Electronic Discovery Institute Course - Class 13 - Third Party Obligations & Procedures

Here's a continuation of my postings about the Electronic Discovery Institute's online e-discovery certification program, that you can subscribe to for just $1. I last blogged about this program on October 21, 2017. Go to https://www.lawinstitute.org/ to sign up for it.

Tonight I took the course entitled, "Third Party Obligations and Procedures". It is taught by Robert Owen, a law firm partner and the president of the Electronic Discovery Institute; Rachel Marmor, an eDiscovery counsel for Barclays; and Stacey Blaustein, an attorney specializing in eDiscovery for IBM.

Third Party Information Request

Federal Rule of Civil Procedure Rule 45 provides a way to access ESI in the hands of third parties. Blaustein noted that law firms will often have control of information that is relevant to an action that a client is a third party to. Marmor noted that in divorce cases, spouses often subpoena one another employers. Subpoenas are often served on auto insurers in cases arising from car accidents because the insurers have so much information on their customers driving habits.

Third Party Request Process

Rule 45 subpoenas should be served on the parties who have custody of the relevant data. Documents themselves, an inspection, or a deposition can all be requested under Rule 45. There is not usually any judicial scrutiny before the subpoena is served.

Blaustein said that a non-party is obligated to preserve the documents described in a subpoena, but there may be a basis to negotiate down the scope. A simple preservation letter from another entity may also give rise to an obligation to preserve data. IBM operates systems through which entities' data is transferred, and it sometimes has to freeze databases in response to subpoenas.

Determining Whether a Third Party Request is Necessary

Depositions may be taken in order to determine if a third party has information.

Legal Obligations of the Requesting Party

The requesting party must ask for things that are necessary and should not conduct a 'fishing' expedition.

Undue Burden & Cost Considerations

Blaustein said that a requesting party must ask for a reasonable scope of documents. Motions may be made to quash burdensome and oppressive requests. A subpoena must make specific requests - for example, for sales information in a particular date range on a specific product. Subpoena requests should not unnecessarily interrupt the third party's business. One must be transparent, making sure that all parties are on the same page about what is being preserved and what can be produced. Third parties usually understand that responding to subpoenas are part of doing business.

Marmor said a requesting party wouldn't always know what a third party was capable of producing. If financial analyses are requested from an advisor and they can be obtained from your client, those should not be requested from the third party. Meet and confers are a good way to make sure a subpoena does not impose an undue burden. Third parties can be invited to negotiate what is reasonable. Reasonable search terms should be proposed and there should be a limit on the number of custodians from which data is collected.

Legal Obligations of the Third Party

A Rule 45 subpoena imposes a legal obligation to respond. If the request is objectionable. Responses and objections can be made. A third party has the right to seek a protective order from a local court.

A document retention order should be distributed to an agreed upon list of individuals. The effort to preserve should be memorialized. Check to see if data needs to be segregated from a dynamic system. Data in a legacy database may be very expensive to store with a third party vendor. Proper processes must be in place to collect data and review it in order to determine what is responsive. A confidentiality order should be drafted that extends to other third parties so that trade secrets and personal information cannot be disclosed.

Third Party Preservation Obligations

The duty to preserve is triggered immediately and a hold notice should be distributed right after receiving a subpoena. The party issuing the subpoena should be engaged in discussions about limiting the costs of responding to it. Rule 45(d)(1) provides that the issuer must take steps to avoid unnecessary costs being incurred by the responding party. A proportionality analysis should be conducted in order to determine how much money should be spent on preservation. Preservation will not be treated as a priority for third parties - but a court could scrutinize an aggressive data deletion policy.

Blaustein recommended reviewing the relationship to the requesting party whether there was a contract mandating cooperation with the requests. Letters usually are exchanged between in-house counsel of the involved parties. Its prudent practice to review the claims in the case and gauge whether or not the requests are excessive. The date range and subject matter involved may be narrowed.

Proportionality Principles for Third Parties

The Rule 26(b)(1) proportionality principle carries over to Rule 45 subpoenas, and cost shifting provisions are included in 45(d)(1). A dialogue should be started about the scope of the subpoena as soon as it is received.

Proportionality, as integrated with the 2015 amendments to the FRCP, has not made a great difference in how subpoenas are responded to according to Blaustein. Blanket objections on proportionality grounds cannot be made - there must be some substance to them. Proportionality to closely tied to the concept of reasonableness.

Owen said that the Committee indicated the importance of cost allocation when amending the FRCP. Although there is no requirement that the requesting party pay the costs of production - a court should be asked to allocate at least some of the costs. A co-pay of 10-20% can be asked for. A minimal co-pay can lead to their requests being made more reasonable.

Production Format Requirements

Data should be produced in the form in which it is ordinarily maintained or in a reasonably usable format. Companies often use vendors to assist with productions

Ensuring Delivery of Necessary Data

Just issuing a subpoena duces tecum, without conducting a deposition doesn't allow the requester to confirm that all the available data is produced.

When Does the Preservation Obligation Expire? One should check with the requesting party before putting the requested ESI back on regular document retention schedules. A letter can be sent stating the production has been completed and confirming that no further production will be required. A preservation letter can institute certain practices and policies which are followed for a long periods even though further communication is not made with the requesting party.

2015 Amendments to the Federal Rules

No major change was made to Rule 45, but a reference to ESI was added in order to leave no doubt that it should be included. The amendments make clear that boilerplate language should not be used in responses and objections.

Collaboration & Conclusion

According to Marmor, Barclays receives a lot of third party subpoenas which are in effect fishing expeditions. The Sedona Principles of Cooperation and the meet & confer process should encourage parties to reach uniform agreements on what must be done to respond to subpoena instead of dealing with issues one by one.