7th Circuit Pilot Program Moves to Stage 2

7th Circuit Pilot Program Moves to Stage 2

March 01, 2011

I. Background and Phase One

The December 2006 amendments to the Federal Rules of Civil Procedure (“2006 Amendments”) served to focus attention on discovery of electronically stored information (“ESI”). Well known horror story decisions, such as Zubulake v. UBS, highlighted the need for a new approach to ESI Discovery. The 2006 Amendments were the Federal/Judicial Conference effort to bring uniformity and reason to the process.

The Seventh Circuit Electronic Discovery Pilot Program (“Pilot Program”), is another effort to impose sanity on the E-Discovery process. This effort developed as a result of concerns by attorneys and business leaders calling for discovery reform, and the release of reports by the American College of Trial Lawyers, the Institute for the Advancement of the American Legal System at the University of Denver (“IAALS”), and The Sedona Conference. The Pilot Program Committee is chaired by Chief Judge James F. Holderman of the U.S. District Court for the Northern District of Illinois, and U.S. Magistrate Judge Nan Nolan. The committee includes over 90 attorneys, drawn from litigation and corporate law practices, government, corporate counsel offices, academics, and consultants from the ESI Discovery industry.

From May to September 2009, committee members met in several different sub-committees, and produced the Pilot Programs Principles Relating to the Discovery of Electronically Stored Information (the “Principles”). The Principles were implemented and evaluated in Phase One of the program through a sample of litigations from October 1 through May 1, 2010.

There had been several calls for cooperation in the E-Discovery process prior to the Pilot Program, most notably the Sedona Conference® Cooperation Proclamation. The Principles take that philosophy a step further, incentivizing cooperation and providing specific guidance. The Principles recognize that many preservation and discovery issues can and should be discussed by counsel, and either resolved or promptly brought to the Court’s attention. Many of these issues can be identified prior to the initial Rule 16 conference and those that cannot, should be raised as soon as practical.

The Principles also provide guidance “to the judiciary and the bar concerning the procedural framework for electronic discovery and technical aspects of electronic information storage, preservation and discovery.”1 That guidance should be equally valuable to corporate litigants. Many skilled attorneys are intimidated by ESI and the procedures of ESI Discovery, and are not effective in communicating the need for immediate review of ESI issues, at or before the onset of litigation. Corporate managers are often dismayed by the scope of E-Discovery, and the related expense. The time and effort necessary to conduct early case assessment can be daunting to attorney and client, but Principle 2.01(c) leaves no room for debate.2 Although other organizations offer guidance, the Principles are unique in having been tested and evaluated during Phase One. The Proposed Standing Order adopted by the participating courts and the Principles on which it is based, have been reviewed in light of the Phase One experience and necessary modifications have been adopted.

II. The Principles

The Principles are important guidance on how E-Discovery should be conducted. They are possibly more important when adopted by the court in the form of the Standing Order. Consideration of the Principles reveals several unusual features.

The Principles inject a concept into E-Discovery, that was previously foreign to most litigation: zealous representation of a client is not compromised by conducting discovery in a cooperative manner.3 E-Discovery can be very expensive, and unreasonable failure to cooperate causes additional expense. Principle 1.02 implements Federal Rule of Civil Procedure 1, requiring counsel “to ensure that civil litigation is resolved not only fairly, but also without undue cost or delay.”4 Counsel are expected to cooperate to facilitate discovery and reasonably limit discovery requests. Failure to act reasonably increases expenses and “contributes to the risk of sanctions.”5 Discovery is not to be used as “a weapon in ways that undermine resolving cases timely, efficiently, and on their merits.”6 Incorporated into a Standing Order, Principle 1.02 is a warning to counsel: scorched earth litigation tactics risk sanctions.

The Principles take that concept a step further. Federal Rule of Civil Procedure 26(b)(2)(C) provides the guidelines for a “proportionality” standard.7 Principle 1.03 extends the reach of Fed. R. Civ. P. 26(b)(2)(C): “requests for production of ESI and related responses should be reasonably targeted, clear, and as specific as practicable.”8 Discussed below, proportionality is key in avoiding unnecessary expense, allowing focus on the merits of litigation rather than “gotcha litigation” where the expense of only marginally relevant discovery pressures settlement decisions, or discovery failures lead to sanctions.

Proportionality extends further: Principle 2.03 specifically disfavors vague and overly broad preservation requests. Preserving ESI can be difficult and disruptive to normal business and IT functions. Demands to preserve ESI “through the use of a preservation letter request or order should be reasonable in scope and mindful of the factors set forth in Rule 26(b)(2)(C).”9

Principle 2.02 adds a new member to litigation teams, the E-Discovery liaison. When an E-Discovery dispute arises, the E-Discovery liaison’s role is required for “meeting, conferring, and attending court hearings on the subject.”10 The liaison may be in-house or litigation counsel, an employee of the party (i.e., IT personnel), or a third party consultant.11 It is axiomatic that legal counsel and IT speak different languages and lack common ground for understanding. The liaison is the translator, able to speak to opposing liaisons, IT, counsel, and the court. “The only requirements are that the liaison be available and competent to discuss the technology issues that are the subject of the dispute. A lawyer who lacks such competence and lacks the inclination to acquire such competence must involve a liaison who possesses the necessary technical expertise.”12

Principle 2.02 requires the liaison to:

aI Be prepared to participate in E-Discovery
dispute resolution

bI Be knowledgeable about the party’s E-Discovery efforts

cI Be, or have reasonable access to those who are,
familiar with the party’s electronic systems and capabilities in order to explain those systems and answer relevant questions

dI Be, or have reasonable access to those who are, knowledgeable about the technical aspects of E-Discovery, including electronic document storage, organization, and format issues, and relevant information retrieval technology, including search methodology.13

III. The Ongoing Effort: Phase Two

Phase One was designed to be a limited test, formally including only 93 cases before a limited number of judges in the Northern District. Phase One was followed by analysis of the results through surveys and, if indicated, revision of the Principles. The Phase One report was over 400 pages.14 The judicial survey responses were generally positive, and often identified the E-Discovery liaison as the most significant, followed by the proportionality requirements.15 Attorney comments were somewhat broader, but also largely focused on liaison, proportionality, and early case addressing of anticipated issues and disputes. Principles 1.02 (cooperation), 1.03 (proportionality), and 2.02 (liaison) were all well received and no changes were recommended in either Principle for Phase Two.16 Revised Principles were issued August 1, 2010.

Phase Two expands on Phase One, extending the number of courts and cases covered within the Program and subject to the Standing Rule.17 For the first time, judges outside the Northern District of Illinois, as well as additional judges within the Northern District, will participate. The Committee is also adding new members, including persons outside the Seventh Circuit, as interest in the program expands.

IV. The Focus on Proportionality

Consistent with the Pilot Program’s focus on proportionality, the Sedona Conference® recently issued a major publication on the topic.18 The Sedona Conference Principles on Proportionality (“Sedona Principle(s)”) are consistent with the Pilot Program and its emphasis on Fed. R. Civ. P. 26(b)(2)(C):

1I The burdens and costs of preservation of potentially relevant information should be weighed against the potential value and uniqueness of the information when determining the appropriate scope of preservation.

2I Discovery should generally be obtained from the
most convenient, least burdensome, and least
expensive sources.

3I Undue burden, expense, or delay resulting from a party’s action or inaction should be weighed against that party.

4I Extrinsic information and sampling may assist in the analysis of whether requested discovery is sufficiently important to warrant the potential burden or expense of its production.

5I Nonmonetary factors should be considered when evaluating the burdens and benefits of discovery.

6I Technologies to reduce cost and burden should be considered in the proportionality analysis.

Sedona Principle 6 is particularly important in its relationship to the Pilot Program’s liaison position. The commentary to Sedona Principle 6 suggests that the initial Rule 16 discussions should include “technological approaches to preservation, selection, review, and disclosure that reduce overall costs, better target discovery, protect privacy and confidentiality, and reduce burdens.”19 The Commentary goes on to recognize the rapid pace of technological change, and the difficulty these changes present to many litigators. Counsel is urged to either keep personally current on technology, or engage experts as needed. “Parties familiar with the available technological tools and their costs will have an edge in asserting, or responding to, arguments as to cost and burden.”20 The Pilot Program’s requirement of a liaison similarly recognizes the advantage, to the court as well as the litigants, in having readily available a person conversant with the technology, and the party’s own IT system. Most litigators, and many in-house counsel, are ill-equipped to play the liaison role. Third party consultants are just one of several options, but the liaison should be involved early in the process, to allow their expertise to be available to counsel, and the court, at the initial Rule 16 planning stage.

As the Pilot Program progresses through Phase Two, the proportionality principles will likely be even more prominent in the ESI discussion. With more courts and judges involved, and more cases formally subject to the Standing Order, parties and their ESI consultants will find it increasingly more important to understand those principles, and apply them early in the litigation. Counsels who do not understand ESI and these principles must have a good consultant, and should consider designating the consultant as their E-Discovery liaison under Principle 2.02.

Guest author:

Michael D. Gifford, Esq.

1 Statement of Purpose and Preparation of Principles, Seventh Circuit Electronic Pilot Program, October 1, 2009, p. 10.

2 Referring to counsel’s obligations in meeting with opposing counsel and preparing for the Rule 16 conference with the court, Principle 2.01(c) provides: (c) Disputes regarding ESI will be resolved more efficiently if, before meeting with opposing counsel, the attorneys for each party review and understand how their client’s data is stored and retrieved in order to determine what issues must be addressed during the meet and confer discussions.

3 Principle 1.02

4 Report on Phase One, Seventh Circuit Electronic Pilot Program, May 20, 2009 – May 1, 2010, p. 51.

5 Principle 1.02

6 Report on Phase One, Seventh Circuit Electronic Pilot Program, May 20, 2009 – May 1, 2010, p. 51.

7 Describing when limitations on the frequency or extent of discovery are appropriate, Fed. R. Civ. P. 26(b)(2)(C) provides: When Required. On motion or on its own, the court must limit the frequency or extent of discovery otherwise allowed by these rules or by local rule if it determines that: (i) the discovery sought is unreasonably cumulative or duplicative, or can be obtained from some other source that is more convenient, less burdensome, or less expensive; (ii) the party seeking discovery has had ample opportunity to obtain the information by discovery in the action; or (iii) the burden or expense of the proposed discovery outweighs its likely benefit, considering the needs of the case, the amount in controversy, the parties’ resources, the importance of the issues at stake in the action, and the importance of the discovery in resolving the issues.

8 Principle 1.03

9 Principle 2.03(a)

10 Principle 2.02

11 Id.

12 Report on Phase One, Seventh Circuit Electronic Pilot Program, May 20, 2009 – May 1, 2010, p. 56.

13 Principle 2.02

14 The 26 mb .pdf file may be downloaded here.

15 Report on Phase One, Seventh Circuit Electronic Pilot Program, May 20, 2009 – May 1, 2010, pp. 36-37.

16 Report on Phase One, Seventh Circuit Electronic Pilot Program, May 20, 2009 – May 1, 2010, pp. 52-53, & 57.

17 In Phase One, in addition to Judge Holderman and Magistrate Nolan, only five district judges and seven magistrates, all within the Northern District of Illinois,
participated, covering 93 cases.

18 The Sedona Conference® Commentary on Proportionality in Electronic Discovery, The Sedona Conference Journal, Vol.11, Fall 2010, p. 289.

19 Id, p. 301.

20 Id, p. 302.