E-Discovery Best Practices: California Rule of Court Requires Advance Meeting and Planning

On August 14, 2009, the California Judicial Council formally amended California Rule of Court 3.724, thereby requiring California litigants to meet and confer regarding the discovery of electronically stored information (“ESI”) at the early stages of every case.

As amended, the relevant portions of section 3.724 state:

Unless the court orders another time period, no later than 30 calendar days before the date set for the initial case management conference, the parties must meet and confer, in person or by telephone, to consider each of the issues identified in rule 3.727, and, in addition, to consider the following: …

(8) Any issues relating to the discovery of electronically stored information, including:

(A) Issues relating to the preservation of discoverable electronically stored information

(B) The form or forms in which the information will be produced;

(C) The time within which the information will be produced;

(D) The scope of discovery of the information;

(E) The method for asserting or preserving claims of privilege or attorney work product, including whether such claims may be asserted after production;

(F) The method for asserting or preserving the confidentiality, privacy, trade secrets, or proprietary status of information relating to a party or person not a party to the civil proceedings;

(G) How the cost of production of electronically stored information is to be allocated among the parties;

(H) Any other issues relating to the discovery of electronically stored information, including developing a proposed plan relating to the discovery of the information.

California Rule of Court 3.724—Overview

The new rule imposes a duty on California litigants, requiring them to meet and confer in person or over the telephone on ESI discovery issues before the initial case management conference. By so doing, section 3.724 brings California into conformity with the Federal Rules of Civil Procedure governing ESI discovery, specifically Federal Rule of Civil Procedure 26(f)(3)(C). Section 3.724 also gives litigants an opportunity to proactively address a myriad of issues surrounding the discovery of ESI, consistent with developing standards that encourage cooperation—versus the old rules of “gamesmanship.” ¹See e.g., The Sedona Conference®, “The Sedona Conference, “Cooperation Proclamation,” 10 Sedona Conf. J. 331 (2009 Supp.); The Sedona Conference, “The Case for Cooperation,” 10 Sedona Conf. J. 339 (2009 Supp.); Steven S. Gensler, “A Bull’s Eye View of Cooperation in Discovery,” 10 Sedona Conf. J. 363 (2009 Supp.) Oracle USA, Inc. v. SAP AG, 2009 WL 3009059, at *2 (N.D. Cal, Sept.17, 2009).

Legislative Intent.

In enacting this rule change, California’s Judicial Council specifically intended to “ensure that parties and the courts address issues relating to electronic discovery early in the course of litigation.” ²Because the amended rule specifically requires the parties to meet and confer in person or by telephone, boilerplate letters informing the other side that a party plans to seek ESI in discovery and demanding that the party impose a broad litigation hold on such ESI will likely be deemed insufficient. The enactment of the rule follows on the heels of the June 30, 2009 enactment of the California Electronic Discovery Act (the “California EDA”), California Civil Code §§2031.010 et seq., which was designed to “modernize California’s discovery law to reflect the growing importance of, and need for guidance in the handling of the discovery of electronically stored information.” ³See Littler ASAP, California Enacts New E-Discovery Rules that Mirror Federal Court E-Discovery Rules —With One Exception, July 2009, available at http://www.littler.com/PressPublications/Lists/ASAPs/DispASAPs.aspx?List=edb4a871%2D9e73%2D4eae%2Dbf81%2D3d045b6ede6d&ID=1398 (last visited April 30, 2010). And, while the California EDA contains provisions that require parties to meet and confer when disputes arise during a case before a dispute concerning ESI can be brought before a court, newly enacted section 3.724 requires parties to proactively address all potential issues concerning ESI at the outset of the case.

Meet and Confer.

The newly enacted section 3.724 gives litigants a significant tool in their e-discovery arsenal. Through the mandatory meet and confer process, parties now have the opportunity to shape—from the outset of a case—how electronic discovery will be conducted. By meeting and conferring on these issues fully and in earnest ⁴Judicial Council of California, Meeting Notes, August 14, 2009, p. 16, http://www.courtinfo.ca.gov/jc/documents/min081409.pdf. prior to the initial case management conference, litigants can propose a reasonable plan governing the discovery and production of ESI at the initial conference, and then subsequently insist upon compliance with the plan’s limits once it is adopted by the court. Moreover, to the extent the parties disagree about issues surrounding things like the form of production of ESI, time frames for the production of ESI, the scope of discovery of ESI, potential cost shifting for the discovery of ESI—including mandatory cost-shifting for producing ESI from back-up media, ⁵The California EDA specifically preserves mandatory cost-shifting for producing ESI from back-up media, as articulated by the California Appeals Court in Toshiba v. Superior Court of Santa Clara County, 124 Cal. App. 4th 762 (2004). and how to protect privileged or confidential ESI, those issues can and should be addressed with the court right away during the initial status conference. The court can then provide a ruling or other guidance on those ESI issues at the beginning of the case, thereby providing clear direction to all parties about how they should be handled, and avoiding potentially time consuming and expensive side shows on these issues at a later point in the case.

With the amendments to section 3.724, litigants and their attorneys ignore issues related to the discovery of electronic information at their peril. This rule change, along with the enactment of the California EDA, signal that litigants in California state courts will be held increasingly more accountable for participating in the court’s attempts to create protocols governing the preservation and production of ESI.

Having been given the opportunity to address those issues at the outset of litigation via the meet and confer provisions of section 3.724, complaints made in the throes of litigation concerning the costs, substance, form, scope, or timing of electronic discovery are increasingly likely to fall upon deaf ears. Conversely, if taken seriously, the new meet and confer provisions should allow parties to save time and money that would otherwise be spent litigating needless discovery disputes.

Best Practices—Activities in Preparation
For Meet and Confer

In light of the similarities between the new California Rules of Court governing e-discovery and the Federal Rule 26(f), California litigants are advised to engage in several best practices to ensure that they abide by their obligations.

1. At the outset of a case, it is critical to understand a arty’s IT infrastructure, where potentially relevant ESI might be located, and what individuals are likely to be custodians of potentially relevant ESI.

First and foremost, litigants and their counsel must take the time to understand a party’s IT infrastructure, where potentially relevant ESI might reside, and who the key custodians of this potentially relevant ESI are. This process, while time consuming, is necessary to provide litigants and their counsel with the information required to engage in a productive meet and confer process regarding ESI. At a minimum,

to do this, counsel must become fully familiar with [their] client’s document retention policies, as well as the client’s data retention architecture. This will invariably involve speaking with information technology personnel, who can explain system-wide backup procedures and the actual (as opposed to theoretical) implementation of the firm’s recycling policy. It will also involve communicating with the “key players” in the litigation, in order to understand how they stored information. ⁶Zubulake v. UBS, 229 F.R.D. 422 (S.D.N.Y. 2004) (“Zubulake V”)

While the focus of e-discovery is often on the defendant’s IT systems and data sources, litigants should not lose sight of the fact that e-discovery is a two-way street, and e-discovery obligations apply just as forcefully to plaintiffs—who often anticipate litigation well in advance of any defendant. ⁷Indeed, even in a single plaintiff case, federal courts have held that both parties have duties and responsibilities with respect to e-discovery, and face serious consequences for a failure to abide by them. See e.g., Leon v. IDX Sys. Corp.,(9th Cir. 2006) (affirming spoliation sanction and dismissal of plaintiff’s ADA/discrimination lawsuit, because plaintiff wiped the unallocated space on his laptop’s hard drive before turning it over to defendant’s expert for examination); Kvitka v. Puffin Co., LLC (M.D.Pa. 2009) (dismissing plaintiff’s lawsuit because plaintiff threw away “old” laptop that that was having technical problems – although it may have contained recoverable relevant e-mails – upon purchasing a new one, after the duty to preserve had been triggered). Compare also, Easton Sports, Inc. v. Warrior Lacrosse, Inc., 2006 WL 2811261 (E.D.Mich. Sept. 28, 2006) (termination of personal Yahoo e-mail account immediately after receiving notice of lawsuit constituted spoliation warranting negative inference instruction); Smith v. Café Asia, 2007 WL 2849579 (D.D.C. Oct. 2, 2007) (Court ordered plaintiff to preserve text messages stored on cell phone as they might bear on defendant’s claim that plaintiff invited the alleged sexual harassment forming the basis for her claims). With the enactment of the California EDA, it is now clear that the two-way nature of e-Discovery applies in California as well. Thus, plaintiffs in California litigation also need to undertake this analysis as well.

This discussion must necessarily be informed by the causes of action alleged in the complaint, as well as any defenses that a party intends to assert (if they are a defendant) or reasonably anticipates (if they are a plaintiff). As such, this discussion should be a collaborative effort between a party and their counsel.

There are valuable resources that can guide parties and their counsel as they investigate these issues and prepare for meeting obligations under new Rule 3.724. See e.g., The Sedona Conference©“Jumpstart Outline”: Questions to Ask Your Client and Your Adversary to Prepare for Preservation, Rule 26 Obligations, Court Conference and Requests for Production (Public Comment Draft), October 2008 (setting forth a detailed series of topics and questions to ask your client and your adversary to prepare for meeting obligations related to preservation, Rule 26 court conferences and requests for production).

2. Be prepared to address the possible types of relevant ESI that the adverse party possesses and controls.

Counsel should also have a discussion with their client to determine what types of potentially relevant ESI the opposing party is likely to have in its possession, custody, or control, and who the potential custodians of that information are likely to be. Such information provides the client and counsel with a “jumping off point” for discussions regarding preservation and potential production of the opposition’s ESI during the meet and confer process.

Again, it is important to keep in mind that in today’s digital world both parties most likely possess some type of relevant ESI—even in cases where individuals ⁸With respect to individuals, relevant ESI may include: home computers; home and personal e-mail accounts; social networking communications from sites like Facebook and MySpace; “tweets” from a Twitter account; phone records; texts; etc. versus a business party—and that there are resources that can guide counsel about the types of questions to ask their adversary during the initial meet and confer conference. See The Sedona Conference© “Jumpstart Outline”, supra.

3. Formulate an ESI preservation strategy and be prepared to address it during the meet and confer conference.

Discussions regarding the client’s IT infrastructure, sources of potentially relevant ESI in the respective parties’ possession, custody, or control, and the identity of custodians who may have potentially relevant ESI provide a “lead-in” to discussions regarding the preservation of discoverable electronically stored information. ⁹CRC 3.724(8)(A).

The obligation to preserve evidence arises when the party has notice that the evidence is relevant to litigation or when a party should have known that the evidence may be relevant to future litigation. ¹⁰Zubulake v. UBS Warburg, Inc., supra at 216.

As a general rule, parties should anticipate the need to preserve ESI broadly, and they should endeavor to create a proposed preservation strategy which accomplishes this task.

In most cases, potentially relevant ESI can be divided into tiers and its collection for purposes of presentation can be prioritized as follows:

1) Relevant data which is relatively inexpensive to access should be collected first;

2) Highly relevant ESI which is more costly to access should be collected second; and

3) Low relevancy ESI which is costly to access should be collected last. ¹¹See Georgetown University Law Center’s Advanced E-discovery Institute, ESI and Rule 26(f) Meet and Confer Guide, 2008.

In those situations where questions arise as to whether or not specific sources of information need to be preserved, parties should either:

• Err on the side of caution and preserve the information; or

• Raise this issue with your adversary during the Rule 3.724 meet and confer conference to see if an agreement can be reached concerning the duty to preserve the specific information in question.

If the parties are unable to come to an agreement on preservation of specific sources of ESI, those specific areas where the parties disagree should be raised with the court at the initial Case Management Conference.

4. Determine your preference for the form in which potentially relevant ESI is going to be produced.

Armed with a general outline of the potentially relevant ESI in their own possession, custody, or control and an understanding of the types of potentially relevant ESI which are likely to be in the opposition’s possession, custody, or control, parties will be in a position to engage in a meaningful and good-faith dialogue concerning the other aspects of production of ESI in the case, such as form of production.

Under California’s EDA, litigants propounding requests for the production of ESI may specify the form in which the production is to occur. ¹²Cal. Civ. Code §2031.030(a)(2). If the propounding party fails to specify the form in which production should take place, the responding party may choose the form of production, provided that it occurs in either “the form or forms in which [the information] is ordinarily maintained or in a form that is reasonably useable.” ¹³Cal. Civ. Code §2031.280(c) and Cal. Civ. Code §2031.280(d)(1). However, as a practical matter, wherever possible, the parties should come to an agreement on the form in which ESI will be produced. Such an agreement avoids needless law and motion practice regarding issues surrounding the form of production.

Agreements regarding the form (or forms) in which ESI will be produced should be reduced to writing in the form of a “Stipulation and Order Governing the Protocol for Production of Electronically Stored Information,” which should specifically spell out the form or forms in which the parties will produce potentially relevant ESI, and which can be presented to the court for approval at the initial Case Management Conference. However, if the parties are unable to agree upon a form of production for ESI, this issue should be raised with the court at the initial Case Management Conference.

5. Determine a reasonable time frame for the parties’ production of ESI.

The digitalization of society and the workplace has significantly increased the amount of information which is created and stored on a daily basis. In most cases, this means that the production of potentially relevant ESI is a process that is significantly more complicated than that facing parties producing only hard-copy documents.

Whereas the production of hard-copy documents requires a party to speak with relevant custodians and collect and review the content of a filing cabinet or similar storage area, the production of ESI requires parties to become familiar with all of the possible sources of potentially relevant ESI in a case, determine what potentially relevant ESI is present in those systems, collect this information, cull it for relevant, non-privileged information, and then redact or otherwise convert that information into a form that can be produced to the opposing party. This is often a time consuming and difficult process.

California litigants should discuss, and potentially agree upon, time frames for the production of ESI. In these discussions, parties should consider whether limitations on the scope of ESI discovery, such as phased discovery or other limits, rolling productions, or other accommodations make sense. Parties should also be prepared to disclose and discuss the amount of potentially relevant raw data which is in the possession of each side. With such details in mind, the parties should attempt to agree upon a realistic timeline for the review and production of relevant, non-privileged ESI.

As with agreements concerning the form of production, agreements governing the time frame(s) for the production of ESI should be included in a “Stipulation and Order Governing the Protocol for Production of Electronically Stored Information” that is presented to the court for approval at the initial Case Management Conference. If the parties are unable to agree upon time frames on the production of ESI, this issue should be raised with the court at the initial Case Management Conference.

6.  Determine if there are any reasonable limits that can be placed on the scope of discoverable ESI.

Intimately related to discussions concerning the time frame(s) for production of ESI are discussions concerning any reasonable limits that can be placed upon the ESI in the case. The types of limits at issue will vary based upon the case, but might include limits on the number of custodians whose ESI is at issue, limits on the number of sources that are subject to potential search, agreements upon key word search terms and other culling mechanisms which will be used to review for potentially relevant ESI, and limits on (a k a exclusion of) the types of data which are subject to search and production.

Other limitations on the scope of discovery may derive from the fact that potentially relevant evidence is located only on media or sources which are not reasonably accessible, or the total value of the case, either of which may render certain types of electronic discovery disproportionate or otherwise unreasonable.

As above, agreements that limit the scope of discoverable ESI should be included in a “Stipulation and Order Governing the Protocol for Production of Electronically Stored Information” that is presented to the court for approval at the initial Case Management Conference. If either party believes limits on the scope of discoverable ESI are necessary in the case, but the parties are unable to reach an agreement concerning such limits, this issue should be raised at the initial Case Management Conference.

7. Determine if cost shifting—including mandatory cost shifting for producing ESI from back-up media—is appropriate.

The California EDA preserves mandatory cost-shifting for producing ESI from back-up media articulated by the California Appeals Court in Toshiba America Electronic Components, Inc. v. The Superior Court of Santa Clara County, 124 Cal. App. 4th 762 (December 3, 2004). ¹⁴In Toshiba, the Court of Appeals reversed a decision of the trial court, and held that the cost shifting provisions of California Code of Civil Procedure section 2031(g)(1) were mandatory, thus, the demanding party had to pay the costs (possibly as much as $1.9 million) for recovering usable information from the responding party’s computer backup tapes. The parties did not dispute that the defendant’s backup tapes were “data compilations” within the meaning of section 2031(g)(1) or that the defendant would incur some expense to manipulate the tapes in order to produce usable information responsive to plaintiff’s document demand. (The court left open for consideration on remand by the trial court the factual issue of what constituted “reasonable and necessary” costs to restore and mine data from the back-up tapes at issue.) In reaching this decision, the court instructed:Section 2031(g)(1) expressly provides that “[i]f necessary, the responding party at the reasonable expense of the demanding party shall, … translate any data compilations … into reasonably useable form.” The clause is unequivocal. We need not engage in protracted statutory analysis because its plain language clearly states that if translation is necessary, the responding party must do it at the demanding party’s reasonable expense.[Plaintiff] contends that the cost shifting specified by section 2031(g)(1) may only be had upon a showing by the responding party that it will suffer undue burden or expense. This contention ignores the plain language of the statute. It is also based almost entirely upon federal law, which does not include a provision similar to the cost-shifting clause of section 2031(g)(1)… . Given the patent difference between the state and federal schemes, [Plaintiff’s] reliance on federal decisions is misplaced. [Plaintiff] also argues that interpreting section 2031(g)(1) as an exception to the general rule would conflict with settled federal law. We agree that the cost-shifting provision of section 2031(g)(1) conflicts with the federal rule, but it appears to us that the Legislature intended it to be that way. In particular, the California EDA retains the following language from section 2031(g)(1) that was interpreted in Toshiba, re-lettered 2031.280(e) ¹⁵In its report to the Members of the Judicial Council in support of the final California EDA, the Policy Coordination and Liaison Committee specifically stated:The committee’s legislative proposal does not change the language of section [2031(g)(1)] or the holding of the Toshiba decision. The proposal not only retains the current language [re-lettered as 2031.280(e)], but also includes it in new section 1985.8 [concerning subpoenas for ESI]. See Judicial Council of California, Policy Coordination and Liaison Committee Report re: Electronic Discovery: Proposed Legislation, April 16, 2008, pp. 126, available at www.courtinfo.ca.gov. Compare also Senate Judiciary Committee Analysis of AB 5, June 9, 2009, pp. 10 – 11, available at www.sen.ca.gov and www.assembly.ca.gov/Evans (“This bill would not affect the standard articulated in Toshiba v. Superior Court regarding the allocation of costs for recovering ESI from back-up media… . [The procedures set forth in the California EDA] preserve the rule articulated by Toshiba for the allocation of the financial burden of producing ESI from back-up media, and are consistent with the intent of the sponsor of this bill.”):

If necessary, the responding party at the reasonable expense of the demanding party shall, through detection devices, translate any data compilations included in the demand into reasonably usable form. ¹⁶Identical language is also contained in the California EDA section that authorizes subpoenas for ESI. See California EDA §1985.8(g).

The California EDA also permits a party to object to the discovery of ESI on the grounds that it is from a source that is not reasonably accessible because of undue burden or expense, ¹⁷ See California EDA §2031.210(d). and further provides that in those situations where a court finds “good cause” to allow discovery from those sources, the court may impose conditions on that discovery, including allocation of discovery expenses. ¹⁸See California EDA §§2031.060(d) – (e)

California litigants should therefore use the initial meet and confer process to discuss sources of potentially relevant ESI that are not reasonably accessible, whether the information stored in those systems is truly necessary to the litigation, and, if so, how the costs of producing that data will be apportioned.

Additionally, the parties should discuss and agree upon how payments for these costs will be made (e.g. from law firm to law firm, from law firm to vendor, etc.), and when payment will occur. Agreements on these issues should be included in the parties’ “Stipulation and Order Governing the Protocol for Production of Electronically Stored Information” that will be presented to the Court for approval at the initial Case Management Conference. Any disagreements on these issues should be raised with the court at the initial Case Management Conference.

8. Use the initial meet and confer conference to spell out how the parties will handle asserting or preserving claims of privilege.

California’s EDA contains specific provisions that set forth a procedure to assert a claim of privilege or attorney work product protection of ESI inadvertently produced in discovery, establishes what the receiving party must do in response, and creates a mechanism for resolving such claims. ¹⁹Cal. Civ. Code §2031.285. The mandatory meet-and-confer conference thus presents an ideal opportunity to address and attempt to agree upon how any post production claims of privilege will be raised, the use of clawback agreements, how the opposing side will respond to such claims, and what will happen in the interim to any ESI that is the subject of such claims.

This also is an ideal time to discuss the form and format for privilege logs. Many ESI review platforms have the capability of exporting data describing ESI which has been redacted or marked as privileged directly into Excel or other spreadsheet programs. If the parties can agree upon the types of information that will be included in such logs, the often difficult task of preparing proper privilege logs can be eased and streamlined with respect to ESI.

As above, any agreements reached on these subjects should be reduced to writing, in the form of a Stipulation and Proposed Order which can be submitted to the court at the initial Case Management Conference.

Conclusion

The specific items which should properly be the subject of a CRC 3.724 meet and confer will depend on the facts of each case. However, preparing for the meet and confer session with the above in mind should increase the odds of ensuring that the session is beneficial for all parties involved. Parties should therefore consider such sessions as an indispensable opportunity to shape the course of discovery and define its contours and limits from the outset of the case. Above all, the parties should enter these sessions in good-faith, and attempt to be as transparent as possible regarding their efforts to preserve, as well as what they believe is properly subject to production in the case. By so doing, parties greatly increase the chances that they will each be able to concentrate on the merits of their respective cases, as opposed to needless discovery fights and law and motion practice.