DTCI: The Scope of Discovery Standard — Is it Time for an Update?

By David J. Beach and Ryan Cook
 

Cook

Beach

As a child of the 1970s, I recall fondly the holiday season. One such memory is the annual holiday catalog. The catalog had several hundred pages in which you could find everything from a Sunday dress to a circular saw, but the important pages were in the back — 10 to 20 pages of the latest and greatest toys of the season. My mom knew how we eagerly anticipated the holiday catalog. The day it came in the mail, she would leave it on the counter for us to thumb through when we got home from school. We would mark the must-haves of the season, dog-ear the pages, and leave the catalog in a prominent place to make sure that our hints were not missed. Words were rarely exchanged. My parents were well-versed in the dance and knew exactly where to look when the time came for Christmas shopping.

At the same time, and well off my radar at the time, Indiana enacted its version of the Federal Rules of Civil Procedure. Indiana implemented the scope of discovery standard in what is now the first paragraph of Ind. Trial Rule 26(B)(1), a standard with which we are all familiar. It has remained unchanged since. This standard has served us well, but much like the holiday catalog of my youth, advances in technology have changed the landscape in which it functions.

As a father, I now watch my own kids at the holiday season. The catalogs still come, but the 10 to 20 catalog pages have been augmented by hundreds of web pages, and Internet searches provide hundreds more product reviews. I never could have imagined this explosion of information when I was a kid.

Technology and complex discovery

In the same way, technology has markedly changed the complexity of discovery. The scope of records “relevant to the subject-matter involved in the pending action” in the ’70s would barely scratch the surface of the scope of records today. Electronic devices are standard issue for employees. Emails and text messages have supplemented or even supplanted oral communications and traditional written reports. Capturing this information can prove costly and time-consuming, often with modest results that have little impact on the case.

At the start of a case, we all serve discovery requests seeking records of the pertinent issues and those who may have knowledge of them. Trolling through electronic records with search terms that might produce an arguably relevant record set has become commonplace. Employers try to manage this sea of electronic data by implementing document retention policies, but too often these policies beget their own discovery issues. Which documents were destroyed? When and by whom? How diligently was the document retention policy followed? The threat of spoliation or sanctions hangs like the Sword of Damocles over a litigant who is confronted with discovery requests for electronic records.

Proportionality standards

Indiana added a second paragraph to T.R. 26(B)(1) in 2007 which provides some tools to manage discovery. This second paragraph gives the trial court discretion to limit discovery if the discovery sought “is unreasonably cumulative or duplicative, or is obtainable from some other source that is more convenient, less burdensome, or less expensive. . . or. . . the burden or expense of the proposed discovery outweighs its likely benefit, taking into account the needs of the case, the amount in controversy, the parties’ resources, the importance of the issues at stake in the litigation, and the importance of the proposed discovery in resolving the issues.” Too often, however, these tools are first used in response to a motion to compel or to seek a protective order, after a discovery dispute has already arisen. The language of the rule provides no mechanism to implement these safeguards until after the “discovery [is] sought. . . .” The attorneys will have spent costly time battling over particular discovery requests, conducting their T.R. 26(F) conferences, and requesting court intervention to slog through the particular requests and series of exchanges leading up to the dispute. This is, of course, antithetical to the intent of discovery, which is supposed to be self-executing with minimal court supervision.

The federal counterpart to our rule has undergone significant modernization to help address these issues. In 2015, the Federal Rules of Civil Procedure were amended to include the proportionality language in FRCP 26(b) and now require the parties to address issues regarding the preservation of electronically stored information at the commencement of the case in their Rule 26(f) discovery plan.

Critics may point out (and correctly so) that the 2015 amendment to FRCP 26 was not intended to change substantially the discovery standard. As the committee notes acknowledge, the substantive change to the rule was implemented in 1983 “to deal with the problem of over-discovery.” “The present [2015] amendment restores the proportionality factors to their original place in defining the scope of discovery.”

Restating this standard more prominently should not be dismissed as a mere stylistic change. Chief Justice Roberts remarked:

“The amendments may not look like a big deal at first glance, but they are. . . . The amended rule states, as a fundamental principle, that lawyers must size and shape their discovery requests to the requisites of a case. Specifically, the pretrial process must provide parties with efficient access to what is needed to prove a claim or defense, but eliminate unnecessary or wasteful discovery. The key here is careful and realistic assessment of actual need. … The amended rules accordingly emphasize the crucial role of federal judges in engaging in early and effective case management.”

Chief Justice John Roberts, 2015 Year-End Report on the Federal Judiciary (Dec. 31, 2015).

By proactively addressing the proportional needs for discovery, discussing preservation of electronically stored information (ESI), and formulating a discovery plan, parties can establish meaningful direction for a case with minimal court intervention. Time spent rehashing the procedural history of a discovery dispute and trying to resolve it can be more effectively used by establishing this guidance proactively and shepherding a discovery plan at the onset of a case. Our Indiana Rules of Trial Procedure presently have no mechanism for the parties to delineate the proportional needs of discovery, address the need for preservation of ESI, or collaboratively establish a discovery plan at the outset of litigation.

The Sedona Conference

The Sedona Conference foresaw the challenges created for discovery of electronic data more than a decade ago:

“In 1990, a typical gigabyte of storage cost about $20,000; today it costs less than $1. As a result, more individuals and companies are generating, receiving and storing more data, which means more information must be gathered, considered, reviewed and produced in litigation. … [T]he cost to review just one gigabyte of data can easily exceed $30,000. These economic realities — i.e., the huge cost differential between the $1 to store a gigabyte of data and the $30,000 to review it — act as a driver in changing the traditional attitudes and approaches of lawyers, clients, courts and litigation support providers about how to search for relevant evidence during discovery and investigations. Escalating data volumes into the billions of ESI objects, review costs, and shrinking discovery timetables, all add up to equaling the need for profound change.”

Sedona Conference Best Practices Commentary on the Use of Search and Information Retrieval Methods in E–Discovery, 8 Sedona Conf. J. 189 (2007). The Sedona conference provided pertinent practice pointers to consider going forward:

Practice Point 1. In many settings involving electronically stored information, reliance solely on a manual search process for the purpose of finding responsive documents may be infeasible or unwarranted. In such cases, the use of automated search methods should be viewed as reasonable, valuable, and even necessary.

Practice Point 2. Success in using any automated search method or technology will be enhanced by a well-thought-out process with substantial human input on the front end.

Practice Point 3. The choice of a specific search and retrieval method will be highly dependent on the specific legal context in which it is to be employed.

Practice Point 4. Parties should perform due diligence in choosing a particular information retrieval product or service from a vendor.

Practice Point 5. The use of search and information retrieval tools does not guarantee that all responsive documents will be identified in large data collections, due to characteristics of human language. Moreover, differing search methods may produce differing results, subject to a measure of statistical variation inherent in the science of information retrieval.

Practice Point 6. Parties should make a good faith attempt to collaborate on the use of particular search and information retrieval methods, tools, and protocols (including keywords, concepts, and other types of search parameters).

Practice Point 7. Parties should expect that their choice of search methodology will need to be explained, either formally or informally, in subsequent legal contexts (including in depositions, evidentiary proceedings, and trials).

Practice Point 8. Parties and the courts should be alert to new and evolving search and information retrieval methods. 8 Sedona Conf. J. 189, 194–95.

Budgeting for retrieval

In the federal realm, courts have also addressed cost sharing for retrieving data. “The Court has the authority to proportion the costs of e-discovery in cases of undue cost or burden …. [D]istrict courts in the Seventh Circuit have transmuted the test for whether discovery is proportional under Rule 26(b)(1) to guide the court’s discretion in whether to shift discovery costs.” Williams v. Angie’s List, Inc., 2017 WL 1318419, at *5 (S.D. Ind. 2017). Factors considered by the courts include:

1) the likelihood of discovering critical information;

2) the availability of such information from other sources;

3) the amount in controversy as compared to the total cost of production;

4) the parties’ resources as compared to the total cost of production;

5) the relative ability of each party to control costs and its incentive to do so;

6) the importance of the issues at stake in the litigation;

7) the importance of the requested discovery in resolving the issues at stake in the litigation, and;

8) the relative benefits to the parties of obtaining the information. Id.

Developing a discovery plan in the era of ESI necessarily requires thoughtful collaboration at the commencement of a case to deal with the limitations of discovery in an electronic world.

“Chief among [those limitations] is that such a search necessarily results in false positives (irrelevant documents flagged because they contain a search term) and false negatives (relevant documents not flagged since they do not contain a search term).” As a result, electronic discovery requires cooperation between opposing counsel and transparency in all aspects of preservation and production of ESI.”

Venturedyne, Ltd. v. Carbonyx, Inc., 2016 WL 6694946, at *1 (N.D. Ind. 2016); see also Knauf Insulation, LLC v. Johns Manville Corp., 2015 WL 7089725, at *3 (S.D. Ind. 2015) (“As the Court noted at the hearing, in the realm of electronic discovery there are no guarantees that every relevant responsive document will be found.”).

In Mancia v. Mayflower Textile Services Co., a progenitor to the most recent FRCP 26 amendments, the court recognized that Rule 26 “imposes an affirmative duty to engage in pretrial discovery in a responsible manner that is consistent with the spirit and purposes of Rules 26 through 37” and criticized “kneejerk discovery requests served without consideration of cost or burden to the responding party and boilerplate objections which do not disclose the burdens involved.” 253 FRD 354, 357 (D. Md. 2008). In that case, the court ordered the parties to meet and cooperate with a goal of “attempt[ing] to quantify a workable ‘discovery budget’ that is proportional to what is at issue in the case.” Id.

Indiana Commercial Court rules

Chief Justice Loretta Rush has shepherded the commercial courts pilot project to advance the goal of achieving a judiciary “that continually refines and adapts itself to meet the evolving needs of its customers.” Chief Justice Loretta Rush, State of the Judiciary (January 16, 2019). To advance these purposes, the Court promulgated commercial court rules which will take effect June 1. These rules require litigants to tailor discovery that is “proportional to the needs of the case, considering the importance of the issues at stake in the action, the amount in controversy, the parties’ relative access to resolving the issues, and whether the burden or expense of the proposed discovery outweighs its likely benefit.” In re Indiana Commercial Courts, 2019 WL 2135832, at *8 (Ind. 2019). They also include provisions for initial disclosure requirements and preservation of ESI.

Chief Justice Rush’s efforts are a needed first step in addressing discovery in the era of ESI. As the amendment to FRCP 26 has demonstrated, the proportionality considerations have merit for all cases. The additional requirement of formulating an early discovery plan that addresses preservation of ESI would provide a framework for all attorneys to address discovery more efficiently and work more collaboratively in the electronic era.•

David J. Beach is a partner and Ryan Cook is an associate in the Hammond office of Eichhorn & Eichhorn. Mr. Beach chairs the DTCI Trial Tactics section. Opinions expressed are those of the authors.