December 2, 2006
Supreme Court Releases New E-Discovery Rules
In case you missed the news, today new Supreme Court rules went into effect regarding e-discovery. There were several good articles on the wires today: Yahoo; Washington Post; Investor’s Business Daily.
The problem with all these articles is that they don’t provide links to the actual rules published by the court. Since I have no life, I searched the Supreme Court’s website for the published rules. The new rules (http://www.supremecourtus.gov/orders/courtorders/frcv06p.pdf) were released by the Supremes last April. Based on my reading, there is both good and bad news in the rules with regards to e-discovery.
(Legal Disclaimer: I am not a lawyer; Do not rely upon my opinions; When in doubt hire a real lawyer and make sure he’s a good one; I am not responsible if you rely upon my analysis.)
Rule 37 (f) “Absent exceptional circumstances, a court may not impose sanctions under these rules on a party for failing to provide electronically stored information lost as a result of the routine, good-faith operation of an electronic information system.”
These rules are good for two reasons:
First, there is now a potential release from e-discovery based upon “undue burden or cost.” As an example, if a company can show that it would be prohibitively expensive to search every pc in the company for a document that the other party suspects exists, but has no proof, this rule allows for the potential to have this request waived. Of course, if the requester can “show good cause,” the court can still order the discovery, but at least this rule provides a potential cost exclusion where it did not exist before.
Second, sanctions cannot be imposed for “information lost as a result of the routine, good-faith operation…” So if a company stores its archive tapes at a secure off-site storage facility, and that facility burns down, the loss of those tapes will not trigger court sanctions. This is a big change, but the key provision is “good-faith operation.” A company that doesn’t backup its data, or store it in a manner consistent with its data retention obligations is not operating in good-faith and could still be subject to sanctions if the data is not produce-able.
Rule 34 (a) expands the types of electronic data to include sound recordings, images, and other “data compilations.” This is being interpreted in the press to include things like instant messaging and text messages on cell phones and Blackberrys. If you have a VOIP system that integrates your voice mail system with your e-mail system, such as Cisco’s UNITY product, be prepared for your voice mail messages to become discoverable.
Rule 34 (a) also specifies data “stored in any medium from which information can be obtained.” This would appear to include cell phones, PDAs, and USB flash drives. Not withstanding the cost exclusion of Rule 26 (b)(2)(B), companies have an expanded duty to track where their data is stored, and how it is maintained.
Last September, I published a white-paper regarding designing an e-mail archive system for compliance. The topics discussed in that article are even more important under the new rules. To meet obligations under these new rules, companies must act in “good-faith” to identify their electronic data, establish policies regarding the storage and retention of their data, and then design systems to enforce the retention policies. Also, if you work for a public company, pay close attention to Sarbanes-Oxley section 802. SOX 802 crimializes the destruction of business documents.
The new Supreme Court rules apply to all companies involved in Federal litigation. Unfortunately, if you wait until you are involved in litigation, it is too late. You must prepare for these rules before they apply.
-Bill
Ledokin » New Court Rules Allow Companies to Subpoena Cell Phones, PDAs & IMs said,
November 2, 2007 @ 10:42 am
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