The Report of the Judicial Conference Committee on Rules of Practice and Procedure (“Standing Committee Report”) which predated the enactment of the 2006 ediscovery amendments to the federal rules provided some insight. The Standing Committee Report did note that the features of an information system that make it burdensome or costly to access ESI can vary from system to system and will change over time. However, it provided several examples of “current technology” that do not generally fit under the rubric of reasonable accessibility. Those examples included “deleted information, information kept on some backup-tape systems for disaster recovery purposes, and legacy data remaining from systems no longer in use.” See THE NEW E-DISCOVERY RULES, Dahlstrom Legal Publishing, Inc. (2006) at p. 15. Unfortunately, that guidance was not carried over into the 2006 Advisory Committee Note to Rule 26(b)(2)(B).

The difficulty identifying and then proving that a particular source of information was inaccessible under the Rule has resulted in decisions such as Starbucks Corp. v. ADT Sec. Services, Inc., 2009 WL 4730798 *6 (W.D.Wash. April 30, 2009), where one court concluded:

The Court cannot relieve Defendant of its duty to produce those documents merely because Defendant has chosen a means to preserve the evidence which makes ultimate production of relevant documents expensive…. To permit a party to ‘reap the business benefits of such technology and simultaneously use technology as a shield in litigation would lead to incongruous and unfair results.

All is not lost, help has arrived. The task of identifying sources of ESI that are inaccessible has been streamlined by one of the principles promulgated in the Seventh Circuit’s Electronic Discovery Pilot Program. One of our prior blog posts highlighted the main features of the Seventh Circuit’s Pilot Program [Info about the program - PDF] which was developed in response to comments by the business community and practicing attorneys that the civil justice system’s pretrial discovery process is in need of reform. The purpose of the Seventh Circuit’s Pilot Program is to assist courts in the administration of Fed.R.Civ.P. 1 and secure “the just, speedy, and inexpensive determination” of every civil case.

A series of ediscovery principles were developed and codified into a standing order that is used as part of the Seventh Circuit’s Pilot Program. Principle 2.04(d) addresses the scope of preservation and identifies categories of ESI that are generally not discoverable in most cases. Those categories of ESI are:

• “Deleted,” “slack,” “fragmented,” or “unallocated” data on hard drives;
• Random access memory (RAM) or other ephemeral data;
• On-line access data such as temporary internet files, history, cache, cookies, etc.;
• Data in metadata fields that are frequently updated automatically, such as last-opened dates; and
• Backup data that is substantially duplicative of data that is more accessible elsewhere;
• Other forms of ESI whose preservation requires extraordinary affirmative measures that are not utilized in the ordinary course of business.

Principle 2.04(d) further provides that if any party intends to request the “preservation or production of these categories” of ESI, then that should be discussed at the party’s initial meet and confer conference or as soon thereafter as practicable. Obviously, Principle 2.04(D) streamlines the process of identifying inaccessible sources of information. While it does not categorically prohibit discovery of ESI from those sources, it suggests that discovery from them will not be permitted unless a good reason or compelling need is shown.

While this principle will primarily benefit those attorneys practicing in district courts within the Seventh Circuit’s boundaries, attorneys practicing outside of the Seventh Circuit’s “friendly confines” should be aware of principle and consider raising it as persuasive authority when resisting attempts to obtain discovery from those sources of ESI identified in Principle 2.04(d).

Please remember however, that identifying a source of ESI as inaccessible under Rule 26(b)(2)(B) does not obviate the client’s need to preserve that information. The Advisory Committee Note to Rule 26(b)(2)(B) highlights that conundrum by explaining: “whether a responding party is required to preserve unsearched sources of potentially responsive information that it believes are not reasonably accessible depends on the circumstances of each case.” Thus, the need to continue to preserve ESI from inaccessible sources should be another topic of potential discussion with opposing counsel at

Photo courtesy Flickr user eurleif under this Creative Commons license.

A series of Principles Relating to the Discovery of Electronically Stored Information (“ESI”) were developed and codified in a standing order. These principles are intended to serve as supplemental procedural ediscovery guidelines for the parties in selected cases. Individual district court, magistrate, and bankruptcy judges in the Seventh Circuit have agreed to adopt the principles and implement them in selected cases during Phase I of the program, which runs through May 1, 2010.

Kenneth J. Winters, the Managing Director of the Sedona Conference®, and former Colorado Supreme Court Judge Rebecca Kourlis, the Executive Director of the Institute for Advancement of the American Legal System (“IAALS”) at the University of Denver, assisted in the development and review of these principles.

IAALS is developing questionnaires to assess the efficacy of the principles. The questionnaires will be completed by the judges and lawyers participating in Phase I of the program. The results of the IAALS’ questionnaires will be presented to the Seventh Circuit at its annual meeting in May, 2010. At that time, the program’s ediscovery principles will be reviewed and refined as needed. Phase II of the program is scheduled to proceed from June, 2010 through May, 2011. It is contemplated that in May, 2011, Phase II findings will be presented and the Seventh Circuit’s final ediscovery principles announced.

Among other things, the principles require in the event of a dispute during the meet and confer process, the appointment of an ediscovery liaison who should be prepared to participate in ediscovery dispute resolution. These principles also recognize that that Rule 26(b)(2)(C)’s proportionality principles should be applied when formulating a discovery plan; provide that sanctions can be imposed for the failure to cooperate and participate in good faith in the meet and confer process; identify categories of ESI, which are generally not discoverable in most cases; and provides that if a party intends to request the preservation or production of these categories of ESI, that such a request be discussed at the parties’ initial meet and confer session or as soon thereafter as practicable.

Some of the other noteworthy aspects of the Seventh Circuit’s principles include:

• Acknowledging Fed. R. Civ. P. 1’s forgotten role in ediscovery by providing the purpose of these principles is to assist courts in the administration of the Rule’s requirement of securing “the just, speedy, and inexpensive determination of every action and proceeding.”
• Recognizing that an attorney’s ethical duty of zealous representation is not compromised by conducting discovery in a cooperative manner.
• Specifying that Rule 26(b)(2)(C)’s proportionality standard should be applied when formulating a discovery plan, meaning that requests for production and responses thereto “should be reasonably targeted, clear and as specific as practicable.”
• Noting that ESI disputes will be resolved more efficiently if before the initial conference with opposing counsel, the attorneys for each party review and understand how their client’s data is stored and retrieved in order to determine what issues must be addressed during their initial meet and confer discussions.
• Authorizing a court to require additional discussions prior to the commencement of discovery and/or to impose sanctions where appropriate on any party or counsel that fails to cooperate and participate in good faith in the meet and confer process.
• Requiring in the event of a dispute concerning the preservation or production of ESI, the designation of an ediscovery liaison for the purposes of meeting, conferring, and attending court hearings.
• Providing the ediscovery liaison may be an in-house or outside counsel, a third-party consultant, or an employee of a party.
• Specifying the ediscovery liaison must be prepared to participate in ediscovery dispute resolution; know the parties’ ediscovery efforts; and have access to those who are familiar with the parties’ electronic systems and capabilities in order to explain those systems and answer relevant questions. The ediscovery liaison must also have reasonable access to those who are knowledgeable about technical aspects of ediscovery.
• Providing that vague and overly broad preservation orders should not be sought or entered and noting that the information sought to be preserved through a preservation letter or court order should be reasonable in scope and mindful of Rule 26(b)(2)(C)’s proportionality factors.
• Explaining that if the recipient of a preservation letter chooses to respond, the response should provide useful information regarding the preservation efforts undertaken by the responding party. Examples of useful and specific information for such a response include the information a responding party is willing to preserve, the steps taken in response to any preservation letter, any disagreements with the preservation request, and any further preservation issues that were not raised.
• Mandating that every party and its counsel are responsible for taking reasonable and proportionate steps to preserve relevant and discoverable ESI within its possession, custody, and control.
• Recognizing that discovery concerning another party’s preservation and collection efforts may be appropriate, but noting that if used inadvisably, can cause unnecessary expense, delay, and may unnecessarily implicate work product and attorney-client privilege. Requires that prior to initiating such discovery, the parties are expected to meet and confer concerning its need and the suitability of alternative means for obtaining that information. Acknowledges this requirement does not preclude deponents addressing the merits of the case from answering questions concerning the steps taken to preserve and collect ESI.
• Specifying that certain categories of ESI are considered generally “not discoverable” in most cases and requiring a party that intends to request the preservation of production of those categories of ESI, discuss that discovery request at the parties’ initial meet and confer session, or as soon as practical thereafter.
• Identifying categories of ESI that are generally not discoverable to include: (a) deleted, fragmented, unallocated data, or data found in the slack space of computer hard drives; (b) random access memory (RAM) or other ephemeral data; (c) temporary internet files, history, cache, cookies, and other forms of on-line access data; (d) data in metadata fields that are frequently updated automatically such as last-open dates; (e) backup data that is substantially duplicative of data that is more accessible elsewhere; and (f) other forms of ESI whose preservation requires extraordinary affirmative measures that are not utilized in the ordinary course of business.
• Requiring in the event of a dispute concerning the scope of a party’s preservation efforts that counsel meet and confer and fully explain their reasons for believing that additional efforts are not reasonable or appropriate.
• Encouraging parties, at their initial Rule 26(f) conference, to discuss ways to eliminate duplicative ESI, including horizontal or vertical deduplication, the filtering of data by date ranges, file types, custodians as well as the use of search terms, keyword searching, concept clustering, or other advanced methodologies.
• Providing that ESI or other tangible or hard copy documents, which are not text searchable, need not be made text searchable when produced.
• Recognizing the requesting party is responsible for the incremental cost of creating its copy of any requested information.
• Encouraging parties to discuss cost sharing for optical character recognition (OCR) or other upgrades of paper documents or other forms of non-text-searchable ESI.
• Noting that ESI stored in a database or a database management system can be produced by querying the database for discoverable information resulting in a report or a reasonably useable exportable electronic file for review by the requesting party or its counsel.

Several years ago, in an article to the members of the Illinois Association of Defense Trial Counsel, I wrote that if left unchecked, the cost of electronic discovery will prove to be the biggest single threat to our civil jury trial system. Only time will tell whether these steps will fulfill their purpose of streamlining ediscovery and reducing the cost of federal-court litigation or whether a more “radical” step such as some form of mandatory cost as under the Texas rules will be required.

Pilot photo courtesy of Flickr user UNC – CFC – USFK under this Creative Commons license.

Given today’s economic climate, shifting the costs of electronic discovery is a strategy that should be considered whenever possible. In Proctor & Gamble, the district court rejected the defendant’s attempt to shift the costs of applying optical character recognition (“OCR”) to documents it had agreed to produce in a tagged image file format (“TIFF”). The application of OCR to the TIFF images would make the imaged documents electronically searchable.

While the district court recognized that the application of OCR to the imaged documents was “not absolutely necessary to [the] litigation,” it rejected the defendant’s attempt to shift the cost of OCR processing because the defendant failed to provide any support for its cost estimate, and no valid legal argument to support its claim that the cost burden should be shifted. The defendant advised the court that it did not intend to use the OCR process, and argued that it should not be forced to bear the added OCR expense solely for the plaintiff’s convenience. That argument failed to carry the day in Proctor & Gamble.

Any cost-shifting strategy requires careful advanced planning, and a thorough knowledge of the client’s information systems. While the district court’s ruling in Proctor & Gamble appears relatively straightforward, there are a number of issues that are relevant to any cost-shifting strategy that must be carefully analyzed before a party should even begin to evaluate cost-shifting factors outlined in Zubulake, which was the focus of the district court’s opinion in Proctor & Gamble.

Evaluate the accessibility of the data.

A number of district courts have concluded that cost-shifting should not be considered absent a showing of inaccessibility. See, e.g., Peskoff v. Farber, 240 F.R.D. 26, 31 (D.D.C. 2007) (“cost-shifting does not even become a possibility unless there is first a showing of inaccessibility”); Quinby v. WestLB AG, 245 F.R.D. 94, 104 (S.D.N.Y. 2006)(“Cost-shifting is appropriate only where electronic discovery imposes and undue burden or expense”); Zubulake v.UBS Warburg, LLC, 217 F.R.D. 309, 323 (S.D.N.Y. 2003)(“A court should consider cost-shifting only when the electronic data is relatively inaccessible, such as in backup tapes). The burden of proof is placed on the party asserting inaccessibility.

While information stored on backup tapes, on legacy systems, and fragmented data on hard drives may generally be considered inaccessible sources, there is no clear dividing line between accessible and inaccessible data sources. Under Rule 26(b)(2)(B), the inaccessibility of a data source is determined by how burdensome and costly the preservation and production of that data is, which will vary from client to client, and case to case. The information about the cost and burden of producing data from various sources can only come from the client. Thus, the client’s IT staff will play a key role in any attempt to establish that certain forms or sources of data are inaccessible, which is one of the first issues to address in any cost-shifting analysis.

Evaluate the proportionality of the discovery being sought.

The fact that the data to be produced is from an accessible source should not be the end of your cost-shifting analysis. “The ready accessibility of information, whether electronically stored or not, does not in itself require the production of that information.” Peskoff v. Farber, 244 F.3d 54, 59 (D.D.C. 2007). Rule 26(b)(2)(C)’s proportionality factors are a relevant consideration for any discovery being sought, even accessible electronic data. Under Rule 26(b)(2)(C)’s proportionality principles, one factor that a court can consider in limiting discovery that would otherwise be allowed is whether:

the burden or expense of the proposed discovery outweighs its likely benefit, considering the needs of the case, the amount in controversy, the parties’ resources, the importance of the issues at stake in the action, and the importance of the discovery in resolving the issues.

When a party can demonstrate that the burden of producing the requested data is out of proportion to the amount in controversy or is not justified, on balance, by its potential relevancy to the issues at stake in the litigation, then a court may limit the requested discovery or condition its production upon a payment of some or all of its cost by the requesting party. Remember however, that courts require evidence of the burden involved, and as the Proctor & Gamble decision teaches, courts will not shift the cost of ediscovery based on a mere assertion that the requested discovery is unduly burdensome or disproportionate.

Evaluate the discovery your opponent requested.

It seems fundamental, but don’t overlook the fact that courts generally won’t compel discovery that has not been sought. See D’Onofrio v. SFX Sports Group, Inc., 247 F.R.D. 43, 48 (D.D.C. 2008). Carefully review the discovery your opponent has requested. If the requesting party has not sought production of electronic data in its native state with accompanying metadata fields, or in the case of TIFF or PDF images, has not requested OCR be added to the images, there is no need to necessarily produce the data with those features.

Evaluate whether the data is created in a unique or unusual format.

Data that is created and stored in unique or unusual formats can complicate how that data is produced, and your cost-shifting analysis. When electronic data is produced in its native state, to simply view the data, the party receiving it usually needs the same software application used to create the data. That is why the federal ediscovery rules provide that data may be produced in the format in which it is ordinarily maintained or in a reasonably useable form. Unless the party possessing data in a unique or unusual format can demonstrate that the cost of translating the requested data into a reasonably useable form is out of proportion with the amount at issue in the case, or that the relevancy of the data is marginal, that party will likely be forced to incur the cost of translating the data into another reasonably useable form.

Evaluate whether the data is electronically searchable in its “native state.”

The 2006 Advisory Committee Note to Rule 34(b) specifies: “If the responding party ordinarily maintains the information it is producing in a way that makes it searchable by electronic means, the information should not be produced in a form that removes or significantly degrades this feature.” Generally speaking, the electronic data generated by many of today’s applications is electronically searchable at some level within the application. However, that point should always be confirmed. How easily native data can be searched depends on the particular application, and the volume of information involved.

However, producing data in its native state has several perceived disadvantages. Application and system metadata, as well as any embedded comments or track changes accompany documents or data when produced in their native state. Moreover, electronic documents cannot be Bates stamped, and privileged or confidential information cannot be redacted from documents produced in their native state. Documents can also be altered after production has occurred in their native state.

These factors have led many parties to produce electronic data in an imaged (PDF or TIFF) format. However, without the addition of OCR, the imaged documents are not electronically searchable. The application of OCR to documents once they have been imaged permits them to be searched on a common platform. When different forms of data are produced natively, they generally have to be searched within their respective applications. Thus, the inclusion of OCR to imaged documents adds to the convenience of the search process as the defendant claimed in Proctor & Gamble. Nonetheless, if a particular data set was electronically searchable in its native state, compliance with the Advisory Committee Note to Rule 34(b) may require that OCR be added when that data is produced in an imaged format.

Evaluate Zubulake’s cost-shifting factors.

Once the various issues noted above have been carefully considered, the cost-shifting factors outlined in Zubulake should be analyzed. Those factors, in order of their relative importance are:

• The extent to which the request is tailored to discover relevant information;
• The availability of such information from other sources;
• The total cost of production, compared to the amount in controversy;
• The total cost of production, compared to the resources available to each party;
• The relative ability of each party to control costs, and their incentive to do so;
• The importance of the issues at stake in the litigation; and
• The relative benefits to the parties of obtaining the information.

The defendant in Proctor & Gamble merely argued that plaintiff’s discovery requests were overbroad without any further explanation. That argument fell woefully short of meeting any of Zubulake’s cost-shifting factors in the court’s view.

Other Relevant Considerations.

Courts are unlikely to entertain any cost-shifting arguments where the producing party failed to adequately preserve the data from an accessible source. One district court, in responding to such an argument explained: “It reminds me of Leo Kosten’s definition of chutzpah: ‘that quality enshrined in a man who, after having killed his mother and father, throws himself on the mercy of the court because he is an orphan.” Disability Rights Counsel of Greater Washington v. Washington Metro. Transit Authority, 242 F.R.D. 139, 148 (D.D.C. 2007).

Finally, while this point may also seem fundamental, any cost-shifting argument should be brought before production occurs. Post production cost-shifting arguments are untimely, and will be rejected. See, e.g., Cason-Medina v. Detroit Medical Center, 2008 WL 2714239 (E.D. Mich. July 7, 2008).

As can be seen from this brief discussion of ediscovery cost-shifting, the factors to consider are numerous and varied. However, given the expense of electronic discovery, the analysis required is well worth the effort.

Chess photo courtesy Flickr user dbking under this Creative Commons license.

We have attached our slide below, and if you click on the image, it will enlarge for your ease of reference. Admittedly, not every email system will have all of the various features shown on our slide, and there can be other repositories in some systems that we did not include, but our slide does provide a fairly comprehensive overview of the various “nooks and crannies” where emails can be found.

While it is not as complex as a map of New Orleans, our slide shows that the world wide web is not exactly an information superhighway. Rather, it’s more like a medieval European city where you can easily get lost if you can’t read the signs or know where you are going. Hopefully our slide will prevent you from getting lost, and will help you find what you are looking for.

[Click image to enlarge]

If you want to use this slide for any reason, just drop Steve or Evan a note.