Best Practices

Ronald J. Hedges introduces "The Flow of Litigatio," and suggests that electronic discovery can be managedaEUR"and economies realizedaEUR"by using case managementtools authorized by the Federal Rules of Civil Procedure.

This is the first of two articles that appeared in Digital Discovery & e-Evidence, a BNA publication. The first sought to put discovery of "electronically stored information" ("ESI") into the broader context of the management of litigation bu a federal judge. The second article which will appear next month, which expanded the first, looked to motions to dismiss and how those motions might effect the discovery of ESI.

Why should insurance agents and brokers care about the content of the articles (and the accompanying "Flow of Litigation" chart)? Quite simply because agents or brokers might be sued and ESI sought from them in discovery. Moreover, although the articles and chart focus on litigation in federal courts, the principles discussed apply equally in State courts. The artcles provide insight into how a given civil action might be managed and what arguments might be made to control discovery of ESI and avoid significant costs.

Case Management and E-Discovery: Perfect Together?
By Ronald J. Hedges

Ronald J. Hedges is a former U. S. Magistrate Judge and the Chair of the Digital Discovery & e-Evidencea,,? Advisory Board.
Readers of Digital Discovery & e-Evidencea,,? may be excused if they focus on electronically stored information ("ESI") and the ins-and-outs of electronic discovery. After all, that is what binds the reader to the publication.
Nevertheless, electronic discovery must be put in context. That context, for the purposes of this article, is the management of all discovery under the Federal Rules of Civil Procedure. Fed. R. Civ. P. 1 states that the rules "should be construed and administered to secure the just, speedy, and inexpensive determination of every action and proceeding." Electronic discovery can be managed to that end..
The Burdens of Discovery.
"[C]ases in federal courts take too long and cost litigants too much. As a consequence, proponents of reform argue, some litigants are denied access to justice and many litigants incur inappropriate burdens when they turn to the courts for assistance in resolving disputes."
Sound familiar? The concern certainly is, but the quote comes from "Just, Speedy and Inexpensive? An Evaluation of Judicial Case Management Under the Civil Justice Reform Act," published by the RAND Institute for Civil Justice in 1996.
Early Commentary.
The Civil Justice Reform Act itself was enacted in 1990 "to explore the causes and delay in civil litigation." (The Civil Justice Reform Act, Final Report, Alternative Proposals for Reduction of Cost and Delay Assessment of Principles, Guidelines & Techniques at 1 (Judicial Conference of the United States: May, 1997)).
The RAND Institute undertook an independent evaluation of measures undertaken by United States district courts "[t]o provide an empirical basis for assessing new procedures adopted under the act." Just, Speedy and Inexpensive at 1. This article is not intended to be a history of the Act or what the United States courts did to implement it. However, for our purposes, one conclusion is on point: "[W]hat judges do to manage cases matters: If early case management and early setting of the trial schedule are combined with shortened discovery cutoff, the increase in costs associated with the former can be offset by the decrease in costs associated with the latter." Just, Speedy and Inexpensive at 2.
Somewhat ironically, the Judicial Conference of the United States (FJC), in espousing a cost and delay reduction plan alternative to that proposed by RAND, suggested that, "[t]he prudent use of modern telecommunications and other electronic technologies has the potential to save a significant amount of time and cost in civil litigation." Final Report at 4.
Applicability to Electronically Stored Information.
These technologies did not address electronic discovery per se other than to suggest "[c]onducting scheduling and discovery conferences by telephone, when appropriate," and "using on-line and video telecommunications technologies to facilitate more efficient judicial proceedings." Final Report at 22.
A reader can be forgiven for wondering if the Judicial Conference had any idea what discovery would encompass within a few years.
Everyone knows, at least anecdotally, that electronic discovery can be expensive. The RAND Institute has been attempting to quantify those costs and has called for more research on the subject. Everyone knows, at least anecdotally, that a (or "the") major component of costs associated with electronic discovery is privilege review. See, Allman, Thomas Y., "Addressing Excessive Review Costs: The Ephemeral Promise of `Quick Peeks' and the Need for Proportionate Discovery and Cost Shifting," 9 DDEE 5, pp. 142-145 (5/1/09).
What can a federal court do today to manage and, working with counsel before it, minimize those costs? This article begins a discussion of that management by focusing on several cost-savings measures.
Stays of Discovery.
Unfortunately, some electronic discovery costs must be incurred in the earliest stage of litigation, indeed, before litigation begins. Many spoliation disputes arise out of a defendant's failure to preserve relevant ESI when the defendant should have reasonably contemplated litigation against it. See, e.g., D. J. Kessler and R. D. Owen, "Outlier or Harbinger? Recent Case Invents New Preservation and Information Management Duties for Corporation," 9 DDEE 6, pp. 176-179 (6/1/09).
[Image]What is less readily seen, however, are spoliation disputes arising out of a plaintiff's failure to do so. See, e.g., Innis Arden Golf Resort Club, Inc. v. Pitney Bowes, Inc., 2009 U.S.Dist. LEXIS 43588 (D. Conn. May 21, 2009). A putative plaintiff must, at some point, collect and review ESI in order to comply with its Rule 11 obligations before filing a pleading and must preserve relevant ESI, just as a defendant must.
Practice Pointers.
What can be done to control costs of production after these "preliminary" ESI-related costs are incurred? There are several opportunities to do so, as displayed on the Flow of Litigation chart1, above. The chart illustrates the course of typical federal civil litigation and can be used to locate "firebreaks" where some cost-savings measures can be imposed. Some examples include:
(1) When a defendant makes a dispositive motion in lieu of filing an answer, seek a stay of discovery (assuming that a stay is discretionary and not mandated by law). This may not be a simple matter. For example, Local Civil Rule 26(a) of the Eastern District of Texas provides: "Absent court order to the contrary, a party is not excused from responding to discovery because there are pending motions to dismiss, to remand or to change venue."
(2) If there is no stay, consider whether modification or suspension of automatic disclosures under Rule 26(a)(1) might be appropriate. "Prediscovery disclosure avoids the cost of unnecessary formal discovery and accelerates the exchange of basic information to plan and conduct discovery and settlement negotiations. The judge should administer Rule 26(a)(1) to serve these purposes; disclosure should not place unreasonable or unnecessary burdens on the parties aEUR? ." Moreover, "[t]he scope of disputed issues and relevant facts aEUR? may not be sufficiently clear from the pleadings to enable parties to make the requisite disclosure." Manual for Complex Litigation (4th) ?11.13 (FJC, 2004) (Manual).

"Staging" Discovery.
For better or for worse, "[t]he general principle governing the scope of discovery stated in Rule 26(b)(1) permits discovery of matters, not privileged, `relevant to the claim or defense of any party.' The court has discretion to expand that to `any matter relevant to the subject matter involved in the action.'" Manual, ?11.41.
Plainly, as we all know, discovery under either standard can be costly. Leaving aside disputes about the scope of discovery in a particular action, opportunities to limit electronic discovery costs include, among other things:
(1) Bifurcating discovery between liability and damages, with the latter being undertaken only after a dispositive motion on liability is made and decided.
(2) Focusing discovery on a (or "the") central issue in an action, as a precursor to settlement negotiations.
(3) Agreeing to defer any request for discovery of ESI from sources that may be not reasonably accessible under Rule 26(b)(2)(B) until all requested ESI from "accessible" sources has been produced.

Unfortunately, proportionality does not appear to be utilized often enough either by courts or parties. For example, "[t]he [Advisory] Committee has been told repeatedly that courts have not implemented these limitations with the vigor that was contemplated." GAP Report of Advisory Committee to 2000 Amendment to Rule 26(b)(1), 192 F.R.D. 340, 390 (2000).
Perhaps such under utilization is changing. Federal courts are using the proportionality rule to control electronic discovery costs. See, e.g., Spieker v. Quest Cherokee LLC, 2008 WL 4758604 (D. Kan. Oct 30, 2008). However, parties should use Rule 26(b)(2)(C) as a guide to limitingaEUR"or at least sequencingaEUR"electronic discovery along the lines suggested above.
In the alternative, parties should be reminded that the rule allows judges to raise proportionality "on its own."
A First Step.
This article and the illustrative chart that accompanies it is intended to open discussion by parties and judges on the use of active case management to control electronic discovery costs. It requires parties to engage in serious meet-and-confers under Rule 26(f) and to be prepared to think "outside the box." It also encourages judges to grapple with electronic discovery issues as soon as practicable. Together, judges and parties should craft cost-effective solutions to the problem of the costs of electronic discovery.

Reproduced with permission from Digital Discovery & e-Evidence, 9 DDEE 220, 07/01/2009. Copyright (C) 2009 by the Bureau of National Affairs, Inc. (800-372-1033)

Ron Hedges is the principal of Ronald J. Hedges LLC. Ron served as a United States Magistrate Judge in the District of New Jersey from 1986 to 2007. Among other things, Ron is a member of the adjunct faculty of Georgetown University Law Center, where he teaches an introductory course on electronic discovery and evidence. He is also a member of the boards of advisors of The Sedona Conference and Georgetown's Advanced E-Discovery Institute.

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