Companies face new threat with electronic records subject to discovery
Last December’s changes to the Federal Rules of Civil Procedure drastically reinterpreted the discovery and handling of electronic records in federal courts. The repercussions have been particularly hard on records managers, who, often in tandem with IT departments, are tasked with developing a strategy for storing and deleting a whole new area of records. The major complication has to do with the addition of Electronically Stored Information (ESI) to the category of Business Records, meaning this information can now be used as evidence, and as such, is subject to discovery.
With almost any electronic document subject to discovery, understanding your records retention policy is more important than ever before. Right now, information that falls under disclosure includes that ‘in the possession, custody or control of the party.’ As per Rule 26a-1, no discovery request is required to access this information, unless it is privileged in which case it needs to be revealed within 99 days. Even if one party ‘identifies [information] as not reasonably accessible because of undue burden or cost,’ as stipulated by Rule 26b-2B, the description, category and location of the information must be disclosed. That information could include fragmented deleted emails and non-indexed back-up tapes.
Retaining such information puts huge strain on records management systems as almost any email or electronically stored document could potentially be a record – and many people may not be aware of it. Responsibility has commonly been laid at the feet of the IT team but the records managers, general counsel, secretariat and board must also be involved. It is not all bad, however. Some rules allow companies to breathe a sigh of relief. Rule 37, effectively a safe harbor, offers defense for companies who have retention schedules that automatically delete emails that may have been wanted for evidentiary purposes. The Advisory Committee on Civil Rules said that an entity would usually be protected if it had lost information as a result of ‘routine good faith operation of the party’s electronic information systems.’ To avoid situations where data and records are lost outside ‘routine operations’ it is extremely important that a legal hold structure is in place – and fully understood by everyone.
Part of the complication with electronic data is confusion about the responsibility of third-party recipients and vendors. It is clear companies themselves are required to treat electronic information as records and retain it accordingly. But what happens when some of this data is created by a third party or resides offsite?
In his seminar, ‘Federal rules one year later & RIM’s role at counsel’s table’ during the recent ARMA conference in Baltimore, John Isaza, RIM Specialist at Howett Isaza Law Group drew attention to this particular issue. In a recent case, Columbia Pictures v Bunnell, third-party information management was called into question. In this case Joseph Bunnell, founder of TorrentSpy, which assists video-downloads, was not held responsible for holding third-party records because there were no sanctions about requesting to preserve Random Access Memory (RAM) data at that time. And therefore, no violation of a preservation order took place.
One other crucial element of the FRCP that underwent metamorphosis, is Rule 26f, the ‘meet and confer’ rule that addresses the preservation of discoverable information at pre-trial meetings and lays out the ground rules for what can be considered material (therefore discoverable) in a case and some procedures, on both sides of the case, for conducting discovery. This may include electronic discovery procedures, the treatment of confidential information, whether special procedures will be needed for certain kinds of discovery and what general topics the parties will want discovery into. The problem with this is that, where electronic records are involved, it can be almost impossible to figure out at the outset of a case what is material. A metatag, for example, is information. But is the underlying data the record or the ‘tagged’ data?
Strategize
Certain RIM strategies can be used to boost success in applying the revised rules. ‘Addressing electronic discovery from the outset’ is important, said Isaza. It is also necessary to understand electronic information systems, identify types and locations of information, take steps to preserve information, exchange information regarding storage systems and basically ‘limit the universe of what’s out there,’ said Isaza.
Though these changes are some of the most ground-breaking to date in electronic records management, to many companies, they come as no surprise. In another ARMA presentation, ‘Accessibility readiness: How to comply with the Federal Rules’, David Ison, partner, Greenberg Traurig, and Dean Gonsowski, managing director, Daticon, quoted Judge Scheindlin’s resolution regarding Zubulake v UBS Warburg: ‘Cost-shifting arguments were appropriate only when electronic data is relatively inaccessible.’
The Sedona Principles of 2004 quickly followed, stipulating the ‘primary source of electronic data and documents for production should be active data and information purposely stored in a manner that anticipates future business use and permits efficient searching and retrieval,’ and providing that, ‘absent a showing of special need and relevance a responding party should not be required to preserve, review or produce deleted, shadowed, fragmented or residual data or documents.’
Outside the Federal Rules, the records management community has been responding to the changes brought upon by the evolution of electronic records. ‘Different states are adopting their own versions’ said Isaza, with courts providing some guidance, scope and a tendency to be more forgiving. Implementation requires IT and legal department coordination, as ESI is often largely IT territory, and early scheduling. Fortunately, these rules allow companies to achieve such aims, with provisions for disclosure within 120 days of a lawsuit, ESI on the initial disclosure itemization list and the rule requiring companies to meet and confer ‘at least 21 days before a scheduling conference is held or a scheduling order is due.’
With these revisions to the Federal Rules, records management is no longer a department that companies can ignore or isolate. And with records managers now subject to deposition on RM policies, counsel needs to be kept informed and should have the ability to access records policy information.
