e-Discovery Grows Up

Last summer the Williamsburg, Va.-based National Center for State Courts (NCSC)--an organization that disseminates information to state court leaders on key national policy issues--dedicated its newsletter to one of the hottest and most contentious issues facing the legal community today: e-discovery.

Although the newsletter was intended for the state courts, litigators and corporate counsel may want to take note of its opening salvo, supplied by an anonymous judge.

"I don't care how much I try to understand meta-data, residual data, and legacy data, and up data, and down data, and whatever, I am never going to understand the [recordkeeping processes] the way the lawyer should. There are different kinds of hardware; there are different kinds of software ?? 1/2 It is the lawyer's responsibility to not only understand that and to know it, but to also be able to communicate it to me, so that I can make an intelligent decision if there is a dispute among the parties."

Indeed e-discovery is generating an awful lot of ink--not to mention debate, seminars, forums, working groups, and a wide variety of state and federal rules, guidelines and opinions.

More importantly, the issue also is generating plenty of heartburn, especially for litigators and in-house counsel who realize the days of simply pleading undue burden in an e-discovery dispute have gone the way of dollar-a-gallon gasoline. As the judge points out, it's time for in-house attorneys to stop carping, develop technical expertise, and take charge of their e-discovery issues.

"Today, it is insufficient for an attorney to go before a judge and complain that

e-discovery is too much of a burden," says Greg Joseph, principle of Gregory P. Joseph Law Offices in New York and the co-chair of a recent ABA Task Force on e-discovery. "We are light years beyond that argument. Virtually all discovery today is electronic. And if it's relevant evidence, then the evidence is going to have to be made available."

A Lawyer's Burden

Contrary to popular belief, federal and state courts are more than capable of sorting through the technicalities of an e-discovery dispute. The real problem lies with the litigants.

Or so says the NCSC newsletter, which advises, "problems raised by e-discovery aren't insurmountable for the average trial judge who is familiar with discovery concepts in general. What is essential, however, is for the lawyers to fulfill their obligation to explain clearly the nature of the discovery dispute."

Joseph argues that it's the litigants, not the judge, who need to understand and explain the machinations of a company's electronic record storage system. If there's a dispute surrounding the discovery process, he says, the primary concern is cost versus benefit, "and judges expect that information to be supplied by the litigants."

Ken Withers, senior judicial education attorney with the Federal Judicial Center in Washington D.C., is just as adamant. "No attorney can go into a federal court today and try to bluff their way through an e-discovery case," he says. 'That will no longer work. If you say e-discovery is burdensome, the judge will expect plenty of detail as to why it's such a burden. And if you're the requesting party, you'd better be able to explain exactly what needs to be produced and why it's important."

Mark Coulson, a principal in the Baltimore, Maryland office of Miles & Stockbridge, takes the argument several steps further. The courts, Coulson says, are actually ahead of most attorneys in terms of understanding e-discovery and the technical issues that surround it. "The courts are years ahead of the lawyers," Coulson says. "Just look at the recent opinions that have come out --they include very detailed discussions of the technical issues."

As an example, Coulson points to two recent cases in which the courts requested specific, technical e-discovery information: Thompson v. U.S. Dept. of Housing and Urban Development, and Aero Products Int'l., Inc. v. Intex Corp.

In Thompson, a case that involved allegations of discrimination in connection with the operation of public housing in Baltimore, the defense resisted discovery of e-mail, making generalized objections about burden and expense. In finding such objections lacking (and ultimately sanctioning the defendants) the court ruled in 2003 as follows:

"Conclusory or factually unsupported assertions by counsel that the discovery of electronic materials should be denied because of burden or expense can be expected to fail. ?? 1/2 . Instead, a particularized showing, by affidavit or similar submission is required to present facts supporting the challenge. [citations omitted]. ?? 1/2 A court is provided abundant resources to tailor discovery requests to avoid unfair burden or expense and yet assure fair disclosure of important information. ?? 1/2 But it can do none of these things in factual vacuum, and ipse dixit assertions by counsel that the requested discovery of electronic records is overbroad, unduly burdensome or prohibitively expensive provide no help at all to the court."

One year later, in Aero, a patent-infringement suit where the plaintiff argued that the defendant copied its patented inflatable air mattresses--the opposite occurred: The court found that the defendant's specific proof (including an affidavit from an expert) as to its efforts to locate responsive electronic documents made sanctions inappropriate.

What the two cases demonstrate, Coulson says, is that judges continue to ask attorneys to go beyond the standard "time, cost and ability arguments" and articulate the alleged burdens of e-discovery in concrete terms. But in many cases, such as Thompson, attorneys are rejecting the request.

"We jump right into the technical issues--how to produce the requested data and what that will cost--instead of explaining what is and isn't relevant and whether the discovery scope is sufficient," he says. "The courts are saying: 'We'll listen to your e-discovery issues, but give us a real argument. We'll be fair, but you can't just say it's burdensome. We want details that are specific to the client.'"

Getting Educated

While the burden of explaining the technical nitty-gritty of an e-discovery dispute clearly rests with the litigants, it's equally clear that judges do need to get up to speed on the basics of e-discovery.

"Judges do need to be better educated on this issue, no question," says Judge Lee Rosenthal of the U.S. District Court for the Southern District of Texas, and a member of the committee proposing amendments to the U.S. federal court system rules for civil procedure. "An e-discovery dispute is no different than a patent, copyright, antitrust, or intellectual property dispute--you have to be familiar with the subject area."

Towards that end, numerous efforts are underway to help federal and state judges and attorneys better understand and manage the ever-changing docket of

e-discovery issues.

For example, the U.S. federal court system has proposed changes to its rules for civil procedure that will, in part, clarify e-discovery standards. The amendments are now up for public comment. Also released in 2004 were the ABA's updated Civil Discovery Standards, which include e-discovery amendments, and the Sedona Principles, a series of e-discovery best practices, recommendations and principles crafted by litigators, general counsel and jurists.

In each case, specific recommendations are made to clarify the key e-discovery issues, including data and document preservation, scope of e-discovery, cost sharing among litigants, privilege and privilege waiver, form of production, and electronic spoliation.

On the education front, the Federal Judicial Center has in the past five years offered a series of programs for federal judges and attorneys employed by U.S. Courts. The programs include e-discovery, technology in the criminal justice system, and advanced uses of technology in the administration of justice.

On the state level, the NCSC has in the past year presented three comprehensive

e-discovery programs to the chief justices of each state.

"We designed the programs to get the e-discovery issue on their radar screens because not too many cases have reached their level," explains Richard Van Duizend, the organization's principal court-management consultant. "We basically told them: 'It's coming on and if you haven't heard about it yet, you're going to.' We went over what e-discovery is; why it's not simply another discovery issue; the volume, cost and difficulty of accessing electronic documents; and then specific issues like privilege and allocation of cost."

That, in turn, spurred the Chief Justices to form an e-discovery working group of their own--headed by Chief Justice Shirley S. Abrahamson of Wisconsin--to develop guidelines for state trial judges. Van Duizend says the NCSC intends to use the guidelines, which are due to be presented in July, to develop an educational program that specifically targets state trial court judges and attorneys. That program will be in place by October 2005.

"The state courts, in general, first became aware of e-discovery when the issue began hitting the federal courts," Van Duizend says. "I would say it has got to be hitting the state courts now. But we haven't performed a survey on this. It's a very difficult issue to track."

That's probably because e-discovery is but one of a number of subjects fighting for a judge's attention, says Richard E. Best, a discovery consultant who served as a commissioner in the San Francisco Superior Court from 1974 to 2003.

"E-discovery is more of a technology issue than a legal issue. For judges, continuing education on DNA, or insurance, or accounting may be more relevant," Best explains. "In discovery matters that are time consuming, or require special expertise or attention, judges often refer matters to special masters or discovery referees who either take the place of judges, or provide (them with) reports and recommendations."

Another issue that's difficult to track is the number of e-discovery disputes actually reaching U.S. courtrooms. While prominent federal cases continue to garner headlines, smaller state-level disputes rarely generate written opinions.

"Discovery is supposed to be resolved outside of court," Best says. "So e-discovery disputes must be a tiny fraction of discovery disputes resolved by courts today and (therefore) many judges have never seen an e-discovery dispute. E-discovery issues are unlikely to arise at trial for a variety of reasons, not the least of which is that discovery is theoretically over at that stage."

Judge James C. Francis IV, U.S. Magistrate Judge in the Southern District of New York, agrees.

"I would describe cases involving e-discovery disputes as sporadic," says Francis, best known as the author of Rowe Entertainment, Inc. v. William Morris Agency, a groundbreaking 2002 case that established procedures for e-discovery and the allocation of costs. "Are they a fraction of discovery disputes? Yes, I think that's accurate, but with one caveat--when they do come before the court, they often come in the form of a train wreck. These are particularly complex disputes."

Other issues also can affect a court's exposure to e-discovery. For example, according to Judge Ronald J. Hedges, Magistrate Judge of the U.S. District Court for the District of New Jersey, a judge's exposure to an e-discovery dispute can depend on the court's location. "Do I see e-discovery civil disputes? Yes. Are they common? No," Hedges says. "But that can also depend on the district. In mine, I'm responsible for pretrial management of civil cases. So I do see them, while others may not."

While admitting judges do need to be better informed on the many issues surrounding e-discovery, Hedges says he looks to the attorneys to explain the technicalities surrounding an e-discovery dispute.

"It really should come from the lawyers," he says. "As a judge, I have to be educated about the facts of the case--what information is accessible and what is inaccessible? What has to be done to restore information that's not active anymore and how far does a certain entity have to go to fulfill that request? I need the lawyers to explain exactly what the fight is about."

The New Jersey District Court currently is promulgating an early-disclosure rule that will require attorneys to make every effort to resolve e-discovery disputes on their own, before bringing them before the court. A similar measure is included in the proposed federal rules for civil procedure.

"It's become clear from case law that attorneys have the obligation to learn their client's electronic record storage systems and be prepared for e-discovery," Hedges says. "The attorney seeking the discovery will have to know what to ask for and ask for discrete things. And we are seeing more attorneys doing that."

Such early disclosure provisions are key because they help the judge better manage e-discovery matters and litigants reduce legal risks, such as spoliation.

"The courts definitely appear to be pushing attorneys toward early disclosure and having a plan in place for data preservation," says Eric Schwarz, national practice leader for legal technology at Ernst & Young. "It's to the attorney's benefit to get out in front early and preserve that electronic evidence, because it can help out later on. If, for example, there are allegations of spoliation, you can say, 'Here's what we said we'd provide and here are the steps we took.'"

Sharing The Cost

Finally, if there's one issue sure to raise the hackles of corporate counsel everywhere, it's the charge that unscrupulous litigators using the threat of e-discovery to shake down businesses for out-of-court settlements. While the charges are relatively common, specifics are difficult, if not impossible, to come by.

"You hear about it, but I don't think there's any way to verify it," says Adam Cohen, a partner in the litigation department of the New York office of Weil, Gotshal & Manges. "If you're a corporation, I have the right to ask for e-discovery. I am entitled to that discovery. Cases have always been settled due to costs. If e-discovery ramps up your legal expenses dramatically, of course you're going to settle. So it's not really any different than traditional discovery."

But that may be changing too. If recent case law is any indication, the courts are increasingly asking requesting parties to bear all or part of e-discovery expenses. For example, in Toshiba America Electronic Components Inc. (TAEC) v. the Superior Court of Santa Clara County, the court ruled in December 2004 that the requesting party in an underlying suit involving TAEC--Lexar Media Inc.--should bear the estimated $1.5 million to $1.9 million cost of recovering information from Toshiba backup tapes.

Although the cost-sharing/shifting issue continues to evolve, TAEC demonstrates that requesting parties may want to temper e-discovery demands, lest they be saddled with exorbitant e-discovery costs of their own.

In the meantime, Cohen offers two recommendations. First, follow through with early disclosure, which allows the judge to better manage the case from the outset. Second, since the best target for an e-discovery shakedown is a company that's least prepared to respond to it, corporations need to "get smarter" about the way they manage electronic data and information. "If there's no business or legal reason to keep old emails or other electronic documents, then get rid of them," Cohen says.

In other words, attorneys should focus more on developing their own e-discovery expertise and worry less about the technical savvy of the courts, or the latest set of federal rules for civil procedure.

"Every case is fact specific--the lawyers have to look at the case and try to determine what's fair, just, reasonable and cost effective and present it to the court. That's always going to be the case," Best concludes. "Yes, you have to have guidance from the courts, or new rules, but the best way to deal with the situation is having skilled lawyers backed by experts to produce the best result. Just looking for new rules won't be satisfactory."

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Scott Gawlicki is a freelance writer based in Connecticut. He can be reached at s.gawlicki@excite.com.

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