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Troutman Sanders LLP: E-Discovery In 2013: A Look Back To Plan Ahead

The consensus among most commentators tracking annual developments in eDiscovery law seems to be a collective yawn when it comes to evaluating 2013.  No earth-shattering edicts were pronounced; no bright lines were drawn to simplify preservation obligations; no definitive guidance was announced on what must be disclosed when predictive coding is deployed.  But 2013 was still notable – new and amended rules continued to be introduced and adopted at the state and federal level and cases continued to refine parties’ obligations and options for effectively addressing eDiscovery. The eDiscovery landscape of 2013 can help prepare you for 2014 and beyond.

The diverse nature of electronically stored information and the varied ways it may be relevant or useful in any particular matter means that courts, judges and lawmakers rarely give bright line rules to provide parties with clear direction.  Not surprisingly, this past year cannot be summarized with ten new discovery guidelines and their sources.  But the hundreds of cases decided in state and federal courts addressing ESI, as well as the new rules passed or proposed, were notable for a few key themes that will likely continue for years to come.

Proposed Rule Changes

The most notable activity in 2013 was the continued effort to provide more guidance and reduce burdens associated with discovery through rule-making.  Most notably, key proposed amendments to the Federal Rules regarding the scope of discovery and preservation entered the public comment phase.  We may be a year or more away from final amendments, but the efforts to improve the Federal Rules to address issues that have evolved since the last round of amendments (almost a decade ago) have been significant and have inspired similar state rule proposals.  States are also going out on their own to address some of these issues, including cost recovery.  A few highlights from the states this past year:

• Florida: Uniform Guidelines for Taxation of Costs were amended to allow for recovery of certain eDiscovery costs;

• Georgia:  Proposed legislation was introduced (and is currently being actively debated) to address the scope of discovery, proportionality, cooperation, format of production of ESI, third party productions, clawbacks, and preservation-related sanctions;

• Iowa: The Iowa Supreme Court began seeking comments for proposed amendments to the discovery provisions of the Iowa Rules of Civil Procedure;

• Massachusetts: New eDiscovery rules enacted which become effective January 1, 2014 and require parties to plan for eDiscovery, including cost allocation, and include a “clawback” provision and rules allowing judges to limit the frequency of discovery;

• Minnesota: The state’s Rules of Civil Procedure were amended effective on July 1, 2013 to incorporate “proportionality” and require parties to confer about discovery “as soon as practicable;”

• New York: On January 7, 2013, New York’s Unified Court System’s E-Discovery Working Group proposed amendments to 22 NYCRR §202.12(b) of the Uniform Rules of the Trial Courts;

• Washington:  On September 13, 2013, an amendment to Washington Court Rule 34 became effective, introducing the term “electronically stored information”, addressing the format in which ESI should be produced, and providing a framework for resolving disputes regarding the form of production.

Many rules and standing orders emphasize the need for proactive planning, early conferences, and iterative discussions on issues ranging from preservation, scope, search and retrieval, format of productions, and privilege logs.  Given the fact-specific nature of these issues, Judges hope many common issues can be addressed and resolved early without their involvement.

2013 Case Law Highlights

Format of Production.

Several cases decided in 2013 underscore the need for proactive, early planning and discussions regarding the basic issue of format of production of ESI.  The individual cases are not really notable, but they provide a valuable lesson for 2014 – resolve production format issues before you produce ESI.  The Federal Rules, and many recently amended state rules and local court orders, require parties to discuss production format before production of ESI.  Unless parties reach agreement on format, or at a minimum, request a specific format and clarify the format they intend to use, these cases will continue to appear in 2014.  The key is to address format concerns before costs are incurred.

Failure of Process.

As with other years, the key problems leading to motions and sanctions in 2013 resulted from failures of process.  Most of these failures stem from litigants trying to avoid costs or burdens associate with ESI and then overstating their efforts.  For example, in Branhaven LLC v. Beeftek, Inc., the plaintiff and its counsel were both sanctioned for failing to make a reasonable investigation of ESI sources, including failing to conduct any search of email, before certifying responses to document requests.  The Court found this strategy of “buying time” inconsistent with discovery requirements.  Similarly, parties and lawyers who failed to control the collection and production process were sanctioned and ordered to take more diligent and systematic efforts to identify and produce responsive documents.  In Peerless Indus., Inc. v. Crimson AV, LLC, the defendants were ordered to produce additional documents and to pay the costs associated with the moving party’s motion to compel after the court found that “[d]efendants cannot place the burden of compliance on an outside vendor and have no knowledge, or claim no control, over the process.”

“Discovery About Discovery.”

This past year marked notable increases in the practice of seeking “discovery about discovery.” Possibly because of the growing body of cases outlining process failures and preservation imperfections, parties are increasingly serving discovery requests about the discovery process itself.  Information sought includes the process used for preservation, collection, and production; identification of custodians and search filtering techniques; information regarding “hit reports,” sampling, and testing of data; and disclosure of predictive coding seeds sets and work flows.

Parties seeking additional discovery about discovery often seek the information to identify gaps in productions or to justify additional depositions, document productions, or sanctions based on information gained in the process.  Although the number of cases officially discussing “discovery about discovery” in 2013 was relatively small, see e.g., Ruiz-Bueno v. Scott, these requests are steadily increasing in litigation.    Last year one case resulted in two separate options about the predictive coding process, including one that held the producing party did not have to identify is seed set documents.  See In re: Biomet M2a Magnum Hip Implant Prods. Liab. Litig.  Discovery about the use of predictive coding and other technical aspects of productions is likely to increase in 2014 as parties seek to leverage technology to reduce costs.

Cost Recovery.

Many litigants continued to seek to recover significant costs of eDiscovery in 2013.  In Country Vintner of North Carolina, LLC v. E & J Gallo Winery, Inc., the Fourth Circuit weighed in on the debate and followed the strict view of costs recovery under 28 U.S.C. § 1920 by rewarding only those costs that could literally be associated with “making copies” and excluded the most significant costs required to process, filter, and produce ESI.  The case of Scentsy, Inc. v. B.R. Chase LLC, notably demonstrated that other avenues may be available for recovering costs, including the Lanham Act and the Copyright Act.

Yes, many of these topics are the same ones we have read about in previous years, but many of these same topics will dominate 2014.  Expect more debate on the proposed rule changes, additional discovery about discovery, and an increased expectation that parties will proactively address these issues.  Rather than yawn and ignore these cases, take note of the lessons that can be learned to avoid unnecessary costs in 2014.

For more information, please contact Alison Grounds.

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