To Amend or Not to Amend-That is the Question: Proposed Amendments to Federal Rule of Civil Procedure 26 (Post 2 of 5)

As new technologies emerge and difficulties in the discovery process of electronically stored information rise, the Federal Rules of Civil Procedure fails to provide an effective solution. This blog series discusses the proposed amendments to the rules of discovery and analyzes whether these amendments will be effective.

Proposed Amendment to Rule 26(b)(1)

Rule26 of the Federal Rules of Civil Procedure deals with duties to disclose and general provisions governing discovery as they relate to parties in court. Rule 26(b) defines the scope and limits of discovery, including limits on frequency and extent of discovery and the materials that are discoverable. The proposed amendment to Rule 26(b)(1) limits the scope of discovery to matters that are “proportional to the needs of the case, considering the amount in controversy, the importance of the issues at stake in the action, 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.”

At first glance this proposed amendment appears to protect parties from unnecessary, costly discovery.  A closer examination reveals instead a potential windfall to businesses that have implemented email retention or archiving solutions. With technological advancements, companies can save a great deal of money by updating their email storage or archive systems. The new systems are often cheaper to run and can be operated and maintained by fewer employees. As it affects the upgrade, however, the company must decide whether to migrate (or transfer) their old emails to the new storage or archive system, or leave them archived in some fashion in the outdated system. If the company elects to spend the money and migrate their emails to the new system, the result is that accessing, searching, and producing emails during litigation is likely much more efficient and inexpensive. Companies that elect to save money up-front and not migrate their email will likely incur substantial costs during the discovery process if they need to access, search, or produce these emails during litigation. Where a court hears a case in which one party demands production of documents from another party who reaped the benefits of a newer, more efficient, and inexpensive email storage or archive system, but saved the expense of migrating its older emails, the court should take this business decision into account in deciding whether to shield the responding party from a now costly production.

The Rules as they are currently written provide the courts with the ability to protect against such windfalls. This issue arose in Starbucks Corp. v. ADT Security Services, Inc. In that case, Starbucks sought to compel the discovery of electronically stored information (ESI) from ADT. From the period of August 2003 through March 2006, ADT archived its ESI on a system it alleged was “so cumbersome . . . that it[was]not‘reasonably accessible because of undue burden or cost.’” Moreover, ADT failed to migrate its ESI stored on this outdated system to its new system, which is much more functional and more readily searchable. Under the current Rules, the court was able to compel discovery. Under the proposed, new Rules, this case may come out differently.

Similarly, as warned by the United States Court of Federal Claims in AAB Joint Venture v. United States, “the [c]ourt cannot relieve [d]efendant of its duty to produce…documents merely because [d]efendant has chosen a means to preserve the evidence which makes ultimate production of relevant documents expensive.” The court similarly stated that, “[t]o permit a party to reap the business benefits of such technology and simultaneously use that technology as a shield in litigation would lead to incongruous and unfair results.”

Not only may courts compel discovery when reasonable, but courts may also limit discovery when reasonable. For example, in Apple Inc. v. Samsung Electronics Co. the United States District Court for the Northern District of California refused to compel production of difficult-to-produce documents after determining that it “is required to limit discovery if ‘the burden or expense of the proposed discovery outweighs its likely benefit.’ This is the essence of proportionality—an all-to-often ignored discovery principle.” On the other hand, if the court determines the producing-party is not fully complying with its discovery requirements, the court may be able to protect moving parties by compelling the responding party to retain an e-discovery vendor.

For these primary reasons, there is no need for this proposed amendment to Rule 26(b)(1), as it is currently presented. If the amendment were modified to account for the cost calculus discussed above, and thus to protect against windfalls, it would have far more use and impact within the courts.

The next post in this series will take a look at the proposed amendment to Rule 26(f)(3)(C).