PUBLIC HEARING ON PROPOSED AMENDMENTS 

 TO THE FEDERAL RULES OF CIVIL PROCEDURE 

 DALLAS, TEXAS 

 JANUARY 28, 2005 

 BEFORE THE HONORABLE LEE H. ROSENTHAL 

 HONORABLE PETER D. KEISLER 

 HONORABLE NATHAN L. HECHT 

 HONORABLE THOMAS B. RUSSELL 

 PROFESSOR EDWARD H. COOPER 

 HONORABLE SHIRA ANN SCHEINDLIN 

 DANIEL C. GIRARD, ESQ. 

 PROFESSOR RICHARD L. MARCUS 

 SIDNEY A. FITZWATER 

 ALSO PRESENT: 

 PETER G. MCCABE 

 Secretary, Committee on Rules of Practice & Procedure 

 JAMES ISHIDA 

 Attorney Advisor, Office of Judges' Program 

 JOHN K. RABIEZ 

 Chief, Rules Committee Support Office 

 Proceedings reported by stenographic machine, 

 transcript produced by computer. 

 Court Reporter: PAMELA J. WILSON, CSR 

 1100 Commerce, Room 1514 

 Dallas, Texas 75242 

 214.662.1557 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 2 

 1 P R O C E E D I N G S: 

 2 JUDGE ROSENTHAL: Good morning. 

 3 Thank y'all for joining us for this, our second hearing 

 4 on the proposed amendments to the discovery rules to 

 5 accommodate electronic discovery. We are very pleased to 

 6 see all of you and very much appreciate the time and thought 

 7 that you are willing to give to help us make these proposed 

 8 amendments as good as they can be and to decide what the 

 9 most appropriate step on the rules enabling act process 

 10 there is and what is the best path for us to take. 

 11 This is, of course, the second of the proposed -- of 

 12 the hearings on these amendments. We will have a third 

 13 hearing in Washington the second week of February, and the 

 14 comment period is scheduled to end on February 15th. 

 15 So those of you who have not yet submitted written 

 16 comments but wish to do so, you, of course, still have time 

 17 to do just that. 

 18 The procedure that we will follow today will be very 

 19 much like that we followed last -- at our last hearing, for 

 20 those of you who were present at that. 

 21 Each of you will be given an opportunity to present 

 22 your position, but there will, of course, be questions from 

 23 the committee members that will give you an indication of 

 24 the specific concerns that we have, give you an opportunity 

 25 to respond to them. 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 3 

 1 It is most helpful to us if in making your comments you 

 2 are not merely expressing your general concerns about 

 3 discovery today or tomorrow, but if you speak in specific 

 4 terms, as well, about the language of the proposed 

 5 amendments and specific changes that you think could be 

 6 helpful in improving the proposed amendments or specific 

 7 language that you think if enacted would cause particular 

 8 problems. 

 9 And with that, I think we are ready to begin with Mr. 

 10 Wren. 

 11 MR. WREN: Thank you, Your Honor. 

 12 Good morning. I'm Jim Wren. I am not here with a 

 13 claimed expertise in matters of electronic storage, per se. 

 14 I am here as an attorney who practices in electronic 

 15 discovery and teaches electronic discovery, so I'm here to 

 16 speak to what I am concerned about might be practical 

 17 ramifications of -- 

 18 JUDGE ROSENTHAL: Excuse me, Mr. Wren, you are 

 19 listed as speaking on behalf of the Texas Lawyer's 

 20 Association? 

 21 MR. WREN: Texas Trial Lawyer's Association. 

 22 JUDGE ROSENTHAL: All right. Can you tell us a 

 23 little bit about the group that you are speaking on behalf 

 24 of. 

 25 MR. WREN: Yes, Your Honor. Texas Trial Lawyers 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 4 

 1 Association is an organization of plaintiff's trial 

 2 attorneys, representing primarily individuals, sometimes 

 3 businesses, but primarily individuals in litigation. 

 4 JUDGE ROSENTHAL: Thank you. 

 5 MR. WREN: The issues -- what I would like to do 

 6 is briefly speak to three particular concerns and then to -- 

 7 or in the midst of that address what I have concerns about 

 8 in the context of a -- of a practical case, that -- where I 

 9 think it illustrates how my concern may play out. 

 10 First of all, with regard to the proposed language of 

 11 Rule 37 F, I believe that as currently worded it raises the 

 12 potential for discovery abuse, certainly not occurring in 

 13 every situation, or hopefully not even in the majority of 

 14 situations, but I do believe it increases the chance of it. 

 15 Based on my practical experience, I question whether 

 16 there is even a need for a safe harbor provision, but to go 

 17 to the specifics of it, I'm very concerned that the 

 18 combination of the safe harbor provision, with the language 

 19 from Rule 26 regarding presumed nondiscoverability, and that 

 20 is the effect, of information deemed by the responding party 

 21 to be not reasonably accessible, creates a situation in 

 22 which the -- I believe it invites a situation for a party 

 23 who wants to prevent the discovery of information, would 

 24 within its control move the information to a, quote, 

 25 nonaccessible or unaccessible status, that is, through 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 5 

 1 archiving, through encryption, et cetera. It's still there, 

 2 but by that action it creates at least the argument that it 

 3 is not reasonably accessible. 

 4 JUDGE ROSENTHAL: May I ask you a question? 

 5 MR. WREN: Yes, Your Honor. 

 6 JUDGE ROSENTHAL: You practice in Texas. 

 7 MR. WREN: Yes, Your Honor. 

 8 JUDGE ROSENTHAL: And Texas, of course, has a much 

 9 stouter two-tier provision than is proposed in the federal 

 10 rules. We have heard anecdotally that the Texas provision 

 11 on the inability to get discovery in the first instance of 

 12 materials that is not -- that are not used in the ordinary 

 13 course of the producing party's business has actually not 

 14 led to discovery abuse, that it has worked very well, and it 

 15 goes much further than the provision that is proposed in the 

 16 amendments under Rule 26. 

 17 What is your experience? 

 18 MR. WREN: Your Honor, quite honestly, the 

 19 experience I have run into with what I perceived to be 

 20 attempted discovery abuse did not occur in Texas. The case 

 21 I was going to speak to is a California case. So in 

 22 Texas -- I -- let me say at the outset, my experience with 

 23 opposing counsel is that by in large opposing counsel are 

 24 honorable and that the companies that I have been in 

 25 litigation with, by in large, are honorable. 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 6 

 1 JUDGE ROSENTHAL: Have you found that the Texas 

 2 provision has encouraged companies to move materials that 

 3 would otherwise be in the discoverable category under the 

 4 Texas rule and put them into the nondiscoverable category 

 5 under the Texas rule in order to -- not for business 

 6 purposes, but for litigation strategic purposes? 

 7 MR. WREN: Thus far, Your Honor, I have not. That 

 8 has not been my personal experience, quite honestly. But 

 9 let me tell you the concern with that. 

 10 When -- the companies that are potentially affected by 

 11 that have concerns of litigation that go far beyond just 

 12 Texas, and so they are not going to rely on just the issue 

 13 arising under Texas rules in order to make their decisions. 

 14 The federal rules are far more broad reaching, far -- I 

 15 believe it again removes the level of concern that simply a 

 16 Texas rule would not. Therein lies my concern, that if 

 17 there is a desire to abuse discovery, with this enacted into 

 18 the federal rules it potentially provides comfort that a 

 19 mere Texas rule does not. 

 20 JUDGE ROSENTHAL: I'm not sure the Texas Supreme 

 21 Court would appreciate your characterization of the "mere 

 22 Texas rule," but go ahead. 

 23 (Laughter.) 

 24 MR. WREN: I understand. And certainly no -- no 

 25 disrespect to Your Honor. 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 7 

 1 JUDGE HECHT: Mere is better than some things. 

 2 MR. WREN: My concern is that with the discovery 

 3 potentially being categorized as -- or the information 

 4 potentially being categorized as not reasonably accessible, 

 5 that that would then allow, under the current wording of the 

 6 rules and the comments, for the party to deem that that is 

 7 not, quote, discoverable information, and therefore take 

 8 no -- make no effort to remove it or to safeguard it from 

 9 the operation of routine destruction. 

 10 The -- you appeared to have a question. I don't want 

 11 to cut you off. 

 12 JUDGE ROSENTHAL: Go ahead. Keep talking. 

 13 MR. WREN: There is a comment -- there is a 

 14 statement in the comment that says, and I'm quoting, "in 

 15 some instances it may be necessary for a party to preserve 

 16 electronically stored information that it would not usually 

 17 access if it is relevant and is not otherwise available." 

 18 That sentence is the only thing that addresses this issue, 

 19 and I do not believe it is sufficient, for a couple of 

 20 reasons. 

 21 First of all, it does not -- it creates, actually, the 

 22 distinction, or the arguable potential distinction, between 

 23 information that is not usually accessed versus information 

 24 that is not reasonably accessible and, therefore, could 

 25 create the argument that the -- 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 8 

 1 JUDGE SCHEINDLIN: Can I interrupt with a question 

 2 also? 

 3 So is your concern then that because of the two tier 

 4 it's not clear whether the producing party should preserve 

 5 that which it identifies as inaccessible? 

 6 That's the real concern, isn't it? 

 7 In other words, the two tier, since you don't have to 

 8 produce the inaccessible right away you should identify it 

 9 and say I'm not going to produce it because it's 

 10 inaccessible, but your question is, is there anything that 

 11 tells that party you ought to hold on to it so the court can 

 12 make a meaningful ruling as to whether it should be produced 

 13 anyway. 

 14 MR. WREN: That is exactly the primary concern I 

 15 have. 

 16 JUDGE SCHEINDLIN: That's the concern, the 

 17 preservation -- 

 18 MR. WREN: Yes. That goes away. 

 19 JUDGE ROSENTHAL: Let me follow-up on that. 

 20 The notes, as you point out, do make clear that if the 

 21 producing party has a basis to believe that there is no 

 22 other source for information that would otherwise be deleted 

 23 in the ordinary course of the computer's operation, there is 

 24 a duty to preserve it. 

 25 MR. WREN: That's exactly right. 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 9 

 1 JUDGE ROSENTHAL: Is your real question then 

 2 that -- or is your real point then that that point is so 

 3 important that it needs to be emphasized more than the 

 4 present language does? 

 5 MR. WREN: Yes, Your Honor. In fact, by that 

 6 statement that you just pointed out, of a belief that it is 

 7 not otherwise available, in effect that creates an 

 8 additional condition that for a -- for a party who wanted to 

 9 engage in discovery abuse, but with the desire to have 

 10 arguments to justify it, the -- that creates one additional 

 11 basis for saying we believed this information would be 

 12 otherwise available. Whether it's true or not. 

 13 My concern is with the information going away under the 

 14 combination of the safe harbor provision with the -- 

 15 JUDGE SCHEINDLIN: Isn't there something in the 

 16 safe harbor provision that says you have to act reasonably 

 17 to preserve that what you know will be discoverable in this 

 18 case, something like that? 

 19 MR. WREN: Yes, Your Honor. 

 20 JUDGE SCHEINDLIN: Again, you may not have acted 

 21 reasonably if you don't preserve the only source of 

 22 information, even if it's inaccessible at the moment, so the 

 23 two tied together actually might tell a producing party that 

 24 they better not make it unavailable. 

 25 MR. WREN: It might. And I would certainly argue 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 10 

 1 exactly what you just said, but I am very concerned, under 

 2 the current wording of the rules that that ambiguity creates 

 3 an argument for the other side. 

 4 JUDGE SCHEINDLIN: What ambiguity? 

 5 JUDGE ROSENTHAL: What ambiguity? 

 6 MR. WREN: The ambiguity of, for instance, 

 7 referring to information not accessed or -- or information 

 8 accessed versus that which is reasonably accessible, and the 

 9 additional condition being raised of whether they believe it 

 10 is available otherwise. I desire for there to be no 

 11 ambiguity that can lead to the arguable justification for 

 12 destruction of evidence. 

 13 JUDGE SCHEINDLIN: I understand. 

 14 JUDGE ROSENTHAL: Let me ask you one other 

 15 question on that about your practice not only in Texas but I 

 16 gather that you also have questions that proceed under rules 

 17 of other jurisdictions as well. 

 18 In your work on electronic discovery, have you found 

 19 that in most instances you are able to obtain sufficient 

 20 responsive information from electronically stored 

 21 information that is reasonably accessible, that is, that you 

 22 don't need to resort to backup tapes or fragmented data or 

 23 legacy data and all of the other ways of characterizing 

 24 stuff that is hard to get? 

 25 MR. WREN: Yes, Your Honor, as a general rule I 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 11 

 1 have found that. I am concerned about the exception. 

 2 Let me turn to a practical example of this. 

 3 JUDGE ROSENTHAL: When you say "as a general 

 4 rule," does that mean in almost every case that has been 

 5 true? 

 6 MR. WREN: True, in almost every case. 

 7 JUDGE SCHEINDLIN: Were you going to give us a 

 8 couple of practical examples? 

 9 MR. WREN: Yes. 

 10 JUDGE SCHEINDLIN: That might be helpful, I 

 11 think. 

 12 MR. WREN: The example I was going to speak to 

 13 involved a case I tried in the fall of 2001 in Los Angeles. 

 14 It involved a publicly-traded NASDAQ company that as the 

 15 defendant it was a breach of partnership agreement between 

 16 that company and another company, primarily an individual, 

 17 very small business, regarding a partnership opportunity, a 

 18 business opportunity for the partnership. 

 19 The business opportunity appeared to come undone and to 

 20 go nowhere and to die on the vine. In truth, what was 

 21 appearing, and found by the court, was that for a period of 

 22 months after the partnership opportunity seemed to have gone 

 23 away, that the publicly-traded company was actually involved 

 24 in secret negotiations in the implementation of the business 

 25 deal that until publicly announced months later was unknown 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 12 

 1 to the party that I represented. 

 2 Now, the way we were able to put that together was 

 3 through primarily e-mail discovery. There was -- we 

 4 presented evidence in court that there had been attempts 

 5 made to delete the record, to delete the trail, e-mails. We 

 6 were -- in that situation we did have to resort to going to 

 7 information that would under I believe -- certainly they 

 8 would have argued would not be reasonable. 

 9 JUDGE SCHEINDLIN: Well, where was it? 

 10 Where were the e-mails that you retrieved? 

 11 How did you get them? 

 12 MR. WREN: We had to retrieve them from backup 

 13 tapes from -- we did one search of a computer hard drive. 

 14 And my concern is that had there been a clear road map 

 15 provided for them to on a short cycle not just attempt to 

 16 delete as they did, but to move everything on short cycle to 

 17 backup tapes and then routinely continue with the 

 18 destruction of that, in the months before we ever even found 

 19 out there was an issue there, the trail would have been 

 20 gone. 

 21 PROFESSOR MARCUS: Excuse me, counsel. You said 

 22 clear road map. Is there no road map now, without federal 

 23 rules? 

 24 MR. WREN: I don't believe there's clear comfort. 

 25 I believe that's why there is a push for this. In order 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 13 

 1 to -- 

 2 PROFESSOR MARCUS: Is there any legal limitation 

 3 you're aware of on destroying, deleting, discarding the kind 

 4 of information you're talking about? 

 5 MR. WREN: Yes, there is. Under the exfoliation 

 6 doctrines under the common law of various states there 

 7 certainly is a response to that. Here in these rules there 

 8 is no -- for instance, the continued destruction by routine 

 9 operation, or even the -- the implementation of routine 

 10 operation is in no way tied to a valid business or 

 11 technological justification, and that's the concern. 

 12 PROFESSOR MARCUS: But what I was curious about 

 13 was whether you think there's some failing in the 

 14 preservation obligations you just mentioned that means that 

 15 there's inadequate protection in a case like the one you 

 16 have. 

 17 MR. WREN: In the case we had without the -- no. 

 18 In the case we had, as -- as the rules existed they worked. 

 19 The -- the exfoliation rules worked. 

 20 Whether they would work under the language being 

 21 proposed by these rules is a concern. Even if the court 

 22 believed -- 

 23 JUDGE RUSSELL: What makes you think they work 

 24 differently? 

 25 That's what I have a problem with. What makes you 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 14 

 1 think they work any differently? 

 2 MR. WREN: There is no -- there is no statement in 

 3 these rules that routine operation for destruction is tied 

 4 to a valid business or technological reason. It could be 

 5 simply to avoid litigation, period. That's the only reason. 

 6 JUDGE ROSENTHAL: If we made clearer that the 

 7 routine operation of the system had to be what some have 

 8 characterized in good faith, but a more precise way of 

 9 saying that, that is it was a neutral, legitimate business 

 10 purpose, not targeted to a particular subject matter that 

 11 was the subject of litigation, would that ease your concern 

 12 in that respect? 

 13 MR. WREN: It would certainly ease it, Your Honor. 

 14 JUDGE ROSENTHAL: All right. 

 15 MR. WREN: For instance, if there were language in 

 16 Rule 26 that -- excuse me. If there were language in Rule 

 17 37. Let me make sure I'm stating it correctly. 

 18 Yes. If there were language in Rule 26 to the effect 

 19 that a party need not provide discovery of electronically 

 20 stored information if the party identifies it is not 

 21 reasonably accessible. A motion by the requesting party to 

 22 the responding party must show that the information is not 

 23 reasonably accessible and that lack of accessibility is the 

 24 result of valid business justifications and/or valid 

 25 technical limitations. 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 15 

 1 JUDGE ROSENTHAL: Such as a good document 

 2 retention and destruction policy that was put into place 

 3 unrelated to any litigation. 

 4 MR. WREN: Unrelated to litigation. Exactly, Your 

 5 Honor. I'm still questioning whether it's sufficient, but 

 6 that would go a long way to easing the concerns that would 

 7 exist. 

 8 Your Honor, I don't want to run over my time. If I may 

 9 speak to another issue. 

 10 JUDGE ROSENTHAL: You may briefly. Thank you. 

 11 MR. WREN: Okay. I also believe that the issue 

 12 regarding access to data should not be a discovery -- 

 13 discoverability issue. It should be tied to cost. That is 

 14 really the issue. 

 15 JUDGE ROSENTHAL: Isn't there a difference between 

 16 saying that somebody has to produce something in the first 

 17 instance, number one, and, number two, who's going to pay 

 18 for that production, recognizing that there are costs of 

 19 production that go far beyond the physical costs that may be 

 20 necessary to restore and retrieve data? 

 21 There is the cost of the attorneys who have to review 

 22 it before producing it, the cost of attorneys who have to 

 23 make decision as to privilege before producing it. 

 24 Aren't they related but separate questions? 

 25 MR. WREN: Your Honor, I believe that cost is the 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 16 

 1 issue. And by making it -- by making discoverability the 

 2 issue, I am concerned that the information can be deemed -- 

 3 regardless of the willingness of a party to pay the 

 4 presented cost, that the information simply is not made 

 5 discoverable. I believe it is a cost issue. That's what 

 6 this is all about, and it should be treated as such. 

 7 JUDGE SCHEINDLIN: But what is the second tier? 

 8 Why do you say it's not discoverable? 

 9 It just shifts into that second tier where you're going 

 10 to have to make a little bit of a showing, but why is it not 

 11 discoverable? 

 12 MR. WREN: I believe by the way it is worded, 

 13 you're right, there is that ability to present good cause. 

 14 But, in essence, what that does is to present a presumption, 

 15 once there is a showing of not reasonably accessible. In 

 16 essence, it has created a presumption against 

 17 discoverability. 

 18 JUDGE SCHEINDLIN: I understand. But then you 

 19 come into the court and you say here's why I really need it, 

 20 by the way, I'm prepared to share some of the costs of 

 21 getting it because I realize it's hard to get at, but it's 

 22 not available anywhere else, and you explain your case and 

 23 you get it. It's not not discoverable, it's just that you 

 24 have to have to carry a burden, including cost, which is 

 25 what you just said you wanted to do. 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 17 

 1 MR. WREN: And I'm saying, Your Honor, I believe 

 2 that the proper issue should be one of cost, period. 

 3 Certainly there needs to be a showing of why it is needed. 

 4 But under the rules, as stated, there is a presumption 

 5 now that it is not discoverable. And I believe that that -- 

 6 the good cause provision can be to create a burden greater 

 7 than needs to be created. I think rather the issue ought to 

 8 be whether the -- assuming that it is not reasonably 

 9 accessible, that there has been a showing of a proper 

 10 balancing of the cost. 

 11 PROFESSOR MARCUS: Mr. Wren, is it your view that 

 12 under the rules now a responding party must search all its 

 13 backup tapes in response to an initial request unless it 

 14 gets an order from the court relieving it of that? 

 15 MR. WREN: No. That's not my position. 

 16 PROFESSOR MARCUS: Isn't that what the rule says, 

 17 that you don't have to do that? 

 18 MR. WREN: But it certainly must take steps to 

 19 review it. 

 20 JUDGE ROSENTHAL: So nobody can ever suspend the 

 21 routine deletion of backup tapes. 

 22 MR. WREN: I believe it depends on the situation, 

 23 but what I want to come back to is that there must be a 

 24 valid business or technological reason, not just this 

 25 blanket blessing of continued routine destruction. 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 18 

 1 JUDGE ROSENTHAL: Just so I understand your 

 2 position, are you suggesting that by framing the issue in 

 3 terms of cost rather than discoverability we move more 

 4 towards the Texas rule and have a presumption of cost 

 5 shifting for information that is not reasonably accessible? 

 6 MR. WREN: Not a presumption, Your Honor, but at 

 7 least an inquiry into it. 

 8 What I would like -- 

 9 JUDGE ROSENTHAL: Isn't that -- 

 10 MR. WREN: What I would prefer is that there not 

 11 be a presumption one way or the other. 

 12 JUDGE ROSENTHAL: You mean we not make any 

 13 change. 

 14 MR. WREN: By the due cause requirement there is a 

 15 presumption, I believe, that unfairly tilts the playing 

 16 field. 

 17 JUDGE ROSENTHAL: Are there other questions of Mr. 

 18 Wren? 

 19 JUDGE FITZWATER: Is it -- is it your concern that 

 20 the safe harbor will somehow affect exfoliation doctrines in 

 21 states? 

 22 MR. WREN: Yes. 

 23 JUDGE FITZWATER: Will you state the basis for 

 24 that concern. 

 25 MR. WREN: Yes. Exfoliation doctrine -- the case 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 19 

 1 law varies slightly lie in various states but it's 

 2 relatively uniform, and it goes to a reasonableness of 

 3 actions taken in light of what is known or should be known. 

 4 The current rule, by not tying to business 

 5 justification or -- the proposed rule, by tying -- without 

 6 tying to business justification or technological 

 7 justification, in essence, creates a situation where if 

 8 routine operation is implemented there is no longer an 

 9 inquiry required as to whether that is tied to legitimate 

 10 reasons, whether it is reasonable under the circumstances. 

 11 And I believe that potentially shifts the law on 

 12 exfoliation. 

 13 JUDGE ROSENTHAL: Thank you very much, Mr. Wren. 

 14 MR. WREN: Thank you, Your Honor. 

 15 I did -- and I apologize for this, I did belatedly 

 16 prepare written statements as well. May I present those to 

 17 Mr. McCabe? 

 18 JUDGE ROSENTHAL: Certainly. They will be made 

 19 part of our record. 

 20 Mr. Sloan. 

 21 MR. SLOAN: Good morning, Judge Rosenthal, members 

 22 of the committee. Thank you very much for the opportunity 

 23 to chat with you briefly. 

 24 My name is Peter Sloan. You do not have written 

 25 testimony from me. It will be forthcoming. I will get it 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 20 

 1 to the committee prior to the 15th. I can't decide where I 

 2 come down on 37(f), and I'm continuing to mull that over. 

 3 I am a private practice lawyer in a law firm in Kansas 

 4 City, Missouri, Blackwell Sanders Peper Martin. I'm a 

 5 reformed trial lawyer. It's been six years since I tried a 

 6 case and I never will for the rest of my career. My sole 

 7 practice is working with companies on records and 

 8 information management. I work not really with litigation 

 9 lawyers outside or in-house, I work with records management 

 10 professionals, and IT professionals, and some in-house 

 11 counsel who are striving and groping in the dark to figure 

 12 out what it is they're supposed to do with their records. 

 13 Your time is dear, mine is brief, so I will simply make my 

 14 three comments. 

 15 First, I almost hesitate to do this, it will likely 

 16 make people grumpy, but I think it's an important point so I 

 17 want to raise it. Throughout the amendments the reference 

 18 is to electronically stored information and that's what we 

 19 all call it. Actually though that's not what it is. It's 

 20 digitally stored information. 

 21 JUDGE ROSENTHAL: I have to tell you that we 

 22 actually considered that during our deliberations and one of 

 23 our astute members had a computer there and went like this 

 24 (indicating) and looked up and informed us that the first 

 25 definition in Webster's on digital was of and pertaining to 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 21 

 1 fingers, so we moved on from there. 

 2 MR. SLOAN: Since I joined this party late I don't 

 3 mean to take us back to earlier festivities, but I make 

 4 three brief comments explaining why I do think that's a 

 5 valid, though perhaps picky, change. 

 6 The stuff in which the information is that we all are 

 7 discussing and wish to see is seldom stored electronically. 

 8 It's stored predominantly in a magnetic medium 

 9 increasingly. It's stored optically. Very seldom is it 

 10 stored electronically. In fact, the term suggests confusion 

 11 because where digital data is housed electronically, is in 

 12 memory when it's being processed, so it's not accurate in 

 13 fact and it can cause confusion. 

 14 Second, your task and our hope is that we have rules 

 15 that stand the test of time, and as technology progresses 

 16 who knows in what medium this information will be housed. 

 17 In ten years it could be in the time space continuum for all 

 18 we know. But what we do know is that it will remain 

 19 digital. Ever since half a century ago Claude Shannon, Bell 

 20 Labs, figured out that binary digits or bits could be used 

 21 to house and transfer information, it's been digital, and it 

 22 will remain digital. 

 23 Last, and most importantly, what we do as lawyers in 

 24 this field is important and nice but nothing ever gets 

 25 accomplished until we work with an IT professional. More 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 22 

 1 than half the time we have no idea what they're talking 

 2 about. And it shouldn't surprise us that more than half the 

 3 time they have no idea what we're talking about. And 

 4 sometimes that is caused or exacerbated by us not using the 

 5 correct language, or the language that they understand. So 

 6 with that, I give that suggestion. 

 7 JUDGE ROSENTHAL: Do you -- may I ask one question 

 8 about that? 

 9 MR. SLOAN: Um-hum. 

 10 JUDGE ROSENTHAL: If we elected not to use 

 11 "digital," because it has other associations in this 

 12 transition period that we may be in between the world we 

 13 used -- the information world we used to live in and the 

 14 information world that our children will live in, do you 

 15 have a second choice as an alternative to electronically 

 16 stored information? 

 17 MR. SLOAN: Wouldn't presume to offer one. I 

 18 suggest that electronic evidence is alliterative and widely 

 19 used and people generally -- within the legal community 

 20 people generally understand what we're talking about. My 

 21 only suggestion is that it would be more accurate to refer 

 22 to it as digital. 

 23 My second point is simply that this work of the 

 24 committee is tremendously important and is -- is -- is to be 

 25 commended, and these amendments should be -- should be 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 23 

 1 passed along and recommended and put into the rules, because 

 2 they address some critical issues that have faced companies 

 3 and lawyers, and from my perspective, more importantly, 

 4 records managers and IT professionals in a great conundrum 

 5 for some -- for some time. So I applaud the committee's 

 6 work and I encourage you to push forward. 

 7 My third and last point is I get calls from clients 

 8 about a specific issue, and in my mind it's the elephant in 

 9 the room, and that is preservation and what do we do with 

 10 this stuff when a -- when a lawsuit is pending or impending, 

 11 and I don't know what to tell them. And I understand the 

 12 committee's reluctance due to the enabling act and other 

 13 concerns not to tackle preservation head on, but there are 

 14 things the committee is seeking to do such as the accessible 

 15 versus not reasonably accessible, such as the safe harbor. 

 16 JUDGE SCHEINDLIN: That's my question. If we pass 

 17 these in the form they are today and you are working in your 

 18 practice advising the records managers -- 

 19 MR. SLOAN: Yes. 

 20 JUDGE SCHEINDLIN: -- what would you do with 

 21 inaccessible material once the lawsuit is filed? 

 22 What would you say to your client? 

 23 MR. SLOAN: I don't know what to tell them under 

 24 these rules. I still struggle with that. 

 25 JUDGE SCHEINDLIN: That's bad. We haven't given 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 24 

 1 you enough guidance. 

 2 Do you think you have to preserve -- 

 3 MR. SLOAN: Yes. But I believe that you have not 

 4 because you feel constrained -- 

 5 JUDGE SCHEINDLIN: I know the reasons, but I'm 

 6 saying in terms of your being able to give guidance, would 

 7 you suggest that they preserve the inaccessible if it's not 

 8 available anywhere else and it might be discoverable under 

 9 the second tier? 

 10 Do they have to hold on to it? 

 11 Otherwise what's the point of the second tier, the 

 12 court says to the requesting party, okay, you win, and the 

 13 producer says, oh, but it's gone, I held none of it. That 

 14 doesn't make sense either, does it? 

 15 MR. SLOAN: Let's address that in the context of a 

 16 hypothetical specific. 

 17 A client that is large, a company that's large, lots of 

 18 people using e-mail and lots of dedicated exchange servers 

 19 and the e-mail is backed up in a traditional way currently 

 20 onto digital linear tape and there are four incremental 

 21 nightly runs, what I would advise that company to do is the 

 22 following. On the active side, on the active side, e-mail 

 23 is just a medium, it's not a record in and of itself. It's 

 24 analogous to white paper. There may be record worthy stuff 

 25 on the white paper or there may not be. E-mail is exactly 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 25 

 1 the same. But it all comes into this common pot receptacle 

 2 of the exchange server, and so the first of two things that 

 3 the company should do in an ordinary course of business is 

 4 have a process in place so that record worthy e-mail comes 

 5 out of the common pot exchange server and goes into some 

 6 form of records managements, and the remainder of the e-mail 

 7 that is not record worthy really needs to go away. 

 8 JUDGE SCHEINDLIN: But you're talking about the 

 9 active -- that's still on the people's active servers. 

 10 How long is that routinely kept with your clients, the 

 11 e-mail? 

 12 Is it six months? 

 13 Is it more? 

 14 MR. SLOAN: It varies. But if it is truly not 

 15 record worthy, if there's not a legal requirement, a legal 

 16 consideration in the ordinary course of business requiring 

 17 it to be retained, in my mind it's not a business record and 

 18 it can go away and it should go away. 

 19 JUDGE SCHEINDLIN: That's not what I was asking. 

 20 How long are people keeping it around on their own hard 

 21 drives? 

 22 MR. SLOAN: I leave it to them. Some have routine 

 23 practices of having it go away in 30 days, some in 60 days. 

 24 JUDGE SCHEINDLIN: Okay. 

 25 MR. SLOAN: I advise them if they are going to 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 26 

 1 have that kind of auto purged to have it triggered on a 

 2 particular date, rather than be rolling, for reasons that 

 3 will be apparent in a moment. In other words, It doesn't 

 4 roll off every day in 30 days. It appears on a particular 

 5 day of the month. So in fact e-mail could be on the active 

 6 side -- that's nonrecord worthy could be on the active side 

 7 for anywhere between 30 and 60 days, because that auto purge 

 8 is going to happen on a particular day. Again this is 

 9 ordinary course of business, no preservation duty. 

 10 On the backup side the whole purpose for disaster 

 11 recovery media is just that. And I tell clients go talk to 

 12 your IT professionals and ask them a single question, how 

 13 long do you need this backup media data to perform disaster 

 14 recovery, and specifically how many days. Not weeks. Not 

 15 month. How many days. 

 16 And the answer will always be between three days to ten 

 17 days. Sometimes as long as 30 days if someone's worried 

 18 about corruption as a disaster event. 

 19 JUDGE ROSENTHAL: So your notion of the perfect 

 20 world would be on that third day that backup tape is gone. 

 21 MR. SLOAN: Because it has fulfilled its only 

 22 purpose in the ordinary course of business, which is to 

 23 react to the disaster. That's the ordinary course. 

 24 Then the plot thickens. The preservation duty arises. 

 25 What should they do then. 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 27 

 1 What I hope clients will do is to vigorously pursue a 

 2 legal hold process. 

 3 JUDGE ROSENTHAL: On active data? 

 4 MR. SLOAN: On active data, because that's where 

 5 it's accessible. That's where you can find it, and you can 

 6 deal with it, and you can move it, and you can protect it, 

 7 and that's everyone's goal. 

 8 PROFESSOR MARCUS: Mr. Sloan, could I ask you a 

 9 question I think is about that? 

 10 MR. SLOAN: Yes. 

 11 PROFESSOR MARCUS: One of the things we have heard 

 12 from some is that e-mail communications in particular have 

 13 become the new place where companies communicate important 

 14 information to their employees about a variety of subjects. 

 15 What's your expectation about preserving that for a 

 16 company, that as opposed to what you might call chitchat? 

 17 MR. SLOAN: If it is something that is required by 

 18 law or a legal consideration or a business purpose to keep, 

 19 it's a record and it should be managed as other records. 

 20 PROFESSOR MARCUS: Now, you say "business 

 21 purpose." If the company notifies all of its employees 

 22 about things that employees need to be told, that would be 

 23 business purpose? 

 24 MR. SLOAN: In my mind. We're speaking in 

 25 generalities, but yes. 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 28 

 1 JUDGE RUSSELL: You give advice to clients. In 

 2 looking at our safe harbor provisions, what type of advice 

 3 would you give -- would it be different with the two 

 4 provisions we have, the one with more culpability and the 

 5 one with less culpability? 

 6 MR. SLOAN: I think that the safe harbor is quite 

 7 helpful, because it recognizes the validity and the need to 

 8 have some form of routine process that cleans house 

 9 appropriately. Appropriately. And for good faith and in 

 10 good purposes. 

 11 I would tell clients that the safe harbor is a -- a 

 12 wonderful effort to move the ball forward in clarifying that 

 13 issue, but under either alternative there are great 

 14 restraints on its extent. And I would also tell clients 

 15 that hopefully over time the rationale behind the safe 

 16 harbor will extend itself through judicial decisions, 

 17 earlier in the process and also perhaps more broadly. 

 18 JUDGE KEISLER: Mr. Sloan, Let's say you had a 

 19 client, picking up on what Mr. Wren was talking about, who 

 20 said I want to make sure that I preserve anything, even if 

 21 it's not reasonably accessible, that might not otherwise be 

 22 available and might be germane to some pending piece of 

 23 litigation. Is there an easy way for that client to execute 

 24 that intention, to identify what inaccessible data is not 

 25 otherwise available and is relevant to litigation, without 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 29 

 1 undergoing all the costs that responding to discovery with 

 2 respect to inaccessible data would impose in any event? 

 3 MR. SLOAN: It's not going to cost quite as much 

 4 as retrieving it, making it viewable, hiring the lawyers to 

 5 look through it and then putting it in a form appropriate 

 6 for production, but it's not going to be an easy task. I 

 7 mean, this is why it's inaccessible. 

 8 I mean, it's difficult because it's not reasonably 

 9 accessible. 

 10 JUDGE KEISLER: So even the process of identifying 

 11 the category that you would need to preserve would impose 

 12 some costs but not as much as producing it? 

 13 MR. SLOAN: Yes. Yes. And there is a -- a widely 

 14 stated notion, that I respectfully do not agree with, and 

 15 that is, well, it's just preservation, you know, what's the 

 16 cost, what's the harm, it's just a DLT tape, cost 40 bucks, 

 17 let's just set it over here. No one has had to go to the 

 18 expense of getting into it to find out what's there, and we 

 19 can put that off for another day and we'll sample it then 

 20 anyway, and it will -- it will all work out, it's not 

 21 expensive. 

 22 What we're focused on there is the cost of storage. 

 23 And it's minimal. I -- I can see that. The cost of storing 

 24 digital data is minimal, but the cost of storming is not the 

 25 same thing as the cost of retaining it. It's not the same 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 30 

 1 thing. Because another dilemma that faces clients is, okay, 

 2 backup media, we're going to try to execute a great, 

 3 vigorous legal hold process on the active side and we're 

 4 going to minimize as much as possible exercising 

 5 preservation by holding on to backup media. But we -- we -- 

 6 it's unclear. It's unclear what the rules say. It's 

 7 unclear what the court's say. And remember the timing in 

 8 which these decisions are made. These decisions are 

 9 agonized over sometimes before the lawsuit is ever actually 

 10 filed, before it's actually commenced, the preservation duty 

 11 arguably may have arisen, so there's no order in that case. 

 12 The rules themselves are not specifically enlightening. And 

 13 they have to decide what to do. 

 14 It is tempting to take that backup tape and set it down 

 15 and preserve it. The problem with that is whether you get 

 16 to it or not you run smack dab into what I refer to as the 

 17 serial preservation dilemma. 

 18 You set aside this tape, this backup media, and you may 

 19 or may not use it in that case but a company of any size, 

 20 son of a gun, the next week or the next month the next case 

 21 comes and after that the next case comes. There is no end 

 22 to this. That -- that backup media can never be put back 

 23 where it belongs, which is into the proper rotation. That's 

 24 the central dilemma. 

 25 Yes. 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 31 

 1 JUDGE ROSENTHAL: Which means that, if I 

 2 understand your nightmare world of the serial preservation 

 3 dilemma, your client has disposed of nothing and therefore 

 4 the world of discoverable information is infinite. 

 5 MR. SLOAN: Yes. 

 6 JUDGE SCHEINDLIN: Can I ask one more? 

 7 JUDGE ROSENTHAL: Go ahead. It's your time, then 

 8 I'll go. 

 9 JUDGE SCHEINDLIN: I know our time is short and I 

 10 have a lot of speakers here, but I have one quick question 

 11 for you. 

 12 I've been reading the comments and some comments are 

 13 worried that they don't know what "reasonably accessible" is 

 14 versus "inaccessible." You haven't seemed to have a problem 

 15 with that. 

 16 How do you understand the inaccessible? 

 17 MR. SLOAN: I have no problem about that. 

 18 JUDGE SCHEINDLIN: Can you quick tell me -- 

 19 MR. SLOAN: I think because I've been reading your 

 20 opinions and your notions. 

 21 JUDGE SCHEINDLIN: Tell me what you -- 

 22 MR. SLOAN: Judge, I've heard those who have 

 23 criticized that concept because it seems ill-defined or not 

 24 defined. 

 25 JUDGE SCHEINDLIN: Tell me what it is. What is 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 32 

 1 inaccessible. 

 2 MR. SLOAN: Because, as with any definitional 

 3 issue, sure, there's some gray things in the middle, but 

 4 it's intuitively clear that active data on the network that 

 5 is accessed on a daily basis in the normal operation of 

 6 business, that's accessible. 

 7 And over here data that is compressed and -- in a 

 8 backup medium that is extremely difficult to get to, it's 

 9 not impossible to access it, it's not impossible to get to, 

 10 but it's not reasonably accessible, that just seems crystal 

 11 clear to me. And by using that -- that language -- 

 12 JUDGE SCHEINDLIN: But is it not accessible 

 13 because it's expensive or because it would take forensic 

 14 experts? What makes it so hard to do? 

 15 MR. SLOAN: What makes it hard to do is the manner 

 16 in which the information is stored, and, frankly, its 

 17 volume. It's not impossible to get to it. 

 18 JUDGE SCHEINDLIN: No, I will realize that. 

 19 MR. SLOAN: And it's designed to not be impossible 

 20 to get to, because when we have a disaster we need to 

 21 immediately restore the system. 

 22 PROFESSOR MARCUS: How often does that happen? 

 23 MR. SLOAN: What makes it difficult to get to is 

 24 it is stored in a manner that's designed for that purpose, 

 25 which is the wide-scale restoration of a server environment, 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 33 

 1 rather than let's go find the e-mail or the memo that Billy 

 2 Joe sent to Bobby Sue on such and such a date. It's just 

 3 not designed for that. 

 4 JUDGE ROSENTHAL: It's designed to restore the 

 5 haystack rather than find any particular needle. 

 6 MR. SLOAN: Exactly. 

 7 PROFESSOR MARCUS: How -- I have a question about 

 8 backup media. 

 9 How often is it used either for disaster recovery or 

 10 other purposes? 

 11 Because one of the notes mentions the possibility that 

 12 it may have been accessed and that that relates on whether 

 13 it should be deemed accessible. 

 14 MR. SLOAN: The reality of this -- I'm just 

 15 speaking frankly with you. The reality of it is the stuff 

 16 is designed to restore systems, and that's its proper 

 17 purpose. And I encourage clients to pursue solely that 

 18 purpose. 

 19 But the reality of it is occasionally, in some 

 20 companies, when the CEO loses the e-mail he or she calls the 

 21 guy in IT and that constitutes a disaster for that IT 

 22 person's purposes. 

 23 (Laughter.) 

 24 And the problem there is the company has not pursued 

 25 the institutional discipline to have process trauma 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 34 

 1 personnel. So, yeah, that happens from time to time. I 

 2 wish it didn't, but it's human nature. 

 3 I think the language in the rules contemplate that 

 4 it's not a gotcha rule as proposed. That can happen from 

 5 time to time, but if it's clear to the court that the 

 6 purpose of this process and of this data is institutional 

 7 disaster recovery, we're not going to treat it as reasonably 

 8 accessible. 

 9 JUDGE HECHT: Given that that's human nature, do 

 10 you see any push either in business or technology to make 

 11 disaster recovery material more accessible? 

 12 MR. SLOAN: I don't. And I see that thread in 

 13 some of the -- in some of the written testimony and perhaps 

 14 in some of the concerns of the committee. 

 15 Technology is changing constantly. Who knows what will 

 16 come next. But I do not believe that the fundamental 

 17 character of disaster recovery storage strategies will 

 18 change, because think about what they're designed to do. 

 19 Regardless of if we're using DLT tape or we're using 

 20 something like Tivoli Storage Manager where we're 

 21 replicating information and putting it into kind of like a 

 22 server environment and then backing it up in turn, 

 23 regardless of the individual process, the purpose of 

 24 disaster recovery is to take a whole bunch of information 

 25 off of an active environment and store it somewhere briefly, 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 35 

 1 in case there is a disaster. And so just by the nature of 

 2 that request for a process we're going to be compressing 

 3 that data so it's easier to store, and we're only going to 

 4 be keeping it properly for a short period of time. 

 5 So for those reasons technology will change but I think 

 6 disaster recovery media and processes will still be 

 7 reasonably inaccessible under the proposed test. 

 8 JUDGE ROSENTHAL: Any other questions? 

 9 MR. SLOAN: Thank you very much. 

 10 JUDGE ROSENTHAL: Thank you, sir. 

 11 Mr. Beach. Good morning. 

 12 MR. BEACH: Good morning, Your Honors. 

 13 It's not often that I get in the courtroom, and when I 

 14 get in a courtroom I don't like to see this many judges. 

 15 I am Chuck Beach. I'm coordinator of corporate 

 16 litigation for Exxon Mobil Corporation. I thank you for 

 17 letting me comment on the rules, but I really want to thank 

 18 you for the work that you've done. I've been working on 

 19 this for a couple of years. I know that you've been working 

 20 on it for a lot longer. I appreciate the effort. I 

 21 understand what the effort is. 

 22 Unfortunately, given the nature of these hearings and 

 23 the time we have, I'm going to spend most of the time 

 24 telling you stuff I think you could have done better, but 

 25 that should not take away from the fact that what you have 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 36 

 1 put together is a remarkable package. It has identified the 

 2 problems and it has tried to deal with the problems in a 

 3 balanced fashion. 

 4 I said that I am from Exxon Mobil. Probably for the 

 5 purposes of this hearing what I should have said is I'm from 

 6 a company that has 15,000 active litigations. In the year 

 7 2004, which was a slow year, we got new litigations at the 

 8 rate of 225 a month. 

 9 A few other numbers. We operate in 200 countries in 

 10 the world. We have 306 offices around the world, seven -- 

 11 70 of them in the U.S. We generate 5.2 million e-mails a 

 12 day, about half of that in the U.S. We have 65,000 desktop 

 13 computers around the world and 30,000 laptop computers. 

 14 These are for our employees, about half of those in the U.S. 

 15 The computers we are now putting in have a storage 

 16 capacity of 40 gigabytes. I am not a techie, but I have 

 17 looked on the Internet -- 

 18 JUDGE SCHEINDLIN: One interruption, are you going 

 19 to give us this in writing? This is great information. 

 20 MR. BEACH: I will. 

 21 JUDGE SCHEINDLIN: We're frantically writing down 

 22 how many gigabytes, when you can tell us this. 

 23 MR. BEACH: I said I was going to give you these 

 24 in writing. I'm not sure how much clearance I can give -- 

 25 JUDGE ROSENTHAL: We have a record being made. 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 37 

 1 (Laughter.) 

 2 MR. BEACH: Okay. I have a record. You shouldn't 

 3 have told me that. Okay. 

 4 JUDGE ROSENTHAL: It will be on a backup tape 

 5 though. 

 6 MR. BEACH: If there's a record, the Business Week 

 7 article won't come out misquoting what I said, again. 

 8 Anyway, the storage -- I will put in written comments 

 9 afterwards. 

 10 JUDGE ROSENTHAL: Thank you. 

 11 MR. BEACH: The storage capacity of the computers 

 12 that we are putting in now, and I think will be completed by 

 13 next year, is 40 gigabytes. That is the equivalent of 20 

 14 million typewritten pages, so that's for each of our 

 15 employees, has the capacity to store on his laptop or his 

 16 desktop 20 million gigabytes. 

 17 We have, in addition to the 65,000 desktops and 30,000 

 18 laptops, we have between 15,000 and 20,000 blackberries and 

 19 PDAs around the world. 

 20 We next year are going to -- with the new technology 

 21 we're putting in, we're going to have things called thumb 

 22 drives. Now, I got my older boy a thumb drive for 

 23 Christmas. You can hold one gigabyte on that. One gigabyte 

 24 is 500,000 pages. Everybody is going to be walking around 

 25 with 500,000 pages in his pocket, and we will have an 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 38 

 1 estimated hundred thousand of those, 40,000 in the U.S. 

 2 We have 7,000 servers worldwide, 4,000 of them in the 

 3 U.S. We have one thousand to 2,000 networks worldwide, 

 4 about hall of those in the U.S. 

 5 We have 3,750 e-collaboration rooms. I assume that 

 6 they're chat room type things, for people to be working on 

 7 documents simultaneously. About 3,000 of those are in the 

 8 U.S. 

 9 We have 3,000 databases, 2,000 of those in the U.S. 

 10 Our total storage of information that we now have is 

 11 800 terabytes, 500 terabytes in the U.S. One terabyte 

 12 equals 500 million pages. 500 terabytes equals 250 billion 

 13 pages. 800 terabytes equals 400 billion pages. 

 14 I don't have worldwide figures on the disaster recovery 

 15 system. The latest figures I have on the disaster recovery 

 16 systems in the U.S. is that we generate 121,000 backup tapes 

 17 for disaster recovery purposes. 

 18 If we were ever to get an order, and we never have, 

 19 that told us that we would have to stop all of our backup 

 20 tapes, just the replacement of the backup tapes would cost 

 21 1.98 million dollars a month. That's over 20 -- that's 

 22 about 24 million dollars a year. 

 23 Now, I give you these figures because people look at 

 24 rules from different perspectives. And I think that judges 

 25 and outside counsel look at a lot of cases. When we're 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 39 

 1 looking at a lot of cases, we're looking at a lot of cases 

 2 for a lot of different parties. 

 3 When you give a rule, I have to look at a case that I 

 4 have to be able to do 15,000 times all at once, and I have 

 5 to prepare to do it 225 times again each month. Now, 

 6 luckily, it's not just me, but that is the perspective that 

 7 I'm looking at it. 

 8 I'm also looking at it from the perspective of a 

 9 company that has large, complex, very decentralized computer 

 10 systems. So a rule that will work for a simple, small 

 11 computer setup is not going to work as well for a large, 

 12 decentralized complex. 

 13 Now, all that, I'll get to specific comments on the 

 14 rules. And I'll start with the two-tier discovery proposal 

 15 in Rule 26(b)(2). 

 16 Basically what this would do is it would put two tiers 

 17 of electronic -- electronically stored information, that 

 18 which is reasonably accessible, and then people could 

 19 designate, put everybody on notice of what is not reasonably 

 20 accessible. And that, until somebody did something to put 

 21 that back into discovery, would be outside of -- of the 

 22 discovery. 

 23 PROFESSOR MARCUS: Will it be difficult for you to 

 24 make that designation? 

 25 MR. BEACH: I don't think it's going to be 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 40 

 1 difficult if the guidance in the committee note is as I 

 2 interpret it. And I interpret that as saying that you can 

 3 use broad categories. 

 4 And I assume that we are going to make that examination 

 5 and we're going to have broad categories available. There 

 6 may be some tweaking that we would have to do in particular 

 7 cases, if there were -- for instance, for certain legacy 

 8 data. But if we -- from the note, my understanding is that 

 9 if we say, look, information on a -- on the backup recovery 

 10 system is inaccessible, that's fine. And if we said, look, 

 11 in this particular case we have some legacy data that we got 

 12 from a merger ten years ago and it's on Yang systems and we 

 13 don't have the software, we don't have the hardware, we have 

 14 no idea what's on that, we don't know if it's relevant, so 

 15 we have explained that, we've explained why we don't know 

 16 it's relevant, we've explained why we can't recover it, your 

 17 note says that's adequate. 

 18 JUDGE SCHEINDLIN: What about preserving? 

 19 That seems to be the key question. 

 20 Now you've said you identified it as inaccessible and 

 21 done it in broad categories, I think that's fine, but what 

 22 are you going to do about preserving it? 

 23 MR. BEACH: Well, about preserving, that's where 

 24 the safe harbor comes in. Obviously, the legacy stuff isn't 

 25 going to go anywhere, it's not going to be destroyed. 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 41 

 1 The stuff on the backup tapes, those backup tapes are 

 2 going to continue to run. And that, as I think we 

 3 demonstrated, you can't stop 15,000 times, you can't stop 

 4 225 times a month. So -- 

 5 JUDGE ROSENTHAL: But can you -- One quick 

 6 question. But can you pinpoint it so you stop it on 

 7 one server? 

 8 In other words, you have backup systems that are 

 9 decentralized, you could theoretically stop it in one unit, 

 10 one office, one time frame, or couldn't you? 

 11 JUDGE SCHEINDLIN: At least segregate it for a 

 12 period of time until the second-tier motion is made and the 

 13 court rules? 

 14 MR. BEACH: I'm not a techie and I don't want to 

 15 get in too far over my head. You obviously don't have to 

 16 stop everything at once. The -- but when you talk about one 

 17 server, you talk about segregating, that, again, completely 

 18 ignores the complexity. 

 19 When we have to stop something, it's very seldom that 

 20 we have a decision that is made by -- if all we had to do 

 21 was stop the stuff for one person, but if you have people 

 22 dealing in Fairfax, people dealing in Houston, people 

 23 dealing in Dallas, and people dealing on the West Coast, 

 24 then you have to stop everything everywhere, because you 

 25 can't -- you can't pick and choose, and you don't know 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 42 

 1 quickly enough, and you have to do it 225 times a month. 

 2 JUDGE ROSENTHAL: Has it been your experience, Mr. 

 3 Beach, that if a -- that if when you are put on notice of a 

 4 litigation and you are able to identify the key personnel 

 5 who are likely to be the sources of information important to 

 6 that litigation, and a litigation hold is put on their 

 7 active data, so that it is preserved pending the development 

 8 of the litigation and refinement of your understanding of 

 9 what will need to be produced, if that is a accurate 

 10 description of how you generally operate, has it been your 

 11 experience that in most cases you are able to give adequate 

 12 responsive information in discovery from that active data 

 13 without any need to resort to backup tapes? 

 14 MR. BEACH: Yes. That has been our experience. I 

 15 don't think we've been sanctioned a lot in discovery for not 

 16 producing. Maybe we haven't done it fast enough, but I 

 17 don't think anyone has -- I'm not aware of a big Exxon Mobil 

 18 case that says that we do a bad job. 

 19 PROFESSOR MARCUS: So in Exxon's experience 

 20 sanctions are not a serious problem? 

 21 MR. BEACH: Well, they're a serious threat and 

 22 they are a serious problem. You don't want to be to faced 

 23 with them. You want to you want to be able to obey the 

 24 rules. You want to be able to have clear guidance and be 

 25 able to do what the rules say you're supposed to do. 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 43 

 1 PROFESSOR MARCUS: And Under the current rules 

 2 Exxon has succeeded in that? 

 3 MR. BEACH: Well, I'm on record here -- let me not 

 4 talk about Exxon Mobil. Let me talk about any large 

 5 company, other than Exxon Mobil. You could not -- you could 

 6 not stop -- if the rules say, and if under some of the cases 

 7 say, that when there is a threat of litigation that you 

 8 would have to stop the backup tapes that held the e-mails 

 9 and the word documents of the key players, you can't do 

 10 that. It's a practical impossibility. 

 11 PROFESSOR MARCUS: Well, the reason I asked the 

 12 question I asked is some that I think I recall have 

 13 suggested to us that there is outburst, onslaught, major 

 14 concern with sanctions being imposed. 

 15 MR. BEACH: Yes. 

 16 JUDGE SCHEINDLIN: And so I'm curious whether 

 17 Exxon has experienced actual sanctions indicating there is 

 18 such an onslaught. 

 19 MR. BEACH: Well, I think -- I think -- no, I am 

 20 not aware of any important sanction case against Exxon Mobil 

 21 for discovery. I'm sure that there have been minor 

 22 discovery violations, but I think that our job is to protect 

 23 our client. We can't wait for the train wreck. We have 

 24 to -- and we have to give our client advice. And we want to 

 25 follow the rules, and we can't -- other people can't follow 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 44 

 1 the rules. 

 2 JUDGE SCHEINDLIN: So the short answer to the 

 3 original question though, about being able to preserve the 

 4 inaccessible is -- depends on what the inaccessible is, old 

 5 legacy stuff you haven't destroyed for 15 years can sit 

 6 there a little longer but daily backups that are on a three 

 7 day or weekly or monthly overwrite schedule, you're going to 

 8 have to keep doing it. You are not going to be able to 

 9 preserve -- 

 10 MR. BEACH: You're going to have to keep doing 

 11 that. Now, under the rules, and what you've set up, whereas 

 12 you have the -- the -- you have to identify it. I mean, 

 13 when we get to the safe harbor, you have to identify it. 

 14 You have to put people on notice, hey, you know, this is 

 15 stuff we consider inaccessible. Your early discussion, 

 16 where you have to talk about what's being preserved and 

 17 what's not being reserved, that puts everyone on notice. So 

 18 then you can go in and you can ask the court -- if the other 

 19 side thinks that there is something essential that has to be 

 20 done that you're not doing, you can get the court to resolve 

 21 it. People are on notice. 

 22 I use the term the early identification and the early 

 23 discussion of preservation are sort of the entry fee to the 

 24 safe harbor. Those are the things that may be a pain in the 

 25 neck on something like that, but you're doing that because 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 45 

 1 you have to put people on notice that some of this stuff is 

 2 routinely going on, but it has to routinely go on. It has 

 3 to routinely go on because you can't do business if it 

 4 doesn't routinely go on. 

 5 PROFESSOR MARCUS: Your -- in a 26(F) conference 

 6 your lawyers are going to explain the nature of Exxon's 

 7 information systems to the other side so it can appreciate 

 8 the complexity and implications? 

 9 MR. BEACH: Well, I'm not sure that anybody is 

 10 going to appreciate the complexity. I don't, and I've been 

 11 talking to them for a long time. 

 12 I think what they will talk about in the conference is, 

 13 you know, we've -- we've identified the stuff that we think 

 14 is inaccessible and so that everybody knows that the backup 

 15 tape is still running. At that conference is the time when 

 16 people will talk about whether it's okay that that has to 

 17 keep running, or if it's not, if there's some reason that 

 18 you need extraordinary discovery, that's the time that you 

 19 hone in and you limit it. You say, okay, do it for these 

 20 five people in these -- in this location. 

 21 MR. GIRARD: Can you comment on the experiences 

 22 you've had in those type of exchanges with the opposing 

 23 parties as to how successful that's been typically? 

 24 MR. BEACH: No. I have to say I'm a coordinator 

 25 of corporate litigation. I just told you, I don't get in 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 46 

 1 the courtroom much. 

 2 MR. GIRARD: The second question then would be -- 

 3 MR. BEACH: I -- I -- I can tell you one 

 4 experience, and it was an experience where there was a -- a 

 5 state investigation of oil prices and we were dealing with a 

 6 state and they insisted that we stop the backup tapes. We 

 7 had to stop the backup tapes -- and this is something that I 

 8 personally handled. We had to stop the backup tapes for 

 9 e-mail and word documents at nine locations in the United 

 10 States. And that went on for 13 months. It was an ongoing 

 11 obligation. We generated 1400 backup tapes a month. The 

 12 cost was 121,000, just for replacing the backup tapes. So 

 13 that was over a million dollars just for replacing the 

 14 backup tapes. And I'm giving you the tip of the iceberg of 

 15 the cost. The only reason I'm giving you the tip of the 

 16 iceberg is that's a hard figure I could get at. I could 

 17 talk about the administrative cost, I could talk about the 

 18 storage cost but they're pretty fuzzy figures. And we 

 19 didn't have to search them. We never had to search them. 

 20 If we had to search them, it would have been then a much 

 21 greater cost. The irony is -- we had over 10,000 tapes. 

 22 I'm not sure at the end if we had to search them that there 

 23 would have been capacity among the vendors in the United 

 24 States to search them. That's one thing I've asked the 

 25 techies, you know, can they get information on that, because 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 47 

 1 my understanding is that there's a lot of stuff that's being 

 2 saved and there's not even capacity in the market to search 

 3 it if you had to. This isn't something that -- we can't do 

 4 it. You have to send it out to vendors to do it. 

 5 How do the vendors take Exxon Mobil's system, the 

 6 backup tapes, and do 'em all. So, I mean, it has to be 

 7 targeted. 

 8 There's -- I mean, the manual for complex litigation 

 9 says -- makes -- makes two points, I think, that are helpful 

 10 here. 

 11 First of all, it says that broad preservation orders 

 12 are unduly expensive and unduly disruptive. So let's start 

 13 from that. 

 14 If you don't have a safe harbor, every time you go into 

 15 a litigation or every time a litigation starts you're in 

 16 broad preservation mode. That's -- that's the default. And 

 17 you have to go in and narrow it. That's the reverse of what 

 18 it should be. 

 19 What it should be is everybody's on notice of what's 

 20 happening. We're giving notice. If there's a problem, 

 21 let's run in and fix it, but fix it narrowly, fix it 

 22 something that -- that you can -- that you can handle, 

 23 that -- that you can -- you can deal with. 

 24 The -- well, I can continue, or if you have more 

 25 questions I can -- I have a couple more things I would like 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 48 

 1 to say. 

 2 JUDGE ROSENTHAL: We are running short on time. 

 3 If you have some last comments to make -- 

 4 MR. BEACH: Well, I do want to comment on the 

 5 point that was raised about sort of the hypothetical 

 6 nightmare that case-determinative documents are going to be 

 7 destroyed. That's the nightmare on everybody's mind, that 

 8 that's what happens. The stuff is going to continue 

 9 operating, you're going to have some really essential stuff 

 10 that is going to get destroyed. I think, one, that ignores 

 11 the vast volume of active data. I'm talking about computers 

 12 that every employee has on his desk that's going to be able 

 13 to hold 20 million documents and nobody destroys anything, 

 14 and when they get through with that they archive it. So 

 15 there's vast, vast amounts of data in the active, reasonably 

 16 accessible files. 

 17 MR. GIRARD: Can I ask you this question though? 

 18 MR. BEACH: Sure. 

 19 MR. GIRARD: In a temporal sense, that active 

 20 data, how long would it stay active? 

 21 Say if you have a case file that involves events that 

 22 go back say three or four years, would it remain within the 

 23 world of active data at the point where the case was filed? 

 24 MR. BEACH: I think I'm the person at Exxon Mobil 

 25 that keeps the cleanest and the smallest amount of stuff on 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 49 

 1 the computer, because I print stuff out and put it in 

 2 files. I have stuff that goes back years. You don't erase 

 3 it. 

 4 Now, the e-mail, at least in our part of Exxon Mobil, 

 5 we have a limit of a hundred megabytes. I think a hundred 

 6 megabytes equates to 50,000 typewritten pages. And after 

 7 that you have to make a choice, are you going to go through 

 8 all that stuff and delete it or are you going to archive 

 9 it. I can archive it. I can't go through and delete it. 

 10 Once it gets that big, you can't go through and delete it. 

 11 And so everybody's saves it, and it's all -- it's there. I 

 12 mean, it's -- 

 13 JUDGE ROSENTHAL: And is it safe to say that if 

 14 there was a legitimate business need or purpose for keeping 

 15 it, there is purposeful archiving that occurs? 

 16 MR. BEACH: Correct. Yes. 

 17 Anything that has a business need or legal obligation 

 18 is not going to be destroyed by the routine operation of the 

 19 systems. 

 20 The only stuff that is destroyed by the routine 

 21 operation of the system is something that you do not have a 

 22 legal obligation or business need to keep. Anything that 

 23 you have a business need or a legal obligation, that has to 

 24 be archived in a place where you are going to be able to get 

 25 at it and you're going to have to keep it for -- if there's 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 50 

 1 a law, you're going to have to keep it for the -- the 

 2 statutory period, or if there's a business need you're going 

 3 to have to keep it for the duration of the business need. 

 4 And unfortunately for us, is that while people are 

 5 real good at saving the stuff, they're not very good at 

 6 deleting. 

 7 JUDGE KEISLER: Some companies though do I think, 

 8 Mr. Beach, have somewhat more aggressive policies than Exxon 

 9 Mobil appears to, that move data from categories that we 

 10 would consider active and accessible into categories that we 

 11 would consider relatively inaccessible, somewhat more 

 12 automatically than it sounds like -- 

 13 MR. BEACH: Well, I don't understand that. I 

 14 don't -- that to me doesn't ring true. You don't -- as a 

 15 business purpose you don't put records in a place you can't 

 16 get them. It doesn't make any sense. You can't run your 

 17 business that way. 

 18 We're in the oil and gas business. We're not in the 

 19 litigation business. Our systems are made to work in the 

 20 oil and gas business. You don't put records that you 

 21 need or that you're obligated to keep in an area that you 

 22 can't get at 'em. It's a waste of time. It just doesn't 

 23 happen. I mean -- now, if someone is going through and we 

 24 have, you know, Arthur Andersen, Enron, people are going 

 25 through and pushing the delete button, go after it. That's 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 51 

 1 not what we're talking about. 

 2 But the last point -- the last point is that you don't 

 3 make a rule on the hypothetical worst case. You can't make 

 4 your rules on a hypothetical worst case. 

 5 Your rules are under the mandate of Rule 1 of the 

 6 Federal Rules of Civil Procedure, which I only mentioned 

 7 once. I was going to mention a hundred times. 

 8 But the mandate is that your rule be administered and 

 9 for the just, inexpensive, and speedy resolution of every 

 10 case. If you make your rules based on the hypothetical 

 11 worst case, it's not going to work. It's going to be 

 12 inefficient. It's -- it's -- and that's not the way you 

 13 make rules. You have to make rules with the mandate of 

 14 federal Rule 1 in mind, is this going to promote the just, 

 15 speedy, and inexpensive resolution of the case. 

 16 JUDGE ROSENTHAL: I think at this time we have to 

 17 go to speedy. 

 18 MR. BEACH: That would be the expedient thing. 

 19 (Laughter.) 

 20 JUDGE ROSENTHAL: Thank you very much. 

 21 Ms. Kershaw. 

 22 MS. KERSHAW: Good morning. 

 23 I'm going to try to speak up, because even though I was 

 24 just in the second row, it is a little hard to hear back 

 25 there. If it seems like I'm shouting at you, please tell 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 52 

 1 me. I don't want to do that. 

 2 My name is Ann Kershaw. I am the founder and principal 

 3 of A. Kershaw, PC, attorneys and consultants, which is a 

 4 litigation management firm based in Terrytown, New York. 

 5 I want to thank you-all for your hard work in bringing 

 6 these proposed amendments to the public comment. I support 

 7 these amendments and I thank you for the opportunity to 

 8 comment. And I hope that my research and my professional 

 9 experience will bring some insights. 

 10 My firm works primarily with in-house counsel on volume 

 11 litigation management issues. 

 12 Over the past 15 years I've developed a keen interest 

 13 and expertise in electronic discovery, discovery generally 

 14 in volume cases or large cases. And in the past year much 

 15 of our work has been in designing and implementing 

 16 information preservation protocols, is what I call them, and 

 17 litigation response plans. We have been on the front line 

 18 of many of the issues that are affected by these proposed 

 19 amendments. 

 20 About a year ago, maybe a year and a half ago, one of 

 21 my clients, Altria Corporate Services, asked me to help them 

 22 assess the impact generally by the proposed amendments. And 

 23 as part of that process I learned that the committee was 

 24 interested in getting information, specific information 

 25 about the burdens of electronic discovery. 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 53 

 1 So I set about to discuss that with clients that I 

 2 consult for and other large companies. One of the first 

 3 things I learned was that the gamesmanship of electronic 

 4 discovery is so intense that in-house counsel is unwilling 

 5 to publicly discuss the issues. And I feel that that in 

 6 itself is a strong indication of a big problem. 

 7 I got around the problem, we overcame it by agreeing 

 8 that all of their responses to my inquiries would remain 

 9 confidential. So I can't tell you the source -- the 

 10 specific source of any of the information I'm going to share 

 11 with you today, but I will discuss generally my findings. 

 12 I chose 40 companies that I knew had expressed an 

 13 interest in electronic discovery. I sent the chief 

 14 litigation counsel of each company a general questionnaire, 

 15 which was really just meant to be a guidepost for my 

 16 follow-up telephone call. And I did call each company. 

 17 And I spoke with individuals personally responsible in 

 18 those companies for electronic discovery issues. 

 19 And I asked about the company's size. I asked about 

 20 its information and backup systems, its procedures and 

 21 experiences with e-discovery, costs, future outlook. I 

 22 obtained both qualitative and quantitative information. And 

 23 so far I have 10 sets of responses. That's a 25 percent 

 24 sample, not -- not too bad so far. I started -- I didn't 

 25 start this until January 10th, so, you know, we -- we were 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 54 

 1 moving pretty fast. 

 2 I'm continuing to solicit participation, and I'm 

 3 continuing to call people and I'm -- I'm expecting to get 

 4 more information. And I'm happy to put the whole gamut of 

 5 information in written responses, written comments before 

 6 the close of the February period. 

 7 JUDGE ROSENTHAL: That would be helpful. 

 8 MS. KERSHAW: Now, forgive me, I'm going to turn 

 9 to a little bit of reading because I want to make sure I get 

 10 all the right information. 

 11 On the quantitative front, one of the companies was 

 12 fairly small, about 1200 employees, but the rest were large 

 13 corporations, with more than 30,000, one 260,000 employees. 

 14 They include manufacturing, pharmaceuticals, banks, 

 15 petroleum and computer products companies. They for the 

 16 most part have offices in the U.S. and worldwide. They all 

 17 had in excess of 100 cases pending in federal court. One 

 18 had as many as 2400 cases currently. Another had 3,000. 

 19 Now, the information systems of these companies, as you 

 20 heard, are huge and complex. And the information I got is 

 21 consistent with what Mr. Beach was telling you, what you've 

 22 heard I think from Microsoft and Intel. 

 23 You're talking about companies with 7,000 servers 

 24 worldwide, 65,000 desktops in some cases, 30,000 laptops. 

 25 Some had as many as 5,000 databases, they thought. 1,000 to 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 55 

 1 2,000 networks, including local area networks. 20,000 

 2 blackberries or PDAs. The thumb drives, a hundred thousand 

 3 range. Imagine, that much data walking around in the back 

 4 pockets of your employees. 

 5 The data volume is also huge. The total data output by 

 6 these companies is estimated to exceed 800 terabytes, with 

 7 5.2 million e-mails exchanged daily. 

 8 One company estimated that they're now in the pedabyte 

 9 territory. I can't define pedabyte, but I know it's bigger 

 10 than a terabyte. 

 11 It was interesting that e-mail volume didn't 

 12 necessarily coincide with the size of a company. 

 13 One company of 177,000 employees reported 2.8 million 

 14 e-mails per day, whereas another company with 30,000 

 15 employees said its traffic is two and a half million a day. 

 16 My guess is that has something to do with the nature of 

 17 their business. 

 18 JUDGE SCHEINDLIN: Can I interrupt you? 

 19 I hope you don't think I'm rude. If we take all this 

 20 to mean it's a lot of data, a lot of information, you could 

 21 stop the numbers and tell us what we draw from that. 

 22 Because I know you're going to go on with more of those 

 23 numbers. I think we got the point already from Mr. Beach 

 24 but it's supplemented by you there's a tremendous amount of 

 25 data, more than we can mention. 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 56 

 1 MS. KERSHAW: I was giving you these numbers just 

 2 for the record. 

 3 JUDGE SCHEINDLIN: But we're going to run short. 

 4 MS. KERSHAW: I was just next going to go into 

 5 the backup information I got. It's consistent with what 

 6 you've heard. A 3,000 server company has told me it takes 

 7 one or two days to back up one server. 3,000 servers, 

 8 imagine how long that takes. 

 9 Regarding document retention policies, all of them 

 10 reported very comprehensive and robust policies that were 

 11 not static, that they constantly sought to improve. 

 12 And when I asked about their litigation hold 

 13 procedures, all of them told they me they thought they were 

 14 very effective for electronic material. 

 15 JUDGE ROSENTHAL: May I ask you a question about 

 16 that area? 

 17 MS. KERSHAW: Yes. 

 18 JUDGE ROSENTHAL: A number of people have told us 

 19 that in many cases, most cases, the information necessary 

 20 fully to respond to discovery is met by active data, without 

 21 any need to resort to inaccessible information. 

 22 Is it your experience that in most cases the requesting 

 23 party asks for ordinarily in the boilerplate form production 

 24 request for backup data and inaccessible data, right out of 

 25 the box? 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 57 

 1 MS. KERSHAW: Yeah. My experience is that they 

 2 ask for everything and then you object and you say you're 

 3 not going to go to your backup tapes and, you know, you see 

 4 if they're going to make a motion. 

 5 But it's also the fact, as Mr. Beach was saying, 

 6 there's a lot of people save stuff. I mean, think about 

 7 your own personal experience. How often do you go back and 

 8 delete work product. 

 9 I know I just updated my servers and I just took 

 10 everything that was on the old one and put it on the new 

 11 one. You can see stuff I did there in 1995. 

 12 JUDGE ROSENTHAL: Active. 

 13 MS. KERSHAW: Active. My backup systems don't 

 14 delete documents and Power Point presentations. We're pack 

 15 rats. Even when a company puts in a rule to try not to 

 16 prevent that, excessive saving, people who want to keep it 

 17 get around that. I have seen people who brought into a new 

 18 company things from their prior job, keeping it on things 

 19 like this (indicating) or what have you. 

 20 PROFESSOR MARCUS: You mentioned, Ms. Kershaw, 

 21 that the response with regard to the backup and 

 22 miscellaneous things you described would be we're not going 

 23 to go look at those, it's too difficult? 

 24 MS. KERSHAW: I'm speaking now as to my personal 

 25 experience. I'm not speaking now as to the survey. I 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 58 

 1 didn't ask them about their responses -- 

 2 PROFESSOR MARCUS: I understand that. 

 3 What I'm interested in is if that's correct whether 

 4 Rule 26(b)(2) on inaccessible information would serve a 

 5 purpose, because it sounds like you're getting there without 

 6 the benefit of a rule already. 

 7 MS. KERSHAW: I think there has been some 

 8 discussion about that. The point is the preservation. But 

 9 I have a client who had a broad preservation order in a case 

 10 in 1994 where they had to save absolutely everything, and 

 11 because of the subsequent litigation they're still paying 

 12 probably a million and a half a year just to store this 

 13 stuff. I know there's no way you can get it -- it's so old 

 14 that you can't -- you don't know what's there, but you can't 

 15 throw it out. That's really that -- what's that -- the 

 16 serial preservation issue. 

 17 But I -- I did ask a lot of questions about 

 18 accessibility. And let me just quickly note that they all 

 19 reported a noticeable and critical increase in e-discovery 

 20 in their cases and a correspondingly dramatic increase in 

 21 costs. 

 22 One company told me that in the last five years the 

 23 increase cost of -- due to e-discovery went up 300 percent. 

 24 It's increasingly becoming the most expensive part of 

 25 corporate litigation. And for the companies I interviewed 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 59 

 1 they said virtually every case in some level involves 

 2 electronic discovery. And about a third of the companies 

 3 responding told me they had settled cases because of 

 4 e-discovery issues. And 20 percent of them told me that 

 5 electronic discovery is the most expensive part of 

 6 litigation. A preservation -- 

 7 JUDGE SCHEINDLIN: I understand that, but what is 

 8 the point? 

 9 It's going to become the most expensive part because 

 10 all the records are stored electronically. It's not a 

 11 surprise. We're in an electronic world, not a paper world. 

 12 So what do you have to say about our proposal? 

 13 What do you have to say about our proposal? 

 14 MS. KERSHAW: I'm getting there. I really was 

 15 setting about on this endeavor to get information for the 

 16 record. I have opinions, but I'm really -- when I get into 

 17 some of the other issues on my questions of accessibility, 

 18 we have to talk about that. 

 19 I believe that all of these things about volume and 

 20 cost and all of that says it's a good thing to start 

 21 figuring out where the lines are and drawing lines and 

 22 however we do that it's all good and let's try and go there 

 23 and let's make sure that if we can that that happens. 

 24 JUDGE SCHEINDLIN: So you do support rules now, so 

 25 to speak? 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 60 

 1 MS. KERSHAW: Yes. Thank you. 

 2 JUDGE SCHEINDLIN: Okay. 

 3 MS. KERSHAW: Blanket prediscovery preservation 

 4 orders. Two companies said they were routine. One quoted a 

 5 preservation order for me by a federal judge, issued sua 

 6 sponte in a case with very broad claims, and that order 

 7 said, "Every -- each party shall preserve all documents and 

 8 other records containing information potentially relevant to 

 9 the subject matter of this litigation." 

 10 Now, the company subject to that blanket order issued a 

 11 proper litigation hold - I asked a lot of questions about 

 12 it - but it was sanctioned anyway, because of employee error 

 13 in following that hold. And there was no record that any of 

 14 those employee errors were willful, negligent, or even 

 15 substantively significant. 

 16 PROFESSOR MARCUS: Was that case in a federal 

 17 court? 

 18 MS. KERSHAW: Yes. And this company has since 

 19 suspended all of its e-mail deletions and it now has 56 

 20 servers housing all of its Microsoft exchange e-mail and 

 21 Microsoft as classified 40 of those servers as 

 22 unmaintainable, meaning they cannot be reliably backed up. 

 23 The same company thinks that -- or told me that it 

 24 spent more than ten million since 2002 to comply. That 

 25 company is not alone. 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 61 

 1 Another company told me that it spends two million a 

 2 month in tape and people cost alone to comply with a blanket 

 3 hold. That company also had to suspend its e-mail 

 4 deletions. 

 5 And I'm giving you this data to encourage and support 

 6 the notion that we really need to find a way to educate the 

 7 judiciary that these blanket preservation holds are a 

 8 problem. And under the way the rules currently are, I think 

 9 there's a concern that because it could take 90 days to get 

 10 to your meet and confirm, when someone files a suit they're 

 11 going to give you a notice that they think all the relevant 

 12 information is on the inaccessible stuff and they're going 

 13 to get a hold at least for that 90 day period until the meet 

 14 and confer. Well, that doesn't do a lot of good, because 

 15 once you have a hold that's where the problem is. 

 16 Accessibility, how to think about it and how to 

 17 identify it. 

 18 I asked them -- I have a list -- 

 19 PROFESSOR MARCUS: I have a question about what 

 20 you just said. 

 21 MS. KERSHAW: Yes. 

 22 PROFESSOR MARCUS: We've been told by some that I 

 23 would say are plaintiff's side that defense counsel try to 

 24 put off the 26(f) conference as long as possible. But it 

 25 sounds like you're saying the defense perspective would be 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 62 

 1 let's do that as soon as possible. Is that the experience 

 2 you're aware of? 

 3 MS. KERSHAW: That's what I recommend in my 

 4 consulting practice. You know, I can't say I don't run into 

 5 problems with some law firms. But, you know, I like to see 

 6 people walk into a meet and confer with a list of 

 7 everything, as Mr. Beach described, everything that they 

 8 have been able to identify, what their databases are, what 

 9 they have. 

 10 There are lawyers out there who still are the old 

 11 school of, you know, let's not make it easy. I think that 

 12 the new school is -- and I'm going to get to that, because I 

 13 see this as a trend. The new school is, no, it's let's make 

 14 it easy. Let's get it when it's created and let's identify 

 15 it, and let's make it easy to produce and quick to produce, 

 16 because, frankly, it's a lot less expensive to do that. 

 17 I asked -- I have a list of -- and I asked what they 

 18 thought was accessible or inaccessible. 

 19 The list was, you know, active e-mail accounts, deleted 

 20 e-mail fragments found on hard drives, e-mail found on 

 21 backup tapes, web sites, information created with old 

 22 formats, et cetera. I got different answers. 

 23 Everybody agreed that active e-mail that is unfiltered 

 24 is accessible, but there were different answers on web 

 25 sites. For most of the people they would say it depends. 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 63 

 1 One company told me that they took this list to all 

 2 their paralegals in their IT department and nobody could 

 3 agree. And the point there is that it's not just a 

 4 technical assessment. I think that it's -- it's good to 

 5 have a distinction, but I think it's a -- the distinction 

 6 needs to be more than just a technical definition. It 

 7 should include all the considerations that generally goes 

 8 into a discovery issue, including burden and cost and, of 

 9 course, the considerations of rule one. 

 10 The identify piece. Companies clearly know and can 

 11 identify what they use in the day-to-day conduct of their 

 12 business. But throughout the years of upgrades and 

 13 advancements and acquisitions, they have not maintained 

 14 records of what they have retired and where it is located, 

 15 and they're not organized on the premises of document 

 16 retrieval for litigation, so they don't maintain lists and 

 17 indices of all these potential retired data sources. 

 18 Companies I talked to are concerned that there is old 

 19 data that exists that they do not know about and cannot 

 20 identify it. If, you know, if the identification is just 

 21 generally, you know, backups, and this and that, I mean if 

 22 there's a category that says that -- all the stuff I don't 

 23 know about, which I think should be a given, but, you know, 

 24 in this world of gotchas I'm not sure that it is, and that 

 25 is the concern. 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 64 

 1 You know, people told me about situations where in a -- 

 2 in a high profile case that they had done everything under 

 3 the sun to collect, 72 CDs show up the night before the case 

 4 goes to the jury. I've just had another case, you know, 

 5 three years into the case some backup tapes are found in a 

 6 closet somewhere. They wouldn't have been able to identify 

 7 that stuff up-front. They're worried if you have this 

 8 identification requirement that if that happens down the 

 9 line somewhere their adversary is going to say, you lose, 

 10 you didn't identify, and they're at a disadvantage because 

 11 of that. 

 12 JUDGE ROSENTHAL: Ms. Kershaw, is your 

 13 recommendation to us that we provide greater specificity as 

 14 to what is a sufficient identification? 

 15 MS. KERSHAW: Yeah. Yeah. And maybe something in 

 16 the comments that says, you know, you can -- obviously you 

 17 can only identify what you know about or that it shouldn't 

 18 be used against you. I don't know the language. 

 19 JUDGE ROSENTHAL: I think you're close to being 

 20 out of time. 

 21 MS. KERSHAW: Okay. Let me move along. 

 22 JUDGE ROSENTHAL: Save some for writing. 

 23 MS. KERSHAW: I'm going to skip then to the -- 

 24 some of the anecdotally qualitative information I got. 

 25 Well, I've got some great stuff on safe harbor. 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 65 

 1 JUDGE ROSENTHAL: I promise we'll read it if you 

 2 submit it in writing. 

 3 MS. KERSHAW: Okay. All right. All right. All 

 4 right. 

 5 JUDGE ROSENTHAL: If you have some windup comments 

 6 you would like to make, that would be wonderful. 

 7 MS. KERSHAW: Sure. Sure. Sure. 

 8 On the safe harbor, I think you heard it, I'm going to 

 9 say it again, the e-discovery world is producing a 

 10 hundredfold times what was available in the paper world, and 

 11 at the same time there is just so many ways that someone can 

 12 just inadvertently lose information in the complicated 

 13 e-discovery world. And, you know, just think about the 

 14 knowledge gaps that exist between the user and the 

 15 technologist and the programmer and the developer and all 

 16 those folks who are trying to keep up with each other. 

 17 I just question whether it's fair to have an ordinary 

 18 negligence standard in the safe harbor. I think that it 

 19 isn't. And I think a safe harbor with an ordinary 

 20 negligence standard is really no safe harbor at all. It 

 21 should have a culpability standard of willfulness or 

 22 recklessness, particularly for what I call the case killer 

 23 sanctions, the adverse inference rulings or the striking of 

 24 a pleading. 

 25 JUDGE ROSENTHAL: Of course, the rule is designed 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 66 

 1 to apply to an entire range of sanctions. If we had 

 2 language in the note that provided greater guidance, that 

 3 is, that the higher the sanction the greater degree of 

 4 culpability that should be required, would that give you 

 5 some comfort? 

 6 MS. KERSHAW: Yes. Yeah. 

 7 I also think that one of the best things that can 

 8 happen in this e-discovery world is for every generator of 

 9 large data to have very solid, meaningful document retention 

 10 preservation litigation response plans. 

 11 And if you get brownie points for that in the safe 

 12 harbor notes, that would be great. I think that if you are 

 13 a company with a meaningful document retention plan that 

 14 that should weigh in your favor in considerations on a 

 15 sanction motion. 

 16 And, you know, I do want to reiterate, the trend that I 

 17 saw and heard about, companies being very proactive in 

 18 getting their information before a lawsuit is filed. 

 19 Companies that are subject to a lot of litigation know 

 20 generally what their adversaries want. They want all their 

 21 marketing documents. If they're a products company, they 

 22 want their research stuff. They want their financial 

 23 stuff. They're getting it. Some of them have pop-up boxes 

 24 now that say should this be saved for litigation. Yes. It 

 25 goes to a server. If you have a document management program 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 67 

 1 you click a box. This is all good. I see it happening. 

 2 One guy told me about his company is working to link 

 3 it's litigation department to its human resources department 

 4 and its consumer complaint department so that as things -- 

 5 problems emerged in those departments they could quickly 

 6 identify what documents and where they should start holding, 

 7 before any lawsuit was filed. 

 8 Well, I guess I should wrap up. I can tell. 

 9 I also just -- I have to say one more thing, that may 

 10 have been forgotten in this debate. But everybody said 

 11 that, you know, we should remember that a really effective 

 12 way to work on this problem is to narrow the discovery 

 13 requests. The discovery requests that companies face 

 14 continue to be very, very broad. And, as you heard, I think 

 15 you're going to hear again from some other people, 

 16 technologies -- search technologies are good at finding, you 

 17 know, a few in a lot, but it's really hard to use those 

 18 technologies to find all of the relevant stuff out of a 

 19 mass. And so, you know, getting more targeted discovery 

 20 requests is a very effective way to do this. 

 21 In closing, I'm going to say I think it's fair to say 

 22 that coping with discovery has been an uphill battle for 

 23 large data producers facing lots of litigation. And I feel 

 24 that in effect they have told me in some ways they feel that 

 25 the litigation owns the company in some areas. 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 68 

 1 I reiterate -- reiterate the mandate of Rule 1. The 

 2 rule should be construed and administered to ensure the 

 3 just, speedy, and inexpensive determination of every action. 

 4 Are we there yet? 

 5 No. 

 6 Huge electronic productions of largely irrelevant 

 7 material are taking us away from Rule 1. 

 8 Can we get there? 

 9 I -- I think we can. And I think thanks to your hard, 

 10 studied and determined work, I am hopeful that we will 

 11 attain the mandate of Rule 1. 

 12 JUDGE ROSENTHAL: Thank you, Ms. Kershaw. 

 13 We look forward to your written comments as well. 

 14 Mr. Bland. Good morning. 

 15 MR. BLAND: Good morning. 

 16 Thanks so much, Your Honor. My name is Paul Bland. 

 17 I'm with Trial Lawyers for Public Justice. We're a public 

 18 interest law firm. We do civil rights cases, environmental 

 19 cases. Almost everything I do are consumer class actions, 

 20 that's sort of my area. I mostly do appellate work. I'm 

 21 stepping in because one of our civil rights lawyers that was 

 22 supposed to do this, who has done most of the heavy lifting, 

 23 has had a baby five weeks early. So I've talked to a lot of 

 24 people who do discovery, but I myself don't do as much of it 

 25 as I probably should. 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 69 

 1 I'd like to talk first about the safe harbor rule, if I 

 2 might. I think it is very hard to tell how it's going to 

 3 play out with the law of exfoliation as it currently exits. 

 4 It differs somewhat from one state to another. There's some 

 5 states where it's rhetoric, some states where it isn't, and 

 6 the contours of it change quite a bit. 

 7 I understand that the note right now has language 

 8 designed to indicate that the rule is procedural, that in 

 9 keeping with the rules enabling act that it's not supposed 

 10 to be substantive. 

 11 I feel almost certain that when charges of exfoliation 

 12 are raised that this safe harbor is going to be invoked as a 

 13 way of responding to it, though. I think it's hard to 

 14 imagine that this will not become a central player in 

 15 debates about exfoliation. 

 16 One thing that immediately pops out to me about the way 

 17 I think this rule is going to play out in the safe harbor 

 18 provision, is because it has the language which indicates 

 19 that it does not apply in cases where there is a 

 20 preservation order, I think you're going to see that there's 

 21 going to be in virtually every significant, complex case, a 

 22 motion at the outset asking for a preservation order with 

 23 respect to overwriting programs. 

 24 JUDGE ROSENTHAL: We had a number of very 

 25 thoughtful comments at the Fordham conference which 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 70 

 1 indicated that the real problem for a lot of companies and 

 2 entities that are sued frequently is not reacting to a 

 3 tailored specific preservation order but rather dealing with 

 4 the uncertainty that exists if there is no preservation 

 5 order in the period before one is obtained or in reacting to 

 6 an ex parte save everything preservation order. 

 7 But if what you suggest would be a likely result of 

 8 having the safe harbor, a greater frequency of court-ordered 

 9 preservation requirements tailored to a particular case with 

 10 input from both sides, is that bad? 

 11 MR. BLAND: In -- I -- I certainly take Your 

 12 Honor's point. I think there is some circumstances where it 

 13 would be unfortunate. 

 14 First, there are a number of jurisdictions where I 

 15 think right now, under -- under principles of state law that 

 16 are already out there, that it's pretty clear that there is 

 17 effectively a -- a -- a -- a rule of law which would amount 

 18 to a -- a preservation order already. 

 19 There are a number of states where when we get into a 

 20 case we will send a letter at the outset that says under 

 21 North Carolina law we don't need to go and get an order like 

 22 this because it's clear these are things you need to keep 

 23 and we're not going to be able to prove our case down the 

 24 road if you don't have them. And what we're going to be 

 25 doing, we're going -- and now I think that such a letter, 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 71 

 1 and quoting this kind of law, I would be very nervous about 

 2 it given the language of the rule. I think you would need 

 3 to add a several month dance at the -- I think you're going 

 4 to add to an already sort of event laden discovery calendar 

 5 that you're going to at the beginning have a bunch of 

 6 litigation about that. I think there are going to be cases 

 7 where it is, unfortunately. 

 8 I take your point there are going to be cases where 

 9 spelling it out has -- has advantages, but I think that 

 10 there are a lot of places right now where that can be done 

 11 without going through a rigamarole, if you will. 

 12 One thing that I would also suggest that is -- is -- 

 13 should be focused on, when you look at this, so much of the 

 14 discussion is focused on e-mail. 

 15 In the consumer class action world a great deal of 

 16 litigation can only be proven with respect to financial 

 17 services companies, HMOs or whatnot, with databases, with 

 18 documents that are never, ever put onto paper. The 

 19 documents simply don't exist on paper. 

 20 I've had several cases where we have gotten into 

 21 battles over this where -- I listened to some of the 

 22 discussions, you know, there's zillions of documents and 

 23 they cost this incredible amount of money. I have been in a 

 24 number of cases where at the beginning of a case an HMO or 

 25 bank will come in and say we can't preserve these documents, 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 72 

 1 we have our overwriting program, and we will have go out and 

 2 hire an expert and come in. So many of these claims of 

 3 incredible costs are really wildly exaggerated. Part of the 

 4 reason for that is that -- one of the things that troubles 

 5 me about though the whole process here is that in some 

 6 extent we are making rules about estimates of how much 

 7 things cost to do with respect to computers right now. 

 8 Someone is coming in and saying it costs us this much under 

 9 current technology. These technologies are moving at such a 

 10 light speed. When I started practicing law none of the 

 11 lawyers in the large firm had computers on their desks. You 

 12 know, 15 years ago no one had the Internet. 

 13 You know, things have changed so incredibly rapidly. I 

 14 think that the technology responds somewhat to what the 

 15 users are looking for. If you say to people, well, if you're 

 16 going to buy this system -- 

 17 PROFESSOR MARCUS: Mr. Bland, before you move on 

 18 beyond databases, may I ask a question about that? 

 19 MR. BLAND: Please. 

 20 PROFESSOR MARCUS: That's your experience in 

 21 dealing with the litigations you have handled. 

 22 MR. BLAND: In my experience -- 

 23 PROFESSOR MARCUS: No. No. No. I mean that was 

 24 the sort of predicate question, that's correct that that 

 25 is. 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 73 

 1 MR. BLAND: Yes. 

 2 PROFESSOR MARCUS: We have heard that production 

 3 of databases really can't be done in the sense that they're 

 4 documents because they're relational and evolving at all 

 5 times. 

 6 How do you go about getting the information you want if 

 7 the other side has a relational database that is the source 

 8 of what you want. 

 9 MR. BLAND: Typically what we do is ask permission 

 10 to have our computer person go and analyze the data on their 

 11 system. There are many companies that find that a better 

 12 way of doing it, particularly in a case that's going to take 

 13 years. 

 14 A lot of the cases that I will handle there will be 

 15 three appeals before you actually get to the discovery. You 

 16 know, in consumer class actions, cases frequently take seven 

 17 years. I think Mr. Girard will probably be able to speak to 

 18 this from his experience with it. I have literally had 

 19 several cases, as I said, over the last year, where we've 

 20 gotten a hundred cents on the dollar, so these weren't like 

 21 phony, bad cases, but took three appeals in nine years. 

 22 If someone doesn't stop the overriding of the database 

 23 then when we get to the point we won the last appeal and 

 24 everyone knows they have to pay, they will say, well, we 

 25 actually really don't know who our customers are because all 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 74 

 1 that data from ten year ago is gone. 

 2 So we have to have somebody go early in and preserve 

 3 the stuff. Typically it will be our computer person working 

 4 on it directly with them. 

 5 JUDGE ROSENTHAL: I guess that comes back to my 

 6 same question. In those kinds of cases are you likely to 

 7 get involved with the other side early in the litigation to 

 8 reach a shared understanding as to what needs to be 

 9 preserved on a specific basis? 

 10 MR. BLAND: We frequently do get into that. And 

 11 it's -- it's -- it's varying levels of formality right now. 

 12 I am concerned that if we don't get the kind of order that's 

 13 specified though that we're going to run into problems at 

 14 the end of a case where the data is gone. 

 15 We have had several instances in cases with where we 

 16 thought there was an understanding and they changed law 

 17 firms, or whatever, at some place deep into it. 

 18 We had a case involving a large HMO in Maryland where 

 19 they did, in fact, destroy all of the computer data which 

 20 would allow you to identify any of the people who were 

 21 double billed. So at the end of the day we had this 

 22 ridiculous situation where we had essentially proven in 

 23 summary judgment that they had overbilled in a certain 

 24 amount and all of the names of the actual clients were 

 25 gone, so to all the money ends up -- 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 75 

 1 JUDGE SCHEINDLIN: The safe harbors we drafted, 

 2 shouldn't they have preserved that, if that was the only 

 3 source of those list of consumers then it would have been 

 4 absolutely unreasonable not to hold on to that list. 

 5 MR. BLAND: That's what we argued, and we got an 

 6 award in Maryland on that ground. 

 7 JUDGE SCHEINDLIN: Okay. And does our safe harbor 

 8 take that away from you? 

 9 MR. BLAND: That one I think you're right. I take 

 10 your point, Your Honor. 

 11 But I also have to say, I'm not sure what the driving 

 12 need for the rule is, in that, in terms of sanctions orders, 

 13 the cases where we have pursued those, and from talking to a 

 14 lot of people who get them, I'm not really aware of 

 15 widespread federal judges tyrannizing companies by entering 

 16 unfair sanctions orders. I don't understand the weight of 

 17 pressing need that gives rise to this, to some extent, which 

 18 I think is somewhat the flip side of Your Honor's point in 

 19 my illustration that it wouldn't have hurt so much. 

 20 I'd like to briefly also speak, if I could, about -- 

 21 oh, one other thing which I would like to add. I 

 22 apologize. I missed on my notes on the safe harbor issue. 

 23 I do not know how to pronounce the name of your famous 

 24 case. 

 25 JUDGE SCHEINDLIN: Zubulake. 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 76 

 1 MR. BLAND: In the Zubulake case, as I understand 

 2 it, the opinion had some important language that has been 

 3 quoted and used a lot in subsequent cases about where a 

 4 company should have reasonably anticipated that litigation 

 5 was coming. And at least in my review of the -- of the 

 6 committee note that accompanies the safe harbor provision, 

 7 while the case is mentioned as an illustration of the fact 

 8 that courts are looking at this, that language is not 

 9 there. And I think that that's very important. 

 10 It seems to be that the safe harbor imposed -- to the 

 11 extent it speaks about obligations not to destroy important 

 12 documents, it does so after a case has been filed. 

 13 In the course of reading endless newspaper articles 

 14 about how electronic discovery issues have come out, I've 

 15 run into a number of cases where the Wall Street Journal, 

 16 the New York Times will report incredibly important e-mails 

 17 that indicated basically that a company knew that something 

 18 had significant had gone wrong. A drug company has now got 

 19 a test that shows there are heart problems with people with 

 20 a certain disease, they are talking about this, they know 

 21 it's an issue. The language in Zubulake would seem to say 

 22 at that point this company should start saving e-mails back 

 23 and forth from scientists saying this is a problem. Things 

 24 that Elliott Spitzer and people are getting into the front 

 25 page of the papers. I'm worried that the safe harbor 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 77 

 1 doesn't seem to have language like that. We would prefer 

 2 not to see any amendments to this rule, but if you're going 

 3 to do that we would strongly urge you to consider that at 

 4 least. 

 5 With respect to Rule 26(b)(2), the reasonably 

 6 accessible language, there are a couple of concerns. Here 

 7 again, I think that you look at how rapidly technology 

 8 changes and what pressures are technology going to -- are 

 9 the technology changes going to react to. I think that the 

 10 proposal is going to give companies an incentive to devise 

 11 systems in which they will be able to characterize as not 

 12 reasonably accessible. 

 13 JUDGE ROSENTHAL: Can I ask you a question about 

 14 that? 

 15 We have had several speakers saying today that the 

 16 incentive that companies react most strongly to is that they 

 17 need to preserve on an active business information that they 

 18 have a business need for, they're not going to get rid of 

 19 that, information that they have a regulatory or legal 

 20 obligation to keep they're not going to put that in an 

 21 inaccessible basis. 

 22 What you're saying is you don't like the two tier 

 23 because it requires companies to keep -- it would encourage 

 24 companies to make inaccessible information for which they 

 25 have no business need and no legal obligation to keep. Is 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 78 

 1 that bad? 

 2 MR. BLAND: Your Honor, I'd like to say I'm a 

 3 little cynical. I would like to add what I think is a very 

 4 strong third reason that's going on with businesses. 

 5 After stories come out about Merrill Lynch gets caught 

 6 with these incredible documents saying we know that this is 

 7 the worst possible stock but we're going to give it an A 

 8 rating, Elliott Spitzer writes these cases, the legal 

 9 periodicals and the corporate counsel digest and stuff, 

 10 which for some reason they send me for free, is filled with 

 11 articles saying don't let this happen to you, you need 

 12 through your company and make sure that you are getting rid 

 13 of stuff, to make sure that it's not there the next time an 

 14 Elliott Spitzer comes, you need to have -- 

 15 JUDGE ROSENTHAL: I don't mean to interrupt you, 

 16 but I'm not sure you're not answering -- that you're 

 17 answering my question. 

 18 People may write things down that will wind up being 

 19 helpful to one side or another in litigation, but there is 

 20 no business need to keep that material, there is no legal or 

 21 regulatory obligation to keep that material. It's chatter. 

 22 Now, is it -- you may want to have it around because 

 23 it's really helpful in your next case, and there may be, as 

 24 well, chatter that would be very helpful to the other side, 

 25 that they would want to have around, but if there's no 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 79 

 1 business need to keep it, if there's no regulatory or legal 

 2 obligation need to keep it, is it -- on a policy level is it 

 3 a -- that an indictment of a rule that it would not require 

 4 companies or encourage companies to keep stuff that they 

 5 don't need to? 

 6 MR. BLAND: Your Honor, I don't mean to be 

 7 difficult, but I guess I have trouble with the premise that 

 8 there is no business need for it. 

 9 JUDGE ROSENTHAL: That's the question. 

 10 MR. BLAND: I think one of the things we just 

 11 heard is that most people actually working in a business 

 12 like to keep their records on things. People go back and 

 13 look at them. People want to have this stuff to how they're 

 14 going to operate their lives. I have piles of paper around 

 15 my desk that, you know, I may not need immediately. But I 

 16 think one of the things you're seeing in the legal 

 17 literature on this is a strong pressure from people saying 

 18 whether you would want to keep this stuff lying around or 

 19 not, we don't want you to have it, because we don't know 

 20 when the next one of these e-mails is that's going to cause 

 21 a problem for us. To avoid the, you know, Elliott Spitzer 

 22 problem, if you will, we need to hunt down these things, in 

 23 the normal course that other than this pressure you would 

 24 keep because you, the regular employee, don't remember 

 25 everything and think this would be a value to you. 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 80 

 1 And I think there's a lot of stuff like that there's 

 2 going to be an incentive to find ways to get rid of it. I 

 3 mean, people keep -- a lot of people have folders of e-mails 

 4 that they find are useful to go back and keep and look at. 

 5 And I think that what you're going to see is that there's 

 6 going to be pressure to devise systems that will enable the 

 7 lawyers to say, oh, we don't have to go look for those 

 8 things, even though the employees themselves would normally 

 9 keep them. 

 10 So if in fact we were talking about all things in which 

 11 there was no legitimate business purpose -- but I think what 

 12 is happening is litigation is driving a lot of what's being 

 13 defined as a business purpose, if you will. And not even 

 14 necessarily specific business litigation. It doesn't have 

 15 to be, we found out that this one drug is already causing 

 16 this. I think a fear some place down the road that somebody 

 17 is going to have done something that is going to cause the 

 18 company to become liable is driving the way computer systems 

 19 are going to be designed. 

 20 And I think that if -- if what you are telling these 

 21 people is, look, the way that we make the best business is 

 22 at the end of the day we need you to be able to get up and 

 23 say you can't get there from here, that's that going to be 

 24 the answer they're going to be able to come up and find. 

 25 It reminds me, if I could draw an analogy to the Clean 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 81 

 1 Air Act -- just one minute. I apologize. 

 2 When they first did the Clean Air Act technology 

 3 enforcing provisions, what the environmentalists call them, 

 4 air with respect to gas mileage, and they said all cars much 

 5 reach, you know, 16 miles per gallon or something by this 

 6 year, and General Motors came in and said we could never do 

 7 this, it's impossible. And back in the early 1970s the 

 8 Congress said, well, you know, you just have to do it. And 

 9 they did. 

 10 I mean, as computers are changing so incredibly rapidly 

 11 the idea that we would now say, well, these things are so 

 12 expensive to find you could never find them, all kinds of 

 13 new things are coming up repeatedly in our practice where 

 14 we're able to get experts to come in and say, well, they say 

 15 that's old legacy data, no one will be able to figure it 

 16 out. You know We've got some kid with a baseball cap turned 

 17 on backwards, he can solve that in like an hour. You know, 

 18 you give me $150 I can get that stuff out of there for you, 

 19 where the business came in and said it costs $40,000. 

 20 JUDGE ROSENTHAL: Doesn't the rule provide that 

 21 if you then can come in and say that's not inaccessible, the 

 22 two-tier structure doesn't apply? 

 23 MR. BLAND: Yes. That's true. But as was said 

 24 earlier, there's now a presumption. 

 25 JUDGE SCHEINDLIN: You did great, but that wasn't 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 82 

 1 the right answer. The right answer is it may not be 

 2 preserved. That's the answer to her question that you want 

 3 to give. It's all very well that it's there because you can 

 4 find this kid to take it out for $150, disproving the cost 

 5 argument, I understand that. 

 6 But if it's not there, the kid won't do you any good. 

 7 But your concern and a lot of people's concern is the 

 8 preservation order. 

 9 MR. BLAND: Thank you. 

 10 MR. GIRARD: Can I ask a quick question before 

 11 you go? 

 12 MR. BLAND: Yes. 

 13 MR. GIRARD: Can you comment on the Notion of 

 14 getting an early tailored preservation order in a consumer 

 15 case? 

 16 Is that realistic, in your experience, that you're 

 17 going to be able to get the attention of a judge or a 

 18 magistrate to focus on? 

 19 MR. BLAND: That is certainly a fair point. I 

 20 mean, I think that the very common experience -- it differs 

 21 a great deal from court to court, but there are many judges 

 22 who they first raise the discovery order will say something 

 23 like, look, can't you ALL be gentlemen and gentle ladies and 

 24 go and work this out. And it can take a long time before 

 25 you can get -- the thing that makes the discovery process 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 83 

 1 work so much worse than a trial is that you're not in the 

 2 presence of a grownup, if you will. 

 3 I mean, in a trial people don't make the kinds of 

 4 objections and so forth, because the judge is right there 

 5 and there will be consequences. There is a lot more games 

 6 playing. There is a lot more stonewalling and cheating in 

 7 discovery, and sometimes it is very slow to get the 

 8 attention of a court, I think that's very true. 

 9 JUDGE HECHT: Just one other question. In your 

 10 experience is it -- how often are blanket preservation 

 11 orders issued early in a case? 

 12 MR. BLAND: I guess -- I've heard the word 

 13 "blanket" raised, the idea, I guess, of every single bit of 

 14 information in Exxon's entire system -- I've never seen 

 15 anything like that. 

 16 We have gotten orders that -- I don't know if you would 

 17 characterize them as blanket or not, but which say all 

 18 documents related to the consumers' transactions in this, 

 19 whether they were charged this charge or not, what dates and 

 20 so forth, must be preserved. I -- is that a -- is that a 

 21 blanket or is that a narrow? 

 22 I don't -- I guess I apologize if I'm not following the 

 23 language well. 

 24 JUDGE HECHT: No. I'm just trying to get the idea 

 25 of what kind of blanket orders and how frequently. Anything 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 84 

 1 relevant to the complaint or -- 

 2 MR. BLAND: Well, I mean, in theory that is what 

 3 Rule 26 provides for, but I think that preservation orders 

 4 tend to be much more narrow than that. You hear anecdotes 

 5 about these bad state courts in certain places that 

 6 supposedly do that, but I certainly haven't seen federal 

 7 judges do something that a defendant has been able to come 

 8 in and say this is a seriously expensive thing if it's too 

 9 broad. I mean, it's usually something you can negotiate 

 10 down with the help of your computer person. 

 11 MR. GIRARD: I think part of the question is how 

 12 often is that happening in cases. 

 13 MR. BLAND: I have not seen it very broadly in my 

 14 cases. 

 15 JUDGE SCHEINDLIN: I guess my question is are you 

 16 seeking preservation orders in those cases? 

 17 MR. BLAND: It really depends on the state. 

 18 JUDGE SCHEINDLIN: Try federal court. 

 19 MR. BLAND: Yes. Although somehow those 

 20 exfoliation rules sometimes seem to carry over. It's 

 21 frequently, even in federal court, the law about destruction 

 22 of evidence is still frequently governed by state law -- 

 23 JUDGE SCHEINDLIN: Are you seeking preservation 

 24 orders -- 

 25 MR. BLAND: In many states we don't. In a few 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 85 

 1 states we have. 

 2 JUDGE SCHEINDLIN: When you go into federal court 

 3 you tend not to seek one? 

 4 MR. BLAND: In many states we do not. I'm sorry. 

 5 In our experience anyhow, maybe I'm making a choice of law 

 6 error here, but we in a number of cases don't do that. We 

 7 send a letter and say -- cite -- you know, here's the 

 8 California case that we say means you have to do this and 

 9 that -- that's usually worked for us. But there are some 

 10 places where we think the state law is mushier and we don't 

 11 trust it and we do go in and do that at the beginning. 

 12 Thank you very much, Your Honor. 

 13 JUDGE ROSENTHAL: Thank you, Mr. Bland. 

 14 Mr. Gardner. Good morning. 

 15 MR. GARDNER: Good morning, judge. 

 16 My name is Steve Gardner. I am here as chair emeritus 

 17 of the National Association of Consumer Advocates, NACA, 

 18 which is a nonprofit Washington-based advocacy group whose 

 19 membership is comprised of right now I think a little over 

 20 1,000 private and public sector attorneys, law provosts and 

 21 other such folks. I am testifying somewhat on my own 

 22 knowledge and somewhat based on the inherited knowledge of 

 23 members of our organization. 

 24 My first point, and I have prepared -- prefiled written 

 25 testimony. My first point, I'm not going to belabor, NACA, 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 86 

 1 I think you will hear from almost any plaintiff, lawyer or 

 2 organization, believes that special treatment of electronic 

 3 discovery is simply not needed, not called for and is, in 

 4 fact, going to create more dilatory and side litigation than 

 5 we currently see. 

 6 I'm not going to belabor that except to -- slightly, I 

 7 guess, by making two points. 

 8 I never thought I would be in a position of agreeing 

 9 with a lawyer from Exxon Mobil, but I do agree that y'all 

 10 should not rule on the hypothetical worst case. I would 

 11 extend that to say that you should also not write rules just 

 12 because Exxon Mobil needs them or other huge corporations, 

 13 because of their huge data retention policies and data 

 14 retention practices need them, but recognize that these 

 15 rules will not just apply to Exxon Mobil but will apply to 

 16 the Mobil station on the corner, it will apply to mid-sized 

 17 businesses and other small businesses. So the rules that 

 18 large corporations may actually need to protect themselves 

 19 in litigation will just make for side litigation or 

 20 needlessly hamper discovery when applied across the gamut. 

 21 JUDGE SCHEINDLIN: Can I interrupt with one 

 22 question? 

 23 It's not just large business, of course. It's any 

 24 large organization. In my court the most common defendant 

 25 is probably the City of New York or the United States, and 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 87 

 1 those are large organizations, as is Exxon Mobil, and they 

 2 have many of the same volume issues that Exxon Mobil has. 

 3 The city -- can you imagine the City of New York and its 

 4 document retention issues or the United States Government? 

 5 So I understand your point that you think some of this 

 6 is driven by big businesses desire to be protective, and I'm 

 7 concerned about big organizations which litigate in my court 

 8 all the time. 

 9 JUDGE ROSENTHAL: And let me also follow-up on 

 10 that with a somewhat different variation of the point, which 

 11 is that it is not only large entities that have -- are 

 12 subject to some of the concerns that animate these rules. 

 13 The small, individually owned service station may, indeed, 

 14 keep records on a computer and unbeknownst to the operator 

 15 of that computer there are routine recycling features of 

 16 that computer that are losing data every time that computer 

 17 is turned on or turned off. And if that person is subject 

 18 to discovery, that person may need the safe harbor more than 

 19 Exxon Mobil. 

 20 MR. GARDNER: That person may need the safe 

 21 harbor I think only -- and to Judge Scheindlin, I do want to 

 22 make clear, I'm not -- I'm not attempting to bad-mouth big 

 23 business. I am just saying the real concerns are for any 

 24 large entity. And some of them are valid, but they can be 

 25 dealt with as they are dealt with now. 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 88 

 1 JUDGE SCHEINDLIN: That's the question. Do our 

 2 current rules give enough protection to the issues that are 

 3 unique to electronically stored information. That's the 

 4 question. 

 5 MR. GARDNER: I believe that these are 

 6 exceptions. They are the worst cases is what you're hearing 

 7 from, by many who have testified. 

 8 JUDGE SCHEINDLIN: Actually, it's a daily problem. 

 9 If you listen to some of the statistics that Mr. Beach gave, 

 10 about 225 actions a month, I suspect that the City of New 

 11 York it's more than that and with the United States 

 12 Government it's more than that. So we're talking about 

 13 frequent parties in litigation. 

 14 MR. GARDNER: But not as to the Mobil dealer, not 

 15 as to the florist. 

 16 JUDGE SCHEINDLIN: They're just a percentage of 

 17 our parties. The greater percentage of our parties are 

 18 probably large organizations, once you add the 

 19 municipalities and the federal government. So do we have a 

 20 problem or don't we with electronic data? 

 21 MR. GARDNER: The problem is when companies refuse 

 22 to produce information. The problem is not when companies 

 23 are making production. 

 24 I do believe, and I don't want to belabor the point, 

 25 but I do believe that it is possible to fashion orders now 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 89 

 1 that protect discoverable data but do not subject the 

 2 company to sanctions in -- as part of a regularly recycled 

 3 program. 

 4 JUDGE SCHEINDLIN: Let me ask you a very pointed 

 5 question. 

 6 When you bring a lawsuit, do you think -- against a 

 7 company, the city or federal government, a large entity, do 

 8 you think they have to stop all their recycling and preserve 

 9 everything from that moment forward? 

 10 MR. GARDNER: At this point I don't think they do, 

 11 I don't think they should. But I do think that under these 

 12 rules, if they are adopted, and the company gets to make a 

 13 unilateral decision initially of what is reasonably 

 14 accessible -- and I will tell you that my experience is that 

 15 many of the defendants I deal with don't believe anything is 

 16 reasonably accessible if it isn't already in the public 

 17 domain, that they -- if they make that determination then 

 18 the concerns become very much greater as to the safe harbor. 

 19 Let me address -- in fact, let me skip to that. That 

 20 was I think my last comment, but I had a couple of points I 

 21 would like to make specifically on the safe harbor. 

 22 In passing, I would observe that the two-tier system is 

 23 going to create nothing but headaches from plaintiff's 

 24 lawyers. It is my practice now not to get a protective 

 25 order at the outset. It will be my practice to get a 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 90 

 1 protective order, and the broadest one possible at the 

 2 outset, if these rules kick into place, because I won't know 

 3 what's fixing to happen to them. 

 4 JUDGE SCHEINDLIN: Of course, these rules would 

 5 encourage you to sit down with your adversary and discuss 

 6 preservation, see if you can come to a voluntary agreement 

 7 as to what you really need preserved. And probably as 

 8 reasonable as you can be will help you get what you want. 

 9 It's the overpreservation that the adversary is worried 

 10 about. If you say what I really need are your customer 

 11 lists so if I win nine years from now I know who gets to 

 12 recover, they might be able to do that for you. 

 13 MR. GARDNER: And I might echo some cynicism of 

 14 other plaintiff's counsel, judge, in that those are not 

 15 often extraordinarily meaningful sit-downs. It's 

 16 unfortunate but true. When we meet in the meet and confer 

 17 it is pulling teeth rather than exchanging information. 

 18 JUDGE SCHEINDLIN: Do you think our proposal here 

 19 on 16 and 26 are helpful, by highlighting the need to do 

 20 that early and to make that adversary talk about 

 21 preservation with you? 

 22 MR. GARDNER: Helpful, but I don't think 

 23 sufficiently mandatory. 

 24 Justice Hecht was -- participated in writing some 

 25 wonderful early disclosures under a Texas law that are more 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 91 

 1 observed in the breach. The initial disclosures that are 

 2 asked for, we ask for them, we don't get them, there's 

 3 insufficient sanctions. It's a great concept, but in 

 4 reality it is very, very difficult to get that information. 

 5 The primary litigation in a lawsuit is avoiding making 

 6 discovery relevant facts. From a plaintiff's perspective 

 7 that's what we believe, because in frequent instances that's 

 8 what we see. 

 9 JUDGE ROSENTHAL: May I ask you a question about 

 10 that? 

 11 We've had several people tell us that it has been -- 

 12 from the plaintiff's side as well as the defense side, that 

 13 in the vast majority of cases discovery is fully dealt with, 

 14 that is, responsive information is found on active sources 

 15 of the computer, that there's no need to resort to backup 

 16 tapes or legacy data or what we are terming loosely not 

 17 reasonably accessible sources. Has that been your 

 18 experience? 

 19 MR. GARDNER: It's certainly been my experience 

 20 that that's what I get. 

 21 JUDGE ROSENTHAL: That's not my question. 

 22 Has it been your experience that in most cases that 

 23 satisfies what you need to get in discovery? 

 24 MR. GARDNER: I phrased it inartfully because I 

 25 was answering your question. 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 92 

 1 JUDGE ROSENTHAL: I'm sorry. 

 2 MR. GARDNER: That's what I get from defendants 

 3 who claim that that is all they have. I suspect that in a 

 4 global sense it's not true, that there is other information 

 5 on -- on -- archived and truly, honestly virtually 

 6 inaccessible data. But I know that what is produced to me 

 7 is what is from active files. 

 8 JUDGE ROSENTHAL: And in those cases do you then 

 9 feel the need to pursue what is archived and not 

 10 accessible? 

 11 MR. GARDNER: In a case where defense counsel 

 12 makes a good faith representation to that, that is what is 

 13 responsive, I would not feel the need to pursue. Under 

 14 these rules, I would. Because I would know that they are 

 15 asserting there might be something else out there in the 

 16 data they have not even looked at that might be responsive. 

 17 That causes concerns. 

 18 PROFESSOR MARCUS: The 26(b)(2) identification 

 19 provision would prompt you to pursue discovery you would not 

 20 otherwise pursue? 

 21 MR. GARDNER: If it were -- if I was advised that 

 22 responsive data might reside on something that they had not 

 23 looked at, then I would feel the need to make sure that 

 24 there wasn't something stuck away there that was relevant. 

 25 JUDGE RUSSELL: But don't you think that's what's 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 93 

 1 happening now, they're just not telling you? They're making 

 2 that determination or they don't know -- they don't know 

 3 it's out there, they don't ask the question, now they're 

 4 going to have to say this is accessible and this is not 

 5 accessible. 

 6 Aren't you going to be better off? 

 7 MR. GARDNER: Will I be better off today than I 

 8 was four years ago? 

 9 JUDGE RUSSELL: Yeah. 

 10 MR. GARDNER: I don't -- 

 11 JUDGE RUSSELL: At least they're going to tell you 

 12 it's there. I mean, I think the response you're getting is 

 13 this is all we have. What they're really saying is we made 

 14 a reasonable effort to do something, this is all we've come 

 15 up with. Now they're going to have to say, well, we know 

 16 there's some other stuff, other information, but we can't 

 17 get to it. 

 18 MR. GARDNER: It's absolutely true that we may -- 

 19 we will know it. I am just advising you that -- and it is a 

 20 function of the hide-and-go-seek game that we often play 

 21 with defendants that we have reason to believe in many 

 22 instances there is data there that we do need to obtain. 

 23 Let me address specifically three points on the -- the 

 24 safe harbor provision. 

 25 One thing, absolutely, please, please, please, keep it 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 94 

 1 at negligence. Don't give them more reason to be sloppy. 

 2 Negligence -- you know, negligence is not that low a 

 3 standard for -- because we're really here talking about 

 4 large companies and we are talking about large law firms who 

 5 have plenty of resources and will put a whole lot of 

 6 resources into this review. So it's not that easy to trip 

 7 over negligence. Anything else sends a signal that it's 

 8 okay to be negligent as long as the -- it's the Sergeant 

 9 Shultz from Hogan's Heros approach, it's okay not to know 

 10 something as long as you're not affirmatively seeking 

 11 ignorance. 

 12 Secondly, I think there is a small problem with 

 13 specific language that I would urge y'all to correct. The 

 14 test is something - and I'm paraphrasing - don't reasonably 

 15 believe to be discoverable. My understanding is, from 

 16 reading the initial response to discovery requests that are 

 17 compelled, they don't believe anything is discoverable. 

 18 The pro -- is that an adverb -- I would suggest would 

 19 be more properly something along the lines of information 

 20 not that's not discoverable but that may contain information 

 21 subject to a discovery response request or may contain 

 22 information, paraphrasing Rule 26, relating to the subject 

 23 matter of the litigation, whatever that wording is. But 

 24 something that does not invite the defendant to make a 

 25 determination, and they could absolutely do it in this 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 95 

 1 instance, that it's not discoverable. 

 2 The fact that the court later determines that it is 

 3 would then be a fait accompli. They would have determined 

 4 in advance that it's not discoverable. They could do that 

 5 because, as I said, they generally don't believe anything is 

 6 discoverable and thereby have an affirmative deletion 

 7 policy, even though they also know that there is a request 

 8 to which that relates pending that has not yet been ruled 

 9 on. And that is a very wide hole that a defense lawyer who 

 10 doesn't take advantage of it would be crossing over into 

 11 negligence as well. 

 12 JUDGE ROSENTHAL: If you could wind up your 

 13 remarks with regard to -- 

 14 MR. GARDNER: There was one more point also on 

 15 that, and then I wrote down in response to what one of the 

 16 members of the committee said -- and I'm trying to decipher 

 17 my writing. 

 18 JUDGE ROSENTHAL: I understand your problem. 

 19 MR. GARDNER: Oh, I don't think anything is as 

 20 acute as this one, Your Honor. 

 21 There was a question, I think it may have been from 

 22 you, judge, about the need -- the question of the need to 

 23 keep data versus the desire to get rid of it. 

 24 JUDGE ROSENTHAL: I hoped I asked it somewhat more 

 25 artfully, but go ahead. 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 96 

 1 (Laughter.) 

 2 MR. GARDNER: I suspect you did, and I will 

 3 presume without argument that you did, Your Honor. 

 4 The -- the question of whether these rules apply to 

 5 data that they don't feel as a corporate or as an 

 6 institutional matter they need to keep but that employees 

 7 may feel the need to keep is only relevant to the degree 

 8 that the safe harbor does exist. Otherwise, destruction 

 9 of -- well, the exfoliation rules sufficiently keep -- put 

 10 defendants at risk now, I think. And our concerns are -- as 

 11 to both the two-tiered approach and the safe harbor, is that 

 12 you're going to create an entire new body of law on what, as 

 13 Mr. Bland observed, is an ever developing technology. And I 

 14 think that we are asking for some trouble trying to predict 

 15 what electronic discovery will be four years from now and to 

 16 write rules with the almost micromanagement, if you can 

 17 bring in the -- the committee notes, comments, that these 

 18 rules do. I think that they go beyond that which is 

 19 necessary when broadly applied to every federal case. 

 20 When they are necessary, as in the Zuba -- Zubulake, 

 21 Your Honor? 

 22 JUDGE SCHEINDLIN: Zubulake. 

 23 MR. GARDNER: As in the Zubulake decision the 

 24 courts have shown themselves quite competent -- very 

 25 competent to deal with it. And if -- when these arise it is 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 97 

 1 better to take the current rules and apply them than to 

 2 write a whole new set of rules -- 

 3 JUDGE SCHEINDLIN: Mr. Gardner, the one thing we 

 4 haven't heard about this morning is privilege, and I noticed 

 5 you did put that in your written comments. If you could 

 6 just take really a minute, because we are at the end of your 

 7 time, which should end in two minutes, but could you take a 

 8 minute and just address your privilege point? 

 9 MR. GARDNER: Yes. The -- the problem, and I will 

 10 have said it much more artfully in my written comments, I 

 11 hope, is that it presumes facts not in evidence. The -- not 

 12 in existence, indeed. 

 13 The -- the need to create a pullback rule assumes that 

 14 before documents were produced in wholesale form they will 

 15 not, in fact, already have been reviewed, and that's just 

 16 not true. 

 17 JUDGE ROSENTHAL: May I ask you a question about 

 18 that? 

 19 MR. GARDNER: Yes. 

 20 JUDGE ROSENTHAL: Have you had any experience 

 21 under the Texas rule which has a -- is similar in part but, 

 22 of course, goes much further and actually prescribes the 

 23 outcome of the privilege forfeiture issue when there's been 

 24 inadvertent production, which the proposed federal rule does 

 25 not? 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 98 

 1 Have you had any experience with that rule? 

 2 MR. GARDNER: Not in the privilege context. Most 

 3 my practice these days is in federal court anyway. But when 

 4 there has been an inadvertent disclosure, I've given stuff 

 5 back. But this allows for gamesmanship, and it will create 

 6 gamesmanship, I can guarantee you, because they will either 

 7 willfully -- they won't negligently not review it. They 

 8 will willfully not review it not really caring -- because 

 9 when I find something I care about and I show it to them 

 10 then they will go -- man, I'm really sorry, I did not mean 

 11 to produce that, and now that you have moved -- you know, 

 12 when I'm at trial or moving for -- defending a summary 

 13 judgment based on material they produced, they can whip it 

 14 back. 

 15 This also, as I read it, applies not just to electronic 

 16 discovery. This is a rewriting of the rules overall. And I 

 17 see -- I don't know an instance where this has been a real 

 18 problem and that there have been a problem because of sloppy 

 19 review work by defense counsel. I don't think that exists. 

 20 And when it -- and in the rare instances when it happens, 

 21 despite every effort, my experience and the experience of 

 22 others is we may not like giving the stuff back, but we do 

 23 and we don't use it, so it's just not necessary. 

 24 JUDGE HECHT: Is it your experience that counsel 

 25 negotiate some kind of provision like this for pretrial or 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 99 

 1 case management order? 

 2 MR. GARDNER: On privilege? 

 3 JUDGE HECHT: Yes. 

 4 MR. GARDNER: Generally, Your Honor, with -- only 

 5 if we are entering into a protective order. By which I 

 6 mean, yes, in every case. In virtually any case when we 

 7 have discovery we do have to have a protective order. The 

 8 protective order will provide for inadvertent production of 

 9 privileged materials, and it's about the only part of the 

 10 protective order we don't argue about. 

 11 JUDGE HECHT: What is different from having a 

 12 provision in the rules than having that provision in a 

 13 protective order? 

 14 MR. GARDNER: Twofold. One is it is extremely 

 15 broad in its operation, allows it to be asserted anywhere 

 16 down the road. Actually, that is the second one as well. 

 17 There is no limitation on it. The -- it can be literally 

 18 months or years after the disclosure. 

 19 The inadvertent privilege is almost always in my 

 20 practice limited. If they give it to me in discovery, they 

 21 got to tell me pretty quick, so I'm not moving forward on 

 22 it. 

 23 JUDGE RUSSELL: The rules say within a reasonable 

 24 time. 

 25 MR. GARDNER: Yes. And that is also an invitation 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 100 

 1 for -- for additional argument. 

 2 But they will say, well, we didn't -- because we didn't 

 3 have to review it when we produced it, and we didn't need to 

 4 review it until we were on -- until he brought it up, until 

 5 he attempted to introduce it, until he put it on his exhibit 

 6 list, we objected within three days of knowing that we had 

 7 inadvertently disclosed it. 

 8 JUDGE KEISLER: Do you see any countervailing 

 9 advantage if they're deciding not to engage in the 

 10 significant privilege review in advance, that you're 

 11 actually getting the material perhaps more quickly earlier 

 12 in your own process than you might otherwise? 

 13 MR. GARDNER: The -- 

 14 JUDGE SCHEINDLIN: Particularly in cases of large 

 15 volume productions, where you would otherwise face a 

 16 significant delay. 

 17 MR. GIRARD: Isn't your response to that that you 

 18 have the option now to get that material produced by 

 19 agreeing to terms that provide for the claw back voluntarily 

 20 in the context of a protective order? 

 21 MR. GARDNER: With limitations and with a lot 

 22 greater specificity than here. And to answer your question 

 23 directly, I would have to have experience of that to answer 

 24 it. In other words, I would have to have a wide-open 

 25 production. In the twenty-whatever-seven years I've been 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 101 

 1 practicing, I would have to see it first, before I could 

 2 advise as to whether or not I found it useful. It just 

 3 doesn't -- it truly -- it doesn't happen. 

 4 We don't have -- with one exception I know of. Back 

 5 when I did regulatory work, Southwestern Bell took the 

 6 brilliant approach of opening all of its records to people, 

 7 such as me, representing consumer interests, knowing that we 

 8 didn't have the staff to go through the roomful of 

 9 documents. But with that one salient exception of 

 10 Southwestern Bell in a regulatory proceeding that showed as 

 11 far as we knew everything, I've never had a defendant offer 

 12 or -- to do that. Certainly I never got that broad a 

 13 production. 

 14 If I got it, I would feel a lot different about giving 

 15 a claw back as a principle. But we're not dealing with 

 16 the -- I don't think this will encourage wide-open 

 17 production. It will merely encourage claw backs on a more 

 18 unprincipled basis later. 

 19 Thank you very much. 

 20 JUDGE ROSENTHAL: Any other questions? 

 21 Thank you very much. 

 22 Mr. Gregory Lederer. 

 23 Sorry if I mispronounced your name. 

 24 We will hear from you, Mr. Lederer, and then we will 

 25 take a brief break. 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 102 

 1 MR. GARDNER: Good morning. 

 2 My name is Greg Lederer. I'm a lawyer from Cedar 

 3 Rapids, Iowa. I am here on behalf of and as president elect 

 4 of the International Association of Defense Counsel. IADC 

 5 is a 2400 member organization of lawyers who defend 

 6 individuals and entities in civil litigation and represent 

 7 them in commercial litigation on either side. Membership is 

 8 peer review and invitation only. How I became a member is a 

 9 constant mystery to my parents. 

 10 I would refer the -- the committee to the written and 

 11 oral submissions. A number of our members -- I'll -- I'm 

 12 sure I'll omit someone, but I would refer the committee to 

 13 the written and oral submissions by Walter Sinclair, David 

 14 Dukes, and later today Mike Pope, John Martin and Steve 

 15 Morrison. These folks know far more about electronic 

 16 discovery in large cases than I do. 

 17 I have a different perspective. I come from Cedar 

 18 Rapids, Iowa, a 30 year lawyer law firm, in a 200,000 

 19 Metropolitan area. My cases are not monster cases. But my 

 20 cases have elements of electronic discovery. Not every 

 21 time, but often enough that it has become a problem. And I 

 22 don't represent the Exxon Mobils, because they don't get 

 23 sued so much in Cedar Rapids, Iowa. 

 24 But I represent some significant-sized companies, but I 

 25 also represent some small companies, a husband and wife 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 103 

 1 company from New Hampton, Iowa, who install grain bins. 

 2 They have five computers and they're networked. I represent 

 3 a company that manufacturers, sells, delivers and pours 

 4 ready-mix concrete in Iowa and several other states. We 

 5 have servers in three of those states. They're networked. 

 6 They have 300 employees, some of whom have PDAs. They have 

 7 those electronic issues. They are on much smaller scales 

 8 than what you hear about in testimony. But let me tell you, 

 9 they have litigation, and when electronic discovery requests 

 10 comes in, they -- with all due respect to the larger 

 11 companies and the monster cases, those kinds of requests can 

 12 paralyze small companies. Because, number one, they are not 

 13 staffed to handle their normal business activities 

 14 electronically in the first place. 

 15 JUDGE ROSENTHAL: Mr. Lederer, is your overall 

 16 point that the proposed amendments will help clarify and 

 17 guide your clients? 

 18 MR. GARDNER: Yes. I want to talk specifically 

 19 about two -- two components, what I call the meet and confer 

 20 component, I believe is essential, because it has -- it 

 21 gives the clients that I see and the litigation that I see 

 22 the opportunity to anticipate problems at an early stage and 

 23 avoid embarrassment later. 

 24 I personally would suggest that the meet-and-confer 

 25 language be more expansive than simply preservation. I 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 104 

 1 think that preservation is an important component of that, 

 2 and I certainly have no problem with its mention, but I 

 3 would -- I would hope that the language would permit people 

 4 to meet and confer about all parameters of electronic 

 5 discovery. 

 6 The other point that I want to commend to you is cost 

 7 shifting. And I will just tell you anecdotally that 

 8 whenever electronic discovery comes up, in my practice, I 

 9 take the position that if you want something on this you're 

 10 going to have to pay for it. So far -- so far that's 

 11 worked. I'm not that good, and I don't expect that to be 

 12 successful much longer. 

 13 PROFESSOR MARCUS: When you say it's worked, would 

 14 you tell us how it was worked? 

 15 MR. GARDNER: It has worked either because the 

 16 other side has abandoned their -- their request or we have 

 17 worked it out at a level that they can afford. 

 18 What I'm saying is that no one has taken me to a judge 

 19 yet on that issue. It will probably happen next week, but 

 20 it hasn't happened yet. 

 21 What I want to commend to you is -- is -- is 

 22 strengthening the provision that you have proposed to either 

 23 mandatory cost shifting or at minimum presumption. If -- 

 24 if -- if you don't do that, then you let the lawsuit 

 25 control. 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 105 

 1 I'm a believer in the market. If my -- my mother 

 2 taught me, if you make a mess, clean it up. 

 3 JUDGE SCHEINDLIN: Excuse me. I really have a 

 4 question that's troubling me. Why is electronic discovery 

 5 different than any other type of discovery with respect to 

 6 that? 

 7 Are you arguing for a systemwide change -- let me 

 8 finish. 

 9 Should we have a presumption that the requesting party 

 10 has to pay for what it gets? 

 11 What is it about electronic data which is cheaper to 

 12 produce and cheaper to get at than paper ever was, 

 13 particularly with respect to obviously here to the active 

 14 data, why should we shift our presumption to requesting 

 15 party pays? 

 16 MR. GARDNER: I don't believe that you have to 

 17 change the presumption -- 

 18 JUDGE SCHEINDLIN: You just suggested that. 

 19 MR. GARDNER: -- that the requesting party change 

 20 on a blanket basis. 

 21 JUDGE SCHEINDLIN: I thought you just suggested 

 22 that. 

 23 MR. GARDNER: I'm sorry. I believe that with 

 24 respect to extra -- extraordinary production that is 

 25 required -- 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 106 

 1 JUDGE SCHEINDLIN: Are you talking about the 

 2 inaccessible now, such as the legacy data, the deleted data, 

 3 the backup data? 

 4 MR. GARDNER: If a small company has to undergo 

 5 expense that they don't have to undergo in the normal course 

 6 of their day-to-day business, in order to regurgitate 

 7 electronic evidence or records, then I would suggest that at 

 8 minimum there be a presumption that the side that wants that 

 9 evidence should have to pay for it. Otherwise the -- the 

 10 lawsuit controls. 

 11 I believe that the market -- if you put the market in 

 12 the middle of that discovery transaction, I believe that the 

 13 market will help the requesting party decide just exactly 

 14 what they really need and how much they're willing to spend 

 15 to get it. 

 16 I believe that if you combine cost shifting with early 

 17 discussion -- and I wish I had a suggestion for how to 

 18 enforce early discussion, because my experience is that it 

 19 varies from court to court and from judge to judge -- 

 20 PROFESSOR MARCUS: Do you -- do you usually 

 21 represent -- represent defendants? 

 22 MR. GARDNER: Yes, sir. 

 23 PROFESSOR MARCUS: And are you in a hurry or -- to 

 24 have that meeting or do you want to put it off until the 

 25 last minute? 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 107 

 1 MR. GARDNER: It depends, but rarely at the last 

 2 minute. Normally I would just as soon get in and find out 

 3 what we're going to talk about, because the sooner I get 

 4 that resolved, the sooner I can get to the interesting part 

 5 of the lawsuit. 

 6 I urge you to combine those two things. I ask you to 

 7 give serious consideration to heightening the cost-shifting 

 8 language. 

 9 Thank you very much. 

 10 JUDGE ROSENTHAL: Thank you, Mr. Lederer. 

 11 We'll take a fifteen minute break. 

 12 (Recess taken.) 

 13 JUDGE ROSENTHAL: I think we're ready to begin 

 14 with Mr. Summerville. 

 15 Good morning. 

 16 MR. GARDNER: Good morning. 

 17 JUDGE ROSENTHAL: I understand the microphone has 

 18 been amplified, so you might find yourself louder than you 

 19 expected to. 

 20 MR. SUMMERVILLE: If you find me too loud, let me 

 21 know. 

 22 Each time I step to a lectern like this I feel 

 23 compelled to say may it please the court. Good morning. 

 24 JUDGE ROSENTHAL: Good morning. 

 25 MR. SUMMERVILLE: My name is Darren Summerville. 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 108 

 1 I'm an attorney with the firm of Bondurant, Mixon & Elmore 

 2 in Atlanta, Georgia. I'm here today not only on behalf of 

 3 myself but also on behalf of the Impact Fund, a citizens' 

 4 right group based in California that provides an array of 

 5 litigation services to civil rights practices. 

 6 I believe the committee heard the testimony of Ms. 

 7 Joselin Market (phonetic) just a couple of weeks ago. In 

 8 that same vein I have several comments as to the proposed 

 9 rules. And as with any discussion or debate, I believe 

 10 context is quite important and it's important not just to 

 11 cite what we're really talking about here. 

 12 What we're talking about is accessibility to relevant 

 13 evidence. As to the two-tiered discovery process, let the 

 14 committee please not lose sight of the idea that we're 

 15 talking about relevant evidence. We're not talking about 

 16 evidence that should be swept under a rug from the outset 

 17 but, instead, something that under the current rules and 

 18 under the rules since 1939 has been presumed discoverable. 

 19 The watershed nature of the proposed two-tier discovery 

 20 system is just that, a watershed. This would be one of the 

 21 few exceptions that I certainly have come across or 

 22 certainly am aware of -- 

 23 JUDGE SCHEINDLIN: Can I interrupt by challenging 

 24 the presumption? 

 25 MR. SUMMERVILLE: Of course. 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 109 

 1 JUDGE SCHEINDLIN: The problem is that probably 

 2 the vast, vast, vast percentage of this inaccessible data is 

 3 not relevant evidence. That's the problem. 

 4 MR. SUMMERVILLE: And that probably is also true 

 5 outside of the electronic discovery context as well. It is 

 6 difficult from the outset to know relevant in this corner 

 7 and irrelevant in another, of course. 

 8 JUDGE SCHEINDLIN: Right. But probably we know 

 9 from experience that with the inaccessible it sweeps up so 

 10 much that the overwhelming percentage of it is not relevant 

 11 evidence. Somewhere in there, there may be something, 

 12 right? But the vast percentage will not be. 

 13 MR. SUMMERVILLE: I think on a case-by-case basis 

 14 that generalized statement is, of course, correct. All the 

 15 information available to a particular business organization 

 16 will not be relevant to a given dispute. That is a given. 

 17 However, again, let's not lose sight of the idea that 

 18 within the haystack there are certainly several needles that 

 19 might very well be out there. 

 20 JUDGE ROSENTHAL: Mr. Summerville, has it been 

 21 your experience that in most cases the accessible data 

 22 largely provides the information necessary to fully respond 

 23 to discovery needs? 

 24 MR. SUMMERVILLE: As a general statement, I would 

 25 say that is probably more true than not, but there are 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 110 

 1 certainly examples that I would like to present to the 

 2 committee in which that was not the case. And I guess I 

 3 could use that as a transition to discuss the specific -- 

 4 PROFESSOR MARCUS: Well, Mr. Summerville, before 

 5 you make that transition, just one other sort of background 

 6 question. 

 7 Would it be wrong to assume that ordinarily in the 

 8 litigations on which you have worked the responding party 

 9 does not go to the inaccessible information in the first 

 10 instance in responding to discovery, but only later, if at 

 11 all? 

 12 MR. SUMMERVILLE: You would not be wrong at all. 

 13 In fact, you would be universally correct. Correct that 

 14 that is the first response, that is, that so-called 

 15 inaccessible data almost inevitably in my experience digital 

 16 linear tapes or backup tapes is essentially off the table. 

 17 PROFESSOR MARCUS: All right. So Rule 26(b)(2) as 

 18 currently proposed reflects your experience exactly, it's 

 19 the same as what's going on now? 

 20 MR. SUMMERVILLE: I would say that the factual 

 21 situation that I have encountered is encompassed within both 

 22 the existing rule and proposed rule. I may have 

 23 misunderstood your question, if I could just explain. 

 24 Essentially what happens as a matter of course now is 

 25 there will be a discovery request propounded as to all 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 111 

 1 documents or information relating -- 

 2 JUDGE ROSENTHAL: Excuse me. Could I interrupt 

 3 and ask you a question about that? 

 4 Is that -- as part of the continued discovery requests 

 5 do you always ask for inaccessible information as part of 

 6 your initial requests? 

 7 MR. SUMMERVILLE: I would not term it exactly that 

 8 way. I would term it in a sense that all relevant 

 9 information as to a given point of contention. 

 10 JUDGE ROSENTHAL: Regardless of whether it is on 

 11 backup tapes, whether it's legacy data, whether it's 

 12 accessible, whether it's unactive, you ask for it? 

 13 MR. SUMMERVILLE: I would say that's my duty under 

 14 the current rules and that's how I comport myself. 

 15 To answer your question, professor, essentially my 

 16 experience is that under the current rules a plaintiff - and 

 17 my work is divided almost evenly between the plaintiff's 

 18 side and the defense side - will almost inevitably ask a 

 19 fairly broad discovery request. It will cast the net very 

 20 widely. In that sense, the objection is almost a 

 21 boilerplate, that is, that this is an undue burden, it would 

 22 require time, it would require expense, it would require -- 

 23 if a defendant was particularly detailed in a request it 

 24 would require X lawyers and Y paralegals a number of hours 

 25 to respond to that. And then, unless we can reach and 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 112 

 1 agreement, obviously a motion to compel follows if my client 

 2 as the plaintiff has the resources and the wherewithal to 

 3 pursue that discovery aspect. 

 4 That is one of the primary problems, however, with a 

 5 rule that de facto makes so-called inaccessible data 

 6 presumptively nondiscoverable without a showing of due -- of 

 7 good cause. That is, as to certain types of cases and 

 8 certain types of plaintiffs that information may very well 

 9 become simply too costly to seek in the first place, that 

 10 is, a particular example, in a civil rights case or an 

 11 employment discrimination case, access to circumstantial 

 12 evidence is almost inevitable, simply because very few 

 13 defendants simply fester to explain that they did indeed 

 14 demonstrate racial or gender animus when we bring a 

 15 complaint. But, in that case, there needs to be access to 

 16 statistical data that may have been otherwise overwritten. 

 17 There also may be need to resort to e-mail communications, 

 18 which are filled with candor about a particular employee's 

 19 evaluation or a particular supervisor or class of 

 20 supervisors' policies towards a particular group, maybe a 

 21 gender or racial or otherwise. 

 22 JUDGE ROSENTHAL: In your present practice you 

 23 said that generally an objection is raised. Is it then your 

 24 practice to, if you really need this information, that is, 

 25 if you have not obtained the information that is responsive 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 113 

 1 to your requests satisfactorily from the active data, is it 

 2 then your practice to go into court and say I really need 

 3 this additional stuff? 

 4 MR. SUMMERVILLE: It would depend upon the client, 

 5 bus as general rule I would say yes. And the reason it 

 6 would depend upon the client is simply depending upon our 

 7 arrangement with a given client it may very well be that 

 8 that individual or that organization is not willing to set 

 9 forth the hundreds of thousands of dollars it would require 

 10 to either risk -- either pay out their own expenses if the 

 11 cost shift is awarded against them or simply to pursue the 

 12 motion to compel. There may very well be instances where we 

 13 could not resolve those situation issues at all, the initial 

 14 accessibility question without resorting to a particular 

 15 expert, be it someone with a baseball cap turned backward, 

 16 either way they bill out at a fairly high rate, and 

 17 generally those costs are ones that we have to take to our 

 18 clients initially to determine whether they wish to go 

 19 forward. 

 20 JUDGE SCHEINDLIN: Do you practice much in the 

 21 employment area? 

 22 MR. SUMMERVILLE: Our firm does do a fair amount 

 23 of -- 

 24 JUDGE SCHEINDLIN: Just a question that I have. 

 25 When you're looking for statistical data, is that -- is that 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 114 

 1 not kept by the company in -- in some form other than the -- 

 2 this very disorganized thing called backup tapes? 

 3 I mean, can't you get that elsewhere in the company, 

 4 the HR department, in their record, whatever? 

 5 I'm not sure I phrased the question -- but you see what 

 6 I'm saying. 

 7 MR. SUMMERVILLE: I think I do, and I will attempt 

 8 to answer, and you can tell me if I have satisfied your -- 

 9 satisfied your -- given the answer to your question. 

 10 Some companies do. 

 11 Larger companies generally have more diverse and 

 12 segregated departments that are delineated with particular 

 13 policies or procedures. For example, one of our larger 

 14 class actions was against a soft drink manufacturer and that 

 15 particular manufacturer indeed does have very 

 16 well-delineated human resources departments. 

 17 It's when you digress to the next layer, maybe outside 

 18 the Fortune 500, as a walking around definition, that those 

 19 policies may not be as well-defined and those records may 

 20 not be kept nearly as well. 

 21 There are plenty of cases in federal courts and 

 22 otherwise that revolve around discrimination or civil rights 

 23 aspects in organizations or companies that don't have those 

 24 particularly organized fields where you might be able to 

 25 taylor a request more narrowly. 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 115 

 1 That is one of the -- the questions -- 

 2 JUDGE RUSSELL: Mr. Summerville, has it been your 

 3 experience in this cost sharing if you're going for data 

 4 that's in the nonactive status that you assume you're going 

 5 to be bearing some share of the cost to get that? 

 6 MR. SUMMERVILLE: I would not say that as an 

 7 assumption. Certainly as a plaintiff we would want to 

 8 obviously avoid any of the cost sharing. I have fought it 

 9 on both sides. I have fought motions to compel, motions for 

 10 sanctions for withholding that data. I have lost those 

 11 motions for protective order as to some computer discovery 

 12 as well. 

 13 I would say that in my experience almost inevitably the 

 14 costs are born by the defendant, that is, the producing 

 15 party in that regard. 

 16 And that has -- again, it's because of the factual 

 17 nature of those disputes that I'm hesitant to say something 

 18 of a general nature, except for the fact that that is also 

 19 one of the reasons for my objections to the rules as 

 20 currently written. That is, data that is so-called 

 21 inaccessible from the outset under the proposed rules 

 22 doesn't seem to be dramatically different, except from the 

 23 presumptive standpoint, from the current rules. That is, 

 24 there are policies in place -- excuse me, there are subsets 

 25 within the rules already to deal with the undue burden 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 116 

 1 question. 

 2 And the notes to the committee's recommended amendments 

 3 to 26(b)(2) do assert that, that is, the examples that are 

 4 set out deal with cost, they deal with access issues. And 

 5 in that sense it's my experience, both from Your Honor's 

 6 cases and otherwise, that courts are beginning to get a 

 7 handle on how to delve into the cost issues or the initial 

 8 accessibility issues, because there are simply a series of a 

 9 risk/reward or a cost/benefit analysis, if you will, that 

 10 courts undertake on almost a daily basis, either federal or 

 11 state. 

 12 JUDGE HECHT: If you initially request all 

 13 relevant information and you anticipate a relatively 

 14 standard objection and some working out of that over time, 

 15 even with opposing counsel or with the judge if it may be 

 16 necessary, is it -- is it your view that in that period of 

 17 time the responding party is obliged to keep anything that 

 18 could fall within that very broad request? 

 19 MR. SUMMERVILLE: I would think so. Yes, Your 

 20 Honor. I believe -- the exfoliation law in the 

 21 jurisdictions in which I practiced almost uniformly would 

 22 say certainly within once the litigation is commenced and 

 23 there is a dispute over a particular subset of data then the 

 24 party charged with -- potentially charged with ultimately 

 25 producing that data would also be under an obligation to 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 117 

 1 preserve it. 

 2 JUDGE ROSENTHAL: And that would include what 

 3 we're calling inaccessible data? 

 4 MR. SUMMERVILLE: It would. And if that was 

 5 something that was identified at the outset -- for example, 

 6 that's another transition I wish to make. 

 7 Let me address the situation in which that so-called 

 8 inaccessible data is known to a particular producing party 

 9 to have relevant data. 

 10 JUDGE ROSENTHAL: Can I flip it before you get 

 11 there and ask about the situation in which the producing 

 12 party, the responding party, has a great deal of active data 

 13 responsive to the discovery requests and also has a great 

 14 deal of inaccessible data but has no basis for believing 

 15 that there is relevant information on the backup tapes, to 

 16 use them as an example, that is not otherwise enable on 

 17 active data? 

 18 Is that party precluded from continuing the ordinary 

 19 operation of its computers, its recycling, in that 

 20 situation, nearly because you've asked for all relevant data 

 21 in any form? 

 22 MR. SUMMERVILLE: My experience leads me to -- to 

 23 subdivide your question slightly. 

 24 Generally in a situation where a party that would be 

 25 producing has a fairly sophisticated backup system, within 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 118 

 1 that backup system - and I'll use backup magnetic tapes as 

 2 an example - there are for lack of a better word summaries 

 3 of what each tape contain. They are of course delineated by 

 4 date, oftentimes they are divided by server, that makes it 

 5 easier to determine which tape may have particular data, 

 6 relevant data. That's, again, something I've asked the 

 7 committee not to be silent. Is there any need to cite 

 8 numbers in a sense of numbers of tapes, numbers of hours, 

 9 and I would hold up a sheaf of documents saying exactly the 

 10 same thing. But in most cases all of these things could be 

 11 handled under the current rules with a few simple steps. 

 12 One step is I would urge the committee to adopt the 

 13 changes to Rule 16 and Rule 26 as to the meet-and-confer 

 14 provisions. And, in fact, I would actually provide -- I 

 15 would actually suggest that the committee provide even more 

 16 detailed analysis as to what should be broached in the 26(f) 

 17 conference simply dealing with the outlay of a particular 

 18 party's electronic system. Obviously this may not apply if 

 19 electronic discovery will not come into the radar screen. 

 20 But if it will, and it's presented to the parties as such, I 

 21 believe that the rules will be well-served to clarify them 

 22 as to the design of a particular IT or -- excuse me -- 

 23 information technology system, to allow for the initial 

 24 discovery request to be more narrowly tailored. And I think 

 25 that really gets to the heart of the issue. 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 119 

 1 PROFESSOR MARCUS: Mr. Summerville, you do 

 2 represent defendants at such meetings? 

 3 MR. SUMMERVILLE: Absolutely. 

 4 PROFESSOR MARCUS: Do you provide full information 

 5 to the other side about your client's information systems 

 6 during those -- those meetings? 

 7 MR. SUMMERVILLE: If the plaintiff's counsel asks 

 8 the right questions. Essentially if -- if electronic 

 9 discovery is on the map, I would much rather get it out in 

 10 the open initially rather than, again, cost may client ten 

 11 or $100,000 fighting the initial wave of motions that come 

 12 in discovery practice. I think it simply makes sense, that 

 13 even if that is a practice however that may be practical 

 14 with the savvy lawyer or the lawyers who are behind me in 

 15 the room, that it still makes sense for the committee to 

 16 address that as part of the rule, that that should be 

 17 something at the outset, because it simply avoids the other 

 18 smaller squirmishes. It may not avoid the large scales, but 

 19 it certainly is a step in the right direction. 

 20 JUDGE SCHEINDLIN: You're concerned with our 

 21 raising the privilege question in that meet and confer and 

 22 maybe hinting that you could reach an agreement that will 

 23 cover you later if there's a waiver? 

 24 Are you concerned about that one or do you like that, 

 25 too? 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 120 

 1 MR. SUMMERVILLE: I am not concerned that the 

 2 committee recommend it be raised. I am concerned with the 

 3 hint that you suggested, for a couple of reasons, and I 

 4 briefly touched on this in my written comments. 

 5 But I believe that the rule as written, at least 

 6 there's a good faith argument to be made that it colors into 

 7 a substantive aspect that may be beyond the purview of this 

 8 committee or the rules in general. 

 9 Beyond that, the rules themselves I think are much 

 10 more -- well, the rule itself would be a very inflexible 

 11 tool into what needs to be a flexible process; that is, the 

 12 initial conference could easily encompass a called quick 

 13 peek or a claw back, but that would depend on litigation 

 14 that a particular party may have already been a party to. 

 15 It may deal with the relationship of the parties. It may 

 16 be a question of whether or not a producing party 

 17 anticipates being involved in another litigation and, as 

 18 such, a quick peek or a claw-back agreement may not bind 

 19 themselves as to waiver finding further on down the line. 

 20 So I think it would be an absolute step forward to 

 21 suggest as part of the 26(f) conference that the issue be 

 22 raised. I do have concerns, however, about putting the 

 23 thumb on the scale, even to a small -- a small degree at 

 24 that point. 

 25 I'm rapidly running out of time, but essentially -- 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 121 

 1 PROFESSOR COOPER: If this is a pause, your 

 2 written comments addressed something I have not heard 

 3 addressed in specific terms. That is, you say that when you 

 4 need to prove fraud, intent, elements of that sort, you have 

 5 found that embedded in metadata, may be indispensable. You 

 6 have illustrations, an actual sense of how often that 

 7 happens? 

 8 MR. SUMMERVILLE: In terms of how often it 

 9 happens, I can speak to my practice, of course. As to a 

 10 general statement, I wouldn't be comfortable making that. 

 11 In general what I mean by that, embedded data and metadata 

 12 are sometimes inflated. I understand them to be somewhat 

 13 different. Embeded data may very well encompass, for 

 14 example, drafts of a different document or a different 

 15 electronic source of information. Metadata is that which is 

 16 not actually input by a particular user or information 

 17 gatherer. That is simply that it is recorded as on more of 

 18 an encoding technique. But in terms of a fraud aspect or an 

 19 intent aspect, Fraud in the large part in the jurisdictions 

 20 in which I practice, of course, requires an affirmative 

 21 misrepresentation of a knowingly false objective fact. 

 22 Now, the key part there generally is proving scienter 

 23 or willfulness. And in some cases the metadata will provide 

 24 a trail of bread crumbs, as if you will, as to what 

 25 individual received the message and when. That is, if the 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 122 

 1 stock was evaluated at a certain price an individual at a 

 2 deposition says, oh, that information was simply not shared 

 3 with me, then metadata provides a very easy trail in those 

 4 instances, and that may be a good example of when the 

 5 inaccessible data although almost tangential to the 

 6 layperson could be critical to a legal analysis. And in 

 7 those cases, and others like them that I have cited in my 

 8 written comments, such as knowledge and notice, it's very 

 9 important not to have that presumption up-front. 

 10 JUDGE ROSENTHAL: Why is metadata not reasonably 

 11 accessible? 

 12 MR. SUMMERVILLE: Because it's in the backup 

 13 tapes. For example, if there had been an overwritten aspect 

 14 of it, The metadata would be captured on -- depending on the 

 15 type of server, a uniserver may not capture it, but 

 16 otherwise on backup tapes there may be metadata as to a 

 17 particular e-mail sent or received time. 

 18 JUDGE ROSENTHAL: But if that e-mail is on active 

 19 data, wouldn't the metadata also be active? 

 20 MR. SUMMERVILLE: Absolutely. 

 21 JUDGE ROSENTHAL: That's what I didn't 

 22 understand. 

 23 MR. SUMMERVILLE: And, of course, I would say the 

 24 majority of situations will be that active data will provide 

 25 the building blocks for a litigation. 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 123 

 1 JUDGE ROSENTHAL: It will provide the roof? 

 2 MR. SUMMERVILLE: I'm not sure it will stand up to 

 3 the big storms at that point. 

 4 JUDGE SCHEINDLIN: I have another question about 

 5 metadata. 

 6 MR. SUMMERVILLE: Yes, ma'am. 

 7 JUDGE SCHEINDLIN: I know that you're not sure 

 8 there's not much distinction between document and 

 9 electronically stored information -- 

 10 MR. SUMMERVILLE: I can't quite hear you. 

 11 JUDGE SCHEINDLIN: You wrote you're not sure 

 12 there's much distinction between electronically stored 

 13 information and documents. Actually, I was communicate -- 

 14 all along worried about metadata being anything like a 

 15 document. It does strike me as far more information. It's 

 16 stored information, the metadata itself would hardly be 

 17 thought of as a document. 

 18 Do you think that there's some protection in creating 

 19 the separate category to make sure that people know that, 

 20 for example, metadata may be discoverable, despite of the 

 21 fact that it's information and not what we thought of as 

 22 document in the 20th Century? 

 23 MR. SUMMERVILLE: I think the same protection that 

 24 you're alluding to and that I would support would also be 

 25 included with a simpler solution and that's simply claiming 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 124 

 1 that electronically stored information or digitally created 

 2 information, or whichever definition ends up being part of 

 3 the rules ends up in part of the rules and is included as a 

 4 subset of documents under Rule 34. 

 5 JUDGE SCHEINDLIN: You like putting the word 

 6 somewhere in the new rules to make sure that people know 

 7 that the information itself is discoverable, not just the 

 8 four corners of what we once thought of as a document? 

 9 MR. SUMMERVILLE: Certainly. I would. I would 

 10 say that in my experience that this has not been a 

 11 particular stumbling block. There are three instances I can 

 12 think of in my practice where this was an initial argument, 

 13 that is electronic data, is it really a document. 

 14 JUDGE SCHEINDLIN: I'm thinking about metadata 

 15 particularly, for example. 

 16 MR. SUMMERVILLE: I'm not understood. I'm sorry. 

 17 I misunderstood If -- I did not answer your question 

 18 directly. But essentially there are only three instances I 

 19 can draw from, and both -- and all of those were dispelled 

 20 of quite quickly. It seems to me that no opinion that I'm 

 21 aware of really turns on the idea of this electronic nugget 

 22 of information that would not be included in the four 

 23 corners of a contract or a document is not discoverable. 

 24 And it's clear the information is invaluable and under the 

 25 spirit of the rules would certainly be relevant. And as a 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 125 

 1 result, I think the subset solution would probably be a more 

 2 neat one. With that, I again reiterate my thanks for the 

 3 opportunity to comment. 

 4 JUDGE ROSENTHAL: Thank you, Mr. Summerville. 

 5 Mr. Fish. 

 6 MR. FISH: Good morning. My name is David Fish. 

 7 I practice in the Chicago area, primarily within the 

 8 Northern District of Illinois. 

 9 I'd like to discuss today primarily two of the proposed 

 10 amendments, the first relating to documents that are not 

 11 reasonably accessible and also the safe harbor provision. 

 12 I feel very strongly that this committee and the rules 

 13 should not be changed in relationship to these. The rules 

 14 should be left alone. They adequately deal with these 

 15 issues. 

 16 The problem -- the problem main that I see, and I'll 

 17 start with the safe harbor provision -- 

 18 JUDGE HECHT: Could I ask the nature of your 

 19 practice? 

 20 MR. FISH: Sure. I represent primarily small 

 21 businesses and individuals, primarily against large 

 22 companies. However, I also represent a number of defendants 

 23 that are businesses. So I deal with both sides of the 

 24 discovery disputes. 

 25 The -- the problem that I see with the safe harbor 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 126 

 1 provision is I feel like it gives it a stamp of approval for 

 2 companies to enact document destruction policies. And what 

 3 I envision happening is -- 

 4 JUDGE ROSENTHAL: Don't companies in the ordinary 

 5 course of business have to have -- if they are well 

 6 organized don't they in the best of all possible worlds, 

 7 indeed, have thoughtful crafted, well-implemented document 

 8 destruction policies? 

 9 MR. FISH: Absolutely. And I think that's great 

 10 and there's nothing wrong with that. 

 11 However, when a new federal rule comes down that says 

 12 you have a safe harbor against being sanctioned as long as 

 13 your document was destroyed in the ordinary course of 

 14 business, practically what is going to happen is -- I 

 15 believe that these companies are going to encourage more 

 16 destruction, for the various reasons that we've already 

 17 heard about. If e-mails don't exist anymore, they're not 

 18 going to hurt a company down the road. 

 19 Now, the question was asked earlier should companies be 

 20 obligated to maintain documents they don't need for 

 21 regulatory or business purposes. Of course not. It's not 

 22 the role of legislation to get in the role of people's 

 23 businesses and help run them. However what's absolutely 

 24 critical is not blessing a standard of care where you're 

 25 telling a company ahead of time as long as you destroy 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 127 

 1 something normally you're not going to be sanctioned. 

 2 I'm not aware of any judge that would ever sanction a 

 3 litigant for permitting a document to be destroyed in the 

 4 normal course of business, when litigation was not a 

 5 possibility. That's what the case law currently says. It 

 6 does not -- 

 7 JUDGE SCHEINDLIN: But the problem is that we've 

 8 heard for some companies, some municipalities and the 

 9 federal government, litigation is always a possibility. 

 10 They are sued every day and are always in suit. So take 

 11 that as your hypothetical. Then what? 

 12 MR. FISH: Then what has to occur is you need 

 13 personnel who say, okay, there is -- as Your Honor did in 

 14 your opinion, the Zubulake case, you identify the key 

 15 players, and you have to have individuals who can put a 

 16 litigation freeze on those people. 

 17 I'm not suggesting you need -- 

 18 JUDGE SCHEINDLIN: But Mr. Beach said, and 

 19 probably correctly, that that's not the way the storage 

 20 system works. It's not like you can say save all the backup 

 21 tapes for employee X, and it won't be just X, it will 

 22 probably be A through Z, so where do you -- how do you store 

 23 those? How do you stop those? 

 24 He's saying it's not so easy as envisioned. 

 25 MR. FISH: The way that I have dealt with it in 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 128 

 1 the litigation that I have handled, is that you identify 

 2 terms. For instance, I'm involved in a case where we have a 

 3 class action pending relating to a recommendation to 

 4 purchase an Enron investment. And there were about ten key 

 5 players in the decision. And what we did, and it didn't 

 6 have to go to a court, we sat down under the existing rules, 

 7 I made an initial discovery request, they objected on the 

 8 basis that it was unduly burdensome. We sat down and I 

 9 said, well, look, why don't I give you terms to identify, 

 10 like, for instance, Enron, the names of the key players -- 

 11 JUDGE ROSENTHAL: I'm sorry, are you talking about 

 12 putting that in place as a litigation hold for active data 

 13 or are you talking about going beyond that to backup tapes? 

 14 MR. FISH: What occurred in this case was they did 

 15 these searches on the backup tapes. 

 16 On the accessible -- the accessible data, they were 

 17 able to easily produce the documents that existed. 

 18 For the backup data that they claimed was going to be 

 19 hundreds of thousands of dollars to search, we worked out a 

 20 compromise where these terms were searched on the old data, 

 21 on the backup files. 

 22 MR. GIRARD: How did you know that you needed to 

 23 go to the back up files? 

 24 How did that get decided? 

 25 Did they raise in the meet and confer the objection to 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 129 

 1 going to backup data? 

 2 MR. FISH: No. It was just a matter of we 

 3 received documents and they didn't appear to be -- we 

 4 expected there to be more documents that existed. 

 5 JUDGE ROSENTHAL: Mr. Fish, did you do this word 

 6 term or word search on backup tapes for a very few number of 

 7 tapes, kind of a sampling process? 

 8 MR. FISH: There were -- what -- the way it worked 

 9 out was we -- we actually had to have a Rule 30(b)(6) 

 10 deposition of the -- of the person who made -- who -- their 

 11 records keeper, as they called that person. And he 

 12 identified a number of tapes I believe that had -- that -- 

 13 and in this case I believe actually had separate tapes 

 14 for -- for different employees. 

 15 So I'm not a tech expert, but in the way that it was 

 16 handled, and this is a large financial institution, they 

 17 were able to do specific searches. I mean, as the tech 

 18 person said in his deposition, it's essentially like doing a 

 19 google search, you put in the term that you're looking for 

 20 and you're going to come up with every e-mail, every 

 21 document that's on that tape that uses that word. 

 22 Now, we got a lot of documents that had nothing to do 

 23 with what we were looking for, but it was a reasonable 

 24 compromise. And I believe that the current rules as they 

 25 exist require that. Before you file a motion to compel you 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 130 

 1 have to go in and talk to other side. They can object to 

 2 something being not -- overly burdensome. 

 3 JUDGE ROSENTHAL: When you did that search, did 

 4 you have a reason to believe that you would not find the 

 5 same information on active data? 

 6 MR. FISH: Yes. 

 7 JUDGE ROSENTHAL: And you were -- so before you 

 8 did the search you had already concluded that the active 

 9 data wasn't going to give you what you needed? 

 10 MR. FISH: Well, I had received documents in 

 11 discovery already and it didn't have any -- we believed that 

 12 there was more out there. 

 13 JUDGE ROSENTHAL: So it was the second stage? 

 14 MR. FISH: Yeah. And it was effective for us. 

 15 But I believe that the current rules already provide 

 16 for that. I also think technology is changing, and by the 

 17 time that these rules get enacted there very well may be 

 18 more effective ways to do searches. I think this is an 

 19 evolving area of the law. I think the case law is 

 20 evolving. And I think that it makes sense to leave these 

 21 rules alone. 

 22 JUDGE FITZWATER: Mr. Fish, Let me ask you a 

 23 question on that last point. Is there a concern that 

 24 although these rules are intended to deal with electronic 

 25 discovery that the future will primarily be electronic 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 131 

 1 discovery and that these rules are establishing normative 

 2 standards for basically all discovery? 

 3 MR. FISH: I think that's a good point. It's not 

 4 one that I have thought about. 

 5 My experience in litigation is it's not all electronic 

 6 discovery. It's really e-mail. That's where I find the 

 7 primary disputes coming in, because I've found e-mail to be 

 8 extremely invaluable in litigation. 

 9 But in reality, the vast majority of documents nowadays 

 10 are kept in electronic format and are printed off of a 

 11 server somehow or another. So I think that's a very good 

 12 point. 

 13 JUDGE FITZWATER: Another question. 

 14 When you say that judges are handling this under the 

 15 present rules, those who argue for a standard contend that 

 16 this -- that the existence of a predictable standard is 

 17 essential and that it just cannot be left up to the vagaries 

 18 of what judges may do. What's your response to that? 

 19 MR. FISH: I believe there is a predictable 

 20 standard. When I defend cases this is how I treat it with 

 21 my clients. 

 22 I tell them if you know there's going to be litigation 

 23 or you have reason to believe that there's going to be 

 24 litigation, you need to maintain the documents for the 

 25 people who are going to likely have documents relating to 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 132 

 1 the dispute, the key players in the litigation. You need to 

 2 gather that stuff. That rule already exists. If you don't 

 3 do that you're probably going to be sanctioned now. 

 4 So I don't think that a special rule needs to be 

 5 enacted. Other clarification is unnecessary. 

 6 MR. GIRARD: What guidance do you give to the 

 7 person responsible for the documents that are, quote, 

 8 documents on backup tapes for a large company that may have 

 9 tapes scattered throughout the world? 

 10 That's the problem that we're struggling with. 

 11 MR. FISH: Well, my -- yeah. The -- the -- the 

 12 primary contact that I have had in the defense role is 

 13 dealing with an in-house lawyer. And it's not an in-house 

 14 lawyer at a company like Exxon Mobil where there is probably 

 15 hundreds if not thousands of them. It's ones where there's 

 16 one or two in-house lawyers and you -- that person then goes 

 17 and talks to the IT department and tells them -- and my 

 18 communication to the in-house lawyer is maintain the 

 19 documents relating to these people. 

 20 And they will -- but the primary way that they do it, 

 21 in the litigation that I've been involved in, is they do a 

 22 search right away. And I like that as a defense lawyer, 

 23 because I want to know what's out there. I think it makes a 

 24 lot of sense if you know that somebody is going to be sued 

 25 and looking at your documents, you want to know the good and 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 133 

 1 the bad, so you're going to do the search. And, of course, 

 2 you end up having to turn some bad documents over, but I 

 3 think it just -- this isn't gamesmanship, it's providing 

 4 access to the truth. And by telling people to do that 

 5 search initially -- 

 6 PROFESSOR MARCUS: What is it that you search at 

 7 that point? 

 8 MR. FISH: The -- for instance, you may search the 

 9 name. 

 10 PROFESSOR MARCUS: Active data or do you go to all 

 11 the backup tapes as well and try to search them? 

 12 MR. FISH: Well, certainly active data. 

 13 PROFESSOR MARCUS: Then with regard to the active 

 14 data you encounter that comes up on the search, do you do 

 15 something to keep it available? 

 16 MR. FISH: Yes. In terms of what inaccessible 

 17 data is -- and I think there's a question as to what 

 18 inaccessible data is, but what I consider inaccessible data 

 19 to be is anything that -- I can -- by the way, I consider 

 20 deleted e-mails to be accessible, because I know that when I 

 21 use Microsoft Outlook when I delete an e-mail, if I need to 

 22 go back and get it, I can get it with relative ease. I can 

 23 search that myself. 

 24 In terms of looking up backup tapes -- for instance, 

 25 let's say you know that John Smith is the primary person who 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 134 

 1 was involved in a dispute, and that person signs their name 

 2 John Smith or uses a particular e-mail, you could search 

 3 that backup tape and easily gather every document where John 

 4 Smith was the person, even if you don't segregate out backup 

 5 tapes by person. You can segregate out by doing a search 

 6 term, by knowing how that person signs his or her name. 

 7 JUDGE ROSENTHAL: That's if you have a small 

 8 company with maybe one server and you're just searching a 

 9 small backup tape library. Is that what your prior 

 10 experience has been? 

 11 MR. FISH: I believe that's correct. 

 12 JUDGE ROSENTHAL: One more question, unless others 

 13 have questions as well. 

 14 MR. FISH: Yes. 

 15 JUDGE ROSENTHAL: If -- let's assume that you're 

 16 in that situation and you have searched the active data for 

 17 John Smith and you are satisfied that through your search 

 18 and consequent litigation hold that you have maintained as 

 19 accessible data the e-mail and other electronically stored 

 20 information that John Smith had during the relevant period. 

 21 Do you then need to suspend the recycling -- automatic 

 22 recycling of your backup tapes on the off chance that there 

 23 might be some additional e-mail that your initial search, 

 24 for whatever reason, did not preserve as accessible? 

 25 MR. FISH: Well, if -- if -- let's say the time 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 135 

 1 frame for your -- say it's a business dispute, is a two-year 

 2 period. And let's say that during that two-year period 

 3 there -- that -- that data is accessible. 

 4 JUDGE ROSENTHAL: And you preserve it. As -- and 

 5 through your litigation hold you've taken steps to be sure 

 6 that it stays accessible. 

 7 MR. FISH: Right. 

 8 JUDGE ROSENTHAL: Okay. 

 9 MR. FISH: And these -- these parties in a 

 10 business dispute didn't even know each other prior to that 

 11 two-year period, of course, you don't have to go back and 

 12 search something before then. You're not going to find 

 13 anything. 

 14 And I don't think that if currently under the existing 

 15 rules you went in and asked the judge to do that, I don't 

 16 think any judge would -- would ever order you to put in a 

 17 litigation freeze before it's even possible that -- that 

 18 things would be found. 

 19 What -- what I would encourage -- if there is going to 

 20 be a change to the rules, I would encourage that a mandatory 

 21 sanction discussion take place. 

 22 For instance, if -- if -- if you tell companies they 

 23 have a safe harbor as long as documents were destroyed in 

 24 the ordinary course of business, et cetera, et cetera, I 

 25 think they should also be told that there is a mandatory 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 136 

 1 sanction that if one of your employees deletes a document 

 2 and you had reason to anticipate litigation, you're going to 

 3 be sanctioned. I think that that needs to be balanced out, 

 4 because right now as I read the rule it's going to be 

 5 subject to extensive abuse. 

 6 If I could turn -- 

 7 JUDGE ROSENTHAL: Briefly. 

 8 MR. FISH: Yeah. Okay. As to the -- the 

 9 meet-and-confer rules, I think those do make sense. My 

 10 experience is that those are not taken seriously. I don't 

 11 think parties discuss them. And quite frankly, I don't 

 12 think that lawyers are usually prepared at those meetings to 

 13 make -- to have educated conversations about the details of 

 14 electronic discovery. 

 15 I think from a plaintiff's perspective, it's incumbent 

 16 upon the plaintiff to be prepared for that and to ask the 

 17 right questions, because I think in many cases it wouldn't 

 18 be unreasonable to expect that there would be the 

 19 destruction of documents before that conversation takes 

 20 place. 

 21 But I -- I thank you for your time, and thank you. 

 22 JUDGE ROSENTHAL: There are no further questions? 

 23 Thank you very much, sir. 

 24 Mr. Morrison. Good morning. 

 25 MR. MORRISON: Good morning. My name is Steve 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 137 

 1 Morrison. 

 2 I rise to support these rule amendments. I would like 

 3 to address the compelling need for change, the genius of the 

 4 two-tier structure and the necessity for an even narrower 

 5 safe harbor. I come at you from three directions. I'm from 

 6 South Carolina. I was once the general counsel for about 

 7 three years of a New York Stock Exchange computer software 

 8 company where I managed their litigation and I managed their 

 9 legal affairs in 34 countries. We traded on the New York 

 10 Exchange and sold the company in 2001 to Computer Sciences. 

 11 I'm also with Parker, Riley, Mullins and Scarborough. In 

 12 that role I try cases around the country. it's been my 

 13 privilege to serve as lead counsel in 24 states now. I've 

 14 tried over 200 cases to jury verdict and argued 60 appeals, 

 15 including to the United States Supreme Court. 

 16 Thirdly, I come to you as a past president of Lawyers 

 17 for Civil Justice. I've been very active on the discovery 

 18 reform agenda for decades, and the past president of the 

 19 Defense Research Institute. 

 20 Coming from those perspectives, I would tell you that 

 21 the procedure makes a huge difference. The comment that was 

 22 just made by Judge Fitzwater is that these rules could make 

 23 a huge difference in how we resolve disputes and these rules 

 24 can in fact become normative and the genius of the rules 

 25 that you propose is they are appropriately normative because 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 138 

 1 they move us toward a more proportional approach to 

 2 discovery and they move us toward a reasonable sanctions 

 3 approach towards discovery. Both of those moves are in 

 4 accord with past moves made by the civil rules committee. 

 5 But I digress. 

 6 The compelling need for change is clear. Electronic 

 7 data is different. It is vastly faster in its movement and 

 8 therefore increases in volume much more significantly. That 

 9 volume increases cost and burden. 

 10 Second, the data itself is dynamic. It is not like 

 11 paper once it's done sitting in a file. It is changeable. 

 12 Even if you delete it, it is still there. 

 13 Third, it is incomprehensible in many instances without 

 14 the system with which it was created. Under those 

 15 circumstances electronic data is different. Discovery is 

 16 also different. 

 17 In the old days we searched for artifacts, like we were 

 18 archaeologists, going for a piece of this and a piece of 

 19 that. Now we're frequently asked for dynamic information. 

 20 Information that we've never been asked for before, in a 

 21 form that we've never been asked for before on the theory 

 22 that that report can be written for a particular database. 

 23 In addition, a lot of uncertainty has been created in 

 24 the world of those of us who litigate all the time, and our 

 25 clients, on both sides. We're uncertain now as to what to 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 139 

 1 preserve, how to search, where to search, what form should 

 2 the documents take when we produce them. We're uncertain 

 3 about disaster discovery. We're uncertain about deleted 

 4 data. We're uncertain about legacy data. We're uncertain 

 5 about paper electronic form, pdf, et cetera, et cetera. 

 6 That uncertainty makes it significant that we move to rule 

 7 changes. 

 8 We are, in addition, in a situation where rule changes 

 9 could make a significant impact in guiding us back toward 

 10 resolving cases on the merits, under Rule 1. There is, 

 11 arising in this country, and I litigate it and make a lot of 

 12 money from it, litigating what I call the sanctions tort or 

 13 the sanctions crime. And it comes up in case after case 

 14 after case, involving some circumstantial inference of a 

 15 conspiracy within a large corporation to do away with data, 

 16 to hide data, to stonewall, and so forth. 

 17 Rarely am I engaged at this point in my career in any 

 18 case where the stakes are not very, very high. And where 

 19 the stakes are very, very high, I have found the accusations 

 20 regarding the conduct of corporate America become meaner and 

 21 nastier and smaller and there are no holds barred. 

 22 JUDGE ROSENTHAL: We heard some speakers earlier 

 23 suggest that there really isn't any great increase in 

 24 sanctions allegation or sanctions litigation. You seem to 

 25 be suggesting a different picture. 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 140 

 1 MR. MORRISON: I think that the big civil case, 

 2 the class action, the mass tort, the repeated pattern 

 3 litigation, the bet-your-company case at the board of 

 4 directors level for Securities and Exchange violations, and 

 5 so forth have -- they're the death penalty cases of the 

 6 civil law, and as such they cast a dark shadow over the 

 7 entire civil law landscape. And in those death penalty 

 8 cases sanctions accusations are routine. I regret reporting 

 9 that to the committee, but they are. 

 10 And under those circumstances -- and frequently a judge 

 11 doesn't see that many death penalty cases in a legal 

 12 career. Certainly a lot of lawyers don't see a lot of those 

 13 kinds of civil cases. Under those circumstances we must 

 14 have resort to rational rules. 

 15 But the question is raised are these rules just for 

 16 these death penalty cases. I would tell you no. As a maybe 

 17 of my bar, I've been chairman of the house of delegates and 

 18 done a lot of work with the family law section. The area of 

 19 most significant concern to the state rules, which, by the 

 20 way, are guided by you, you -- you determine what the state 

 21 rules will be by determining what the federal rules are, but 

 22 the most significant family court issue is dealing with 

 23 personal computers, cell phones, and personal PDAs, or 

 24 whatever we want to call them, blackberries, or whatever it 

 25 is, because that's where the discovery is now in the meanest 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 141 

 1 and nastiest family law cases. 

 2 So if you think you're just talking about Exxon Mobil, 

 3 you're talking about families in America. You're talking 

 4 about the small corner business. Somebody earlier talked 

 5 about a gas station. When's the last time you went into a 

 6 gas station and actually paid inside the station, if you 

 7 were in a hurry. It's all electronic. Every transaction at 

 8 the station is electronic. And it's at the pump. 

 9 So there is virtually no business left and no family 

 10 left in America that doesn't need some guidance as to how 

 11 we're going to manage discovery in an electronic age. 

 12 Let me address two other concerns. 

 13 One, I hear on some basis that people think that the 

 14 technology will catch up with and supersede and make easy 

 15 discovery. In the first place, as Mr. Beach said, no 

 16 business in America designs its business to be responsive to 

 17 discovery. Now, they have to be responsive as a byproduct 

 18 of being in this great country of ours. It's necessary. 

 19 Second, as a computer software developer, executive 

 20 vice president of a New York Stock Exchange company, I can 

 21 tell you that there is no product that we saw from 1980 to 

 22 2000, and I was EBP and general counsel from 1984 to 2000, 

 23 we saw no product come out that didn't increase the 

 24 complexity of finding data in the past. It eased the use of 

 25 data on a daily basis, but it increased the complexity of 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 142 

 1 finding data in the past, because you had multiple 

 2 platforms, multiple operating systems, multiple systems 

 3 of -- of hardware, new gadgets that you put on top of these 

 4 things. Everything that we ever had developed cost more to 

 5 look backwards and cost less to look forward. Another 

 6 reason there is a compelling need for change. 

 7 I understand that there is a -- a question that's 

 8 raised about whether we should have -- wait on case law to 

 9 develop. But we know that discovery and procedure drives 

 10 virtually all of the civil law toward a settlement. I think 

 11 I read that only one percent of the civil cases filled in 

 12 the federal courts of the United States last year were 

 13 actually tried. If that's the case, then the procedure that 

 14 you implement is critical to us. The likelihood of an 

 15 appellate decision or a body of appellate law helping us 

 16 solve this problem is minimal. This is a rules-based 

 17 problem and should be addressed by this committee. So there 

 18 is a compelling need for change. 

 19 Let me turn to the genius then of the two-tier 

 20 structure. It focuses first on proportionality. As we 

 21 should in all discovery. And why there's not more case law 

 22 on proportionality, I don't know, but the rules need to 

 23 guide us in that direction. 

 24 First we look at the center of the case, what's readily 

 25 accessible and most likely to produce responsive 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 143 

 1 information, and you ask us to look at what's reasonably 

 2 accessible, not the word readily. And you don't look at 

 3 what's not reasonably accessible, unless there's good cause 

 4 shown to go to that level. That is a genius level 

 5 proportionality rule that focuses not only on Rule 1 but on 

 6 Rule 26 proportionality and fits in perfectly as we begin to 

 7 go forward with electronic discovery. 

 8 The second thing I would say about the good cause 

 9 shown, is that the good cause shown is to see something that 

 10 is proportionally appropriate to discovery in this case. 

 11 And you have said "under conditions." Now, I would ask you 

 12 to add to those conditions a specific reference to cost 

 13 shifting, in part because we have an experiment going on 

 14 here in Texas that works. The states are providing you with 

 15 a crucible of some experimentation, and when you find one 

 16 where the plaintiff's bar and the defense bar, as I have 

 17 found here in Texas, both say, you know, we both focus a 

 18 whole lot more since we have to pay each other for what 

 19 we're asking for as to whether we really need it. 

 20 JUDGE ROSENTHAL: We heard someone earlier today 

 21 say that the Texas experience really shouldn't be the source 

 22 of too much assurance, because most multistate or 

 23 multinational companies aren't going to form their -- the 

 24 basis of their behavior on the rule of any one state. Can 

 25 you respond to that? 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 144 

 1 MR. MORRISON: Well, I agree -- I agree you're 

 2 not going to base your -- your behavior on the rule of one 

 3 state. And I think that -- that makes sense. Texas is a 

 4 pretty big state. And Texas and California are the two 

 5 cost-shifting states. California, if it was a nation, would 

 6 have the sixth largest economy in the world. I don't know 

 7 how big the Texas economy would be, but it can't be too far 

 8 behind California. So it's the equivalent of, I don't know, 

 9 maybe France. It's a -- it's a -- it's a big economy. 

 10 (Laughter.) 

 11 JUDGE ROSENTHAL: We don't think of ourselves as 

 12 that. 

 13 MR. MORRISON: Well, you probably have a better -- 

 14 you have a bigger Army than France. What was it General 

 15 Patton said, I would rather have the Germans in front of me 

 16 than the French behind me. 

 17 I apologize for equating France with Texas. 

 18 My point is -- my point is, if I'm doing business in 

 19 the Texas, my market in Texas is gigantic. Some of my 

 20 behavior is definitely driven. If I have cost shifting in 

 21 Texas that's automatic and I have cost shifting in 

 22 California that is almost automatic, it's being used 

 23 dramatically, two of the biggest states in the biggest 

 24 markets in the wealthiest nation that this earth has ever 

 25 known in the history of mankind are going to drive some 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 145 

 1 behaviors. 

 2 MR. GIRARD: Mr. Morris, do you see any 

 3 gamesmanship with the producing party being able to shift 

 4 the cost to the producing party under the two-tier system? 

 5 MR. MORRISON: Not if we are truly proportional. 

 6 There is always a rogue lawyer out there that will game a 

 7 system. But if we focus on true proportionality, which is 

 8 what the court should drive us to, what is at the center of 

 9 this case -- and let us discover what's at the center first, 

 10 reasonably accessible, if that leads you to conclude that 

 11 there may be something else out there -- I mean that's a lot 

 12 of data in most cases, and if that leads you to conclude, 

 13 and you're on the other side from me, that you need more, 

 14 you ask for more and you say why you need that more and why 

 15 it appears to be here. But now you have a case for that. 

 16 We started at the right place. 

 17 Chances are that you and I, once we review that data, 

 18 would find, as we are finding in Texas and California, that 

 19 it's not worth your money or my time to go get the other 

 20 data. Now, maybe we go one circle outside the bull's-eye 

 21 together and we cost shift a little bit. But what is 

 22 encouraged now, under the current rule, is let's take the 

 23 whole target -- well, no, let's not take the whole target, 

 24 let's take the target and the whole wall that the target is 

 25 on, and we'll come out from the edges back towards the 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 146 

 1 bull's-eye. That proportionality is exactly wrong and does 

 2 not drive us toward the merits of a case, which is 

 3 ultimately where we need to be. 

 4 MR. GIRARD: Do you not often though at the 

 5 beginning of a case approach the requesting party and 

 6 identify those areas of discovery that you think are 

 7 problematic, where you think the requesting party is 

 8 overreaching and ask for some cooperation there and say, 

 9 look, we're not going to search these systems, we're not 

 10 going to put these out of commission, we've got a company 

 11 here to run and -- and then resort to the court if you can't 

 12 get cooperation from the requesting party? 

 13 MR. MORRISON: Yes. And -- and frequently the 

 14 requesting party, particularly in the kind of cases I'm 

 15 involved in, is unwilling to narrow any request, because 

 16 there is a potential for a sanctions tort. If they have the 

 17 broadest possible request, and I give them something 

 18 narrower subject to an objection and something comes up 

 19 later, only then can they say, well, I asked you for that 

 20 you intentionally withheld it, you're stonewalling or 

 21 dumptrucking or any other kind of pejorative phrase that 

 22 comes up these days. 

 23 If we could get with our counsel and focus on the 

 24 center, as you discuss, that's where it should be. And 

 25 compromises should be made by both sides. It's not 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 147 

 1 happening now, because the rules don't facilitate it 

 2 sufficiently. 

 3 Rules can help in this regard. And I would, on the 

 4 genius of the two-tier, I would encourage -- when we talk 

 5 about those areas that are not reasonably accessible, I 

 6 would encourage the committee to think carefully about how 

 7 you guide us with regard to what you mean by identifying 

 8 what's not reasonably accessible. 

 9 I think what I understand that you mean is some kind of 

 10 categories. In other words, we are not searching legacy 

 11 data, we're not search deleted data, we're not searching 

 12 backup tapes. But it could be interpreted -- unless you are 

 13 careful in the notes and guidance to us, it could be 

 14 interpreted as requiring the equivalent of a new privilege 

 15 law. I understand that's not what you mean, but I would 

 16 encourage you to make that absolutely clear. 

 17 JUDGE ROSENTHAL: We have heard people today and 

 18 in written submissions and the earlier hearing, express 

 19 concern that the two-tier approach will encourage responding 

 20 parties to push information out of the accessible category 

 21 into the inaccessible category in order to avoid having to, 

 22 A, produce it, and B, possibly preserve it. Can you comment 

 23 on that? 

 24 MR. MORRISON: Well, I'll comment bluntly. It's 

 25 silly. The people I represent are not going to take data 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 148 

 1 that they need to know their customer to sell more product, 

 2 to run their business, to make a profit, and push it back 

 3 into some system that they don't have ready access to -- 

 4 reasonable access to. That would be to defeat the purpose 

 5 of the whole organization. The state government is not 

 6 going to do that. My home town, the capital of South 

 7 Carolina, Colombia is not going to do that. If they need 

 8 the data it's going to be there for their day-to-day 

 9 activity. 

 10 So the idea that you would all of a sudden change all 

 11 of your technology to push stuff so it's not reasonably 

 12 accessible is to subject that you would alternate your 

 13 systems to run your business to defend a lawsuit. Well, if 

 14 they did that, they wouldn't be able to pay me. 

 15 JUDGE KEISLER: Why can't there be a large 

 16 category of information, that is saved or not, depending on 

 17 what the default rule is, information that a company doesn't 

 18 actually feel it needs for it's business, the question is 

 19 how much energy is it going to put out in order to clean 

 20 that out. And it may well be, as Judge Rosenthal intimated, 

 21 that there is nothing wrong with something that says clean 

 22 out stuff you're under no legal obligation to preserve, 

 23 that's not necessary for your business. But isn't it the 

 24 case that one would expect that there's just some middle 

 25 category of information that might stay or go, depending on 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 149 

 1 how companies perceive litigation incentives. 

 2 MR. MORRISON: You're postulating there is a 

 3 category of got to have for the business data, don't need at 

 4 all, and might be nice to have, might need it some day. 

 5 JUDGE KEISLER: Or don't need it at all but it's 

 6 not worth the effort to get rid of it. 

 7 MR. MORRISON: That's sort of like the jars of 

 8 screws in my closet with my tools. I suppose yes. The 

 9 answer to that candidly is there probably are that kind of 

 10 closets around that -- that exist. If we are doing our job 

 11 as general counsels, you know, we're telling our clients to 

 12 go ahead and clean the closet if we don't need it to run the 

 13 business. It -- it cost money. The closet cost money. And 

 14 the closet in this instance -- I mean, the company that I 

 15 was involved with running had a server farm at a data center 

 16 and it was literally five acres under a roof, filled up with 

 17 servers, and we did outsourcing for lots of other companies. 

 18 If we had not been cleaning out the data that you're 

 19 talking about on a nightly basis, that would have had to be 

 20 50 acres to keep the business going. 

 21 JUDGE ROSENTHAL: Mr. Morris, -- 

 22 MR. MORRISON: That doesn't mean there aren't 

 23 closets full of screws somewhere that don't exist for any 

 24 real purpose. You know, you have to say that that does 

 25 exist. And for good cause shown under your rule, you would 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 150 

 1 go search the closet for the screws. 

 2 JUDGE ROSENTHAL: Mr. Morris, we're running short 

 3 on time and I know you wanted to talk a little bit about 

 4 safe harbor. If you could move to that and wind up. 

 5 MR. MORRISON: Yes. The narrow safe harbor is in 

 6 fact narrow. No sanction for failure to -- for failure to 

 7 produce something that was in the routine operation of the 

 8 computer system destroyed, essentially. 

 9 And then -- I mean, that's a good start. And it's a 

 10 place where we need -- we need to have -- we need to have 

 11 guidance and help. You're routinely destroying information, 

 12 it makes sense to have that. 

 13 But the sanction availability there is the entire scale 

 14 of sanctions available to any judge anywhere. And I know 

 15 that -- that this committee, and judges across the country, 

 16 want that discretion. But for the narrow area that you're 

 17 talking about, destroyed in the routine course of business, 

 18 there shouldn't be a death penalty sanction, unless that was 

 19 done intentionally. 

 20 In other words, you have the extremes of sanctions, so 

 21 if you think about it as a spectrum you have the slap on the 

 22 wrist, don't do it again, a little bit of attorney's fees, 

 23 some cost shifting, and so forth. All the way out to 

 24 default. 

 25 JUDGE SCHEINDLIN: You're thinking in the text of 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 151 

 1 the rule we should add if the sanction is going to be 

 2 dismissal or default then it has to be willful or reckless, 

 3 something like that. You think we should pick out those 

 4 two, put it in the text, and say at that level it has to be 

 5 willful or reckless? 

 6 MR. MORRISON: If the safe harbor is this narrow, 

 7 yes, Judge Scheindlin. 

 8 JUDGE SCHEINDLIN: Okay. 

 9 MR. MORRISON: Frankly, there never should be a 

 10 situation under this narrow safe harbor where the available 

 11 sanction is default, or striking of the complaint, unless 

 12 the judge finds under that strange occasion that, boy, 

 13 you -- you just flat -- there was criminal conduct, you did 

 14 this culpably. 

 15 JUDGE SCHEINDLIN: By the way, I think that's what 

 16 the case law shows, that those sanctions are not given 

 17 unless there is willful or reckless, but you would put that 

 18 right in the text of the rule, of the safe harbor rule, if 

 19 you're going for the top sanction then it has to be a 

 20 elevated level of culpability? 

 21 MR. MORRISON: Yes, ma'am. I would guide it 

 22 because the -- because the safe harbor is narrow. It is my 

 23 hope that this would result in a proportionality of sanction 

 24 being guided by this rule that would infect, in a good way, 

 25 the rest of the sanctions litigation that we have. 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 152 

 1 JUDGE ROSENTHAL: You view an adverse inference 

 2 instruction as a death penalty or merely extreme torture? 

 3 MR. MORRISON: As an old trail lawyer, I view an 

 4 adverse inference from a federal judge sitting with a robe 

 5 in my court as a death penalty. 

 6 I've -- I have taken more than my time. Thank you. 

 7 JUDGE HECHT: One more question. 

 8 MR. MORRISON: Yes, sir. 

 9 JUDGE HECHT: Having tried so many cases, is it 

 10 common in your experience to have some sort of claw-back 

 11 provision as we've talked about in negotiating between 

 12 counsel? 

 13 MR. MORRISON: Yes. And that's an area where I 

 14 found plaintiff's counsel and defense counsel frequently 

 15 reach an agreement in a -- in a consent order, that there is 

 16 a claw back for inadvertent disclosure of information, or if 

 17 there's some kind of a quick peak arrangement or a just 

 18 look -- you can look at all of this but if there's something 

 19 in there I get to claw it back. 

 20 And I have found the plaintiff's bar to be very, very 

 21 honorable in that regard. 

 22 JUDGE HECHT: Should it be in the rule? 

 23 MR. MORRISON: Yes, sir. There should be a 

 24 guidance for the courts in that -- in that space. 

 25 Especially because -- because, Judge Hecht, it's going to be 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 153 

 1 more common for clients to want to give us 10,000 documents 

 2 of e-discovery without asking me and my law firm to look at 

 3 them and pay me to do all of that. And so the claw back is 

 4 going to be more and more common as we go forward. 

 5 That's why these rule changes are so significant, 

 6 because we will end up with discovery being done on this 

 7 playing field as well as paper, for a period of years, and 

 8 then maybe sometime passed my lifetime there won't be paper 

 9 in most lawsuits. 

 10 Thank you very much. 

 11 JUDGE ROSENTHAL: Thank you very much. 

 12 Mr. Martin. 

 13 And to you I think I can say good afternoon. 

 14 MR. MARTIN: Someone commented to me that 

 15 following Steve Morrison is always a tough act to follow and 

 16 I feel that way even more so after hearing Mr. Morrison's 

 17 remarks. 

 18 I'm here today as a trial lawyer in Dallas, Texas, with 

 19 the firm of Thompson & Knight, where I've practiced for over 

 20 30 years. I've tried a few cases myself along the way. 

 21 I'm also here today as second vice president of DRI, 

 22 the organization of which Mr. Morrison was president a 

 23 number of years back and of which I will be president in 

 24 2007. This is an issue of great importance, great interest 

 25 to DRI. DRI is -- we have a large educational program for 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 154 

 1 lawyers, as many of you know. We have had an electronic 

 2 discovery seminar for several years, and have another one 

 3 coming up this spring, because it is of such key importance 

 4 to our members and to corporate members of our organization. 

 5 So it is an important issue. 

 6 The rules that this committee has proposed I think are 

 7 outstanding. I do have a couple of comments I'm going to 

 8 make about them. 

 9 I've been involved in -- in some rules drafting and 

 10 rules revisions myself. I have served on our state bar 

 11 committee that deals with the Texas Rules of Civil Procedure 

 12 for approximately ten years, and I've served for five years 

 13 with Justice Hecht on the Texas Supreme Court Rules Advisory 

 14 Committee. And I think both of those committees need to 

 15 take a hard look at what you've proposed here to see if we 

 16 should tweak our Texas rules in any way to deal even better 

 17 than we have already with electronic discovery. But I'm 

 18 here primarily to tell you that our rule on electronic 

 19 discovery, that has been mentioned here several times this 

 20 morning, has been tremendously effective. It works very 

 21 well. 

 22 I have never heard -- in the six years that it has been 

 23 in effect, I have never heard one complaint about it from 

 24 any plaintiff's lawyer that I've dealt with on a case. I 

 25 have not heard public complaints from the plaintiff's bar 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 155 

 1 about the rule. And in my personal experience it's working 

 2 very well. 

 3 Just by the luck of the timing I became involved in 

 4 some very significant aircraft litigation right after the 

 5 new rule went into effect. Some of it was in federal court, 

 6 some of it was in state court. And we had various discovery 

 7 issues related to electronic discovery. It was a 

 8 weather-related accident and we had a lot of electronically 

 9 stored weather data. We had need to go back and get some 

 10 electronically stored policies and procedures to see how the 

 11 current policies and procedures evolved and developed over 

 12 the course of that litigation, and we -- we really never had 

 13 a problem. 

 14 The -- I realize the two-tier structure of the Texas 

 15 rule sets a different standard than your proposed rule does, 

 16 and I'm really not here to comment on that. I think if you 

 17 adopt a different standard than in Texas we should look at 

 18 it and decide whether we want to keep our standard the same 

 19 or adopt -- or adopt the federal standard. And as somebody 

 20 who has been who has been involved in these air disaster 

 21 cases a number of times, where we will have parallel cases 

 22 going on in state and federal court, there's a lot to be 

 23 said for having rules that are essentially the same or 

 24 consistent, and that's not always been the case. 

 25 I -- I do think that the court should seriously 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 156 

 1 consider adopting the -- that the committee rather should 

 2 seriously consider adopting something along the lines of the 

 3 Texas cost-shifting provision. It only kicks in when it 

 4 requires extraordinary steps to produce the data, but I 

 5 think that really takes away a lot of the incentive of 

 6 lawyers on either side of the docket to engage in abusive 

 7 behavior -- 

 8 JUDGE SCHEINDLIN: Excuse me -- are you 

 9 suggesting -- 

 10 MR. MARTIN: -- and ask for something just because 

 11 a judge might say they can get it. 

 12 JUDGE SCHEINDLIN: -- mandatory cost shifting once 

 13 you have -- the recovery of the data involves extraordinary 

 14 efforts then you think cost shifting should be mandatory? 

 15 MR. MARTIN: Yes. 

 16 JUDGE SCHEINDLIN: You don't think it should be 

 17 discretionary with the court based on -- 

 18 MR. MARTIN: I think it should be mandatory, 

 19 because if -- if a lawyer believes that they might be able 

 20 to get something, they're a lot more prone to ask for it 

 21 than if they know they're not going to get it. And so I 

 22 think -- I think there should be -- I think there should be 

 23 a mandatory presumption, when it requires -- and I like the 

 24 Texas -- the Texas language. Reasonable expenses of any 

 25 extraordinary steps required to retrieve and produce the 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 157 

 1 information. 

 2 JUDGE ROSENTHAL: May I ask you a question about 

 3 that, Mr. Martin? 

 4 It's similar to the question I asked Mr. Morrison. 

 5 There has been -- a number of people have commented 

 6 that if we adopt the two-tier provision it will provide an 

 7 incentive for organizations to move material from accessible 

 8 status to inaccessible status to avoid initial discovery 

 9 obligations. Have you found that under the Texas rules 

 10 organizations have moved -- have made information 

 11 unavailable except through extraordinary steps in order to 

 12 shift the cost? 

 13 MR. MARTIN: No. I have seen no behavioral change 

 14 on behalf of Texas-based corporations, or any other 

 15 businesses that I represent, because of this Texas rule. 

 16 And I believe somebody asked the president of the Texas 

 17 Trial Lawyer's Association that same question this morning 

 18 and he gave essentially the same answer, that he has not 

 19 seen any behavioral change either, and I would not expect 

 20 there to be. 

 21 I think it's a good rule. I think it's workable. 

 22 We're not hearing complaints about it from the plaintiff's 

 23 bar. And I would urge that one change be made in your 

 24 proposal. 

 25 The other -- the other point I want to make is -- is 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 158 

 1 really just to second what my good friend Mr. Lederer from 

 2 Cedar Rapids said this morning, and also to pick up on the 

 3 point Mr. Morrison made about the impact of these rules 

 4 changes on individuals, on small businesses, will be 

 5 tremendous. And I think sometimes that gets lost in these 

 6 discussions, when we're talking about Microsoft and Exxon 

 7 and large airlines and other large corporations. 

 8 Many small businesses have fairly sophisticated 

 9 computer systems and they don't use 10 percent of its 

 10 capability. They don't know what it can do. They don't 

 11 know what it can't do. They use it for their payroll 

 12 records and maybe some -- some word processing. And I think 

 13 we don't want to do anything here that has unintended 

 14 consequences with regard to those businesses. 

 15 JUDGE SCHEINDLIN: And are you worried we have? 

 16 MR. MARTIN: I think there's the potential, but 

 17 I'm not proposing any potential change in the rule. I think 

 18 it's going to be largely an educational process. I think 

 19 it's going to be an -- 

 20 JUDGE SCHEINDLIN: So there is nothing specific 

 21 that we've done now that you think endangers the smaller 

 22 businesses or the families -- 

 23 MR. MARTIN: No. No. The only change I'm here to 

 24 advocate is the cost shifting. 

 25 If there are no other questions, I'll pass to the next 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 159 

 1 person. 

 2 JUDGE ROSENTHAL: Thank you, Mr. Martin. 

 3 Mr. Regard, good afternoon. 

 4 MR. REGARD: Good afternoon. 

 5 JUDGE SCHEINDLIN: Mr. Regard, this may be the 

 6 weirdest thing that's ever happened to you, but I know who 

 7 you are and I have a question right off the bat, because a 

 8 previous speaker talked about searching backup tapes by 

 9 names and search terms. He said it was pretty easy to 

 10 search all the backup tapes. 

 11 Before you even get started, could you tell me with 

 12 your expertise, can that really be done so readily as that 

 13 speaker described? 

 14 I know you were here when he said it. He said just 

 15 search the backup tapes. 

 16 MR. REGARD: It depends on who you ask. 

 17 JUDGE SCHEINDLIN: Okay. I'm asking you. 

 18 MR. REGARD: I know you are. There are a variety 

 19 of techniques out there that have facilitated searching 

 20 backup tapes in certain circumstances, this is true. 

 21 However, there are a number of legacy systems that have 

 22 never been searched or never had technologies adapted to 

 23 them. 

 24 Today we have gotten a lot better at it. We don't need 

 25 to restore an exchange backup server and take a week to 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 160 

 1 create the environment to restore that served in order to 

 2 search for an e-mail. We can search across the compressed 

 3 files if they're on the right backup tapes in the right 

 4 format, with the right version of exchange. So we have some 

 5 technologies that have enabled us, but by no means is it 

 6 comprehensive. 

 7 PROFESSOR MARCUS: Would you regard that as 

 8 reasonably accessible information? 

 9 MR. REGARD: If it was the right version? 

 10 PROFESSOR MARCUS: If you could do what you just 

 11 said. 

 12 MR. REGARD: I'd like to address the issue of 

 13 reasonably accessible. 

 14 JUDGE SCHEINDLIN: And I apologize. 

 15 MR. REGARD: Not at all. And I'm glad you brought 

 16 that up, Your Honor, because that is one of the primary 

 17 issues I would like to discuss. 

 18 JUDGE SCHEINDLIN: Okay. 

 19 MR. REGARD: I have looked over my own notes and 

 20 had anticipated reading my notes, and they're quite lengthy, 

 21 and I won't subject the committee to this today or the 

 22 people who are waiting to travel or to speak. However, I 

 23 will summarize quickly. 

 24 I'm a technologist first; I'm a lawyer second. I don't 

 25 practice law. I practice consulting, and have done so for 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 161 

 1 about 20 years. 

 2 My perspective on the technologies is that they are 

 3 extremely complex. And while we are making progress -- 

 4 progress, such as with the searching of backup tapes with 

 5 some companies and some technologies, just as other 

 6 companies tell us they have improved their linguistic 

 7 searching capability or their neuronetwork searching 

 8 capability, these are not panaceas, and the technology is 

 9 not solving the problems as quickly as it is creating the 

 10 problems. 

 11 Arthur C. Clark once said, "Once a technology is 

 12 sufficiently complex it appears as magic to us," and we all 

 13 take advantage of magical technologies every day. I know 

 14 that I for one don't know how my cell phone works, but I 

 15 wouldn't want to be without it. So we need to bear that in 

 16 mind. 

 17 We have these very complex, almost magical systems that 

 18 we're trying to grapple with. 

 19 JUDGE FITZWATER: Mr. Regard, I have a question 

 20 that really came to me when this process began sometime 

 21 ago. Are we talking to the right people and is this process 

 22 of holding hearings, where we hear primarily from lawyers, a 

 23 sufficient process for this committee to understand this 

 24 issue? 

 25 As you know, we've had people referring to the tech -- 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 162 

 1 I'm not a techie, the IT people know it. Just -- just as 

 2 quick an answer as you can give: Is this process sufficient 

 3 or do we need to have pure technical people talking to us? 

 4 MR. REGARD: I think the process has been 

 5 sufficient. I think that, number one, the attorneys -- the 

 6 members of the bar that I've had the privilege of listening 

 7 to today and reading in the literature, have been very 

 8 attune into the technical aspects. 

 9 I think that there are individuals, such as myself, who 

 10 have stepped forward to speak out. I wish there were more 

 11 of us. But some people tend to prefer a neutral stance 

 12 rather than stating out their position. But the public 

 13 hearings have been very helpful, I think. And certain 

 14 organizations, such as Pike and Fisher, who have been 

 15 publishing a lot of opinions and articles have certainly 

 16 helped in this area. I encourage the committee to 

 17 familiarize yourself, to the extent you haven't, with the 

 18 articles there. 

 19 JUDGE ROSENTHAL: Mr. Regard, -- 

 20 MR. REGARD: Yes. 

 21 JUDGE ROSENTHAL: -- let me, since time is 

 22 short -- your criticism of the two-tier structure in your 

 23 written proposal suggests that the aspect of the burden of 

 24 inaccessible data can be addressed under the existing rule 

 25 under the proportionality factors of burden in 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 163 

 1 26(b)(2)(iii). 

 2 My question to you is: If, as others have commented, 

 3 for whatever reason, litigants and judges are not applying 

 4 the burden factor, the proportionality factors that are in 

 5 the rule now with sufficient efficacy, is there a way to 

 6 address the unique features of electronic data in a way that 

 7 will facilitate the application of the proportionality 

 8 factors? 

 9 MR. REGARD: I'm glad you raised that, and I did 

 10 submit some preliminary comments that indicated that 

 11 position. I've had the opportunity to look over the 

 12 language more. I am not in the business of crafting legal 

 13 language, that's not my expertise. 

 14 My position is more so with the term reasonably 

 15 accessible than it is with the two-tier system. And what I 

 16 would like to say today is an expansion of the committee's 

 17 thought on what reasonably accessible may or may not mean, 

 18 would be more important to me, in my experience, combined 

 19 with a support of the two-tier system, and it's the 

 20 following. 

 21 Summarized very succinctly, reasonably accessible has 

 22 been talked about mostly as backup tapes versus live data, 

 23 and it needs to be expanded, perhaps in the notes, to be a 

 24 more encompassing definition that includes data that may be 

 25 live data on active magnetic systems but is nevertheless not 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 164 

 1 reasonably accessible. 

 2 JUDGE SCHEINDLIN: Why? Why isn't it reasonably 

 3 accessible? 

 4 MR. REGARD: That's an excellent question. It may 

 5 not be reasonably accessible because with my experience of 

 6 databases we have not tens of hundreds but thousands of 

 7 tables of data that are quickly being generated, or purged, 

 8 not all of them. Of thousands of tables in a database every 

 9 individual table may have its own life cycle determined by 

 10 the needs of the system that created it. 

 11 JUDGE SCHEINDLIN: What makes it inaccessible 

 12 there is a short temporal life? 

 13 MR. REGARD: You may have a short temporal life. 

 14 You may also not have the tools in the company that is using 

 15 the database to access those temporal tables. 

 16 The example of the corner gas station, where you buy 

 17 your gas at the pump and you leave, yes, that's a -- that's 

 18 a magnetic transaction. There is a data trail there. But 

 19 what is the gas station on the corners capability to 

 20 transfer those transactions, collect them and deliver them 

 21 in litigation? 

 22 Almost zero. They have no control over that 

 23 equipment. No access to those tables. They don't interfere 

 24 with the telephone transmissions of the data. You, in fact, 

 25 have to go to another organization somewhere else in the 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 165 

 1 world to get those transactions. 

 2 JUDGE SCHEINDLIN: Are you moving -- suggesting 

 3 that we move more towards a standard that would say it is 

 4 reasonable -- it is not reasonably accessible if the 

 5 producing party would have to take extraordinary steps or 

 6 engage in extraordinary effort outside the ordinary course 

 7 of its business to produce it? 

 8 MR. REGARD: That is the direction that I'm 

 9 thinking. Yes, Your Honor. 

 10 I refer to the Sedonna principles, principle number 8? 

 11 Which talks -- for this I will read -- ask your indulgence 

 12 to read, "The primary source of electronic data in documents 

 13 for production should be active data and information 

 14 purposefully stored in a manner that anticipates future 

 15 business use and permits efficient searching and retrieval." 

 16 I won't read the rest of it, but it's in the same 

 17 vein. There was a lot of data that my clients, that users 

 18 of technology create, leave behind, that they may never be 

 19 aware of or never have access to under the normal operating 

 20 conditions of the software applications that they use. This 

 21 goes not only to databases and to backup tapes, it also goes 

 22 to metadata and to other what I call the technological 

 23 grease that keeps the wheels of our applications of 

 24 our operating systems moving. 

 25 JUDGE SCHEINDLIN: Let's just stick with metadata 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 166 

 1 for a moment. 

 2 MR. REGARD: Yes. 

 3 JUDGE SCHEINDLIN: What's inaccessible about 

 4 that? 

 5 Other than the fact that you're not viewing it on the 

 6 screen and so the user isn't using it daily in their 

 7 business, but it's hardly inaccessible to retrieve. It's no 

 8 big deal to pull up the metadata. 

 9 MR. REGARD: Well, it -- that's not necessarily 

 10 true. There is some metadata that we are familiar with and 

 11 we become more familiar with in litigation. There's a lot 

 12 of metadata that we're not familiar with more and the -- 

 13 JUDGE SCHEINDLIN: Let's stick with the stuff that 

 14 you are familiar with and you access easily. Why should it 

 15 suddenly go over to the inaccessible category if it's easily 

 16 accessed? 

 17 MR. REGARD: I'm not trying to suggest that all 

 18 metadata would classify as inaccessible. 

 19 JUDGE SCHEINDLIN: Okay. All right. Then how 

 20 would you define the cutoff? 

 21 It's not just the business use. It's how easy it is to 

 22 retrieve, right? 

 23 MR. REGARD: It's the ease of retrievability. 

 24 And -- and one measure might be to question whether the 

 25 person who is creating and using the data has themselves the 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 167 

 1 ability to retrieve these hidden, arcane or -- 

 2 JUDGE SCHEINDLIN: Well, why should it turn on the 

 3 ignorance of an individual user, be it a lawyer or a 

 4 secretary, who cares? 

 5 If it can be easily retrieved by the IT department, 

 6 just easy, then it should be produced if it contains 

 7 relevant evidence, shouldn't it? 

 8 MR. REGARD: I would agree with that. 

 9 JUDGE SCHEINDLIN: Oh, okay. So how are we going 

 10 define this cut? 

 11 I have a little trouble coming up -- see I like the 

 12 conversation, which nobody else has time to listen to, I 

 13 understand, but how are we going to get there? 

 14 Where's the line? 

 15 MR. REGARD: I haven't come up with language to 

 16 suggest to the committee. 

 17 JUDGE SCHEINDLIN: If you want to submit future 

 18 comments you can. 

 19 MR. REGARD: I would like to submit my written 

 20 comments, no today, but at a point in the near future. 

 21 JUDGE ROSENTHAL: Is it fair to say you want us to 

 22 move toward a functional description that is not as tied to 

 23 current technology, such as, backup tapes, as the notes may 

 24 presently suggest? 

 25 MR. REGARD: Absolutely. 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 168 

 1 MR. GIRARD: Can I ask you a follow-up question? 

 2 And that would be: The flip side of that is if that 

 3 happens the areas that are not accessible are going to have 

 4 to be identified in some way, do you see a problem with 

 5 that? 

 6 In other words, it would be -- the range of potentially 

 7 difficult areas to access in the area that you describe, it 

 8 seems to me, to be fairly complex and open-ended in a way 

 9 that goes beyond what we've been looking at in the context 

 10 of backup tapes, for example. 

 11 Do you think that could ultimately put more burden on 

 12 the producing party to define those areas that have not 

 13 been -- that are not accessible? 

 14 MR. REGARD: I think if you ask a producing party 

 15 to make a laundry list of everything that was not 

 16 accessible, that's the equivalent of asking them to be aware 

 17 in advance of all the areas where data is actually being 

 18 created and used, and I don't know if that's necessarily 

 19 possible. That's part of the problem. 

 20 When you -- when you purchase applications, a lot of 

 21 activity goes on underneath the surface that you don't need 

 22 to know about, but may in an arcane or very narrow 

 23 circumstance become -- become necessary to retrieve. 

 24 And systems can be changed. The data can be retrieved, 

 25 but only with extraordinary efforts. 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 169 

 1 JUDGE SCHEINDLIN: Yeah, but that -- but that's 

 2 the most dangerous, because that's going to change as 

 3 technology changes. If we write a note that is too specific 

 4 and says that something is not easily retrievable, in a 

 5 month there will be a new invention and it will become 

 6 easily retrievable. So we don't want to maybe be too 

 7 specific in listing things that are not easily retrievable, 

 8 because they will be. 

 9 MR. REGARD: I agree. That's why I say we should 

 10 not have a laundry list. 

 11 I'm sorry if I misspoke that. No, I agree with that. 

 12 JUDGE RUSSELL: I thought you said put a laundry 

 13 list. 

 14 MR. REGARD: No. I'm not for a laundry list. 

 15 That would be a poor thing to do. 

 16 PROFESSOR MARCUS: You mentioned databases and 

 17 several other people have also. There is a proposal 

 18 regarding the definition of -- a description of what's 

 19 discoverable under Rule 34 that treats electronically stored 

 20 information as a sort of co-equal with something called 

 21 document. I'm interested in hearing from you on how 

 22 discovery is done with regard to databases. 

 23 Are they somehow ever produced in whole? 

 24 Are they accessed by the other side? Or in some other 

 25 way do they generate the information obtained through 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 170 

 1 discovery? 

 2 MR. REGARD: I've seen database production handled 

 3 in a manner -- in a number of fashions, including the two 

 4 you have just mentioned, where they have been produced in 

 5 their entirety and where they have been produced as an 

 6 on-site visit or inspection, if you will. 

 7 Largely the production of databases requires one to 

 8 acknowledge that they contain many thousand -- maybe tens, 

 9 hundreds or thousands of pieces, each of which may need to 

 10 be addressed. 

 11 So typically it starts with a 40,000 foot view of what 

 12 does the database contain in terms of the tables, how are 

 13 those tables structured, which tables are important, what do 

 14 they contain, which other tables do they require to be 

 15 interconnected to, and then how will we extract that data, 

 16 will it be through a report, will it be through a custom 

 17 written program, will it be through a native capability of 

 18 the database to export or will it be the native file, which 

 19 would require the receiving partner -- party to have the 

 20 native application to read the native file. I've worked 

 21 with all conditions. 

 22 The problem is databases have so many constituent parts 

 23 and you need to look at the various parts independently. I 

 24 worked on a case recently where an organization had a 

 25 database and the judge said, which would seem reasonably -- 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 171 

 1 reasonable, please produce that database, and, by the way, 

 2 do so quickly. The problem was that the database was really 

 3 more of a platform than a single application. And the 

 4 company was using this platform, which was a database 

 5 environment, to actually house over 400 different types of 

 6 database applications together. 

 7 So where they had the software update rules, which was 

 8 the crux of the litigation, they also had the EEOC hot line 

 9 complaints and the customer returns, and a lot of 

 10 information that was tangential, unrelated, or subject to 

 11 trade secret or other types of privilege. 

 12 By producing all of it at the same time, it opened up a 

 13 whole other host of problems, and the logistical problems of 

 14 producing it, which meant that service had to be created, 

 15 data needed to be migrated, special software needed to be 

 16 written to facilitate the exportation. The export was done 

 17 wrong, then it had to be redone. And it just took time was 

 18 another issue that came up in the case. 

 19 So thinking of databases as a single entity is where we 

 20 need to start not thinking. They are not a single thing. 

 21 They contain many parts and those parts all have different 

 22 rules of data retention and they have different values to a 

 23 particular litigation. 

 24 JUDGE SCHEINDLIN: These databases that are 

 25 short-lived and dynamic, could anybody really think of them 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 172 

 1 as a "document," as we used the word in the past? 

 2 MR. REGARD: I would not. No. 

 3 JUDGE SCHEINDLIN: Is "electronically stored 

 4 information" a good word or would you agree with an earlier 

 5 speaker that that doesn't capture it? 

 6 MR. REGARD: I like "electronically stored 

 7 information." 

 8 One of the things that you should know, the playground 

 9 snickering going on behind the committee's back of 

 10 technologists is we know that e-mail is a database. It's 

 11 mostly stored as a database. 

 12 JUDGE ROSENTHAL: You think we don't know that? 

 13 MR. REGARD: And that even though we think of 

 14 e-mails, because they are transmitted under smt format, as a 

 15 single atomic unit, aren't really stored in our corporate 

 16 systems as a single unit. They are broken up into pieces, 

 17 the pieces are organized into tables, and then that is 

 18 reassembled to look like a single unit when you ask to look 

 19 at an e-mail. 

 20 So we, the technologists, feel that we are not even 

 21 addressing the databases that we're familiar with as 

 22 databases. We're still thinking of them in a paper paradigm 

 23 of discrete atomic components, when they are not. 

 24 PROFESSOR MARCUS: Can I just make sure I was 

 25 understand what you were saying about databases? 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 173 

 1 Would it be fair to say that there might be an 

 2 advantage to separating out or describing somewhat 

 3 differently electronically stored information from 

 4 documents, so as to focus with regard, for example, to 

 5 databases on the need to fashion a discovery device that is 

 6 less than everything and it's the information that is 

 7 relevant being sought, not the entire database? 

 8 That could be what you were getting to. 

 9 MR. REGARD: Today, quickly, that comment sounds 

 10 appropriate. I reserve the right to reflect upon it. 

 11 Electronically stored information would be more appropriate 

 12 to describe databases than documents. Absolutely. 

 13 JUDGE ROSENTHAL: Just to follow up on what 

 14 Professor Marcus just said, it also might affect the former 

 15 production greatly. You're not really going to be printing 

 16 out, as we think of it, it's not even printable in that 

 17 sense, the database. You really have to either view it or 

 18 have the applications to work with it in a different way, so 

 19 it affects the production, too. 

 20 MR. REGARD: It affects the production greatly. 

 21 JUDGE ROSENTHAL: Greatly. 

 22 MR. REGARD: When you view the data in a database 

 23 you're only viewing what the software has been designed to 

 24 allow you to view from that user's perspective. 

 25 JUDGE ROSENTHAL: So it's really different from 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 174 

 1 "document" in that sense, too. 

 2 MR. REGARD: Vastly different. 

 3 JUDGE HECHT: From the point of view of the 

 4 spectator, it looks like one of the reasons for a different 

 5 disaster recovery system might have been limited readily 

 6 accessible storage in the first place. Maybe -- maybe two 

 7 systems for more mechanical reasons rather than users. But 

 8 we had the example earlier where the CEO says I can't find 

 9 this e-mail and I go back and look on the backup tape to 

 10 find it, which is not really the purpose of the backup tape 

 11 but you can do, and do that. 

 12 Is there -- do you think that pressure will make it 

 13 such that what's readily accessible and what's not will -- 

 14 that distinction will begin to lose meaning, because even 

 15 disaster recovery will be readily accessible? 

 16 MR. REGARD: I think -- I think if we maintain 

 17 readily accessible as a paradigm between backup tapes and 

 18 live data, that will go away, and we will find that 

 19 companies rely on live storage for disaster recovery 

 20 purposes much more than that of tape. 

 21 JUDGE HECHT: How soon -- is that -- 

 22 MR. REGARD: Oh, I don't know how quickly that is 

 23 going to happen. One of the things I have found in my 

 24 research that does concern me is that we have, under one 

 25 estimate, in 2002 thirteen terabytes -- 13,000 terabytes of 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 175 

 1 storage media sold. That's expected by 2008 to grow to 15 

 2 million terabytes of media in storage capability. 

 3 JUDGE ROSENTHAL: Mr. Regard, if I understood your 

 4 earlier comment, your -- the conclusion that you would draw 

 5 from the likelihood that backup tapes will in the future 

 6 move from the inaccessible to the reasonably accessible 

 7 category doesn't mean that the two-tier distinction is 

 8 without justification, but because there will still be a lot 

 9 of information that for the producing party in a given case, 

 10 under a functional description of reasonably or readily 

 11 accessible, is not going to be in that category? 

 12 MR. REGARD: Yes. But I want to make sure that -- 

 13 I'm not just saying -- it's not just the volume that makes 

 14 it reasonably -- 

 15 JUDGE ROSENTHAL: Oh, I understand. 

 16 MR. REGARD: -- accessible. 

 17 JUDGE ROSENTHAL: I understand. 

 18 MR. REGARD: It's the manner in which it's 

 19 stored, the tools we have to access, the purpose for which 

 20 it was created, and the extent to which we readily 

 21 understand it. 

 22 Going to Professor Marcus's issue though on databases 

 23 helps me transition very quickly to the safe harbor, which I 

 24 also support and I will sum up in 30 seconds. 

 25 JUDGE ROSENTHAL: Good for you. 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 176 

 1 MR. REGARD: And that is under the safe harbor 

 2 system we have data -- we need to expand our knowledge 

 3 beyond just e-mails. And these databases is a key area 

 4 where we have systems in place that collect, summarize, and 

 5 dispose of data behind the scenes that the purchasers and 

 6 operators of software many times don't see or interfere 

 7 with. 

 8 So when we think of the safe harbor taken in the 

 9 context of complex systems, the data can be extracted 

 10 eventually, given enough time to plan and special program 

 11 and extract, but there is almost always going to be data 

 12 lost while we plan and scope the problem. And we need to 

 13 think of it in that context. And for that reason I am very 

 14 much in favor of the safe harbor. 

 15 Thank you. Thank the committee. 

 16 JUDGE ROSENTHAL: Thank you, Mr. Regard. 

 17 Mr. Pope. 

 18 MR. POPE: Thank you, Your Honor. 

 19 My name is Mike Pope. I'm a trial lawyer from 

 20 Chicago. I'm not here speaking on behalf of clients or 

 21 professional organizations. Although I have devoted a major 

 22 portion of my career to being involved in professional 

 23 organizations. Most recently I was president of the Seventh 

 24 Circuit Bar Association, and proud to say I was able to 

 25 persuade Judge Higgenbotham to come up and talk to us. I've 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 177 

 1 also been president of the -- of Lawyers for Civil Justice 

 2 and the International Association of Defense Counsel. 

 3 I spent a lot of my time in those organizations trying 

 4 to figure how can we make the civil justice system better. 

 5 From that context I certainly come to applaud you for the 

 6 work you've done and to support the proposed amendments. 

 7 One of the things that I focus on a lot is how we are 

 8 supposed to act as lawyers in terms of explaining to the 

 9 public, or to in many cases my clients, what's going on, how 

 10 does the court system work, and is it really rational. And 

 11 I think therefore a clear understanding by the public of how 

 12 procedural rules are going to operate is very important. 

 13 And thus, I think these amendments help. They bring 

 14 clarification to a very confusing and difficult area of the 

 15 law in terms of electronic information. 

 16 And to the extent there's any question about need, I 

 17 would support what Steve Morrison said, and I can assure you 

 18 from my own experience, there is a tremendous amount of 

 19 confusion and concern. And even among very sophisticated 

 20 clients as to what really is going on, what is their duty to 

 21 preserve information. Not so much when does it start but 

 22 what is their actual job, what do they have to do. 

 23 When I first looked at this I -- I said -- this is one 

 24 of those experiences where you say, wow, this is something 

 25 really going on here. This is a real trap for the unwary. 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 178 

 1 And then I looked more closely, and I don't want to sound 

 2 tripe, but it sounds like it is a trap for the wary as well 

 3 because, there are no answers absent these rules and these 

 4 proposed rules. So I think that they bring clarification to 

 5 the conflict and their adoption will in fact increase 

 6 respect for the court system and the civil justice system. 

 7 I only would add a couple of things, you've heard a lot 

 8 today. I support the two-tier approach and the safe 

 9 harbor. The two-tier approach is what we have done all 

 10 along in complex litigation. I've heard a lot of questions 

 11 about what happens, what -- what do people ask for. One 

 12 side asks for everything. The other side goes to their 

 13 clients and the client says we can't produce that stuff, 

 14 tell 'em no. And my job, usually, is being intermediary, 

 15 being the professional, is to say, wait a minute, if you 

 16 give me what we can produce, then I can sit down and 

 17 negotiate why we can't produce the other things. 

 18 JUDGE SCHEINDLIN: Can -- 

 19 MR. POPE: It seems to me your approach is very 

 20 similar to what has been done traditionally. 

 21 PROFESSOR MARCUS: Mr. Pope, when you're at that 

 22 point could you -- one of the features of 26(b)(2) as 

 23 proposed is identification of inaccessible information. As 

 24 part of your experience in dealing with these cases, do you 

 25 provide some information about what it is you're not 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 179 

 1 producing? 

 2 MR. POPE: Absolutely. And why. 

 3 I think -- I -- well, I don't live in the same world as 

 4 some of the lawyers I heard here talk. Mr. Gardner, for 

 5 example, made it sound like all the lawyers on the other 

 6 side are all black hearts. I think my job is to sit with my 

 7 colleague on the other side of the case, whether it's 

 8 plaintiff or defendant doesn't really matter, and explain to 

 9 them what we are doing, why we are doing it, and try to get 

 10 buy-in from the other side as to why that's a legitimate 

 11 approach. 

 12 It seems to me one of the reasons why the two-tiered 

 13 approach that is in the proposed amendments makes so much 

 14 sense is that most of everything that's ever used in cases 

 15 would be within the area of reasonably accessible. So, 

 16 sure, you want to say we can't do this and I'd like to 

 17 explain to you why we can't do that, because it doesn't 

 18 exist in any capacity we can search, and we can't go get 

 19 anymore. But there normally is a way to go about that, by 

 20 negotiation. But you have to establish your credibility, 

 21 certainly, in that regard, and explain why we can't produce 

 22 something. And then the ball goes back to the other side to 

 23 say where do you want to go from here. 

 24 PROFESSOR COOPER: Do you do the same for paper 

 25 discovery as you're -- 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 180 

 1 MR. POPE: That's what I'm saying, professor. 

 2 What I see as good about your proposal is that it builds on 

 3 the experience many experienced lawyers have had in focusing 

 4 on what is accessible first, before we had electronic 

 5 discovery. Now, before we had electronic discovery, 

 6 discovery was too expensive. It's getting more so. 

 7 But the concept of dealing with what you can get your 

 8 arms around first and producing that and seeing if that 

 9 isn't enough is a very traditional approach in complex 

 10 litigation. And in my experience, you hardly ever need to 

 11 go beyond that, if you're being serious. 

 12 One thing I come back to at the end is whether cost 

 13 shifting should play some kind of a role in that. 

 14 But in my personal experience the notion of not readily 

 15 accessible information playing any major role in cases is 

 16 almost nill. So that argument, plus the notion that if 

 17 backup tapes -- as I have been told over and over again, by 

 18 highly paid professionals, tell me it's almost impossible to 

 19 search on any practical basis, the notion that we spend so 

 20 much time worrying about those, instead of focusing on what 

 21 we can produce because it's readily accessible, it seems to 

 22 me that's the way we should do it, and that's what you've 

 23 done. 

 24 JUDGE ROSENTHAL: Mr. Pope, as a segue into the 

 25 safe harbor, which I understand you want to talk about 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 181 

 1 briefly as well, one of the concerns that we've been dealing 

 2 with is what you do with the material that is not reasonably 

 3 accessible while you are examining what is produced as 

 4 reasonably accessible and determining whether it adequately 

 5 meets the needs of the litigation, and that's the question 

 6 of the obligation to preserve what might not be reasonably 

 7 accessible. 

 8 Do you believe that there is a problem in the 

 9 relationship of the safe harbor proposal and the two-tier 

 10 proposal or do you believe that it is sufficiently clear in 

 11 the relationship of those two proposals as to when there 

 12 might be an obligation to preserve something that is not 

 13 reasonably accessible? 

 14 MR. POPE: Well, I think, judge, that's what the 

 15 "good cause shown" language is supposed to provide, the 

 16 flexibility to work in that area. I think once the parties 

 17 have sat down and said here's what we think is reasonably 

 18 accessible -- and remember, judges always forget, the 

 19 lawyers have to learn first what the facts are before that 

 20 meeting takes place, less we fear you misstate things 

 21 inadvertently. 

 22 But I think that's an area that is not crystal clear 

 23 right now but that the obvious import of having a safe 

 24 harbor is that we'll get back to our regular recycling of 

 25 unaccessible information or backup tapes, anyway, and 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 182 

 1 therefore that -- my experience is it usually is the party 

 2 that has the most data that is pushing to have this meeting, 

 3 so we can seek clarification, we can reach agreement or seek 

 4 a court order saying here's what we can do and therefore we 

 5 understand -- both sides understand that that means what you 

 6 can't do can in fact be destroyed or recycled, as the case 

 7 may be. 

 8 I think what we need is clarification. As I said for 

 9 the purposes of the rules certainly the safe harbor is 

 10 intended to provide some clarification for parties so they 

 11 know what they can do, whether it's reasonable standard -- 

 12 the only problem I would have with that is we've been trying 

 13 cases now for about 225 years on the question of what was a 

 14 reasonable person standard. I don't know whether we've 

 15 written that much clarification by simply using 

 16 reasonableness as opposed to something more like intentional 

 17 or willful, but I leave that to your deliberations. I know 

 18 you've wrestled with that quite a bit. 

 19 The one thing I would add though is if you want us to 

 20 sit with the other -- with our colleagues and come back to 

 21 you with agreed orders on some of these things, in my world 

 22 the -- the -- the wall is divided in two parts. There are 

 23 cases where both parties have a lot of data and documents. 

 24 And your experience I'm sure is in those cases they work out 

 25 agreements very well, mutually assured destruction exists, 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 183 

 1 no problem, let's find a way to make this work. The real 

 2 problem comes in the other areas, the area where it's a 

 3 class action, consumer class action, almost no documents 

 4 against a big company that has a whole bunch of documents. 

 5 The one thing I would suggest to you is you consider 

 6 further the question of cost shifting of -- for not readily 

 7 accessible information, to see whether that would provide 

 8 some incentive to allow those negotiations to make more 

 9 sense. 

 10 JUDGE SCHEINDLIN: Again, would you seek mandatory 

 11 cost shifting or discretionary -- 

 12 MR. POPE: No. I would say discretionary would be 

 13 sufficient. I think -- I certainly am not trying to suggest 

 14 the District Court shouldn't conintue to play a role and 

 15 have discretion to make these decisions. 

 16 But the trouble really is If I'm sitting against the 

 17 most -- the best lawyer on the other side, who is a 

 18 plaintiff's class action lawyer, they have no incentive to 

 19 take anything other than everything. They're worried about 

 20 embarrassment. If something later comes out why didn't you 

 21 get it all, you know, there's other implications. And I 

 22 suggest by having cost shifting as a role here there is an 

 23 incentive to make this more reasonable. 

 24 JUDGE SCHEINDLIN: Of course that -- but that is 

 25 sort of there now. It says the court may order the second 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 184 

 1 tier on terms and conditions. Then in the notes terms and 

 2 conditions includes -- includes caution. So it's there if 

 3 you want -- 

 4 MR. POPE: Your Honor, I know that if you look 

 5 carefully you can see it. I just question whether it's 

 6 clear enough that is your intent. And maybe if it's clear 

 7 enough in the note to be your intent, then we won't have a 

 8 problem with it in the future, but I just didn't know for 

 9 sure whether, when I read that it, that was your intent that 

 10 cost shifting could be a factor the District Court could 

 11 apply. 

 12 JUDGE SCHEINDLIN: Oh, yeah. 

 13 MR. POPE: I would say it should be clearer, 

 14 because otherwise -- if it's an incentive it ought to be 

 15 clear to the other -- the lawyer that, you know, if you're 

 16 asking for this stuff, you know, you may have to contribute 

 17 to it. 

 18 JUDGE SCHEINDLIN: You may have to. 

 19 MR. POPE: But as long as the judge can make that 

 20 ruling, then you and I are in agreement. 

 21 Okay. Thank you very much. I don't want to rush 

 22 through, with the lunch hanging over everybody's head, but I 

 23 do really appreciate the work that you have done. And you 

 24 are -- the rules -- the proposed rules, if you adopt without 

 25 any changes right now, we would be so much further ahead in 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 185 

 1 terms of allowing people to have a sense of what's going on 

 2 in this very difficult area of the law. 

 3 Thank you. 

 4 JUDGE ROSENTHAL: Thank you, Mr. Pope. 

 5 Ms. Owens. 

 6 MS. OWENS: You heard from a reformed trial lawyer 

 7 earlier today. I'll still somewhat unreformed, and I am the 

 8 head of a products liability practice group at Austin, a 

 9 firm based in several cities. I practice out of Atlanta, 

 10 Georgia, with that firm. Our practice group actually is the 

 11 most active group within our firm in terms of trying cases. 

 12 In December, for example -- our small group is about 

 13 eight partners and among those eight partners we had three 

 14 cases on trial calendars: One was mine, and it went instead 

 15 to arbitration; and one was specially set, but was delayed 

 16 and is being tried this week; and the third was also 

 17 specially set but was delayed to some other day. So we are 

 18 pretty frequently in the courtroom among the members of our 

 19 practice group and pretty frequently involved in discovery, 

 20 both the old-fashioned paper version and electronic today. 

 21 I'm not here though, I should hasten to say, on behalf 

 22 of my firm or any particular group or any particular client, 

 23 but I'm here as an individual lawyer who has been engaged in 

 24 litigation for about 20 years. 

 25 I do think though that the groups which I belong and 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 186 

 1 the trial lawyers with whom I worked with on both sides of 

 2 the fence would join me in expressing gratitude to you for 

 3 the time you put in. I saw firsthand the work that you put 

 4 in at Fordham, and I read that you've been working on this 

 5 for about five years. I think we're all profoundly grateful 

 6 for the time you're putting in and also just the level of 

 7 thought, the depth you're putting into this analysis. 

 8 If you were at Fordham you heard me talk about killing 

 9 a Copperhead by running it over with a Volvo S70 eight 

 10 times. And I used that at Fordham as an example of use of 

 11 excessive force, or a situation of undue leverage, where one 

 12 party has a lot of information to produce and is on the 

 13 heavy side of the producing end and the other party is 

 14 primarily on the requesting side with much less to produce. 

 15 And I listened at Fordham to an advocate on behalf of 

 16 requesting parties use the phrase "We have --" speaking of 

 17 plaintiffs, "-- weapons of mass discovery," talking about 

 18 discovery in the electronic discovery as not an 

 19 investigatory tool but as a weapon. And that really 

 20 reinforces the concept I've thought about, about the excess 

 21 use of force that can happen without amendments to the rules 

 22 that have been proposed. So I am here favoring effective 

 23 amendments to the rules and would like to particularly 

 24 address the inaccessible data concepts and also the safe 

 25 harbor provisions. 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 187 

 1 So today I'll talk about the Copperhead from a new 

 2 perspective, and that is that the Copperhead didn't know 

 3 what to expect when it ventured into my driveway. It faced 

 4 three different sets of circumstances: It faced my foot in 

 5 a Brooks running shoe; it faced the Volvo; and it faced a 

 6 very large stick. And that unpredictable set of 

 7 circumstances, while different in the courtroom, is what 

 8 both plaintiffs and defendants may face today. 

 9 Most now are becoming familiar with the concepts. And 

 10 most of the clients we represent, the people we hear from 

 11 are familiar with, for example, the Zubulake decision. 

 12 Someone said at the ABA meeting last week, "It rocked our 

 13 world." Some of us might have seen it coming, given it was 

 14 the fifth in a row of Zubulake decisions. But it was an 

 15 interesting concept. And in thinking about that world 

 16 though, our world is not just the Southern District of New 

 17 York. It's the Southern District of Georgia. It's 

 18 Colorado, where very recently our firm had a judge enter an 

 19 order limiting the e-mails that were sought for production 

 20 by opposing counsel, and equating e-mails today to the 

 21 telephone conversations of yesterday, essentially the 

 22 chatter Judge Rosenthal has mentioned. In different courts 

 23 we would have faced obviously different orders and some 

 24 judges would have allowed broader discovery today of the 

 25 e-mails that were sought. And so we do have some issues of 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 188 

 1 predictability in the litigation that we face today. 

 2 You know, some courts, including in Zubulake, have 

 3 offered to litigants some applicable rules that we can use 

 4 to begin to get a handle on the production that is sought. 

 5 What we're hearing, and what I hear directly from 

 6 companies today, is that those rules may be harder to apply 

 7 in more complex litigation and in litigation where it's 

 8 harder to reach an agreement about, for example, who are the 

 9 key witnesses, who are the key employees, and also where 

 10 it's more difficult to know what is particularly on those 

 11 backup tapes that are currently in storage for the company. 

 12 You've heard some about large corporations and the 

 13 problems that they face. I'll offer to you today an example 

 14 from a smaller company, based in Atlanta, not one I 

 15 personally represent but one that shared with me its 

 16 experiences in the electronic evidence world. That company 

 17 has told me that it had to restore a hundred backup tapes in 

 18 order to capture about eight months of data. And I brought 

 19 some notes with me. 

 20 They were unable they say to reduce the number of 

 21 backup tapes because they had three different servers that 

 22 were used and those servers were often rebalanced. And 

 23 because of that rebalancing the practical result was that 

 24 they ended up with different individuals on different 

 25 servers at different times. And so even to go after a key 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 189 

 1 group of individuals, they nevertheless had to include one 

 2 hundred backup tapes. Cost to restore was $450 a tape for 

 3 them, and so that cost was $45,000. That company, by the 

 4 way, because of some previous experiences in litigation, 

 5 does no recycling of backup tapes today. 

 6 The same company simultaneously faces a very large 

 7 class action. And in that class action so far plaintiff's 

 8 counsel has not agreed to -- and hasn't gone to the court 

 9 yet, but plaintiff's counsel hasn't agreed to any 

 10 restrictions on the time periods or the custodians or the 

 11 subject matter of the discovery material that is sought. 

 12 They are seeking everything from every business unit in the 

 13 company, currently. And with that the company faces the 

 14 prospect of having to restore several hundred backup tapes 

 15 and the cost of attorney review of those tapes. 

 16 They have got over 1800 tapes for the year 2004 alone. 

 17 And they have actually a cost of $350 a tape to restore 

 18 those tapes, so that gets them to around $840,600 in 

 19 potential cost. The current cost, by the way, for that 

 20 company to save its backup tapes, just to save, the storage 

 21 part of it, not the retrieval and processing part of it, is 

 22 a $100,000 a year. 

 23 Putting it in perspective, looking at the over 1800 

 24 backup tapes that they have, they believe that those will 

 25 hold, based on some of the technical analysis we have heard 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 190 

 1 that I won't engage in, about 266 million documents. Assume 

 2 that 5 percent of those documents may be privileged and 

 3 require a more detailed privilege review, they have 13.3 

 4 million documents for privilege review at one minute of 

 5 document, at which I don't pretend I could do, but at one 

 6 minute a document for privilege review, that would be 

 7 221,660 hours, and you can multiply that by attorney fees 

 8 and it leads to quite a significant number. Now, those are 

 9 big numbers. I trust that that company will not ultimately 

 10 have to engage in discovery of all of those backup tapes for 

 11 a single year. But they certainly get us into the concept 

 12 very quickly of why sampling is really important and why 

 13 that concept is important in the comments that are included 

 14 in the rules, and also why the concept of inaccessible data 

 15 and cost sharing becomes very important. 

 16 I know that some have raised the concern related to 

 17 inaccessible data that -- that companies will abuse the 

 18 inaccessible data concept by transferring data into 

 19 inaccessible formats so that it will become inaccessible. 

 20 My view really is that the very act of capturing the data 

 21 off of the active system and transferring it into 

 22 inaccessible data is in itself access to the data. 

 23 I note that the comments that are already written state 

 24 that if the responding party has actually accessed requested 

 25 information it may not rely on this rule as an excuse for 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 191 

 1 providing the discovery, even if it incurred substantial 

 2 expense in accessing the information. 

 3 So it seems to me that to convert from active use into 

 4 an inaccessible form of storage in some intentional action 

 5 of trying to avoid discovery could be viewed as access to 

 6 the data by the courts. So the issue may already be 

 7 addressed by the existing comments, but to the extent that 

 8 it's not, I agree with some of the comments that have been 

 9 made before, that corporations today are not in the business 

 10 of rendering their business information inaccessible. They 

 11 are investing a lot of corporate dollars into figuring out 

 12 better means of having access to their data, and they make 

 13 those investments for business reasons, not for legal 

 14 reasons. 

 15 And I also would advocate developing these rules from a 

 16 good faith premise and not from an expectation or 

 17 presumption of wrongful conduct that certainly could be 

 18 sanctioned by the courts if it occurs. 

 19 I also heard some comment that companies should make -- 

 20 or be required by the rules to make more of a showing that 

 21 there was a business purpose for the inaccessible data. And 

 22 it struck me as that comment was made that that is really 

 23 not necessary. 

 24 I think that the committee has before it enough 

 25 information about the need for disaster recovery systems and 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 192 

 1 why those are important to companies that when companies 

 2 have backup tapes or storage of inaccessible data the 

 3 business purpose of that storage is generally evident. And 

 4 there might be slight variations on the theme of why one 

 5 company would need a disaster recovery system, versus why 

 6 another company would have that need, or why one company 

 7 would be having backup tapes -- 

 8 JUDGE SCHEINDLIN: Should we define this by the 

 9 business purpose or by the ease of retrieval? 

 10 In other words, if this backup system is easily 

 11 retrieved and easily searched, is it off elements so to 

 12 speak in the first tier merely because it was designed to be 

 13 a disaster recovery system, even if it's easily retrieved? 

 14 Again it's that line drawn. What do you advice us? 

 15 MS. OWENS: Well, my point is that you should 

 16 stick with your concept of inaccessible data, without 

 17 requiring a different level of proof that there's a business 

 18 purpose for having the inaccessible data. 

 19 JUDGE SCHEINDLIN: You would stay away from 

 20 business purposes and you would talk about ease of 

 21 retrieval? 

 22 MS. OWENS: I hear the committee struggling with 

 23 how we define inaccessible data -- 

 24 JUDGE SCHEINDLIN: Yes. I'm asking you. 

 25 MS. OWENS: -- and so I have given that some 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 193 

 1 thought, and I've wanted to say off-the-cuff that it's 

 2 inaccessible if you have to pay somebody to go retrieve it 

 3 for you. I'll offer the Regard rule. If my client needs 

 4 somebody like Dan to get it, then maybe it's inaccessible. 

 5 I think of it -- 

 6 JUDGE SCHEINDLIN: Then that would be ease of 

 7 retrieval and not business purpose. 

 8 MS. OWENS: Yes, it would be ease of retrieval -- 

 9 JUDGE SCHEINDLIN: All right. 

 10 MS. OWENS: -- but I think that actually the best 

 11 definition would be to look at whether this is information 

 12 that a party can access using the systems that it routinely 

 13 uses in the ordinary course of business. If the company had 

 14 access to the information using systems that are employed in 

 15 the ordinary course of business, then that information is 

 16 accessible. 

 17 JUDGE SCHEINDLIN: And if technology will permit 

 18 that to be done with backup tapes five years from now then 

 19 they would all cross into the accessible. 

 20 MS. OWENS: Well, the reason I'm thinking about 

 21 that definition is because I think it does allow for 

 22 advances in technology that might work on both sides. 

 23 Technology may cause more information to become even 

 24 more inaccessible. It may also cause retrievability to be 

 25 enhanced and more cost effective in the future. I think 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 194 

 1 that the more simple that language is, actually, the better. 

 2 JUDGE ROSENTHAL: Did you want to take a few 

 3 minutes to talk about the safe harbor as well? 

 4 MS. OWENS: I would like to. And I will include 

 5 in my written comments some concerns about the 

 6 identification concept. 

 7 The comments right now say what would be required in 

 8 terms of identification might differ with the 

 9 circumstances. You know, we want to understand what the 

 10 obligations are and -- and have some predictability there I 

 11 think, and so I'll express further my concerns about that in 

 12 my written comments. 

 13 I'll also mention that in terms of cost shifting, I 

 14 understand cost shifting is in the comments, and I know the 

 15 people in this room read the comments, but I'm sorry to tell 

 16 you not everybody reads the comments. And so something 

 17 that -- that is actually stated in the rules, and I would 

 18 advocate a presumption of cost shifting, be incorporated. 

 19 You're tiptoeing around it a bit by leaving it in the 

 20 comments, I suppose. Perhaps not tiptoeing, but if it's 

 21 there -- 

 22 JUDGE SCHEINDLIN: What would be the presumption 

 23 you would propose? 

 24 If it's the second tier presumably requesting party 

 25 pays? 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 195 

 1 MS. OWENS: I would propose that the 

 2 presumption -- that it be not mandatory cost shifting, in 

 3 other words, but that for inaccessible data there be a 

 4 presumption. 

 5 JUDGE SCHEINDLIN: That the requesting party will 

 6 pay? 

 7 MS. OWENS: Yes. 

 8 JUDGE SCHEINDLIN: Which the requesting party 

 9 could then rebut? 

 10 MS. OWENS: Exactly. And I'll offer a brief 

 11 comment on Texas, that things do seem to be working as far 

 12 as I hear justice is still being done in the state, and I 

 13 think that cost shifting can work as a benefit on -- on both 

 14 sides and as an incentive to the requesting party to 

 15 exercise some limits in what is requested. 

 16 My point about safe harbor is that anyone who deals on 

 17 the producing side deals with some anxiety today in terms of 

 18 meeting the obligations that are there under the rules. And 

 19 some of that anxiety began to develop when the Lennon case 

 20 in state court came out a few years ago and a company was 

 21 sanctioned for recycling backup tapes for a four month 

 22 period of time in the Fen/Phen litigation and that anxiety 

 23 has continued for me since I read that case. 

 24 I noted in some of the comments that were written a 

 25 concept that litigants and lawyers live with the problems 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 196 

 1 that are existing right now and so the plea for the safe 

 2 harbor is really a plea to be able to sleep at night. It's 

 3 a plea for in-house counsel to be able to -- to rest assured 

 4 that if they're acting in good faith and putting in place 

 5 appropriate litigation holds that they're not going to be 

 6 sanctioned for what happened as a result of the routine 

 7 operations of their systems. 

 8 I think about in-house counsel who receives by fax from 

 9 CT Corporation the copy of the complaint on his or her desk 

 10 and they have gone to get a cup of coffee and they come back 

 11 and what if it is the day that the e-mail system is being 

 12 purged. What if something is changing on their database at 

 13 that -- at that time. 

 14 We have companies ask us, how quickly do we need to 

 15 impose litigation hold. Do we have a week, a month. Do we 

 16 have two hours. You know, what are those rules. So there 

 17 is a lot of anxiety there related to the safe harbor. 

 18 On the concept of whether it should operate based on 

 19 principle of negligence or willfulness, I'm a products 

 20 liability lawyer, trust me, almost everything can be alleged 

 21 to be negligence. We need something that's a little bit 

 22 stronger there in terms of -- of willfulness. 

 23 In my mind, given my personal experience with 

 24 negligence obligations -- 

 25 JUDGE SCHEINDLIN: Would you be satisfied with the 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 197 

 1 suggestion that depending on the level of sanction the level 

 2 of culpability needs to be raised but there may be a certain 

 3 type of sanction, like simply shifting cost of certain 

 4 depositions or whatever, that wouldn't require the higher 

 5 level of culpability, the range of sanctions would go with 

 6 the range of culpability? 

 7 MS. OWENS: I'm comfortable and agree with the 

 8 concept of a range of sanctions. I also agree with Steve 

 9 Morrison's comment that adverse inference to a lawyer is 

 10 essentially a death sentence. And going back to the Lennon 

 11 case, after the adverse sanction was given for the recycling 

 12 of backup tapes in the Lennon case, that case settled. 

 13 We're looking for enhancing the likelihood that 

 14 litigation can be resolved on the merits and not resolved 

 15 based on discovery issues. And the safe harbor would help. 

 16 And in my mind a safe harbor based on the broader principles 

 17 of negligence, which can often and will be often alleged, 

 18 will be an unsafe place to be. 

 19 JUDGE ROSENTHAL: We've heard some criticism or 

 20 concern that the safe harbor would encourage prospective 

 21 litigants to set their routine operation programs to operate 

 22 on a kind of accelerated basis and that that would be a bad 

 23 development. Do you want to comment on that? 

 24 MS. OWENS: Well, you know, right now there are 

 25 companies that are almost scared to have those -- those 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 198 

 1 processes in place at all, like the company that -- that is 

 2 not recycling any backup tapes. 

 3 So in my mind the rule does need to shift somewhat in a 

 4 direction of greater level of comfort with utilizing 

 5 systems, including disaster recovery systems and including 

 6 e-mail deletion systems and routine systems in operation 

 7 that are necessary, because ultimately, given the numbers 

 8 that we're talking about, whether you're Exxon Mobil or at 

 9 the much smaller company in Atlanta, Georgia, not only are 

 10 defendants not going to be able to deal with the volume 

 11 that's created, you know, plaintiffs are not going to be 

 12 able to either. 

 13 So I'll close that -- that -- that with the changes 

 14 that have been proposed, as I have addressed them, perhaps 

 15 in the future we'll get to try a few more cases in federal 

 16 court and -- and live in the more predictable world that the 

 17 Copperhead thought that it was in when it ventured into my 

 18 driveway. 

 19 Not unlike children, and perhaps snakes, it's my view 

 20 that we all behave better when we know what to expect. And 

 21 even the -- just the -- the actual occurrence of the 

 22 publication and putting on the Internet the draft rules and 

 23 the proposal that you have already put out I believe is 

 24 beginning to make some positive changes in the right 

 25 directions. People are beginning to get some better ideas 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 199 

 1 of best practices that they can employ. 

 2 And so those changes are -- are needed and I believe 

 3 will be welcomed by the courts and by most litigants when 

 4 they are hopefully adopted. 

 5 JUDGE ROSENTHAL: Thank you, Ms. Owens, very much. 

 6 Mr. Michalowicz. 

 7 MR. MICHALOWICZ: If you have to go to the 

 8 cafeteria I recommend baked fish with cornbread. It's 

 9 pretty good. My name is Jim Michalowicz. I'm actually a 

 10 Washington Redskin fan. I was sent to Dallas by Callowitz 

 11 (phonetic), and I had to drive on Tom Landry Boulevard to 

 12 get here and that was pretty difficult. Thank you for 

 13 sending me to Dallas, Peter. 

 14 Let me just explain who I am. Again, my name is Jim 

 15 Michalowicz. I work with Tyco International, a little 

 16 company of 260,000 employees. I would say a global 

 17 company. Diversified products. Worked there for about a 

 18 year. Prior to coming to Tyco I worked for DuPont for 12 

 19 years. I'm one of those nonattorneys that is a witness 

 20 today, and I guess I come from a little bit different 

 21 perspective. You've got a copy I think now of my -- my 

 22 testimony. 

 23 You might look at this as a process and see where are 

 24 the breakdowns in the current process and where can the 

 25 rules actually help support improvements in the process. So 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 200 

 1 I think the first I would like to kind of just state though, 

 2 I think is important, is what is the goal here. And I would 

 3 like to say as an information management professional my 

 4 focus is developing an efficient process in discovery that 

 5 delivers an accurate and timely response to a defined 

 6 discovery request. I think that's one of the issues I think 

 7 I have right now. 

 8 And Professor Marcus, you brought up something about a 

 9 road map. I'm going to tell you quite honestly, I don't 

 10 think there is a road map right now. And frankly, there is 

 11 a lot of people who are making money and taking advantage of 

 12 the system because discovery really does not necessarily 

 13 have a road map. This whole industry of electronic 

 14 discovery grew out of that fact. There really is a lack of 

 15 clarity. People are making money. We're talking about cost 

 16 and expenses. Someone is making money off of this. 

 17 So what I'm going to look at trying to do again is 

 18 looking for accuracy, timeliness, and making this efficient, 

 19 and for all parties. 

 20 So the first thing I would like to just mention is I 

 21 think there truly are seven steps in the discovery process. 

 22 In a discussion about the early intervention, as far as the 

 23 discussion I think there needs to be some framework. So I 

 24 would just like to offer this to everyone. 

 25 I truly believe that there is the define stage, define 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 201 

 1 the scope of the request; identify the custodians and 

 2 location of information; preserve; collect; index; and 

 3 review; and produce. We try to do that at Tyco every time 

 4 we have litigation, to go through the discovery road map. 

 5 PROFESSOR MARCUS: When you're at the identify 

 6 stage of that road map, are you also identifying the places 

 7 that it's too difficult to inquire? The inaccessible 

 8 places? 

 9 MR. MICHALOWICZ: I would say we're looking for 

 10 where the evidentiary materials are. If those can be in 

 11 places that would be maybe considered inaccessible, possibly 

 12 would go there. Possibly go there. 

 13 Is that the primary place we go? 

 14 Probably not. Because I truly believe, I think we 

 15 discussed this again and again, the active area is generally 

 16 where those evidentiary materials are going to be. 

 17 JUDGE ROSENTHAL: Based on that framework of 

 18 looking at discovery generally, do you believe that, A, the 

 19 amendments are -- amendments are necessary in this area, and 

 20 B, do you have specific comments on the proposal? 

 21 MR. MICHALOWICZ: Yeah. Absolutely. I think the 

 22 amendments I think support as far as that, you know, 

 23 especially as far as the early part about that. There was 

 24 an interesting question that was raised about the earliness 

 25 in terms of is that something that the responding parties 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 202 

 1 urge. I would say absolutely yes. Because I think that 

 2 definition of scope is so critical. If I look at where the 

 3 breakdown is for the process, that's the root cause. I can 

 4 tell you that most often that's the -- the electronic 

 5 discovery has just exacerbated that issue. So in my mind, 

 6 as far as the definition of scope -- and I would go ahead 

 7 and say it's very similar to what we do as companies, what 

 8 we call early case assessment. We go through the process, 

 9 we try to see what the risk is, what the costs are 

 10 associated with it. So we do that already kind of 

 11 internally. I'm almost like saying let's interject that 

 12 into the discovery, into the early conference as far as 

 13 discovery is concerned. 

 14 Now, one thing I would just like to say though, I think 

 15 it's important, is I don't think there's any improvement 

 16 made to the document discovery process unless all parties 

 17 agree that these breakdowns are defects to the process. I'm 

 18 not sure that's true right now. I think there are some 

 19 advantages to some parties that there are these breakdowns. 

 20 So, for instance, in my mind having this what I call 

 21 unknown part of electronic discovery, how big is it, what's 

 22 it called, what is defining the scope like that, that can be 

 23 the advantage to a requesting party. It really could be, 

 24 that unknown part. So I'm not necessarily sold on the fact 

 25 that there's a commitment to these proposed rules 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 203 

 1 amendments, because is it to the advantage of all parties as 

 2 far as that's concerned. 

 3 So in my mind I think the proposed amendments, the 

 4 16 -- let me get this right -- 16 and 26 can truly support I 

 5 think the more efficient process than what we're trying to 

 6 get to. 

 7 One other part I would like just to kind of mention 

 8 though, as far as the other options I think might be 

 9 available, I know this gets a little bit away from the 

 10 rules, but I think that formal production, I think there's 

 11 something a little confused about this, about the ordinary 

 12 course. It sounds like the native files, what's kept in the 

 13 ordinary course, sounds like the easiest thing to do as far 

 14 as the exchange of evidentiary materials. However, that's 

 15 not the ordinary course of how we've done traditionally 

 16 production. So that's one thing that gets me a little 

 17 concerned sometimes. Sometimes we move to ordinary course 

 18 the way it's maintained as being the ordinary course that 

 19 we'll produce it. And they truly are in different kind of 

 20 formats. And what we're used to is an identification 

 21 system, an indexing system, so when we have this exchange we 

 22 can go ahead and go back and forth. I don't think that the 

 23 technology is really supporting the native file production. 

 24 So I just want to make a note of that. 

 25 However, I think that one thing that can be viewed as 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 204 

 1 an option sometimes, it should be more, and this may sound 

 2 very hypocritical somewhat of the litigation process, is we 

 3 can share an on-line depository sometimes of discovery 

 4 materials. And I'm surprised sometimes that's not 

 5 encouraged more. It does help with the efficiency, the 

 6 timeliness, and I think the accuracy, to view that as an 

 7 option, to say that the discovery materials can be put on an 

 8 on-line repository. My feeling is I know my role. I don't 

 9 win cases. I can help the process as far as discovery 

 10 manager. I don't want records management to become the 

 11 issue in the case. I really don't. So I look for ways 

 12 again help to facilitate as far as that exchange. 

 13 The one other thing that I would like to just go ahead 

 14 and caution, and I know, Judge Scheindlin, you and I might 

 15 disagree on this, is the accessible and the inaccessible. 

 16 Because I think -- I think it could be a good rule change, I 

 17 can support it. It's just that those in the information and 

 18 records management field don't look at data that way. They 

 19 don't look at information that way. So I see one of my jobs 

 20 at Tyco is being a multilinguist. I'm a translator. I work 

 21 with the IT department, I work with businesses. And what I 

 22 try to do is to figure out how can I translate now what is 

 23 -- when we're looking for materials that could be 

 24 evidentiary materials and break it down to accessible or 

 25 inaccessible. It's just not the way I go after it right 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 205 

 1 now. So I try to figure out -- I know what the purpose is I 

 2 think of doing that, but I usually look at it as active, I 

 3 looked at archived, and I look at backup data, usually. And 

 4 I usually see, therefore, that backup data is what we 

 5 already talked about as disaster recovery. I would caution, 

 6 however, archived data and backup data is not the same. I 

 7 think we just have to be real, real careful about that. It 

 8 could very well be that archived data is accessible data and 

 9 also that companies have made a conscious decision to 

 10 archive it because it needs to be retained for regulatory 

 11 requirements. 

 12 JUDGE SCHEINDLIN: But then is it in the first 

 13 tier? 

 14 MR. MICHALOWICZ: Yeah. It could be. And I think 

 15 that's why I'm having the problem, Judge Scheindlin, is 

 16 because one company might be viewing archiving as being 

 17 truly a way to retain information knowledge assets -- 

 18 JUDGE SCHEINDLIN: Right. 

 19 MR. MICHALOWICZ: -- and another company may view 

 20 that as kind of like a cesspool, say it's not accessible, we 

 21 don't need access to it, where another company might say, 

 22 you know what, we've made a conscious effort to use the 

 23 archive for retention purposes. 

 24 JUDGE SCHEINDLIN: I understand what you're 

 25 saying, but I don't understand what you're suggesting. Do 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 206 

 1 you like the two-tier approach? 

 2 MR. MICHALOWICZ: No. 

 3 JUDGE SCHEINDLIN: What divide might you use? 

 4 MR. MICHALOWICZ: You know what, I don't have a 

 5 good response. That's why I said I think what you have down 

 6 there is probably the best. 

 7 PROFESSOR MARCUS: Sounds to me like what you're 

 8 saying there is that the word archive as you've seen it used 

 9 doesn't necessarily fall on either side. 

 10 MR. MICHALOWICZ: That's right. That's exactly 

 11 right. 

 12 PROFESSOR MARCUS: So that reasonably accessible 

 13 might be a way of focusing on what someone should really be 

 14 thinking about? 

 15 MR. MICHALOWICZ: I think that's a way of looking 

 16 at it. This concern about when we say accessible, 

 17 inaccessible, what's going to start being put into those two 

 18 categories is where I'm coming from. I guess from an IT and 

 19 information records management, archiving doesn't 

 20 necessarily fall into -- 

 21 JUDGE SCHEINDLIN: What you're worrying about is 

 22 the first court interpreting the new rule says the archived 

 23 files are inaccessible, but in the next case they really are 

 24 inaccessible because of the way -- 

 25 MR. MICHALOWICZ: Yeah. And I'm worrying how we 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 207 

 1 as companies may confuse matters there. 

 2 So, in other words, if a company has made an investment 

 3 in an archiving system, and there are smart archiving 

 4 systems out there that say I need to retain, you know, for 

 5 government reporting purposes, another company says, well, 

 6 I've got that, it's called really inaccessible, I think it 

 7 could get confusing and that one company could hurt from the 

 8 other one who has actually made an investment into 

 9 archiving, not because they're trying to say it's accessible 

 10 or inaccessible, or there's an incentive to make it 

 11 inaccessible, but because it's a good practice. It's a good 

 12 practice. That's it. 

 13 So I guess one last comment would be as far as I think 

 14 the safe harbor, I am supportive as far as that proposed 

 15 amendment. 

 16 As one of the editors of the Sedonna principles I used 

 17 this kind of interesting approach to say that there was a 

 18 constitution and a bill of rights. And I think that 

 19 companies have a responsibility to address what I call a 

 20 life cycle as far as records information management and to 

 21 address the status that goes from creation all the way 

 22 through disposition. And if you do that, if you take the 

 23 time to build that kind of program, you do get a bill of 

 24 rights. And that right says, yeah, you can go ahead and 

 25 dispose of that information, which is not needed for 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 208 

 1 business purposes, does not have a regulatory requirement to 

 2 it or is not needed for regulatory materials. In addition, 

 3 you can change and update your records management program, 

 4 because of changing business needs, because of changing 

 5 regulations. 

 6 And what Laura just said, there is that fear factor 

 7 right now. Companies feel like they can't do it because 

 8 disposition destruction is synonymous with exfoliation. 

 9 That's the fear. 

 10 Is it a true fear? 

 11 I'm not sure. But I think there is that fear that 

 12 exists right now. 

 13 So I believe that the safe harbor provision helps what 

 14 I call the bill of rights. A company addresses this and 

 15 says this is a routine operation, this is not information 

 16 that's required because of purposes I talked about before, 

 17 then there should be a safety as far as doing that. 

 18 JUDGE ROSENTHAL: Other questions? 

 19 Thank you very much. 

 20 MR. MICHALOWICZ: Thank you. 

 21 JUDGE ROSENTHAL: We appreciate your time. 

 22 Mr. Wilson. Good afternoon. 

 23 MR. WILSON: Good afternoon. 

 24 My name is Ian Wilson. Let me give you a little bit 

 25 about my background so you can put my comments in 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 209 

 1 reference. I'm an attorney licensed to practice in the 

 2 Commonwealth of Virginia. I started my legal career as a 

 3 judicial clerk for one of the Supreme Court jurists and was 

 4 in an active commercial litigation practice for about 13 

 5 years, where I learned firsthand some of the challenges of 

 6 electronic discovery. 

 7 I also was on the founding team of a technology company 

 8 this was built and developed and later sold to a 

 9 multinational corporation. And in October of 2003 I took 

 10 the position of CEO and chairman of Servient, Inc., which is 

 11 a company that is developing technology to address 

 12 electronic discovery and data manipulation issues. 

 13 When I litigated I learned when I was last on the 

 14 docket it's always a good idea to be short. Given I'm last 

 15 on the docket here -- 

 16 JUDGE ROSENTHAL: No. No events have overtaken 

 17 you. But you can still be short. 

 18 MR. WILSON: Okay. I would like to be short by 

 19 addressing one point. I really came here to talk about the 

 20 issue that -- that really has been talked about today, that 

 21 is the reasonable accessibility standard setting a norm and 

 22 how that will play out in the development of future 

 23 technology and how will that work. 

 24 As lawyers we like to put things in compartments. And 

 25 I think if you talk to a lot of lawyers that are reading the 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 210 

 1 cases that have come out, there are bright lines being drawn 

 2 right now. 

 3 Backup tapes are inaccessible; archives, near-line 

 4 storage, accessible. Where really the test though is the 

 5 burden imposed in accessing the data. And very well the 

 6 technology may develop, and may be in existence for certain 

 7 types of backup material, that renders that data accessible. 

 8 So I think it's important that we realize that these 

 9 decisions of reasonable accessibility will be determined in 

 10 the context of discovery motions, which I learned as a young 

 11 litigator, I never ran into a judge that liked a discovery 

 12 motion. But I think it has a danger of really resulting in 

 13 drawing to a bright-line test, because are we really going 

 14 to take the time with -- unless we have clear guidance in 

 15 the rules, to evaluate the reasonable accessibility of the 

 16 data in a time of changing technology that's a difficult 

 17 factual determination for a court to make. And it will be a 

 18 constant changing and differed -- different by the data and 

 19 the technical infrastructure of the company before the court 

 20 that day. 

 21 JUDGE SCHEINDLIN: So are you saying you don't 

 22 like that -- those words as the cutoff between tier one and 

 23 tier two, there's a better cut up or there shouldn't be any 

 24 cut up, there shouldn't be tier one and tier two? 

 25 MR. WILSON: I believe that with the current 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 211 

 1 state of the technology that reasonable accessibility is the 

 2 best standard and I am a proponent of that standard. 

 3 The difficulty and danger, I believe, and I think it 

 4 can be addressed in the comments, is that we cannot have 

 5 that as a -- we cannot fall into a bright-line test of 

 6 certain storage media. 

 7 JUDGE ROSENTHAL: So your bigger point, if you 

 8 will, is that we can't frame these standards to much in 

 9 terms of current technology and be limited to current 

 10 technology, we have to use functional descriptions that 

 11 will -- that will accommodate changes in technology? 

 12 MR. WILSON: That -- that -- that is correct. I 

 13 think we already see it today in practice in talking with 

 14 lawyers that are actively practicing today. A common 

 15 conception today is that backup tapes are inaccessible, and 

 16 you can see it if you read the decision in an analytical 

 17 way. That's what a lawyer will pick up. 

 18 JUDGE SCHEINDLIN: Right now, the way the notes 

 19 are structured, it does keep saying backup tapes are 

 20 presumptively inaccessible, most cases you wouldn't have to 

 21 search. Would you suggest taking out all reference to 

 22 backup tapes because the technology will possibly overtake 

 23 it and it will flip from inaccessible to accessible? So you 

 24 would take that word out of the notes? 

 25 MR. WILSON: No, I don't believe so, because it 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 212 

 1 truly is a challenge -- it still is a challenge today, but 

 2 the challenge differs depending on the -- the -- the data 

 3 set up and the backup systems, and then also the continuing 

 4 development of technology to address it. 

 5 So I think it's a fair point to note that historically 

 6 backup tapes have been a problem area and have been 

 7 inaccessible and so special care should be taken as we 

 8 looking into the burdens that can be imposed on backup 

 9 tapes. But unless we go further and say, however, storage 

 10 media alone is not with -- is not the test, I think we fall 

 11 into a potential trap of a bright line based on storage 

 12 media. 

 13 Now, I brought my written comments with me. I'll hand 

 14 them up at the -- at the end of the hearing, but I did take 

 15 a moment just to -- to draft a couple of comments from my 

 16 humble point of view, to address these points. 

 17 And the first is, basically, that the -- the touchstone 

 18 of reasonable accessibility from the reasonable 

 19 accessibility test is the burden imposed in accessing the 

 20 data. The storage media alone should not govern the 

 21 determination of a reasonable accessibility. 

 22 Now, the second point, in trying to look at what a 

 23 norm -- what this test could do on -- on developing 

 24 technology, is I think we also have to look at the 

 25 availability of technology to address the inaccessibility of 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 213 

 1 the data, and also the party's determination of whether they 

 2 implement that technology. 

 3 Let's say I'm in a start-up company and we decide 

 4 accessibility of data is a big problem. You might have 

 5 thousands of backup tapes. And we get our programmers and 

 6 they put their -- their baseball caps on backwards, stay up 

 7 all night for three months and come up with a technology 

 8 that allows you to backup your data in a way that -- that 

 9 can support a disaster recovery but also you can access the 

 10 data. That would solve the problem. Now, if I were to come 

 11 up with that product and put my marketing hat on and walked 

 12 into the corporate counsel's office and say I've solved your 

 13 problem, do you think that product would be purchased? 

 14 What is the incentive of a corporation to render its 

 15 data accessible if the rule and practice is inaccessible 

 16 data is not subject to discovery. The reason we're 

 17 developing the technology is because of discovery, of 

 18 addressing the technical problem of storing inaccessible 

 19 data. I would submit I'd have an awfully hard time selling 

 20 that product. 

 21 So the real issue then is the party's decision in 

 22 implementation of available technology. I think that's a 

 23 factor, as things develop, that we need to take into 

 24 account. 

 25 PROFESSOR MARCUS: Mr. Wilson, do you think 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 214 

 1 someone could develop a product that would make archiving 

 2 activities create material that would be inaccessible, in 

 3 other words, design a product with an eye to the rule that 

 4 would put large amounts of material on the other side of the 

 5 accessibility gap? 

 6 MR. WILSON: I believe so. Which may be more of 

 7 an interesting product, to render data inaccessible but if 

 8 you really, really need it we can get it. 

 9 JUDGE SCHEINDLIN: But if you can get it then why 

 10 isn't it accessible? 

 11 MR. WILSON: Well, whether it's reasonably 

 12 accessible. 

 13 JUDGE ROSENTHAL: Do you believe that a company 

 14 would likely invest in such a product, which I imagine would 

 15 cost something, in order to make inaccessible information 

 16 that it needed for its own business purposes or had a legal 

 17 or regulatory obligation to keep? 

 18 MR. WILSON: No. I do not believe so. However, I 

 19 do not believe that the scope of discovery should be based 

 20 upon the business need of the data, and that there is 

 21 another line of information. 

 22 Let's take, for instance, a contract, the e-mail for 

 23 the negotiation of that contract may be very important to 

 24 the litigation but may not necessarily be important to the 

 25 ongoing business needs of the company. The contract itself 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 215 

 1 is essential. So can we move the e-mail to an inaccessible 

 2 storage and continue with the business needs of the company? 

 3 JUDGE ROSENTHAL: If no obligation to preserve 

 4 those e-mails has arisen at that time. 

 5 MR. WILSON: Correct. 

 6 JUDGE ROSENTHAL: Would there be any reason not to 

 7 do that? 

 8 MR. WILSON: I agree. 

 9 JUDGE ROSENTHAL: If there was -- to flip the 

 10 question, if at the time the e-mails were moved they were 

 11 targeted for moving because they pertained to the subject of 

 12 the litigation and an obligation to preserve them had 

 13 arisen, then nothing in the proposed rules would either 

 14 permit that to be done or safeguard the person moving them 

 15 from sanctions. 

 16 MR. WILSON: That's correct. But I think, Your 

 17 Honor, you may have made my point though in terms of the 

 18 business needs of the data. Because if it's not important 

 19 to the business needs of the data, it's still relevant and 

 20 some of the most important evidence in litigation, but our 

 21 intuitive thought pattern to that fact pattern is that a 

 22 party may, in fact, move that an inaccessible format. 

 23 JUDGE ROSENTHAL: If at the time the materials are 

 24 moved, the moving party, if you will, moving from accessible 

 25 to inaccessible, knows that they're relevant, knows that 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 216 

 1 they're discoverable, then I think that's there's a common 

 2 law preservation obligation that enters in that I'm not sure 

 3 your analysis is taking into account. I'm just trying to 

 4 understand what you're saying. 

 5 MR. WILSON: I don't want to move too far into 

 6 this, because I do think that you can stretch well too far 

 7 the potential of parties' rendering important data 

 8 inaccessible, and so when we start to talk in the 

 9 theoretical we start to move into that realm. 

 10 But the question that started with Professor Marcus, I 

 11 do think there is a potential for technology that can at 

 12 least move some historic data that we would be interested in 

 13 along with the -- the chatter to an inaccessible need. 

 14 JUDGE ROSENTHAL: Have you announced a new 

 15 product? 

 16 (Laughter.) 

 17 MR. WILSON: No. 

 18 JUDGE SCHEINDLIN: Given your fears in both 

 19 directions, that nobody would buy your product if you made 

 20 it more accessible and they might buy your product if you 

 21 made it inaccessible, what is your suggestion to us? 

 22 Do you not like this divide of a two-tier approach 

 23 using reasonably accessible or do you? 

 24 I'm having a little trouble following where your 

 25 comments take us. 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 217 

 1 MR. WILSON: No. I like the divide as a former 

 2 trial lawyer. 

 3 JUDGE SCHEINDLIN: Today, in your testimony. 

 4 MR. WILSON: And today. Where it's taking me 

 5 though is to the point that I believe that in determining 

 6 reasonable accessibility one factor should be the party's 

 7 determination in adopting available technology in the 

 8 decision to make the storage media. 

 9 JUDGE SCHEINDLIN: I think I understand. One of 

 10 the factors to be considered would be the party's intent. 

 11 MR. WILSON: Yeah. 

 12 PROFESSOR MARCUS: Are you suggesting then that if 

 13 there's a question about accessibility one could anticipate 

 14 discovery regarding the thought process by which a company 

 15 decided to adopt a certain technology? 

 16 MR. WILSON: Unfortunately, I have considered 

 17 that. I thought in determining reasonable accessibility 

 18 with the ongoing development of technology, you may need 

 19 discovery about -- 

 20 JUDGE ROSENTHAL: Why somebody didn't buy your new 

 21 product. 

 22 MR. WILSON: It's certainly not my product. 

 23 JUDGE ROSENTHAL: I understand what you're 

 24 saying. 

 25 MR. WILSON: As I tried to reduce it to writing, 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 218 

 1 "In determining reasonable accessibility, the availability 

 2 of technology to aid in the accessibility of the data should 

 3 be considered. Data should not be considered reasonably 

 4 inaccessible if the burden of accessing the data is the 

 5 result, in part, of a party's decision to forego 

 6 implementation of technology that would aid in the 

 7 accessibility of the data." 

 8 JUDGE SCHEINDLIN: Do we have that yet? 

 9 MR. WILSON: I'm going to -- I'm going to hand 

 10 them up. 

 11 But that's my -- that's the second one. I think that 

 12 a factor, in the comments, is the intent of the party, the 

 13 actions of the parties. And, in fact, it was in the early 

 14 electronic discovery cases. You know, the very early cases. 

 15 JUDGE ROSENTHAL: As I understand those early 

 16 cases, that was at the time when judges were saying, look, 

 17 if you guys want to use computers, then you need to take the 

 18 baggage along with the benefits that it provides. It was 

 19 your choice, so you deal with the cost of having made that 

 20 choice. That's somewhat of a different context. 

 21 MR. WILSON: That's right. That's right. And 

 22 I -- and I -- and I agree that that certainly is not a -- 

 23 and as the law developed is not the major piece. It was 

 24 not -- was not necessarily the best way, but I think -- I 

 25 think if we're going to have these rules as norms, the 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 219 

 1 availability of technology and what the party has done 

 2 should be an important factor. 

 3 JUDGE ROSENTHAL: Would that evolve to a standard 

 4 that would require every company to be at the forefront of 

 5 information storage capabilities, that is, in order to meet 

 6 your standard would ever company, particularly companies 

 7 of -- who could afford it, in some sense, every company 

 8 would have to buy the latest and have all the updates in 

 9 place in order to make sure they had the maximum 

 10 accessibility to meet your standard? Is that where we would 

 11 be? 

 12 MR. WILSON: I think reasonable accessibility, if 

 13 that is the touchstone, reasonable is reasonable and not 

 14 extraordinary. It's a very difficult standard, I know, but 

 15 it's a very difficult thing to attach to an ongoing and 

 16 developing technology. 

 17 So I just try to understand and think through factors 

 18 that may allow it to adapt. 

 19 JUDGE ROSENTHAL: Thank you, Mr. Wilson. 

 20 Are there any questions that have not been asked? 

 21 Thank you, sir. 

 22 We appreciate your time. 

 23 Mr. Cody. 

 24 MR. CODY: Thank you for seeing me on short 

 25 notice, getting me on the schedule. 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 220 

 1 A little background. 15 year lawyer. Partner with 

 2 Fulbright & Jaworski, and I practiced in Texas may entire 

 3 career. I'm here to advocate to you two separate things, 

 4 but overriding all that, I'm advocating to you how effective 

 5 our Texas rule has been. 

 6 Rule 196(4) was implemented a little over six years 

 7 ago. I ran a search on West Law yesterday so I could 

 8 present this to you: There's one reported case. And that 

 9 may already have been reported to you, but that one reported 

 10 case dealt with the accessibility of the database. So it 

 11 has worked marvelously. And it has worked marvelously in 

 12 two ways. 

 13 PROFESSOR MARCUS: Was there lots of reported 

 14 electronic discovery cases before the rule was adopted? 

 15 MR. CODY: There are a few. What I think the rule 

 16 does, and why we don't see any cases, is I think it took a 

 17 lot of the discretion, where the parties would fight, where 

 18 the parties would drag each other into the courts and spend 

 19 a lot of unnecessary time in discovery disputes, the rule 

 20 took care of that. And it did it with mandatory cost 

 21 shifting. And it did it with setting out the standard, a 

 22 bifurcated, two-step approach, which are the new rules -- 

 23 proposed rules do. The language is a little different, and 

 24 I believe that's sound. 

 25 So where I'm coming from to the committee is I believe 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 221 

 1 that the bifurcated approach is sound. I believe in the 

 2 idea of cost sharing or shifting. I think mandatory is the 

 3 best way to do it. I have been in cases where it makes the 

 4 parties play fair. You would -- a lot of this you've 

 5 already heard before. I've listened to the comments and -- 

 6 and what I would like though to -- to provide you is a 

 7 little anecdotal information that I have about the 

 8 accessibility argument that's been discussed here and the 

 9 definitions. 

 10 Recently we've got a situation where a client is a 

 11 smaller company, less than 200 employees. And there's a lot 

 12 of litigants out there that would fall in this category. 

 13 This company is immature from a company infrastructure 

 14 perspective. They lack the sophistication of having 

 15 comprehensive, enforceable policies and procedures to handle 

 16 some of their processes, including their electronic data. 

 17 But I got involved in this matter my record, and I've 

 18 been doing electronic discovery law -- my record for one 

 19 person looking at their active e-mail account was 14,000 

 20 e-mails. I always thought that would stand the test of 

 21 time. I have recently discovered the new record is a little 

 22 over 110,000. And this is where -- and this is what's so 

 23 important about what y'all are doing, is the definitions you 

 24 put in with respect to the -- and the instruction you give 

 25 us with respect to what is not reasonably accessible. 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 222 

 1 The reasonably piece of this is critical, because this 

 2 company -- I'm not worried about the backup tapes. What I'm 

 3 worried about is a 500 gigabyte server where they just save 

 4 it all, and have for three or four years. 

 5 Is that reasonably accessible, if is just a mishmash of 

 6 data in there? 

 7 If you look at the comments -- 

 8 Can you search that, word search it? 

 9 It ultimately may be possible. 

 10 Is that reasonable? 

 11 That's where you get into this idea we've heard bandied 

 12 about of burden. This is a small company. 

 13 Could they go invest -- is it possible? 

 14 Yes, it is. 

 15 JUDGE SCHEINDLIN: But, you know, at our last 

 16 hearing we had some discussion about this and we said even 

 17 with respect to the first tier, that which is accessible, 

 18 the proportionality rule still applies. We would hope to 

 19 clarify that if we haven't already in our notes. There's 

 20 some misconception. Some people think it's tier one we 

 21 don't look at the proportionality, but we do. You could 

 22 still argue even if it's accessible it's unduly burdensome 

 23 and you shouldn't have to do it. So as long as you know the 

 24 proportionality rules apply, even to tier one, it doesn't 

 25 have to be inaccessible for you to have comfort. 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 223 

 1 MR. CODY: In that instance if that server is 

 2 accessible then I have to search it. 

 3 JUDGE SCHEINDLIN: Right. 

 4 MR. CODY: And I may have to search the whole 

 5 thing. 

 6 JUDGE SCHEINDLIN: Yeah. 

 7 MR. CODY: And the idea being, if it's 

 8 inaccessible I wouldn't have to search it globally. I would 

 9 only have to search it perhaps in parts. 

 10 PROFESSOR MARCUS: How could you do that if it was 

 11 inaccessible? 

 12 MR. CODY: For example, in the server you could 

 13 have directories that would label to individuals which might 

 14 make it accessible. You could go and pull down someone's 

 15 particular directory where he may have 400 documents. 

 16 PROFESSOR MARCUS: Suppose you had paper records, 

 17 as in a famous case from a long time ago where a large 

 18 company had collected paper records on all the claims that 

 19 had been made regarding its products and just put them in 

 20 chronologically and not otherwise organized, are you saying 

 21 all that material would be inaccessible under your 

 22 approach? 

 23 MR. CODY: I would say it would qualify as 

 24 inaccessible unless you show good cause. That's the beauty 

 25 of the rule. And that's the beauty of the Texas rule. It's 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 224 

 1 not saying you don't ever get it. It's just saying this is 

 2 such a massive amount of data that has no structure that it 

 3 should fall into this category. And my concern, when 

 4 reading the comments, was that there was such focus on the 

 5 inaccessible data being a backup tape or something that is 

 6 technologically inaccessible that it ignores the 

 7 technicality of what inaccessible -- 

 8 JUDGE SCHEINDLIN: My question is still the same. 

 9 In the first tier your problem is cost and volume. You're 

 10 saying it's all accessible but it's ridiculous, we shouldn't 

 11 have to do that. 

 12 Fine. It's a matter of burden of proof. You seek a 

 13 protective order, say it violates the proportionality rules, 

 14 I shouldn't have to do this at all. You might win that. 

 15 What's the problem? 

 16 MR. CODY: I don't have a problem with that, if 

 17 that's the way the comments play out. 

 18 JUDGE SCHEINDLIN: As long as we clarify that the 

 19 proportionality rules apply to tier one. 

 20 MR. CODY: Yes. Yes. Yes. 

 21 JUDGE ROSENTHAL: If the technology exists to make 

 22 that volume of material, which is readily retrievable, 

 23 there's not a problem of it being legacy data, it's not 

 24 compressed, it's not -- it doesn't present those problems, 

 25 if it is not only retrievable but also subject to 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 225 

 1 searchability, if it can in fact readily be searched, then 

 2 is it -- even if it's big, is it then accessible, as you 

 3 understand the proposed amendment? 

 4 MR. CODY: It depends on the economics of making 

 5 it searchable. If it's very expensive to go out and do that 

 6 then -- it's a multitude of factors, and that's why this 

 7 reasonableness concept is so important and it must be 

 8 applied on a case-by-case basis, I think. 

 9 JUDGE ROSENTHAL: So you would view searchability 

 10 as part of accessibility? 

 11 MR. CODY: Absolutely. 

 12 JUDGE ROSENTHAL: Given the volume you've 

 13 described. 

 14 MR. CODY: And in today's world it's going to be 

 15 extremely expensive to tackle this issue. A year from now 

 16 or ten years from now it may be easy. 

 17 JUDGE ROSENTHAL: Two real quick questions. 

 18 In the discussions that you have with opposing counsel 

 19 under the Texas rule, have you encountered difficulties in 

 20 trying to figure out in those conferences what is subject to 

 21 being produced without cost shifting and what is not? 

 22 MR. CODY: No. It's been very effective. 

 23 What it has really promoted is that when they are 

 24 looking for something specific they come forward and they 

 25 tell you, and they narrow their request, because, quite 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 226 

 1 frankly, they know they have to pay for it. It's kind of 

 2 putting your money where your mouth is. If you really want 

 3 that data -- and I'm all for that. 

 4 I mean, my practice, I'm a commercial litigator, so I 

 5 practice on both sides of the V all the time. And so as 

 6 often as not I'm going after it. So when I'm going after it 

 7 I'm very careful that I focus my inquiry. And I think 

 8 that's the key to part of the success of the rule. 

 9 Any other questions? 

 10 Thank you very much. 

 11 JUDGE ROSENTHAL: Thank you, Mr. Cody. 

 12 Mr. Cortese, you wanted to speak today or did you want 

 13 to speak in Washington? 

 14 MR. CORTESE: I would like to just mention one 

 15 thing today, and that is that I think it really comes 

 16 down -- and I would, with Your Honor's permission, like to 

 17 appear in Washington on behalf of an organization. 

 18 But to -- just to cap this, essentially what I'd like 

 19 to say, and I see the time, is that really this seems to be 

 20 coming down to where the effort started in the late 1970s 

 21 and through the 1983 amendments and through the 2000 

 22 amendments we are now at the point where essentially all 

 23 this discussion comes down to, in my view at least, to 

 24 attempting to make discovery more efficient, less costly, 

 25 less burdensome, more effective, and to include the signals 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 227 

 1 to the bar and the bench that it is essential to have 

 2 elements like a safe harbor and two-tier approach to 

 3 discovery in order to incorporate all of the things that 

 4 have been established over those -- that number of years, so 

 5 that we focus the cases, particularly in this area of 

 6 electronic discovery, on the -- on the key materials, 

 7 because there is such a mass of information, as you've heard 

 8 many, many times, that it's virtually impossible, even if 

 9 it's technologically accessible, to make it usable in the 

 10 litigation, and that there ought to be some protection so 

 11 that companies don't have to go from the large and the small 

 12 and save everything out of the fear that they will be 

 13 sanctioned because they didn't save something that might 

 14 have been relevant, that really nobody knows about. 

 15 So I -- I would urge you -- I congratulate you on 

 16 approaching this area and really it's been an extraordinary 

 17 illuminating discussion, and I think the package is a good 

 18 package. It needs to be improved in some respects, improved 

 19 in the sense that it should be clarified and it should 

 20 perhaps give a little more bright-line guidance to the 

 21 extent that that's possible, but I -- I know you'll attend 

 22 to that and I appreciate your time. 

 23 Thank you. 

 24 JUDGE ROSENTHAL: Thank you very much. 

 25 I want to thank all of you who came and spoke and wrote 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 228 

 1 and listened for assisting us in the issues that we are 

 2 dealing with. 

 3 I want to also thank all of the people in the Dallas 

 4 courthouse for their help in gathering us all today and 

 5 supporting our meeting. 

 6 Stay tuned. 

 7 We are adjourned. 

 8 (Recess taken.) 

 9 

 10 

 11 

 12 

 13 

 14 

 15 

 16 

 17 

 18 

 19 

 20 

 21 

 22 

 23 

 24 

 25 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 229 

 1 I N D E X 

 2 WITNESS OR PROCEEDING PAGE 

 3 

 4 Comments by James Wren 3 

 5 Comments by Mr. Sloan 19 

 6 Comments by Mr. Beach 35 

 7 Comments by Ms. Kershaw 51 

 8 Comments by Mr. Bland 68 

 9 Comments by Mr. Gardner 85 

 10 Comments by Mr. Lederer 101 

 11 Comments by Mr. Summerville 107 

 12 Comments by Mr. Fish 125 

 13 Comments by Mr. Morrison 136 

 14 Comments by Mr. Martin 153 

 15 Comments by Mr. Regard 159 

 16 Comments by Mr. Pope 176 

 17 Comments by Ms. Owens 185 

 18 Comments by Mr. Michalowicz 199 

 19 Comments by Mr. Wilson 208 

 20 Comments by Mr. Cody 219 

 21 Comments by Mr. Cortese 226 

 22 

 23 

 24 

 25 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT 
 1 C E R T I F I C A T I O N 

 2 I, PAMELA J. WILSON, CSR, certify that the foregoing is 

 3 a transcript from the record of the proceedings in the 

 4 foregoing entitled matter. 

 5 I further certify that the transcript fees format comply 

 6 with those prescribed by the Court and the Judicial 

 7 Conference of the United States. 

 8 This the 10th day of January, 2005. 

 9 

 10 

 ____________________________ 

 11 PAMELA J. WILSON, CSR 

 Official Court Reporter 

 12 The Northern District of Texas 

 Dallas Division 

 13 

 14 

 15 

 16 

 17 

 18 

 19 

 20 

 21 

 22 

 23 

 24 

 25 

 PAMELA J. WILSON, C.S.R., U.S. DISTRICT COURT