Increasing rate of sanctions points to a need for changes to the federal ediscovery rules.

April 16th, 2010 | By Evan Brown

Next month, the Standing Committee on Rules of Practice and Procedure will meet at Duke University to consider possible amendments to the Federal Rules of Civil Procedure. Pursuant to 28 U.S.C. § 331, the Judicial Conference of the United States is required to “carry on a continuous study of the operation and effect of the general rules of practice and procedure.” The Judicial Conference is authorized to consider and recommend changes to the rules in order to promote simplicity, fairness, the just determination of litigation, and the elimination of unjustifiable expense and delay. Id. These factors, both individually and collectively, warrant a careful reexamination of the federal rules addressing electronic discovery.

As it now stands, electronic discovery is easier to get wrong than it is to get right under the existing rules. Kroll Ontrack is a national ediscovery consultant that tracks and summarizes decisions addressing electronic discovery issues. In January 2010, Kroll reported that from January 1, 2009 to October 31, 2009, 39% of all ediscovery decisions addressed sanctions. During that same timeframe in 2008, Kroll reported that 25% of ediscovery decisions addressed the issue of sanctions. See Case Law Update & Ediscovery News, January 2010, Vol. 10, Iss. 1 found here. Thus, even though parties and their counsel may be more familiar with the federal ediscovery rules and more knowledgeable about electronic discovery than in prior years, requests for sanctions are climbing at an alarming rate.

So what type of rule amendments might the standing committee be considering? Hopefully, one dealing with the duty to preserve ESI, clarifying the types of information that need to be preserved and addressing the trigger for that obligation in federal court litigation. As we have noted in a prior blog post, presuit letters and correspondence can trigger a duty to preserve information, but attempting to distinguish letters that trigger such a duty from those that do not frequently involves an exercise in splitting hairs. Parties should not face the specter of sanctions or the cost of unnecessarily preserving information for a wrong guess.

Additionally, as we reported in another blog post, which you can read here, when a duty to preserve is triggered prior to the filing of a lawsuit and the client fails to properly issue a litigation hold at that time, under the “prevailing view” in federal court, an attorney’s otherwise privileged correspondence – directing that a litigation hold be imposed – will have to be produced if a preliminary showing of spoliation is made. In other words, the client forfeited the right to raise attorney-client privilege before the lawyer was even retained. This has created a proverbial Hopson’s choice for attorneys when confronted with this same scenario. An attorney will have an interest in issuing a litigation hold letter to the client in order to avoid sanctions being imposed on the attorney and his firm. However, under the prevailing view, that litigation hold letter will have to be produced and will likely be used as evidence against their client when a preliminary showing of spoliation is made. Where else, other than in the world of ediscovery, must a lawyer write a letter to the client, under pain of sanctions if he fails to do so, knowing that his letter may ultimately have to be produced and could be used as evidence against his client. Court decisions addressing electronic discovery are blithely triggering new ethical dilemmas for practicing attorneys.

Some have suggested that notions of federalism and the Rules Enabling Act, 28 U.S.C. §2072, would preclude the development of rule addressing when information should be preserved prior to suit. However, Principle 2.04(d) from the Seventh Circuit’s electronic discovery pilot program recognizes that there are certain categories of information that are generally not discoverable in most cases and that if a party intends to request the preservation or production of those categories of information, then that intention should be discussed at the parties initial meet and confer or as soon thereafter as practicable. The recognition that there are certain categories of ESI that are not generally discoverable means that Rules Enabling Act should not preclude the development of a rule providing there is no obligation to preserve those categories of information and that no sanctions should be imposed for failing to preserve them. Because such a rule merely addresses procedural issues in federal court litigation and exempts certain categories of information generally from discovery, the Rules Enabling Act should not pose an impediment.

The Supreme Court, in Shady Grove Orthopedic Associates v. Allstate Ins. Co., 2010 WL 1222272 (U.S. March 31, 2010), explained that a procedural rule does not run afoul of the Rules Enabling Act if it affects a litigant’s substantive rights, because “most procedural rules do.” Id. at *8. When a rule, like the type noted above, merely addresses “the manner and means” by which a litigant’s rights are enforced in federal court, it would pass constitutional muster under Shady Grove. Id. Nor would such a rule trample notions of federalism and respect for state laws because it merely applies to issues involving preservation, discovery, and sanctions in federal court proceedings. Importantly, such a rule would provide some clarity and certainty to one of the conundrums facing parties and their counsel in Federal court litigation.

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