Judges, lawyers, and the new rules: it's been four months since the amended federal rules governing electronic discovery took effect. How are they changing e-discovery disputes in the courts? An expert on electronic evidence talks with two current judges and a former judge about what the changes mean from the perspective of the bench.

In 2005, the U.S. Judicial Conference, which governs federal courts, adopted amendments to the Federal Rules of Civil Procedure regarding discovery of electronically stored information. The changes were an acknowledgement of the new legal territory. that computers and electronic information have created since the discovery rules had last been amended.

Before the amendments took effect in December 2006, few rules specifically governed electronic discovery. Many lawyers and judges had looked fin advice to The Sedona Principles, guidelines for electronic discovery created by The Sedona Conference, a nonprofit legal research institute based in its namesake Arizona city (see www.thesedona conference.org). Others were guided by developing case law in their respective states.

These changes are now being felt acutely in the nation's courtrooms, where judges are routinely required to adjudicate disputes regarding the production of electronic information. To see the view of the new rules and electronic discovery from the bench, KEN WITHERS, director of judicial education and content at The Sedona Conference, talked with three judges: RONALD HEDGES, U.S. magistrate judge for the District of New Jersey; JOHN CARROLL, dean of the Cumberland School of Law at Samford University in Birmingham, Alabama, former chief U.S. magistrate judge for the Middle District of Alabama, and a former member of the advisory committee on the federal rules; and STEVE LEBEN, a Kansas state district court judge and president of the American Judges Association.

In a wide-ranging discussion, they surveyed the new terrain that lawyers and judges are working hard to map.

WITHERS: What are the most common disputes in electronic discovery?

HEDGES: Ones that we've had all along: first, whether a party has waived privilege through the inadvertent production of privileged materials and, second, whether the scope of discovery requests is too broad. By that, I mean both the temporal scope, in that the requests cover a long period of time, and the geographical scope--for example, whether entity-wide information has to be provided as opposed to information restricted to one particular division of an entity.

LEBEN: I would agree. Privilege becomes particularly complicated in the world of e-mail, as a thread of communication is copied to a variety of parties. With e-mail, the number of possible recipients for a communication and the speed at which they all get it are multiplied.

CARROLL: I agree that the conflicts are the same, essentially, as they were with paper--the defendants say the plaintiffs want too much, the plaintiffs say the defendants aren't giving them what they need. The other issue is cost, which is very different when you're dealing with electronically stored information. Paper just isn't that expensive to produce. With electronically stored information, it's conceivable, depending on how the judge decides to rule, that the production of information becomes very costly and the judge has to decide who pays.

WITHERS: What are the worst mistakes you have seen parties make in electronic discovery?

CARROLL: Lawyers representing to the court things that they couldn't back up. For example, a lawyer saying that a client could do something that the client simply couldn't do.

HEDGES: That is the biggest problem. And I don't know if I would call it a mistake; maybe it's a desire to fulfill expectations that we all have with moving a case along promptly, consistent with Rule 1. It's not unusual for me in a case with a high volume of electronically stored information to be told something can be done by day X, and it takes X plus 120 days.

LEBEN: Whether they represent a requesting or a responding party, attorneys often come into court without a sufficient understanding of the basic structure of the electronic evidence they are seeking to be able to respond accurately to either questions from the court or arguments from opposing counsel.

WITHERS: So the worst mistake that a requesting party can make is to blindly ask for everything?

LEBEN: Or not to understand the ways in which data might be stored, so that the party never asks for the most appropriate thing. With paper, the requester simply can ask the respondent to produce the documents either in a specific form or in the form they are kept. But electronic evidence can be kept in any number of ways and is easily manipulated. Lawyers need to understand how the opposing party is actually using the information. For that reason, the requesting party often will take a Rule 30(b) (6) deposition of someone who can tell them the way in which documents have been stored and maintained, and what is available.

HEDGES: A fairly common problem is disputes between the parties as to search terminology. Another arises when the requesting party gets to use the search terms it wants and the hits don't come back the way the requesting party expected. The requesting party then may want to renegotiate to increase the number or content of the search terms.

WITHERS: Is there room, for that kind of iterative process in electronic discovery ?

HEDGES: I think there has to be, because requesting parties--and even responding parties--often don't have a clue what, or how much, information is in a particular database until some initial searching is done. I think this process has to be iterative, and I certainly think it's an area for the meet-and-confer sessions that the rule amendments are intended to push parties toward.

WITHERS: The new federal rules imply a much more proactive role for judges in managing discovery, particularly Rule 16(b), where the judge has to query the parties about privilege waiver. Is there a mote managerial role now for judges?

CARROLL: There's no question that these new rules embrace the concept of the managerial judge--that the judge is going to be deeply involved in the discovery process and that it's going to be a long-term role. The new rules say to judges, You have a new role, even if you don't like it. You've got to get in the middle of all these electronic discovery issues.

WITHERS: Is this going to mean a major change in what we might call judicial culture?

LEBEN: I don't think so. And I would note that many states don't have this particular version of the rule at this point.

But judges have long been responsible for managing cases and dockets. The role of the judge in state court is well beyond just calling balls and strikes. Juvenile courts were set up in the 1800s, and judges started looking out for the welfare of children. We have drug courts, domestic violence courts, and others in which judges are something other than an umpire. The difficulty comes in the minutiae of the materials you have to review in making decisions regarding electronic discovery. Some of those seemingly endless e-mail strings certainly can be problematic.

WITHERS: With two-tiered discovery, Rule 26(b)(2)(B) allows discovery of accessible electronically stored information first. The parties then can file motions to support their position that any undiscovered information either is or is not "reasonably accessible." How does a judge determine whether information is reasonably accessible?

HEDGES: This adds another layer of argument that parties have to make to judges as well as another step judges will have to take before we decide we're going to allow discovery, whether or not it's from sources that are not reasonably accessible. But in the end, we have to use the same test to determine whether discovery should go forward--the so-called proportionality rule, which had been Rule 26(b) (2) and is now 26(b) (2) (C). That rule provides that a judge can deny or limit or condition a discovery request that is too burdensome or expensive.

The advisory committee in at least one note has said judges do not employ this test sufficiently. We're going to need to make more detailed fact-findings, especially in determining whether cost-shifting is appropriate. And then we're back to where we were before as far as cost-shifting goes: What tests do we apply? Do we use the seven-factor test of Zubulake [Zubulake v. UBS Warburg LLC, 217 F.R.D. 309 (S.D.N.Y. 2003)], the eight-part test of Rowe Entertainment [Rowe Ent., Inc. v. William Morris Agency, Inc., 205 F.R.D. 421 (S.D.N.Y. 2002)], or another to determine how to exercise our discretion in this area?

WITHERS: Under any of these tests, quite a bit of factual detail is necessary. How does a managerial judge get that? And what is the role of the advocate?

HEDGES: Well, the first thing we're going to see in this area, fortunately or unfortunately, is an increased use of experts. The average person can't intelligently argue about the burden of restoring backup tapes or securing fragmented data. I certainly don't think that the need for advocacy is going to diminish--if anything, it is going to increase because attorneys will be needed to get their experts' points across.

The other concern I have is that this may be an area for satellite discovery, which can run counter to the admonitions we're given under Rule 1.

CARROLL: I think the advisory committee envisioned a nonadvocacy role in the early stages of discovery. The rules are meant to get the lawyers together, get them to understand that they have to be informed, and get them to understand that the best decisions are the ones that they make jointly, rather than requiring a judge after hearing expert testimony to sort out complex issues.

I think Judge Hedges's paradigm is certainly possible, but I hope that lawyers will work together to make decisions and not get the judge involved.

LEBEN: When both parties are businesses and, therefore, both have electronic documents, each side has a similar incentive to work out some reasonable way of dealing with electronic evidence. The disagreements are much more likely to occur in cases in which, for example, you have a plaintiff bringing a class action against a corporate defendant who has all the electronic documents. Then, you have no real incentive for the two to agree on the scope of discovery because it's not mutual in terms of the way the rules would be applied. You end up needing an expert who can tell you what is going to be required, what is the reasonable cost of that production, whether the party will be able to control those costs, and all those things that in the factor test would need to be examined.

HEDGES: I don't know if I agree with that. The biggest disputes I see are in cases in which both sides have a lot of resources. I often see in discrimination cases that the requesting party is relatively careful in what he or she is asking for, probably bearing in mind the admonition, "Be afraid of what you ask for, because you might get it." I think people tend not to consider the cost that a requesting party will incur if that requesting party has to review the electronically stored information it asked for.

WITHERS: In mass tort or multidistrict litigation, what is the role of the judge, and how do you differentiate this from his or her role in conventional discovery?

HEDGES: The judge is going to have to be proactive in multidistrict litigation. I am a big fan of sequencing discovery--I do not want the parties to conduct depositions or involve experts until document discovery is out of the way. This calls for very active judicial management, although I haven't had that many difficulties because, in multidistrict litigation, the parties and their lawyers are sophisticated; they understand what's expected of them.

CARROLL: I agree. In multidistrict litigation, these rules won't have much of an impact because you usually have very skilled lawyers who understand the economic consequences of everything, and very skilled judges who are used to managing.

Where these rules are going to make a lot of difference is in single-plaintiff employment, automobile accident, or products liability cases. Five years ago, electronic discovery didn't play a role in those cases, because the plaintiff bar wasn't sophisticated enough to understand what they could be asking for. Now I think that the plaintiff bar understands the value of electronically stored information. But defendants, too, are increasingly asking for electronic information stored on a plaintiff's PDA and home and office computers.

WITHERS: Judge Leben, do you see this situation changing over the next five years in state court?

LEBEN: Yes, for the same reason. I think people have been content to take what they get and have not really pursued electronic discovery. Dean Carroll's point about the individual plaintiff's PDA or hard drive is one that may be a countervailing factor, because if both parties make these requests, they have an incentive to work out disagreements. When each side can potentially lose something valuable, this leads to com promise, with disputes being resolved out of court.

WITHERS: let's say that I represent a plaintiff in an employment discrimination suit and receive a discovery request from the defendant for information from the client's PDA and home computer. The plaintiff did nothing to preserve electronic information stored on these devices and can't afford an expert to recover it. What should I have done--if anything--before filing suit that I wouldn't have done in the days of conventional discovery?

HEDGES: I am not sure that anything's changed except the volume and location of the data being requested. You' re alluding to obligations that plaintiff attorneys have always had. When the client walks in the first time and the attorney is beginning to formulate the litigation, the attorney has to ask the client, "Where are your documents?" He or she needs to be able to look at them if for no other reason than to comply with federal Rule 11 obligations before litigation commences.

I don't think the fact that a person consults a lawyer ipso facto creates a preservation obligation. But I would think that the lawyer has to ask a potential client: "Where is your information? What kind of information systems do you have? How do I access the information?" Under our local rules, the lawyer would have to do this. The lawyer also has to ask himself or herself: "What do I need to satisfy both Rule 11 and Rule 26(a)(1)?"

WITHERS: Do you think that both plaintiff and defense attorneys are talking about these issues with their clients as litigation is being contemplated?

HEDGES: I think that if they don't, they should have their malpractice insurance checked.

CARROLL: But I'd be willing to bet that if you surveyed lawyers and asked, "When you sit down with your client, are you telling that client that he can't destroy any information on his hard drive, that he's got to keep all this data in some place that is reasonably accessible?," most lawyers would say no. There's a lack of understanding among even skilled practitioners about these obligations (which Judge Hedges correctly said have existed forever) and how they translate into this new world of electronically stored information.

LEBEN: Corporate lawyers are careful to tell clients to preserve electronic records as soon as it is clear that litigation is possible. This is because obstruction-of-justice charges have been brought against some corporations and their lawyers when this wasn't done.

The other thing that forces preservation into early discussions is the Rule 30(b)(6) depositions regarding how documents have been preserved and what changes have been made in the preservation of the documents after a claim was made. I suspect that plaintiff attorneys have not come as far because there have not been as many notable attacks on plaintiff attorneys for failing to raise preservation with their clients. But I think that is going to change.

WITHERS: Do these rules--particularly, if they have state counterparts--have the effect of pricing middle-class people out of the courtroom?

CARROLL: I think the rules committee was concerned about that. I hope it's not the case, but I think it's a possibility.

LEBEN: The price of litigation has risen, but these rules help us combat that, because they allow judges to consider cost versus benefit in ordering discovery. If disputes under these new rules go into the sort of satellite litigation that Judge Hedges mentioned, obviously that would be the downside. If, on the other hand, the new rules encourage parties to follow Rule 1 and keep litigation as inexpensive and reasonable as possible, then they would have the other effect.

HEDGES: I think discovery costs are getting to the point now where it's just not worth trying some cases. The trial rate in the federal system has been declining, and I think that's driven by the prospect of spending enormous amounts of money on litigation.

CARROLL: As Judge Leben said, the rules give judges managerial tools to help hold down the cost of litigation, and hopefully that's the by-product. But again, as we all agree, if you're a plaintiff lawyer in a single-plaintiff employment discrimination case and you've got to bring expert witnesses in, your client may not be able to afford it, and if that happens, it's a bad thing.

WITHERS: Electronically stored information deemed not reasonably accessible means that the cost and burden of reviewing the information outweighs its value to the litigation. What duty does a holder of this type of information have to preserve it ?

HEDGES: The duty to preserve and the duty to produce are not the same. If a party has sources in which there may be relevant, discoverable information, that party has an obligation to retain that source at least until a court decides it's not subject to discovery. Even then, I don't think the party would be safe discarding anything until they get some type of agreement from the other side.

CARROLL: Judge Hedges is right. That is one of the most misunderstood provisions of the new rules. People say, 'It's not accessible, we don't have to preserve it,' and that is absolutely wrong.

WITHERS: New Rule 37(f) says, "Absent exceptional circumstances, a court may not impose sanctions under these rules on a party for failing to provide electronically stored information lost as a result of the routine, good-faith operation of an electronic information system. "Is this rule a safe harbor?

CARROLL: Absolutely not. As it was originally drafted, it may have been, but this rule benefited significantly from the comment process. I'm not sure it offers any protection that didn't exist well in advance of its effective date.

WITHERS: Is there anything in Rule 37 that requesting parties can look to for solace?

HEDGES: I think you can look to the introductory clause, which says that if there are exceptional circumstances, sanctions can still be imposed. And I think "exceptional circumstances" means severe prejudice to the requesting party because the information cannot be turned over.

Also, the rule specifically says sanctions will not be imposed under the Federal Rules of Civil Procedure. It leaves open the power of courts to impose sanctions under their inherent authority. Is the exercise of inherent authority consistent with the intent of Rule 37(f)? In Roadway Express, Inc., the Supreme Court cautioned on the use of inherent powers in the face of a statute. [Roadway Express, Inc. v. Piper, 447 U.S. 752, 765 (1980).] Howwill this caution affect the use of inherent powers vis-a-vis Rule 37(f)?

Finally, I don't know if this is solace to the requesting party or the responding party, but the rule applies a good-faith standard. This may be an area for satellite discovery, with the requesting party trying to determine whether the producing party in programming, implementing, or operating the system did so in good faith.

WITHERS: So if a requesting party doesn't get the electronic information it requested and suspects the information existed but has been lost, this rule allows that party to conduct discovery of the responding party's electronic-records-management system generally?

HEDGES: Yes, but the more interesting question is what happens to the preservation obligation in light of Rule 37(f). I don't think that rule is intended to override a party's preservation obligations. How parties and judges construe their preservation obligation along with the safe harbor provision is going to be a big area of case law development in the next few years.

WITHERS: Say I am a corporation defending suits in both state and federal court involving the same product. I produce a privileged document inadvertently in federal court, and it is now subject to the clawback provision under federal Rule 26(b)(5)(B), whereby a party who receives inadvertent production of documents is obligated to return them pending a determination of their privileged status by the judge. However, a litigant in state court, knowing that this document has been inadvertently produced in federal court, says that he is entitled to that document because privilege has been waived by production. Is this an area of conflict between state and federal courts ?

LEBEN: Absolutely. My understanding of the committee note with Rule 26(b) (5) is that the rule doesn't address the privilege question.

WITHERS: So it sets up a procedure dilemma for which there is no solution.

LEBEN: For which there will be at least 51 different solutions. The one that applies will depend on what jurisdiction you are in.

WITHERS: Are judges equipped to determine the privilege status of electronic materials, such as e-mail? And what tools are available to them to do so?

LEBEN: If the material is being produced electronically, I am not sure that there is a lot available to help us. But in camera reviews have existed for a long time, and judges are used to doing them--even if they would rather not. When we review documents in camera, sometimes we get it right and sometimes we get it wrong, and that won't change. Particularly in those cases with long e-mail strings and intersecting recipient lists, I don't think you can get 100 percent accuracy.

HEDGES: If the parties agree, I think that a judge doing an in camera review can engage in sampling. In the American National Bank decision, the court held that the sampling procedure was just too arbitrary to be allowed. [Am. Natl. Bank & Trust Co. of Chicago v. Equitable Life Assurance Socy. of U.S., 406 F.3d 867 (7th Cir. 2005).] The Vioxx decision also mentions the need for a manual or statistically sound protocol for sampling documents. [Vioxx Prods. Liab. Litig. Steering Comm. v. Merck & Co., 2006 WL 1726675, at *2 n. 5 (5th Cir. May 26, 2006) (per curiam).]

When I've needed to do an in camera review, I've had the parties agree that if I rule on one document, my ruling is going to apply to related documents.

WITHERS: Five years from now, what will be the most difficult and most beneficial aspect of working with the new rules?

LEBEN: The most difficult part of electronic discovery continues to be finding the best way to handle the volume of material generated, whether it's by sampling or some other method. The greatest benefit is that the rules let judges become more involved, which will ensure that litigation is handled relatively economically.

HEDGES: I hope that attorneys accept that this is an area where all judges expect cooperation or at least meaningful meet-and-confers. The most difficult part will be determining how Rule 37 (f) will affect preservation obligations.

CARROLL: I think the most difficult part will be getting judges involved in technological areas where they don't feel competent. I think in five years we're going to see the great benefit of these rules in that they will force the parties to work cooperatively, which will produce more reasonable decisions and will make litigation less expensive than it currently is.