Shayna Eagle

It has been nearly a year since the December 2015 amendment to FRCP 26, which now defines the scope of discovery as “any nonprivileged matter that is relevant to any party’s claim or defense and 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 relevant information, the parties’ resources, the importance of the discovery in resolving the issues, and whether the burden or expense of the proposed discovery outweighs its likely benefit.”

This recent change to FRCP 26 is particularly relevant to e-Discovery, as the costs associated with collection and review of electronically stored information (“ESI”) can be substantial. The Oregon District Courts have not yet published any rulings applying the amended rule to requests for ESI, but recent rulings from other jurisdictions give some indication of what we might see from the Oregon District Courts in the future.

1. Though your client’s ESI may not be easily accessible, it may nevertheless be discoverable

The United States District Court for the Western District of Washington recently addressed the often financially burdensome issue of email production.  In Elkharwily v. Franciscan Health Sys.,[i] the defendant objected to a request for emails as burdensome because it did not have an email archiving system. The plaintiff argued that the defendant’s email storage method, which made retrieval, restoration, and review difficult, was irrelevant. Citing FRCP 26(b)(1) and 26(b)(2)(B), the court found that the emails requested were discoverable, but that the defendant showed that retrieving the data would be unduly burdensome. The court further held that the plaintiff did not show good cause for overcoming the burdensome nature of the discovery request, as it did not specify custodians, the alleged contents of the email, or the likelihood that that the emails existed.  Note, however, that although the court denied the motion to compel, the court allowed the plaintiff to have access to the archived email at the plaintiff’s expense since the data was discoverable.

2. Broad discovery of ESI may be permitted if some showing of wrongdoing is made and exploration of ESI may reveal further malfeasance

A District Court in Pennsylvania recently addressed a disagreement over the search of electronic devices by an independent e-Discovery vendor.  In First Niagara Risk Mgmt. v. Folino,[ii] plaintiff alleged that defendant, one of its executives, planned to start a competing business.  In its motion to compel, plaintiff sought broad discovery of ESI, including emails and text messages. The amount in controversy was unknown at the time the court heard the motion, so the court found that factor weighed in the defendant’s favor.  Since the defendant had access to the information in his emails and text messages, while the plaintiff did not, that factor weighed in plaintiff’s favor.  Both parties were determined to have sufficient resources, so that factor was essentially moot.  The court found that the importance of the discovery in resolving the issues in the case weighed heavily in the plaintiff’s favor, as plaintiff reasonably needed to conduct broad discovery to uncover the full scope of the defendant’s misdeeds. Finally, the court found that the substantial burden and expense of the discovery did not outweigh the benefit of the discovery sought.  After weighing the foregoing factors, the court granted plaintiff’s motion to compel, concluding that the “[Plaintiff] ha[d] shown that the material it request[ed] was relevant under Rule 26, and [Defendant’s] defenses under both the Rule 26 proportionality factors and the non-binding Sedona principles[1] fail.”

3. While a court may compel production of ESI, it will not necessarily order it be produced in the most convenient or cost-effective format

The Eastern District of New York recently tackled the issue of the format in which ESI must be produced.  In Sky Med. Supply Inc. v. SCS Support Claim Servs.,[iii] The plaintiff produced requested ESI on discs that contained hundreds of thousands of records.  In response to the defendants’ argument that they were not provided with a convenient method to sort through the data, the plaintiff offered access to their server as an alternative.  In a motion to compel, the defendants argued that an on-site search would be “painstaking and time consuming.”  Plaintiff provided evidence illustrating that the relevant information would be easily identifiable and retrievable from the server.  The court ruled in the plaintiff’s favor, noting that FRCP 34 does not require a party to alter their data from how it is kept in the “usual course of business,” especially in light of the plaintiff’s willingness to allow on-site inspections. The court rejected the defendants’ argument that the process would be “painstaking and time consuming” because the defendants had not yet attempted to inspect the servers themselves.

4. When arguing that the cost of requested ESI is unreasonable, be armed with cost estimates from an e-Discovery vendor

In Mitchell v. Reliable Security, LLC,[iv] the court rejected the defendant’s argument that the cost of producing ESI in native format was disproportionate and unreasonable in a civil rights case for workplace discrimination.  Plaintiff requested the defendant’s emails and spreadsheets in native format with metadata, noting that emails and spreadsheets are easily manipulated. The defendant argued that because it would cost approximately $3,000 more to produce the data in native format as opposed to PDF format, the cost was disproportionate to plaintiff’s likely damages of less than $10,000.  Plaintiff alleged that her damages ranged from $50,000 to $300,000.  The court found that the defendant did not make an adequate showing of the additional costs associated with native production, but that even if it had, plaintiff demonstrated good cause in seeking the native production.  Specifically, the court concluded it was “not at all unreasonable” to verify that the documents had not been manipulated.

With ESI dominating discovery in so many cases, it is only a matter of time until the Oregon District Courts weigh in on the issues discussed here.  In light of the importance and the expense associated with e-Discovery, disputes warranting the court’s involvement are inevitable.  And although the Oregon Rules of Civil Procedure do not contain the same proportionality language in the new Federal Rule (not yet, at least), we expect to see similar discussions in state court as well.

[1] The Sedona Principles are a set of 14 principles that were developed by a group of lawyers, consultants, academics and jurists in order to apply the basic principles of discovery to the developing world of e-Discovery.  The Sedona Principles are considered by many courts to be an authoritative text on e-discovery.

[i] 2016 U.S. Dist. LEXIS 99795 (W.D. Wash. July 29, 2016).

[ii] 2016 U.S. Dist. LEXIS 106094 (E.D. Pa. Aug. 11, 2016).

[iii] 2016 U.S. Dist. LEXIS 121215 (E.D. N.Y. Sept. 7, 2016).

[iv] 2016 U.S. Dist. LEXIS 76128 (N.D. Ga. May 24, 2016).