The Sedona Conference’s recent updates to The Sedona Principles provide important guidance on how parties to litigation should handle e-discovery. In particular, the new edition of the Principles set forth best practices related to proportionality, specificity of requests and sanctions. Litigants should consider the following in handling e-discovery requests:

• The proportionality analysis when addressing requests for electronically stored information (ESI) must include the scope and cost of preservation as well as the full range of costs associated with producing the information.

• ESI discovery requests should be specific about the information sought, avoiding boilerplate language.

• Because parties only need to preserve relevant ESI, they should define their preservation obligations early and adjust their practices throughout the case as claims and defenses develop.

Background

The Sedona Conference is a research and educational institute composed of leading judges, lawyers, experts and academics who are committed to developing the law. The Conference recently published for public comment the third edition of The Sedona Principles, long recognized as a foundational guide for courts and lawyers confronting the challenges of e-discovery. This latest edition was driven by the rapid expansion of the types and volume of ESI, as well as the 2015 amendments to the Federal Rules of Civil Procedure. The 14 Principles provide guidance for handling all aspects of e-discovery, including cooperation with opposing counsel, the appropriate scope of preservation and relevance, the form of production, safeguarding privilege and confidentiality, and sanctions for failure to preserve ESI.

Set forth below are summary analyses of Principles 2, 4, 5 and 14, and their associated comments, which incorporate the amended Rules’ concept of proportionality and their approach to sanctions for failure to preserve ESI.

Principle 2: When balancing the cost, burden, and need for electronically stored information, courts and parties should apply the proportionality standard embodied in Fed. R. Civ. P. 26(b)(1) and its state equivalents, which requires consideration of 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.                

Amended Rule 26(b)(1) makes proportionality an element of the scope of discovery. This means that the proportionality analysis must apply to all aspects of ESI discovery, including preservation, searching, review, privilege and confidentiality; the preparation of privilege logs; and the staging, form and scheduling of production. Parties should be prepared to discuss, at both the Rule 26(f) meet-and-confer and the Rule 16(b) scheduling conference, the likely range of damages and other nonmonetary stakes as they will inform the proportionality analysis. While the parties’ information will necessarily be limited at the outset of the case, the parties should discuss the full range of costs of preserving, collecting, processing, reviewing and producing ESI. In this way, the cost and scope of discovery can be appropriately calibrated to the needs of the case.

Discovery that is not proportional to the needs of the case is objectionable as outside the permitted scope of discovery. Crucially, proportionality spans all aspects of ESI, including the burdens of finding, collecting, reviewing, hosting and producing. Objections to production on grounds of proportionality need only provide sufficient detail to enable the requesting party to understand the basis for the objection and provide reasonable notice of the objection.

Principle 4: Discovery requests for electronically stored information should be as specific as possible; responses and objections to discovery should disclose the scope and limits of the production.

Discovery requests should avoid boilerplate definitions and demands for “all” emails, databases, word processing files or whatever kinds of ESI the requesting party can generally describe. Instead, the requesting party should target particular ESI that it contends is relevant to the claims or defenses and proportionate to the needs of the case. The requesting party should also identify the specific forms in which the ESI should be produced and specify any technical details, such as the need for particular fields or metadata. In federal cases, this information must be discussed at the Rule 26(f) conference and included in a discovery plan, ESI protocol or stipulation.

A responding party need not search or produce information from every electronic source that might contain relevant information. Consistent with the proportionality requirement, a responding party may be able to limit initial searches to sources such as email addresses and information from the accounts of key witnesses. Amended Rule 34 requires a responding party to specifically state the grounds for each objection. Objections asserted for an improper purpose could result in sanctions under Rule 26(g). Amended Rule 34 also requires a responding party to identify whether any ESI is being withheld as to each request — however, a detailed log or description of all withheld documents is not necessary. Finally, if a responding party objects to the requested forms of ESI, or if no form was specified, it should state its proposed forms and discuss the issue at a meet-and-confer session. A party should not respond by simply producing ESI in a form of its choice. It may need to re-produce the ESI if the requesting party shows the produced form is not reasonably useable.

Principle 5: The obligation to preserve electronically stored information requires reasonable and good faith efforts to retain information that is expected to be relevant to claims or defenses in reasonably anticipated or pending litigation. However, it is unreasonable to expect parties to take every conceivable step or disproportionate steps to preserve each instance of relevant electronically stored information.

A party’s preservation obligation extends to information identified as relevant to the claims or defenses in the matter. Consistent with the generally applicable principles of proportionality, a party need only preserve unique instances of relevant ESI; preservation of multiple copies of the same ESI should not be necessary. Earlier editions of The Sedona Principles stated that “it is unreasonable to expect parties to take every conceivable step to preserve all potentially relevant ESI,” which was intended to address the question of whether parties were obligated to preserve and produce information from backup tapes. As technology has advanced, parties may use dual or mirrored live systems making the concern about backup tapes less relevant. The new formulation of the Principle acknowledges this change and makes clear that (1) at most, unique instances of ESI should be preserved and (2) even a unique instance of ESI need not be preserved when the costs and burdens of preserving it would be disproportionate to the needs of the case.

Preservation needs may expand or contract as understanding of the claims and defenses in a case develops, so the parties may choose to adjust their preservation accordingly. A party that unilaterally reduces the scope of its preservation, however, runs the risk that its opponent and the court may disagree with its analysis, so the better practice is to engage in meaningful discussion with one’s opponent. Third-party preservation obligations or preservation of social media and other newer ESI sources likewise present unique challenges and should be addressed by the parties early in their discussions.

Parties should define the scope of their preservation obligations as soon as practicable once the duty arises and should identify both key custodians as well as noncustodial sources of relevant ESI, such as databases or shared storage areas. Organizations should consider documenting their preservation decision-making process, keeping in mind that the law requires reasonable, good-faith steps and not perfection. Legal hold notices, likewise, should be reasonable and directed to those people likely to maintain ESI relevant to the claims or defenses. Defensibility can be enhanced if the legal team meets with recipients of hold notices to confirm that the proper individuals are subject to the hold and that they understand and can comply with their obligations. Finally, parties should also consider whether they should send hold notices to nonparties, such as a cloud storage provider.

Consistent with Principle 6 that responding parties are best placed to evaluate the technologies and procedures necessary to preserve and produce their own ESI, preservation orders are disfavored absent a showing of necessity. A preservation order must be tailored to the claims and defenses of the case, or it runs the risk of shutting down operations in order to prevent any overwriting or loss of data. Crucially, the preservation obligation does not require heroic or unduly burdensome requirements, but rather reasonable, good-faith efforts.

Principle 14: The breach of a duty to preserve electronically stored information may be addressed by remedial measures, sanctions, or both; remedial measures are appropriate to cure prejudice; sanctions are appropriate only if a party acted with intent to deprive another party of the use of relevant electronically stored information.

The 2015 amendments to Rule 37(e), the rule that governs the imposition of sanctions for failure to preserve ESI, were intended to resolve a circuit split as to the appropriate standards for imposing sanctions and remedies. Under the new rule, a party seeking remedial measures must prove that “(1) the ESI should have been preserved in the anticipation or conduct of litigation; (2) the ESI is lost because a party failed to take reasonable steps to preserve it; and (3) the ESI cannot be restored or replaced through additional discovery.” Sanctions — such as enforcing a presumption that the lost information was unfavorable, delivering a jury instruction to that effect, or entering a default judgment — are available only if an additional element is met: intent to deprive another party of the ESI. Rule 37(e), as amended, therefore aligns with the longstanding position of The Sedona Principles that unintentional destruction of relevant ESI is insufficient to trigger spoliation sanctions.

Remedial measures should redress prejudice and place the requesting party in the position it would have been in if the lost ESI had been produced. Remedial measures may include orders for additional discovery or allocation of costs or attorneys’ fees, among other traditional measures employed by courts. If there is no prejudice (because, for example, the lost information is duplicative), remedial measures are not appropriate. The timeliness of challenges to production failures bears on prejudice, and untimely challenges may not provide a basis for relief.

Rule 37(e) differs from The Sedona Principles because it protects the “incompetent spoliator.” Rule 37(e) authorizes remedies and sanctions only if ESI is lost and cannot be restored or replaced. Principle 14, by contrast, recognizes that remedial measures or sanctions, such as a fine, may be appropriate as a deterrent when there was an intent to deprive but no irretrievable loss. This aspect of Principle 14 should not have any effect on proceedings in federal court because the Committee Note to the 2015 amendment to Rule 37(e) makes clear that the Rule forecloses courts from exercising their inherent authority or relying on state law to impose remedies or sanctions. However, it may affect state court proceedings and creep into federal case law when a court relies on old case law or fails to heed the Committee Note.¹

Endnote

¹ See http://www.pepperlaw.com/publications/why-courts-should-not-go-over-and-above-the-federal-rules-to-impose-sanctions-for-loss-of-esi-2017-03-02/.