A technology company has been sued by a non-practicing entity (also known, less politely, as a patent troll) in US federal district court for patent infringement regarding a recently released product that is generating only moderate revenue. The general counsel wants to minimize discovery costs, but the non-practicing entity has issued overbroad discovery requests. The general counsel is aware of recent amendments to the Federal Rules of Civil Procedure (Federal Rules) in favor of proportionality and has inquired whether any additional developments could support a streamlined discovery process.
Background of the Sedona Principles
The Sedona Conference is a nonprofit research and educational institute composed of judges, lawyers, academics and other experts who meet in working groups to discuss legal issues in the areas of antitrust, intellectual property and other complex litigation. One of the most notable of these is The Sedona Conference Working Group on Electronic Document Retention and Production (WG1).
WG1 first met in October 2002 to address the production of electronic information in discovery, which at the time was largely governed by rules and concepts designed for paper records. WG1 recognized the unique challenges that electronic discovery posed and developed a set of recommendations for electronic discovery best practices during litigation. WG1 published an initial draft of these best practices—known as the Sedona Principles—for comment in March 2003. Although the Sedona Principles did not publish in final form until January 2004, the draft version quickly influenced the legal community and was cited in court decisions such as the landmark case Zubulake v. UBS Warburg, 229 F.R.D. 422 (S.D.N.Y. 2004).
As advancements in technology led to a greater volume of and complexity in electronic discovery and the Federal Rules were amended, WG1 continued its dialogue in support of further updates to the Sedona Principles. WG1 published a second edition in 2007 and conducted numerous meetings from 2010 to 2016 based on the evolving viewpoints on electronic discovery best practices. In March 2017, WG1 published the third edition of the Sedona Principles and is seeking public comment through June 30, 2017.
Overview of The Sedona Principles, Third Edition
The third edition of the Sedona Principles comprises “fourteen succinct statements that embody the consensus view of WG1 on a reasonable and balanced approached to the treatment of electronically stored information in the legal process.” It also includes detailed commentary providing context and boundaries for application of the principles. Some of WG1’s proposed principles to guide electronic discovery during litigation include:
- When balancing the cost, burden and need for electronically stored information, courts and parties should apply the proportionality standard embodied in Fed. R. Civ. P. 26(b)(1) and its state equivalents, which requires consideration of 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.
- As soon as practicable, parties should confer and seek to reach agreement regarding the preservation and production of electronically stored information.
- Discovery requests for electronically stored information should be as specific as possible; responses and objections to discovery should disclose the scope and limits of the production.
- The obligation to preserve electronically stored information requires reasonable and good faith efforts to retain information that is expected to be relevant to claims or defenses in reasonably anticipated or pending litigation. However, it is unreasonable to expect parties to take every conceivable step or disproportionate steps to preserve each instance of relevant electronically stored information.
- The primary sources of electronically stored information to be preserved and produced should be those readily accessible in the ordinary course. Only when electronically stored information is not available through such primary sources should parties move down a continuum of less accessible sources until the information requested to be preserved or produced is no longer proportional.
- Absent a showing of special need and relevance, a responding party should not be required to preserve, review or produce deleted, shadowed, fragmented or residual electronically stored information.
(The full list of Sedona Principles can be found on The Sedona Conference’s web site.)
The Sedona Principles promote several common themes, such as cooperation among parties, early discussion of the issues, proportionality (in both preservation and production) and more particularly worded discovery requests and responses. Based on these themes, there are several positions litigants can advance in the face of unreasonable discovery demands. The third edition clarifies that proportionality considerations extend beyond the amount in controversy and include the role that the propounded discovery could play in resolving issues in the case. (See Comment 2.a.) Proportionality should permeate all aspects of discovery, including preservation, searches for relevant electronic information, privilege logs, production scheduling and data delivery specifications. (See Comment 2.b.) Consideration of discovery costs should include not only the expense of document collection and retention but also other litigation costs, including the interruption of routine business practices and the cost of discovery review. (See Comment 2.d.) Parties should also consider streamlined privilege logs that identify withheld documents by category as opposed to document-by-document. (See Comment 3.d.) The Sedona Principles also emphasize that Rule 34 inspections of electronic information systems are disfavored unless the requesting party can show that the operation of a particular system is at issue and there is no reasonable alternative to onsite inspection. (See Comment 6.d.) While these are some positions advanced by The Sedona Principles, Third Edition, parties should review the comments in full for additional analysis to further support efficient discovery procedures.
Litigants are already using the recent Federal Rule amendments to streamline electronic discovery, and the Sedona Principles offer another avenue of reason. Not yet published in final form, the third edition of the Sedona Principles is open to public commentary until June 30, 2017. In the meantime, litigants should consider citing the Sedona Principles, or their corresponding comments, as courts have historically considered them even in draft form.