0112frcp.txt

00001

 1

 2

 3

 4

 5

 6

 7

 8

 9

10

11

12 PUBLIC HEARING ON PROPOSED AMENDMENTS

13 TO THE FEDERAL RULES OF CIVIL PROCEDURE

14

15

16

17

18 DATE: January 12, 2005

19 TIME: 8:34 a.m.

20 LOCATION: Ninth Circuit Court of Appeals

21 95 Seventh Street

22 San Francisco, California

23 REPORTED BY: Melissa Roen Williams, CSR, RPR

24 Certified Shorthand Reporter

25 License Number 12284

00002

 1

 2 A P P E A R A N C E S

 3

 4 The Civil Rules Advisory Committee:

 5

 6 The Honorable Lee H. Rosenthal, Chairperson

 7 Peter G. McCabe, Secretary, Committee on Rules

 of Practice and Procedure

 8

 9 Frank Cicero, Jr., Esquire

10 Professor Daniel R. Coquillette

11 Professor Edward H. Cooper

12 Daniel C. Girard, Esquire

13 The Honorable Sidney A. Fitzwater

14 The Honorable C. Christopher Hagy

15 Professor Geoffrey C. Hazard, Jr.

16 Robert C. Heim, Esquire

17 The Honorable Nathan L. Hecht

18 Ted Hirt, Esquire

19 Dean Mary Kay Kane

20 The Honorable Peter D. Keisler

21 John G. Kester, Esquire

22 The Honorable David F. Levi

23 Patrick F. McCartan, Esquire

24 The Honorable J. Garvan Murtha

25 Professor Richard L. Marcus

00003

 1 Thomas B. Russell

 2 The Honorable Shira Ann Scheindlin

 3 The Honorable Thomas W. Thrash, Jr.

 4 Chilton Davis Varner, Esquire

 5

 6

 7

 8

 9

Page 1
0112frcp.txt

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

00004

 1

 2 I N D E X

 3

 4 COMMENTS PAGE

 5 By Mr. Greg McCurdy..............................7

 On behalf of Microsoft Corporation

 6

 By Mr. Bruce Sewell.............................32

 7 On behalf of Intel Corporation

 8 By Ms. Kathryn Burkett Dickson..................48

 On behalf of California Employment Lawyers

 9 Association

10 By Mr. Michael K. Brown.........................65

11 By Ms. Joan Feldman.............................76

 On behalf of Computer Forensics, Inc.

12

 Morning Recess..................................97

13

 By Mr. Thomas Y. Allman.........................97

14

 By Mr. Jeffrey Judd............................126

15

 By Mr. Gerson Smoger...........................132

16

 By Ms. Jocelyn Larkin..........................151

17 On behalf of The Impact Fund

18 Noon recess................................... 164

19 By Mr. Frank Hunger............................164

20 By Mr. David Dukes.............................176

21 By Ms. Jean Lawler.............................186

 On behalf of Federation of Defense &

22 Corporate Counsel

23 By Mr. Kenneth Conour..........................197

24 By Mr. Henry Noyes.............................220

25 By Mr. Charles R. Ragan........................254

00005

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

 2 JUDGE ROSENTHAL: Good morning, ladies and

 3 gentlemen. I think we're ready to begin.

 4 My name is Lee Rosenthal. I'm chairperson of

 5 the Rules Committee. And on behalf of the Civil Rules

 6 Committee and the Standing Rules Committee, we are very

 7 happy to welcome all of you to this first hearing on the

 8 proposals to amend the civil rules to accommodate

 9 electronic discovery.

10 The procedure that we are going to follow this

Page 2
0112frcp.txt

11 morning is a simple one. We have seventeen witnesses

12 who are scheduled to appear before us today. We have

13 also from a number of these witnesses received and read

14 written materials that you have submitted, for which we

15 also thank you.

16 Because we have so many people, and because

17 the chief purpose of this hearing is not only to allow

18 each of you to express your reactions to the proposal

19 and give us suggestions for improving them, but also to

20 allow the members of both the Civil Rules Committee and

21 the Standing Committee to ask questions, we must of

22 necessity limit the time available for each speaker.

23 We will allow each of the individual speakers

24 up to ten minutes total of roughly uninterrupted time,

25 although that time is not going to be uninterrupted all

00006

 1 at once. The speakers are invited and indeed encouraged

 2 to be interrupted by the members of the committees, who

 3 of course will have questions of each of you.

 4 I note that most of you are very well -- very

 5 knowledgeable about the committees before whom you are

 6 appearing today. But let me just remind the audience

 7 that the Civil Rules Committee before us proposed these

 8 rules changes. They were approved for publication by

 9 the Standing Committee. And in our April meeting, the

10 Civil Rules Committee will take into consideration all

11 of the comments and suggestions that we will have

12 received and make decisions on the basis of the record

13 that we will have established by that point. And we do

14 have a court reporter here, and we'll have a court

15 reporter at each of the hearings making a full record of

16 these proceedings.

17 The proposals that then go forward, if they

18 do, from the Civil Rules Committee will go back to the

19 Standing Committee, which will of course have to approve

20 any of the proposals that we recommend before they can

21 go forward along the process. And that is, as all of

22 you know, a long, deliberately slow, and transparent

23 process. From the Standing Committee, they will have to

24 then go to the Judicial Conference of the United States,

25 then to the Supreme Court, and then to Congress, where,

00007

 1 if they don't become subject to veto, they then become

 2 effective, which is -- the earliest possible date is

 3 December of 2007. So this is a long and slow process,

 4 but one that will make it possible to have a number of

 5 thoughts and comments taken into consideration.

 6 We had hoped that today would go down in the

 7 annals of history as the day in which the advisory

 8 committees were able to consider these wonderful

 9 proposals on electronic discovery, but it turns out the

10 day will probably be known as the day in which the

11 Supreme Court decided the case involving sentencing

12 guidelines. But it's all about guidelines. We have to

13 look at it broadly.

14 And we are here to consider whether the

15 Federal Rules of Civil Procedure, which have done us all

16 proud in many ways over the last decades, whether they

17 can be improved in their ability to handle the unique

18 features of and demands of electronic discovery.

19 Our first witness this morning is Greg McCurdy

20 on behalf of Microsoft Corporation. Mr. McCurdy.

21 COMMENTS BY MR. MCCURDY

Page 3
0112frcp.txt

22 MR. MCCURDY: Thank you. Good morning, Judge

23 Rosenthal, Members of the Committee. It's a great

24 pleasure for me to be here personally and also for

25 Microsoft Corporation to have an opportunity to comment

00008

 1 on these very important proposals.

 2 I think we're most interested in getting some

 3 more data and examples of some of the challenges that

 4 litigants face in this field, so I would like to give

 5 you some of those. I've done some more research beyond

 6 the paper I submitted in December.

 7 Rule 1 is really where we have to start out.

 8 It really calls for the rules to be construed and

 9 administered to secure the just, speedy, and inexpensive

10 determination of every action.

11 In Microsoft's experience and my personal

12 experience, this happens mostly in a just manner, but

13 rarely speedy, and almost never inexpensive, certainly

14 when electronic discovery is involved. The volumes and

15 the costs are so huge that it has a big, big impact on

16 litigation. Motion practice proliferates, and it's a

17 serious problem.

18 One of the representatives of the trial bar at

19 the Florida conference last year referred to "weapons of

20 mass discovery." And those of us who are on the

21 receiving end of requests for electronic discovery

22 frequently perceive it as such.

23 The game in federal court, you know, the

24 determination of actions is unfortunately only in

25 exceptional cases judgement and a trial. Most cases, as

00009

 1 you well know, are determined in settlement

 2 negotiations, and discovery is all about getting

 3 leverage for that. And imposing costs on the other side

 4 is sadly one of the best ways to force another party to

 5 settle.

 6 In my paper you saw that I quoted the

 7 statistics about how much e-mail Microsoft receives.

 8 And it's between three and four hundred million external

 9 and internal e-mails a month. That can be broken down

10 in various divisions, month to month, business days to

11 weekends, obviously. But it's a huge amount.

12 90 percent of that external e-mail is spam.

13 It's junk that we need automatic filters to basically

14 delete according to preset rules without any human

15 intervention. That is one of the routine operations of

16 IT systems that is crucial to keep a large IT system

17 running. And not even just a large one like ours, but

18 smaller companies have the same problem and often even

19 worse.

20 One of the themes I would like to convey is

21 that Microsoft, being a technology and software company,

22 is at the leading edge of -- I guess you can hear me if

23 I step back from the microphone, and then I can see you

24 a little bit better as well -- is at the leading edge of

25 technology. But that doesn't mean that our experiences

00010

 1 don't apply to other companies, especially since other

 2 companies tend to be our customers and use our products.

 3 One statistic that I found very interesting

 4 recently is that in our discovery, over 99 percent of

 5 all pages produced were produced in electronic form.

 6 Less than 1 percent were produced on paper. And some of

Page 4
0112frcp.txt

 7 that may be surprising to you. And perhaps to some

 8 people in older industry companies that have been around

 9 longer than Microsoft, that may not be the case. But

10 that's clearly where the future is going.

11 How many documents are created nowadays other

12 than with computers? How many documents do you write on

13 a typewriter or with a fountain pen? You know, back in

14 the 1980s, 1970s, there was still a lot of that. But

15 starting with the '90s, there's very little, and since

16 the year 2000, almost none.

17 So there's some discussion over whether we

18 need these rules and whether they should apply to all

19 discovery, not just electronic discovery. I'm really

20 here to tell you that if it's not already the case, it

21 soon will be the case that virtually all discovery is

22 electronic. The days of paper created documents are

23 over. If there are documents lying around on paper,

24 they were once created electronically and someone

25 decided to print them out. And quite a few people have

00011

 1 decided that that's no longer the efficient way to go.

 2 To give you an example of averages -- you see,

 3 we get these huge numbers of incoming e-mails, and we

 4 generate a lot of external e-mails. What does that

 5 actually look like in discovery?

 6 We did a sample of one of our big cases. We

 7 were sued by one of our major competitors in about 1998.

 8 And this was a huge case. The files of several hundred

 9 Microsoft employees were involved that we had to serve

10 and collect and produce from. We then settled that case

11 a few years later, and the same competitor sued us

12 again.

13 PROFESSOR MARCUS: Sir, I'm sorry to interrupt

14 you there, but I have a question about what you just

15 mentioned.

16 You said that the files of several hundred had

17 to be produced. Could you say something about how those

18 folks were selected and whether any undertaking was made

19 to preserve any electronic information once the lawsuit

20 was filed.

21 MR. MCCURDY: Absolutely. You get a complaint

22 or some other way of getting notice of the lawsuit. You

23 try to figure out what it's about, what the claims are,

24 what the subject matters are. Then as the in-house

25 lawyer you took to, okay, what business units, what

00012

 1 products are implicated, what people work on them, what

 2 are their positions, and you come up with a list of the

 3 relevant -- we call them custodians. Who would have the

 4 evidence?

 5 The fact is, of course, there are no central

 6 files, for all intensive purposes. You know, documents

 7 are kept by employees that they need in their work

 8 within the ordinary course of business on their laptops,

 9 on their various client devices, occasionally on their

10 server shares. There's some joint ones, but a lot of it

11 is individuals.

12 So you come up with this list, and you say,

13 okay, this is a large list. And to a certain extent,

14 you negotiate it with the other side. You say, okay,

15 this is the number of people, these are the types of

16 people we have put under attention and from whom we

17 intend to collect. And then the other side always wants

Page 5
0112frcp.txt

18 more. You know, they would like to have thousands. We

19 try to keep it lower.

20 But there -- in a large, complicated case,

21 there are hundreds of employees whose files we have to

22 go --

23 PROFESSOR MARCUS: The reason I'm asking you

24 this is that preservation is one of the issues concerned

25 in the amendments. It sounds like what you're saying is

00013

 1 that, even without a provision in Rule 26(f) calling for

 2 this sort of discussion, for years and years Microsoft

 3 has been undertaking the thought and undertaking the

 4 discussion; is that correct?

 5 MR. MCCURDY: Well, there's a common law duty

 6 to preserve evidence, so we send notices to everybody

 7 who we think has relevant evidence. And then the other

 8 side makes their demands, and then that gives us more

 9 specificity as to what they're actually looking for.

10 A lot of that is wildly overbroad. You meet

11 and confer, you negotiate, and you say, oh, you want

12 everything about Windows? Well, you know, that could be

13 every document in the company. Let's be more reasonable

14 about it. And you try to narrow it down. You say, what

15 features are you interested in? What people work on it?

16 So there is that process of give-and-take for

17 the other side necessarily, which works pretty well if

18 you have another side with a lot of employees and a lot

19 of documents and they are an incentive to be somewhat

20 reasonable. And most of our big cases are like that.

21 But in any case, just to get you back to

22 numbers, we compared the '98 to the 2003 custodians in

23 these two lawsuits brought by the same competitor on

24 roughly the same topics. And we found that the amount

25 of e-mail and other documents that the two groups of

00014

 1 employees had kept was seven times -- or more than seven

 2 times larger five years later.

 3 Now, why do they have more than seven times

 4 more documents than they had five years before? I can't

 5 give you an exact answer. You know, the passage of

 6 time, the accumulation of e-mail. You know, obviously

 7 more and more gets created and sent around. There are

 8 many, many causes. But it's certainly an empirical fact

 9 that that has gone up hugely.

10 Now, conversely, while the volume has

11 increased, the percentage of e-mail that is actually

12 responsive and useful in the litigation that was

13 produced decreased significantly. So you had a large

14 increase in volume, and a decrease in the percentage.

15 Now, the number of produced documents is still

16 increased. But while in about '98, '99, from these

17 hundreds of custodians there would have been about

18 15 percent of their documents that were responsive to

19 the request, five years later it's less than 4. It's

20 about 3 and a half percent.

21 So my point in all of that is what's

22 accumulating is largely repetitious and unrelated to the

23 issues, sort of junk. Because it's so easy to keep.

24 People just, you know, stuff it in there, .pft file on

25 their hard drive, and it accumulates. And that's where

00015

 1 the huge costs come from. Judge Rosenthal?

 2 JUDGE ROSENTHAL: I have two questions. One

Page 6
0112frcp.txt

 3 of the themes that comes through in a number of comments

 4 that we have received is that, even though the volume of

 5 electronically generated and stored information is much

 6 greater than we're used to on paper, there are increased

 7 efficiencies that are available today and will no doubt

 8 be even more available in the near future in search

 9 engines and search capabilities that will provide a

10 technological solution to this problem with the

11 technology.

12 I'd like to hear your response as to why that

13 isn't enough as a tool to help reduce the cost and the

14 delay of some of the demands of discovery. That's the

15 first question.

16 The second question goes to your suggestion on

17 handling data that is reasonably accessible and

18 distinguishing that from data that is not reasonably

19 accessible. You suggest that information that is not

20 located in a reasonably accessible location should be --

21 you suggest that we should define "reasonably

22 accessible" as in active use for the day-to-day

23 operation of the company's business.

24 What if you have data that is not part of the

25 day-to-day operation of the business or entity, but it's

00016

 1 really easy to get? Why shouldn't that be as subject to

 2 production as data that is just as easy to get but is

 3 referred to on a frequent basis?

 4 Those are two separate questions.

 5 MR. MCCURDY: Right. Well, as to your second

 6 question, I would say -- and I don't know if I'm

 7 contradicting things in my written testimony -- if it's

 8 easy to get, I don't see any objection to not -- I mean,

 9 that's clearly very accessible, if it's easy to get.

10 And by defining it as or using as part of the definition

11 the fact that the it's used in the ordinary course of

12 business frequently, that is somewhat of a proxy for

13 easy to get, but obviously there are things that you

14 don't use very often that are still easy to get. So I

15 didn't mean that to be an exclusion in some way.

16 As to your first question, that's a very good

17 point. And of course the advance of search technology

18 is the only reason why we are able to have electronic

19 discovery at all. The volumes are so massive that,

20 without using search terms to narrow the volumes down,

21 we couldn't do anything. Everybody uses it. Sometimes

22 they don't talk about it. But it is impossible, given

23 the volumes, to have individual lawyers and paralegals

24 review every document.

25 So, yes, it's a part of the solution, it's a

00017

 1 necessary part of the solution, but that doesn't mean

 2 it's free. That doesn't mean there are no costs

 3 associated. The software and the services provided by

 4 vendors that help us narrow the field and focus on what

 5 is potentially responsive come at a cost.

 6 You know, a vendor may say to you, oh, it will

 7 take you a million dollars to review all of these

 8 documents. Well, I have a nifty software product that

 9 will help you do that much faster, and you won't need

10 all of these lawyers, and I'll sell it to you for half

11 the price. Well, you know, half a million is still a

12 lot of money. And the way this is rising, you know,

13 it's significant. This technology is not free. It

Page 7
0112frcp.txt

14 helps. Without it, we couldn't do it.

15 JUDGE SCHEINDLIN: I have a follow-up question

16 on 26(b)(2). In the written comments, you are very

17 opposed to the concept that you have to identify that

18 which is inaccessible. I'm wondering why you're so

19 troubled. Maybe it's just a misunderstanding as to what

20 the obligation to identify would be.

21 I must say that the way I perceive it, it

22 would be very general. We are deeming our back-up tapes

23 to be inaccessible. We are deeming our legacy material

24 to be inaccessible. We are deeming our fragmented

25 material to be inaccessible. I think that's all you

00018

 1 have to say. So we are not turning over those

 2 categories.

 3 If you understood it the way I described it,

 4 would you be as troubled?

 5 MR. MCCURDY: No, I would not.

 6 JUDGE SCHEINDLIN: But what would you say if

 7 it's a law, a requirement to say, I'm not giving you

 8 document A, B, but name every document I'm not giving

 9 you because it's inaccessible?

10 MR. MCCURDY: Well, the concept of having to

11 identify is sort of a new obligation, so I have a little

12 bit of a problem with that. But if it is as you

13 describe, identify it in general terms, that is not so

14 burdensome, and that can be done. So I don't have a

15 problem with that.

16 The identification requirement that is in the

17 proposal was not entirely clear to me. And if it is

18 clarified in the notes, that would be very helpful.

19 JUDGE SCHEINDLIN: So what you didn't want to

20 do though is a privilege log, document by document, that

21 would require you to retrieve everything just to

22 identify?

23 MR. MCCURDY: Exactly. You know, you would

24 have to access what is inaccessible, figure out what is

25 unknown. I mean, huge burden and expense. Of course, a

00019

 1 requesting party will want to have as much detail as

 2 possible, and a producing party will only want to give

 3 broad categories.

 4 JUDGE SCHEINDLIN: But if it were as limited

 5 as I proposed in that hypothetical exchange, then that

 6 would be --

 7 MR. MCCURDY: I think that would be doable.

 8 MR. HEIM: I have a question that goes to the

 9 question Judge Rosenthal asked you. Perhaps it may give

10 you an opportunity to change your mind again on this

11 subject.

12 As I understood Judge Rosenthal's argument, it

13 is, what's the problem with having this change in the

14 rule that says if it's easy to get, even though not --

15 it doesn't fall into the routine operation of your

16 computer system, then that should be within the province

17 of the initial request as well?

18 My question to you is this, since you know

19 systems far better than I. If we're trying to come up

20 with reasonably bright line standards -- I understand

21 that it's impossible to have true, you know, real

22 black/white kind of standards here -- doesn't an

23 easy-to-get kind of approach to this -- wouldn't it be

24 so speculative, so in-the-eye-of-the-beholder, that

Page 8
0112frcp.txt

25 it's, you know, whether it's easy to get or not easy to

00020

 1 get, who knows whether it's really easy to get or not?

 2 I mean, aren't we better off staying with

 3 the -- it's either part of what you routinely do to

 4 operate your computer systems for purposes of your

 5 business operations or not?

 6 MR. MCCURDY: If you're looking for a bright

 7 line rule, then I think what you propose is much better

 8 and a much brighter line. Because if you really don't

 9 use something and it's sitting in some warehouse because

10 you've never bothered to do anything with it, you know,

11 that's a pretty obvious fact.

12 Easy to get and inaccessible versus not

13 accessible are very amorphous terms. There is a

14 spectrum. And what was accessible yesterday, a month, a

15 year, three years from now may not be accessible. The

16 passage of time, the change of technology, the departure

17 of employees, change in software, all of those things

18 affect that.

19 So, yeah, I think you have a very good point.

20 Inaccessible and easy to use not bright line. There's a

21 spectrum about which you can argue. I think it's

22 helpful if the rules say, you know, that there are two

23 tiers, and the hard-to-get --

24 Are you okay?

25 JUDGE ROSENTHAL: We didn't realize that you

00021

 1 were quite so --

 2 MR. KESTER: That was not a reaction.

 3 MR. MCCURDY: Okay. So yes, a bright line

 4 rule, is not -- you know, used in the course of business

 5 or not, that will be a more bright line rule, and I

 6 think that will be a helpful approach.

 7 JUDGE ROSENTHAL: Let me go back and ask one

 8 more question that maybe ties these two strands together

 9 and lets you move into a slightly different area as

10 well.

11 Another comment that emerges from the written

12 materials we've seen is a concern that if we draft a

13 rule that would make presumptively not discoverable

14 information that is not reasonably accessible and that

15 we provide a limited safe harbor for information that

16 has become lost because of the routine operation of

17 systems, that we will be encouraging bad litigation

18 behavior, that we will be encouraging, providing

19 incentives for companies to purge information,

20 particularly e-mails, to use today's example, on an

21 accelerated basis, and that will allow companies, in

22 particular litigation entities in general, to avoid

23 keeping what could hurt them in litigation, keeping what

24 could help them in litigation, but keeping what would be

25 relevant evidence in cases that will inevitably arise.

00022

 1 Can you comment on those incentives?

 2 MR. MCCURDY: Yeah. I really don't see the

 3 incentives for that. First of all, the safe harbor is

 4 safe harbor from sanctions under these rules. They do

 5 not affect the sanctions that courts can impose in their

 6 inherent powers for violations of court orders or other

 7 statutes.

 8 One of the better comments I think that was

 9 submitted to you was from somebody that does a lot of

Page 9
0112frcp.txt

10 employment class action litigation. And she expressed

11 that very concern. But she also cited a few statutes,

12 like Title 7 and maybe the Wage and Hours Act in the

13 employment area, that very specifically tell companies

14 what they must keep and what they must not.

15 And I bet those statutes also provide

16 penalties if they are not kept. And I'm pretty sure

17 that they provide -- is it ten to twenty years in prison

18 for the intentional destruction of documents? I mean, I

19 think it would be insanity beyond belief for anybody,

20 any serious lawyer, to advise their client that, oh,

21 yeah, this is a way to get rid of something that might

22 come back to bite us. Because the moment you have that

23 thought, you're engaging in basically criminal conduct.

24 So the routine operations of systems has to

25 strictly be for the business purposes of keeping your IT

00023

 1 systems running. You know, we cannot survive without a

 2 spam filter that filters out 90 percent of all incoming

 3 e-mail everyday. That's clear. The storage capacity

 4 and the budgets of the IT departments will be incredibly

 5 strained if they could not recycle back-ups tapes. You

 6 know, I put some figures in my testimony about how much

 7 it costs just to buy new tapes.

 8 Those are examples of the routine systems.

 9 Those are -- you know, they apply to everything. And as

10 has been pointed out, they will delete incoming mail,

11 incoming spam that might be helpful for you. They might

12 delete things on back-up tapes that you may want in your

13 defense. It's a neutral device. The moment they're at

14 all tailored to filter out helpful or not helpful

15 things, you know, God help you. The safe harbor

16 certainly won't help you. So I think fears along that

17 line are very overblown.

18 You know, one thing about costs in the last

19 five years, our expenses for discovery have tripled.

20 And I want to give you an example of one small case.

21 And this is really what has motivated me personally to

22 be here today and to work on these issues. Because I

23 didn't really focus on electronic discovery until about

24 two years ago. I went to my first meeting a little over

25 a year ago, and then I came in the fourth and last year.

00024

 1 But we have a lot of large cases involving

 2 major competitors and the government. They're very

 3 complicated and involve a lot of electronic discovery.

 4 But we also have some small ones. We occasionally buy

 5 small companies that you're never heard of that have a

 6 couple of hundred employees, maybe start-ups. They have

 7 litigation too. And when we buy companies like that,

 8 it's people like me who end up managing them, because

 9 these small companies generally don't have any inside

10 lawyers. So it gets referred to the parent companies to

11 manage.

12 So this is the case of a small software

13 company -- and I don't want to get into the specifics

14 because of the confidentiality of the settlement. But

15 they had licensed one of their products to another small

16 business, another high-tech start-up, that was using it

17 in its operations. That high-tech start-up went

18 bankrupt. They had problems, they went up. So they

19 sued the supplier of their software, saying it was

20 defects in your software that caused us to go out of

Page 10
0112frcp.txt

21 business. The defense of this small company was, well,

22 that's not true, your own business mistakes and the dot

23 com bust put you out of business, and anyway, we have

24 limitations on warranties, and we're not here to insure

25 the operation of your business just because we sold you

00025

 1 some accounting software.

 2 Well, there was a lot of discovery back and

 3 forth, a lot of it electronic. And at some point the

 4 plaintiffs heard, because the defendants figured it out

 5 finally, that there was a warehouse, and there were 115

 6 back-up tapes from years ago, when it was a small

 7 company, in the middle of nowhere.

 8 The plaintiffs clamored for it, desperately

 9 wanted it, and brought it to the magistrate judge on a

10 motion to compel in federal court. The magistrate said,

11 yes, you know, you know, sounds like there might be

12 responsive things to your request on it, I'll order the

13 production.

14 Well, restoring these tapes that were a few

15 years old -- not real antiques, like this tape from 1986

16 that I brought along, for which clearly there is no more

17 hardware around to run it, never mind the software or

18 the personnel. But, you know, just a few years older.

19 New systems, new servers, new software, new technology

20 all had to be hired. It would cost them a quarter of a

21 million dollars to restore the tape. And by "restore

22 the tape," that means taking it from mass storage

23 device, where you have no way of accessing it, and

24 putting it back on a live server so it can be searched

25 using electronic means. That cost a quarter of a

00026

 1 million dollars. And then once those 115 tapes had been

 2 restored and could be searched, the search process and

 3 getting ready for production would have been another

 4 million dollars.

 5 Well, this was not a big case. It was not for

 6 a big company. But they chose to settle, just for pure

 7 economics. You know, they have very strong defense, but

 8 if you're being required to spend a million and a

 9 quarter dollars just to produce some documents, well, it

10 makes a lot of economic sense to give the plaintiff a

11 big chunk of that just to go away.

12 And that's sort of an example that I think is

13 unfortunately too common. You know, these settlements

14 are not reported. They're generally private,

15 confidential. You're not going to find a lot out there

16 in the literature, but they happen.

17 Now, in a huge case involving us and a major

18 competitor, the costs are far greater than that because

19 of the volume. But luckily, you know, when you're not

20 dealing with a bankrupt company that has nothing left to

21 lose and that maybe has no other systems, that doesn't

22 have back-up tapes, they can go out and press for that

23 very inaccessible stuff that is not used in the ordinary

24 course, is very difficult to obtain, and that is a case

25 in which the two-tier approach would really help avoid

00027

 1 abuses.

 2 Now, would that lessen the amount of documents

 3 produced that are relevant to the issue? I really don't

 4 think so. There's plenty of room for that.

 5 So that's one of the major things I wanted to

Page 11
0112frcp.txt

 6 tell you all about. And I don't know if we're out of

 7 time.

 8 JUDGE ROSENTHAL: Are there any questions from

 9 the committee members?

10 PROFESSOR MARCUS: Could I just follow up on

11 something you mentioned. You mentioned search

12 technology and the impossibility of reviewing -- I think

13 you said it's impossible to review every document.

14 My question is, in what manner does one

15 perform a privilege review for producing under those

16 circumstances?

17 MR. MCCURDY: That's a very good point. Now,

18 what's reviewed for privilege is always going to be a

19 very small subset of the overall volume. When I am

20 saying it's impossible to review it all, I'm talking

21 about the broad mass. If you have a couple hundred

22 employees, you can get all their e-mail, you know, those

23 terrabytes are impossible to produce. Once you've

24 narrowed it down using search technology and you've

25 plucked out all of the e-mails coming to and from

00028

 1 members of the legal department, ones that say

 2 "privileged" on the label, ones that talk about legal

 3 advice, you find that in your electronic search, then

 4 you have to have lawyers sit down and actually read

 5 them, and that is still very expensive. And those

 6 volumes are still large, but they are a small fraction

 7 of the volume you started out with.

 8 So absolutely I do not see any way that

 9 technology could automate the final privilege review.

10 Yes, you need it to cull out what might be privileged.

11 But those final calls always have to be made by lawyers,

12 and that expense is never going to go away as long as we

13 have this system.

14 JUDGE ROSENTHAL: Does that mean you're

15 producing vast quantities of things that may not have

16 said "privileged" on the message line or elsewhere in

17 the message, you're producing it without any review for

18 privilege?

19 MR. MCCURDY: Well, we attempt in our

20 automatic reviews to screen out everything that might be

21 privileged, and then you attempt to screen out

22 everything that's irrelevant, and you narrow it down

23 quite considerably. And then you have techniques where

24 lawyers review it with technology that helps. No, we do

25 not let things go out the door that nobody has looked

00029

 1 at, but it is a subset of the raw material.

 2 And, you know, the proposals about, you know,

 3 whether you get something back after you've produced it

 4 and whether you've waived, you know, those are helpful.

 5 People can agree to that in their protective orders.

 6 But it seems like insanity to just say, oh, here are all

 7 of my documents, have at it. Because, you know, to ask

 8 for something back once you realized that it's

 9 privileged, you have to look at it too, so you may as

10 well look at it up front. You're not going to save

11 yourself any time.

12 JUDGE SCHEINDLIN: I have one more question,

13 although I know our time is limited.

14 On 37(f), the safe harbor, you don't like the

15 fact that we talk about violating court orders. You

16 seem to be critical of the preservation orders that

Page 12
0112frcp.txt

17 courts are giving. Frankly, you think they're just too

18 broad.

19 If the courts were more specific, if they were

20 to say you have to preserve -- specify electronically

21 stored information, then you would be okay with that

22 limitation? You just don't like overly broad

23 preservation; is that correct?

24 MR. MCCURDY: I think preservation orders

25 generally are not necessary, except if the requesting

00030

 1 party has some reason to believe that the producing

 2 party is being dishonest, hiding stuff, getting rid of

 3 things. And then you come running into court, saying,

 4 Your Honor, Your Honor, the common law duties, the

 5 deterrents are not enough. I need you to tell these --

 6 JUDGE SCHEINDLIN: I think that sometimes -- I

 7 think it's a judgement issue. Now, sometimes it's to

 8 help the party know what they need to preserve and what

 9 they can safely not preserve. Sometimes it's just to

10 give them guidance.

11 I'm just trying to inquire about the rule

12 language. If the orders were more specific, you would

13 be less troubled?

14 MR. MCCURDY: Yes. Because in fact, as you

15 say, it can be helpful. If you say, hmm, I understand

16 that there are certain back-up tapes and in the ordinary

17 course they would be recycled or you have this, that, or

18 the other, and I think you really ought to be preserving

19 that. I mean, we agree that maybe this is ambiguous

20 under the common law, but it is my view, then that

21 certainly is guidance for the parties.

22 JUDGE SCHEINDLIN: And then it could stay in.

23 Because if you violate that, it certainly wouldn't be

24 safe harbor. As I said, safe means from year X.

25 MR. MCCURDY: Well, I don't think you need to

00031

 1 mention it in the rule, because you have all the power

 2 in the world to sanction people for violating your

 3 orders, regardless of the safe harbor.

 4 So, you know, it's an invitation to requesting

 5 parties to get another club to beat producing parties

 6 over the head with. Say, oh, but the judge said you

 7 shouldn't do that. Well, the common law, the multiple

 8 statutes in the employment area and Sarbanes-Oxley

 9 already tell you, you go to jail if you destroy

10 documents. So I mean, if it's specific, there's not a

11 huge harm. But it's another sort of tactical device.

12 And plaintiffs, you know, this may be the

13 first time they come to see the judge. They come to see

14 the judge and say, oh, judge, we think these people are

15 bad, they're going to hide evidence, and we need you to

16 tell them what to do. And so it starts the litigation

17 out on a nice little note, like, oh, yes, the other guy

18 is bad.

19 JUDGE ROSENTHAL: No further questions?

20 Mr. McCurdy, thank you very much.

21 MR. MCCURDY: Thank you.

22 JUDGE ROSENTHAL: Our next witness is Frank --

23 I apologize if I mispronounce your name -- Pitre on

24 behalf of Consumers Attorneys of California.

25 Is Mr. Pitre here?

00032

 1 In that case, our next witness is Mr. Sewell

Page 13
0112frcp.txt

 2 on behalf of Intel Corporation.

 3 COMMENTS BY MR. SEWELL

 4 MR. SEWELL: Judge Rosenthal and Members of

 5 the Committee, my name is Bruce Sewell, and I am vice

 6 president and general counsel of Intel Corporation. I'm

 7 very pleased to be here. This is a matter which is not

 8 only close to my heart, but also close to my

 9 professional life, because I spend an inordinate amount

10 of time addressing these issues.

11 I'm here today primarily to bring one message

12 to you. For those who say that there is no problem and

13 that we don't need new rules to address electronic

14 discovery, I would argue that they're either flat wrong

15 or they don't litigate in today's real world. Possibly

16 both.

17 In Intel's experience, discovery and other

18 defense costs often exceed actual liability costs. The

19 threat of the costs and the burden of discovery,

20 especially electronic discovery, should not in and of

21 itself be a tool for the plaintiffs to force a case into

22 early settlement.

23 In the face of a growing trend towards

24 opportunistic litigation, litigation filed by companies

25 that make no products but exist only to file lawsuits,

00033

 1 the specter of having to gather and process millions or

 2 in some cases billions of electronic documents is fast

 3 becoming the number one item that is discussed when a

 4 company is evaluating whether to fight or settle a

 5 lawsuit.

 6 Notice pleadings and independent rules work,

 7 but not if the notice pleadings is the key that forces a

 8 company to spend millions of dollars on discovery every

 9 time a lawsuit is filed without adequate consideration

10 for the need for such electronic discovery or the true

11 difficulty of the (indiscernible).

12 In my testimony today, I will explain why

13 Intel so enthusiastically supports the committee's

14 finding that reform is needed in the discovery area,

15 where the burdens of the cost of discovery are extreme

16 and the probative value of such discovery is often

17 negligible at best. I will also summarize Intel's

18 suggestions for clarifying and improving certain aspects

19 of discovery.

20 Before turning to the specific comments on

21 those rules, it might be helpful to explain briefly how

22 Intel creates and stores electronic information. Our

23 experience proves at least one thing, that discovery of

24 electronic information is a very different creature than

25 discovery of paper information.

00034

 1 Just by way of background, Intel is a

 2 corporation of approximately 80,000 employees. We have

 3 nearly 300 different offices. We're located on several

 4 continents. Given our size and our technology base,

 5 it's no surprise that the company creates and uses an

 6 enormous amount of electronic information. This data

 7 resides on tens of thousands of notebook computers,

 8 desktop computers, active servers, located around the

 9 world.

10 Intel also maintains a disaster recovery

11 system. The purpose of this system is to store in a

12 temporary format enough data to return the overall

Page 14
0112frcp.txt

13 network back to a solid and viable state in the event

14 that that network were to crash. The crash could be for

15 any number of reasons: Natural causes, such as

16 earthquake, weather, disaster; or electronic causes,

17 such as a faulty system. Intel has dozens of disaster

18 recovery storage sites located around the world.

19 For purposes of the proposed rules, it is

20 critical to emphasize the limits of a disaster recovery

21 system such as Intel's. Information which is stored on

22 these systems is very difficult, if not impossible, and

23 expensive to search. In the parlance of the proposed

24 rules, that information demonstratively is not

25 reasonably accessible. Let me explain.

00035

 1 First, consider just the amount of data that

 2 is stored on a disaster recovery back-up tape. I've

 3 actually brought an example of a fairly modern disaster

 4 recovery tape. This little device quite remarkably

 5 holds about 200 gigabytes of information. That's the

 6 equivalent of 90 million pages of data on just this

 7 tape. Intel uses 22,000 of these tapes every week in

 8 order to effect our disaster recovery system. The

 9 amount of information is absolutely staggering.

10 It's not simply the amount of information, but

11 it's also the way in which that information is stored

12 which is relevant to this inquiry. Information is not

13 organized by subject matter. It is not organized in a

14 format which is susceptible to any kind of field or word

15 search. We cannot simply plug in all documents related

16 to Pentium 4 or all e-mails received by Greg Barrett and

17 get an answer out of this.

18 The way these documents are --

19 JUDGE SCHEINDLIN: Just one question. Is it

20 done by server, a server or particular unit that's being

21 backed up?

22 MR. SEWELL: It's actually done -- I've been

23 trying to think for days of an analogy that would work

24 here. The best one I can come up with -- and I will

25 confess this is not great -- is if you've seen those

00036

 1 satellite photographs that are taken from 50 miles up,

 2 the back-up -- the disaster back-up system is sort of

 3 like an automated system which on a routine basis takes

 4 a picture at that 50-mile-above-the-surface-of-the-Earth

 5 kind of level. It's indiscriminate as to what it's

 6 taking a picture of. It's simply capturing a state of

 7 the system at a given moment in time. There's no

 8 attempt to categorize or catalog or store the data,

 9 because the only thing that's important is that you are

10 able to take that image and reproduce it on the network

11 at some later point in time if the network has crashed.

12 So that's the best analogy I've been able to come up

13 with.

14 So this is an automated system which routinely

15 takes a snapshot, and the snapshot contains an enormous

16 amount of information.

17 JUDGE SCHEINDLIN: That's not the answer to my

18 question. I want to know if we can know what system by

19 unit within the company, if it was to be identified by

20 back-up tape that it is serving, so to speak --

21 MR. SEWELL: Not with any great ease, no.

22 There are several back-up disaster recovery servers

23 within the company, but they are not necessarily

Page 15
0112frcp.txt

24 assigned to a particular geography or a particular set

25 of individuals. So an individual servicing e-mail in

00037

 1 Kuala Lumpur, when the back-up system takes that

 2 snapshot, that information could actually be stored on a

 3 disk located in the United States. There's not a simple

 4 way of parsing out or connecting those things.

 5 JUDGE SCHEINDLIN: One more question along

 6 those lines. We have to think this out.

 7 Is this lack of organization going to change?

 8 Or will the technology catch up to where in ten years

 9 from now, they will be completely organized? Will they

10 be backed up by server, where you will know what index

11 system had this change? Will we get left behind if we

12 don't know that?

13 MR. SEWELL: That's a great question, and kind

14 of a response to Judge Rosenthal's question, which was,

15 can we rely upon technology to solve this problem that

16 it's created? The answer is, of course, is that you

17 would never hear from someone at Intel that technology

18 would be incapable of doing anything.

19 The fact of the matter is that these

20 particular tapes are intended for a different purpose.

21 Would it be possible to recreate or to recast these in

22 such a way that they could be searchable? Yes, of

23 course, but at enormous expense.

24 The purpose of these tapes is not to be

25 searchable. And so there's no events on the horizon at

00038

 1 Intel that would suggest we are going to change to make

 2 these tapes searchable, because they serve exactly the

 3 purpose --

 4 JUDGE SCHEINDLIN: There would be no business

 5 necessity to making them organized.

 6 MR. SEWELL: None at all. This is one thing

 7 which -- frankly, I have enough grief within my job

 8 trying to manage the business for legal purposes. And

 9 for me to go to my boss and say, well, now I want you to

10 recast the whole --

11 JUDGE SCHEINDLIN: I wondered if there were a

12 legitimate business purpose --

13 MR. SEWELL: And there isn't, and that's the

14 reason why. It could not, and I don't think it would,

15 unless the legal department said you have to do this,

16 and that would be the reason.

17 JUDGE HECHT: Just to be clear. Just in a

18 routine business, you don't foresee a time that disaster

19 recovery would be more organized, just for that purpose?

20 So that a smaller business could go back and find

21 those -- or maybe even a large business, those documents

22 on the tape?

23 MR. SEWELL: The answer is no, but let me make

24 sure I explain why. Because it already serves the

25 purpose for this it's intended now. You don't gain any

00039

 1 better business events or any better business usage by

 2 making it searchable.

 3 There are plenty of ways to search active

 4 data, and those are the things that will continue to

 5 improve with time. The engines and the facilities we

 6 use to manage data which is being used in real time for

 7 the business will continue to improve. Disaster

 8 recovery in not something which needs improving, in the

Page 16
0112frcp.txt

 9 sense of being organized and being searchable.

10 The information -- just to be clear -- that's

11 on these tapes is subject to some form of organizational

12 algorithm. It is -- the problem is that it's not

13 subject to a searchable algorithm, nor is it subject to

14 an algorithm that would be useful in the discovery

15 context.

16 Actually, these tapes are organized by what's

17 called category. And in the case of a tape such as

18 this, there are approximately 90 million different

19 categories that would have to be understood and would

20 have to be accessed in order to take data out of the

21 tape drives. So there is a storage process, but it's

22 not a process which has any meaning within the

23 litigation or discovery context.

24 So the bottom line is that because these

25 documents can't be searched, the finding of any

00040

 1 particular file or finding of any particular piece of

 2 evidence would be the proverbial needle in the haystack,

 3 requiring a huge amount of tedious activity and a lot of

 4 manual labor.

 5 Once those tasks are done, once the

 6 information is actually taken from the data disk and

 7 converted into some sort of searchable file format, then

 8 the whole process of having it reviewed by attorneys,

 9 having it categorized, having it bates stamped, all of

10 those things would then be on top of that.

11 So when we think of ordinary discovery, we

12 think of a general model of about a dollar per page,

13 when we're thinking of regular discovery out of an

14 active file server. That would be probably ten times

15 the cost to get discovery on these data disks. And in

16 the case -- routinely our productions today are in the

17 multiple millions of dollars. So we routinely produce

18 between three and seven or eight million documents for

19 each litigation.

20 So as you can see, the cost requirements are

21 huge. There is a California case which I'm sure you're

22 aware of -- it's a Toshiba Electronics component case --

23 in which generally the Court found that to search 130

24 back-up tapes for 15 key dates would cost over $200,000.

25 Processing 800 such tapes would cost between 1.5 and

00041

 1 $1.9 million. And then if you apply that to a company

 2 like Intel with the volume of tapes we're talking about,

 3 you can see very quickly this becomes -- the cost

 4 overshadows the potential liability in the vast majority

 5 of these cases.

 6 Not only are these disaster recovery tapes

 7 extremely difficult and costly to search, but also the

 8 search itself has a fairly marginal chance of success.

 9 Tapes only capture information that is on the network at

10 the time that snapshot is taken. The tapes don't

11 capture data that hasn't been created, they don't

12 capture data that's been deleted.

13 Experts also -- IT experts recognize that

14 companies periodically have to recycle these tapes. In

15 Microsoft's comments we had some indication of the cost

16 of these tapes. Intel's experience is very similar. If

17 we were not able to recycle these tapes, we would

18 ultimately and quickly overburden the system. Our IT

19 departments would simply not be able to maintain or deal

Page 17
0112frcp.txt

20 with the data we need to preserve.

21 JUDGE SCHEINDLIN: Mr. Sewell, getting back to

22 the rule. Accepting all that you say, what are your

23 comments with respect to our two-tier approach? In

24 other words, do you like it? And to the extent you

25 don't like it, how would you change it, and why?

00042

 1 MR. SEWELL: We are absolutely in support of

 2 the two-tier approach. And I think what we are

 3 particularly supportive of is the notion of a

 4 presumption that certain kinds of things are

 5 inaccessible, and that disaster recovery tapes should be

 6 among that category. So that provides us with the

 7 ability to know as we go into litigation what sorts of

 8 things are we going to have to be arguing about and what

 9 sorts of things can we reasonably --

10 JUDGE SCHEINDLIN: You would like us to

11 explicitly define back-up tapes as inaccessible?

12 MR. SEWELL: That would be correct. So we

13 certainly support the proposed rules. The party should

14 not be required to produce data that is not reasonably

15 accessible. The burden of searching for information

16 stored in disaster recovery systems, which by definition

17 is inaccessible -- the benefits of such searches

18 normally (indiscernible). It's a rare case when

19 information available on a disaster recovery system

20 would be probative, and in that case there could be a

21 good cause argument, there could be a showing made that

22 requires that kind of a search. But absent that good

23 cause requirement, it's simply too easy for the

24 requesting party to fire off a scatter shot recovery

25 request demanding that information.

00043

 1 JUDGE ROSENTHAL: Mr. Sewell, let me ask you

 2 one question about that. You suggest that we confirm in

 3 the rule or clarify in the rule that nothing in the

 4 rules should require the suspension of the routine

 5 operation of the disaster recovery system, including

 6 recycling.

 7 But I have a question about how you would

 8 handle the case that you describe as "rare" -- but which

 9 by describing it as "rare," you acknowledge it exists --

10 in which an only source of information that through some

11 combination of circumstances you know to be important is

12 on the back-up tapes.

13 So if there is no obligation to suspend the

14 routine operation of a system that might recycle the

15 tapes containing that information, but you know that

16 that is the only source of the information, how do you

17 square that?

18 MR. SEWELL: Well, I think procedurally the

19 question would have to be advanced in front of a court.

20 The judge would make a determination that in this

21 particular case, the general rule -- that suggestion was

22 did not have to stop for recycling -- should be held in

23 abeyance, and therefore the recycling process should be

24 stopped.

25 JUDGE ROSENTHAL: So you would look to a

00044

 1 preservation order that would retain the assistance of

 2 the Court to match the particular needs of that case?

 3 MR. SEWELL: Absolutely. And with some sort

 4 of showing by the plaintiff that there was the

Page 18
0112frcp.txt

 5 likelihood of actually finding this document.

 6 So certainly, if there is a situation in which

 7 the only place to get a probative piece of evidence is

 8 on the back-up tapes, then we would agree that's the

 9 place to go. And then we'll do what's necessary.

10 Although, as you can see from the comments, we propose a

11 cost sharing process in that.

12 JUDGE SCHEINDLIN: Of course, the problem is,

13 you're the only one who knows it. So when you propose

14 we say nothing and the rules require a party to suspend

15 or alter the operation in good faith of the system, if

16 you know that that's the only place that information

17 resides and that information is material to the case,

18 critical to the case, you would have to suspend it

19 yourself. You couldn't wait for the court order.

20 Because you know what you know, which is that there's

21 something key that's only available on that back-up

22 tape. So it's your own duty to suspend in a limited way

23 for a limited time your machine.

24 MR. SEWELL: Absolutely. If we know. If we

25 know. My point is that for the vast majority of cases,

00045

 1 we do not --

 2 JUDGE SCHEINDLIN: I thought it was too broad,

 3 because nothing in these rules require effort to suspend

 4 recycling the back-up tapes because you have your own

 5 duty.

 6 MR. SEWELL: Absolutely. Yes, common law

 7 duty --

 8 JUDGE SCHEINDLIN: That was not exactly the

 9 question. How do you square that with the rule? How

10 would you write into the rule the obligation to preserve

11 what might be on a back-up system if you know it to be

12 the only source of this information and at the same time

13 have a presumption that ordinarily there should be no

14 obligation to preserve or protect from the continued

15 operation of the recycling or other features of your

16 information system?

17 MR. SEWELL: To some degree, this goes back to

18 a conversation from a few minutes ago, which is, to what

19 extent do you need to write into the rule a common law

20 duty which already exists? We have that obligation.

21 The courts do not need federal rules in order to be able

22 to enforce those rules. So certainly if we have

23 knowledge, then we have to preserve that evidence.

24 MR. HEIM: Mr. Sewell, are you ever going to

25 have knowledge? Based on my understanding of how you

00046

 1 described the operation of back-up takes, it's a

 2 snapshot, it's a point in time, there's been recycling

 3 likely that's taken place during that period.

 4 Isn't it always going to be maybe or might?

 5 MR. SEWELL: I can't at this point give you a

 6 hypothetical in which we will absolutely know. I can't

 7 rule out the possibility that such a situation might

 8 exist. But there really is no way for us to know

 9 whether the snapshot that was taken at a particular

10 moment in time captured precisely the document that was

11 in question. One might over some period during the

12 course of the litigation develop reason to believe that

13 if it's anywhere, it's going to be on the back-up tapes.

14 But it's not something that's going to be ascertainable

15 easily. It's too difficult.

Page 19
0112frcp.txt

16 You could construct a hypothetical in which a

17 particular document becomes more and more prevalent to

18 the litigation, but it's not on X server, it's not on Y

19 server. It was created at a particular point in time.

20 It might be on a back-up tape. That's a possibility.

21 JUDGE ROSENTHAL: Are we focusing on this

22 hypothetical too much? Is your real point that in

23 almost every litigation, the information that's going to

24 be important is on the active data?

25 MR. SEWELL: Absolutely. Undeniably. And nor

00047

 1 is there any way to tell what is on the active versus

 2 what is not.

 3 That takes me to my final point, which is to

 4 come back to this concept of cost sharing, which is

 5 something we also had in our comments.

 6 Given the enormous burden that's associated

 7 with trying to delve into this information to produce it

 8 in any kind of logical format, it does seem to us

 9 entirely appropriate that a judge should be involved in

10 that decision and that there should be some ability for

11 the litigants to share the costs. So we're not

12 proposing cost shifting, but we are proposing a

13 situation in which there is cost sharing in the event

14 that these tapes have to be used.

15 JUDGE SCHEINDLIN: Doesn't the Court have the

16 power already in the rules to assign percentages if they

17 want to?

18 MR. SEWELL: I think the court does. We're

19 suggesting the rule make it more clear that if the

20 access is to data otherwise deemed inaccessible, in that

21 particular case the Court should assess some cost

22 sharing.

23 JUDGE SCHEINDLIN: All I'm saying is that once

24 there is cause showing (indiscernible) that also says

25 the Court can use whatever means it thinks appropriate

00048

 1 to --

 2 MR. SEWELL: Yes. I think you already have

 3 that. We would like the rules to make it more clear,

 4 because we think that it creates the right kind of

 5 balance for incentives between the parties with respect

 6 to discovery.

 7 JUDGE ROSENTHAL: Do you have any final

 8 comments to make?

 9 MR. SEWELL: Nothing.

10 JUDGE ROSENTHAL: Any final questions?

11 Thank you, sir. We appreciate your coming.

12 Ms. Dickson on behalf of the California

13 Employment Lawyers Association.

14 COMMENTS BY MS. DICKSON

15 MS. DICKSON: Good morning, Judge, Members of

16 the Committee. My testimony will present a stark

17 contrast to the testimony given by the prior two

18 speakers. We've gone from corporations like Intel to an

19 attorney who represents a group of attorneys who are

20 primarily sole practitioners or small firm attorneys who

21 represent primarily individuals in employment

22 discrimination and labor litigation. The organization I

23 represent, the California Employment Lawyers

24 Association, has about 550 members. As I said, a few of

25 us do some class action litigation, but primarily

00049

Page 20
0112frcp.txt

 1 (indiscernible).

 2 Electronic discovery was promised to many of

 3 us several years ago. It would finally level the

 4 playing field. If a plaintiff's attorney received

 5 information in electronic form, instead of sitting in

 6 our one- or two-person offices, going through thousands

 7 of pages of documents, trying to find relevant

 8 information, we could search electronically. So I think

 9 it was really perceived as something which would be

10 helpful in leveling the playing field.

11 What I'm hearing here today and what I've read

12 in the comments and what I've read in the proposals

13 gives me some real concern about whether that is the

14 direction in which we are moving. The cost issue alone

15 can seem a completely meritorious case. The cost issue,

16 when combined with the proposed inaccessibility rule,

17 can sink meritorious cases very quickly.

18 Let me give you an example that just occurred

19 to me as I was listening to the prior two speakers. And

20 I don't want to be giving any ideas to anyone in the

21 room.

22 Most of our employment cases involve

23 comparative data. Let's say an employer fires an

24 employee for low sales or failure to meet sales quotas

25 or poor performance or bad attendance. Let's say an

00050

 1 employer decided as a business justification to archive

 2 performance reviews at the end of the year after they

 3 have been given to the employee. The justification is,

 4 let's give every employee kind of a fresh start with

 5 each new manager so they are not adversely impacted by

 6 what prior managers have to say.

 7 So the company says, all right, we'll make

 8 this statement, back-up data. We will call it

 9 inaccessible in an employment case. So suddenly you

10 don't have the data that you need to prove your

11 underlying claim.

12 And there is a presumption in this proposal

13 that judges will pay attention to -- particularly those

14 few federal judges who don't know a lot about high

15 technology -- they will assume that what their defendant

16 is saying is accurate, that data is inaccessible. Then

17 the plaintiff either has to pay a large amount of cost

18 for getting critical data or forfeit.

19 JUDGE ROSENTHAL: (Indiscernible.) But the

20 rules would say "good cause showing."

21 MS. DICKSON: Well, that may be one of the

22 easiest. It is an example which just occurred to me.

23 But I do think that data that we do need -- and we are

24 seeing cases -- you know, I think the Quinn case is an

25 example. You know, the party's relative positions in

00051

 1 that case made it a little easier for the Court to make

 2 the decisions the Court did. And that worked out very

 3 well, and they were very thoughtful. But that's not

 4 going to be the case with an individual in an

 5 entry-level employer, like a janitor or someone like

 6 that.

 7 I also wanted to say preliminary that I was a

 8 little bit disappointed in the introduction to the

 9 committee's report, because it does not describe at all

10 the benefits of electronic discovery. There are many

11 benefits to electronic discovery, and I really saw only

Page 21
0112frcp.txt

12 the problems.

13 JUDGE SCHEINDLIN: Can I go back to your

14 hypothetical for a minute. These are manuals?

15 MS. DICKSON: Performance reviews.

16 JUDGE SCHEINDLIN: How do they get to be

17 inaccessible in your hypothetical?

18 MS. DICKSON: No. The company determined to

19 put them in some kind of back-up system or --

20 JUDGE SCHEINDLIN: That's not what an

21 electronic back-up system is. I'm trying to figure out

22 in your hypothetical, they have to have been on the

23 system and then intentionally deleted --

24 MS. DICKSON: Right.

25 JUDGE SCHEINDLIN: And now they're only

00052

 1 available by being retrieved off of back-up tapes, which

 2 would be, you know, as Mr. McCurdy said, sort of

 3 suicidal. I mean, this is the kind of thing that your

 4 business has to keep. I would think annual performance

 5 reviews have to be kept over the years.

 6 To purposely delete them and have the only

 7 place where it can be found a back-up tape is a

 8 far-fetched example, I must say. That would have been

 9 printed out. That's going to be in people's paper

10 files. Not everybody would have deleted it. You would

11 have to put out an order that everybody should hereby

12 delete that from their system.

13 I think getting everybody to comply with an

14 order to delete it is hard to imagine. I think that's

15 actually going to be in the active data. I guess you

16 could argue the hypothetical that they don't want to

17 give it to you.

18 But it's important to us to really see in this

19 hypothetical that that is really unfair to you by saying

20 back-up tapes are presumptively inaccessible. If you

21 want to go to them, there has to be some showing.

22 Because from what's been said, it's very hard to

23 retrieve things from back-ups.

24 MS. DICKSON: I don't know that performance

25 reviews are required by law to be kept for three years.

00053

 1 Certainly hiring data, promotion data, that kind of

 2 thing.

 3 JUDGE SCHEINDLIN: Even if they're required,

 4 wouldn't a company do it? Wouldn't they need to keep

 5 their performance reviews around?

 6 MS. DICKSON: I'm not certain if they would

 7 want to if the rule allowed in some way --

 8 JUDGE SCHEINDLIN: Wouldn't they end up in the

 9 employees' files?

10 MS. DICKSON: I do want to respond to that,

11 and I have an immediate response to that, which is, I'm

12 involved in a case right now that is against a software

13 company where employee performance reviews are not being

14 kept. Everyone deals with them online. The employee

15 puts their data online. The employee reviews it online.

16 The employee signs it online. It is not printed out

17 anywhere. There are no hard copy personnel files in

18 this company.

19 JUDGE SCHEINDLIN: Are there electronic

20 personnel files?

21 MS. DICKSON: There are currently -- there

22 are --

Page 22
0112frcp.txt

23 JUDGE SCHEINDLIN: Again, it's hard for me to

24 understand how that would be deleted and only available

25 on back-up.

00054

 1 MS. DICKSON: If you have to go back more than

 2 three years, let's say a five-year period or a

 3 seven-year period, then you may get into that problem.

 4 PROFESSOR MARCUS: The example calls for when

 5 performance reviews are preserved only electronically

 6 and they're added to. In your view as a plaintiff's

 7 lawyer, would modification of that electronic material

 8 constitute foliation of some sort because it changes it?

 9 MS. DICKSON: What do you mean by

10 modification?

11 PROFESSOR MARCUS: Well, I assume when you say

12 it's added to that sometimes that changes what is there,

13 that what is -- what's there this week is different than

14 what was there last week as a matter of routine

15 operation of your company.

16 MS. DICKSON: I suppose there could be some

17 circumstances where that would be foliation. Because if

18 I haven't yet taken the 30(b)(6) deposition of the

19 person most knowledgable about the performance and

20 management database system, that answers your question,

21 which is a segue into other problem, which is electronic

22 discovery with the limitation on the number of

23 depositions we take.

24 An example I gave in my paper is from a

25 current case. It involves the necessity for me to take

00055

 1 ten PMK, person most knowledgeable depositions to

 2 discover information about the company's computerized

 3 systems. They have separate systems and separate

 4 systems administrators in several different areas.

 5 So for example, there are going to be PMK

 6 depositions of the human resources database, which is

 7 (indiscernible), a payroll database, the separate

 8 recruitment, applicant, and initial hire database, batch

 9 access data for entry into the facility. Often

10 companies file access data, which has been useful for

11 wage and hour cases or useful for attendance or

12 punctuality kinds of cases. There's a separate training

13 database for all the training employees have. There's a

14 separate database for performance review and management

15 data. There's a separate database for the company's

16 Internet website, with which the company communicates

17 much information with its employees.

18 This raises other issue, which is that most

19 employee manuals or employee handbooks for a lot of

20 companies are now online. The prior versions are

21 oftentimes not being kept. So when you bring litigation

22 and you want the employee handbook that was in effect at

23 the time your client was employed, that version of the

24 handbook doesn't exist any longer on the accessible data

25 or sometimes has been overwritten by the revision. So

00056

 1 that's another example.

 2 Another database has access to the company's

 3 computers offsite. Another one is the company's e-mail

 4 system. And finally, there's a PMK deposition for the

 5 archiving and storage of electronic data. So there are

 6 the ten depositions that are presumptively allowed.

 7 JUDGE ROSENTHAL: Have you found it difficult

Page 23
0112frcp.txt

 8 to expand the number of depositions that you are to

 9 take, either by agreement with the other side or by

10 Court order?

11 MS. DICKSON: We are in the process of trying

12 to work that out. As we have learned more about the

13 need to take more of these depositions, I have not

14 encountered them a lot. I anticipate some problems with

15 that. With some judges, particularly those who are very

16 much interested in this kind of litigation, it is take

17 your best view, take your substantive depositions, and

18 move on. So I see that there is a problem.

19 I think the committee could write some

20 comments which would be very helpful in this regard with

21 judges, understanding that you do need to understand the

22 systems, that that is going to take some depositions.

23 I have at least two other quick points. One

24 is sequencing problems. We really need to take these

25 depositions early to understand the systems, to be able

00057

 1 to narrow and focus later discovery, and to take other

 2 reasonably focused depositions. The hold on discovery

 3 that occurs in federal court, the 90-day hold, is a big

 4 problem. We can't even get going with the foundational

 5 depositions until after 90 days.

 6 I like the suggestion that the committee made

 7 to discuss discovery, electronic discovery in the

 8 initial meet and confer. From the plaintiff's

 9 perspective, do you know when that will occur? On the

10 89th day. We have great difficulty getting defense

11 counsel to meet and confer very early in the process.

12 Talking about a preservation order 89 days

13 after you filed your complaint is a big problem. You

14 know, a lot of data can be lost in 89 days.

15 JUDGE SCHEINDLIN: How often do you seek a

16 preservation order from the Court before 89 days?

17 MS. DICKSON: Well, we could do that.

18 JUDGE SCHEINDLIN: I'm sure. But as a matter

19 of practice, do you do it?

20 MS. DICKSON: So far we have been lucky and

21 have been able to get voluntary preservation orders.

22 But I could perceive some problem with the Court's

23 schedule --

24 JUDGE SCHEINDLIN: Usually you negotiate it?

25 MS. DICKSON: Right. We do usually. You

00058

 1 know, I want something that's safe. And if a defense

 2 counsel says, well, I just don't have time to meet and

 3 confer, you know, on and on and on down the line,

 4 suddenly you bring a motion, then want to bring it ex

 5 parte, but the calendar is crowded. It causes a lot of

 6 problems. Again, forcing the parties to do this early

 7 would be very helpful.

 8 Another helpful thing in that regard would be

 9 to make it clear the expectation that the defense --

10 obviously, defense, that is really the typical

11 situation -- that the employer's counsel is expected to

12 be very forthcoming informally in the initial

13 discussions about the company's system. We do not get

14 that kind of cooperation. So we don't know for some

15 period of time what the systems even look like, what we

16 are even going to be facing. We can't explain it to the

17 judge. So this's a little bit of sequencing problem for

18 everything.

Page 24
0112frcp.txt

19 So those are the initial thoughts. And some

20 other things I'll just tell you quickly are positioned

21 on some of the other rules.

22 We obviously love the provision for

23 authorizing the receiving party to specify the format

24 for production. We have had instances in our office

25 already where we have asked for production of e-mails.

00059

 1 They did come from the company's storage system. They

 2 did supply them to us. They were Unix based. We can't

 3 read them at all. It would cost somewhere between 15

 4 and 30 thousand dollars to acquire the hardware and

 5 software we need to read those.

 6 Usually companies are in the position where

 7 they can select among many formats to copy or extract

 8 data. And they could easily have given us that kind of

 9 information in an easily readable and searchable format,

10 but they did not. We are in the midst of that right

11 now.

12 And another --

13 JUDGE SCHEINDLIN: Hold on. Can I get your

14 help on phrasing. We do specify "an electronically

15 searchable form." We would change that to "reasonably

16 usable form"? Do you like "reasonably usable" better

17 than "electronically searchable"?

18 MS. DICKSON: I think "reasonably usable"

19 sounds like a better phrase. Because it's not just

20 searching you're talking about.

21 That leads to this very example. I asked --

22 this was a wage and hour matter, and I asked for data

23 on -- it's a computer class. At this point I asked for

24 the data on 779 employees. We were looking for

25 position, salary, dates --

00060

 1 JUDGE SCHEINDLIN: So you want "reasonably

 2 useful" for you. In other words, that example about the

 3 Unix system wasn't usable for you unless somebody

 4 provided the operating equipment for you to use that.

 5 That would be reasonably usable to the receiving party?

 6 MS. DICKSON: Right. And if you apply a

 7 reasonable standard -- I mean, they knew we wouldn't be

 8 able to read it, and they knew they had a method that

 9 could have made it so we could read it.

10 But when we received data, the data came from

11 a Peoplesoft database. The defense counsel got it into

12 an Excel format, for Excel is easily searchable. You

13 can do all of the calculations, you can do all of the

14 averages, and it was very useful for them. They

15 provided it to us in hard copy. They provided it to us

16 in a 6-point font, Arial Narrow. So we could not scan

17 it. We said, can't you give us this in a usable form?

18 They refused to do so. We had to go to the Court. We

19 had a declaration showing that it came to 180 to 220

20 hours, because there were 48,000 datapoints that had to

21 be checked. And of course that would have been entered

22 slightly different from theirs, because you never have

23 it (indiscernible).

24 The Court then -- then there were fights over

25 what's right, what's not. We were lucky in that

00061

 1 situation that the Court ordered them to produce the

 2 data in the electronic format, and we got an Excel

 3 spreadsheet and used the data. But it took a motion.

Page 25
0112frcp.txt

 4 It took 60 days to get from there to this. So it's very

 5 important that they allow the party receiving the data

 6 (indiscernible). I've already talked a little bit about

 7 the reasonably accessible versus inaccessible matter.

 8 I will say that I have followed somewhat the

 9 development of the storage technology industry. And all

10 you have to do is just go on the Internet and look up

11 EMC, Veritas, Legato, Hitachi, Intel. Everyone is

12 saying they are creating hardware and software right now

13 to store and to allow searches of massive quantities of

14 data. The justification that you'll see from a lot of

15 those companies is that they have to have this

16 information for a long period of time and that they have

17 to have it in a reasonably searchable form. The

18 technology is coming, and it's coming quickly.

19 It seems that thought has occurred to the

20 committee. I really think the notion that we're not

21 going to be able to search massive quantities of data is

22 a temporary problem. So that's not a reason for

23 opposing the inaccessible part of the rules change in

24 addition to the presumption.

25 As I have indicated, judges may give far too

00062

 1 much weight to that presumption. I think that the undue

 2 burden analysis that courts engage in already is

 3 sufficient to deal with that problem. I think that it's

 4 really not fair to create sort of two loopholes, you

 5 know, the one, and then the inaccessible one, which

 6 carries with it a presumption against accessibility

 7 which is totally counter to the (inaudible).

 8 The clawback provision for privileged

 9 information, I do understand the emphasis for the

10 proposed rule change. I think the rule goes too far. I

11 think it is going to cause problems with state laws and

12 ethics provisions, which are at odds with the proposals.

13 There are some states that say (indiscernible) or

14 repeatedly or negligently disclosed, then there's a

15 (indiscernible). So I think there's going to be a

16 problem there.

17 I also think a more technical procedural

18 problem with that one is not allowing the party who

19 receives the information to keep a copy and immediately

20 go to the Court for a determination on whether or not

21 that document on its face is privileged or not. Right

22 now, the way I understand it, we're going to give

23 everything back, and we have to bring a motion to compel

24 to try to get what you gave back. And it's not

25 absolutely clear whether the Court is even going to see

00063

 1 the document that is the subject of the privilege. So I

 2 think that's a procedural loophole.

 3 Finally, the safe harbor provision,

 4 particularly on the section two, subsection two,

 5 providing safe harbor if the failure to provide

 6 information resulted from the loss of information

 7 because of the routine operation of the party's

 8 electronic system. We do think it will encourage

 9 creative companies to figure out ways to routinely

10 operate their systems so that information which is

11 coming up in cases that don't like, like wage and hour

12 or discrimination cases may --

13 JUDGE SCHEINDLIN: I have one question for

14 you. The opposite of that would be a company, as soon

Page 26
0112frcp.txt

15 as it's sued, has to suspend all of its recycling. When

16 you negotiate these preservation orders we talked about,

17 you don't do that? Should they suspend everything? Or

18 do you negotiate part of that, so they can continue --

19 MS. DICKSON: I think that's where the issue

20 should be addressed is in a preservation order and

21 before the judge and under the existing rules.

22 What I'm saying is I don't think there needs

23 to be this provision. I'm not saying the minute you sue

24 a company, everything stops. I don't think that's

25 reasonable. I don't think some companies can operate if

00064

 1 you did that.

 2 JUDGE SCHEINDLIN: The company doesn't want to

 3 be at risk of being sanctioned if they continue the

 4 routine recycling. So the question is, what are they to

 5 do? If we don't make a rule or something like that, are

 6 they in fear required to stop everything until someone

 7 says it's okay to go ahead with recycling?

 8 MS. DICKSON: If they have a fear, they can

 9 discuss that with plaintiff's counsel, and they can

10 motion the court with a proposal and have the --

11 JUDGE SCHEINDLIN: So for 30 days, while all

12 of that is happening, they have to stop recycling?

13 That's what you think?

14 MS. DICKSON: No. I mean, there is a --

15 defense counsel can impose some kind of -- you know,

16 there are obviously some -- this is some kinds of

17 information that, you know, it will be perfectly safe

18 for a company to continue its normal operation. But

19 they have to exercise some judgement, and they ought to

20 be exercising caution, Judge.

21 What I worry about with this provision is that

22 it sort of relaxes that caution somewhat. And I think

23 there is room in the existing procedures for the parties

24 to together try and negotiate this kind of thing and go

25 to the judge and have the judge do it.

00065

 1 Also, I think I read in some of these comments

 2 that were committed in writing even earlier that

 3 there -- something about there aren't sanctions

 4 available under the existing rules? I forgot whose

 5 comments it was. But whether this rule really would

 6 have much impact anyway. But I do believe it is an

 7 unnecessary rule. There are plenty of other safeguards.

 8 Someone mentioned some of the laws which require

 9 preservation of documents.

10 So those are my comments.

11 JUDGE ROSENTHAL: Any other questions? Thank

12 you.

13 We will now hear from Mr. Michael Brown.

14 COMMENTS BY MR. BROWN

15 MR. BROWN: Good morning, Judge Rosenthal,

16 Members of the Committee. My name is Michael Brown.

17 I'm a partner in the law firm of Reed Smith and practice

18 in Los Angeles.

19 The nature of my practice is such that I am

20 confronted with e-discovery issues on a regular if not

21 daily basis. My practice primarily consists of

22 defending complex product liability actions, often on

23 behalf of pharmaceutical and medical device cases.

24 Those cases sometimes include thousands of plaintiffs,

25 but sometimes include a single plaintiff, yet the

Page 27
0112frcp.txt

00066

 1 discovery requests and expectations seem to be the same

 2 in both, thus raising some of the issues that the

 3 committee has dealt with.

 4 What I would like to focus on today concerning

 5 the committee's proposals are the following areas: The

 6 two tiered approach; cost sharing as it relates to

 7 electronic discovery; a safe harbor from sanctions; the

 8 early assessment portion of the proposal, particularly

 9 with respect to preservation obligations; and lastly,

10 the privilege issues regarding inadvertent production.

11 With respect to a two-tiered approach, I think

12 a two-tiered approach is absolutely essential. I think

13 it should be the production of information not

14 reasonably accessible should be the rare exception and

15 never the rule.

16 I would make two clarifications or suggestions

17 as it relates to this approach and the committee's

18 proposal, and that has to do with defining reasonably

19 accessible information. I think we would be better

20 served if we went closer to principal number 8 in terms

21 of describing it as active data, purposefully stored for

22 future use and in a way that permits efficient searching

23 and retrieval. I don't have any problem with the

24 suggestion mentioned earlier that, if in fact it is

25 accessible and available, that would be included also.

00067

 1 I think we also should specifically exclude

 2 back-up tapes and other disaster recovery system

 3 information from the definition of reasonably

 4 accessible. In fact, I think we would all be well

 5 served if somehow we could get rid of from the lexicon

 6 of e-discovery the phrase "back-up tapes." Somehow it

 7 suggests like a back-up quarterback on the sidelines,

 8 ready to come in and do the same as the starting

 9 quarterback. And in respect to disaster recovery

10 systems and back-up tapes, it doesn't work that way.

11 And I think the sooner we rid ourselves of that notion,

12 the better off we will be.

13 JUDGE SCHEINDLIN: Sorry to interrupt. What

14 if it's inaccessible, and then technology changes and it

15 becomes accessible? What do we do?

16 MR. BROWN: Well, I think that technology will

17 be changing, and there will be the ability to add

18 changes to rules and interpretations. But I think that

19 right now the era we're operating in is that we don't

20 have -- that the idea that we do have to preserve or

21 view or identify or search back-up disaster recovery

22 systems is the way it's operating, and I think it's

23 creating a huge cost.

24 With respect to the second issue of cost

25 sharing, obviously electronic evidence and electronic

00068

 1 discovery is a significant cost, even when it's limited

 2 to reasonably accessible data. When we get to data not

 3 reasonably accessible, it is prohibitive. I think the

 4 rules should take on this issue is little more clearly.

 5 What I would suggest is that, at least for

 6 data not reasonably accessible, there be a rebuttal or

 7 presumption that there would be cost shifting or at

 8 least cost sharing. It can in fact be rebutted, given

 9 the facts and circumstances of the case. And even for

10 reasonably accessible information, given the size and

Page 28
0112frcp.txt

11 scope of many productions today, I think we would

12 benefit by an explicit reference in there that there may

13 be cost sharing allocations made. And I know the courts

14 already have the power to do that.

15 I just think that if it's in there explicitly,

16 you are going to get a direction toward narrow -- more

17 narrow requests than we get right now. It is very easy

18 to sit at a wordprocessor and spit out request for

19 production requests that are extremely overbroad. It is

20 a different thing if you have to pay for that in some

21 manner. Then I think we will get more targeted requests

22 for production, and I think that will benefit everyone.

23 With respect to safe harbor, I believe that

24 e-discovery has become a sanctions trap. I do believe

25 that with respect to the proposal the committee has

00069

 1 made, I would make a couple of suggestions. I would

 2 endorse the higher level culpability found in the

 3 footnote to rule 37(f) and have it be sanctions only if

 4 there's been an intentional and reckless failure to

 5 preserve.

 6 Right now the proposal does not allow a safe

 7 harbor if there is a violation of a court order.

 8 Frankly, I think that should be modified that it be a

 9 willful violation of a court order, and the reason I say

10 that is right now there are a lot of preservation orders

11 out there that are very general, and the chances that

12 inadvertently you are in violation of a court order are

13 too great.

14 Is perhaps the fix to be, as Judge Scheindlin

15 suggested earlier, a more specific preservation order?

16 Possibly. But I still think that you have the

17 possibility that you could violate it unintentionally,

18 and, given the ramifications and sanctions associated

19 with violating a court order, I think there should be a

20 higher level of culpability.

21 With respect to the early assessment part of

22 the proposal, I am generally in favor of the concept of

23 discussing all of these issues --

24 JUDGE SCHEINDLIN: Can I interrupt? Can you

25 take off your defense hat for just a minute and pretend

00070

 1 you're on the other side.

 2 For whatever reason, that information is gone

 3 and gone forever. We will never get it; right? Whether

 4 this happened intentionally or recklessly or whatever,

 5 the result is the party that sought it, they will never

 6 have it, never.

 7 Are they not entitled to some recompensation

 8 in some form? No matter what, it's gone. That's a

 9 hypothetical.

10 MR. BROWN: Your Honor, information is gone

11 all the time.

12 JUDGE SCHEINDLIN: But this might have been

13 something critical, and you can't even know that. It's

14 gone.

15 MR. BROWN: We're never going to be able to

16 know that. And the question is, if in the normal course

17 of business that information is gone, should someone be

18 compensated?

19 JUDGE SCHEINDLIN: It's more than the normal

20 course. It was a Court order to preserve something.

21 And for whatever reason -- I'm just asking you to look

Page 29
0112frcp.txt

22 at the other side's perspective -- it's really gone. I

23 didn't mean to do it, but I admit it's gone.

24 From the other side's position, don't you

25 deserve something?

00071

 1 MR. BROWN: Well, I think that in that

 2 hypothetical, the Court likely could fashion something.

 3 But there would need to be more included in the

 4 hypothetical, including that it existed, it was

 5 material --

 6 JUDGE SCHEINDLIN: For sure. But remember,

 7 this one, a court may not sanction. So I'm just asking

 8 you real honestly.

 9 JUDGE ROSENTHAL: I wanted to -- before you

10 move on to this area, I wanted to touch back on the

11 issue of the two-tiered proposal.

12 We heard from some of the other witnesses some

13 disagreement about the extent to which it is common or

14 frequent that information that is important to the

15 litigation is found other than on active data.

16 You deal mostly with pharmaceutical

17 litigation. Can you describe to me very briefly your

18 experience in that regard to cases that you deal with,

19 how often do you actually litigate the need to go into

20 back-up tapes or other inaccessible sources of

21 information? One.

22 And two, how often do you find anything in

23 those sources of information that makes a difference?

24 MR. BROWN: Unfortunately, the request for

25 information on back-up takes comes right out of the box

00072

 1 without anyone having looked at the active data. I

 2 think there's a severe underestimation of what exists in

 3 the active data, especially in the pharmaceutical

 4 industry, where there are government regulations on data

 5 storage by the FDA. Yet we get a request every single

 6 time for back-up information, for dynamic database

 7 information, which has a whole set of separate issues

 8 regarding trade secrets and things like that, and it's

 9 an automatic. So we are in that battle all the time.

10 In terms of whatever is found there, I frankly

11 am -- and I'm involved in a lot of major pharmaceutical

12 kinds of litigation. I'm not aware of anywhere the only

13 place the information was ever found was on a back-up

14 tape or some other disaster recovery.

15 Yet the cost of going through this -- you will

16 hear this refrain all day from everybody that represents

17 companies inside or outside. There is no bigger cost in

18 litigation today than electronic discovery. And so --

19 and it's already huge dealing with the active data. You

20 then take it to another level -- much less start going

21 to every country in which we sell a product, which is a

22 different issue -- and then the cost becomes

23 prohibitive. So hopefully that has answered your

24 question.

25 With respect to the early assessment

00073

 1 provisionings, again, I think talking about it is a good

 2 idea. I won't change the phraseology and take out

 3 references to preservation, in the sense that I think by

 4 having that in there -- I think that a written

 5 preservation order should be the exception, not the

 6 rule. And that by having it in there, you are going to

Page 30
0112frcp.txt

 7 be encouraging the parties that feel like there's a need

 8 for a written preservation order. And once you start

 9 down that process, down that path, it becomes very

10 difficult.

11 I've had the choice of, when we were looking

12 in pharmaceutical litigation, saying, well, what have

13 they done in some of the other cases? And we saw one

14 order that said, "preserve all relevant information." I

15 said, well, gee, from a drafting standpoint, that's easy

16 to accomplish, but from a trying-to-comply-with-it

17 standpoint, we felt it was fraught with peril. The

18 corresponding one was a ten-page one with technical

19 terms that I had no idea what they were talking about,

20 so we agreed on something in the middle.

21 But I think that the lawyers on both sides

22 would know that a detailed preservation order is

23 necessary. What I wouldn't like to see is just

24 knee-jerk, automatic having that in there. And that's

25 why I would change the language with respect to that.

00074

 1 PROFESSOR MARCUS: Mr. Brown, while you are on

 2 that subject, Mr. McCurdy mentioned the fact that

 3 Microsoft begins preserving or litigation hold

 4 activities upon notice of a lawsuit.

 5 Do your clients usually or often embark on

 6 some kind of effort to find and keep track of the

 7 information that may be important in cases once they're

 8 sued?

 9 MR. BROWN: Absolutely. Litigation holds are

10 not new. In fact, the companies that I deal with are

11 quite sophisticated because, fortunately or

12 unfortunately, they get sued quite a bit. So litigation

13 holds and kind of the common law duty to preserve are

14 well known and are exercised already in my view.

15 PROFESSOR MARCUS: You don't see a problem

16 with 37(f), the insistence that that be something that

17 was undertaken by the parties seeking protection and

18 safe harbor?

19 MR. BROWN: Reasonable steps to preserve I

20 think are the standard that should be there. In

21 terms -- but what I would suggest, however, is that

22 before sanctions get imposed, it has to be something

23 more than a negligence type standard. And that's why I

24 raised the footnote approach of an intention and

25 reckless standard.

00075

 1 Lastly, with respect to privilege, I endorse

 2 the committee's proposal of having a procedure about

 3 inadvertent production up front. The committee asked a

 4 question about whether a certificate of destruction

 5 would be appropriate. I think it would. And that

 6 certificate should also include that that information

 7 has not been circulated to anybody else. It's very easy

 8 to accomplish. It's not cumbersome, it's not

 9 burdensome, and frankly, if it were made under penalty

10 of perjury, I think it would be a deterrent to somebody

11 misusing the information.

12 JUDGE SCHEINDLIN: Quick question. What if it

13 has been circulated? Do we have an obligation

14 (indiscernible). Because by the time you realize it may

15 have been circulated to a hundred people, of whom they

16 don't particularly care to tell you who they are --

17 MR. BROWN: Well, I would then have a

Page 31
0112frcp.txt

18 provision whereby it goes to court for an in-camera

19 inspection --

20 JUDGE SCHEINDLIN: (Indiscernible.)

21 MR. BROWN: Yes. I would at least identify to

22 the Court in camera. Again, the goal of this is not to

23 get at -- have a document provision on the other end

24 either. So I think hopefully there could be a provision

25 in there that would accommodate both.

00076

 1 Those are the substantive comments on the

 2 specific proposals that I have. I would just like to

 3 commend and congratulate the committee on the very

 4 thoughtful work that it has done thus far. In its

 5 conclusion to the August 3 revision of the report, the

 6 committee suggested that it proceed with caution, and

 7 that's certainly a prudent approach for anything, any

 8 endeavor we're in.

 9 My only final comment would be the

10 recommendation that the committee proceed and the

11 committee act, because the bench and bar are thirsting

12 for clarity and guidance on this issue. And once the

13 federal rules are worked out, then hopefully the states

14 will follow shortly thereafter so that this monster we

15 know as electronic discovery that is fraught with

16 uncertainty and huge costs can be reduced.

17 I know there are other people eager to share

18 their views. I hope some of mine were helpful. Thank

19 you very much.

20 JUDGE ROSENTHAL: Joan Feldman on behalf of

21 Computer Forensics, Inc.

22 COMMENTS BY MS. FELDMAN

23 MS. FELDMAN: I want to thank you for

24 opportunity to present some of my opinions concerning

25 all of the hard work you've been involved in, and I want

00077

 1 to join with other witnesses that have been

 2 participating today in thanking you for the enormous

 3 amount of time you have put into this.

 4 I deal everyday with groups of attorneys and

 5 judges who are struggling with this issue who have

 6 approximately one-tenth of the knowledge of the people

 7 sitting in front of me. I'm hoping that through those

 8 rule changes and through this commentary, we can begin

 9 to clear away some of the fog of war that encircles us.

10 I have comments on only three of the rule

11 changes, and I'm going to limit my comments simply to

12 that rather than going through the list. They're brief

13 for the first two, which have to do with Rule 26(b)(2)

14 concerning discovery scope. My comments are restricted

15 to the issue of what's reasonably accessible.

16 This is an issue that stemmed from a

17 conversation concerning such media as back-up tapes or

18 offline data. I believe, as has been presented here,

19 that a description of offline data or inaccessible data

20 as defined as back-up data is probably already outdated.

21 I would like to talk about accessible or reasonable

22 accessibility.

23 Having said that, though, I do want to address

24 one issue that came up concerning back-up tapes, and

25 that is we too have seen a movement of people that are

00078

 1 gathering documents to produce documents where they may

 2 have moved active data to an offline or back-up state

Page 32
0112frcp.txt

 3 and then are raising Judge Scheindlin's argument that

 4 therefore it's accessible and they do not need to

 5 produce it. So there's already been some shifting

 6 there, and that's not the direction that we want to go.

 7 But I wanted to make note of that.

 8 I believe that a term of "reasonably

 9 accessible" should be substituted. I think that means

10 data that is relatively easy to get to and also to read.

11 It leads into a discussion of how information is

12 produced and how you're going to provide that

13 information to others, which will also hinge upon my

14 main comment today, which is going to be on the -- let

15 me go first to the second point, Rule 37.

16 JUDGE SCHEINDLIN: Reasonably accessible

17 should be substituted for what?

18 MS. FELDMAN: I'm sorry. Reasonably

19 accessible should be substituted for this issue of --

20 excuse me, whether it's a residual data or back-up data

21 versus active data.

22 JUDGE SCHEINDLIN: So you wouldn't use that in

23 the definition? You would leave it as "reasonably

24 accessible." You want to say back-up tapes are

25 inaccessible?

00079

 1 MS. FELDMAN: Exactly. That's correct.

 2 JUDGE ROSENTHAL: It's a functional

 3 description?

 4 MS. FELDMAN: A functional description. Thank

 5 you.

 6 Let me discuss the safe harbor provision, to

 7 which I have some objection. In our practice, we are

 8 routinely helping clients gather and produce

 9 information. So in many cases we are working with

10 people, historically defense counsel, who are gathering

11 information. We also assist people who are pursuing

12 that information, requesting parties.

13 I think it's important to note that companies,

14 even companies like Microsoft that are normally

15 producing parties, are often themselves in the position

16 of asking for data. So I choose to use very specific

17 terms in my work, requesting and producing parties.

18 When you are a requesting party, you are at a

19 disadvantage, because the producing party has the

20 knowledge of what they have. This is a given, whether

21 it's paper based documents or electronically stored

22 document. There's not anything we are going to be able

23 to do today to change that.

24 Once this fundamental fact is agreed to, I

25 believe that the burden for identifying responsive data

00080

 1 substantive in subsequent actions required to preserve

 2 that data most heavily rests upon the producing party.

 3 It's a burden that's part of doing business. It's part

 4 of the documents of doing business.

 5 People have struggled with this issue for

 6 years, and they've learned that they have documents in

 7 archival storage, and they're learned that it's a big

 8 issue to manage corporate records. And what we've seen,

 9 is, particularly in the last five years, the dawning

10 recognition that it's a big issue to manage your

11 computer based records. This is true.

12 It's not impossible. Many of our clients are

13 doing so in a very comprehensive way. They're doing it

Page 33
0112frcp.txt

14 as a course of business to manage their business.

15 They're doing it in light of discovery. But they're

16 doing it.

17 If we accept this practice, I believe that a

18 good faith effort, a good faith preservation of record

19 can be made by companies and should be expected to be

20 made by companies, in that they should recognize on at

21 least some basic level the primary information their

22 companies may have that may be relevant for litigation.

23 I think this goes beyond whether it's active

24 or whether it's on a back-up tape. I think it has to do

25 with companies understanding that information is

00081

 1 traveling through their companies, through their e-mail

 2 servers. They have information in their companies that

 3 are in database stores. They may have information

 4 that's traveling through their companies on their

 5 voicemail systems.

 6 What's recognized is they should use the tools

 7 at hand to begin to identify potentially responsive

 8 information or relevant information. They have an

 9 obligation to make this effort. To simply say that it's

10 too confusing --

11 MS. VARNER: You've heard the impassioned

12 discussion concerning disaster recovery. Do you

13 disagree with those comments?

14 MS. FELDMAN: I believe that it's very

15 difficult to restore and search back-up tapes. I think

16 that's the smallest problem facing us. They need to

17 respond to preserve data, and they need to respond to

18 produce data.

19 I think the biggest challenge to companies is

20 just recognizing that their data is in many locations

21 throughout the enterprise, often not even at the point

22 of a back-up tape.

23 To get to a discussion of text searching

24 means --

25 JUDGE SCHEINDLIN: Wait. I'm sorry to

00082

 1 interrupt. There's been a lot of back and forth so far

 2 this morning in that there is an indication

 3 (indiscernible) suspend the routine. And somebody says

 4 yes, somebody said no. What's your view? Is there ever

 5 a time when at least for a period of time it should be

 6 suspended until there's a snapshot? What's your view as

 7 an expert?

 8 MS. FELDMAN: I believe that the urgency for

 9 producing parties is in identifying likely data stores

10 that have deposits of data, whether they're active on

11 the line, possibly imperiled, i.e., routine destruction.

12 They need to identify the location of the majority of

13 responsive data and to have some understanding of how

14 it's --

15 JUDGE SCHEINDLIN: So you didn't answer. Is

16 there ever a time when a company should, either on its

17 own or by an order to suspend, at least for a period of

18 time --

19 MS. FELDMAN: Yes. I'll give you an example.

20 JUDGE SCHEINDLIN: Yes, there may be such a

21 time?

22 MS. FELDMAN: Yes, there may be such a time.

23 Let me give you a company example. 400 e-mail

24 servers deployed -- they have hundreds of thousands of

Page 34
0112frcp.txt

25 employees, 400 e-mail servers for hundreds of thousands

00083

 1 of employees. You have a case, and it involves one

 2 narrow group of employees, a group of engineers that are

 3 working on one auto component; right? Are you going to

 4 ask them to automatically cease overwriting the data on

 5 400 e-mail servers because they have a program that

 6 automatically deletes e-mail messages? Are you going to

 7 ask them to freeze that worldwide as a way -- as a

 8 safety issue? No.

 9 But I might say, if the people that are at

10 issue are primarily in the United States -- let's look

11 at some subset of 400 e-mail servers. Let's say the

12 five --

13 JUDGE SCHEINDLIN: But is the back-up done by

14 server?

15 MS. FELDMAN: Yes, the back-ups are done by

16 server.

17 JUDGE SCHEINDLIN: Well, others seemed to say

18 no, the back-ups aren't done by server.

19 MS. FELDMAN: The back-ups are done by server,

20 and in most cases you can identify using a back-up

21 system the servers that have been backed up. It's not

22 so mysterious. It's not difficult. We do this on a

23 routine basis. Now, we often have to help people

24 identify this. It's not the first thing that comes to

25 mind. But I can tell you that that's our first step,

00084

 1 and it's pretty much does; okay?

 2 So you begin to narrow it. You begin to

 3 narrow in and target --

 4 JUDGE SCHEINDLIN: So you could suspend

 5 backing up that particular server?

 6 MS. FELDMAN: That's correct. Now, I have a

 7 question for you. It's not really fair to ask 25

 8 people. You have your own safe harbor.

 9 JUDGE ROSENTHAL: No. We're just

10 inaccessible.

11 MS. FELDMAN: My question is -- and I think

12 why I do this issue is that people really do need to

13 move very quickly to begin communicating with each

14 other. I find that this is critical to this process.

15 If there's going to be any hope for reducing these

16 costs, these burdensome costs, if there's going to be

17 any hope for protecting the rights of requesting parties

18 to get the evidence that they need, that there has to be

19 a recognition of the urgency to get people together to

20 agree on their role and their the duties for

21 preservation, their identification of this information.

22 This is of great urgency. It begins in the earliest

23 stage.

24 So my question for you is, I'm making the

25 assumption that the meet and confer component of those

00085

 1 proposal changes is just about the most critical segment

 2 for all of us here. And I would like to talk to you

 3 about that. I would like to talk to you about the

 4 elements that I think need to be included in that

 5 section for meet and confer.

 6 I tried to keep my comments limited to broader

 7 topics, so that we wouldn't have to get into the nuances

 8 of today's technology, which, which the way, have

 9 already passed us by as we're sitting here in this room;

Page 35
0112frcp.txt

10 okay? So I don't want to get in the trap of working

11 with the committee to develop rules that are going to be

12 obsolete as soon as the laser ink is dry on the

13 document.

14 So I have some elements for a protocol for

15 meet and confer that I'd like to share with you. And it

16 involves a discussion in the form of production; it

17 addresses how the privilege waiver would be targeted; it

18 addresses preservation issues and steps; it must address

19 a determination of the nature and the logging of the

20 data to be reviewed; and I've included an element that I

21 believe has to be part of this section, which is

22 mutually agreed upon terms, mutually agreed upon costs.

23 These are things that I think have to be

24 present and I would like to see built into the language.

25 I want to elaborate on them today and get us out of the

00086

 1 realm of the abstract and into the world of concrete

 2 electronic discovery.

 3 Form of production. We have tossed this

 4 around. We have talked about reasonably accessible,

 5 reasonably usable. There are a few things that make

 6 electronic data reasonably accessible and reasonably

 7 usable. The primary way people do this is they will

 8 convert data to make it more usable. They'll take a

 9 Word document and they'll turn it into a .pdf document,

10 because they can move it around easier, they can affix

11 numbers to it, they can do a lot of things with it.

12 This has become in a way sort of a token of the realm in

13 electronic litigation discovery support efforts.

14 If you convert the document, what does it

15 mean? It means that you have to have informed consent

16 before you agree to accept converted documents. You

17 need to understand that as soon as I convert a document,

18 I am losing information that was in that native

19 document. So there has to be understanding of what this

20 means when you're talking about mode of production.

21 I heard a reference today to someone producing

22 electronic mail when the other side would have

23 difficulty reading that. If the other side said, you

24 know what, it's too difficult converting to a .pdf

25 format, that's fine. But I don't think they should be

00087

 1 able to come back down the road and say, you know, when

 2 they converted it, I lost some information. So again,

 3 it hangs on an understanding, a clear understanding of

 4 the intent, and a clear understanding of the method, and

 5 a clear understanding of what's going to be gained, ease

 6 of use versus what's going to be lost, perhaps

 7 information available in the native format.

 8 So there's an example where a dialogue has to

 9 occur to think that two parties are going to stand in

10 front of a judge, you know, that has only dealt with

11 these issues in the most cursory way. And to getting to

12 the nitty gritty fundamentals of this to me is

13 (indiscernible).

14 So form of production with all its nuances --

15 I may not be able to provide detailed notes to you about

16 what's some of these nuances are, but I simply want to

17 alert you to some of the issues that we see coming up.

18 The protection of privilege waiver component,

19 that needs to be addressed. Again, the determination of

20 the format of how the documents are going to be produced

Page 36
0112frcp.txt

21 is critical. If I submit a native format Word document

22 to you and that's how you can read it, then it's

23 possible that within that native format there's going to

24 be embedded comments from counsel.

25 Most of the software we're all using to do

00088

 1 this review process, to get it out the door, to do our

 2 privilege review doesn't go down to that level to read

 3 in that embedded information. So I may very well

 4 inadvertently produce privileged information to you,

 5 because the tools I'm using won't catch it. But if I

 6 agree that we're all going to use a format at that high

 7 level, that means none of us are going to be too

 8 concerned for reviewing embedded information, then let's

 9 agree to that and have some kind of claw back provision

10 if at a later date we find this kind of data.

11 But again, we need to understand that what

12 you're agreeing to in the early stages, some of these

13 issues, such as embedded data, might include privileged

14 information.

15 More critical to understand is that a lot of

16 discussion about back-up data is how problematic it is

17 and how much of it it is. I think that you haven't seen

18 anything yet until you walk into an American business

19 today and you ask them, what's active and what's online

20 on your file servers? It puts back-up tapes in the

21 shade. You have the data on these file servers that's

22 20 years old. Goes back 20 years.

23 Think of your own personal file storage

24 system. You don't have to share it with me. Think

25 about all the documents you may have. Think about a

00089

 1 company with thousands of employees, each person their

 2 own little library. And it's online. We're not even

 3 talking about what's on the back-up tapes. And then

 4 think about what's happening today with changes in

 5 technology. Your voicemail that used to just be on your

 6 telephone voice system, your voicemail could be today or

 7 perhaps as soon as next month now wrapped up and

 8 incorporated into your e-mail. So that is one location

 9 which would effectively, if you combine your voicemail

10 and e-mail, that could give you what? Easily a

11 25 percent increase in the amount of data on that server

12 it's accessible, it's online, and it's growing at an

13 incredible pace.

14 So we must deal with the volume of material.

15 You must have a conversation about it. And you're going

16 to have to make decisions. Plaintiffs are going to have

17 to make hard decisions about how far they want to go.

18 Producing parties are going to have to make hard

19 decisions about what they're going to look at. But

20 there has to be some agreement that you can't look at

21 everything. You cannot. You know why you can't?

22 Because you won't have time.

23 There are no tools to do that. There is no

24 technology great enough today to help you review this

25 information, whether it's active or inactive. There's

00090

 1 no text searching tool, there's no concept searching

 2 software that is going to get that down. So the parties

 3 have to agree they're not going to look at everything,

 4 they are to agree that they're going to use the same

 5 guidelines that they've used.

Page 37
0112frcp.txt

 6 They also need to understand that they need to

 7 get a handle on how much they may have to deal with and

 8 work backwards to see if there's a possibility they can

 9 do their review for privilege before they can produce --

10 whether it would be possible or even usable by discovery

11 cutoff or by trial.

12 The other element of this meet and confer

13 session would be to discuss preservation issues, how

14 fast -- this is my question to you. How fast can you

15 get these people to talk to each other? Because this

16 has to happen very quickly. This has to happen almost

17 immediately.

18 What is the burden -- what's the burden on

19 producing? They must have a knowledge of their inner

20 system. This means that the average attorney, in-house

21 counsel, the average attorney, outside counsel, must

22 have brought his or her knowledge from e-mail and

23 Internet and Word documents and Excel spreadsheets to an

24 understanding of enterprise technology. They have to

25 have some fundamental understanding of what takes place

00091

 1 at the server and for their clients.

 2 Clients can help, companies can help, and

 3 in-house counsel can help begin to create some kind of

 4 map that they keep up-to-date for where their data is.

 5 This is key for me to know what they have and where it's

 6 located.

 7 Having a consistent response to litigation is

 8 one way that we've seen more successful and larger

 9 Fortune 500 companies handle this topic. What does that

10 mean, "consistent"? We know every litigation is

11 different. We understand that. But companies can adopt

12 some consistent guidelines for the way they routinely

13 respond in electronic discovery. A lot of the costs

14 that they're talking about, a lot of this burden they're

15 talking about begins to come down. And the burden is on

16 the front end. The burden is on the end none of us like

17 to do. Organizing, chair kind of meetings, talk about

18 where this stuff is, how long it's kept.

19 JUDGE SCHEINDLIN: Proposal number 34 on page

20 two, where you said, "Parties should discuss any issues

21 relating to the nature (indiscernible) data, time

22 frames, and stipulations as to what constitutes

23 duplicate or near duplicate data." And that's the

24 specific proposal you're making?

25 MS. FELDMAN: That's correct. And on this

00092

 1 preservation issue, I'm just saying that knowledge of

 2 the system is key, because I believe it's going to be

 3 shared with the requesting party. At a minimum it's

 4 going to have to be shared with the requesting party.

 5 So I think it's a good time to hurry up and get

 6 acquainted with what's traveling through these company

 7 systems, what's on them.

 8 JUDGE SCHEINDLIN: You don't think our

 9 language now captures this?

10 MS. FELDMAN: No. I think what we've done --

11 and we've done a good job so far -- is we've addressed

12 this issue of back-up data, archive data, and so on.

13 But I want to shift the focus forward to what's out

14 there, what's current. Because I think that's actually

15 the biggest problem. I think that's a bigger problem.

16 And I think that's the problem that's going to continue

Page 38
0112frcp.txt

17 to grow. Also, it doesn't effect decisions concerning

18 preservation.

19 I can give you an example of one other case we

20 worked on, the Walmart case, where they have a database

21 that was filled with information that was needed by the

22 requesting party, by the plaintiff. I am going to -- as

23 Walmart stated and I'm going to state now, that database

24 was routinely purging itself every three months. This

25 doesn't have anything to do with back-ups. This is just

00093

 1 an online problem database. This was a few years ago.

 2 So they weren't -- they said we weren't aware, we

 3 weren't aware of how that data was stored, and we had no

 4 idea that it was being routinely purged.

 5 My suggestion to --

 6 JUDGE SCHEINDLIN: The language we have now is

 7 any issues relating to disclosure or discovery of

 8 electronically stored information. If the

 9 (indiscernible) were to develop some of the -- would

10 that be sufficient?

11 MS. FELDMAN: Yes, yes, I do.

12 JUDGE SCHEINDLIN: Okay.

13 MS. FELDMAN: I would also like to talk about

14 one of the ways of reducing the volume of data. And I

15 think it needs to be discussed and maybe needs some

16 further conversation. And that is, this is a key fact

17 in American businesses, that for each document that

18 exists, there are probably a minimum of five exact

19 copies of that document located throughout the system,

20 active and online, not including things that might be on

21 back-up tapes or on off-site storage.

22 This is a point that should be raised in a

23 meet and confer session as to how to address this. In

24 my long history of work in discovery efforts, which goes

25 back to some of the issues raised by the problems of the

00094

 1 new technology of the photocopy machine, we used to have

 2 to struggle with, how do you handle the duplicate? Do

 3 you preserve the original and only work with these

 4 photocopies?

 5 Well, we're sort of backing down. I don't

 6 mean to minimize the issue. Because a duplicate e-mail

 7 message that's in your inbox, that's a duplicate of the

 8 one that's in my inbox. We might agree that it's the

 9 same thing, but for an attorney who wants to show that

10 somehow it was different because it was in my mailbox,

11 then it's no longer a duplicate. So if you're typing up

12 e-mail messages that are in thousands of mailboxes and

13 issues like that, there has to be some agreement between

14 the parties, and they do have to take this on.

15 Another issue we may have to take on that may

16 be more difficult is more near duplicates. Let's take

17 the easiest example of documents that have been

18 converted to a .pdf format that still exist in a Word

19 format. While doing a privilege review for

20 attorney-client privilege, I look at the Word document,

21 and then I find out that there's 20 versions in a .pdf

22 format that are the same document, but it's not a

23 duplicate. In today's parlance, it's not a duplicate.

24 It's a different format; right? So do I have to review

25 it 20 times?

00095

 1 What if there was a word change? What if it

Page 39
0112frcp.txt

 2 was the a mass distributed letter where only the

 3 addressee would change, but there's 10,000 copies? Do I

 4 have to produce it 10,000 times, or can I make an

 5 agreement -- so one of the sections where you talk about

 6 the nature and volume of data, I would like them to

 7 address duplicates and near duplicates as well.

 8 All of those things help to reduce volume,

 9 which should be a primary concern here, to reduce the

10 volume of data down with good faith efforts, acceptance

11 by plaintiffs. There will be the inevitable arguments

12 you're going to hear that they're not going to get

13 everything. And at the same time it does put I believe

14 some emphasis on a good faith effort to identify

15 responsive data sources so there is an understanding of

16 what's there, and then the process of elimination can

17 take place.

18 The other thing that I wanted to add into this

19 meet and confer session, an element of it, is something

20 that wasn't originally in there, and that is something

21 that we're seeing to be quite problematic in electronic

22 discovery, and that is an agreed to glossary of terms or

23 an agreed to vocabulary as early on as possible.

24 I watched one of my clients spend over three

25 and a half million dollars and three months of a special

00096

 1 magistrate's time arguing on what the difference between

 2 what's a field in a database and what's a record in a

 3 database. I am not making that up. What I'm saying is

 4 that they chewed through millions of dollars for

 5 attorneys' motion for practice, our time, the court's

 6 time, because early on when the discussion came up about

 7 producing databases, they weren't clear on their terms.

 8 This is a big problem with technology, in that

 9 it creates a real arena of smoke and mirrors for people,

10 where they think they understand something and they

11 agree to it and they torture each other down the line

12 with discovery motion practices. I said this, but what

13 I meant was this. I think it's pretty easy to have some

14 fundamental glossary or insist that they actually have

15 agreed to it. It can be two or three pages. Again,

16 we'll provide you with samples for just a starting

17 place.

18 We feel that if the elements of a meet and

19 confer session are in place and agreed to with some

20 commentary and some guidelines for formal production,

21 how to conduct a discussion of the protection or

22 preservation issues, how to reduce the nature and the

23 volume of the material, this alone will probably be

24 enough to reduce the costs of electronic discovery and

25 move things forward and move things out of the courtroom

00097

 1 and into the conference room, where it should be taking

 2 place.

 3 And it's not a perfect world, and these aren't

 4 perfect solutions. I tried to give you some suggestion

 5 that would be as long-lived as possible. Technology

 6 changes. You've got to get to the basics. And if you

 7 wanted to stem the time it takes to produce, I think it

 8 really comes down to a reliance upon good faith

 9 conversation.

10 JUDGE ROSENTHAL: We appreciate your time very

11 much. Thank you.

12 We'll take a 15-minute break, and then we will

Page 40
0112frcp.txt

13 resume. Thank you.

14 (Morning recess.)

15 COMMENTS BY MR. ALLMAN

16 JUDGE ROSENTHAL: Mr. Allman.

17 MR. ALLMAN: Ladies and gentlemen, first let

18 me express my pleasure of being here today, a very

19 personal pleasure. Approximately five years ago, I

20 testified here in San Francisco before your committee

21 and addressed the issue of electronic discovery at that

22 time, little knowing that over the next five years what

23 I thought was a major problem would explode into the

24 incredible situation we now face, one which you are

25 addressing in a very fine and honorable fashion.

00098

 1 May I also comment on a trend that I have

 2 observed since I left my position as a general counsel

 3 approximately a year ago, and that is that there is now

 4 in America today and American business a very strong,

 5 almost explosive growth and interest in records

 6 retention programs involving electronic information.

 7 And those of us in the private practice know that our

 8 clients are demanding and they're insisting that we give

 9 them advice on how they can best update their records

10 retention programs and their information management

11 protocols to respond to the demands, not just of

12 electronic discovery, which is simply one part of the

13 picture, but to the need to better understand what

14 information must be retained, how long it must be

15 retained, and what form it is to be retained. And all

16 of this ties dramatically into the work that you're

17 doing here today. And I would like to suggest that you

18 keep that in mind as you go forward, and I will try to

19 comment on that as I make my comments here today.

20 What I'd like to do is organize my comments

21 around some of the catch phrases that we have seen in

22 the rules and address what I think has been some superb

23 filings that have been presented to you by the

24 participants, and I'd like to respond where I can to

25 some of those filings.

00099

 1 First, let me start with that magic phrase,

 2 "electronically stored information." It has not been

 3 floated here today as far as I can recall, so I'm going

 4 to venture into that, I guess, by saying that, first, I

 5 believe it is a useful distinction. It's a meaningful

 6 distinction. Someone made a comment to the effect that

 7 what's good about it is that it captures that

 8 information as held in certain places, and it's not just

 9 flows. So I really support that phrase, and I really

10 like the use of it.

11 But I am somewhat persuaded by some of the

12 comments that have been filed that perhaps it is a

13 subset of a document. Perhaps, as Greg Joseph said, the

14 bar would benefit greatly from not introducing yet a

15 third distinction between documents and things --

16 electronically stored information. Perhaps you could

17 leave it in 34(a) as part of the document. In other

18 words, the document would include but not be limited to

19 electronically stored information, dah, dah, dah.

20 JUDGE ROSENTHAL: Let me ask you two questions

21 about that. One of the criticisms that was raised about

22 "electronically stored information" as the label to be

23 put on this stuff we're talking about is that it might

Page 41
0112frcp.txt

24 be obsolete, because there might be changes in the way

25 information is stored, and that we might be better

00100

 1 served with a formulation such as "data compilation."

 2 Do you have a response to that or thought

 3 about that?

 4 MR. ALLMAN: I have one. And I don't regard

 5 that as too much of an issue for this reason. Data

 6 already is in the definition of Rule 34, and I don't

 7 believe you're suggesting we take it out. So there's a

 8 certain inconsistency between data complication and

 9 electronically stored information, but it's kind of a --

10 it's kind of a challenge, and it's kind of a positive

11 challenge to us to understand that by having those two

12 ways of looking at a document, we are really trying to

13 cover the whole waterfront. We're not confining it just

14 to information that contains a document like

15 characteristic, that is a way, an organized method, as

16 opposed to data, which I believe you probably intended

17 or the committee probably intended to be simply raw

18 information in tabular form. So I kind of like having

19 both of them in the rule, and I don't regard them as

20 inconsistent.

21 That's all I am going to say about

22 electronically stored information. I just wanted to say

23 that my views are changed a little bit after reading the

24 comments that have been submitted. I went through --

25 and I'm sure all of you did this too. I went through

00101

 1 and said to myself, how would it change if you did it?

 2 It would not be hard to do that.

 3 Second thing I'd like to talk about is this

 4 wonderful phrase, "presumptive limitations." I swiped

 5 that from Doug Shillman's comments in the AcaDoca

 6 magazine recently. I have not used that phrase before,

 7 but I like the idea of a presumptive limitation. I

 8 think that really captures what you're trying to do in

 9 Rule 26.

10 I think that guidance is needed. I think it's

11 a line that can be drawn. I don't believe that it is

12 necessary to spell out that back-up tapes or disaster

13 recovery tapes or anything else fall on one side or the

14 other. I think time and experience will demonstrate

15 where it goes.

16 I don't agree with Greg Joseph that everything

17 is a burden. This is not all about burden.

18 Accessibility is a different concept. Accessibility has

19 always been part of our rules. When I was just managing

20 hard copy discovery, the question in my mind always was,

21 is it accessible? Did I have to go to the dumpster?

22 Did I have to go to, as Greg said in his written

23 comments, did I have to go dig it up out of someplace?

24 Well, the reason you don't is because it's not

25 accessible. So I think you're updating the rules by

00102

 1 clarifying that it is a self-managed presumptive

 2 limitation on accessibility.

 3 MR. KEISLER: Mr. Allman, can I ask you a

 4 question about this issue?

 5 MR. ALLMAN: Yes.

 6 MR. KEISLER: I'm with the Department of

 7 Justice. And one thing that we are (indiscernible)

 8 increasingly seeing stricter documents kind of policies

Page 42
0112frcp.txt

 9 toward e-mails getting deleted 60 days after being

10 created, and they're not online. Frequently they say to

11 get back-up tapes in response to second requests under

12 (indiscernible).

13 I heard earlier that Mr. McCurdy said that

14 you've got to create document retention policies that

15 really are sensitive to the kinds of policies we adopt

16 in the rules, that they're going to be driven by other

17 business oriented considerations. I think you said at

18 the beginning that you've been consulting with your

19 clients for litigation about what kinds of document

20 retention policies they should be adopting.

21 Could you talk about to what extent you think

22 the rules as presently proposed or as might be changed

23 will actually affect the policies that your clients

24 adopt?

25 MR. ALLMAN: Yes. That's a very tough

00103

 1 question to answer.

 2 In the first place, let me answer the most

 3 obvious place it will have an impact, and that is in the

 4 formulation of the policies that address litigation

 5 holds. Probably half of the inquiries we get today are,

 6 how can we better design a litigation hold? Well,

 7 obviously, if we adopt the two-tier system and adopt the

 8 comment on page 34 of the report, to the effect that the

 9 parties in generals will satisfy their preservation

10 obligations by grabbing hold of accessible information,

11 that is going to influence to some extent how people

12 draft their litigation hold policy. So there's a very

13 concrete, specific example in the context of litigation

14 hold.

15 On the broader issue which you have just

16 raised -- and that is, what happens with respect to the

17 very understandable need to delete volumes of

18 information that is not currently believed to be needed

19 for active use? And that is to say the automatic

20 deletion after 60 days, which is the most dramatic

21 example. I routinely advise our clients, you cannot

22 adopt such a policy without having an out. Have an

23 ability to suspend those automatic deletions for

24 individuals who might be on that list that Greg

25 described, the hundred people who are going to be

00104

 1 involved. So I understand their concern in the Justice

 2 Department about those kinds of policies.

 3 But I would like to go back to the essential

 4 underlying point here, and that is that the volume of

 5 information that's being collected -- Joan just

 6 mentioned that everyone is now a little librarian. We

 7 each have our own libraries of information. That has to

 8 be controlled at some point. Storage technology is

 9 cheaper. EMC is doing a great job of having cheaper

10 storage, long-term storage. But there are limits, and

11 those limits are very practical.

12 If you have to produce -- if you have to go

13 through and produce all of that information, if you have

14 to account for its long-term storage, move it to new

15 kinds of servers, when the time comes that they're no

16 longer state-of-the-art, in other words, it makes sense

17 to weed out information that is irrelevant and

18 extraneous, and there's nothing wrong with that. And

19 the rules should not discourage that.

Page 43
0112frcp.txt

20 So that's the second area where I would

21 suggest that we have to be very careful. And nothing

22 I've seen, by the way, in your current proposal would

23 attack that or make it impossible.

24 The toughest area is where you get into the

25 word preservation. I must say that where I have ended

00105

 1 up -- and I'm a little surprised -- but where I've ended

 2 up is kind of where I started, and that is that the

 3 rules should not address the preservation obligations.

 4 They should not go into anything other than discovery.

 5 They should deal with inspection for purposes of copying

 6 for production of information, and they should leave --

 7 JUDGE SCHEINDLIN: Even telling people they

 8 should discuss that in their Rule 16 conference is too

 9 much for you?

10 MR. ALLMAN: I share the comment made earlier

11 that putting the word "preservation" in that list of

12 things to discuss is a little bit provocative and

13 perhaps unnecessary. But obviously early discussion of

14 any issue is a good idea. Joan listed a very good set

15 of core areas --

16 JUDGE SCHEINDLIN: She put preservation --

17 MR. ALLMAN: She did.

18 JUDGE SCHEINDLIN: That's why I'm asking you,

19 are you saying that the Rule 16 checklist should or

20 should not encourage the parties to discuss preservation

21 issues? It's not like we're discussing a preservation

22 rule. Should it be on the list?

23 MR. ALLMAN: I would not put it in a rule. I

24 would not have a problem with it being mentioned in the

25 comments, but I would not put it in the rule. I think

00106

 1 it would be better to have the parties discuss what

 2 applies to that particular case.

 3 JUDGE SCHEINDLIN: What applies to the case

 4 once the case is filed. But your reason for not wanting

 5 to put it there -- you said "provocative." What do you

 6 mean by that? What is the harm of having it in that

 7 list?

 8 JUDGE ROSENTHAL: Can I follow up on that?

 9 Its not like the problem is going to go away if it's not

10 put in the list of things to talk about.

11 MR. ALLMAN: I understand that.

12 JUDGE ROSENTHAL: It's the 800-pound gorilla

13 in the room.

14 MR. ALLMAN: It is, and it isn't. I would say

15 that in probably 75 to 85 percent of your cases, it is

16 not in fact a problem. The great majority of cases are

17 tried -- the information is collected and preserved

18 without a lot of disputes over preservation.

19 What I'm concerned about is creating disputes

20 that are unnecessary. Where there is a real, honest

21 dispute as to whether or not -- let's say the Justice

22 Department sends me a second request, and I've had them,

23 where you ask me for our back-up tapes. I am definitely

24 going to put a hold on my back-up tapes until I can

25 negotiate with the Justice Department a more reasonable

00107

 1 rule, which would probably be something like this. I

 2 will save what I have as to the past, but as to the

 3 future, we will put in place an effective litigation

 4 hold process, make a deal with you guys, and will not be

Page 44
0112frcp.txt

 5 saving the back-up tapes going forward.

 6 MR. HEIM: Are you concerned with preservation

 7 enough of the things that we discussed that it will

 8 inevitably lead to kind of routine preservation orders

 9 that will be generic and then dealing with the

10 uncertainties of preservation orders, or is it something

11 else?

12 MR. ALLMAN: That is part of what I'm

13 concerned about. Almost by definition, a preservation

14 order is entered at a time when you do not in fact know

15 what is in the information you're being asked to

16 preserve. And yet, at least as currently written,

17 Rule 37(s), prohibition on the violation of a

18 preservation order, is an invitation to an inadvertent

19 violation of a preservation order. I have real concerns

20 about blanket preservation orders.

21 There are times, of course -- one of the

22 employment lawyers made a very good point -- that if

23 let's say you have these enterprise database systems and

24 the company is showing a resistance to preserve or to

25 take selective snapshots of a dynamic database, then you

00108

 1 should come to the courtroom and you should obviously

 2 air it and have a carefully crafted preservation order

 3 that addresses the needs of that particular case.

 4 MR. CICERO: Mr. Allman, I have a question.

 5 First of all, I was struck by three key points that you

 6 set forth as key issues on the second page of your -- I

 7 think it's the second page. I wanted to ask you about

 8 the second one.

 9 But before I do that, you stress the issue of

10 preservation and production in both the first and third

11 points. Now, it seems to me that it is an important

12 issue. People know it is. The kinds of cases that I

13 get in -- not as many as you have, I'm sure -- you get a

14 request for preservation orders right at the outset for

15 agreements -- or either an agreement and so on. So I

16 guess I'm a little puzzled as to why we wouldn't want to

17 deal with it specifically.

18 Let me ask you another question. I was very

19 intrigued by your second key issue, that the rules at

20 the present time are rigid and inflexible, and they

21 provide inadequate inventive to restrain requesting

22 parties from the unreasonable demands for electronic

23 information. Anyway, you suggested how we might

24 incentivize parties not to make unreasonable demands.

25 And I guess -- do you have any suggestions on

00109

 1 that? Or are we simply saying, well, it's like original

 2 sin. It's there. They're going to make unreasonable

 3 demands, and therefore we have to provide safe harbor

 4 and we have to provide whatever else in the rules in

 5 order to deal with it.

 6 Do you have any thoughts on incentivizing

 7 parties, whether it's in the initial conference or what?

 8 MR. ALLMAN: I suggest two answers to that

 9 question in my paper. The first deals with a little bit

10 more on cost allocation by perhaps including a phrase

11 within the phrase about terms and conditions that would

12 indicate perhaps a presumptive shifting of costs or

13 allocating of costs. Sharing of costs is a good word.

14 MR. CICERO: Most people reading that though

15 would take that as a suggestion that more costs be

Page 45
0112frcp.txt

16 shifted to the requesting party; no?

17 MR. ALLMAN: Yes. That's my point.

18 MR. CICERO: Well, how does that incentivize

19 requesting parties not to make unreasonable demands?

20 They'll have to pay the costs?

21 MR. ALLMAN: That's the rather simple kind of

22 Texas based experience that I'm suggesting.

23 JUDGE ROSENTHAL: Free market.

24 MR. ALLMAN: Free market. There you go. I

25 also suggest at the end of my paper that early

00110

 1 discussion does indeed play a role here, and also the

 2 idea that the parties know that the routine deletion of

 3 information caused by the ordinary operation of a system

 4 that's done in good faith, which I prefer to -- that's

 5 my formulation. I prefer the good faith formulation. I

 6 believe that that will tend over time to discourage

 7 people from making unreasonable demands.

 8 I may be naive in this. It may be that it's

 9 just the flip side concern that the other folks

10 expressed, that once you give us a presumptive

11 limitation, people are going to try to shift everything

12 to the side that doesn't require the preservation of

13 production. I don't think probably that point or even

14 perhaps my point is really the answer here. Maybe the

15 answer is that we try to find a middle ground, such as

16 the committee suggested.

17 MR. HEIM: The concern about cost shifting as

18 I understand it, is that what in fact is an unreasonable

19 demand is frequently a gray area that's difficult for a

20 court to kind of filter its way through at that point in

21 the litigation. If we add some kind of cost shifting

22 provision or some sense that the rule should go in favor

23 of cost shifting, you really are -- you're affecting the

24 small litigant, you're affecting the pro se litigant,

25 you're pushing the rules in the direction that we've

00111

 1 never wanted the rules to go. It's the old saw about

 2 the English courts that said the courts are open to all

 3 like the Savoy Hotel.

 4 How do you deal with that?

 5 MR. ALLMAN: Well, what I proposed in my

 6 language is that it would be as follows: That there

 7 would be appropriate shifting or sharing of

 8 extraordinary costs. And I guess those are weasel

 9 words, but really I've tried to address that concern.

10 Because obviously there are times when it is totally

11 inappropriate to require even extraordinary costs to be

12 shifted to someone who either can't afford them or in

13 the case -- in some of the cases, some of the employment

14 cases there are times when the information really is

15 only in your possession, and it's something that's

16 needed for the case.

17 JUDGE ROSENTHAL: You raise a -- go ahead,

18 please.

19 MS. VARNER: Would you discuss with us your

20 concern about the identification part of the proposal.

21 MR. ALLMAN: Yes. That was on my list to try

22 to deal with. And I recognize that this is a difficult

23 concept, and I recognize that the fairness demands that

24 a party to whom you are asking to take action and to

25 question and to raise early what is inaccessible when

00112

Page 46
0112frcp.txt

 1 they don't know what you think is inaccessible, I

 2 recognize they're at a disadvantage.

 3 I would point out that historically, even in

 4 the hard copy world, we never asked parties to make a

 5 list of what it is we weren't going to go and look and

 6 do and chase down and find former employees. You know,

 7 we never put that burden on people. I think there was a

 8 reason why we didn't. And that is because it would get

 9 you off into work product, it would get you off into an

10 area where there would be endless amounts of questions.

11 So that is fundamentally my problem with the

12 identification process.

13 Having said that -- and I proposed language

14 that does not use that word. It turns your language

15 from a negative to a positive, because I think that

16 makes it parallel to the way we've always written the

17 rules, and that's why I recommended that.

18 I would think that in those 15 percent of the

19 cases where preservation is an issue and where

20 inaccessibility is really an issue, I would think that

21 the parties would naturally discuss this, and I would

22 think that the requesting party would press the

23 producing party, what is it? What do you have? What

24 systems do you have that you haven't taken into account?

25 And I would expect there to be a dialogue.

00113

 1 And if there wasn't a dialogue and if it was

 2 unsatisfactory, I would think the courts could be asked

 3 and should be asked to step in. Maybe you have to take

 4 a deposition or two. Maybe you're going to have to

 5 submit interrogatories. But I'm told by the

 6 identification process, and that's the reason why I --

 7 JUDGE SCHEINDLIN: At the beginning of the

 8 day, if it was broad enough so that you just said, this

 9 is what I'm not giving you in terms of systems, I mean,

10 I'm not giving you our back-up tape system -- I need a

11 couple more examples of words. Joan, do you want to

12 help me? Examples of the big things.

13 MS. FELDMAN: (Indiscernible.)

14 JUDGE SCHEINDLIN: Because you're making the

15 cut. You're withholding something that exists, that --

16 it doesn't capture data, but it's your decision to say

17 it's inaccessible. I'm not talking about a privilege

18 log type of identification. But just those things,

19 those systems you're not producing, those data capturing

20 systems.

21 Joan, can you --

22 MS. FELDMAN: Yes. For example, you might

23 say, (indiscernible) we're not collecting removable

24 data, and we're not turning in back-up tapes. It's more

25 of a classification --

00114

 1 JUDGE SCHEINDLIN: Thank you. You just had to

 2 name the locations that you're not turning over because

 3 you're not considering that accessible.

 4 Is that so burdensome?

 5 MR. ALLMAN: That does not capture adequately

 6 what is inaccessible in a given case.

 7 Let me give you an example. The phrase

 8 "enterprise systems" was used by someone here recently.

 9 The typical company is going to have hundreds, hundreds

10 of databases and enterprise systems, dynamic systems,

11 that they are simply not going to be looking at for your

Page 47
0112frcp.txt

12 particular case.

13 I'm not sure that any of us could ever

14 adequately write a description of every single thing

15 that we're not looking at. And I think it would be kind

16 of dishonest frankly to give you a laundry list that

17 says maybe five categories. I'm not sure it's a very

18 honest list, and I frankly don't think --

19 JUDGE SCHEINDLIN: Well, you have intrigued

20 me. That's what I want to know. We're not looking at

21 any of our foreign locations. Okay. Now, I, as the

22 requesting party, say, oh, he didn't look at the foreign

23 locations? Well, I have an argument as to exactly why

24 you should be looking at those, knowing the case as I

25 do. It's important to know that you didn't go there.

00115

 1 MR. ALLMAN: Your Honor, if the requesting

 2 party wants me to look at the foreign locations, they

 3 have an obligation to put that in their request.

 4 JUDGE SCHEINDLIN: It would be 90 pages long.

 5 MR. ALLMAN: No, no, no. It won't be. Well,

 6 sometimes they already are.

 7 JUDGE ROSENTHAL: Is it sufficient to get to

 8 where the rule is intended to go if the responding party

 9 says, here, I'm giving you what I could get from my

10 active data or words to that effect.

11 Does this sufficiently convey that there has

12 not been any attempt to examine or retrieve information

13 that is not active data?

14 MR. ALLMAN: I honestly don't know.

15 JUDGE SCHEINDLIN: Well, it's worse than that.

16 In the hypothetical you just gave, you are not giving

17 all of your active data. You didn't go to your foreign

18 locations.

19 JUDGE ROSENTHAL: Domestic data.

20 JUDGE SCHEINDLIN: Yeah. You have to do

21 something --

22 MS. VARNER: This is one thing to do in a room

23 filled with people. But your concern is this represents

24 sort of a departure from the way things have been done

25 in the past, that you didn't have to identify X, Y, Z.

00116

 1 Could you shelve some of your concern if the

 2 rules said you could either identify where you didn't

 3 look or you can identify where you did look?

 4 MR. ALLMAN: I think that's what Judge

 5 Rosenthal was just suggesting, and I think Greg made

 6 that same suggestion. I'm not sure that that

 7 accomplishes a whole lot either, because you're then

 8 getting into the question of duplications. Why did you

 9 go only to this certain place and not to this other

10 place to get to the copy of this same document?

11 I think I would prefer to let the free market

12 work here. In other words, have the requesting party do

13 the best job they can to specify what they want. If the

14 responding party, they think it's too onerous, too

15 broad, they can state that they think it's too broad.

16 Then the parties could, as in a normal process, either

17 have a Rule 37 motion to compel, or you could more --

18 hopefully you could handle it in your early conferences

19 and maybe work out --

20 JUDGE SCHEINDLIN: If it's the way the rule is

21 proposed now, you have a burden to prove that stuff you

22 withheld on accessibility grounds is inaccessible, which

Page 48
0112frcp.txt

23 was the burden before the burden shift. Before the

24 seeking party gets to show good cause, you can say, I

25 hereby prove that what I said was inaccessible is really

00117

 1 inaccessible. So the cut is accessibility, not burden.

 2 I didn't look in the foreign location because it was

 3 burdensome. The question is to try to make a second

 4 tier for that which is inaccessible. Unless you don't

 5 like the two-tier approach.

 6 MR. ALLMAN: Oh, I love the two-tier approach,

 7 but I don't like the idea of explicitly spelling out a

 8 burden on who has to prove accessible or inaccessible.

 9 I think that that's something that should be done as a

10 natural assault. What I just said --

11 JUDGE SCHEINDLIN: (Indiscernible) -- burden;

12 right? We're saying that the requesting party now has a

13 burden under tier two to make a good cause showing to

14 the Court. To balance that, we said, since you're

15 withholding material on the grounds of inaccessibility,

16 you first have the burden to show that before the burden

17 shifts to a requesting party to show good cause.

18 Because that's new, and a lot of the comments have

19 picked that up and say, you're changing the federal

20 rule.

21 MR. ALLMAN: I understand that.

22 JUDGE SCHEINDLIN: So if your (indiscernible)

23 threshold showing inaccessibility --

24 MR. ALLMAN: I don't believe that you do.

25 JUDGE SCHEINDLIN: Would you be satisfied with

00118

 1 a reformulation of the rule that would keep a burden on

 2 the responding party to show inaccessibility but would

 3 not have that triggered by this identification

 4 requirement proactively?

 5 That is, on your diagram, once there was a

 6 request and an objection and the objection asserted that

 7 certain categories of information sought are not

 8 reasonably accessible, you go to the Court, and the

 9 Court looks to you as the responding party to say, okay,

10 now show me that that's really inaccessible, and the

11 requesting party would then have to show good cause.

12 MR. ALLMAN: I recognize that's somewhat

13 inconsistent with what I said a second ago, but I would

14 not have a problem with that.

15 I have a little bit of a problem with spelling

16 out burdens in the rules. I think that's something

17 courts develop as they apply them.

18 JUDGE ROSENTHAL: Isn't putting a presumptive

19 limit another way of saying who's got the burden?

20 MR. ALLMAN: Yeah. I think it's inherent,

21 frankly. That's what I meant by spell it out. I think

22 it's apparent that you are lying on a line and saying

23 this falls on the inaccessible side of the line. I

24 think when challenged, you have the burden of proving

25 that that's where it properly belongs. I just don't

00119

 1 think it has to be in the rules.

 2 PROFESSOR MARCUS: If there's no

 3 identification, isn't the next step going to be

 4 discovery about what was withheld, or is that something

 5 you expect would happen anyway?

 6 MR. ALLMAN: That's what I said earlier. In

 7 95 percent of the cases, 85 percent of the cases, this

Page 49
0112frcp.txt

 8 is not going to arise, this is not going to be an issue.

 9 Where it is an issue, I would hope the parties

10 would discuss it at their first opportunity. If they

11 can't resolve it --

12 PROFESSOR MARCUS: Wouldn't that be

13 identification, their talking about it, from the

14 perspective of the producing party?

15 MR. ALLMAN: In the sense that identification

16 means informed discussion of what other information that

17 the requesting party seeks that the producing party has

18 not provided, that is a form of identification. I would

19 call the whole process of discussion to be the

20 identification process. If it's necessary to have

21 discovery as part of that, yes, that would be part of

22 it.

23 MR. HEIM: I think I'm following up on

24 Professor Marcus' question. I'm not entirely certain.

25 Do you see it as a concern, or maybe it's not

00120

 1 a concern, that as the rule, as the proposed rule is

 2 currently framed, that there is almost no reason why a

 3 requesting party, after the responding party has

 4 identified what it thinks is not reasonably accessible,

 5 there is virtually no reason why the requesting party

 6 shouldn't take a shot at having that party justify its

 7 identification?

 8 Because it doesn't have to make any showing at

 9 that point in time. It just says, well, prove it. I

10 mean, why wouldn't everybody want to do that? Because

11 if they can't satisfy the Court that it wasn't

12 reasonably accessible, then you're home free.

13 MR. ALLMAN: You know, I'm not too concerned

14 about that for this reason. I think with the passage of

15 time and a few court decisions that analyze the way this

16 works, I don't think this is going to be much of a

17 problem. I think we're going to come to an agreement

18 fairly early on as to what is fairly reasonably

19 accessible and what is not.

20 I just don't see requesting parties -- and to

21 the extent they do, the extent they abuse it, there are

22 ample opportunities to take care of that. I think I'm

23 not worried about that.

24 JUDGE HAGY: The way the rule was written

25 down, it won't take very long for defense counsel to

00121

 1 come up with a definition that will be spit back in

 2 response to every interrogatory as to the material

 3 you're holding back. You're holding back, blah, blah,

 4 blah, blah, blah, and such other materials. Boom, you

 5 put the burden on the other side. That seems to me it's

 6 going to work that way.

 7 MR. ALLMAN: No question. And Judge

 8 Scheindlin kind of suggested with Joan's help what it

 9 would say. But I am troubled by doing something that

10 becomes a form and doesn't have meaning to it. And I'm

11 especially troubled because it deviates from what we've

12 done in the past. That seems kind of dishonest to me.

13 JUDGE HAGY: If it doesn't go that way, then

14 the form comes on the response for the response. I am

15 providing this information positively, and they say --

16 they ask for this other information. Then you come back

17 and say it's not accessible. It seems to me it's going

18 to develop that way, whichever way.

Page 50
0112frcp.txt

19 MR. ALLMAN: Well, you're probably right.

20 This is a tough one. This is a very tough issue.

21 Luckily, I get a chance to express my views, so those

22 are my views.

23 JUDGE ROSENTHAL: You're right. Let me ask

24 you about your views on Rule 37 briefly.

25 MR. ALLMAN: Yes.

00122

 1 JUDGE ROSENTHAL: You suggested that you

 2 thought that the higher level of culpability, that

 3 negligence should be present before there was an

 4 ineligibility for the safe harbor.

 5 There's been in a number of comments concerns

 6 about putting the level of culpability a higher level of

 7 concern, that it would be too subjective, it would not

 8 sufficiently capture the need for the Court to be able

 9 to react to a whole range of possibly sanctionable

10 behavior that falls far short of death penalty kinds of

11 sanctions, and that there is a concern about encouraging

12 parties to purge information on an accelerated basis,

13 which would be even more of a license.

14 Can you respond to some of those concerns in

15 defense of your position that the higher level of

16 culpability is desirable.

17 MR. ALLMAN: Interestingly enough, the way

18 your proposal reads, the culpability standard does not

19 explicitly apply to the preservation order in that

20 footnote. I don't know if that's an important

21 distinction in your minds or not.

22 I meant that to include the preservation

23 order. So I kind of enjoyed the dialogue that you had,

24 Dr. Scheindlin, about the risks. And I tend to share

25 the concern that even a violation of a preservation

00123

 1 order that does not require a certain amount of

 2 wilfulness is perhaps unfair because of the likelihood

 3 that most preservation orders entered at a time when

 4 they don't exactly know what they are ordering preserved

 5 might be inadvertently violated.

 6 So I would like to see -- there's a great line

 7 in the commentary to Rule 37 that what you're trying to

 8 focus on is things that get lost when parties don't

 9 intend for them to get lost, or words to that effect. I

10 apologize for not remembering exactly how it's phased.

11 But that deals with intent.

12 And I do believe that people who

13 intentionally -- people who have, for example, a reason

14 to believe that a particular back-up tape contains

15 information that's solely responsive to this particular

16 case, I do not believe those people can walk away from

17 their obligation to preserve that information. But I

18 don't believe that belongs in the rule, and I don't

19 believe that's the place to deal with it.

20 I think that Rule 37 should be careful and

21 focus on what it's intended to be focusing on, which is

22 simply advising the practicing bar and the courts that

23 the rules are not intended to force people to stop using

24 productive systems in the manner that they routinely do

25 without any intention to exfoliate or to hide the

00124

 1 information. That's why I like the concept of good

 2 faith, and that's why I prefer that.

 3 JUDGE SCHEINDLIN: In your proposal, on page

Page 51
0112frcp.txt

 4 five, it looks like you do use the phrase "operation of

 5 good faith." (Indiscernible) -- unless the party issued

 6 in the action requiring the preservation of that system.

 7 I read that, and I had a very bad reaction.

 8 You are inviting a preservation order in every case. I

 9 really think that would facilitate a wholesale mad dash

10 for preservation orders. Did you really want to stand

11 by that, that we put that --

12 MR. ALLMAN: Let me be candid with you. Since

13 writing this, I have -- as I stated a few minutes ago,

14 I've really changed my position on preservation. I

15 don't think it should be mentioned at all in the rules.

16 I would not put that in there, no.

17 Actually, what I did kind of enjoy was the

18 comment made by one of the earlier speakers, where they

19 took something I wrote back in 2000, where I wrote that

20 nothing in these rules is intended to require the

21 suspension -- that was my original proposal to you folks

22 a number of years ago. And you know, there is something

23 to be said for that simple formulation. But I think

24 we've come probably too far now to go back to that.

25 JUDGE SCHEINDLIN: In your testimony today,

00125

 1 which I thought was very candid, you said you would tell

 2 the client to suspend that for a period of time until

 3 you negotiate or got a court order or figured out what

 4 to do. I thought you said you would actually advise a

 5 suspension. You didn't say that --

 6 MR. ALLMAN: I didn't mean to say that as a

 7 black letter rule.

 8 JUDGE SCHEINDLIN: No, no. At the pending --

 9 MR. ALLMAN: Yes. And I believe in the Sedona

10 Principle 8 -- I think it's 8 -- that says that it's the

11 responsibility of each party who has electronic

12 information to determine how best to preserve the

13 information on their systems.

14 JUDGE SCHEINDLIN: There's a suggestion right

15 in the rule that you should never have to suspend the

16 regular operation of your system.

17 MR. ALLMAN: That's not what the rule would

18 say. It would simply say that nothing in these rules is

19 intended to require that. That doesn't mean that the

20 party would not exercise independent discretion based

21 upon their common law obligation. Which could be

22 sanctioned, failure of which could be sanctioned. As

23 you well know, because you did it. You issued a

24 sanction, you know, that's based on your inherent power

25 and not on your ruling.

00126

 1 Well, thank you, Your Honor.

 2 JUDGE ROSENTHAL: Thank you very much,

 3 Mr. Allman.

 4 Mr. Judd.

 5 COMMENTS BY MR. JUDD

 6 MR. JUDD: Thank you, Judge Rosenthal, and

 7 Members of the Committee. Thank you for giving me this

 8 opportunity to talk today.

 9 I first want to commend you for starting

10 what's been a vigorous national debate about these

11 issues. And certainly hardly a gathering of lawyers

12 today occurs without some discussion of what's going on

13 with e-discovery, either on a practical, personal basis,

14 or in connection with your proposed rules amendments.

Page 52
0112frcp.txt

15 And that's good and healthy.

16 I want to focus my comments on two fairly

17 narrow points that have been discussed at some length

18 already. The first one is the discussion in Rule 26(f)

19 that would require parties to initially discuss in their

20 meet and confer the idea of what documents would be

21 preserved, preserving discoverable information. And

22 while I think that's appropriately listed in the notes

23 or more generally, I think that the rule itself ought to

24 focus on identification of discoverable information, the

25 discovery and identification of information. And I

00127

 1 think naturally from that a discussion of preservation

 2 is likely to occur when it arises.

 3 I'm concerned that there not be an

 4 overemphasis in the discovery rules on the preservation

 5 obligation for many of the reasons already discussed. I

 6 think that in those cases where a focused, tailored

 7 preservation order is appropriate, certainly the courts

 8 have that power and certainly the parties generally tend

 9 to be sophisticated enough to identify those situations

10 where one needs to be entered.

11 PROFESSOR MARCUS: Mr. Judd, one of the

12 concerns that could be behind having something in the

13 rule is that there seem to be circumstances in which

14 later on there's a big problem with the preservation of

15 material that would have been solved if it had been

16 thought out earlier on.

17 Are you saying that that actually doesn't

18 happen?

19 MR. JUDD: Is the question does it not happen,

20 that there are problems afterwards?

21 PROFESSOR MARCUS: Are there no significant

22 number of cases in which two years into the case, it

23 turns out that material, particularly electronically

24 stored information, that existed when the case is filed

25 is no longer in existence, and now somebody is asking

00128

 1 for sanctions as a result of that change?

 2 MR. JUDD: I think that happens, of course.

 3 But let me --

 4 PROFESSOR MARCUS: Wait a minute. Calling

 5 upon people to talk about this at the beginning

 6 explicitly, is it likely to reduce the incidence of that

 7 sort of thing?

 8 MR. JUDD: It's possible, certainly. My

 9 experience with meet and confer frankly is it's like

10 playing poker, that there's not a lot of meaningful

11 exchange of information. But I am not saying that that

12 shouldn't be a subject of discussions in an initial meet

13 and confer. I'm just saying that the way the rule is

14 now written, where the discussion is focusing on the

15 preservation of discoverable information instead of --

16 I'm suggesting that the preservation item either be part

17 of the note or one of the items in the list that

18 follows, but that the principal discussion should be on

19 the identification and discovery of information.

20 I mean, let me be frank. One of the first

21 things we talk about when we're retained in a new

22 litigation with our client is what have you done to

23 preserve documents, to preserve information. We

24 frequently have that discussion even before we're

25 retained, you know, to flag the issue that there are

Page 53
0112frcp.txt

00129

 1 substantial preservation obligations, to try to get them

 2 thinking early on what needs to be done to avoid this

 3 problem that you raise.

 4 My point is simply that when the two counsel

 5 enter into their meet and confer, the focus ought to be

 6 on some discussion as to what information you reasonably

 7 intend to seek and what is it that we have and to try to

 8 find some common grounds that we can enter into, ideally

 9 some agreement. If not an agreement, at least focus the

10 issues so that when we have our initial case management

11 conference with the judge, we can flag those issues and

12 either have an appropriate discovery plan or some type

13 of preservation order.

14 But again, it seems to me that the focus of

15 the discussion ought to be on what information is

16 discoverable. I believe that naturally preservation is

17 a subset of that. And that's my simple point.

18 The second point I want to make is with

19 respect to the proposed amendment to Rule 26(b)(2), and

20 like every other defense lawyer who's gotten up here, I

21 certainly endorse the two-tiered approach. And I

22 certainly have found as a matter of course that back-up

23 tapes are frequently listed in initial discovery

24 requests, and certainly this rule addresses the

25 inaccessibility and the difficulties inherent in that.

00130

 1 I would point out, however, that the way that

 2 the rule is written, it focuses really only on the

 3 question of accessibility. And even the notes focus on

 4 the question of accessibility and what's accessible or

 5 inaccessible versus active and inactive. And I'm afraid

 6 that's buried in that, even though there's no change to

 7 this opportunity to make an objection on burdensome

 8 grounds and to then initiate the litigation or the

 9 discussion about whether even active data or active

10 documents are overly burdensome or not and whether some

11 sort of cost shifting or cost sharing ought to be

12 undertaken.

13 What I think should occur is that, at least in

14 the notes, that there ought to be some discussion

15 emphasizing that none of this has changed, that

16 burdensome objections are still appropriate, and that

17 there is an existing method to identify and to litigate

18 where something is overly burdensome, where some sort of

19 cost sharing would be appropriate. And I think that the

20 amendments would be well served if that discussion, a

21 short paragraph, is contained in the notes to emphasize

22 that.

23 Yes?

24 PROFESSOR MARCUS: Is it adequate to say, as

25 on page 13 in the bottom paragraph, or 55, that if a

00131

 1 showing -- that if there is good cause to seek

 2 inaccessible material made, the rule that is proposed to

 3 be added does not apply, but the limitations in

 4 26(b)(1), Roman numeral one, two, and three, could still

 5 apply? It sounds to me like that's what you're talking.

 6 MR. JUDD: I'm saying I think that it's still

 7 provided in the rule itself. I think there's still an

 8 acknowledgement that nothing has changed with respect to

 9 the Court's power to appropriately limit or structure

10 discovery.

Page 54
0112frcp.txt

11 What I'm saying is that the note itself is

12 almost single-mindedly focused on the discussion of

13 accessible versus inaccessible. And I think that it

14 would be useful to the bar and the judiciary to ensure

15 that the note highlights the fact that even accessible

16 information or that the discovery and production of

17 accessible information can still be exceedingly

18 burdensome.

19 JUDGE SCHEINDLIN: You're saying the first

20 tier.

21 MR. JUDD: Yes.

22 JUDGE SCHEINDLIN: But when we cover the

23 concept of tier two, we should remind the reader that

24 the proportionality test still applies to the

25 accessible, the tier one. That's all.

00132

 1 MR. JUDD: Precisely.

 2 JUDGE ROSENTHAL: Is it your suggestion that

 3 that language be moved from the note into the rule?

 4 MR. JUDD: I don't think so. I don't think

 5 that's necessary. But again, these are going to be

 6 parsed over and cited and recited, and you know what we

 7 do with whatever you write. And again, I --

 8 JUDGE ROSENTHAL: I think you flatter us.

 9 MR. JUDD: We try to take what we can and

10 offer what isn't there. But I do think that would be a

11 useful addition in the notes again, just to highlight

12 that.

13 I want to thank you.

14 JUDGE ROSENTHAL: We appreciate your comments

15 very much. Of course, we all remember that the notes to

16 Rule 23 talk about how 23(b)(3) will not ordinarily be

17 appropriate in certain kinds of mass harms and that

18 language.

19 Thank you very much, Mr. Judd.

20 Mr. Smoger.

21 COMMENTS BY MR. SMOGER

22 MR. SMOGER: Thank you for giving me the

23 opportunity to talk. I have written comments with me.

24 I just recently got back from Thailand and didn't get

25 them to you before, and I will present them to you.

00133

 1 The things that I'd like to talk about are

 2 primarily I think things that we've heard over and over

 3 again in 26(b)(2) and 37(f).

 4 I'm from a different perspective. I am a

 5 plaintiff's attorney and have always been such.

 6 The question that comes to mind -- and I

 7 participated -- I go back to the discovery conference we

 8 had some years ago, where we spent three days talking

 9 about the change in the determination of the rule going

10 from the subject matter to cases and defenses. And the

11 argument at that time was that limitation, the same

12 basis that we now see for electronic discovery were the

13 same basis that the limitation was made, which was

14 inaccessibility of data; the costs of production, to

15 limit the cost of production; and the interference with

16 business activities. And I would submit that that is

17 true of any litigation, and in and of itself that's not

18 sufficient to say where should we change the

19 requirements of discovery of both sides.

20 Clearly, whether the burden of proof -- and

21 there are burden of proofs at times that defendants

Page 55
0112frcp.txt

22 have, and we forget that. I think that there's a good

23 example of advocacy defense attorneys who filed an

24 amicus brief on the other side of the expert witness

25 case because they normally would have the burden of

00134

 1 proof.

 2 When you have that burden of proof, then the

 3 discovery becomes necessary. And obviously when you

 4 don't have the burden of proof, the mechanisms to limit

 5 that discovery are something that are to be used and

 6 promoted. I mean, that's, you know, the object of

 7 defending as best you can the party that you're trying

 8 to represent.

 9 So we get to the question -- and I look at --

10 26(b)(2) and 37(f) really are ways that this committee

11 is telling judges to do the job that they already have.

12 In each of these situations, I mean, the question of

13 accessibility, which -- the fear regarding accessibility

14 is by definition its limitation. To say that you can

15 automatically say that it's inaccessible, then you've

16 changed the two-tiered approach. So you're saying,

17 okay, you get to change a burden on part of what you

18 would discover. Remember that all of these documents

19 that are supposedly inaccessible must by nature be

20 related to defenses, or they wouldn't be discoverable to

21 begin with.

22 So you're saying, okay, if they're

23 inaccessible, but they might be related to defenses,

24 then that's a basis for you to prove need. Now, you

25 often -- from the requesting party, that information is

00135

 1 difficult. But again --

 2 PROFESSOR MARCUS: Mr. Smoger, maybe this

 3 is -- I'm not sure -- something that was said earlier

 4 concerning the identification provision of Rule 26(b)(2)

 5 was an objection that perhaps it would require one to go

 6 disinter that material, look at it, and then report what

 7 was there.

 8 Are you saying that in order to identify

 9 materials as not having been reviewed, one must make an

10 affirmative decision that they contain discoverable

11 information?

12 MR. SMOGER: No. I'm not saying that that --

13 PROFESSOR MARCUS: That would be a provision

14 in your view to enumerate in your --

15 MR. SMOGER: Oh, I don't think it's sufficient

16 in my view. But you're asking me if I think that that's

17 what's important --

18 PROFESSOR MARCUS: No. I'm sorry. I phrased

19 that poorly.

20 If there were a requirement of identification,

21 do you think you would be satisfied by enumerating

22 back-up tapes, fragmentary data by category, the sorts

23 of things without making a representation that of course

24 there is material within 26(b)(1) on those media, but we

25 aren't giving it to you?

00136

 1 MR. SMOGER: The reality is it happens anyway.

 2 We can put it in the rule, but the first request for

 3 production states, state all material that you keep data

 4 on. And the response to that should be a listing of

 5 places if anybody has that request.

 6 So do you get that information anyway during

Page 56
0112frcp.txt

 7 the normal course of discovery? You do.

 8 PROFESSOR MARCUS: You don't need an

 9 identification provision in 26(b)(2)? It's not helpful?

10 MR. SMOGER: What helps is it puts it in the

11 front end of the litigation, before. That's what helps

12 with the conference provisions as well, is you're saying

13 let's get on with this and get this happening.

14 Mind you, in an MDL, that currently doesn't

15 take place for six months, because it takes that long to

16 set it up, which are one of the major large discovery

17 places that -- types of cases that we're talking about.

18 But what you're doing is you're putting it right up

19 front and telling us to get on with our job, which we

20 should do right away.

21 JUDGE SCHEINDLIN: I think there was an

22 assumption in your comments that troubles me. You said

23 you wouldn't be producing it anyway if it weren't

24 related to a claim or claiming it wasn't relevant.

25 The problem is the producing party folks who

00137

 1 have testified are saying we don't think we should have

 2 to disinter and review and look for responsive

 3 information in that which is truly inaccessible, because

 4 it's so burdensome. It's such a unique and different

 5 story these days. We shouldn't have to look through 300

 6 back-up tapes at a cost of $2 million or $3 million to

 7 see if there's something. We can just say, it's

 8 presumptively inaccessible, and whether it would be

 9 relevant or not be relevant, we shouldn't even have to

10 go there, unless you can show a special need for us to

11 go there. It wouldn't be a limited review to figure out

12 whether there's something there or not. We shouldn't

13 even have to look at those materials right now

14 initially.

15 MR. SMOGER: That is understood. But it's no

16 different from the way the courts operate as we sit here

17 today. That is an objection that is immediately made

18 about -- when we put it in into the rule, we're going to

19 have twenty different definitions of inaccessibility.

20 And the inaccessible definitions are going to be per se

21 definitions, where courts, judges don't look any further

22 than defining inaccessibility and saying, if it's this

23 type of material, it must be inaccessible.

24 As it is now, there's an explanation of where

25 those are. Well, these are held in an archive in

00138

 1 Germany. They're all in German. Are they something

 2 really necessary? And generally the courts view that

 3 information and review that within the light of the

 4 discovery you're trying to obtain and come up with an

 5 order that a judge will say reasonably, no, I don't

 6 think you're entitled, I'm not going to order the

 7 production of this information. That's the reality of

 8 practice.

 9 JUDGE SCHEINDLIN: Would you prefer the

10 producing party, typically a defendant, would just say,

11 I'm not producing it, it's too burdensome, and then

12 there would be a motion?

13 MR. SMOGER: Then there would be a motion,

14 rather than putting into a rule the concept of

15 inaccessible. Because once that is in the rule, then it

16 gets defined, and it would be defined by a number of

17 courts. Once it's defined, and not by this committee,

Page 57
0112frcp.txt

18 it will be defined per se that any time you have back-up

19 tapes in a certain fashion, it's automatically

20 inaccessible. And then it will be referred to, and

21 you'll see twenty court orders, none of which are

22 published by other courts, all stating they've defined

23 this as inaccessible.

24 And then the review becomes the burden not

25 with the actuality of the substance of the material, but

00139

 1 the type of method that was kept. And they said, okay,

 2 if it's that's type of material, it becomes

 3 inaccessible. That's the reality of the way the

 4 practice ends up happening after the rules are written.

 5 PROFESSOR COQUILLETTE: Mr. Smoger, can you

 6 see a situation where a particular defendant routinely

 7 gets a reasonable inaccessibility finding from a series

 8 of courts, and then you're confronted with a situation

 9 where you're told, look, we have reasonable

10 inaccessibility findings that have been made in the last

11 five cases, and therefore you're confronted with a

12 situation where you have to decide if you're going to be

13 asking a judge to revisit an issue that's already been

14 decided, such that in effect the burden you're going to

15 be confronted with is higher than the one really

16 specified if the rule? Because you're going to be

17 confronted with a series of enumerated categories of

18 data.

19 MR. SMOGER: In a short word, yes. I mean,

20 once you get that fifth, I mean, you're not going

21 further. And the question is whether the prior

22 litigants even had the same issues in the litigation.

23 The rulings are already there, and it's very hard in the

24 pressed matter of time to go before a court and have

25 them say, well, there's five that says this, why should

00140

 1 I change that. And the burden becomes extraordinarily

 2 high.

 3 JUDGE HAGY: Not very different from what

 4 we've got now, where they weigh the costs and benefits

 5 and say it's too burdensome to provide the information,

 6 overly burdensome. If five times they say that, you

 7 come in and say, yeah, but that's key to my case.

 8 MR. SMOGER: I agree with you. That's why I

 9 don't think the rule need to be changed, because I don't

10 think we need precise definitions of what

11 inaccessibility is.

12 JUDGE HAGY: The defendant could say, I'm

13 providing this information, but I'm not providing

14 information that is not maintained in the regular

15 course, something like that, that you got to search for.

16 MR. SMOGER: They're going -- they say that

17 anyway, and they're going to say that, and we have that

18 evaluation in any case.

19 JUDGE HAGY: But this makes them define what

20 that is. When we're talking about day to day, ordinary

21 courses, back-up tapes, this, that. Now what you've

22 got, it looks like a privilege log, where they say,

23 we're withholding this information, and they have to

24 list it. You don't go after all 25 things.

25 MR. SMOGER: And then the difficulty is that

00141

 1 those privilege logs become per se inadmissible in all

 2 cases, because it becomes part of the -- even though

Page 58
0112frcp.txt

 3 this committee doesn't set forth the rule, the case law

 4 says that any time you have these type of logs, it will

 5 get cited and say I don't have to look at that, because

 6 I know by definition they become inaccessible. That's

 7 the way the rules are used after they get past this

 8 committee.

 9 So my question is, the rule, as Your Honor

10 just said, the rules already take into account the

11 argument of inaccessibility right now. The particular

12 court in examining those rules in that single case

13 weighs the particular information about how that --

14 those are kept and the needs in that particular case.

15 But if we establish a rule, then there will be

16 definitions for that rule, and you don't even get to the

17 particularities of how the information is kept for the

18 need. You get to a definition that this type of

19 material is defined per se as being inaccessible.

20 JUDGE ROSENTHAL: It is your position then

21 that you simply disagree with those who have spoken

22 already who first say that accessibility is different

23 from burden in a way that needs to be spelled out in the

24 rules, and who second say that in fact, although there

25 is certainly litigation and discussion over what will

00142

 1 and won't be produced and under what terms, that it is

 2 now too uncertain and too inconsistent in the practice

 3 that's developed and in the court decisions that are

 4 emerging to be as useful as it should be or as

 5 productive as it should be.

 6 Do you disagree?

 7 MR. SMOGER: Two questions. I'll answer the

 8 first. Yes, it's uncertain. Yes, it's unpredictable.

 9 But there are a million ways that data is stored and a

10 million questions being asked on that data. It is

11 necessarily uncertain and unpredictable. Unless every

12 corporation in the United States wants to keep all their

13 data in the exact same format and have the same exact

14 document retention and destruction policies, it is going

15 to be uncertain.

16 Every time we litigate against any

17 corporation, we find a different mechanism of how their

18 documents are stored, how they're transmitted, how their

19 e-mails are kept, and how their back-ups are kept.

20 They're unique to the corporation. And some -- and the

21 question of inaccessibility, whether they're

22 deliberately inaccessible or not is a question for the

23 court.

24 JUDGE ROSENTHAL: My question wasn't clear. I

25 apologize.

00143

 1 Is your primary objection not that there are

 2 going to be disputes that will be litigated under

 3 principles and decisions that will emerge about the

 4 obligation to provide information that is not reasonably

 5 accessible? Would you tell us that that's happening

 6 anyway?

 7 MR. SMOGER: Correct.

 8 JUDGE ROSENTHAL: And whether we change the

 9 rule or don't change the rule, that will continue to

10 occur.

11 Is it fair to say that your primary objection

12 to putting this into the rule is that it will make it

13 more clear that the property seeking that kind of

Page 59
0112frcp.txt

14 information will have the burden of showing the need to

15 obtain it.

16 MR. SMOGER: That's part of my objection, yes.

17 The other part is that we will establish rigid

18 guidelines in the courts where it doesn't -- where the

19 burden is actually increased because of the rigidity of

20 the guidelines of what's defined as inaccessible. If

21 this court says legacy information is an example, legacy

22 information will be absolutely impossible to get without

23 a strong showing.

24 Because there will be cases -- if this

25 committee says that legacy information is in the notes

00144

 1 and that that is not something that is produced in

 2 discovery, the testing of the waters by anybody

 3 defending these cases will immediately -- I think they

 4 will be obligated to say that any time somebody

 5 requested legacy information, that it's objected to as

 6 inaccessible, because it's put as one of the things that

 7 could be inaccessible. Then you have a strict rule that

 8 has a very high level for the plaintiffs to get past.

 9 JUDGE SCHEINDLIN: What you really object to

10 is the burden shift itself. All this does is set up the

11 burden shift. Once it's inaccessible, you still get it

12 as the plaintiff's attorney if you make a special

13 heightened showing.

14 Basically, you don't want to do that. That

15 only defines that material as to what you have to make a

16 heightened showing. It doesn't mean you don't get

17 legacy material. It says if you want to pursue it, you

18 say to a court here's why I need the legacy material

19 anyway, because in the active data that I have now

20 reviewed, none of it's there. It must be old stuff, and

21 that's the only place I'm going to find it. But you

22 just don't really want the second tier burden shift at

23 all, I think.

24 MR. SMOGER: I'm talking about the level of

25 that burden shift. When we seek information, and

00145

 1 there's costs and expenses depending on the level of

 2 that information, it's almost always, whether it's

 3 stated or not, the burden shift goes on the plaintiff to

 4 describe need. So we have -- we almost always have that

 5 burden shift.

 6 The question is whether the exact things by

 7 topic are automatically shifted for burden. When it's

 8 any kind of a legacy, you have to strong burden to

 9 get it, regardless of any other things --

10 JUDGE ROSENTHAL: Could we need a response to

11 the concern raised in part then by perhaps being more

12 careful in the note language to emphasize that we are

13 not attempting to do anything except give a functional

14 description of what is reasonably inaccessible, and

15 that, because technology changes and because there are

16 as many variations of information storage as there are

17 entities and individuals, that we can't possibly chart

18 in the rule or the notes where that line will fall in

19 any one case. Would that --

20 MR. SMOGER: I think that you can say it. I

21 think that the reality is within two years we will have

22 set definitions of what accessibility means from a

23 number of courts. They will refer to it, and it will

24 become rigid, whether we say it or not. If we add to

Page 60
0112frcp.txt

25 the rules and say accessibility is there, it will be

00146

 1 rejudified in case law in two years, which is what my

 2 concern is.

 3 It's my concern for 37(f) as well that, once

 4 we say what things are in the routine course of

 5 business, then you rejudify the types of things that can

 6 be destroyed routinely and then you don't go further.

 7 That is just the reality of how litigation practices and

 8 how things are dealt with once they're put into a rule

 9 generally.

10 And I understand that this committee, you

11 know, realizes the enormity of putting specifics into

12 the rule. But when -- and I think that -- I agree with

13 other people. It's almost impossible to do that. But I

14 think the rules take care of both of these situations on

15 a case-by-case basis. Once we make them more specific,

16 then there will be interpretation of what accessibility

17 means, and the interpretation language of 37(f) will

18 occur, and then it will be rejudified, whether this

19 committee wants to have it that way or not.

20 JUDGE SCHEINDLIN: You wouldn't have the words

21 "reasonable" or "accessible" anywhere in the rules?

22 MR. SMOGER: That would be correct. I think --

23 JUDGE SCHEINDLIN: Historically, looking back

24 to all of our work, there were some presumptions I

25 think. And the whole question is, if you take it out

00147

 1 entirely, then the presumption is, like any other data,

 2 it's discoverable, unless the producing party can show

 3 why it shouldn't be. But it's presumptively

 4 discoverable.

 5 MR. SMOGER: I understand that. But I want to

 6 say very clearly in this practice that even though the

 7 rule does not shift the presumption, the reality of

 8 practice already shifts the presumption. Once the

 9 objection is made and there is an affidavit of costs and

10 it's stated how much effort we'll have to do, then any

11 judge reasonably looking at that information makes the

12 evaluation in any case.

13 So the rule does not change that. The rule

14 only will rejudify certain definitions, and that would

15 be my concern.

16 JUDGE HAGY: Maybe defense can come up and

17 say, all right, don't make broad objections. Specify

18 what -- you're not so now (indiscernible) the target. I

19 thought we were -- (indiscernible) you agree with

20 defense counsel. Disclose that, make them say give us

21 the information, period.

22 MR. SMOGER: Well, if they say that I'm

23 looking for that, that's part of the mandatory

24 disclosures. I didn't object to that. I don't have a

25 problem with that. It is taken care of in the

00148

 1 production where you say, please state all documents and

 2 all materials, the situations and where all of your

 3 documents are kept, and often you have to move to compel

 4 on that. But that answers the question of where things

 5 are.

 6 What's important about the 26 -- about the

 7 26(f), the disclosure provision, is it puts it on the

 8 table right to begin with. And that's helpful in

 9 short-circuiting discovery and moving the case along,

Page 61
0112frcp.txt

10 because it normally will take us to get to that same

11 information six months by the time we go through

12 conferences and do it. So you save six months' time in

13 litigation for us to get the same result.

14 And the last thing I just wanted to say is

15 that in dealing with electronic discovery, we are really

16 dealing with all discovery. These are not really

17 separate. We have to be cognizant of the fact that more

18 than 90 percent of all information is electronic now.

19 The real legacy data was written information, and the

20 real far legacy data was microfiche. And shortly

21 99 percent of all material will be electronic. So these

22 are not separate rules for electronic discovery. In

23 reality, these are rules for all discovery, with a small

24 exception.

25 And to add to that, in the legacy data, the

00149

 1 data we're talking about, microfiche and paper

 2 discovery, where we have rooms full of documents -- and

 3 I am dealing with some cases that do go back to

 4 discovery from the '70s, and there were mountains of

 5 documents kept in multiple storage. What is the first

 6 thing that every litigant does with these mountains of

 7 documents? They have to be scanned in and turned into

 8 electronic data so we can search them.

 9 And the searchable nature of that is

10 dramatically improving every day. And now there are

11 intelligent searches that aren't just word searches.

12 They can comb documents and find similarities in

13 documents contextually. And in another few years, the

14 enormous impact of the search technology -- millions of

15 documents of microfiche that were impossible for all of

16 us to look at on those readers, they're immediately

17 converted, and they're immediately converted into OCR so

18 we can search and use them.

19 JUDGE SCHEINDLIN: I apologize to my hungry

20 colleagues. But I want to ask you about -- you don't

21 like the sentence in 37(f). I think you did mention the

22 other. Why do you not like --

23 MR. SMOGER: Well, I think it's the same

24 thing. The power to give sanctions already exists. And

25 if we say that there's certain parameters of how you

00150

 1 will not sanction, then it encourages those parameters

 2 to be used and set up. So if there's one court that

 3 says, well, if you have a routine destruction policy

 4 every 60 days, that's okay. Everyone will have a

 5 routine destruction policy every 60 days. One court

 6 will say, if your destruction policy is any greater than

 7 60 days, that's okay, because it's already been

 8 determined.

 9 And I think that right now any time you want

10 sanctions, which realistically are incredibly rare, they

11 still have to be by notice of motion, they still have to

12 be explained, and you still have to go in and request

13 it. And you often have to present compelling facts for

14 the sanctions. I don't think there's a need for a

15 higher standard, which we asked for. The standard's

16 already there.

17 And if -- for those of you practicing on the

18 bench, I think you can count the number of times that

19 you've actually issued sanctions. They are not normal,

20 and we don't need to say when they can be accepted or

Page 62
0112frcp.txt

21 when you don't need sanctions, because they are rare to

22 begin with.

23 JUDGE ROSENTHAL: Thank you.

24 Thank you Mr. Smoger.

25 COMMENTS BY MS. LARKIN

00151

 1 MS. LARKIN: I'm going to pour myself some

 2 water so I have something to spill on my notes.

 3 JUDGE ROSENTHAL: I'll turn my phone back on

 4 if you spill your water. How about that?

 5 MS. LARKIN: Judge Rosenthal, Committee

 6 Members, I want to thank the audience for this

 7 opportunity to speak about the proposed amendments to

 8 the federal rules on electronic discovery.

 9 My name is Jocelyn Larkin, and I'm the

10 litigation counsel with The Impact Fund. The Impact

11 Fund is a legal nonprofit with a unique mission. What

12 we do is provide support to lawyers who are bringing

13 public interest cases. And we do that both through

14 providing grants, but also training and basically

15 technical assistance to lawyers who are trying to bring

16 cases in the public interest.

17 We also have our own caseload, and we are

18 currently lead counsel in the Dukes vs. Walmart

19 litigation, which is a gender discrimination class

20 action on behalf of 1.5 million female employees.

21 I will say we've gotten an awful lot of

22 electronic discovery in that case. We filed it four

23 years ago, and last I checked, Walmart is still in

24 business. They seem to be doing fine, despite having to

25 deal with us and many other large cases against them.

00152

 1 JUDGE ROSENTHAL: Can I ask you a question

 2 about that case?

 3 MS. LARKIN: Oh, absolutely.

 4 JUDGE ROSENTHAL: How much of the litigation

 5 surrounding the discovery you've obtained in that case

 6 dealt with inaccessible information?

 7 MS. LARKIN: We had quite a bit of work that

 8 we did around e-mail. Walmart, at least two years ago,

 9 when I did the 36(b) depositions, they had do many

10 obviously, because they have very many electronic

11 systems and large systems. We had a lot of litigation

12 over -- actually, we did a lot of discovery around the

13 e-mail.

14 As it turns out at the time, Walmart had

15 servers for e-mail, but they could not identify which

16 employees' e-mails were on particular servers. As a

17 result, we as plaintiffs had to make the judgement that

18 we did not get a vast production of e-mail. And we did

19 not get it, and that was simply because without any

20 indexing essentially of their servers and which

21 employees are on those servers, it wasn't possible for

22 us to search them and use them. We ended up getting

23 more limited e-mail from high level individuals, where

24 there was a specific special litigation hold on their

25 computers.

00153

 1 JUDGE ROSENTHAL: So you had active data, and

 2 that satisfied your production?

 3 MS. LARKIN: Yes, in the sense that the most

 4 important policy makers were people that we were able to

 5 obtain e-mail from. There's absolutely no doubt in my

Page 63
0112frcp.txt

 6 mind that there's lots of evidence of discriminatory

 7 intent in the e-mail of middle managers that we made a

 8 judgement based on our information that we didn't get.

 9 This tells you a lot I think about what I mean

10 to say, which is really that we have been working with

11 electronic data in the Title 7 area for a very, very

12 long time. Starting really more than 20 years ago, we

13 began getting payroll and personnel databases in order

14 to prove our cases. The Supreme Court has made clear

15 essentially, and this is really important for the

16 committee to understand, we cannot prove our case unless

17 we have electronic discovery, typically the payroll and

18 personnel data. The prima fascia case must be proved

19 which statistics, which require that we have electronic

20 data.

21 For the most part, that data is kept in an

22 active way. But there are some times, for example,

23 that, rather than having the personnel data that's

24 really every single day what it looks like, we will

25 agree to and take snapshots of the data once a year.

00154

 1 Both parties agree that those annual snapshots will work

 2 and they will accommodate it.

 3 There are a few --

 4 PROFESSOR MARCUS: Ms. Larkin, let me follow

 5 up on something you earlier said. The preservation

 6 practices in that case, were those the product of

 7 earlier negotiations? Or did they come into existence

 8 unilaterally by the defendant's actions?

 9 MS. LARKIN: We have a practice and have had a

10 practice for more than ten years of sending a

11 preservation stipulation and order with our complaints

12 to the defendants. That's actually something that was

13 in the manual for complex litigation and is something we

14 have used.

15 I will say one of my comments about the rule

16 changes is that putting into the rules the requirement

17 that essentially the parties work on that at the front

18 end is going to be very important. I had a circumstance

19 this summer where we did our routine sending of the

20 preservation order to the other side, and the other side

21 said to us they were unwilling to even discuss a

22 preservation order without some local authority

23 establishing that it was necessary unless there was

24 actual proof of foliation. Of course, I had no proof

25 that there was foliation. But rather than doing what

00155

 1 would have made sense, which was to sit down with us and

 2 talk about what they had, what we thought we needed,

 3 come up with a realistic list, the automatic reaction

 4 was, no, we're not going to sign anything.

 5 I think one of the great things about the rule

 6 is that it does put that obligation on both parties to

 7 sit down at the outset, and I think that's going to work

 8 out a lot of the problems with respect to concerns about

 9 having to save too much information and the like.

10 When I listen to defense lawyers, it's sort

11 of -- it surprises me. Because sort of the last person

12 they come and talk to is us about what it is we really

13 want. Instead, they struggle with what they should be

14 keeping. If they called us, we would tell them. We

15 could talk about and negotiate what it is that's really

16 necessary, that we do need to keep. So that early

Page 64
0112frcp.txt

17 obligation to discuss it I think is going to be very

18 important.

19 JUDGE SCHEINDLIN: In the typical case when

20 you make this request to defense counsel, do you for

21 example ask them to retain all back-up tapes?

22 MS. LARKIN: Often we do, because we have no

23 idea what's there. At the outset, as we've described,

24 we don't necessarily know.

25 JUDGE SCHEINDLIN: And do you ask them to stop

00156

 1 recycling?

 2 MS. LARKIN: No, no, we do not.

 3 JUDGE SCHEINDLIN: Going forward, they keep on

 4 recycling?

 5 MS. LARKIN: Well, the point of sending the

 6 stipulation and order is to provoke that conversation.

 7 JUDGE SCHEINDLIN: Yes. But I'm wondering

 8 what you usually ask for.

 9 MS. LARKIN: Yes. We'll put in that request,

10 because we really have no way of knowing at the

11 outset --

12 JUDGE SCHEINDLIN: Now, but you don't ask them

13 to stop regular recycling?

14 MS. LARKIN: Typically, we do not.

15 JUDGE SCHEINDLIN: Okay. Thank you.

16 MS. VARNER: Ms. Larkin, do I understand your

17 comments, that you are basically against the two-tier

18 approach?

19 MS. LARKIN: That's correct. I think

20 Mr. Smoger made a lot of important points on that. But

21 let me just emphasize an additional point that really is

22 the perspective of the groups that I work with, which

23 are nonprofits who are struggling to do this kind of

24 litigation on very limited resources.

25 And this is -- when we throw around, you know,

00157

 1 you can go to court, you can do this, for us, every time

 2 we think about whether we're going to district court, we

 3 have to think about the time it takes, how much it costs

 4 us, and really whether we're ultimately going to have,

 5 you know, a friendly reception from the district court.

 6 Because, you know, district courts don't like discovery

 7 disputes. And you know that's true.

 8 And so one of the reasons that I have a good

 9 deal of difficulty with the two-tiered system I think is

10 that it increases the likelihood of litigated discovery

11 disputes. The way I see the rules now -- I think that

12 Mr. Smoger pointed it out, and I won't repeat it -- but

13 it takes into account a lot of the problems. I think

14 creating the presumption will increase the likelihood

15 the defendants push back essentially and tell us the

16 particular systems are not reasonably accessible.

17 And one of the things I really want you to

18 think about is from the perspective of the plaintiff,

19 what do you do when the defendant has designated

20 something as reasonably inaccessible, and then they come

21 up with, you know, a declaration from their IT

22 professionals explaining how many hours it will take and

23 how deep the information is and how difficult it is?

24 From a plaintiff's perspective, the only way

25 I'm going to convince district court that that's not

00158

 1 accurate, that that's not true, is if I hire Joan

Page 65
0112frcp.txt

 2 Feldman or somebody like her and potentially take

 3 discovery of that person to try to establish -- in the

 4 same way we had to struggle with this before when there

 5 was disputes over the volume of documents and warehouses

 6 and the like. I have to hire a professional, who's

 7 essentially going to come in and provide expert

 8 testimony on a discovery dispute.

 9 JUDGE SCHEINDLIN: One interruption. In

10 listening all morning, there's like a missing step.

11 This's a heck of a lot of active data that are non

12 inaccessible. I guess the word is "accessible."

13 So have you stopped to really go through the

14 millions and millions of pages, if we can still use that

15 word, of what's accessible and then your argument might

16 be made? If after doing that, what you expected to find

17 isn't there, that's a pretty strong argument that it

18 might in fact be stored elsewhere. But until you've

19 done that -- you know, the comment was made here that

20 people immediately jump to hold onto your back-up tapes,

21 search your back-up tapes, without having looked at

22 first all they can get, which is huge.

23 MS. LARKIN: Here's the problem. Reasonably

24 inaccessible is not well defined.

25 JUDGE SCHEINDLIN: It's not there.

00159

 1 MS. LARKIN: It's very difficult to define, I

 2 think. And the problem is I think as a result, a lot of

 3 defense lawyers are going to apply that label to

 4 particular documents or systems that they don't want to

 5 produce. Or at the very least, they're going to say,

 6 look, the rules are unclear about this, so we're going

 7 to make an objection, and then put it to the plaintiffs

 8 to have to basically take us to court and make us prove

 9 it.

10 And this goes to my resource question, which

11 is, okay, we are more frequently put I think to

12 litigated discovery disputes.

13 JUDGE SCHEINDLIN: I asked the defense counsel

14 earlier -- I said, the documents are lost, they really

15 aren't there.

16 Now I ask you to do the opposite. If you

17 really want some company to store, restore, and search

18 300 back-up tapes, you could be talking, according to a

19 recent California Court of Appeals case, 2 or 3 million

20 dollars.

21 Shouldn't you have to make some heightened

22 showing as to request they've got to spend that

23 3 million dollars on back-up tapes when you haven't even

24 finished maybe your search of all that is accessible,

25 which is active data and more? In other words, it's not

00160

 1 only active data that is accessible. So before you

 2 would put a company to that, if you can put another hat

 3 on, speaking of resources --

 4 MS. LARKIN: There's no question in my mind

 5 there are circumstances where, exactly as it occurred in

 6 Walmart, it was tough for them to go to those servers

 7 and give us that data. It was too much, and we

 8 understood and agreed to that.

 9 But the premise of your hypothetical is that

10 they've already given us all of the active data and we

11 got to look at it and we were -- after we looked at all

12 of it, we realized what we wanted wasn't there. But the

Page 66
0112frcp.txt

13 premise they're going to give us the active data at the

14 outset isn't accurate.

15 JUDGE SCHEINDLIN: That's a different issue.

16 MS. LARKIN: Yes. But you've given them

17 essentially a new defense, which is that some data is

18 reasonably inaccessible. And you've put me to have to

19 leap through each of these hoops. Even if they

20 establish it's reasonably inaccessible, what you want me

21 to do is essentially show good cause. I understand

22 that. But oftentimes we've not even done discovery to

23 try to be able to show something is good cause if we

24 haven't gotten the data.

25 So the point that I want to make about it is I

00161

 1 feel like the presumption that you've created puts a

 2 weight on the scale that favors the defense and will

 3 encourage litigated discovery disputes, and that the

 4 existing rules provide the ability for district courts

 5 to work with the burden -- the justifiable burden issues

 6 that are raised by defendants in particular cases.

 7 The other issue that I'm concerned about is

 8 that in the existing system, both sides really have

 9 strong incentives to work it out and not go to court.

10 And that's because for the plaintiffs, obviously we want

11 to get information. The defendants, when they recognize

12 at some point they have to provide it, they want to

13 figure out what makes sense for them. But I think if

14 you give them this sort of first barrier, this

15 reasonable inaccessibility, they have less incentive to

16 come and work it out with us, and they're going to take

17 a shot at it. Why not take a shot and see if the

18 district court will say, yeah, that's a legacy system,

19 that's out, that's a back up tape, that's out.

20 JUDGE HAGY: They object to it on the grounds

21 of burdensome and that the benefits are outweighed by

22 the costs. We're not giving them anything they don't

23 already have. We're just making them specify.

24 MS. LARKIN: Well, I think you're making it

25 harder with us. Right now we work with the presumption

00162

 1 that everything is discoverable, and you're changing

 2 that. And I think that that changes the incentives.

 3 JUDGE HAGY: I don't think we're changing it.

 4 We're defining something -- we are alerting the parties

 5 to a problem that they already know exists. As to

 6 inaccessible data or data that's difficult to get, they

 7 think you can say, we'll give you everything except that

 8 which would be a burden for us to get. And you say,

 9 what is that? Well, legacy data. And then you go into

10 Rule 26(f) discovery. You're already there, it seems to

11 me.

12 MS. LARKIN: The problem is we're going to be

13 looking at much more complex discovery, as I've

14 described. We're going to be hiring experts and trying

15 to deal with this definition of reasonably inaccessible.

16 I'd rather live with the rules as we have them now.

17 JUDGE HAGY: That's what defense counsel said.

18 Don't change it. Don't put this in.

19 MS. LARKIN: I know you're hungry, so let me

20 try to finish up quickly.

21 You have my comments in writing. I want to

22 make a point just about the fact that there are many

23 practices that we have worked out in the course of our

Page 67
0112frcp.txt

24 work to ensure that a lot of these data issues are done

25 informally. And to the extent that the rules can

00163

 1 emphasize that, I think it would be real important.

 2 We have something we call tech-to-tech calls,

 3 where we essentially have our tech person call their

 4 tech person, and they work together about fields and how

 5 they're going to read data and definitions and the like.

 6 The lawyers actually for once keep their mouths shut.

 7 It's incredibly efficient, and it's very inexpensive. I

 8 would urge you to encourage parties to engage in that

 9 kind of nonlitigated discovery. There's nothing worse

10 than lawyers taking technical depositions.

11 JUDGE ROSENTHAL: Yes, there is. Judges.

12 MS. LARKIN: Okay. Let me finally say that we

13 are also opposed to the safe harbor provision. I think

14 Mr. Smoger put it very well. I think we need to ensure

15 that each side has incentives to do things as best they

16 can, and sanctions are I think very rare. I don't think

17 it's necessary to create that special safe harbor.

18 That's all I have.

19 JUDGE ROSENTHAL: Thank you very much. Was

20 there a question? Thank you Ms. Larkin. I appreciate

21 it.

22 Mr. Sinclair on behalf of the International

23 Association of Defense Counsel, is he here? All right.

24 I have an old list apparently. And Mr. Kuhn I believe

25 is not going to be with us; is that correct? All right.

00164

 1 Ladies and gentlemen, lunch. I think we can

 2 be back in an hour and 15 minutes without too much

 3 stretch. There is a lunch facility in the first floor

 4 of this building, and, hey, we're in San Francisco.

 5 Thank you very much. We'll resume in one hour

 6 and 15 minutes.

 7 (Luncheon recess.)

 8 COMMENTS BY MR. HUNGER

 9 MR. HUNGER: Judge Rosenthal, Members of the

10 Committee, I want to thank you for committing me to

11 appear before you today. I also want to express my

12 appreciation for this undertaking. I can relate to you,

13 if I think back to experiences that I had with this

14 committee with Rule 23, and I see a lot of the same

15 situation going on.

16 I don't appear before you today as a

17 representative of any special interest group, nor do I

18 appear before you representing any particular body.

19 However, I do appear before you as one who has been

20 involved in litigation, in actual trial litigation for

21 approximately 40 years. I also appear before you as one

22 who managed one of the largest civil lobbies in this

23 country for approximately seven years, and I appear

24 before you as one who had the honor and the privilege to

25 serve on this committee for approximately seven years.

00165

 1 I don't profess in any way to be an expert on

 2 computers. I don't know a microchip from a potato chip,

 3 and I'm the first to acknowledge that. But I do hope

 4 that I can present to you views that are somewhat

 5 unbiased.

 6 And I have one recommendation and one area

 7 that I would like to concentrate on. And it's nothing

 8 new to you, and you've heard a lot about it earlier

Page 68
0112frcp.txt

 9 today, and that's Rule 26(b). There is one slight

10 aspect to it that I've heard no one mention, and I would

11 like to bring it to your attention.

12 Basically, I suggest that you consider a

13 provision to the rule that says that after the good

14 cause hearing and after this matter has been litigated

15 between the two parties, if in fact the U.S. district

16 judge or the U.S. magistrate decides that good cause has

17 been shown for inaccessible information, that there

18 arise a presumption that the party who is requesting the

19 information have to pay, and this presumption can be

20 overcome by clear and convincing evidence that an

21 injustice will be done if that is in fact made a part of

22 the proceeding.

23 I think this is fair. I don't think that it

24 is contrary to what we think of as the American rule,

25 and really it presents nothing new. When I hear of cost

00166

 1 shifting, I think that's really just a matter of

 2 semantics.

 3 I don't think anybody in this day and age,

 4 when they ask to take the deposition of an expert is

 5 really with the opposing party asking that they pay the

 6 fee. I don't think of that as cost shifting.

 7 I don't think that now, when anyone produces

 8 thousands of pages of documents as a part of their

 9 records and the other side can go in and copy them and

10 they pay the fee for it, they don't think of that as

11 cost shifting. So I see an analogy here.

12 Now, first I suggest, while I know that it's

13 rare for a case in this day and age to actually proceed

14 to a judgement, that when you have the situation where

15 that does arise, then as I interpret that statute,

16 28 U.S.C. 1920 with the Rule 54, that there would be a

17 basis where this could be passed off on behalf of the

18 prevailing party.

19 So you would have a situation where there

20 would be a presumption, a presumption could be overcome

21 in a case where there was an injustice, and further, if

22 the matter proceeded finally to a trial and a party had

23 to pay the costs and it was eventually the prevailing

24 party, then it could get its money back. That's my

25 proposal. That's my suggestion. I would be glad to

00167

 1 entertain any questions. I'll be watching the clock.

 2 JUDGE ROSENTHAL: Any questions? Do you think

 3 that under your proposal, the rule or the language

 4 should provide any specificity as to the factors that we

 5 got for it in determining whether the presumption --

 6 MR. HUNGER: No. I have a lot of trust and

 7 confidence in the United States judiciary and those who

 8 have been selected to serve on it, and I think that each

 9 matter would vary with the facts of the case, and it

10 would be a matter of discretion.

11 Also, one thing that I heard here today -- and

12 again, I tend to approach matters on just a common sense

13 point of view -- is there's been a lot of talk about

14 these proposed amendments, and most of it has been in a

15 vacuum. I don't forget about depositions,

16 interrogatories, requests for admissions. And of course

17 all of that is involved when you have a discovery

18 dispute of some type. Then those are tools that are

19 there and that there available for the lawyers to use.

Page 69
0112frcp.txt

20 One thing that I strongly endorse -- and here

21 again, you've heard it from everybody -- that's the

22 two-tier approach. But perhaps contrary to some who

23 have spoken here, I think you've got a good point. I

24 don't see how a party who is requesting the information

25 originally would know what to request if the other

00168

 1 party, who is the responding party, hasn't said first

 2 what they're claiming to be in assessment. Who knows

 3 the records better than anyone? It's the party who has

 4 the information. So to me to have some other procedure

 5 earlier just puts the requesting party in an untenable

 6 position.

 7 And I also do make this suggestion to you

 8 today, as one who is a member of a law firm that does a

 9 major part of plaintiff's work as well as defense

10 work -- and of course my time with the department. As

11 Peter can say, we have an awful lot of cases where we do

12 represent the plaintiff. And I think that if you put

13 this -- and here again, I don't call it cost shifting.

14 I call it a presumption of cost sharing, which can be

15 overcome, that you're going to cut down on the number of

16 discovery disputes you have, you're going to have people

17 narrowing their requests, and you would have a situation

18 with a presumption which could be overcome when you have

19 someone who is tenuous or lacking in the necessary

20 finances to overcome it.

21 Let's face it. We all know it. Most of the

22 major litigation that we see now, the big cases, are

23 parties who have a dollar in their pocket. And if they

24 think that there's information there that they really

25 need, they'll pull that dollar out and pay for it.

00169

 1 That's just to me what I would do.

 2 I can give you a real good example of this,

 3 and then I'll sit down. When I was in the department,

 4 we had 136 major cases that were activated overnight as

 5 a result of a decision from the United States Supreme

 6 Court. It involved billions of dollars. I went over

 7 to -- and as you know, the way the United States gets

 8 their money is from the judge's fund, which is a

 9 bottomless pit of money, or at least that's the way it's

10 described. So there was a lot of heavy duty pressure

11 coming from the agency and other sectors of the

12 government to settle these cases, because they knew they

13 didn't have to come up with the money.

14 Well, when I met with the head of the agency,

15 and he was trying to push the department into a

16 settlement, we got into the issue of discovery. And he

17 said, you know, Mr. Hunger, we're going to have to

18 produce over a billion pieces of paper in this lawsuit.

19 And I said, well, that's very interesting, because if

20 that takes place, you're going to have to pay for it.

21 So that matter went quickly by the board. I reduced it

22 by 999 billion pieces of paper in about fifteen minutes.

23 It was done by just saying, okay, pal, you're going to

24 pick up the bill.

25 Thank you.

00170

 1 MR. HEIM: Can I ask you a question?

 2 MR. HUNGER: Sure.

 3 MR. HEIM: I just want to make sure I

 4 understand the concept, and I think I do. Your

Page 70
0112frcp.txt

 5 presumption of cost shifting --

 6 MR. HUNGER: I don't call it cost shifting.

 7 MR. HEIM: Okay. Whatever you call it. That

 8 could be overcome based on the circumstances, the

 9 resources of the plaintiff.

10 MR. HUNGER: Absolutely.

11 MR. HEIM: And so forth. But it applies --

12 you would have this apply in situations where the

13 requesting party was asking for inaccessible data?

14 MR. HUNGER: Absolutely.

15 MR. HEIM: And your suggestion, I gather, is

16 in part an answer to the question that was asked I think

17 by Professor Marcus or by someone on the committee about

18 what incentive is there for the requesting party to

19 narrow or to be careful about what they're asking for.

20 There's the incentive, because they know if they lose

21 the case, those costs may be taxed against them.

22 Is that basically it?

23 MR. HUNGER: Absolutely. And also you're

24 seeing at the time that you ask for it that the judge

25 might rule, okay, you can have it, but you're going to

00171

 1 have to pay for it.

 2 MR. RUSSELL: If the reason was it was not

 3 reasonably accessible but they don't have the money to

 4 get it, then that satisfies that anyway. It's like

 5 they're willing to pay for avoiding the reasonably

 6 accessible argument.

 7 MR. HUNGER: If it's reasonably accessible,

 8 then you produce it anyway.

 9 MR. RUSSELL: If there's good cause, you ought

10 to have it anyway.

11 MR. HUNGER: That's correct.

12 MR. RUSSELL: How about the reason it was not

13 reasonably accessible because of the fact it costs too

14 much to produce it?

15 MR. HUNGER: Not as I see it. That could be

16 one factor. But if it's accessible, then you have it.

17 And if the Court rules that it is inaccessible and cause

18 has been shown to the judge for it, then after that

19 there would arise the presumption that you're going to

20 have to pay for it.

21 JUDGE SCHEINDLIN: Mr. Hunger, I have a

22 question too. You sort of presume that the plaintiff is

23 pretty well funded too. You said in big litigation the

24 plaintiff is pretty well funded too. That's true in the

25 big class actions, the manufactures, etc. But you have

00172

 1 to look at the impact on the lady who spoke about doing

 2 employment work on a small budget.

 3 And I'm concerned about two things. You said

 4 there's nothing new about this. The Supreme Court has

 5 said -- I think it was Oppenheimer v. Sanders -- that

 6 presumptively producing parties pay. You certainly

 7 would be changing that presumption, where now The Impact

 8 Fund, Ms. Larkin, has a burden to overcome, a

 9 presumption to overcome, whereas before, the Supreme

10 Court said presumptively you pay.

11 So if I rule the good cause is shown, now go

12 ahead and produce your inaccessible stuff too, you do

13 want to change the presumption. You want to say

14 presumptively now she's going to have to at least share

15 that cost.

Page 71
0112frcp.txt

16 Here we've got an underfunded person. If

17 that's the clear and convincing evidence, is that

18 enough? If she says I'm poor, is that enough --

19 MR. HUNGER: Well, that's a matter that you

20 can certainly take into consideration under the

21 suggestions I made, most definitely.

22 JUDGE SCHEINDLIN: I don't know if that's the

23 clear and convincing evidence you were thinking of.

24 MR. HUNGER: Well, what I'm thinking of, Your

25 Honor, that decision is yours.

00173

 1 JUDGE SCHEINDLIN: In other words, anything

 2 the Court wants to consider to rebut this presumption,

 3 the court could consider.

 4 MR. HUNGER: I see no reason why not. You're

 5 in a discovery hearing.

 6 JUDGE SCHEINDLIN: Wouldn't you agree though

 7 there is something new in the proposal that does change

 8 the way it was, that presumptively the producing parties

 9 pay? That's what the Supreme Court has told us.

10 MR. HUNGER: Well, if that's so, then I can

11 only point you to exceptions to that, and they are

12 there.

13 JUDGE SCHEINDLIN: One being the deposition of

14 experts that you mentioned?

15 MR. HUNGER: Yes. And another being the other

16 situation that I mentioned, where, you know, you produce

17 your records, and if you want copies of them, you're

18 going to pay for them.

19 JUDGE SCHEINDLIN: I also worried about

20 whether or not this will have a chilling effect, so to

21 speak, on public interest and civil rights litigation,

22 where in these fields the plaintiffs will be chronically

23 underfunded, and they would just not be able to bring

24 the kind of what we think of as civil rights type

25 litigation they brought heretofore if there was a

00174

 1 presumption of cost sharing once you got behind the

 2 reasonably accessible stuff.

 3 MR. HUNGER: Well, I'm --

 4 JUDGE SCHEINDLIN: You're going to chill some

 5 kinds of litigation maybe.

 6 MR. HUNGER: But I am giving you a basis to

 7 get to it without that. You're there. You're the

 8 judge. You have the discretion. You can look at the

 9 situation, and you make the call. And it would be a

10 very unusual situation for that to be able to be

11 appealed.

12 JUDGE SCHEINDLIN: I understand that. I'm

13 just worried about people not even presenting the cases

14 if they're up against that in the first place.

15 MR. HUNGER: Well, I hope the people who come

16 into your court, Your Honor, are certainly versed enough

17 to know what their duties and responsibilities are to do

18 that.

19 MR. KESTER: Sir, why wouldn't you extend this

20 to any kind of discovery?

21 MR. HUNGER: Because quite frankly, until now

22 I hadn't given enough thought to all of it, coming to

23 present this one situation.

24 MR. KESTER: Why do you say it's a new

25 subject?

00175

Page 72
0112frcp.txt

 1 MR. HUNGER: Because of the fact that we're

 2 dealing here with a new subject. And first off, there

 3 are some instances where you can have a cost added. If

 4 you present a deposition in evidence, you can tax that

 5 as cost and get your money back for it.

 6 MR. KESTER: I'm not sure this is a new

 7 subject. Isn't this a subset of burdensomeness?

 8 MR. HUNGER: Not as I see it.

 9 JUDGE SCHEINDLIN: Well, how does it differ

10 from burdensome?

11 MR. HUNGER: Well, I'm not sure I understand

12 your question, Your Honor.

13 JUDGE SCHEINDLIN: He said isn't it a subset

14 of burdensome. You said, "Not as I see it." I just

15 want you to explain.

16 MR. HUNGER: Well, if I understood his

17 question correctly, he was talking about who had the

18 burden to have to pay for this; is that right?

19 MR. KESTER: Yes.

20 MR. HUNGER: And right now there are

21 situations where if you originally accept the burden,

22 you win the lawsuit, you can tax it as cost. I don't

23 know if that answers your question.

24 PROFESSOR MARCUS: I'm interested in the

25 relationship between imposition of some or all of the

00176

 1 costs and the finding of good cause. If the party

 2 seeking production is willing to pay all of the costs

 3 that bear on whether there's good cause to direct the

 4 discovery --

 5 MR. HUNGER: I'm not trying to evade your

 6 question, but you just have to look at the facts.

 7 JUDGE ROSENTHAL: If I can maybe just be a

 8 little more abstract. As you presented it, first there

 9 has to be a determination that there is good cause, a

10 need for that information, because it's not available

11 elsewhere. And then we get to the question of the terms

12 and conditions of production, including what you've

13 projected as a proposed presumption of cost sharing or

14 shifting. But they're separate?

15 MR. HUNGER: Yeah. Thank you.

16 JUDGE ROSENTHAL: Thank you, Mr. Hunger.

17 Mr. Dukes.

18 COMMENTS BY MR. DUKES

19 MR. DUKES: Judge Rosenthal, Members of the

20 Committee. Thank you for the work that you've done in

21 this area. It's a very important area. I think you can

22 see that from the comments you've received already.

23 My name is David Dukes, and I practice in

24 South Carolina. That probably means you'd like a little

25 explanation as to what I'm doing in San Francisco. We

00177

 1 are national counsel to a computer software company.

 2 And because all of their information is maintained in

 3 electronic format, including their actual product, I

 4 learned a lot about electronic discovery and the

 5 problems we were facing at that time.

 6 Currently I'm more involved in the

 7 pharmaceutical industry, and I serve as national counsel

 8 for pharmaceutical companies. And I'm also president

 9 elect of the DRI. So that's the perspective that my

10 comments come from.

11 I know that one of the things you're

Page 73
0112frcp.txt

12 interested in are real world examples of what litigators

13 are facing with electronic discovery. I have a couple

14 of examples for you.

15 First, in a recent case, one of my clients

16 searched between 400 and 600 million electronic

17 documents. That search led to 8 million electronic

18 documents that were deemed to be potentially responsive.

19 Now, this was significant national litigation. And my

20 point here is not that they had to search too much. But

21 what they did search, we would consider to be reasonably

22 accessible information or active data.

23 And the point that I make here is, I think

24 this is an example that, even if we limit this to

25 two-tiered discovery where clients are searching for

00178

 1 reasonably accessible information, we are not going to

 2 eliminate a lot of things that would potentially lead to

 3 discoverable evidence. I think you're going to find

 4 that you're getting the bulk of the material through

 5 what is actual, active data.

 6 Another example is one of my clients in the

 7 last several years had seen their IT staff, which is

 8 devoted strictly to complying with electronic discovery

 9 requests in litigation, increase over 50 percent. I

10 think this illustrates the importance of what you are

11 focused on.

12 And frankly, my law firm is well compensated

13 for doing electronic discovery. But I have flown here

14 across the country at my firm's expense because

15 electronic discovery is broke as we know it, and

16 litigants are entitled to more predictability and more

17 consistency in dealing with these electronic discovery

18 issues.

19 Now, I raised in my written submission some

20 concern about the identification obligation. I'm

21 encouraged by the comments I've heard today, and

22 frankly, I'll be brief today, because some of my

23 colleagues have made some of the comments I was going to

24 make.

25 But I'm encouraged to hear that if you adopt

00179

 1 an identification obligation that the intent would be

 2 that that would be a general description, such as

 3 back-up tapes or legacy data or something similar to

 4 that, rather than something with the precision of a

 5 privilege log. I think that's very important that the

 6 committee clarify that.

 7 Also, one of the questions that this committee

 8 raised, and I think it's a very legitimate question for

 9 the rule making process --

10 JUDGE SCHEINDLIN: If you could clarify

11 something. As opposed to not doing it at all, you could

12 accept the broad category identification?

13 MR. DUKES: Yes, Your Honor. My preference

14 coming frankly -- and it may just be because of twenty

15 years of dealing with a different process, responding to

16 discovery, is I had some concerns about imposing that

17 particular obligation. But part of that concern was

18 driven by the fact that I don't think it would be

19 workable to have a privilege log type of process.

20 JUDGE SCHEINDLIN: You would have to end up

21 searching the inaccessible. But if it were just the

22 broad category identification, that would be okay?

Page 74
0112frcp.txt

23 MR. DUKES: Yes, Your Honor. If this

24 committee recommended an identification obligation, I

25 would be under those circumstances.

00180

 1 One of the questions you've asked is, will

 2 technology solve this issue of accessible information

 3 versus inaccessible information? I have some personal

 4 history for that.

 5 In 1990 I was national counsel for a software

 6 company. I spent three years on discovery of electronic

 7 information in the Bay Area, spent two and a half months

 8 before Judge Claudia Wilkin over in the Oakland

 9 courthouse on a software case.

10 And at that time consultants and software

11 vendors were telling us, we have products that will make

12 everything in a corporation accessible. I called it the

13 push the button argument. You just push the button, and

14 everything a corporation has is going to come out

15 easily, it's going to come out in whatever format you

16 want it to come out in.

17 What we found was there was a disconnect

18 between the marketing arm of these consultants and the

19 technology arm of these consultants. They couldn't do

20 it then. And some of these were good friends, and I

21 hire a lot of consultants, and I purchase software, both

22 as a national counsel and in my capacity as managing

23 partner of my law firm. But we need to be careful not

24 to be lulled into the belief that the marketing pitch

25 about technology addressing these issues of accessible

00181

 1 information is going to really solve it.

 2 So I would ask you, if you're seriously

 3 considering that argument, make people show you how

 4 technology will solve this accessible versus

 5 inaccessible issue. Please don't just rely on the

 6 marketing pitch as to how it would be done. It wasn't

 7 done ten years ago, and based on what I've seen, there

 8 still does not exist technology that can make everything

 9 in a corporation that people are requesting be produced

10 accessible. There's still that differentiation.

11 Judge Scheindlin, I think you asked Michael

12 Brown, take off your defense lawyer hat. And I

13 certainly think I'm viewed more as defense lawyer than

14 plaintiff's attorney, so I will do that.

15 In talking with my corporate clients about

16 these issues, about these rules, my corporate clients --

17 many of whom I represent not just in products liability

18 litigation, but also in commercial litigation, where

19 they are suing their other corporations -- understand

20 that these rules would apply whether they're a plaintiff

21 or a defendant. And they and I have studied these, and

22 the clients that I have discussed this with are prepared

23 to abide by these rules, whether they're plaintiffs or

24 whether they're defendants.

25 These rules are an improvement in the status

00182

 1 quo and litigation as we know it in America.

 2 JUDGE ROSENTHAL: May I ask you one question?

 3 You began by talking about electronic documents. One of

 4 the issues what's been discussed in some of the written

 5 comments is whether we ought to retain the distinction

 6 of written documents on the one hand in Rule 34 and

 7 electronically stored information as a separate category

Page 75
0112frcp.txt

 8 of what is required to be produced.

 9 Do you have a view on that?

10 MR. DUKES: Your Honor, I do not have a view

11 on that. The view that I had coming in was I was

12 supportive on the way it was proposed. I've heard some

13 comments made today that were thought provoking

14 comments, but I haven't taken the time to go reflect on

15 those and think how that would actually play out in my

16 practice. So I don't. I think it's an important issue,

17 but I don't have the answer to it sitting here.

18 JUDGE SCHEINDLIN: I have a question also on

19 your 34(f) comment on page 3 of your written. You

20 proposed your own language, and it ended with "violated

21 an order issued (indiscernible) specified information."

22 And I asked a previous speaker, did he want to

23 back off of that, because it might encourage requests

24 for preservation orders in every case with a specific

25 direction, something that could set up the barrier, you

00183

 1 know, to be violated.

 2 Do you think that by putting that in the rule,

 3 we might encourage people to run in and get preservation

 4 orders all the time?

 5 MR. HUNGER: No, I don't. I think that was

 6 Mr. Allman who said -- and I would back off that.

 7 Because I have experience with blanket preservation

 8 orders. Fortunately, mostly in the state court system.

 9 And there is no worse experience dealing with electronic

10 discovery than blanket preservation orders.

11 With regard to safe harbor though, Your Honor,

12 I would encourage this committee to consider the higher

13 standard of culpability. I know we've discussed a lot

14 corporate America and large IT staffs and millions of

15 pages of documents today, but there's a whole segment of

16 litigants who are small businessmen and individuals who

17 don't have IT staffs and who don't have any idea what

18 their computer is saving or what it's deleting or how

19 it's deleting. I think as we look at that important

20 issue, we need to look at that group of citizens also.

21 And this is a very, very complicated issue, even for

22 those of us who live with electronic discovery, but I

23 think a better standard is willfulness and recklessness.

24 JUDGE SCHEINDLIN: What do you think about the

25 fact that when you're dealing with safe harbor, you're

00184

 1 not necessarily sanctioned, you're just thrown on the

 2 good judgement of the Court?

 3 JUDGE ROSENTHAL: You're asking if he's

 4 comforted by that?

 5 JUDGE SCHEINDLIN: Yeah, I am. Because before

 6 (indiscernible) he trusts the judges to figure these

 7 things out. All I'm saying is the fact that you

 8 wouldn't be in the safe harbor does not mean you're

 9 going to be sanctioned. You can hope that the Court, in

10 its wisdom, which Mr. Hunger commented, will get it

11 right. Doesn't that --

12 MR. DUKES: I understand. And I have enormous

13 respect and competence in the courts. I just prefer

14 them to be interpreting the willfulness and recklessness

15 standard rather than that.

16 JUDGE HAGY: The willfulness and recklessness

17 standard is the violation of an order. Would you expand

18 it to willfully and recklessly destroying documents,

Page 76
0112frcp.txt

19 regardless of whether there's an order?

20 MR. DUKES: Not in the context of these rules.

21 I think that's an issue that exists in the preservation

22 context before you have a lawsuit. In the context of

23 these rules, it would be an order.

24 JUDGE HAGY: You mean somebody should take

25 safe harbor if they know that a document could be

00185

 1 relevant and there's no court order, and they go ahead

 2 and destroy it.

 3 MR. DUKES: No. I'm sorry. I'm putting that

 4 in the context of -- that usually occurs, at least in my

 5 practice, frequently when we get a letter that says,

 6 we're thinking about suing you, or we get the complaint.

 7 At that point, as I understand it, these rules are not

 8 intended to apply to that. But that was my

 9 understanding of the note, that these apply to after the

10 litigation is entered but not prior to the litigation.

11 But under the situation that you were

12 describing, I think if somebody recklessly or willfully

13 destroys evidence, whether there's an order or not, that

14 the Court has discretion to sanction them, certainly.

15 JUDGE ROSENTHAL: Any questions?

16 JUDGE HAGY: I read your language a little

17 broader than that. You're giving yourself protection --

18 MR. DUKES: Yeah. The proposed --

19 JUDGE HAGY: I think it starts before the

20 litigation starts. If you willfully or -- you know, if

21 you don't take reasonable steps to preserve information

22 when you should have known it was discoverable in the

23 action -- well, you're saying you think the action has

24 been started?

25 MR. DUKES: I thought I read that in the

00186

 1 notes. Now, I may be confusing it with someone else's

 2 materials that I read. But I thought there was a

 3 statement that said that this was intended not to apply

 4 until the action was filed. I understand there are

 5 other obligations that apply before the action is filed,

 6 but I may have been mistaken. I thought I read that in

 7 the context of this.

 8 Thank you very much, Your Honor.

 9 JUDGE ROSENTHAL: Is Ms. Lawler here on behalf

10 of the Federation of Defense & Corporate Counsel?

11 COMMENTS BY MS. LAWLER

12 MS. LAWLER: Good afternoon. Thank you so

13 much for your time here today. It's certainly an honor

14 to appear before you.

15 I am Jean Lawler, and I am a senior partner in

16 the Los Angeles office of Murchison and Cumming, a civil

17 litigation defense firm. And I am appearing before you

18 today in my official capacity as president of the

19 Federation of Defense & Corporate Counsel, which is also

20 known as the FDCC.

21 Just by way of background, the FDCC is an

22 international organization. It was founded in 1936, and

23 we have approximately 1,400 members. They consist of

24 attorneys that are in private practice, defending civil

25 litigation, of which our membership is limited to 1,050,

00187

 1 and it is by nomination only. We have international

 2 members as well. We have corporate counsel who manage

 3 litigation brought against their corporate entities, and

Page 77
0112frcp.txt

 4 then we also have insurance company executives whose

 5 companies insure risks that are involved in litigation.

 6 So that's the general parameters of our membership.

 7 The FDCC is one of the founding sister

 8 organizations of Lawyers for Civil Justice, LCJ. And

 9 LCJ has submitted comments, and there was a white paper

10 that was submitted sometime ago. So the FDCC supports

11 the comments that were submitted by LCJ.

12 I did not provide written testimony before I

13 came here today. It was a matter of time. I apologize

14 for that. But it is my intent to submit some written

15 comments if I might before the comment period expires.

16 Against this backdrop, I will leave the

17 wordsmithing to this committee and to the scholars among

18 us who study judicial process. But I would really like

19 to really direct my comments to the practicality of the

20 litigation of lawsuits, the day-to-day life in the

21 trenches, if you will.

22 First, we believe that there is a need for

23 these amendments, and we commend this committee for its

24 fine work. As amazing as it may seem, thinking about it

25 before I came here today, I was thinking it was only in

00188

 1 1994 when my firm first began working with one of our

 2 insurance company clients as a guinea pig for e-mail.

 3 This was the senior vice president who had e-mail going

 4 into his computer in the office and then would transmit

 5 it internally. That's ten years ago essentially. What

 6 a difference a day makes or a decades makes.

 7 When you think about it too, all of the small

 8 business that are out there, they're not the

 9 multinational corporations, they're not the computer

10 savvy corporations that we have and will hear from.

11 Many of those industries don't even really use

12 technology much. Think of the construction industry,

13 for example. They may not always be in federal court.

14 But nonetheless, what this committee decides will

15 provide guidance as well to other jurisdictions that

16 then consider how electronics discovery is handled.

17 So what these multinational corporations and

18 small businesses have in common though, no matter their

19 level of sophistication, is they need to have a level

20 playing field and clear rules, as clear as possible,

21 upon which they can conduct their business, rely upon to

22 make decisions, and price their goods and services.

23 The FDCC supports both the two-tiered system

24 for discovery of electronic information and the safe

25 harbor provision. We agree with the reasonably

00189

 1 accessible standard but believe that it should refer

 2 only to data used in the actual course of business, not

 3 the disaster recovery systems.

 4 Again, just, you know, anecdotally, and

 5 thinking back -- I'm dating myself here. Think of chron

 6 files you may have had when you first became a

 7 practicing lawyer. The secretary kept a copy of every

 8 single letter that she typed. She had a carbon paper

 9 there that she used many times over. That might be like

10 the hard drive or something, you know, as it went along.

11 But the chron file was there. It was kept, and after a

12 while, it was tossed. It was a back-up system that was

13 meant in case a file got lost or who knows what happened

14 to the letter that was put in the file. Well, the

Page 78
0112frcp.txt

15 disaster recovery systems, which some have referred to

16 as back-up systems, essentially serve the current and

17 more up-to-date same process and system.

18 For the actual production of documents -- and

19 again, this is just not necessarily an intellectual

20 approach, but practically speaking -- it seems like

21 having the documents in a .pdf format or .tiff format or

22 something like that where you actually capture a

23 snapshot of the document that exists on the date that it

24 was produced is the best approach and is in keeping with

25 traditional standards of document production.

00190

 1 If you're producing documents in native

 2 formats -- and I don't profess to be a computer guru at

 3 all -- but the dates can change, things change on them.

 4 If you've got your shell letter saved in the computer,

 5 sometimes when they pop up and you're going to use it

 6 again, it changes the date on it, and you have to look

 7 at the second page to that little header there to see

 8 what the date of that real letter was, if you didn't

 9 save it. So something like that that can be more easily

10 redacted for privilege purposes, if necessary, or

11 marked, something like that seems to make the best

12 sense.

13 In terms of safe harbor for sanctions, we

14 believe that there should be safe harbor where

15 information is unavailable due to routine computer

16 operations, and we do believe that there should be some

17 willfulness factor there. You know, I defend insurance

18 companies in bad faith actions. Everybody thinks

19 everything they do is willful and malicious. It may be

20 or it may not be, but generally it's not.

21 PROFESSOR MARCUS: Can I ask a question about

22 that? Some people have asserted that the adoption of

23 Rule 37(f) might affect that behavior in terms of

24 preservation, record keeping, or something. Do you

25 think that could happen?

00191

 1 MS. LAWLER: The cynical of the world probably

 2 believe that anything that you do like that would

 3 adversely affect it. I think that what you would hope

 4 is it would affect it in a positive way. You set out

 5 the ground rules and you know what it is, and then the

 6 documents, you know, are maintained.

 7 If you have a sinister motive, I'm sure

 8 anybody can find a way around anything, if they try and

 9 hide something. But then they should have to face the

10 consequences.

11 I do not see that as engendering negative

12 conduct. Does that make sense?

13 PROFESSOR MARCUS: I'm going to ask you an

14 unrelated question.

15 You mentioned .tiff and .pdf documents, which

16 I assume relates to the Rule 34(a) proposal concerning

17 requests for production in certain forms.

18 Do you have a problem with letting the initial

19 choice rest with the party making the request? Because

20 it might not be .tiff or .pdf. It might be something

21 else.

22 MS. LAWLER: I do, to a certain extent.

23 Because the purpose behind discovery -- think about it.

24 If you've got a paper document production, you provide

25 the piece of paper, you provide the letter, you provide

Page 79
0112frcp.txt

00192

 1 whatever it is. If you're providing something that is a

 2 Word document maybe, you can go up there and look at the

 3 properties and whatever that term is, and you can find

 4 how many times a secretary or you or whoever did what to

 5 it, metadata or whatever that is. So I think that

 6 production in that format, it goes beyond what the

 7 traditional intent of producing documents is.

 8 I had many years of loss policies, insurance

 9 policy cases in the environmental arena years ago, when

10 that was hot and heavy for insurance coverage purposes.

11 And, you know, you would bring in the drafter of the

12 documents or whatever it was, the drafter of the rules

13 or the drafter of this or that. And that's where the

14 testimony should be as to what was done maybe in

15 connection with preparation of the document. But for

16 purposes of document production, it seems to me that you

17 are producing the document, and that's what's

18 requested --

19 PROFESSOR MARCUS: Are you sufficiently

20 covered by the provision also in there that you can

21 object if you are the responding party, and it's then

22 left to the parties to work it out or the Court to

23 resolve?

24 MS. LAWLER: Maybe you are, or maybe you

25 aren't. But by the same token, surely it's in the

00193

 1 discretion of the Court then, and I have the utmost

 2 respect for what the judge would decide. But again,

 3 it's a matter I think of knowing what the rules are as

 4 you go into things and what the expectations are and

 5 what the level playing field is. In one case it may be

 6 one thing, and in another it may be something else. It

 7 may be more expensive here, less expensive there. How

 8 is a company going to price products or decide how it

 9 conducts its business. You know, there are so many

10 factors that come out of it.

11 JUDGE SCHEINDLIN: If somebody doesn't make

12 that request, then you as the producing party would

13 simply decide what format. Now, you're talking about

14 .pdf and .tiff. Somebody else may run it all through a

15 printer and send over boxes, and then the receiving

16 party says, oh, no, no, I didn't want boxes. I wanted

17 something searchable, electronically searchable.

18 Doesn't it make some kind of sense for you to

19 at least know what the person wants? Then you can argue

20 it. But at least you know what they want, rather than

21 face the risk of doing it twice.

22 MS. LAWLER: Well, certainly, if they have a

23 choice to tell you what they want. I'm not saying they

24 shouldn't be able to tell you what they would like to

25 have it in. Whether they can get it in that format may

00194

 1 or may not be acceptable.

 2 JUDGE SCHEINDLIN: (Indiscernible.) They

 3 request, and then you have the absolute right to object

 4 and say, no, that doesn't make sense here. And then, if

 5 you can't agree, the Court decides.

 6 MS. LAWLER: Well, again, I look at this, and

 7 I'm sure the committee does, for long-term. I go back

 8 to '94, starting with outside e-mails, and then I come

 9 to 2005 and look ahead to either ten or twenty years.

10 What you decide here and in the months to come will

Page 80
0112frcp.txt

11 affect future generations of jurists, attorneys,

12 litigants. It will set the stage.

13 So I -- you know, all of these are ideas. You

14 take them, you sift through them, and I have the utmost

15 respect for what you decide. But I do think that there

16 is merit to trying to decide that this is a type of

17 format, if it makes sense, that it can be decided. It

18 doesn't have to be .pdf, doesn't have to be .tiff, but

19 again, I don't think it needs to be the native format.

20 MR. KESTER: Correct me if I'm wrong. Did I

21 understand you to say awhile ago that you would view an

22 ordinary, old-fashioned hard copy chron file as

23 something that wouldn't normally be productive?

24 MS. LAWLER: Well, if it's still maintained

25 when the request for production came in, it probably

00195

 1 would be. I was just equating it to an old fashioned

 2 style of emergency back-up system.

 3 MR. KESTER: That's what I thought you were

 4 doing.

 5 MS. LAWLER: We think alike. It was just

 6 meant to -- yeah.

 7 MR. GIRARD: Do you know if clients you

 8 represent have been sanctioned by a federal court solely

 9 as a result of the routine operation of their electronic

10 data systems?

11 MS. LAWLER: None of mine have, no.

12 MR. GIRARD: Have you heard of anyone having

13 had that experience?

14 MS. LAWLER: Other than just colloquial things

15 that, you know, I couldn't tell you here. I can't

16 represent specific examples. I cannot.

17 If I might get back to your question. The

18 difference though between the production of the chron

19 file and the production of the emergency disaster

20 recovery system goes to the accessibility of it. It's

21 one thing to have a chron file sitting on the

22 secretary's desk or in a desk drawer; it's another to

23 have to go back and search the back-up discs and all of

24 that. I just want to make that distinction.

25 MR. KESTER: What if it's sitting in a

00196

 1 warehouse someplace, not very well indexed, and nobody

 2 can find it?

 3 MS. LAWLER: That doesn't sound too

 4 accessible, if you don't know exactly where it is.

 5 Also, couldn't accessibility be the ability to get in

 6 the computer program? Maybe that's an old program

 7 that's not made anymore and not easily accessible.

 8 There's just so many --

 9 JUDGE SCHEINDLIN: I think what he's asking

10 is, should we have the same divide in paper documents?

11 I mean, in other words, is this accessibility standard

12 unique to e-documents or e-discovery, or, if we're going

13 to do it, should we just do it?

14 There have always been some I suppose paper

15 documents that are highly inaccessible. We have to ask

16 the question whether this is unique.

17 MS. LAWLER: Sure. I would always make the

18 burdensome objection on the discovery request. But I

19 think this issue is unique to electronic because of the

20 nature of electronic documents and electronic data.

21 MR. KESTER: Shouldn't the issue be in each

Page 81
0112frcp.txt

22 case (indiscernible)?

23 MS. LAWLER: It could be. But that way you

24 are not giving the litigants guidance as to what the

25 rules of the game are and how then they would expect to

00197

 1 need to play them, play the game. It's not really a

 2 game. You know, conduct their business is how I would

 3 say it. I'm sorry. Thank you.

 4 JUDGE ROSENTHAL: Any other questions? Thank

 5 you very much.

 6 Mr. Conour? I probably mispronounced your

 7 name. I apologize.

 8 COMMENTS BY MR. CONOUR

 9 MR. CONOUR: I want to thank you for the

10 opportunity to speak here today. Electronic discovery

11 takes up much of my practice, and I know that the rules

12 are being considered provide an opportunity for

13 much-needed uniformity, guidance, and fairness.

14 I'd like to say that before addressing the

15 proposed changes, let me just say that these are my own

16 personal comments and do not necessarily reflect the

17 opinions of my firm or clients.

18 I'm a partner with Drinker Biddle and Reath.

19 We're a large firm that deals with a variety of civil

20 litigation. In my practice area, I focus on national

21 representation of pharmaceutical clients. And we've

22 done this national representation in the diet drug

23 litigation, Propulsid, PPA, hormone replacement therapy

24 litigation, and other litigations of that nature. So I

25 think you can see where I'm coming from on this.

00198

 1 On these and other matters, I have experience

 2 on electronic discovery. In fact, in most of these

 3 matters, I am the point person for the defendants, at

 4 least for my clients, that deal with electronic

 5 discovery issues.

 6 I'd like to address an area of particular

 7 concern to me that seems to permeate throughout the

 8 rules. Before I do that, because you don't have the

 9 benefit ever reading comments before I speak, let me

10 give you a preview of where I'm going.

11 If you took the comments that were presented

12 to you here today and you put them on a spectrum, you

13 would have the plaintiff's opinions on that side of the

14 courtroom, you would have the defendant's opinions on

15 that side of the courtroom. My opinions are going to be

16 somewhere down the next block. It's the same city. And

17 that is because my particular concern is the perception

18 that information routinely used for business purposes is

19 necessarily a fair target for preservation and

20 production without sufficient regard to the cost and

21 complexities involved with the discovery of active data.

22 In the committee's report and in the notes to

23 the rules, the principal focus in articulating the need

24 for specific rules for electronic discovery is the

25 substantial volume of electronic data that is generated

00199

 1 and retained. But the report and the notes also

 2 appropriately refer to other characteristics of

 3 electronic discovery that just justify specific

 4 treatment of electronic discovery in the rules. These

 5 characteristics include the dynamic nature of

 6 electronics information, the hidden nature of associated

Page 82
0112frcp.txt

 7 data, and the difficulties in translating electronic

 8 information into a usable form of production.

 9 I submit to you that these characteristics are

10 not unique to offline data. In fact, they're very

11 common with what you have defined as reasonably

12 accessible information.

13 The concern I have is that in the notes and in

14 the rules, in articulating all of the burdens associated

15 with electronic discovery and in articulating all of the

16 problems with electronic discovery, then somehow these

17 concerns get distilled toward protection for offline

18 data without sufficient regard to the burdens with

19 online data. There is no justification provided or no

20 rationale provided for why online data should be treated

21 differently than offline data, when you have the same

22 problems with online data.

23 Let me speak to that, if I can. If you're

24 comparing online data with, say, paper documents, which

25 is what's happening when you look at the rules and notes

00200

 1 and what have you, there are of course significant

 2 differences between active electronic data and paper

 3 documents. I mean, after all, how often do you have to

 4 spend tens of thousands of dollars on consultants when

 5 you're dealing with paper discovery just to tell you

 6 where those paper documents are, how to copy those paper

 7 documents, or even to tell you how to stop those paper

 8 documents from automatically disappearing? It just

 9 doesn't happen.

10 Electronic discovery is something much

11 different, and that's both for offline data and for

12 online data. And it's also true that some forms of

13 electronic information that are online are much more

14 difficult to preserve, much more difficult to review,

15 and much more difficult to produce than other types of

16 online data.

17 The example I'd like to talk about a little

18 bit today is that of dynamic databases. In my

19 practice --

20 JUDGE SCHEINDLIN: Before you do, one quick

21 question. Isn't it true that all of our proposals,

22 except for the two tier, do treat the online and the

23 inaccessible the same way? Like the early discussions,

24 and like requests for production, what to do about

25 inadvertent -- everything except the two tier. Is that

00201

 1 wrong?

 2 MR. CONOUR: Two responses to that, Your

 3 Honor. First is that I think with respect to the safe

 4 harbor provisions, I think that those focus primarily on

 5 the offline data when talking about automatic deletions

 6 and inaccessibility of materials. I'll speak to that in

 7 a little more detail in a moment.

 8 The other thing is in responding to that

 9 question, again, the overriding concern is that there is

10 a list of problems for electronic discovery that is

11 provided. And despite those problems being there, there

12 still is the discussion that reasonably accessible

13 information is the information that should be protected

14 from discovery.

15 JUDGE SCHEINDLIN: So you really are talking

16 about the two tiered proposal, the routine destruction

17 part of a document retention/destruction system.

Page 83
0112frcp.txt

18 MR. CONOUR: Primarily.

19 JUDGE SCHEINDLIN: (Indiscernible.)

20 MR. CONOUR: That's true, but they all work

21 together. For example, if you're talking about what's

22 presumptively discoverable, that obviously is going to

23 influence the pretrial discussion -- or excuse me, the

24 conference discussions that the parties are going to

25 have and what have you. I think they do play together.

00202

 1 JUDGE ROSENTHAL: Mr. Conour, if I can direct

 2 you to stay in focus on the rules proposals themselves.

 3 Is your conclusion that there should be a greater

 4 emphasis in the proposals on applying the

 5 proportionality limits that are already in the rules to

 6 the unique features of electronic information?

 7 MR. CONOUR: My specific proposal would be

 8 that I would change -- I know this comes late in the

 9 day -- but I would change the standard from reasonably

10 accessible information to reasonably available

11 information. And by that I mean information which is

12 reasonably available for production and discovery.

13 Here's the rationale for that. It seems to me

14 that if you're looking at discovery and you're trying to

15 decide what should be discovered, the focus ought not to

16 be on what is reasonably disclosed or reasonably

17 accessible in the ordinary course of business, but

18 instead what can be reasonably made available in the

19 course of discovery.

20 Let me explain that, if I can. I was going to

21 talk about dynamic databases. In my practice, I get a

22 lot of requests for data, but I also get requests for

23 actual databases. I'm not sure exactly what this means.

24 When you're talking about dynamic databases,

25 you're talking about something like on an Oracle or

00203

 1 Sequel or another platform. And typically these

 2 databases are large relational databases. The use of

 3 the database is made through an enterprise application

 4 that a company licenses at a cost of several hundred

 5 thousand dollars. The databases often contain dozens of

 6 tables, with each table containing multiple fields and

 7 sometimes tens of thousands or hundreds of thousands or

 8 even millions of records.

 9 JUDGE SCHEINDLIN: By the way, quick question.

10 Would you call that electronically stored information,

11 as opposed to documents? I mean, that would be a good

12 example of the difference between a document and

13 electronically stored information, such that the dynamic

14 databases that you just described don't sound too much

15 like a document, which is usually fixed in form.

16 MR. CONOUR: I do have to apologize. I

17 haven't given this as much thought as others who have

18 appeared here today. But I do agree with the comments

19 of Mr. Allman as he explained them, that perhaps this is

20 a subset of documents and that should be defined as a

21 subset of documents. I do think that there is a place

22 in the rules when talking about preservation and the two

23 tiered approach where you can speak specifically to this

24 subset. But all the same, I think overall it should be

25 defined as documents.

00204

 1 When you talk about the databases, the one

 2 thing to keep in mind is that when you have all of these

Page 84
0112frcp.txt

 3 tables that are all linked, what have you, no one table

 4 presents all of the information relevant to a particular

 5 transaction. In fact, if you look at a very simple

 6 transaction, like a contact for one consumer, the

 7 information regarding that contact could be spread out

 8 over dozens of different tables. In order to bring that

 9 data together, you have to link the different tables in

10 a variety of ways.

11 When you reasonably access it in business,

12 when you're linking together some small subset of that

13 data, never does the company have any need to pull

14 together all of the data and spit out a report which

15 deals with every single item pertaining to a

16 transaction. Instead, they have small queries or small

17 reports that can be defined that put together just a

18 small subset of data.

19 So part of the problem I have when you use the

20 definition of reasonably accessible as meaning something

21 that companies routinely accesses, what are they

22 routinely accessing? Are they routinely accessing the

23 database, or are they routinely accessing all of the

24 data in the databases? I submit to you that they're not

25 routinely accessing all of the data in the database.

00205

 1 JUDGE SCHEINDLIN: Well, then how would you

 2 define "reasonably available"?

 3 MR. CONOUR: I would define "reasonably

 4 available" as information which can be easily put --

 5 here's the problem when you have too many notes, of

 6 course.

 7 By "reasonably available," I would include

 8 that information that can be reasonably made available

 9 for discovery. From that I mean that information that

10 can be provided to an adversary in litigation without

11 sufficient revision, translation, or substantial work

12 done on it.

13 And obviously, you can tell from my comments

14 here today, I am not a wordsmith. But I think the focus

15 ought not to be on whether or not a company can access

16 this information everyday, but how easy it is to turn

17 that information over to your adversary in the

18 litigation.

19 PROFESSOR MARCUS: You mentioned I think that

20 you have had occasion to work with requests for complete

21 databases?

22 MR. CONOUR: That's correct.

23 PROFESSOR MARCUS: What happens?

24 MR. CONOUR: What happens when you get a

25 request for a complete database is you spend hours and

00206

 1 hours working with the other side to explain to them why

 2 do they -- why they do not want a database and why the

 3 databases cannot be produced. In theory you can produce

 4 a database, but in reality it's not something that can

 5 actually be done.

 6 PROFESSOR MARCUS: Would a rule provision have

 7 a bearing on the way those discussions would go?

 8 MR. CONOUR: I think so. Because I think that

 9 if there is a presumption that information which is not

10 reasonably available for discovery is not something

11 that's going to be produced without a showing of good

12 cause, since that doesn't need to be produced in the

13 first instance, I think that would help guide the

Page 85
0112frcp.txt

14 parties in terms of their meet and confer in deciding

15 what data they actually want.

16 Now, when they ask for a database and you

17 finally get them to back away from they can't have a

18 database because it can't be produced, the next thing

19 then is they want all of the data that's in the database

20 in some other form. But there's even problems with

21 that.

22 To produce all of the data that's in a

23 database in some other form, you have to go through all

24 of the data, and you have to identify that information

25 which is relevant to the litigation. Because much of

00207

 1 the data in the database won't be relevant to the

 2 litigation. They're other products or other subjects.

 3 Then you have to take that information from one table,

 4 find the link to every other table, and do the same

 5 tearing down of information across all these tables.

 6 Once you finally produce the information, what

 7 you've produced a not a database. Rather, you're

 8 producing either just straight text, something like

 9 comma delimited ascii text files, or you produce flat

10 tables.

11 When you do that, what the receiving party

12 gets is something that doesn't look at all like the

13 original database. It doesn't have any of the

14 functionality that comes with searches or queries or

15 reports. They have to spend hundreds of thousands of

16 dollars or maybe tens of thousands of dollars to develop

17 that functionality themselves. They also have to figure

18 out what all the links are, because much of the

19 information is in the way of coded information. So just

20 looking at one table, you can't figure out what that

21 means until you track down what all the different codes

22 are in all the other tables. So what they get -- and

23 again, it's just dozens and dozens of tables, and they

24 have no idea what it means.

25 And so what I would submit is instead of

00208

 1 requiring production, at least in the first instance, of

 2 something like all of the tables in the database, that

 3 the parties instead work together to try to figure out

 4 which piece of that database is relevant to the

 5 litigation, which piece of that information should be

 6 produced in the litigation.

 7 And I think that if you set up the standards

 8 that data which is not reasonably available for

 9 production is presumptively not discoverable, that will

10 require the parties to focus on that part of the data

11 which should be part of the litigation and that part of

12 the data which can easily be pulled out of the database,

13 rather than try to translate the entire database itself.

14 The other concern I have --

15 MS VARNER: Mr. Conour, have any of your

16 clients ever given interactive access to a plaintiff to

17 come in and interrogate database?

18 MR. CONOUR: No, we have not. One of the

19 problems we have with that -- and it's particular to

20 pharmaceutical litigation -- is that we are by federal

21 regulation prohibited from disclosing the identities of

22 patients, health care providers, and others who are

23 involved in adverse event reports, clinical trials, and

24 things of that nature. And that's what plaintiff's

Page 86
0112frcp.txt

25 counsel are after in this type of litigation. So we're

00209

 1 actually precluded by regulation from providing that

 2 information.

 3 But the second problem that comes with that is

 4 that when you provide access to this live data that the

 5 company is using on an everyday basis, there's a very

 6 real risk that this data can be corrupted or impaired

 7 somehow, such that it would impact upon the company's

 8 ability to continue to use that database.

 9 So we have not done that. We have done things

10 of the nature of dog and pony shows, if you will,

11 something like that, where we explain databases and

12 explain the data in them to help them come up with some

13 small subset of data that should be produced. But we

14 don't hand them over access to the database.

15 JUDGE SCHEINDLIN: I have a question about

16 "reasonably accessible." If it wasn't tied to the

17 everyday use in business but to the ease or difficulty

18 of retrieval, wouldn't it be -- much like not just use

19 in business, but basically the ease or difficulty of

20 getting at it.

21 MR. CONOUR: Well, Your Honor, I agree to a

22 certain extent. But it's not just the ease of getting

23 it. It's the ease of producing it that I think is

24 really driving this. That's what gives me concern.

25 MR. HEIM: Can you give us an example of that?

00210

 1 MR. CONOUR: Certainly. In pharmaceutical

 2 litigation, we are always asked to produce safety

 3 databases. These are the databases we use to track

 4 adverse event reports. Everyday the company is entering

 5 new information into the database, generating reports

 6 for the FDA, generating reports for its own safety

 7 surveillance.

 8 These databases typically include hundreds of

 9 tables. Each table will have multiple fields with

10 sometimes millions of records. Only some of those

11 records will be of interest to the litigants, because

12 they will involve patients using the particular drug in

13 the litigation.

14 To go through that database and pare down the

15 records to those that might be relevant to the

16 litigation requires you to go through each table and

17 extract out that information which isn't relevant to the

18 litigation, figure out how the tables are linked, figure

19 out what the codes mean, and go ahead and do that.

20 To do that, you have to generate queries to

21 isolate that data. And these queries are different than

22 what you normally use in business. In business you

23 usually use a query that helps you come up with some

24 small subset of data. But for litigation purposes, you

25 have to design a query that goes across all of the

00211

 1 tables and pulls out all of the data that might be

 2 relevant. So it takes a substantial amount of time to

 3 do that.

 4 Once you've done that, you've narrowed it

 5 down, you now have to export that data into some other

 6 fashion. And in exporting that data, you have to be

 7 careful that you haven't somehow impaired the data

 8 itself or the data structures. Because when you're

 9 dealing with that large volume of data, you're going to

Page 87
0112frcp.txt

10 end up with those types of problems.

11 Even then, before you can hand it over to the

12 other side, you have to then go through all of the

13 records and redact out that information that's required

14 to be protected by law, and those can be in millions of

15 freeform narrative records where you have to go through

16 each and every one and redact out the information.

17 So I would submit that in that context, that

18 type of the database is not reasonably available for

19 production.

20 JUDGE ROSENTHAL: Mr. Conour, it seems to me

21 that one of the ways to characterize what you're talking

22 about is the difference that we've been exploring for

23 much of the day between accessibility problems on the

24 one hand and burdensomeness problems on the other hand.

25 What you seem to be saying is that your availability

00212

 1 issues are really issues of burdensomeness, as opposed

 2 to accessibility questions, which are of a different

 3 category.

 4 And I come back to the same question that I

 5 started with. Are you suggesting in these terms that if

 6 we are going to continue to maintain a distinction that

 7 is unique to electronic discovery between active data or

 8 accessible data on the one hand and inaccessible data on

 9 the other and still be able to recognize that, there are

10 going to be burdensomeness issues for accessible

11 information as well? Is what you're really getting to

12 making clearer in the rule that any active data request

13 is still going to be subject to the proportionality

14 requirements that are already present in the rule?

15 MR. CONOUR: The first position would be

16 making information which is not reasonably available

17 presumptively not discoverable. But if that doesn't

18 happen, then of course what I would be looking at is

19 something in the rules that more carefully explains that

20 active data can sometimes not be discoverable.

21 The problem is that the comments right now,

22 they speak very highly about examples of offline data

23 that shouldn't lead to discovery problems, but there's

24 no illustrations or comments discussing the burdens

25 involved with active data, that may be involved with

00213

 1 active data. In fact, in some of the comments they talk

 2 about, if information is accessed by a company,

 3 regardless of the cost or burden involved in accessing

 4 that information, it is discoverable or it's not

 5 prohibited from discovery by the reasonably accessible

 6 standard. That to me almost seems to suggest that the

 7 committee has recognized the cost and burden of dealing

 8 with active discovery, but nonetheless we're only going

 9 to protect that information which is offline data, not

10 online data.

11 MR. CICERO: I have heard of some similar

12 cases including in the pharmaceutical industry, and I'm

13 having real trouble with some of the things you say from

14 about three different standpoints. Overall, it sounds

15 to me like some of it is a challenge or raising problems

16 to things that litigants acting in good faith have

17 successfully mastered for at least ten years or more in

18 dealing with a lot of this type of material. Let me

19 just run through three examples.

20 First of all, I have great difficulty -- and

Page 88
0112frcp.txt

21 I've sat here for some time now trying to really parse

22 through the significant difference between the term

23 "available" and the term "accessible." While you're

24 pleading for one as being significantly different from

25 the other, I have a great, great deal of difficulty

00214

 1 seeing where there really is in practice a difference

 2 between those two terms.

 3 The second thing that causes me to say that I

 4 think you're raising a challenge or raising a problem

 5 with a lot of things that have been successfully

 6 mastered is when you talk about organizing tables and so

 7 on. Now, putting to one side for the moment the

 8 question of -- some of the unique questions about

 9 confidentiality of information that are present at times

10 in certain industries, like the pharmaceutical one

11 perhaps, it is routinely a problem in electronic

12 discovery, it seems to me, and has been since we've been

13 doing it, the fact that pieces of data are here, there,

14 and everywhere. And if you produce a disk that has the

15 database, the other side is going to want to know how to

16 read and assemble that data. That's a problem that has

17 been successfully dealt with by good faith litigants for

18 a long time. And so I'm really having a lot of problems

19 seeing where you're raising something that is not a

20 rather routine problem that has been dealt with.

21 As to the problem of corrupting data that you

22 cited, I'm sure you and I'm sure a lot of us here have

23 routinely produced copies of databases or data

24 collections that are active files that our clients are

25 using. And you don't let the other side come in and

00215

 1 deal with the only original files that are there where

 2 there is a chance of them corrupting them. You make

 3 copies of them. That's something that's routinely done.

 4 It doesn't seem to me that that is something that is a

 5 significant problem or obstacle to production of these

 6 kinds of information.

 7 Now, there are some unique issues raised with

 8 respect to confidentiality of information. But I must

 9 say that at this point, I've listened to you, and I

10 don't find in -- I'm having difficulty finding something

11 that ought to be dealt with by rule.

12 The conclusion I come to is a lot of what

13 you're saying is you don't want this stuff discoverable

14 at all because it will corrupt databases, because it's

15 really a puzzle and you have to fit these pieces

16 together, and we don't want to provide the key to

17 putting it all together or whatever. Those are at best,

18 it seems to me, or at worst, burdensome problems and

19 issues. And I think we have to confront the fact that

20 this information -- the very fact that 99 percent of

21 the, quote, unquote, documents that we're dealing with

22 now or have been in the last five years are all on

23 electronic databases means we have to deal with this

24 issue. We've got to provide a way to get at it.

25 Litigants are entitled to it.

00216

 1 That's the conclusion we came to. So that I

 2 have a great difficulty seeing where your comments would

 3 lead us in terms of what we should change in the

 4 proposed rules, other than saying you can't get this at

 5 all.

Page 89
0112frcp.txt

 6 MR. CONOUR: In response to that, let me first

 7 say that I understand what you're asking. There's a

 8 presumption that the rules already say that information

 9 which is accessible or available is discoverable, and

10 that information which is not reasonably --

11 MR. CICERO: The rules right now say it is

12 material which is relevant and (indiscernible), and

13 that's where we start. And that's where it becomes a

14 problem with -- because it's, you know, various types of

15 information, electronically stored information we heard

16 about today, whether it's disaster tapes or whatever.

17 But I just don't understand what it is in what

18 we're proposing that really comes afoul of some of the

19 concerns you raise, because I think most of those

20 concerns have been very successfully mastered for ten or

21 fifteen years routinely.

22 MR. CONOUR: The way I understand the rules

23 and the notes is they provide guidance. The distinction

24 is being made not between what's reasonably available

25 for production, whether a company can routinely access

00217

 1 that information. All I'm saying is that ought not to

 2 be the standard. Whether or not a company can

 3 ordinarily access data --

 4 MR. CICERO: Tell me quite simply, in your

 5 mind what's the difference between "available" and

 6 "accessible"?

 7 MR. CONOUR: As the notes are written right

 8 now, "accessible" means something that a company

 9 accesses internally as part of its business. They can

10 get at it, they can touch it.

11 To me, "available" means not what the company

12 can do in its business, but is it available for

13 production to the other side? Is it reasonably

14 available without going through all of the tremendous

15 efforts and requirements to put it in a form that the

16 other side can use?

17 MR. CICERO: But it was the same problem with

18 paper files, carbon copies.

19 MR. CONOUR: Certainly there are problems with

20 that. But the location of documents and whether they're

21 easy to get to is serendipity. Whether your documents

22 happen to be across the hall or in a warehouse or what

23 have you, what's relevant to litigation and where you

24 find these documents is serendipity. With electronic

25 discovery, it's de facto. It's hard to get at in most

00218

 1 instances. It's not just the rare occasion where you

 2 have documents in the salt mine or documents that have

 3 been sitting in a basement. It's by the very nature of

 4 electronic data itself that can be difficult to get to.

 5 All I'm suggesting is that information which

 6 is burdensome, which is difficult, which requires

 7 translation, that information is something which ought

 8 to be given more protection. It's not whether the

 9 company itself can get at it.

10 I know I'm running --

11 PROFESSOR MARCUS: Do you have any problem

12 with the protection now provided by 26(b)(2), Roman

13 numeral three regarding unduly burdensome obligations to

14 respond to discovery? Isn't that what you're talking

15 about?

16 MR. CONOUR: I'm not troubled by the rule. I

Page 90
0112frcp.txt

17 don't have a problem with the rule. But what I have

18 concern with is the guidance that's provided in the

19 notes.

20 PROFESSOR MARCUS: The notes perhaps are about

21 something somewhat different. Would it address your

22 concern if they made clear that as to accessible

23 information, Rule 26(b)(2) still applies?

24 MR. CONOUR: Yes. Judge Rosenthal raised that

25 question. I know that the notes now that say some

00219

 1 information will still be subject to --

 2 PROFESSOR MARCUS: These notes are about the

 3 additional material regarding accessibility. They're

 4 not about what was already there.

 5 MR. CONOUR: The problem is that these notes

 6 are perceived as being about electronic discovery.

 7 They're not perceived about being just reasonably

 8 accessible electronic discovery. Because of that, I

 9 think there ought to be standards in the notes that deal

10 with even active data. There are still these problems

11 that need to be addressed.

12 At this point I wanted to say briefly that the

13 problems I have with preservation that I alluded to at

14 the beginning, with these databases, the normal and

15 routine function of these databases is to input data

16 into the databases everyday. This can be in the way of

17 new information, or it can be in the way of updated

18 information. Some databases are designed to track

19 information over a certain period of time. For example,

20 sales over the last six months. Every month that

21 database is going to change. Sometimes every week.

22 Sometimes every day.

23 What do you do with preservation? Do you

24 preserve the database as it appears at the time the

25 litigation is filed? Do you preserve the database as it

00220

 1 looks the next day, the week after, or the following

 2 month? Something needs to address this particular

 3 concern. You cannot just freeze a database each and

 4 every time it changes. You have to have something to

 5 address that.

 6 And what I would submit is something along the

 7 lines that, if a database is preserved, the parties

 8 should not be sanctioned for failing to preserve

 9 subsequent changes to that database that are made in the

10 ordinary and regular course of business. Something

11 along this nature. Because you cannot avoid the fact

12 that even live data is changing everyday, and you cannot

13 create a snapshot of that live data each and every time

14 it changes. Thank you.

15 JUDGE ROSENTHAL: Thank you, sir.

16 Mr. Noyes.

17 COMMENTS BY MR. NOYES

18 MR. NOYES: Thank you, Your Honor. I wanted

19 to preface my comments by thanking the committee for the

20 opportunity to testify today. I want to remind the

21 committee what I've done in my prepared written

22 testimony, which is I've actually written a long article

23 that should have come out last month, but the way these

24 things go, who knows, it may have come out today. In

25 any case, the whole cite for the article is 71 Tennessee

00221

 1 Law Review 585. I'm not going to read from that law

Page 91
0112frcp.txt

 2 review article today, but I am going to cover some of

 3 the issues addressed in there.

 4 A couple of pieces of background information.

 5 I'm a partner at Pillsbury Winthrop here in San

 6 Francisco. I've practiced here about ten years. I will

 7 be beginning a job as a professor of law this fall in

 8 2005. It goes without saying, but I'll say it anyway,

 9 which is, the views in the article and the views here

10 are my known and not necessarily the views or Pillsbury

11 Winthrop or its clients. To emphasize that fact, my

12 colleague and partner, Chuck Ragan, is going to be

13 following me, and I can tell you that I don't actually

14 know the substance of his testimony. So it's clearly

15 not the testimony of the firm that I'm offering.

16 With that said, I wanted to -- before I get

17 into the actual language of the proposed amendments, I

18 want to cover very briefly what I believe were the six

19 primary arguments for there being a difference between

20 discovery of electronic information and other types of

21 information. And based on those six differences, I

22 concluded that there were three actual differences that

23 were not already accommodated for by the existing

24 federal rules.

25 The first important difference is electronic

00222

 1 information is different because it's new. Generally,

 2 new technology has been accommodated in the rules. As

 3 Professor Marcus pointed out, when the rules were first

 4 enacted, we didn't have fax machines, didn't have

 5 photocopiers, and you couldn't direct-dial a

 6 long-distance telephone call. So that's not something

 7 that's particularly new, meaning that it's a new

 8 technology. However, the possibility of legacy data is

 9 something that I believe is unique to electronic

10 information. And that is information -- I think the

11 committee is generally aware of this -- that the

12 responding party either no longer has the technology or

13 possibly the personnel to access and bring it up. It's

14 sort of in a dead language. So that's one way in which

15 the electronic information is different and might

16 warrant changes in the rules.

17 The second purported difference is that

18 discovery of electronic information increases the

19 likelihood of inadvertently distributed information. I

20 don't believe that this is a true difference. This is

21 really an argument based on the increased cost or the

22 purported greater cost of discovery of electronic

23 information.

24 But that same issue, increased cost, is only

25 applicable in cases with large quantities of electronic

00223

 1 information. If you have a small amount, the costs to

 2 review that for privilege isn't going to be any greater.

 3 Conversely, if you have a case with a huge number of

 4 hard copy documents, the cost to review that for

 5 privilege is going to be is very high and is going to

 6 increase the likelihood of inadvertent distribution.

 7 The third purported difference is that that

 8 kind of information often required an on-site inspection

 9 of a party's computer system by an opposing party. I

10 agree that this is at last arguably different than hard

11 copy information, but I believe that this difference is

12 already accommodated and accounted for in the rules that

Page 92
0112frcp.txt

13 permit under 26(c) the producing party to seek a

14 protective order to protect against disclosure of

15 privileged information and in some cases seek a mutual

16 expert to go in and look at that information.

17 The fourth purported difference is foliation

18 of electronic information. The general issue of

19 foliation I believe is not unique to electronic

20 information. Information is often lost, purposely or

21 otherwise. But the dynamic nature -- and we have heard

22 testimony about that today -- of certain types of

23 electronic information is something that's unique.

24 Electronic information can change without human

25 intervention, and it regularly does, and that's unique

00224

 1 to electronic production and might warrant amendment of

 2 the rules.

 3 The fifth purported difference is the form of

 4 production. This is something that electronic

 5 information -- let me apologize here. I've been using

 6 the phrase "electronic information" as a catch-all for

 7 sort of the subject that we are discussing now. In any

 8 case, with electronic information, you have a question

 9 of what form that is going to be produced in, and that

10 is unique to this catch-all of electronic information.

11 The sixth purported difference is increased

12 volume and cost. As I noted before with inadvertent

13 disclosure, I don't believe that that's a true -- that's

14 just a difference in those cases in which there are

15 large quantities of information, hard copy or electronic

16 information.

17 So with that in mind, there are differences,

18 and therefore I think there are some changes that should

19 be made to the rules to accommodate discovery of

20 electronic information and provide guidance on those.

21 I'm going to go into those, but let me give

22 you a little bit of sort of my sense of what the rules

23 intend to do, and we had a little discussion of that

24 earlier, which is that relevant information or

25 self-defined discoverable information should be

00225

 1 discoverable. And that is, the rules are there to

 2 define what is discoverable. Generally, it's relevant

 3 information or likely to lead to the discovery --

 4 JUDGE SCHEINDLIN: You said volume is not a

 5 real difference?

 6 MR. NOYES: It's not a difference that is

 7 unique to electronic information.

 8 JUDGE SCHEINDLIN: I wanted to talk about

 9 that. What about the replicant and duplicative nature

10 of sending out one document? You send one e-mail, and

11 it's on a hundred servers, which sends it out to a

12 hundred more. I know you're going to say, sure, there

13 are copies of paper documents, but it's nothing like you

14 see with duplicate replication, which creates huge

15 volume.

16 Don't you see that as a big difference?

17 MR. NOYES: No, I don't.

18 JUDGE SCHEINDLIN: You don't see -- it's

19 appearing everywhere, the same document, over and over.

20 MR. NOYES: I go back to hard copy. If you've

21 got a hard copy mass mailer that's sent out to 10,000

22 people, that's the equivalent of an e-mail that's being

23 sent out to --

Page 93
0112frcp.txt

24 JUDGE SCHEINDLIN: But everybody is not a mass

25 mailer. Everybody is an e-mailer.

00226

 1 MR. NOYES: That's true. But e-mail isn't

 2 necessarily always sent out to tens of thousands of

 3 people. It depends on the case.

 4 JUDGE SCHEINDLIN: It's not just the e-mailer.

 5 It's the recipients. And then they have it, but it's on

 6 their server, and it's backed up and it's backed up

 7 again so that it repeats itself. It duplicates itself

 8 in a whole new way that never would have happened.

 9 Your mass mailing example doesn't begin to

10 talk about the number of back-ups that you get, which is

11 one of the problems with back-ups. I see there's a

12 difference. I just wanted to ask you to explore this in

13 your mind maybe at a later time.

14 MR. NOYES: I'm not sure that we're differing

15 on substance. We're probably differing on the way that

16 we look at it.

17 What I offer on that, and then I'll move on,

18 is you can have a hard copy document that is distributed

19 to tens of thousands of people. You can have a hard

20 copy document that is altered in small ways. You can

21 have an e-mail that is sent out to tens of thousands of

22 people. Each one of those e-mails may have unique

23 aspects to it. And we talked about this in terms of

24 form of production. Each e-mail can be opened at a

25 different time, and that might be significant. So it's

00227

 1 not necessarily just the e-mail going out, but it's the

 2 other information that goes with it that might be

 3 significant.

 4 MS VARNER: You don't seriously doubt that one

 5 of these large companies that we're heard from before,

 6 like Microsoft, is in the middle of a knowledge deluge?

 7 That is very different in terms of volume and scope. It

 8 once was everybody, if you wanted to send a copy to

 9 somebody, you had to either Xerox it or make a carbon

10 copy and put it in an envelope send it interoffice mail.

11 You're not really challenging --

12 MR. NOYES: Well, I am to one degree, and that

13 is if the question is, is it different simply because

14 it's electronic information? The answer is no. That

15 doesn't necessarily mean the volume is greater. You

16 have to look at, what is the volume of information? And

17 in a hard copy case, you might have -- in an insurance

18 case, a hundred thousand claims files. That's a large

19 case in which volume and cost is going to be an issue

20 and might be dealt through the rules.

21 In a case of electronic information, yes, you

22 have cases in which it's greater, but it's not simply

23 because it's electronic information that it immediately

24 means it's more costly or voluminous. You look at it on

25 a case-by-case basis. Yes, that is more common with

00228

 1 companies like Microsoft, companies -- most companies

 2 these days that are large companies and do most of their

 3 document management by electronic means.

 4 I think I've explained myself. I'm trying to

 5 sort out whether there are differences that are inherent

 6 in the nature of electronic information; okay?

 7 So going back to what is sort of my view of

 8 the principles of the rules. I believe and the

Page 94
0112frcp.txt

 9 proposals that I make and comments that I make are based

10 on the idea that the rules are there to provide for the

11 parties to resolve and deal with discovery, and that we

12 want to avoid getting the courts involved unless and

13 until there is a true dispute that cannot be resolved.

14 I mean, discovery isn't filed with the court unless

15 there becomes a dispute, is the simply example. That,

16 combined with the idea of we define what is

17 discoverable, and if it's discoverable, generally it has

18 to be perused if it's asked for does not abide by

19 proportionality and reasonableness.

20 I want to turn to my analysis of the proposed

21 amendments to the Federal Rules of Civil Procedure. I

22 broke it down into six categories. They're my

23 description. If you're offended by the way I have

24 described the category, that's fine. There's nothing

25 sacred about that.

00229

 1 The first category that I discussed is

 2 expanding the initial discovery planning session to

 3 include consideration of electronic information, the

 4 proposed amendment to Rule 26(f).

 5 My proposal, which I set forth in the prepared

 6 written testimony, is a little bit different.

 7 Essentially, I agree that it's helpful for the parties

 8 to meet and confer at the outset about preservation of

 9 discoverable evidence and issues that might arise with

10 respect to discovery of electronic information. But I

11 think that the insertion of this new phrase,

12 "electronically stored information," is not necessarily

13 good. We'll talk about that a little bit further under

14 the second issue. I however don't think that it's

15 beneficial to insert into the rules a specific

16 requirement that the parties meet and confer regarding

17 whether on agreement of the parties the court should

18 enter an order protecting the right to assert privilege

19 after production of privileged information.

20 As some of the notes of the subcommittee -- I

21 think it was the discovery subcommittee -- indicated,

22 there was a discussion of several specific issues that

23 might be included within those that the parties should

24 meet and confer upon. The one I recall in particular

25 was cost bearing. I believe that conclusion could send

00230

 1 an inappropriate message, meaning undue emphasis,

 2 including some of these issues but not others, and I

 3 agree that -- I do not believe it should be included in

 4 this list. I don't believe it carries an important

 5 status beyond other issues that might be discussed.

 6 I also think that this gets into one of the

 7 issues on inadvertent disclosure of privileged

 8 information, which, as I'll discuss further, I'm not

 9 certain that this provides any actual safe harbor for

10 the parties to reach an agreement or not reach an

11 agreement. And if they can't reach an agreement and the

12 other side is willing to reach an agreement and the

13 other isn't and uses that as sort of a gamesmanship type

14 of position, disclosure of information, then you're not

15 certain that if you use such an agreement, it's going to

16 be binding or upheld or is going to protect you from

17 having waived information in other cases in other courts

18 and other jurisdictions.

19 I also think that that's going to encourage,

Page 95
0112frcp.txt

20 as I note, district courts to enact blanket protective

21 orders, or even the district court themselves to have a

22 certain local rule or standing order regarding

23 production of privileged information. And I think that

24 including that within this would encourage some courts

25 or lead them to do that.

00231

 1 JUDGE ROSENTHAL: The notes make it quite

 2 clear that the court cannot enter any such order unless

 3 the parties agree. Do you think that that is inadequate

 4 language to protect against the tendency of courts to

 5 just do it anyway?

 6 MR. NOYES: I do. And as I mentioned, I think

 7 it might end up with the result of one party not wanting

 8 to agree to that and the other party using that against

 9 them with the court, already knowing that the court

10 might be inclined to enter such an order. And that's

11 not something that I think is productive for the parties

12 in terms of their negotiations about what should and

13 shouldn't be done, particularly given that this rule as

14 I understand it in the proposal is not intended to

15 effect a substantive change in whether you actually

16 waive a privilege by producing information for --

17 JUDGE ROSENTHAL: What in the rule do you

18 think might be changed to make it clearer than saying

19 the court can't do this unless the properties agree?

20 MR. NOYES: Taking it out altogether.

21 The second issue that I describe is revising

22 the current definition of "documents." And this is the

23 proposed amendment to Rule 34 that's been discussed so

24 much today. Mr. Allman addressed it in particular.

25 My proposal is simply there should not be a

00232

 1 change to Rule 34. I don't believe that it's reasonably

 2 in dispute or arguable that electronically stored

 3 information or other types of non-hard copy information

 4 is not discoverable simply because it appears in another

 5 form.

 6 JUDGE SCHEINDLIN: Another suggestion was to

 7 leave it with "documents," but specifically refer to

 8 electronically stored information as a subset of

 9 "documents." You don't like that either?

10 MR. NOYES: I don't, given the proposal here,

11 because I think "documents" already includes data or

12 data compilations. And that's the phrase that I use

13 throughout, because I think that's essentially all

14 encompassing.

15 JUDGE ROSENTHAL: Let me ask you a question

16 about that. Judge Scheindlin made the point earlier

17 that "document" tends to be thought of as a fixed thing

18 that contains information, and electronically stored

19 information refers to the information itself. So if you

20 were to step back and look at it in the abstract,

21 perhaps "document" is really a subset of "electronically

22 stored information." That is, "document" is one way of

23 capturing information.

24 MR. NOYES: Right. I see -- well, I'm not

25 sure. I was going to say I understand that difference.

00233

 1 I see the difference you're pointing out.

 2 JUDGE SCHEINDLIN: The last speaker did it.

 3 He talked about dynamic databases. He said you actually

 4 can take a snapshot of the database at a certain time,

Page 96
0112frcp.txt

 5 but because it's constantly changing, it doesn't sound

 6 like a classic document. I asked him that question.

 7 Then he said, well, he could see that it's a subset.

 8 Do you remember that exchange? Because he was

 9 talking about dynamic databases in a sense of something

10 you can't capture and fix in a moment in time. That's

11 what he said. He has more familiarity with dynamic

12 databases than I do.

13 MR. NOYES: And let me make a confession. My

14 testimony is based on my experience. I'm a

15 practitioner. I have the benefit of being somewhat

16 unsophisticated. I'm not here as a computer forensic

17 expert. I've had some experience with that just doing

18 discovery. So others have talked about that.

19 Let me offer this, which is, as I said, I

20 believe that data or data compilation encompasses all of

21 those types of information, and it's already in the

22 rules.

23 One of the other problems that I believe

24 exists and I want to point out is that by changing the

25 way I see it to include electronically stored

00234

 1 information and documents and having that be two

 2 separate categories, whether they're subcategories or

 3 not, effects other parts of the rules. The rules use

 4 the word "documents," which I would include as already

 5 defined to include electronically stored information,

 6 elsewhere.

 7 If you are going to make changes to

 8 electronically stored information, you will want to make

 9 changes to the rules. And I note it's here in

10 26(a)(1)(d), 26(b)(1), 35, and 36(a). Because, for

11 example, in admitting the genuineness of any documents

12 described in this request, certainly we want somebody to

13 admit the genuineness of electronic information that had

14 been produced.

15 The third category of change that I discussed

16 is establishing that not reasonably accessible

17 electronic data is discoverable only by a showing of

18 good cause. I had a hard time coming up with what I

19 thought was an orderly and logical way to go through

20 sort of the issues that I have with this, but let me see

21 if I can try to set them out a little bit.

22 I think that this is a good change, I mean,

23 distinguishing between two tiers of information. And I

24 think it's actually consistent with the rules. It's

25 just not something that's in the rules. I think it

00235

 1 should not only go in 26(b)(2), but it should also go in

 2 26(b)(1), where we create two tiers of information, one

 3 of which is discoverable without any showing, one of

 4 which is discoverable based on good cause. And since

 5 that difference already existed, we're using that same

 6 standard, or at least the same standard as proposed, it

 7 ought to go in there.

 8 The other reason I think it ought to go in

 9 26(b)(1) is because I don't think that these proposed

10 changes -- or I think of them actually as a

11 clarification of not reasonably accessible information.

12 I don't think that that should alter the objection that

13 can be made on 26(b)(2), sub one, sub two, and sub

14 three, or the objection that can be made on 26(c). And

15 I had a hard time looking at the Rules Committee's

Page 97
0112frcp.txt

16 proposals, figuring out how those three parts went

17 together, given where the proposal was placed.

18 JUDGE SCHEINDLIN: I looked at your proposal

19 on page eight. I thought it was pretty good, with the

20 one exception that it lost the burden shift. It didn't

21 spell out the producing party has to show the

22 inaccessibility and the requesting party has the burden

23 of showing good cause. That's the only thing it

24 dropped.

25 MR. NOYES: And let me make another

00236

 1 confession. When I was reading over this, just sitting

 2 in the audience now, I had a terrible thought that what

 3 this was in some way intended to do, but I didn't say

 4 this explicitly -- and I guess I ought to now, since

 5 we're here for those purposes -- is in my practice

 6 experience, the distinction between information that is

 7 immediately discoverable because it's relevant to the

 8 claim or defense of any party and the second tier

 9 information has been emasculated, obliterated, whatever

10 you want to call it. It doesn't have any teeth.

11 My thought was, well, this will be one way to

12 give that some teeth and make that actually a battle. I

13 think that people in practice need to make it relevant

14 or likely to lead to discovery of admissible

15 information. As moved much beyond that, nobody really

16 fights that, at least in my experience, oh, you really

17 have to go and show good cause on this. Then I had the

18 disheartening thought to myself, well, this is probably

19 just going to emasculate my own proposal, where we don't

20 really fight about that good cause distinction.

21 So that's something that I share with the

22 committee. But I still think this is the appropriate

23 place and the appropriate test. And maybe that leads me

24 to the committee, if it is going to consider this sort

25 of proposal, ought to put something in the notes. This

00237

 1 ought to have real teeth. And the other distinction

 2 between information that is immediately discoverable

 3 versus showing of GOOD cause also ought to have teeth.

 4 MR. RUSSELL: You eliminate the requirement to

 5 identify what they didn't produce also.

 6 MR. NOYES: Yes. And from my perspective,

 7 that's essentially what happens already, to the extent

 8 that we were talking about the showing of good cause

 9 that already exists in the rules. That's the way that

10 works anyway. You meet and confer about it, you offer

11 your arguments, and then you go to court, and the party

12 who wants to get the information files a motion to show

13 good cause.

14 So I think that's the way it's probably going

15 to work in practice, I think that's the way it has

16 worked in practice on this showing of good cause, and I

17 didn't believe it is necessary to spell that out in the

18 rules.

19 The other thing I wanted to raise was that

20 this rule, proposal, the way that it's drafted, is

21 limited to discovery of electronically stored

22 information, and I don't believe that there's a good

23 justification for making information that is not

24 reasonably accessible but exists only in hard copy, to

25 give that some sort of different status. And I think

00238

Page 98
0112frcp.txt

 1 putting all of the proposals together, that's the result

 2 that we would have here. Electronically stored

 3 information is one category, and documents are another.

 4 Because this is referring only to discovery of

 5 electronically stored information, then sort of the

 6 limitation on whether it's not reasonably accessible

 7 wouldn't necessarily apply to hard copy documents.

 8 The proposal that I make goes back to the

 9 language that I described, data or data complications.

10 But I think the point being that's a distinction between

11 information that's reasonably accessible and not is a

12 valid distinction for both.

13 JUDGE SCHEINDLIN: You think that reasonably

14 accessible for the two tier applies to any discovery?

15 MR. NOYES: Yes. And I can't be sure of this,

16 Your Honor, but I think it was an article that you wrote

17 that discussed types of hard copy information that might

18 be inaccessible. I won't put words in your mouth,

19 because these might not be the examples.

20 But documents in storage is very difficult,

21 very expensive to access. Documents converted to

22 microfiche are not searchable by any particular means.

23 You'd have to search literally the entire film to find

24 out what's on it or other documents. There's no

25 indexing system.

00239

 1 In a case, for example, in my practice

 2 experience, there was an insurance case where there's a

 3 hundred thousand claims files, and they're simply stored

 4 in boxes that aren't labeled by, you know, clients or

 5 insured, and they are in a warehouse. And you've got a

 6 hundred thousand claim boxes and no way to know which

 7 information is in which box.

 8 So those to me are distinctions that might be

 9 made between hard copy documents that are reasonably

10 accessible versus not reasonably accessible, and I think

11 the rule ought to apply to both categories of

12 information, electronic and otherwise.

13 The fourth category is the parties are

14 required to produce electronically stored information

15 only in one form unless a court orders otherwise for

16 good cause. I suspect that my proposal here is going to

17 be somewhat controversial, in that my proposal is the

18 parties produce, or at least the presumption is they

19 produce the data or information in each form in which it

20 is maintained. So the presumption would be that you

21 produce it -- let's say it exists on a .pdf, and it also

22 exists on a Microsoft Word document, and it also exists

23 in a hard copy document. You would produce each of

24 those forms in which it's maintained.

25 As an aside, my experience is that you're end

00240

 1 up with fights in any case because -- Mr. Allman was the

 2 one who said 75 or 80 percent of the case, none of these

 3 issues are a problem. So let's talk about the 20 to

 4 25 percent that it is a problem. In those kinds of

 5 cases, you're going to have a fight about immediately

 6 the producing party, probably a plaintiff's attorney,

 7 wanting to get all of the different forms.

 8 I'll give you an example: A .pdf, Microsoft

 9 Word, and a hard copy document. If I'm a plaintiff's

10 attorney, I'm going to want to see those hard copy

11 documents to make sure there aren't writings on them, as

Page 99
0112frcp.txt

12 opposed to a .pdf. I'm also going to want to see the

13 Microsoft Word document, because it's got all the

14 metadata that tells you about who created it, when,

15 what, all those other things.

16 Now, I admit and see this is an initially

17 greater burden or at least a presumptively greater

18 burden to produce the information in all of the forms in

19 which its maintained.

20 JUDGE SCHEINDLIN: You wouldn't want the .pdf.

21 I can see your point about wanting the hard copy. There

22 could be notation. And the Word document, it's got the

23 metadata and it's searchable. What then why the .pdf?

24 MR. NOYES: I probably wouldn't, but I'm

25 thinking from a defense attorney's standpoint, which I

00241

 1 would use .pdf or the .tiff.

 2 JUDGE SCHEINDLIN: Sure. But at most two --

 3 MR. NOYES: Right. So I think that these can

 4 be limited somewhat by initially a greater burden to

 5 produce all of this presumptively by the fact that

 6 you're going to limit the number of motions and the

 7 motion practice that's necessary for a plaintiff's

 8 attorney who in every case is going to want all types of

 9 documents. It's also going to be limited by the

10 requirement that the parties meet and confer on these

11 issues in advance.

12 JUDGE SCHEINDLIN: Well -- the only reason is

13 I have this case in front of me tomorrow, the exact

14 case, where the plaintiffs do want the paper and the

15 electronic. But that should go away over time, because

16 this won't be paper around. The business will be really

17 producing only an electronic record. This is an

18 historical case, and it should go away?

19 MR. NOYES: I can only offer you my opinion

20 and my experience. I don't think it's going to go away,

21 because you're always going to have the secretary, the

22 administrative assistant print out a copy and write

23 something on it. I don't think we're going to exist in

24 a completely paperless world. You may disagree. There

25 may come that day, but I don't see it coming.

00242

 1 And if I'm a plaintiff's attorney, and

 2 somebody knew to print it out and write something

 3 specifically on it, I want to see it. Simply because

 4 they printed it out and wrote something on it, that in

 5 and of itself might be significant in the case. Why did

 6 they print this document and save it?

 7 So continuing on with the issues with request

 8 to -- I think it's also going to be limited by the meet

 9 and confer process, in which you're going to have

10 parties saying, fine, I'll produce for you in a room my

11 10,000 boxes of documents, and you can look at them, you

12 can inspect, and you can tell me which ones you want to

13 copy. Most plaintiff's attorneys -- I won't say most.

14 Some plaintiff's attorneys say, fine, I'll tell you

15 which ones I want. I don't want those. I've been

16 through them, I've seen that there's no writing on them.

17 The meet and confer process should limit some

18 of these, because the parties for cost considerations

19 aren't going to want to actually copy and keep all of

20 the forms in which information might be maintained.

21 The fifth category or proposed -- proposed

22 amendments that I discussed I call lessening the burden

Page 100
0112frcp.txt

23 created by the need to review documents, protecting

24 against inadvertent privilege waiver.

25 My proposal and conclusion is that the rules

00243

 1 should not be amended to address this particular issue.

 2 This is much discussion in some of the discovery

 3 subcommittees about whether substantive changes that

 4 affect the rules of privilege would be valid, and my

 5 understanding is that rules were crafted to move away

 6 from that and not to effect substantive changes that

 7 would have to be done and approved by Congress and by --

 8 at least should be done in conjunction with the Rules of

 9 Evidence.

10 That being said, the way the rule reads to me,

11 I think there are going to be attorneys out there who

12 reasonably read this to say, I can go ahead and produce

13 information in a large document case and then ask for it

14 back and not have waived the privilege. Because

15 otherwise, why would we go to court and get a ruling

16 about it?

17 As I say, what value is there in an amendment

18 that doesn't provide any such substantive protection?

19 What the proposal would allow the party to do who has

20 produced and waived the privilege is request the

21 document back and then have a hearing so the Court could

22 say, yes, you've waived the privilege. I don't see that

23 much value in that.

24 I also think that the phrase that's used in

25 here, reasonable time period to request the documents

00244

 1 back, is going to result in a significant amount of

 2 litigation about how long after disclosure must the

 3 documents be sought back. Each judge is going to have a

 4 different view as to what's a reasonable amount of time.

 5 Their view might differ, even for the same judge,

 6 depending on the facts of a particular case. I think

 7 this was mentioned by the discovery committee. Is it

 8 reasonable to request return of information that's

 9 already been used in a deposition, where the witness has

10 already been examined about it, or at least has been

11 presented to the witness, and somebody objects at this

12 point? What about evidence submitted in support of a

13 motion, particularly a summary judgement motion?

14 And then in any case, as a practicing

15 California attorney, I don't believe that this rule

16 would effect any change in what I'm ethically and

17 professionally obligated to do, because I believe that

18 the rules in California require me -- and I cite several

19 of them -- require me to look at all of that information

20 and make sure I'm not turning over any privileged

21 information and probably any proprietary information of

22 the client.

23 So I'm not sure if effecting this rule is

24 going to change anything. And I'm not sure that, even

25 if it did, I could rely on it as an attorney, because I

00245

 1 would be afraid if I produced information in a federal

 2 case and then got it back and even had the Court say,

 3 and you haven't waived the privilege, that in some

 4 follow-up state case or concurrent state case in

 5 California that a court there wouldn't say, well, you

 6 turned over the information, you did it voluntarily, and

 7 you knew that this was an issue, you've waived the

Page 101
0112frcp.txt

 8 privilege. Because that's the way the rules read to me

 9 in California now, and I wouldn't want to suffer the

10 slings and arrows and potential liability of having done

11 that.

12 MR. KEISLER: (Indiscernible) -- submit the

13 issue for a judicial determination?

14 MR. NOYES: And I guess my thinking on this

15 is, what determination are we submitting it for?

16 Because if you've turned something over and waived the

17 privilege, what good is it to you to have a hearing

18 about that?

19 MR. KEISLER: There may be some question as to

20 whether or not this act of turning it over under the

21 circumstances in which you did effects a waiver, and

22 that would be what the judge would decide. And I think

23 all the rule creates is a mechanism during the interim

24 in which it's litigated.

25 MR. NOYES: I have two thoughts on that. One,

00246

 1 the situation you're describing to me would lead a

 2 reasonable practitioner to say, this must have some

 3 impact on whether or not there's a waiver, because

 4 otherwise why would they create a mechanism for

 5 resolving it?

 6 Second, even if you disagree with that, as I

 7 said, in California, the way I read the rules, once I

 8 have turned that information over, I've waived the

 9 privilege. What good is it for me to go have a hearing,

10 even in federal court, even if the judge decides you

11 haven't waived the privilege in this case, if I've now

12 waived it under California law for California state

13 proceedings?

14 MR. HEIM: It may help you with a case that

15 you have (indiscernible) privileged document. So if

16 your concern is that that privileged document that was

17 inadvertently produced crops up in a case that you're

18 dealing with currently, this rule might provide a means

19 for you to successfully deal with that issue.

20 And as to the first point that you raised,

21 well, I think it's something worth thinking about. That

22 could be dealt with in the notes and likely will be

23 dealt with in the notes.

24 MR. NOYES: And I guess I go back to -- maybe

25 I am confessing or professing my own ignorance here.

00247

 1 I'm not sure and I don't believe what's set forth here

 2 is something different than what the parties already do

 3 now if there were a dispute about information that had

 4 been turned over and somebody said egad, the, you know,

 5 paralegal turned over the wrong box. We did everything

 6 right and we turned it over to the other side, but

 7 somehow they confused the two labels and we sent it to

 8 the other side. What would they do? They'd ask the

 9 other side for it back. If they didn't give it back,

10 there would be a hearing.

11 So I don't know what this would accomplish. I

12 think that the complaint of everybody is electronic

13 information is likely to lead to the disclosure, the

14 inadvertent disclosure of privileged information. I am

15 not sure how this rule limits that concern or even

16 addresses it.

17 MS VARNER: It gets the document out of the

18 hands of the person who -- until that sticks. And there

Page 102
0112frcp.txt

19 are a number of the states in this country where that

20 does not happen and where people will say, I'll put it

21 in an envelope, or I'll keep it, but I'm not giving it

22 up. And I think the committee at least made a tentative

23 proposal that that document ought to come back to the

24 person who owns the privilege unless and until the

25 decision on waiver is made.

00248

 1 Now, with regard to whether a waiver has

 2 occurred, I think your -- at least my personal view is

 3 you're probably correct. There are three schools of

 4 thought: You produce it to the other side, and you've

 5 waived; you produce it to the other side, and as long as

 6 it's inadvertent, you haven't waived, unless you

 7 intended to waive; and the third is it depends on the

 8 circumstances.

 9 I would say that's not materially different

10 from what exists now, but I do think it's a -- I think

11 it's a material difference if you can get the documents.

12 JUDGE SCHEINDLIN: I have a question for the

13 committee. What if you've disseminated it to a hundred

14 people? How in the world do you draw it back from the

15 hundred now? Say that request comes out late in the

16 game and a hundred people have it. What are you going

17 to do?

18 MS VARNER: I think if the judge determined

19 that there was no waiver, under whichever school you

20 happen to be in, if you discovered or --

21 JUDGE SCHEINDLIN: Before the judge. You

22 talked about it to get it out of the hands of the party

23 that shouldn't have it. Before the judge.

24 MS VARNER: I think you have to do recall.

25 JUDGE SCHEINDLIN: Recall from the hundred?

00249

 1 MS VARNER: Whether that's successful or not.

 2 But I do think the whole -- that you do the best you can

 3 to get it back once you need to.

 4 JUDGE SCHEINDLIN: Maybe we need to clarify --

 5 JUDGE ROSENTHAL: We're running out of time.

 6 I wanted to give you an opportunity to talk about safe

 7 harbor.

 8 You had suggested in your article or in your

 9 comments, I can't remember which one, that there ought

10 to be a snapshot taken based on the electronic

11 information available to the company on the day it

12 becomes aware of the potential for litigation.

13 MR. NOYES: It's actually a two tier approach.

14 At the time that it becomes aware of potential

15 litigation -- and the phrase I use is the party must

16 preserve (indiscernible) things that are discoverable

17 pursuant to Rule 26(b)(1) and reasonably accessible,

18 which is the first tier under the existing rules and my

19 proposal for those rules.

20 Then on notice that an action has actually

21 been filed, you have the second tier obligation or the

22 higher obligation, and that is to take a snapshot of

23 inaccessible materials that it stores for disaster

24 recovery or otherwise maintained as back-up data.

25 One reason why I add on inaccessible materials

00250

 1 and add on to that storage for disaster recovery or

 2 otherwise maintained as back-up data is because of a

 3 problem Judge Scheindlin was referring to earlier, which

Page 103
0112frcp.txt

 4 is, okay, litigation has been filed, we want to get a

 5 snapshot of everything, but it needs to be clear that

 6 snapshot doesn't include like residual data or going to

 7 every person's computer and freezing every piece of

 8 information in the entire business.

 9 JUDGE ROSENTHAL: Which was my question. What

10 are the limits of this, quote, snapshot obligation?

11 I've heard this proposal or variations of it from other

12 sources, and it is often accompanied by criticisms that

13 they are simultaneously overinclusive and

14 underinclusive.

15 I'm wondering how you would -- first, do you

16 think it ought to be built into a rule in some fashion

17 where this is more along the lines of protocol and good

18 practice? First question.

19 Second question, how would you limit it so

20 that you wouldn't have these kinds of problems?

21 MR. NOYES: I hope I've addressed each of

22 those issues. I do think it ought to be in a Rule

23 26(b), a new sub-part, sub six, which is a preservation

24 obligation.

25 I don't think that -- you know, let me put

00251

 1 this affirmatively. I do think that it's important for

 2 practitioners who are advising clients and in-house

 3 counsel, for them to know what are your preservation

 4 obligations, and when do they arise. And I think that

 5 ought to be made clear, and I think it ought to be made

 6 clear in the rules.

 7 JUDGE SCHEINDLIN: Can we as a rules committee

 8 promulgate a rule that takes place before there's an

 9 action? Say as soon as it's anticipated, you should

10 preserve? Now there's no action pending. How do the

11 federal rules cover the preaction --

12 MR. NOYES: I leave that to you all to decide.

13 I think you ought to, because it's consistent with the

14 way the rules are set up for prelawsuit sort of

15 jurisdiction of the rules. Meaning you can go and get

16 an emergency deposition before a lawsuit is filed if a

17 witness is going to disappear or die or whatever. I

18 think this is consistent with that and consistent with

19 the idea that if we don't put some limit upon it when

20 you're aware, it triggers some obligation when you're

21 aware that you're going to get sued. Let's say for a

22 specific incident that occurred, I think that's the time

23 at which we ought to know there's a preservation

24 obligation, and it ought to be in the rules.

25 JUDGE SCHEINDLIN: Oh, I know there's

00252

 1 foundation, common law. I want to know whether we can

 2 do it as rules.

 3 MR. NOYES: And again, I leave that to you all

 4 to decide. All I can offer is I think it's consistent

 5 with the scope of the rules as they exist in other

 6 related areas prelawsuit.

 7 As to the other question, which is, how do you

 8 make sure that it's underinclusive and not

 9 overinclusive? And I went back and forth a whole lot

10 about this and came up with what I described as a two

11 tier obligation.

12 Let's go to the second tier, which is, once

13 you know you've actually been sued, whether you've been

14 served or otherwise have notice of it. What I intended

Page 104
0112frcp.txt

15 to encompass is a snapshot, but the snapshot wouldn't

16 freeze the operation of the business. It's those

17 inaccessible materials that are stored for disaster

18 recovery or otherwise maintained as back-up data.

19 I recognize that there can be some hay made

20 with that about -- the phrase "inaccessible" is sort of

21 a dynamic phrase, meaning it can change over time. What

22 is accessible will change as technology grows. And I've

23 avoided that in the rule that deals with the distinction

24 between is it discoverable and do you have to show good

25 cause, and then I've embedded back into the rule here

00253

 1 some of the language that's been discussed about

 2 disaster recovery or otherwise maintained --

 3 JUDGE SCHEINDLIN: You wouldn't take a

 4 snapshot of the active data, but the inactive?

 5 MR. NOYES: The active data would already be

 6 covered under the first tier, if it's relevant and

 7 discoverable.

 8 JUDGE ROSENTHAL: One more question before

 9 we're out of time. Is the practical effect of your

10 proposal that for any company that is a frequent target

11 of litigation, including the United States government,

12 that it would have no ability to recycle any kind of

13 back up information or disaster recovery? It's sued

14 everyday, so it's got to keep every piece of information

15 it ever generated forever? Is that the net effect?

16 MR. NOYES: I hope not.

17 JUDGE ROSENTHAL: Peter is a busy guy. His

18 client is sued even as we speak.

19 MR. NOYES: All of this is limited by the

20 other limitations on what information is discoverable.

21 Once it's discoverable, even if it's accessible, you

22 take a snapshot. I guess the result of that could be if

23 literally a branch of the U.S. government is sued

24 everyday, they would keep a snapshot of every days's

25 information. But I think that at the end of the day,

00254

 1 that's consistent -- I'll go back to what I started

 2 with -- that's consistent with the way the rules are

 3 written and crafted, which is, if the information is

 4 there and you've got it and it's helpful to the other

 5 side, then you ought to produce it.

 6 So I guess the answer is yes. Maybe that's

 7 not the answer that we want, but, yes.

 8 JUDGE ROSENTHAL: Are there other questions of

 9 Mr. Noyes? Thank you, and good luck in your new career.

10 Mr. Ragan.

11 COMMENTS BY MR. RAGAN

12 MR. RAGAN: Thank you, Madam Chairman, Members

13 of the Committee. Thank you for the opportunity to

14 appear today. Thank you for all of your work that

15 you've done over the last several years. It really has

16 been important work.

17 Let me say at the outset that I did not know

18 about Mr. Noyes' article until last week, and we have

19 not shared views about our respective opinions. My

20 opinion is decidedly my own. I represent no client here

21 today and no organization. I'm being paid by no one.

22 If you think the information, the views that are

23 provided to you are worthless to you, you're getting

24 what I'm being paid for.

25 I also apologize to the committee for not

Page 105
0112frcp.txt

00255

 1 having presented written materials earlier. They were

 2 provided over the noon hour. I was consumed by a client

 3 emergency from 6:00 p.m. Monday until 12:30 this

 4 afternoon. And therefore I also probably have to

 5 apologize in advance for the disorganization of my oral

 6 comments. But at the bottom of my written statement,

 7 there is an e-mail address and a telephone number, and I

 8 would urge that if there are follow-up questions on

 9 these issues that you contact me.

10 Let me give you some context for where I come

11 from, because although the last speaker and I share a

12 law firm, my history is different. It's closer to

13 Mr. Dukes' history than you might perceive from just the

14 label. I've been working in the field of assisting the

15 Administration of Justice since 1974, when I went to

16 work for Judge Ruth Aldisert, and I worked for the

17 courts here through the '80s, and I was with the 9th

18 Circuit Judicial Conference for seven years. And I've

19 been working more recently with the Sedona Conference, a

20 group you know very well, for two and a half years. I'm

21 also the head of the firms e-discovery task force and

22 also the head of the firm's document retention task

23 force.

24 With Sedona I am the managing editor of the

25 annotated version, which means it's part of my duties to

00256

 1 read virtually every case that I can find on this

 2 subject and figure out how it's relevant to those

 3 principles. And I'm also a (indiscernible) electronic

 4 discovery, and growing out of that work I work with

 5 companies of all different sizes, 150,000 employees to

 6 50 employees.

 7 And the net lesson of that vast experience I

 8 think is why I respectfully disagree with my colleague

 9 from 50 Fremont Street. And that is that the subject

10 that you have been dealing with is indeed -- in my view,

11 it is the most important subject in the federal courts

12 since at least 1970 with those amendments. And I can't

13 communicate to you adequately the respect I have for the

14 work you've done.

15 As other people have said in written comments

16 to you and in oral comments, you should not allow the

17 perfect to be the enemy of the good. At the same time,

18 while there's a desire to try to keep things simple,

19 sometimes -- and I'll come to a specific here -- the

20 simple is not necessarily fair or right.

21 The volume and complexity of this stuff --

22 what my friend from somewhere down the street there said

23 earlier about dynamic databases is absolutely true. And

24 that phenomenon is probably the one aspect of the

25 developing technology that may not be adequately

00257

 1 reflected in the notes as you have them today.

 2 He talked about a specific industry. In my

 3 experience, the proliferation of databases that are

 4 proprietary, customized, and unique to a particular

 5 company is the single most difficult issue. And Judge

 6 Rosenthal, you're exactly right. To take a snapshot of

 7 that is an impossible situation. If that were the rule,

 8 it would freeze every entity that has computers, in my

 9 mind. And if that were the case, the rule would not

10 only create a disservice to litigant in the courts,

Page 106
0112frcp.txt

11 which is your primary objective, but also to the economy

12 and to the society, and we as a country cannot afford

13 that sort of rule making.

14 So that -- those are some of the high level

15 issues. In terms of timeliness -- in my written remarks

16 I've got a couple of criteria there. I won't bore you

17 with those. But basically the time is right. We have

18 got some anecdotal experience with local rules. We

19 shouldn't go through the cost of trial and error in

20 however many districts there are today as we did with

21 ADR programs in the early '90s as a result of the Biden

22 rules.

23 Guidance should come from on high. And a

24 reason for that is if guidance comes from the federal

25 rules, the big rules, then the practitioners will

00258

 1 realize that it is something they have to understand.

 2 It's not just something that's in Arkansas or Delaware.

 3 It's everywhere. So the CLE bar, if you will, is

 4 raised, and that's a good thing. Because if the CLE bar

 5 is raised, then more people will be doing what some of

 6 the very knowledgeable people that have spoken to you

 7 and commented to you in the past have done over the

 8 years, and there will be fewer issues. And there will

 9 be -- and this is an important thing for the judges --

10 there will be less satellite litigation.

11 Right now we've got a situation where the

12 rules are unclear, and frankly, it's a game of gotcha.

13 In virtually every case where counsel has the expertise

14 and the funding to do some investigation into

15 electronically stored information, they will press the

16 issue. And as we've seen in case after case, Southern

17 District -- not Judge Scheindlin -- you know, through no

18 one's fault, stuff happened.

19 In my firm, two instances where not a reckless

20 and intentional discarding of back-up tapes, but in one

21 case change of personnel. They came in, they thought

22 the back-ups tapes were just there to be recycled, and

23 they recycled them. Now, with raising the bar, it will

24 filter down through the food chain, if you will, and

25 people will realize that if those back-up tapes had been

00259

 1 identified as relevant and potentially important

 2 material, they're going to be put in a safe place and

 3 that won't happen. But you don't get to that level of

 4 understanding and standard of care, if you will, until

 5 you've set the bar. So that's my first main point.

 6 The second point, and I -- this goes to

 7 privilege. And I realize that you've had a history of

 8 debate about privilege. And I'm not going to take on

 9 the big picture questions about privilege between this

10 committee and the other committee.

11 But in terms of practical reality, there were

12 some earlier discussion about the three possible rules.

13 And there is a specific question in your transmittal

14 about whether what you've said in the rule is the

15 appropriate thing or whether a less restrictive standard

16 ought to be set. And in my view, a less restrictive

17 standard ought to be set. And the reason for that is

18 the rule ought to be neutral.

19 The way it's stated now in the proposal, there

20 is ever so slight a presumption or a tendency to think,

21 maybe if it says the court may do this, it's a good

Page 107
0112frcp.txt

22 thing to do. And this is an instance where the simple

23 is not necessarily the right or the fair. It's a simple

24 thing to say a court may do that. But -- and this is

25 probably better articulated in my paper. The parties

00260

 1 are in the best position to understand whether there is

 2 a potential third party issue from disclosure.

 3 And there shouldn't be any judicial sort of

 4 pushing, nudging, wouldn't this be -- let's get through

 5 this issue. There shouldn't be any of that. It's up to

 6 the parties to decide whether to tender the kind of

 7 agreement that you've got in the proposal. That a very

 8 simple tweaking.

 9 But the reason I come to that conclusion is I

10 have had the experience where there was case one and a

11 strong managing judge, not present today, in a very

12 substantial case, that made just the sort of

13 recommendation I think, as you know very well. And

14 there was a no prejudice arrangement entered into.

15 There wasn't any order. It was just an arrangement.

16 And there was a review, and there was, you know, very

17 careful rules about note taking and that sort of thing.

18 And that case went forward to its conclusion. There was

19 a state court proceeding. And that was deemed to be a

20 knowing, voluntary waiver of subject matter in a very

21 substantial, very substantial case. So that's the

22 background for that and why I reached that conclusion.

23 JUDGE ROSENTHAL: Mr. Ragan, are you

24 suggesting that we just change the rule language to

25 clarify that the judge should not be the thumb scale --

00261

 1 MR. RAGAN: Exactly right. And I've suggested

 2 what I think was the question. So if that's an area

 3 where if my suggestion in the written presentation isn't

 4 clear, please don't hesitate to follow up with me.

 5 Now, I wanted to just digress to a couple of

 6 small points that have come up this afternoon, and then

 7 we'll go to safe harbor.

 8 The database, as I've indicated, is the issue

 9 of 2004-2005 in my practice. And addressing Professor

10 Marcus' question about -- first of all, addressing Judge

11 Rosenthal's question about isn't proportionality the

12 answer, I think the answer is yes.

13 Addressing Professor Marcus' question about

14 whether the language in the notes don't take care of it,

15 I think you might have some more wisdom brought to bear

16 about the complexity of databases. And specifically in

17 your proposal, page 11 notes under subsection (b)(2),

18 second paragraph, this is just the start of this. In

19 many instances, the volume of -- I'd insert "the volume

20 and complexity," just to start the subject.

21 In terms of the discussion from my friend

22 considerably south of Market in terms of the pendulum

23 swing here about databases, I have had much smaller

24 cases, and there's a same issue about opposition getting

25 access to that information. And this comes up in terms

00262

 1 of the Rule 33 proposal. I have addressed this in my

 2 written comments.

 3 And basically I don't think that producing in

 4 the manner ordinarily maintained for business makes any

 5 sense for these kinds of animals, but there ought to be

 6 something like a reasonable matter to the circumstances

Page 108
0112frcp.txt

 7 or something like that. Please look at my written

 8 proposal. It doesn't have a specific language, the

 9 suggestion for the Rule 33 issue.

10 But basically what I'm trying to address,

11 however feebly, is that if you've got this massive

12 database. And in my camp it wasn't anywhere as near as

13 large as my friend over here. This were some thirty

14 different fields, only eight or ten of which are

15 relevant, and all of which could be exported to an Excel

16 spreadsheet, which is perfectly manipulative, perfectly

17 searchable, but not maintained in the ordinary fashion

18 by the company. So it's something that can be produced

19 reasonably.

20 The last subject -- you've been here a long

21 time this afternoon. I realize my time is short, but I

22 want to address the safe harbor. And I have not spent

23 anywhere near the amount of time that you have with that

24 issue. My vote would be in favor of the higher

25 threshold, recognizing that, as a theoretical matter, it

00263

 1 may make sense to have a standard as low as negligence,

 2 but in terms of guidance and what I've referred to

 3 earlier as the gotcha syndrome, if you set it that low,

 4 you will not reduce the volume of satellite litigation.

 5 And I don't think that if it's recklessly knowledgeable

 6 deletions that you're going to have a whole lot of

 7 wrongs that are not being addressed.

 8 I haven't perhaps stated that as eloquently as

 9 I might. But it's for guidance and predictability, so

10 that entities, whether they're businesses or not, can do

11 some planning and have some reasonable assurance that

12 what they're doing will not be subject to second

13 guesses. I think that would be better.

14 JUDGE SCHEINDLIN: I'm confused by that still.

15 We do punish negligence. If you were on the other side

16 though and it's gone, however that occurred, its gone.

17 And we're not talking about the ultimate -- we called it

18 the death penalty sanctions, the ultimate dismissal.

19 But there may be something in between that that may be

20 the right thing to do to make up for the wrong.

21 Negligence is not a new concept in the law. I

22 mean, there are causes of action based on negligent

23 conduct all the way for which there are recoveries all

24 the way.

25 MR. RAGAN: I think the question, Your Honor,

00264

 1 is whether it is something that can be addressed in a

 2 rule at present or whether you need to have some fuzzier

 3 language somewhere about reasonable circumstances. I

 4 mean, if we're talking about simple information which

 5 would have been relevant and material that has been lost

 6 through inadvertence, if it can be somehow reconstructed

 7 so that this may be -- from other data, some --

 8 JUDGE SCHEINDLIN: (Indiscernible) -- it just

 9 can't -- it's really gone. It's accidental, but it's

10 gone. I'm just saying that somebody pays some price for

11 that. It may not be the ultimate sanction, but there's

12 a whole range of --

13 MR. RAGAN: I guess my answer is there are

14 some injuries which are not always compensated.

15 JUDGE SCHEINDLIN: Sure. This is only a safe

16 harbor. Outside the safe harbor (indiscernible) --

17 MR. HEIM: Two questions on safe harbor. Do

Page 109
0112frcp.txt

18 you agree that regardless of the negligence standard or

19 a higher culpability standard, counsel who are counsel

20 for the responding party, whether they're inside counsel

21 or outside counsel, their behavior isn't going to be

22 different in terms of how they go about trying to honor

23 their obligations to produce documents.

24 Would you agree with that?

25 MR. RAGAN: I think their behavior, assuming

00265

 1 we have some guidance in the rules, should not be

 2 different. Correct.

 3 MR. HEIM: On the other hand, if you're inside

 4 counsel and you're in a large corporation and you're

 5 balancing the costs of dealing with discovery

 6 obligations and you're trying to design a system to

 7 responsibly deal with the need to produce documents in

 8 litigation that you're dealing with virtually on a

 9 day-to-day basis, are you going to behave differently

10 when you know that the standard is willfulness as

11 opposed to recklessness?

12 MR. RAGAN: I don't think you should. I have

13 not spent as much time as I would like to have

14 addressing the safe harbor proposals. That's number

15 one.

16 Number two, from my background with retention

17 work, what you're questioning reminds me of any number

18 of clients that are frozen in terms of not being able to

19 rationalize their management of electronic information

20 because they fear this issue. And what they're doing is

21 they're stockpiling not just back-up tapes, but

22 essentially electronic garbage cans.

23 MR. HEIM: And the system cost become higher

24 as a result.

25 MR. RAGAN: Exactly right. Exactly.

00266

 1 JUDGE ROSENTHAL: Any further questions of Mr.

 2 Ragan? Thank you, sir.

 3 MR. RAGAN: Thank you so much.

 4 JUDGE ROSENTHAL: You have the honor of being

 5 our last speaker for the day.

 6 Ladies and gentlemen, this has been very

 7 helpful. As you know, we have two additional public

 8 hearings scheduled. The next one is in Dallas, and the

 9 final one is in Washington. There is additional time

10 for those who wish to submit written comments until

11 February 15.

12 We will of course give careful consideration

13 to all that you present, both in writing and here in

14 these hearings. And we are very grateful for the

15 assistance that you are offering us as we grapple with

16 these very interesting and very difficult issues. We

17 appreciate your engagement with us in this process, and

18 we look forward to continuing to exchange views with

19 you. Thank you. Good evening.

20 (Time noted: 4:03 p.m.)

21

22

23

24

25

00267

 1

 2

Page 110
0112frcp.txt

 3

 STATE OF CALIFORNIA )

 4 ) SS.

 COUNTY OF SANTA CLARA )

 5

 6

 7

 8 I, MELISSA ROEN WILLIAMS, a Certified Shorthand

 9 Reporter in and for the State of California, hereby

10 certify that the foregoing is a full, true, and correct

11 transcript of the testimony given and proceedings had in

12 the above-mentioned action; that I reported the same in

13 stenotype to the best of my ability, and thereafter had

14 the same transcribed as herein appears.

15

 ________________, 20__, ________________________________

16 Date Melissa Roen Williams, CSR 12284

17

18

19

20

21

22

23

24

25

Page 111