Welcome to Module 3-B.

Judge Scheindlin on the New Rules and Ralph Losey on Rule 37(e).

Judge Shira Scheindlin

A video was posted online of a speech by Judge Scheindlin of Zubulake fame. She gave the keynote address on October 23, 2006, at the annual meeting of ARMA (formerly known as the Association of Records Managers and Administrators). Although it is unlikely to be a hit on YouTube, it is certainly worth watching.

Judge Scheindlin’s speech is on the 2006 rules amendments.  She begins with the standard explanation from the commentary on why the new rules were needed:

1. volume of e-records, much more than paper records;

2. e-storage systems are dynamic; created and destroyed automatically;

3. ESI is difficult, but not impossible to delete (you only transfer information from an accessible location to inaccessible location);

4. ESI has to be  retrieved, restored and translated before it can even be reviewed.

Judge Scheindlin then talks about the “meet and confer” Rules 26 and 16, pointing out the revision to Rule 26 requiring the parties to  discuss “any issues relating to preserving discoverable information” is the first time the Federal Rules has ever mentioned the word “preservation”.

She then turns to Rule 26(b)(5)(B) on return of privileged materials, pointing out how that the Advisory Committee on the Rules of Evidence has proposed a new Evidence Rule 502.  It would provide the procedural rule with much needed teeth by prohibiting a finding of waiver if reasonable precautions to review were taken.

Then Judge Scheindlin goes into Rule 26(b)(2)(B) on inaccessibility, and Rule 37(f) on “safe harbor” destruction. No new comments on either rule, instead she just outlines the text of the rules and commentaries.

You can also download a copy of the full text of her speech.

2006 Version of Rule 37(e) Required Safe Harbor Routines That Most Companies Lacked.

The 2006 Rule 37(e) (which was originally numbered 37(f)) creates a “safe harbor” for a company to destroy ESI as part of its routine electronic records management practices.  Unfortunately, this harbor was then, and still is now, beyond the reach of most companies because they lack established routines for ESI retention and destruction.  That is one of the reasons that this version of 37(e) only lasted nine years. It was changed again in the 2015 amendments to the rules.

After the  2006 rule amendment, but before the 2015 amendment, Rule 37(e) stated:

(e) Electronically stored information. 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.

Short and simple, but most lawyers were too scared or uninformed that they never took advantage of the rules protections. This language just did not catch on with the US Bar or Bench, and corporations hated it, so after intense lobbying Rule 37(e) was changed again as part of the 2015 amendment package. In fact, it was the most contentious part of the entire rules package.

The routine good faith operation of an electronic records storage system mentioned in the rule can be proven by reference to a company’s written records retention policy.  That is the document, usually very long and complicated, that tells you when to save records, and for how long, and when to delete them.  If the deletion of ESI was in accordance with the company’s written manual on the subject, then you may be able to prove the loss of evidence was the result of routine and good faith operations.  This assumes, however, that: a) the company has such a manual; and, b) the book is routinely followed.  In reality, a company’s records retention policies are often ignored, and seldom enforced.  That makes the routine needed for Rule 37(e) safe harbor protection a difficult element for most companies to prove.

There are many reason for this, including that the records manual is usually too long and incomprehensible, and everyone finds this whole subject too boring and unimportant to deal with. So people just do what they want with the records they control.  This seems to be especially true of IT employees, who, it seems, frequently follow their own rules based on the “we know better principle.” For instance, the book may say to recycle backup tapes every three years, but in reality you may have tapes going back for decades.  The tapes are probably unlabeled, and no one has any real idea what is on them,  much less how to restore them.  Still, the company may have to produce these tapes someday, and pay experts a small fortune to restore them to try to find missing evidence.

In the event a written records retention policy is not uniformly followed, a court will look to actual practices of a company to determine its “routine, good faith operation. ” Although a written manual will have consistent operation procedures specified, when you turn to actual practices by employees in a large company, consistency is rare. What is routine for one part of the IT department may be different from another part. It is worse when comparing individual employees, some of whom may be organized pack rats, and keep everything, and others may delete everything as soon as they read it. Playboy Enterprises, Inc. v. Welles, 60 F.Supp.2d 1050 (S.D.Ca. 1999) (Playmate explained that she had no emails to produce because she always deleted an email right after she read it.)

The result is that it is hard, if not difficult for most companies today to take advantage of the “safe harbor” provided by Rule 37(e). They cannot do so because they do not have routines. About the only thing that is likely to fall within the purview of the rule for most companies is the automatic “janitor” programs that delete things without need for any human intervention at all.  For instance, if a file is not used within a set time period, it will be automatically deleted. In fact, this is a common practice for ESI, but impossible for paper records. (Xerox has, however, recently invented a new kind of printer and paper wherein the document automatically erases itself after a few days.)

Even in the case of automatic ESI destruction, the defense will only work if the electronic janitor did its job before the human in IT was, or should have been, told by legal that there was a lawsuit brewing, and the auto-destruction routines should be placed on hold.  If a litigation hold was not implemented when it should have been, then the practice lacks the good faith needed for the safe harbor, even if it has the routine.

This is made clear by the rules commentary, which states:

The good faith requirement of Rule 37(f) means that a party is not permitted to exploit the routine operation of an information system to thwart discovery obligations by allowing that operation to continue in order to destroy specific stored information that it is required to preserve. When a party is under a duty to preserve information because of pending or reasonably anticipated litigation, intervention in the routine operation of an information system is one aspect of what is often called a “litigation hold.”

As mentioned, unlike paper records, ESI can automatically throw itself away. This distinction between paper and electronic records is the genesis behind Rule 37(e).  The commentary to the new rule explains the difference between paper records and ESI this way:

The “routine operation” of computer systems includes the alteration and overwriting of information, often without the operator’s specific direction or awareness, a feature with no direct counterpart in hard-copy documents. Such features are essential to the operation of electronic information systems.

On the other hand, if paper evidence is destroyed, it is frequently evidence of culpable conduct.  For instance, one tech company apparently began preparing for patent litigation by getting rid of evidence that might make its cases more difficult. Rambus, Inc. v. Infineon Tech. AG, 220 F.R.D. 264, 284 (E.D. Va. 2004); Rambus, Inc. v. Infineon Techs. AG, 155 F.Supp.2d 668, 680-83 (E.D.Va.2001); Rambus, Inc. v. Infineon Techs. AG, 222 F.R.D. 280, 286 (E.D.Va.2004); Samsung Electronics Co., Ltd. v. Rambus, Inc., 439 F.Supp.2d 524 (E.D.Va., July 18, 2006).  The company began its records destruction campaign by establishing a new records “retention” policy.  It began to implement the new policy with what it called “Shred Days,” where, I kid you not, they gave every employee a burlap bag to fill up with papers to be shredded, followed by pizza parties. They managed to destroy 2.7 million pages of documents this way, but the strategy failed in the end, and resulted in spoliation sanctions instead.

SUPPLEMENTAL READING: Watch Judge Scheindlin’s lecture and also review the transcript. Anything you did not understand or at least found odd? Also read all of the cases cited in this module.

NON-MANDATORY READING. For more reading and in depth understanding, search among the thousands of articles on the web or West or Lexis pertaining in one way or another to the 2006 and 2015 amendments to the federal rules of e-discovery. Read a few more that seem like they might be interesting. For each one read, consider whether anything in it seems questionable to you, if not out right contrary to what you have learned in this course. Note that in the law differences of opinion are common, especially in newly developing areas such as e-discovery.

Students are invited to leave a public comment below. Insights that might help other students are especially welcome. Let’s collaborate!

 

Copyright Ralph Losey 2015

 

Ralph Losey is a practicing attorney who specializes in electronic discovery law. He is a principal in a U.S. law firm with over 50 offices & 800 lawyers where he supervises electronic discovery work and litigation support. Ralph has written over two million words on law and technology, including six books on electronic discovery. His latest books are "E-Discovery for Everyone" (ABA 2017) and "Perspectives on Predictive Coding" (ABA 2017) (ed. & contributor). His blog is widely read in the industry: "e-DiscoveryTeam.com." Ralph is the founder and principal author of "Electronic Discovery Best Practices" and "e-Discovery Team Training," a free online course covering all aspects of e-discovery. Ralph's sub-speciality is the search and review of electronic evidence using multimodal methods, including artificial intelligence. He also has a free online training program to teach these advanced methods - the "TAR Course." Ralph has devoted a month of his time each year since 2013 to research and test various AI-enhanced document review methods. In 2015 and 2016 Ralph and his Team participated in the TREC Total Recall Track experiments sponsored by the National Institute of Standards and Technology. Ralph has been involved with computers and the law since 1978. His full biography is found at RalphLosey.com. Ralph is the proud father of two children, Eva M. Losey and Adam Colby Losey, a high-tech lawyer married to another e-discovery lawyer, Cat Jackson Losey, and, best of all, Ralph has been married since 1973 to Molly Friedman Losey, a mental health counselor and life-long friend.

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