Proportionality in Preservation

The preservation process may be the most complicated and confusing stage within the eDiscovery process, principally because there is no bright line indicator of when you need to start preserving data once litigation is reasonably anticipated. Instead, judges and courts around the country have used their own discretion to decide when this must be done, depending on the circumstances surrounding the case.

Your duty to preserve Electronically Stored Information (ESI) for eDiscovery is not enshrined in any law or even explicitly defined in the Federal Rules of Civil Procedure (FRCP). It’s born out of case law, the bulk of which is fairly recent.

As you might imagine, there are gray areas surrounding preservation requirements, and different jurisdictions have their own specific standards. That being said, case law is fairly consistent around a few key areas:

Trigger.

The duty to preserve evidence begins when a party knows of, or has a reasonable anticipation of future litigation. The important thing to remember here is that the duty to preserve can be triggered before a lawsuit has been filed or a preservation letter has been received (see section on preservation letters below).
For an example of preservation obligations being triggered prior to the commencement of litigation, read a good summary of a sanction ruling in Voom HD Holdings LLC v. EchoStar Satellite LLC., N.Y. App. Div., No. M-1748 & 600292/08, 5121N, M-1833, 1/31/12.

Scope.

The scope of preservation obligations can vary greatly from case to case, and is often a point of great contention among parties. In its “Commentary on Legal Holds: The Trigger and The Process,” highly respected e-discovery think-tank The Sedona Conference says factors that dictate the scope of preservation include “the nature of the issues raised in the matter, the accessibility of the information, and the relative burdens and costs of the preservation effort.”

Generally, courts expect parties to apply a standard of “reasonableness” and “proportionality” to their preservation demands and efforts, recognizing that the costs and burdens associated with preserving ESI should always be in balance with the value of the dispute.

Proportionality and the FRCP

Proportionality is nothing new. In a recent webcast, I spoke with Hon. David Waxse, US District Judge from the District of Kansas, who said: “Proportionality has been in the rules since 1983, but it wasn’t used very often. Our goal with the recent FRCP amendment to Rule 26 was to make it usable.”

Under Rule 26(b)(1), parties are allowed to obtain discovery of all relevant, non-privileged information as long as it’s “proportional to the needs of the case.”

The question then becomes, what does “proportional to the needs of the case” mean and how is this language being applied in practice?

Generally, most people assume proportionality applies to collection and review, because that’s where a large part of discovery costs lie.

However, with today’s technology, the eDiscovery process continues to be compressed and more interconnected. If you want to send less data to collection and review, then your preservation practices are an intrinsically linked part of that.

Contributing to the uncertainty surrounding proportionality and preservation is the absences of an explicit mention of preservation in the committee notes for Rule 26(b)(1). In fact, the only reference to preservation regarding proportionality is in Rule 37 and not Rule 26.

According to the Rules Committee Notes, perfection within the preservation process is not needed. If reasonable steps are taken and information is then not preserved, then the preserving party cannot be sanctioned.

Judge Waxse comments on this: “One of the most important first reasonable steps is to have a conversation with the other side about what is reasonable when it comes to preservation. Because if you cooperate and come to an agreement on what should be preserved and what doesn’t need to be preserved, you’re never going to get sanctioned for doing something pursuant to an agreement with the other side.”

Cooperation is Key

When it comes to proportionality, everything, in a sense, goes back to FRCP Rule 1, which states that the overall goal is a just, speedy, and inexpensive resolution. To achieve this, focusing on narrowing down discovery requests to data that is relevant to the issues that are in dispute is required.

Judge Waxse states, “Cooperation is one of the most effective ways to achieve Rule 1. It’s surprising how many discovery requests come in where the parties haven’t done any analysis on what might be related to the actual dispute. They use boilerplate discovery requests instead of targeting requests based on what would be relevant. This puts proportionality in the hands of the parties as well as the courts.”

Jaime Myers, Esq., Sr. Corporate Counsel for Caterpillar comments, “I think that proportionality clearly relates to preservation. It can be costly and time consuming to ‘preserve the world,’ and there is no substitute for trying to sit down and hammer out how you’re going to proceed with the other side. If you do this at the beginning, then if unforeseen challenges come up during litigation, there is a plan on how to move forward and face those issues.”

Preserving less, will in most cases lead to collecting less, and reviewing less, which means spending less.

The committee notes state “A party urging that preservation requests are disproportionate may need to provide specifics about these matters in order to enable meaningful discussion of the appropriate preservation regime.”

As we mentioned, one meaning of these “specifics” is focusing on what is in dispute.

Another “specific” is having an open, honest discussion about costs.

Judge Waxse recalled one case where “parties found, that by using strategies like phasing and tiering, and only requesting things that were actually in dispute, discovery costs dropped from their initial estimate that ran somewhere in the millions, to an actual cost that was in the thousands.”

Technology can often play a role in the cooperation between parties. Judge Waxse says that one way is to “get the parties to agree on the creation of a joint database under a single vendor, subject to protective orders so that information is maintained as confidential when appropriate. When you’re searching a single database as opposed to two, it costs significantly less.”

Best Practices for Creating Reasonable, Proportional Preservation

The thing that makes preservation so difficult is that the duty to preserve comes before litigation ever begins. That’s why it’s important to have a plan in place.

• Decide on which issues are in dispute
• Understand where relative data lives
• Come to an agreement with the opposing side on what you’re going to do with that data (i.e. put in a single database, etc.)
• Understand when you need to collect and when you only need to preserve
• Set up your search process in agreement. Again, the best way to avoid sanctions is to cooperate.

Judge Waxse sums up the issue with preservation and proportionality best: “Too often we get hung up on the formality of litigation instead of trying to cut through and get to the essence of what’s in dispute. In civil court, we try less than one percent of cases, so if you’re saying that you need to collect all this data to get ready for trial, you need to go back and put your focus on finding a just, speedy, inexpensive way of resolving the dispute.”