan. 2007). The protocol provided a series of criteria that would be used by Boeing to ascertain which emails the plaintiffs sought in discovery. These criteria included a description of the individuals whose email should be targeted for screening, the time period during which the emails sought would have been issued, a description of the possible subject matter of the e mail, and e mail containing any of 19 search terms. See id.

To determine the relevant time period for discovery, the Magistrate Judge looked to the traditional factors utilized for all discovery set forth under Rule 26(b)(2). See id. at *2. With regard to the other factors set forth in the plaintiffs' protocol, the court was faced with the defendants' response that there were multiple servers located in different cities that could contain relevant e-mail and that the number of persons likely the subject of the protocol was large, and many of such persons had multiple e mail addresses. See id. at *4. The court noted discovery was limited by the criteria set forth in Rule 26(b)(2)(i),(ii) and (iii), which were not changed by the 2006 amendments and became Rule 26 (b)(2)(C). Consequently, The Magistrate Judge decided to set the issue for hearing and specifically requested additional information:

  • How many persons are covered by plaintiffs' e-mail search protocol?
  • Although Boeing has estimated the amount of hours to locate and search for e-mail, what is the estimated cost?
  • Exactly what are the "benefits of discovery" that plaintiffs reference? Does the number of search terms materially increase the cost?
  • Should the costs of electronic discovery be borne by plaintiffs?
  • Is there a more efficient method for discovery than electronic searches?
  • What computer resources or expertise did plaintiffs rely on in formulating a search protocol? If the information is produced, how will plaintiffs' process the data?

Once the court has narrowed the scope of the discovery, the next question will likely be who is to bear the costs. See, e.g., In re Seroquel Products Liability Litig., 2007 WL 219989 (M.D. Fla. 2007) (setting forth and ruling upon the fields of metadata to be produced and making provision for the allocation of costs between the parties); see also Williams v. Sprint/United Management Co., 2006 WL 3691604 (D. Kan. Dec. 12, 2006) (citing to the newly enacted Rule 34(b)(iii) and holding that the defendant need not re-produce its e mails and attachments in more than one format); Phillips v. Netblue, Inc. 2007 WL 174459 (N.D. Cal. 2007) (holding that a party producing e mails containing hyperlinks to other, third-party servers were not under a duty to download and preserve the images hyperlinked, as such images were not within that party's possession, custody or control).

The Amendments to Rule 34 and the Right To Access An Opponent's Systems and Equipment

The amendments to Federal Rule of Civil Procedure 34(a) for the first time make clear that parties may request an opportunity to test or sample materials sought under the rule in addition to inspecting or copying them. See Fed. R. Civ. P. 34(a) Committee Note. "The current rule [was] not clear that such testing or sampling is authorized; the amendment expressly permits it." Id. Thus, courts face the likely prospect of being petitioned more frequently with requests for access to an opponent's computer system, raising the questions of access, the scope of such access and under what circumstances such access should be granted. The Rules Committee, however, clearly did not mean that such access would become a matter of routine course. Indeed, the Rules Committee tempered that notion when it stated:

"The addition of testing and sampling to Rule 34(a) with regard to documents and electronically stored information is not meant to create a routine right of direct access to a party's electronic information system, although such access might be justified in some circumstances. Courts should guard against undue intrusiveness resulting from inspecting or testing such systems." Id.

As expected, courts are reaching different results, depending on the specific facts of the case at hand. But, the one constant that is emerging is that courts appear to be following the prior practice in which courts would only give access to an opponent's system or equipment if it related to a key issue in the case or a known exception permitted such access.

Access Is More Likely When the Discovery Goes to the Heart of the Case

The scope of a party's right to sample an opponent's databases - and the potential for abuse of such a procedure - are important issues facing the federal courts under the newly amended Federal Rules of Civil Procedure. It appears from the decisions following the effective date of the 2006 amendments that, when the requested access seeks information that goes to the heart of the matters at issue, courts are more likely to grant some form of access or review of an opponent's systems or equipment. This point was underscored by the court in Hedenburg v. Aramark American Food Services, 2007 WL 162716 (W.D. Wash. 2007), when it was required to decide whether the defendant could make an image of the Plaintiff's computer "[i]n an effort to probe the veracity of Plaintiff's claims." Hedenburg, 2007 WL 162716 at *1. The defendant apparently believed that such a search could produce information that would impeach the plaintiff's testimony such that denial of access to the plaintiff's computer would be error. The court disagreed. In denying access to the computer, the court reviewed the defendants' authority (all pre-2006 amendment cases) and noted that "[t]he common thread of these cases is that a thorough search of an adversary's computer is sometimes permitted where the contents of the computer go to the heart of the case." Hedenburg, 2007 WL 162716 at *2. The court noted that it had previously allowed such access to an opponent's computer in past trade secret cases where the requesting party demonstrated the likelihood that trade secrets were forwarded to or sent by the computer. However, the court noted in Hedenburg that the claims at issue before it were wholly unrelated to the contents of the plaintiff's computer.

Similarly, in the other post-2006 amendment cases that were found, those that permitted access to an opponent's computer involved discovery issues that went to "the heart of the case." In Frees, Inc. v. McMillian, 2007 WL 184889 (W.D. La. 2007), the plaintiff sued its former employee under the Computer Fraud and Abuse Act for his alleged theft of proprietary information. To support its claim, the plaintiff sought access to the defendant's computers to show that alleged proprietary ESI that was removed from the plaintiff's laptop may have been downloaded to the defendant's computer. See Frees, Inc. v. McMillian, 2007 WL 184889 at *1 (W.D. La. 2007). The court held that the request was reasonably calculated to lead to the discovery of admissible evidence, despite the fact that the defendant responded in discovery and by affidavit that "any information on the computers relates only to work performed after the [incidents at issue in the suit]." Id. at *2. To ensure the protection of non-responsive and privileged and confidential information, the court set forth a protocol that permitted the plaintiff's computer forensic expert to identify relevant files for production to which the defendant had the opportunity to object prior to their production to the plaintiff.

Another case in which the court permitted access to the opponent's computer is Thielen v. Buongiorno USA, Inc., 2007 WL 465680 (W.D. Mich. 2007). The plaintiff in this case sued the defendant under the Telephone Consumer Protection Act of 1991 for its alleged sending of text messages to the plaintiff's cell phone without his permission. The court allowed the defendant to conduct a forensic examination of an image of the plaintiff's computer with certain restrictions on the scope of the examination. In reaching its decision, the court noted:

"While the court is satisfied defendant has established a viable reason for discovery, for example, whether plaintiff used his computer to initiate contact with Blinko through some internet website, and that this information would be highly pertinent to a decisive issue at trial, that is, whether plaintiff received "unsolicited" communication from [defendant] . . .."

Thielen., 2007 WL 465680 at *2. Once again, the dispositive issue appears to be whether access the system or equipment relates to a central issue in the case. See also Cenveo Corp. v. Slater, 2007 WL 442387 (E.D. Pa. 2007) (a trade secrets case in which the court held that "[b]ecause of the close relationship between the plaintiff's claims and defendants' computer equipment, the Court will allow plaintiff to select an expert to oversee the imaging of all of defendants' computer equipment"); but see Balfour Beatty Rail, Inc. v. Vaccarello, 2007 WL 169628 (M.D. Fla. 2007) (trade secrets case in which access to computers was denied; however, the court denied the motion to compel access because the "[p]laintiff's requests simply seek computer hard drives. Plaintiff does not provide any information regarding what it seeks to discover from the hard drives nor does it make any contention that [d]efendants failed to provide requested information contained on these hard drives.").

Access Is More Likely When the Discovery Relates to a Recognized Exception

The post-2006 amendment cases also indicated that access to an opponent's computers is possible if the request relates to a set of circumstances for which courts have previously said access may be had. For example, in Balfour Beatty Rail, Inc., the court, in denying access as noted above, also pointed out that there was no contention that the defendants failed to provide any requested information contained on the hard drives in question and pointed out:

"As another court in this district and the Eleventh Circuit have held, 'Federal Rule of Civil Procedure 34 permits a party to request documents, but it 'does not give the requesting party the right to conduct the actual search.' As those courts held, allowing a party direct access to another party's databases may be warranted in certain situations, such as a showing of non-compliance with discovery rules." Balfour Beatty Rail, Inc. v. Vaccarello, 2007 WL 169628 at *3 (M.D. Fla. 2007).

Likewise, in Roberts v. Canadian Pacific Railway Ltd., 2007 WL 118901 (D.Minn. 2007), the plaintiff sought to take the deposition of a computer forensics expert hired by defendants "as soon as possible" after an e mail was discovered indicating a policy of destroying ESI. Because of the alleged discovery abuse, the court permitted the deposition to proceed even though the discovery would occur prior to the parties' initial discovery conference.

Roberts v. Canadian Pacific Railway Ltd., 2007 WL 118901 at 1-2 (D.Minn. 2007). With regard to discovery in such instances, however, the federal courts largely remain unwilling to grant access to an opposing party's computers without a showing of non-compliance and remain guarded against the potential for abuse. See Hedenburg, 2007 WL 162716 at *2 (denying the defendant's motion to "essentially seek a search warrant" to image plaintiff's computer and attempt to obtain information to impeach her testimony); Balfour Beatty Rail, Inc., 2007 WL 169628 at *3 (denying the plaintiff's seeking access to the defendant's hard drives as it "would permit Plaintiff to engage in a fishing expedition.").

Conclusion

The early indications in the case law to date are that the district courts are operating business as usual and that the 2006 amendments have not, as of yet, required them to changed their practices or approaches to ediscovery.

Indeed, the courts still rely heavily on pre-2006 amendment authority to support their decisions. However, given the change in the rules, it can be expected that a refinement in the case law on undue burden, cost and the right of access will occur as the courts grapple with the inevitable increase in requests to access an opponent's system and equipment.

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