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Modern Litigation Practice: E-Discovery in the Middle District of Tennessee
by W. Scott Rose
On July 9, 2007, on the heels of the recent amendments to the Federal Rules of Civil Procedure concerning the discovery of electronically stored information ("ESI"), the U.S. District Court for the Middle District of Tennessee laid down its marker on electronic discovery ("e-discovery"). The Court issued standing rules on e-discovery in Administrative Order No. 174 ("AO174"), which can be found on the Court's web site at http://www.tnmd.uscourts.gov/files/AO_174_E-Discovery.pdf. AO174 applies to all civil cases in which discovery is conducted. In accordance with traditional discovery principles, AO174 will assist practitioners in obtaining their clients' compliance with e-discovery obligations while retaining the flexibility to adopt innovative ways to conduct e-discovery.
I. AO174 Extends Traditional Discovery Principles to the E-Discovery Process
In light of the Federal Rules of Civil Procedure's e-discovery amendments, which became effective December 1, 2006, most of AO174's provisions are straightforward and expected:
- Attorneys must work cooperatively and attempt to conduct e-discovery on a consensual basis, particularly with regard to search methodologies (¶¶ 1, 5);
- Attorneys must discuss custodians of ESI, computer systems, and retention policies at the Rule 26(f) conference (¶ 2, 7);
- Each party must implement the required "litigation hold" within seven days of the Rule 26(f) conference (¶ 7); and
- Litigants must immediately return inadvertently produced ESI protected by a privilege or as trial preparation materials if the ESI appears on its face to have been inadvertently produced or the producing party provides notice within 30 days of the production (¶ 8).
With these provisions, the Court extended familiar discovery principles to the e-discovery context. Even when discovery occurred entirely in paper, attorneys were supposed to cooperate on discovery, discuss sources of discoverable paper at the Rule 26(f) conference, and return inadvertently produced paper. Also, litigants have always been required to refrain from destroying discoverable paper (even in the normal course of business). These matters, especially the "litigation hold" (which is analyzed in depth in many other articles), can be more complex with e-discovery. Nonetheless, as AO174's above provisions underscore, e-discovery has not rendered obsolete traditional principles of cooperation, freely and openly exchanging information, and preserving evidence.
II. AO174 Mandates the Appointment of an "E-Discovery Coordinator"
Attorneys who represent businesses in federal court should now be having extensive conversations with corporate information technology ("IT") professionals in every case. These conversations can be awkward. IT professionals construct and maintain computer systems for running an efficient business – not to preserve, identify, and produce data in lawsuits.
A "language gap" may be the real culprit in the steady stream of well-publicized cases in which courts have hit businesses with sanctions for e-discovery violations. Certainly, some lawyers resist change, are not computer savvy, or fear alienating clients. These factors can prevent lawyers from being as direct with their clients about e-discovery as they should be. On the client end, breaking through IT professionals' pragmatism and getting them to focus on why freezing and collecting large amounts of data is important can be tough. And, if attorneys bring e-discovery issues to the attention of upper management, their focus on business (and not litigation) and on the future (and not the historical events that are the subject of lawsuits) may cause them to underestimate the risk and fail to intervene decisively. As a result, unless managed well, business litigants can be slow to implement proper litigation holds and conduct adequate searches for responsive ESI – leaving them vulnerable to court sanctions for spoliation of evidence.
AO174 ¶ 3 addresses this problem by requiring the appointment of an "e-discovery coordinator." AO174 describes the e-discovery coordinator as the person who "shall be responsible for organizing each party's e-discovery efforts to insure consistency and thoroughness and, generally, to facilitate the e-discovery process." In other words, the e-discovery coordinator runs the searches on the servers, desktops, and laptops and sits for the e-discovery compliance deposition. Practitioners should view the appointment of an "e-discovery coordinator" as welcome assistance. To educate a client about e-discovery, learn about the client's computer systems and data storage, and generally assure compliance with e-discovery obligations, AO174 mandates that the attorney (and opposing counsel and the court) need only speak with one person: the e-discovery coordinator. This practice should reduce the number of cases in which courts hit businesses with sanctions for e-discovery violations.
III. AO174 Gives Litigants Flexibility as to the Format of ESI Production
The flexible aspect of AO174 is that it establishes image files as the default production format for ESI. Specifically, in the absence of an agreement by the parties otherwise, AO174 ¶ 6 mandates that "electronically stored information shall be produced to the requesting party as image files (e.g. PDF or TIFF)." AO174 further declares, "After initial production in image file format is complete, a party must demonstrate particularized need for production of electronically stored information in its native format." (Emphasis added).
Except for situations where image files are the native format (like e-faxes, which are frequently in TIFF format), image files such as PDFs and TIFFs are essentially the equivalent of scanned paper. Thus, the default rule in AO174 ¶ 6 to produce image files permits litigants to resort to a modernized version of the pre-amendment baseline of paper production. Nevertheless, the "opt out" exception permits litigants to avail themselves of the benefits of native format production if they agree to do so. And, the "particularized need" exception accommodates the cases for which paper production would be inefficient and an "opt out" agreement cannot be reached.
Native format production has significant benefits to lure litigants to "opt out" of AO174's image-format default. For example, although software that will search PDF and TIFF files is now available, searching in native format requires nothing more than the Windows search utility. Furthermore, production in native format is the truest form of production of files as litigants keep them in the normal course of business. Finally, only production in native format allows the requesting party the ability to review metadata, the data beyond the printable content, such as the original author's name, the creation date, the last modified date, etc. Depending on the case, any of these factors may constitute "particularized need." However, in many if not most cases, both sides will have an interest in these matters, and in such cases, AO174 allows the litigants to "opt out" of the image-format default and produce ESI in native format.
An example of the "particularized need" exception at work would be in a case where the ESI to be produced is not an electronic "document" at all but rather true electronic "information," such as a database. Take, for example, a lawsuit for control of a closely held corporation that alleges misappropriation of company funds and demands an accounting. Prior to e-discovery, attorneys would negotiate over what accounting reports to produce in discovery.
That thinking is too limiting in a world of e-discovery: the attorney representing the non-controlling shareholders should not accept artificial limits on discovery by treating ESI as if it is capable of conversion to paper. Most small and medium-sized businesses use either QuickBooks or Peachtree accounting software. Accordingly, the e-discovery coordinator can "drag and drop" the entire QuickBooks or Peachtree database onto a CD-ROM and produce it. Even in the case of a larger company using enterprise resource planning software, such as a PeopleSoft or Microsoft Dynamics product, the accounting data can be backed up to one or more CD-ROM's and turned over to a forensic accountant to examine using his or her own license for the software. This concept applies not only to accounting software but also to database programs generally. Production of the raw data files puts the receiving party on equal footing with the responding party in that it can run any report, anytime. Production by document image (much less old-fashioned paper discovery) does not permit such robust discovery.
Discovery of ESI generated by proprietary software would work similarly. Many companies develop proprietary software (or make proprietary local modifications to commercial software) uniquely suited for their own internal use, and consequently, such companies generate scads of data that require the proprietary software to read. Data designed for use in proprietary software usually cannot be reduced to paper, PDF, or TIFF format because if it could be, the company could use a desktop word processing or spreadsheet program for the data instead of the proprietary software.
So what to do when data generated by proprietary software is responsive to a discovery request? For purposes of e-discovery, proprietary software is usually hardly more complicated than word processing, spreadsheet, e-mail, and accounting software: the e-discovery coordinator should identify, segregate, and copy the responsive data files onto a CD-ROM. Usually the only added complication proprietary software presents is that the attorneys will need to arrange for the requesting party to have a limited license to the proprietary software in order to view the data. In such cases, litigants can use protective orders to prohibit the requesting party from copying or distributing the proprietary software, require the requesting party to return the proprietary software at the conclusion of the litigation, and limit the requesting party's use of the proprietary software (e.g., to things related to the litigation, to a specific period of time, and/or to certain individuals).
IV. The Future of E-Discovery after AO174
Within a few years, cost should drive business litigants to overhaul the way they conduct discovery. In any case involving the discovery of even a small amount of ESI, it is already more convenient and less expensive to produce ESI in native format.
Take the typical word processing file created in Microsoft Word or WordPerfect – or, more realistically, thousands of such files. To produce them as image files, someone must convert every single file – one by one – from word processing format (DOC, WPD, etc.) to a PDF or TIFF image. The process requires conversion software, and for each file, the e-discovery coordinator must open, convert (which takes at least several seconds), save, and close it. Then the e-discovery coordinator must transfer the image files to a CD-ROM. As cumbersome as that is, it is still less cumbersome than converting the word processing files to paper and producing the paper.
By contrast, to produce thousands of word processing files in native format, only the last step, transferring the files to a CD-ROM, is required. Desktop applications generally, including spreadsheet programs such as Microsoft Excel, e-mail programs such as Microsoft Outlook, and presentation programs such as Microsoft PowerPoint, work the same way. If an e-mail message is responsive, the e-discovery coordinator can drag and drop it onto a CD-ROM. If a calendar entry (or a contact, task, or anything else) in Microsoft Outlook is responsive, the e-discovery coordinator can drag and drop it onto a CD-ROM. If a spreadsheet is responsive, the e-discovery coordinator can drag and drop the spreadsheet file onto a CD-ROM.
Often all of the data from a particular user's Microsoft Outlook account will be discoverable, such as when the user is a plaintiff in a discrimination case or a defendant in a non-compete case. In such situations, it is not efficient to convert every e-mail message, calendar entry, task, contact, and note the user ever wrote or received into a separate PDF or TIFF file (much less convert it to paper) to be produced with tens or hundreds of thousands of other such files. Instead, the e-discovery coordinator can drag and drop the user's .PST file (which is the data file that contains all Outlook data for a particular user) onto a CD-ROM, which the attorney can read on any computer equipped with Microsoft Outlook.
V. Conclusion
In the future, companies' IT departments will be accustomed to e-discovery, litigation holds will be routine, and ESI production typically will be in native format. Until then, AO174 helps businesses litigating in the Middle District of Tennessee to make the transition. While extending traditional discovery principles to e-discovery, AO174 guides companies to avoid spoliation claims by mandating the appointment of an e-discovery coordinator. Moreover, while establishing image format as the default, AO174 allows litigants the flexibility of native format production, by either opting out by agreement or demonstrating a particularized need. |
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