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Legal Alert: Newly Enacted Federal Rules of Civil Procedure Affecting E-Discovery

Changes to the Federal Rules of Civil Procedure were approved by the U.S. Supreme Court in April of this year and became effective Dec 1, 2015.  While several rules outlining e-discovery compliance obligations were modified, the changes to Rules 26(b) and 37(e) are especially significant and will increasingly require inside and outside litigation counsel to better understand these rules and fundamentals, from a practice, technology and best practices standpoint.

Rule 26(b) – Discovery Scope and Limits
Discoverable information is revised under Rule 26(b) with renewed focus on proportionality. In an effort to curb the high costs currently associated with over preservation of data during the identification phase of litigation, the Committee removed the phrase “reasonably calculated to lead to the discovery of admissible evidence.” The amended rule now includes language intended to encourage parties to consider the valuation of the matter in dispute, referring now to the discoverability of data that is “relevant to any party’s claim of defense and proportional to the needs of the case (emphasis added).” Factors to help litigants gauge proportionality include “the importance of the issues at stake in the action, the amount in controversy, the parties’ relative access to relevant information, the parties’ resources, the importance of the discovery in resolving the issues, and whether the burden or expense of the proposed discovery outweighs its likely benefit.” 

Additionally, under amended Rule 26, parties will be able to serve requests for production as soon as 22 days after service of the complaint and before the Rule 26(f) conference – with responses due 30 days after the Rule 26(f) conference. With RFPs allowed before the Rule 26(f) conference, it is anticipated that parties will now come to these conferences better prepared to discuss and form agreements regarding electronically stored information (ESI) relevant to the litigation.

Rule 37(e) – Sanctions for Loss of ESI             
To resolve the current circuit split regarding whether negligence or bad faith suffices to trigger spoliation sanctions, Rule 37(e) has been amended to create a national standard for determining appropriate sanctions for the loss of ESI during litigation.  Among other substantive changes, the subsection’s heading has been amended to read: “Failure to Provide Preserve Electronically Stored Information,” transferring focus for litigants from an ability to provide to an ability to preserve ESI. The new rule contains safeguards which allow for the restoration or replacement of lost data “through additional discovery.” Curative measures for the loss of ESI in the proposed Rule now clarify that “upon finding prejudice to another party from loss of the information, [the court] may order measures no greater than necessary to cure the prejudice; or only upon finding that the party acted with the intent to deprive another party of the information’s use in the litigation may: presume that the lost information was unfavorable to the party; instruct the jury that it may or must presume the information was unfavorable to the party; or dismiss the action or enter a default judgment.” Committee note on Rule 37(e) further reveals that “the rule only applies if the information was lost because the party failed to take reasonable steps to preserve the information (emphasis added).” When evaluating the reasonableness of a preservation effort, the Committee suggests that the aspect of proportionality should be taken into account: “[t]he court should be sensitive to party resources; aggressive preservation efforts can be extremely costly, and parties … may have limited staff and resources to devote to those efforts.” The Committee also encourages counsel to “become more familiar with their clients’ information systems and digital data” in order to properly address the costs and resources associated with preservation efforts.

Practical Implications
These rules changes are the product of intense debate and arduous work of many extremely competent members of the Judicial Conference committee, along with the largest number of public comments offered to any set of proposed Federal rules changes, with over 2,000 comments offered in a one year period. The amendments to Rule 26(b) and 37(e) in particular are meant to streamline the litigation process by placing an emphasis on reasonableness and proportionality when determining the costs and scope of E-Discovery and by clarifying the standard for spoliation sanctions. The amendments are a good reminder that businesses should review their existing litigation practice, litigation readiness (i.e. litigation hold) policies, procedures, and, ideally – and with an eye to larger enterprise-wide information governance –consider revisions or amendments tailored to the new language, especially revisions which relate to the scope and nature of litigation hold and preservation procedures.

Please contact Chris Yoshida with additional questions or discussion about this alert.  Please contact Stephanie Maw Booher or Joe Callow for additional information regarding KMK’s e-discovery and information governance services. 

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