The Importance of "Evidence Preservation": Part 7 - Electronically Stored Information

Robert Franklin posted on 2010/09/28 |

Preserving evidence in the event of an accident is crucial to minimizing one's liability exposure. This is Part 7 in a nine part series of related discussions. The full list of the parts to this series appears following this installment.

The development of technology has dramatically changed the world in which we live. Not that long ago, email and other electronic forms of communication, and information storage, were a novelty. Now, they are commonplace. In fact, it has been estimated that 95% of all information is now digital, and that more than 3.2 trillion emails are sent annually.

The law, specifically the Federal Rules of Civil Procedure (“FRCP”), has changed to keep up with the changes in communication and information storage. Important amendments to FRCP regarding electronically stored information (“ESI”) went into effect on December 1, 2006. The amendments include significant changes to FRCP in 6, 26, 33, 34, 37 and 45. They are applicable to all lawsuits in federal court, except those specifically exempted.

It is extremely important to note that providing disclosure of ESI to adverse parties is mandatory, without the other party even having to ask for it. In practice, however, it is often possible to have counsel for other parties agree to “opt out” of the rules in a given lawsuit. This should be addressed early on, as such an agreement could avoid unnecessary, and significant, time and expense for all.

The emphasis of the new rules is on early disclosure. FRCP 16 and 26 require discussion of ESI in litigation at an initial conference. The parties are to discuss what types of ESI each has, and each will seek, as well as the form in which ESI is to be produced.

If ESI is to be disclosed and exchanged, there is a substantial risk that some otherwise privileged ESI may inadvertently be disclosed. Accordingly, one should seek to negotiate an effective “claw back” provision, which will provide specific procedures for any such ESI inadvertently disclosed, and include a prohibition against any use of such ESI in the related litigation. Attorneys for plaintiffs may oppose such a provision on the grounds that it would encourage “information dumping”, whereby corporate parties would simply bombard them with massive volumes of ESI, as they would not need to be concerned about screening each piece. Corporate defendants, conversely, can note that the failure to have such a “claw back” provision can, as a practical matter, have a chilling effect on the production of ESI, as they will need to err on the side of not disclosing it in order to protect privileged, or otherwise sensitive, information.

The threshold issue is to identify what constitutes ESI. The definition in Rule FRCP 34(a) is extremely broad, and includes writings, drawings, grafts, charts, photographs, sound recordings, images, and “other data or data compilations”, which are “stored in any medium from which information can be obtained”. Some of the ESI is basic and obvious, such as emails. Others, however, are more obscure. For example, attachments to ESI and other “metadata” are included, as well as “embedded data” (e.g. prior drafts of the finalized ESI document). There are also issues regarding the scope of production of ESI. One need not produce ESI if it is “not reasonably accessible because of undue burden or cost” FRCP 26(b)(2)(B).

Such a vague standard is, obviously, subject to different interpretation, and litigation. If such a claim for protection is made, the party seeking such protection has the initial burden of proof to show that the standard stated above has been met. Even if the standard is met, a court may nonetheless order disclosure of ESI if “good cause” (another vague and subjective standard) is shown.

It is important to note that there are procedures identified regarding “cost shifting”, and which depend upon the specificity of the request, the cost/benefit prediction regarding the ESI in question, and the “parties resources”. The latter factor makes it clear that one may be required to produce ESI which will result in high costs, simply because that party has “resources”. It is difficult to imagine any such provision ever being utilized against an individual plaintiff.

Every business should address the issue of ESI. First of all, they may be involved in litigation in federal court, in which the disclosure of ESI may be mandatory. Moreover, it is likely a matter of time before there are similar requirements in state courts, and, indeed, even now state court judges can look to, and utilize, the applicable FRCP as guidelines for prudent practices. It is extremely important to have the requisite policies and practices in place before a “crisis situation”, such as litigation of a serious accident case, necessitates it.

A threshold exercise for any entity is to be able to confirm what ESI it does and does not have. That process is more complex than one may initially think. For example, individuals within the company may retain ESI, including earlier drafts, attachments, etc., even after such ESI has been deleted from the expected and primary source. If one were to, as a result, state, albeit innocently, that something was no longer available, when in fact it was, because it was on an individual's computer, then that may place the corporate party's credibility into question before a jury.

A business should also address, and articulate, its policies and practices with regard to the retention and storage of ESI. Such a practice should include identification and articulation of the policies with regard to accessibility, and ability to retrieve ESI. Please note, particularly in light of the standard for compelling production of ESI, that it is imperative to be able to prove the costs of producing various types of ESI. One should also keep in mind which individual or individuals, with the requisite technical expertise, will be available, and appropriate, to testify in that regard for the business entity, as one with technical knowledge may not necessarily be an effective witness. One should also work with its external service providers, such as IT vendors, manufacturer and service representatives, insurers, and attorneys, in conjunction with these issues.

As is readily apparent from the foregoing, ESI, and related issues, may have extremely significant impact on litigation, and one's exposure. The issues pertaining to the identification of one's ESI, and practices and policies with regard to its retention, storage, deletion, and ability for retrieval, present significant challenges. One should apply the necessary resources to address these issues prior to being faced with them in a significant piece of litigation. While that process will clearly represent a certain level of “cost”, it will likely be well below what one's exposure could be if such measures are not undertaken in advance.

The "Preservation of Evidence" Series

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