Federal Rules of Civil Procedure - Proposed Discovery Rules for "Negotiated Facts", E-Mail, Record Retention, and Spoliation of Evidence

1st Published on 04/07/02; Last Update: 04/11/02 11:00
Overview - Proposed Rules Would Cut Discovery Costs 50-95% for Both Sides in Many Lawsuits

This website provides a workable solution to controlling discovery costs, reducing the scope of electronic and other discovery, and providing rules for document retention in civil litigation.

Readers are introduced to three new, interrelated discovery rules being proposed by attorney Carl Person (the author of this website) for adoption as part of the discovery rules contained in the Federal Rules of Civil Procedure ("FRCP") which, if adopted, would enable the costs of discovery for all parties in major federal cases to be reduced by 50-95%.

Also, a form of proposed stipulation is offered by which parties currently in litigation, in federal or state court, could adopt the three rules for use in their own litigation even though the proposed rules have not yet been adopted for use in the federal (or state) courts.

Index and Quick Links to Website Material

  1. Origin of the Proposed Rules
  2. The Problems Being Addressed by the Three Proposed Rules
  3. The Solutions Needed
  4. Adoption of the Rule by Stipulation of the Parties
  5. Rule 01 - The Proposed, Related Rule on Retention of Data Processing, E-Mail and Other Records; and Application of the Spoliation Doctrine
  6. Rule 02 - The Proposed Rule on "Negotiated Facts" Discovery
  7. Rule 03 - The Proposed Rule on E-Mail Discovery
  8. Proposed-Rule Advantages
  9. Proposed-Rule Disadvantages
  10. Conclusion

Origin of the Proposed Rules

I have been involved in major commercial litigation in federal and state courts since 1970, and have had substantial experience in requesting and producing documents as well as reviewing tons of documents produced to me in hard-copy form.

This background also includes data processing records, in image, hard-copy and machine-readable form, and e-mail records in image and hard-copy form.

The increased size of major corporations and the increased amount of data processing used by them has shifted discovery from hard copies of requested documents which could be segregated and labelled to invisible, ethereal, randomly-positioned bytes of electronic records which are more difficult to review than the corresponding hard copies.

With most if not all major corporations involved in potentially damaging litigation, discovery expense is merely a cost of and welcomed tool for preventing the facts from becoming known.

When current discovery rules are employed by a major corporate defendant to the maximum disadvantage of a small plaintiff suing to recover for damages to its business, the costs of data processing needed to deal with the defendants' records, even if they are all made available to the plaintiff, is so high that the plaintiff cannot afford to obtain the facts needed to prove its case, and the defendant's plan to spare no discovery expense usually enables the defendant to prevail, although generally at a cost well exceeding the amount for which the aggrieved plaintiff would have been willing to settle its case.

As a result, the plaintiff obtains little if anything from the legitimate lawsuit, and the defendant spends more in legal and other discovery costs to prevent an injured plaintiff from obtaining justice.

For the past several years, I have been a speaker on a BNA (Bureau of National Affairs, Pike & Fischer) conference on discovery costs, in the area of "Who Pays for Production [of the E-Mail and Other Data Processing Records]?", and in this setting, at the conference in San Francisco on April 5, 2002, I finally put together a proposed (workable) solution to this long-running litigation problem which my clients and I have been facing.

The keynote speaker at the conference was The Honorable David F. Levi, United States District Judge for the Eastern District of California, who is also Chairman of the Advisory Committee on the Federal Rules of Civil Procedure.

I told Judge Levi about my proposal which I was going to present to the audience, as part of my staged argument that my hypothetical client should not have the costs shifted to it under newly-promulgated FRCP Rule 26(b)(2)(iii), and he asked me to write up my idea as a proposed rule and send it to him for possible adoption as part of the Federal Rules of Civil Procedure (even as an amendment to Rule 26(b)(2)(iii)).

Judge Levi also observed that the proposed rule at the same time could deal with record retention, record destruction and spoliation issues at the same time. Judge Levi was correct in his observation.

For the past 6 years or so, I have been on the Federal Courts Committee of the New York County Lawyers Association, a committee which spends some of its energy in coming up with and trying to obtain judicial adoption of improvements in civil litigation, including the Federal Rules of Civil Procedure. As a result, I understand the practical difficulties in trying to push through an amendment to court rules of any type.

With this encouragement from Judge Levi and in spite of my group experience, I have set about drafting the proposed rules, as well as a form of proposed stipulation which would enable litigants to adopt the proposed rule for their own litigation without waiting for any official rules to be adopted.

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The Problems Being Addressed by the Three Proposed Rules

There are two distinct sets of problems being addressed by the three proposed rules, and these will be discussed separately.

Problems Being Addressed by Rule 01, the Document Retention, Spoliation Rule

The following problems have been addressed in Rule 01 with the expectation that Rule 01, if adopted, would significantly reduce each of these problems, which are:

  1. Corporations are growing in size, complexity and number of records, including hard-copy files, electronic e-mail files, periodic backup files for e-mail files, other data processing files, and backup data processing files, and many companies are or may be failing to preserve such records required by law, to the detriment of all concerned, through the additional costs, time and liabilities or failures of proof which can result from failure to preserve evidence which might be necessary in a specific lawsuit.

  2. The service of a complaint or other pleading is generally the way in which a company is first notified that it has an obligation not to destroy records, but pleadings are often 40 to 100 pages long and filled with many allegations not requiring any record retention.

  3. Pleadings do not list the material facts which the party serving the pleading seeks to prove; as a result, after a party receives a pleading and while attempting to put a hold on destruction of relevant documents, it is not able to readily determine from the pleading what material facts are at issue (to enable appropriate record retention orders to be issued).

  4. Many lawyers and companies are not as aware of the doctrine of spoliation as they should be, and spoliation laws differ from state to state. There is no spoliation rule applicable in the federal courts, and there is no rule describing the range of sanctions applicable to a party committing spoliation, or the type of spoliation involved.

  5. The costs of record retention can be enormous (often amounting to millions of dollars), far exceeding the maximum liability in a specific lawsuit, and a mechanism for reducing retention and review costs might be welcome to the companies maintaining enormous warehouses of records, if the tradeoffs involved were appropriately crafted.

  6. There is no mechanism in the court rules for parties themselves, without court intervention, to reduce the burdens of required record retention, and a mechanism driven by incentives and penalties would create a "market" within a specific lawsuit for discovery admissions and record-retention tradeoffs which could gradually, on a piece-by-piece basis, reduce the quantum of disagreement separating the parties from complete resolution of the dispute.

Problems Being Addressed by Rule 02, "Negotiated Fact" Discovery, and Rule 03, E-Mail Discovery

Rule 02 addresses similar discovery problems:

  1. Electronic discovery has been thrust upon parties, attorneys and judges who often have little idea of the issues or costs involved, and are swayed by the one-sided representations of the party which created the electronic records and doesn't want them to be used.

  2. There is no economic or market-oriented way for opposing parties to obtain immediate, low-cost discovery from each other in instances where (i) an Opposing Party's data processing records could readily provide the answer, or (ii) massive amounts of hard-copy documents may be needed to determine the answer precisely with no practical way of knowing whether or when all the documents have been assembled, or (iii) the party providing the discovery is able to judge from its business experience and knowledge that a Proposed Fact is accurate or less onerous to the Opposing Party in the litigation than what its records would show.

  3. Precision in discovery is not only not possible for an opponent without having the same data and similar financial resources as the party which maintains the needed data processing records or other docments, but in many instances precision is not even needed. A conservative or reasonable estimate will often suffice.

  4. There is no discovery mechanism to require an asserted fact to either be accepted or disproven (by the opposing party) with the actual fact. The present technique would be to serve a Request to Admit, which the opposing party would merely "Deny". The opposing party is not required by Rule 34 to set forth the evidence available to it upon which it denies a Rule 34 Request to Admit.

    • Depositions are generally unable to obtain specific data generally requiring programming and extraction from perhaps millions of data processing and/or hardcopy records.

    • Requests to admit would be denied for failing to hit the nail on the head with the precise amount, and even if the amount were precise, the Opposing Party could always find some theoretical reason to deny the Request without fear of being held accountable for unprofessional conduct

    • An interrogatory directed to the issue would inevitably wind up with no meaningful answer and only the costs, delays and uncertainty in having to make a motion to attempt to get a court order to assist the propounder of the Interrogatory to get the desired answer

    • There needs to be some type of procedure between the parties which requires one party to provide an answer from its records for essential information (and the limit of 15 "Negotiated Facts" requires the user of this new type of discovery to concentrate on the most important facts in the case requiring the Opposing Party to extract the information from its own records, without having to have the other side obtain costly copies of these same records and then pay enormous amounts to persons not familiar with the records to try to obtain the desired information.

  5. An example of how this new type of discovery would work. A plaintiff in a Robinson-Patman Act price discrimination action wants to have the defendant manufacturer calculate the amount of discount from suggested retail price which it has provided to a favored customer during the years 1998, 1999, 2000 and 2001. In fact, the discount was 60%, 63%, 59% and 62% for the four years. The plaintiff, a disfavored competitor of the favored customer, bought the same goods from the same manufacturer at a 40% discount throughout the four years. A Proposed Fact could be: The defendant sold its children's hardcover books [product line] to defendant during 1998-2001 at a discount equal to or greater than 55%.

  6. Although the plaintiff is giving up the evidence of a higher discount for each of the years, the plaintiff is nevertheless saving perhaps $200,000-$500,000 in effort in trying to obtain the raw data from the defendant and, using experts, to reconstruct the information and be able to prove the truth of the actual discount. It would be much less costly for all to have a lower discount proposed and accepted, so both sides can save time and money in what is truly an area in which the dispute is only as to how bad was the discrimination, and not whether the price discrimination existed during the 4 years involved.

  7. The same type of reasoning applies to employment discrimination claims, where precision is not as important as showing that there was some discrimination.

  8. By gradually reducing the areas of disagreement through the "Negotiated Fact" Discovery process, the parties can more quickly (and less costly) come to a point where a case can be settled, because the range of issues has been substantially narrowed.

  9. The process is similar to jury selection, where a lawyer might agree to a juror that he/she doesn't particularly like because of the fear that someone worse may be picked instead. This type of reasoning should encourage a party opposing a Proposed Fact to accept the Proposed Fact even if it seems lightly overstated, rather than run the risk that the Proposing Party may turn out victorious on such issue and be entitled to serve another (the 16th) Proposed Fact as its reward for not overstating the Proposed Fact.

  10. This procedure between the parties is a much better procedure than requiring the parties to take more wide-sweeping discovery disputes to the Court for the purpose of preventing the plaintiff from getting any discovery through an order shifting costs to the plaintiff under Rule 26(b)(2)(iii) or having the plaintiff be awarded discovery (with no costs) which the plaintiff can't afford to utilize because of the high expense involved in dealing with someone else's data processing records (which aren't organized into subjects) and non-machine readable hard copies (which although produced by organized subjects are not machine-readable to summarize electronically).

Rule 03 addresses these discovery problems:

  1. E-mail records are data-processing files maintained in various ways and in various places, and it should go without saying that the best way to search e-mail files is with the existing equipment, programs, databases, and personnel (hereinafter, "DP System"), rather than to try to order parts of an overall DP System to be delivered to an adverse party for use with different equipment, programs and personnel.

  2. Existing discovery rules seem to say that one party cannot require the use of the existing DP System of the party which has the e-mail files, and that the party seeking discovery has to obtain records at great cost and then somehow assemble a DP System to do what the other party can do without any significant additional cost.

  3. The party with the DP System and e-mail or other data-processing records like this apparent rule, because it imposes unnecessary costs on the party seeking e-mail or other data-processing discovery, which then stops the discovery, or through allocation of limited funds to e-mail discovery costs takes away such funds from other, perhaps more important parts of proving the party's case.

  4. Proposed Rule 03 is an effort to harness the DP System of the party which created and is maintaining the e-mail and other data processing files, but under limited-access conditions which require the requesting party to act carefully and economically, at the risk of losing discovery opportunities through the other, more costly techniques.

  5. The party providing the DP System and e-mail discovery obtains the benefit of limited, low-cost discovery, and the ability (once it is completed) to destroy certain e-mail files before any other litigation is commenced in which a party demands production of the same files.

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The Solutions Needed

The costs of data processing discovery have climbed to outrageous highs, making it impossible for many parties to conduct meaningful discovery in support of their position. In the American Booksellers Association action against Barnes & Noble and Borders for alleged violation of the Robinson-Patman Act (i.e., alleged unlawful price discrimination), the ABA admittedly spent $18 million prosecuting its case (which it finally settled for $4.7 million), and the two defendants spent an estimated $75 million. I am amazed because I was going down the same litigation route (based on the same claims and evidence) and did not run into such costs.

Nevertheless, any time out-of-pocket litigation costs routinely go above $100,000, perhaps 95% of the independent businesses in the U.S. are being foreclosed from pursuing their claims in court, and when the out-of-pocket expenses routinely exceed $500,000 for a party, you are limiting discovery to the top 1% or less of independent businesses.

The main problem is that the data needed to prove the plaintiff's case is in the hands of the defendant major corporation, and the existing discovery rules are oriented towards putting parts of the information into the hands of the plaintiff's experts (persons paid perhaps as much as $500 to $1,000 per hour, or $1,500 per hour for 2 experts in the same firm working together), for secret processing by them (because the information is allegedly "highly confidential" and "for outside attorneys only").

The costs of selecting the defendant's data, reviewing it for privileged information, deleting privileged information, running through backup files, the costs of looking at older storage media, the costs of transferring selected data to new storage media, the costs of finding and acquainting plaintiff's experts with the industry and the transferred data, the inability of the plaintiff to participate and reduce expenses because of the alleged ultra confidentiality of the data -- all of this creates costs for the plaintiff which make needed discovery impossible to purchase.

The solution, obviously, is to have the defendant answer the most important discovery questions through using their own data through their own personnel, equipment, systems and programs, similar to the answering of interrogatories (which we know does not work at the present time).

The solution is to create a new type of discovery which requires the defendant (or any other party) to use its own data processing records and hard-copy records to reach a "negotiated fact" when a party proposes a fact which the other side reasonably ought to stipulate to.

The proposed three rules give each party an opportunity to use each Opposing Party's organization 15 times (or more, when penalties are involved) to stipulate to a proposed fact which can be proven with the Opposing Party's records.

Failure to accept a proposed fact which proves accurate (when using a proposed term such as "more than", "equal to or less than", "equal to or greater than" or "less than") gives the Proposing Party an opportunity to make one additional use of the Opposing Party's resources to prove another Proposed Fact.

In this way, the Proposing Party, without cost, can obtain acceptances (really, admissions) of fact from the party readily able to supply such fact, and at the least overall cost, and the Opposing Party which supplies such fact will find its overall discovery and document retention costs lowering by millions of dollars in many costly types of litigation.

E-mail discovery is more text oriented than the discovery envisioned by Rule 02, and a different approach is needed.

The approach is to permit a limited number of Boolean searches and retrieval of documents at the expense of the party maintaining the e-mail records, because this search cost is perhaps 1% of the costs which would be thrust upon the requesting Party if it had to purchase or pay for use of a DP System to process the other party's provided e-mails.

Quite importantly, the e-mail data-processing files would ordinarily be provided to the Requesting Party under a confidentiality agreement limiting access to the e-mails to outside attorneys and consultants, where the costs cannot be controlled by direct supervision of the Requesting Party.

The proposed rule governing e-mail discovery has various incentives and penalties to encourage parties and the courts to encourage its use.

In effect, the three rules create a market for discovery information through a series of incentives and penalties not unlike the jury selection process (take what you are presently offered because what you may get could be worse).

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Adoption of the Rule by Stipulation of the Parties

In federal courts, the judges would probably sign any order presented to them incorporating Proposed Rules 02 and 03 (or Proposed Rules 01, 02 and 03) as an agreed method for the parties to conduct discovery. More than likely, judge of the highest trial court in any state would also so-order a stipulation to such effect for conducting discovery.

Accordingly, a stipulation could be as simple as:

name of court, case caption, index number

Stipulation among the Parties to Govern Certain Aspects of Discovery

IT IS HEREBY STIPULATED AND AGREED, by and among the parties hereto, and subject to the Order of this Court, that the parties hereby agree to conduct their discovery in this action pursuant to attached Proposed Rules 01, 02 and 03 [or Rules 02 and 03] to the extent applicable.

[place, date, and signature information for the attorneys of the parties]


[Name or other indicia of Judge]

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Rule 01 - The Proposed, Related Rule on Retention of Data Processing, E-Mail and Other Records; and Application of the Spoliation Doctrine

There are three interrelated rules being proposed, necessitated by the perceived need to have the Record Retention and Spoliation Rule made of general application, and not limited to the "Negotiated Facts" discovery rule.

The proposed Record Retention and Spoliation Rule (hereinafter "Rule 01") is set forth as follows (4/10/02 version):

Rule 01. Retention of Data Processing, E-Mail and Other Records; and Application of the Spoliation Doctrine.

1. At any time within 30 days prior to the filing of a complaint or other pleading, or thereafter, any actual or prospective party (hereinafter, "party") may serve upon any other party a Notice of Proposed Facts (a "Notice") which the party serving the Notice intends to attempt to prove in the action.

2. Any Notice given under paragraph 1 is not to be construed as a complete statement of all material facts sought to be proved by the party serving the Notice, and any such Notice may be amended or supplemented from time to time during the period for discovery in the action.

3. The party receiving any such Notice has a duty immediately upon receipt of said Notice to order the appropriate officers, employees, departments, consultants, in-house attorneys, and agents to take the appropriate steps to ensure that all e-mail and other data processing records and backup files and other documents concerning each of the proposed facts in said Notice be preserved during the pendency of the action, including any appeals.

4. Any Notice under Rule 02 below shall be given the same effect as a Notice under paragraph 3 above.

5. Upon receiving a pleading from a party, the party receiving the pleading has the same duty as in paragraph 3 above to immediately order preservation of documents concerning the allegations in the pleading, even if the allegations are made against another party.

6. If the party receiving a Notice fails to preserve any of the documents which were required to be preserved under this Rule, the Court is authorized to enter a spoliation order to the extent necessary to offset the effect or likely effect of such destruction upon the party serving the Notice, including but not limited to an order determining disputed facts for purposes of this litigation, a spoliation charge to the jury, and other sanctions, including any sanctions available under Rule 37, F.R.Civ.P.

7. The Court in fashioning its order under paragraph 6 above shall give consideration to whether the destruction was in knowing violation of this Rule, was negligent, was inadvertent, or was caused by machine failure and lack of backup, and the care with which the destroying party attempted compliance with this Rule, and whether the documents destroyed were to be used in establishing liability or or a defense against the party destroying the documents.

8. If a complaint or other pleading is not filed before or within 30 days after a Notice (relating to an unfiled pleading) is served on a party under this Rule, the obligations of document preservation under this Rule are terminated to such extent, but all obligations under the commonlaw rule of spoliation shall continue and shall not be affected by this Rule or any failed effort to invoke this Rule.

9. A party seeking to reduce its obligations of document retention may propose, in its own Notice to one or more other parties, one or more Proposed Facts, and if any of the Proposed Facts are accepted by the party(ies) receiving said Notice (by serving a formal Notice of Acceptance upon all parties having appeared in the action) the party serving such Notice will be released from its obligations to such accepting parties under this Rule to preserve its documents concerning such accepted facts.

10. Acceptance of any Proposed Fact by a party receiving Notice of the Proposed Fact has the effect under this Rule of releasing all parties in the action which are parties to the Notice and Acceptance from any obligation to maintain documents concerning such Proposed Fact. This does not apply to documents (i) which are also relevant to Proposed Facts which have not been accepted, or (ii) as to parties which have not proposed or accepted the Proposed Fact.

11. The extent to which an accepted Proposed Fact (called a "Negotiated Fact") may be used as evidence in the litigation is set forth in Rule 02.

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Rule 02 - The Proposed Rule on "Negotiated Facts" Discovery

The second of the three interrelated rules being proposed is necessitated by the wasteful litigation which has become institutionalized: One side demands more records than it could ever review (now knowing what is available and in anticipation of cutting back the request later), and the other side argues that the other side should pay for everything sought, knowing that this would eliminate or severely curtail the lawsuit.

There seems to be no mechanism or incentives or penalties in place to enable the parties to seek and obtain (or the other side produce) only what discovery is really needed to resolve the litigation fairly.

The following proposed Rule 02 on "Negotiated Facts" Discovery attempts to solve the problem by creating a market based on incentives and penalties for failing to be reasonable:

The proposed "Negotiated Facts" Discovery Rule (hereinafter "Rule 02") is set forth as follows (4/10/02 version):

Rule 02. Negotiated Facts Discovery.

1. As soon as a complaint or other pleading is served or filed, any party or prospective party (hereinafter, "Proposing Party") may serve on any other party (the "Opposing Party") one or more Statements of Proposed Facts not exceeding an aggregate of 15.

2. Any single Proposed Fact may be made up of no more than 10 categories of numerical data which the Proposing Party seeks to include within a single amount as the Proposed Fact.

3. Unless released from the record-retention requirements pursuant to any of paragraphs 8-10 in Rule 01, The Opposing Party is required to preserve all relevant documents (including but not limited to e-mails, e-mail backups, other data processing records, including backups, and hard-copy files and other records, including printouts) for the maximum relevant period under the statutes of limitations for the claims. See Rule 01.

4. Any failure by the Opposing Party to preserve the required records after receipt of such Notice shall entitle the Proposing Party to make application for relief under paragraphs 6-7 of Rule 01.

5. The Opposing Party shall be required, as to each Proposed Fact, to ascertain from its records and/or officers and employees or others having knowledge whether the Proposed Fact is accurate or at least as favorable to the Proposing Party as is asserted in the Proposed Fact.

6. If the Proposed Fact is so confirmed by the Opposing Party, the Opposing Party is required to accept the Proposed Fact in a Notice of Acceptance of Proposed Fact, served on the Proposing Party within 20 days after the Opposing Party was served the Notice of Proposed Facts (or other period which may be determined by the Court).

7. Failure to serve a Notice of Acceptance or Notice of Denial as to the Proposed Facts within said 20-day period shall operate automatically as an admission to each of the Proposed Facts to which no response was timely made, in the same way provided by FRCP Rule 34 for requests to admit.

8. Once accepted, the Proposed Fact becomes a stipulated fact which can be used for all purposes in the litigation, and can become a fact upon which the doctrines of collateral estoppel, res judicata or similar doctrines may be applied, if otherwise appropriate.

9. If the Opposing Party is unwilling to accept the Proposed Fact, the Opposing Party is obliged (within 20 days after service by it of its Notice of Denial) to make an appropriate search of its relevant e-mails, other data-processing records, backups and hard-copy records to determine the actual fact as determined from the Opposing Party's records, and to produce the evidence to the other Proposing Party together with a statement under oath of what the actual fact has been determined to be (hereinafter, a "Notice of Actual Fact").

10. If the Actual Fact as shown by the search is more favorable to the Proposing Party than its Proposed Fact, then the Proposed Party shall be entitled to one additional Notice of Proposed Fact over and above the initial number set forth in paragraph 1 above.

11. If the Opposing Party either (i) accepts a Proposed Fact or (ii) proves after research of its files that the Actual Fact is less favorable to the Proposing Party than the Proposed Fact, the Opposing Party's obligation as to one of the 15 Proposed Facts has been completed.

12. "Negotiated Fact" Discovery continues as long as the Proposing Party has not had all 15 of its available "Negotiated Facts" completed in accordance with paragraph 11 above.

13. In absence of a court order to the contrary, all of the plaintiffs collectively have 15 "Negotiated Facts" available as to each of the defendants, and all of the defendants collectively have 15 "Negotiated Facts" available as to each of the plaintiffs.

14. Upon motion or application for cause shown, the Court may enlarge or decrease the initial number of Proposed Facts available to a party in paragraph 1 above.

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Rule 03 - The Proposed Rule on E-Mail Discovery

The third of the three interrelated rules being proposed is necessitated by rapid change which has occurred during the past few years from use of mail and internal memoranda to use of e-mails to conduct the vast bulk of non-routine business dealings. Every business day, there are about 2.8 billion e-mails sent, mainly by business.

Litigation techniques are evolving to deal with discovery of e-mail, and this proposed Rule 003 is an attempt to reduce to rule form a practical way to resolve e-mail discovery concerns by all parties.

A party electing to use e-mail discovery under this rule waives all other discovery of e-mail data files, in absence of court order to the contrary (for cause shown).

Potential parties having millions of e-mails in their databases seek to avoid meaningful e-mail discovery in any lawsuits brought against them by attempting to destroy all e-mails wherever accumulated at the end of 60 days or so after e-mail creation.

Actually, it is quite difficult to destroy all copies of any specific e-mail, and many experts offer their services to assist in finding e-mails which survived destruction efforts.

Important Point This brings me to an important point, brought to my attention by Robinson-Patman Act litigator Lesley Trager, Esq., who wanted me to point out that before undertaking e-mail discovery it is important to find out through discovery (such as interrogatories and depositions) or informal means precisely what current and legacy (or inherited) systems, servers, equipment, storage and backup media, and software are being used by the party maintaining the e-mails, and to retain an expert to help in this pre-discovery, as well as in designing the questions to maximize the e-mail discovery effort. For example, some existing systems may not be able to search using Boolean search terms, and the expert can help the attorney seeking the discovery determine what this means (and whether the statement is true), and what to do in either event. In this regard, you also should find out about the other party's record retention policy, and determine the length of time for which e-mails are being retained before intentional destruction.

This Rule 03 imposes an obligation to retain e-mails for 2 years, as a compromise retention period.

The Rule provides an opportunity for destruction of e-mails existing less than 2 years, as will be discussed in the proposed rule below.

It is believed that this proposed Rule 03 will reduce dramatically the costs of e-mail discovery for the companies accumulating the massive numbers of e-mail, and at the same time the party seeking relevant e-mails is given an opportunity to require the opposing party to search and produce relevant (non-privileged) e-mails according to search terms created by the party seeking the e-mail discovery.

The benefit of using the in-place databases, programs, systems, equipment and personnel of the company which created the e-mails is beyond quantification from a dollar standpoint, because without being able to have such use the party seeking discovery is shouldered with professional and expert expenses beyond belief, usually on the order of 1 to 5 times the amount for which the party seeking discovery would be willing to settle its claim.

But with the ability to limit the search requests as the price of using the opposing party's facilities, the party seeking discovery can obtain its most needed discovery, and the opposing party can eliminate perhaps one to ten million dollars (or more) in e-mail discovery and legal-review costs.

These tradeoffs make Rule 03 viable, if not something which the party having substantial e-mail would want the opposing party to use, even by stipulation, without the need for any Rule.

Furthermore, it is envisioned that Magistrate Judges, Federal Judges, and State Judges, Referees and Magistrates throughout the United States will look to this Rule (or proposed rules similar to it) as the way to resolve e-mail discovery disputes, even those involving the cost-shifting provisions of FRCP Rule 26(b)(2)(iii), which is a rule which has potentially deadly application against impoverished parties, by denying them data processing or other discovery unless they pay part of the costs.

The proposed E-Mail Discovery Rule (hereinafter "Rule 03") is set forth as follows (4/10/02 version):

Rule 03. E-Mail Discovery.

1. Any party (the "Requesting Party") may serve upon any other party (the "Searching Party") a Request for E-Mail Discovery ("Request") containing proposed search terms ("Search Terms") for up to 25 e-mail searches (of all Relevant E-Mail Records, defined below) and a separate date range (as to each Search Term) for the e-mail data-processing records to be searched.

2. Within 10 days after receipt of the Request and Search Terms (under paragraph 1 above) or Amended Request and Amended Search Terms (under paragraph 3 below), the Searching Party shall respond in writing with the number of e-mails found within the selected data range to contain the Search Terms (without any review of the found documents for withholding by reason of privilege or work-product doctrine).

3. Thereafter, the Requesting Party (i) may request hard copies or electronic copies or both of the non-privileged, non work-product e-mails so identified as to any one or more of the Search Terms, segregated by the Search Terms used to locate such e-mails; or (ii) may serve an Amended Request and proposed Amended Search Terms for any one or more of the original Search Terms (but do so no more than 2 times as to any one Search Term).

4. Service of any Request under this Rule 03 by a Requesting Party shall thereafter exempt the Searching Party from being required or obligated (as to the Requesting Party) to search its e-mail data-processing files under any other discovery rule(s), in absence of a court order for cause shown.

5. At the completion of all e-mail discovery by a Requesting Party under this Rule 03 (and subject to any discovery under Rule 02 not yet completed for the same Requesting Party), the Searching Party shall be free as to the Requesting Party to destroy any of the Searching Party's e-mail data-processing files on condition that any such destruction automatically results in a waiver of any authentication or best-evidence rule issues by the Searching Party as to all of the e-mails produced to the Requesting Party pursuant to the rule, and destroyed by the Searching Party. See Rule 01 for related spoliation rules.

6. In absence of court order or agreement among the parties to the contrary, the Searching Party is required to search all of its e-mail data-processing files for the periods set forth in the Request or Amended Request, including legacy files, individual computer hard drives, personal or corporate backup media, palm computers, personal digital assistants, and other storage media for e-mails (but excluding "slack space" appearing after the end of a logical file, where extraneous data may be stored), but only as to such equipment and storage media which are likely to have e-mails containing any one or more of the requested Search Terms (the "Relevant E-Mail Records"). The Requesting Party and Searching Party are encouraged to meet and confer, prior to use of this Rule (or to use discovery procedures under other rules) to identify which equipment and storage media, if any, are likely to have the e-mails being sought.

7. The Searching Party is required to deliver machine-readable, text-searchable copies (such as PDF, TXT or HTML files) for each of the e-mails required to be produced and do so in storage media such as CD-Roms or ZIP Drive cartridges, appropriately labelled and organized to enable a user of the produced e-mails to determine which e-mails were produced pursuant to a specific Search Term. There shall be no fee charged by the Searching Party for such production. Also, emails shall be divided into separate media according to the categories of confidentiality, if any, assigned to the e-mails by the Searching Party, to enable review of the produced e-mails to be done by an authorized person without exposing such person to e-mails bearing a higher level of designated confidentiality.

8. If a Requesting Party wants to e-mails produced in other form, the Searching Party may charge a fee not exceeding $.15 per copy for each (1) e-mail hard copy produced or (2) e-mail produced in image form (such as a GIF or TIF file).

9. An example of a Search Request is: all e-mails dated or created between 1/1/98 and 12/31/01 which were created by, addressed to or copied to William Jones, W. Jones, Harlan Davis or H. Davis and which had 2 or more of the following terms: kickback!, slot!, special!, holiday!, Robinson-Patman or Robinson Patman, illegal, unlawful, violat!.

10. Search Requests may use Boolean or other search terms used to conduct Lexis, Nexis or Westlaw searches, and the Searching Party shall have the obligation to resolve any doubts or ambiguities by consultation and agreement with the person or firm making the Search Request.

11. The e-mails produced, in whatever form, are to be stamped with or otherwise contain a visible source medium and address to enable retrieval of the original e-mail data-processing record.

12. The Searching Party has no obligation to attempt to match or remove duplicate e-mails from one or more productions to a Requesting Party.

13. The Searching Party is to pay whatever expenses are incurred in performing the Requested Searches, including any reviews for documents to be withheld by reason of privilege or attorneys' work-product doctrine.

14. The court may not change this cost burden under Rule 26(b)(2)(iii), but may do so under this paragraph 14 only under a showing of relative financial circumstances by the parties involved, and the search costs involved, making it unjust not to shift some or all of the costs to the Requesting Party. In absence of extreme circumstances, this Rule 03 is intended to have all of the costs imposed on the Searching Party, which created and is maintaining the e-mails and is in a presumptively better position to control employee, consultant, programming, search, review and production costs than any other party.

15. Before ordering any shifting of costs under paragraph 14 above, the Court shall explore possibilities of changing the Search Terms, or range of dates, or media to be searched, to find a less costly combination agreeable to the Requesting Party which makes it not unjust to impose the search costs on the Searching Party.

16. The Searching Party is not to charge more than a reasonable copying charge for making copies of any CD-Roms or other storage media which the Searching Party creates for its own use with respect to the e-mails found by reason of the Search Request.

17. This rule is intended to be a safe harbor from the cost-shifting provisions in FRCP 26(b)(2)(iii), but is used by a Requesting Party to the exclusion of all other types of discovery of e-mail data-processing records, in absence of court order for cause shown.

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Proposed-Rule Advantages

The main advantages to the interested persons seem to be the following:

As to the plaintiffs, there would be an opportunity to obtain the discovery they need but at a price. Without such rule the plaintiffs probably would be obtaining less needed (and useful) discovery at a much higher cost of time, money, and unnecessary diversion of effort.

As to the major corporations, they would have the opportunity to run their businesses with less interference caused by document retention orders; and with substantially reduced costs of discovery; and would not longer have to spend $50 million to defeat a plaintiff seeking $5 million. Instead, they can have a good chance at defeating the same plaintiff at a reduced cost of $10 million, by reason of the tradeoffs which the plaintiff will have to make to be able to get some of the needed evidence without as much cost and hassle.

The Courts will find that litigation is going more quickly, with fewer motions, and that settlements are being made in a greater percentage of cases, but that more cases will probably come in to fill the judicial pipeline.

The public will have a more efficient and more equitable judicial system.

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Proposed-Rule Disadvantages

The disadvantages to the three interrelated rules need to be seen from the perspective of the persons now using the existing set of rules:

Plaintiffs in civil litigation against major corporations will have to rely on a reduced amount of evidence because of the incentive for such plaintiffs to understate the Proposed Facts, for fear of losing the opportunity of getting the defendant to accept the Proposed Fact.

Major corporate defendants will find that their current practice of denying plaintiffs the discovery they need to prove their cases will be reduced by the Negotiated Fact discovery rule, and plaintiffs will be using the defendant to extract data from its own records in a way that most plaintiffs could never do, or afford to do.

The Courts will lose some of their control over cases because the parties increasingly will be resolving discovery disputes on their own - which of course would be a blessing to most if not all judges. What I guess I'm saying is that I can't think of any disadvantage to the Court, although I'm sure something will turn up.

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The need for accuracy in data is a function of cost and marginal benefit. By accepting less in evidentiary data than could be obtained at a substantially higher price, the respective parties are able to achieve various discovery economies which can more than offset the marginal loss of evidence (as to the Proposing Party) or (as to the Opposing Party) the enabling of the other side to make out its case, but weaker, and at substantially lower discovery cost to the Opposing Party.

Discovery has become so prohibitive that many businesses with legitimate claims are no longer taking their claims into court.

The "Negotiated Fact" discovery process would provide a market mechanism, with built-in incentives and penalties, to reduce the cost of litigation, expedite cases, increase the probability of settlement, and provide a reduced workload for members of the judiciary.

Of course, no matter how many tunnels and roads you build to get to and drive in New York City, for example, you can expect them to be crowded at certain times, because improvements to any system will create an additional demand to use the system.

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    Carl E. Person, Editor, LawMall

    For the c.v. (resume) of Attorney Carl E. Person, click on Carl Person C.V.

    Copyright 2002 by Carl E. Person