The Sedona Conference Working Group on Electronic Document Retention & Production (WG1) has released its Commentary on Proportionality in Electronic Discovery. The public comment period on the Commentary closed on January 31, 2017. This Commentary was much anticipated given the revamping of Rules 26(b)(1) and 37(e) of the Federal Rules of Civil Procedure in December 2015, which directly affected the scope of eDiscovery in federal litigation. The 2015 amendments were aimed at curbing gamesmanship and abuses in eDiscovery by elevating the importance of “proportionality” as the guiding principle governing the entire discovery process and by setting forth the framework for addressing the loss of electronically stored information (ESI) that was required to be preserved.
Under the amended Rule 26(b)(1), “parties may obtain discovery regarding any nonprivileged matter that is relevant to any party’s claim or defense and proportional to the needs of the case….” (emphasis added). Rule 26(b)(1) also now includes the considerations that bear on proportionality, which were moved from the previous Rule 26(b)(2)(C)(iii), rearranged and expanded. The proportionality factors that courts will take into account are as follows: (1) the importance of the issues at stake; (2) the amount in controversy; (3) the parties’ relative access to relevant data; (4) the parties’ resources; (5) the importance of discovery for resolution; and (6) the burden or expense relative to benefit.
The amended Rule 37(e) provides guidance on the scope of the preservation effort that the court expects from litigants. Specifically, amendments to Rule 37(e) affected judicial analysis of sanctions for the loss of ESI (1) that “should have been preserved” in the anticipation or conduct of litigation (2) because a party failed to take “reasonable steps” to preserve it and (3) that cannot be restored or replaced through additional discovery. Upon making this finding, a court has to conduct additional analysis, the goal of which is to differentiate “bad faith” conduct from mere negligence, and order sanctions in accordance with the level of egregiousness. Under the amended Rule 37(e), courts will focus on a party’s intent to deprive its opponent of the benefits of the lost ESI and the resulting prejudice to the opponent. Where the court finds “bad faith” conduct, it may order the harsher sanctions, including adverse inference instruction, default judgment or dismissal. However, only measures limited to curing the prejudice are appropriate for cases where culpability is lacking.
Parties engaged in or preparing for litigation should consider how these amendments impact their overall litigation strategy, as well as their eDiscovery process. While the concepts of proportionality and good-faith discovery conduct are anything but new, the 2015 amendments provide the parties and courts with a more robust and defined framework for their application.
To help federal litigants and courts apply the new amendments in designing the eDiscovery process and resolving eDiscovery disputes, the Commentary on Proportionality offers Six Principles for consideration. The following are the key takeaways.