The New FRCP One Year Later

Tonight I attended a presentation at the Benjamin N. Cardozo School of Law of Yeshiva University, hosted by the Cardozo Data Law Initiative and the Sedona Conference. The panel consisted of Judge Ron Hedges, (a former Magistrate Judge for the U.S. District Court for the District of New Jersey); Steve Bennett, a partner with Park Jensen Bennett LLP; Matt Knouff, eDiscovery Counsel at Complete Discovery Source; and Ariana Tadler, a partner at Milberg LLP. The presentation reviewed the impact of the December 1, 2015 amendments to the Federal Rules of Civil Procedure. The materials are part of the Sedona Conference's training program, which included a PowerPoint slideshow with video clips of judges discussing their views on the meaning of the revised rules. The following are my rough notes on the discussion.

Knouff began the presentation by discussing the data explosion that has taken place since the previous revision of the rules in December 2006. Facebook and Twitter started in 2006, (actually the former just became widely available that year), and Hadoop was introduced in 2007. Microsoft reports that for an average case it preserved 48 million pages; collects 13 million pages; and reviews 645,000 pages. The presentation reviewed the history of the process of arriving at the 2015 amendments, which involved the initial conference at Duke in 2010; public hearings in D.C., Phoenix, and Dallas with testimony by 120 witnesses; and more than 3000 submitted comments - far more than the usual number. Tadler noted that the proposed rules were perceived as being pro-business, and that an rough mix of comments from both plaintiff and defense lawyers were received.

Judge Hedges noted that new rules effecting service and deadlines under the rules will come into effect this week.

The group emphasized the key goals of the December 2015 amendments:

1. Cooperation

2. Early case management

3. Changing the scope on the basis of relevancy and proportionality.

4. Establishing national sanctions standards. [or curative / remedial measures, as Rule 37 doesn't actually use the term 'sanctions'.]

The group noted Judge Lee Rosenthal (S.D. Tex.) has stated that despite the committee note to FRCP 1 stating, "Effective advocacy is consistent with — and indeed depends upon — cooperative and proportional use of procedure.", parties should not even think of filing motions on the basis of opposing counsel not being cooperative. Rule 1 only states an expectation. It's declaratory.

Judge Hedges noted that the key ethical guidelines were the counsels' duty of candor to the tribunal under Model Rule of Professional Conduct 3.4 and duty of candor to the tribunal under Rule 4.4. He also referred to the California Bar's Formal Opinion No. 2015-193 which stated that lawyers had an ethical obligation to understand electronic discovery technology. He recommended reviewing the Sedona Jumpstart Outline, co-authored by Tadler, which provides an outline of issues to discuss with clients on preservation problems and responses to requests for production. Bennett noted that the notes to the ABA's Rule 1.1 also discuss the need to be aware of, "benefits and risks associated with relevant technology".

Judge Hedges has noted that local rules have expanded on the cooperation requirement and specifically referenced the rules specific to Judge Paul Grimm's (D. Md.) chambers, which I believe are posted here, and state that. "Whether a party or counsel has cooperated during discovery also will be relevant in determining whether the Court should impose sanctions in resolving discovery motions." Since the Sedona Cooperation Proclamation was issued in July 2008, 150 state and local judges have endorsed it, and it has been cited in 50 published opinions.

Judge Hedges recommended that Judge Peck's Rule 502(d) template order be used to address the clawback of inadvertently produced privileged documents.

Knouff noted that while Rule 34 document requests can be delivered 21 days after a summons is served, they are not actually considered served until the Rule 26(f) conference takes place. He noted that FRCP 34(b)(2)(c) requires objections to be stated when data is withheld. Bennett speculated that it might be possible to make 'reserve objections' in case later view of data indicates they are needed, but Judge Hedges brought up that this could fall afoul of the FRCP 26(g) certification requirement. Knouff pointed out the District of Kansas decision (in Rowan v. Snowflower ?) that allows for the specification of data searches as basis for indicating what data is being withheld, as an alternative to the privilege log format that would list individual documents withheld.

The group provided this sample objection as good an example of what can be used to respond to a document request:

Tadler cautioned this should not be used as a boilerplate for any case as salary information could be relevant for employment cases. Judge Hedges faulted this form response for not listing a basis for withholding 17 pages of files.

Jim Daly of Seyfarth Shaw LLP was in the audience and pointed out that the SEC, DOJ, and FCC have specific requirements for the forms of production which are in the Code of Federal Regulations.

Steve Bennett noted the comment to FRCP 26(b)(1) which states, "Computer-based methods of searching such information continue to develop, particularly for cases involving large volumes of electronically stored information. Courts and parties should be willing to consider the opportunities for reducing the burden or expense of discovery as reliable means of searching electronically stored information become available." is a reference to the use of TAR which he predicted would be become the dominant form of review in the next 10 years. Judge Hedges questioned this because he said that at least 9 out of 10 cases don't involve large document productions. Running keyword searches might be sufficient in smaller scale cases. The judge made a reference to 17,000 documents as being the break even point for TAR, which is a possible reference to a max size for a seed set. See this posting on the Catalyst site.

Judge Hedges complained about the fact that in attempting to use letters rogatory to obtain overseas production, he only found out after 11 months that France wasn't going to provide the production.

In a video clip, Judge Craig Shaffer of the District of Colorado noted that Rule 26(b) would have to be applied against the backdrop of FRCP 1's admonition to construe, administer and employ the rules for the just, speedy, and inexpensive determination of every proceeding.

Judge Hedges warned against conceiving of proportionality just in terms of dollars and cents and warned that other factors had to be considered as well.

In a video clip Judge Jeffrey Sutton of the 6th Circuit (the Chair of the Standing Committee on the Rules of Practice and Procedure) remarked upon how the removal of the language in FRCP 26 about the scope of discovery including data reasonably calculated to lead to the discovery of admissible evidence, effected the relevancy of the SCOTUS case Oppenheimer v. Sanders, which was based on a version of the Rule including this language. He criticized some judges for continuing to cite this precedent after December 2015.

The group acknowledged that the amendment to FRCP 37 was intended to address the finding in Residential Funding Corp. v. DeGeorge Fin. Corp., by the Second Circuit that sanctions could be imposed for the negligent failure to preserve.

Judge Hedges said that he disagreed with Judge Francis' dicta opinion asserting that judges still have the inherent authority to sanction.

The video presentations alos consisted of comments by Judge David Campbell of the District of Arizona; and Judge Joy Conti of the Western District of Pennsylvania.

Electronic Discovery and Digital Evidence in a Nutshell - Introduction Outline

Today I purchased a copy of Electronic Discovery and Digital Evidence in a Nutshell, the second edition of the West Academic guide to electronic discovery law in the United Statues authored by Judge Shira Scheindlin (the judge in the Zubulake v. UBS Warburg) and members of the Sedona Conference. This post will be the first in an occasional series providing an outline for this book.

I. INTRODUCTION

A. FRCP Amendments

1. FRCP 26(b)(1)

a. No reference to subject of the litigation.

b. Scope of discovery proportional to the needs of the case.

i. Importance of Issues at Stake.

ii. Amount in Controversy

iii. Parties' Relative Access to Relevant Information.

iv. Parties' Resources

v. Importance of discovery in resolving issues.

vi. Does Burden outweigh potential benefit?

c. Committee Notes

i. Requesting party does not have burden of addressing all proportionality considerations.

ii. No boilerplate proportionality objection permitted.

iii. Court should make a case specific determination of scope of discovery.

d. Open Issues

i. Does not specify who has burden of proof on proportionality issues.

ii. Costs may be increased because of unilateral determinations that requests are not proportional.

iii. Pre-motion discovery necessary to assess proportionality.

e. Additional Changes

i. Information need not be admissible in order to be discoverable, but no longer needs to be reasonably calculated to lead to the discovery of admissible evidence - now tightly limited to claims or defenses.

ii. FRCP 26(c)(1)(B) - court can allocate discovery costs when granting protective order.

iii. FRCP 26(d)(2) Rule 34 requests served 21 days after compl.; don't need to wait for meet and confer.

iv. FRCP 26(f)(3) - inadvertent production of priv docs; and preservation of evidence must be discussed at first conference.

v. FRCP 37(e) if evidence that should have been preserved - and cannot be restored - court can order measures no greater than necessary to cure prejudice. Party must act with intent to deprive other party of info for adverse inference instruction.

1. Committee Note - Courts should consider sophistication of parties - corporation held to a higher standard than individual.

vi. Court can require premotion conference - would allow resolution on letter submissions rather than full briefing.

vii. FRCP 34(b)(2)(B) and FRCP 34(b)(2)(C) - if party objects to doc request must state grounds with specificity and note if document are being withheld.

Judge Peck on the EU-U.S. Privacy Shield

This evening I attended a discussion hosted by the Sedona Conference at the offices of BakerHostetler at Rockefeller Center in Manhattan. The topic of the discussion was, "Practical Solutions to the Challenges and UncertaintyAssociated with the EU-U.S. Privacy Shield". The panel was composed of Magistrate Judge Andrew Peck of the United States District Court for the Southern District of New York; Emily Fedeles, an associate with BakerHostetler; and Stacey Blaustein, a Senior Attorney and Global E-Discovery Lead at IBM.

The panel briefly discussed the Schrems decision of a year ago. They laughed about how ironic it was that a law student had found the time to bring the case, and joked that someone could have prevented all the trouble caused by the overturning of the U.S./E.U. safe harbor scheme by giving him a job with an American law firm. The group focused on the new privacy shield adopted in response to the Schrems decision and the General Data Protection Regulation which will be fully implemented in May 2018 in the European Union after a two year transition period.

Stacey Blaustein noted that business can certify online at https://www.privacyshield.gov. The site leads companies through the process step by step. She discussed how the new framework has avenues of redress built in. The FTC has jurisdiction under section 5 of the FTC Act for adjudicating violations of the Privacy Shield Principles. Blaustein mentioned the September 30, 2016 deadline for companies to self-certify and gain a nine month grace period to update contracts made with data processors.

Ms. Fedeles said that under the new framework companies would have a 45 day deadline to address specific concerns raised by complainants. She also noted the many companies have already certified. See the list here.

Ms. Blaustein talked about the onward transfer or downward stream exchange of data, and mentioned that vendors may not have to certify but need to comply with the same standards as the companies who engage them.

The panel noted the the FTC's jurisdiction only extends to the industries that it regulates. Ms. Blaustein noted that is precluded from exercising jurisdiction over transportation.

Judge Peck talked about the anonymization of data as a potential solution to the problem of producing documents covered by European data privacy laws. He speculated that under the new GDPR review will still take place in the European Union, with anonymization taking place before ESI was transferred to the United States.

Ms. Fedeles noted that certification can be rescinded, which would lead to a company having to delete the data it had collected. Audits are conducted under the new privacy shield regime.

Judge Peck discussed cross border discovery in the context of the 1987 United State Supreme Court decision, Societe Nationale Industrielle Aerospatiale v. U.S. District Court for the Southern District of Iowa,482 US 522 (1987) . Five factors were given to judge whether or not international discovery could be conducted despite a foreign blocking statute:

"(1) the importance to the . . . litigation of the documents or other information requested;

"(2) the degree of specificity of the request;

"(3) whether the information originated in the United States;

"(4) the availability of alternative means of securing the information; and

"(5) the extent to which noncompliance with the request would undermine important interests of the United States, or compliance with the request would undermine important interests of the state where the information is located."

Judge Peck noted that over the years two additional factors were added in effect to this Societe Nationale test - the hardship imposed on the producing party and whether or not the request was made in good faith. He blamed bad lawyering for over relying on the fifth factor to justify cross border discovery.

He mentioned the 2007 'Christopher X' case in which a French court only imposed a €10000 fine for the violation of a blocking statute, has been used in American courts to encourage the practice of violating such statutes.

Judge Peck warned that under the new GDPR companies could face fines potentially high as 4% of global gross revenue - not just profit. He said if foreign data currently located in the United States no longer fell under provisions allowing for its exchange, there was a good argument for it being protected under cross border discovery rules, but he felt that this was something other judges would have to be educated about.

Judge Peck noted that a party won't necessarily be sanctioned for the disclosure of private data it moves 'downstream', if it uses proper contracts. He did not know if a negligence standard or something else would be used to evaluate whether or not a party had used proper methods for transferring data.

Ms. Blaustein noted that if possible recipients should only get data for a specific purpose. The panel reminded the audience that the United Kingdom after Brexit, and Switzerland would not be bound by European data privacy laws.

Judge Peck observed that Britain was one country in which discovery could be obtained quickly through the Hague Convention - in part because the British disclosure process is similar to American discovery.