Northern Exposure — E-Discovery in Canada

September 16, 2010

On New Year’s Day, 2010, the province of Ontario became the latest North American jurisdiction to amend its rules of civil procedure to address the discovery of electronically stored information. Yet it mentions the phrase “electronic discovery” once and once only. The United States Federal Rules of Civil Procedure were amended in 2006 in at least twelve places to specifically refer to electronically stored information in discovery. Thirty states since that time have followed suit. One Canadian province, Nova Scotia, has also amended its rules. Now Canada’s largest province, home to nearly one-third of the country’s population and more than half of its lawyers, has amended its rules of civil procedure in a unique way a way that might best be described as either troublingly vague, or a stroke of genius. The relevance to US practitioners is this: in many categories of complex litigation, be it in the financial sector, or in intellectual property, or in energy, actions that may be in the US Federal Courts may very well have a Canadian parallel action, and most often that will be in the Superior Court of Ontario. If you think that “up there” e-discovery is not as far along as in the US, think again.

Ontario’s amended Rule 29.1.03(4) reads as follows: “In preparing the discovery plan, the parties shall consult and have regard to the document titled “The Sedona Canada Principles Addressing Electronic Discovery” developed by and available from The Sedona Conference.”

That’s it. “Electronic discovery” is mentioned only here, within the title of a document that lawyers “shall consult and have regard to.” For observers of the U.S. legal scene, this seems naïve. How do you enforce a rule like this? What Ontario has done either invites difficulty, because on its face this looks vague; or, it has placed on its legal profession – including its judiciary — a clever mandate to become well-informed and act like grown-ups. It may turn out to be the smartest way yet that any jurisdiction has amended its rules for electronically stored information.

Consider this. Aside from the odd fact that a tourist town in Arizona is mentioned in the rules of a Canadian province 2000 miles away, this is remarkable for other reasons. No other jurisdiction has actually mentioned the Sedona Principles or the Sedona Conference by name in its rules. Look at the U.S. federal rules amendments and commentary. You won’t find it, though it’s a known fact that The Sedona Conference was a key source of input to the U.S. rules committee. Notice that the document referred to in Rule 29.1.03(4) is not simply the list of enumerated principles, but the entire publication, 54 pages in length. That’s a lot of content, but not burdensome.

Now take a step back and look at the context around this one subrule, the broader “discovery plan” rule 29.1 This rule requires the parties to litigation to agree upon and file with the court a written discovery plan within 60 days after the close of pleadings. Subrule 29.1.03 (3) states: (3) The discovery plan shall be in writing, and shall include, (a) the intended scope of documentary discovery under rule 30.02, taking into account relevance, costs and the importance and complexity of the issues in the particular action; (b) dates for the service of each party’s affidavit of documents (Form 30A or 30B) under rule 30.03; (c) information respecting the timing, costs and manner of the production of documents [under Rule 30.01(1) “documents” includes electronic data] by the parties and any other persons…. (d) any other information intended to result in the expeditious and cost-effective completion of the discovery process in a manner that is proportionate to the importance and complexity of the action. The subrule immediately following is the one telling the parties they “shall consult and have regard to” Sedona Canada.

When read in context, the significance becomes clear. The first Principle states “Electronically stored information is discoverable.” A discovery plan that doesn’t deal with electronically stored information will violate Rule 29.1. In all likelihood, so will a discovery plan that doesn’t take into account the other Sedona Canada principles, such as:

 • Principle 3, which states that parties must consider their obligation to take reasonable and good faith steps to preserve potentially relevant electronically stored information as soon as litigation is reasonably anticipated.

 • Principle 4, which states that parties and counsel should meet and confer soon and on an ongoing basis.

 • Principle 8, which states that the parties should agree early on the format in which electronically stored information will be produced.

• Principle 9, which states that the parties should agree on or seek judicial direction to protect privilege and confidentiality.

Moreover, as it is the entire 54 page document and not just the list of principles, cursory attention will not suffice. The list does not mention metadata. However, in the discussion under Principle 8, we find at page 30: “The parties should strive to agree on a methodology of production that (a) preserves metadata and allows it to be produced when relevant.” The document explains what metadata is; it also does a good job explaining in clear and concise terms a lot of the other terminology and issues pertaining to electronic discovery.

The amendments to the U.S. rules have been in effect for nearly three years. Yes, they neatly specify that at the Rule 26(f) meet and confer the parties discuss the preservation, forms of production, and procedures for dealing with inadvertent disclosure of electronically stored information. And yes, they provide a process for requesting a specific form of electronic production, and a procedure for objecting to that requested form, and a default minimum standard for a form of production, under Rule 34(b). And so on.

Yet for all that specificity, we’ve seen disputes and lawyers getting into trouble. Nothing in the federal rules tells lawyers to read the U.S. version of the Sedona Principles. In all likelihood, this means that most U.S. litigators have not read the Sedona Principles. It might have saved some of them from a lot of trouble. Like Canada’s version, it is literate, educational, and at 102 pages, not unduly burdensome. The operative words of the Ontario amendment are “shall consult and [shall] have regard to” the Sedona Canada Principles. Though it sounds polite, this is not a suggestion. It is mandatory language telling lawyers to acquaint themselves with material they need to know. For additional “teeth”, look at Rule 29.1.05: “On any motion under Rules 30 to 35 relating to discovery, the court may refuse to grant any relief or to award any costs if the parties have failed to agree to or update a discovery plan in accordance with this Rule.” This is in addition to the court’s power to impose cost penalties and other sanctions found elsewhere in the Ontario rules, and in its inherent authority. Keep in mind, “costs” in Ontario generally means something much more than in the United States. It means that the losing party will pay a sizeable chunk of the winning party’s legal fees. That’s a mighty big set of teeth right there.


Candy or Jagged Glass? Part Two.

May 14, 2009

My last post (below) introduced the report issued in March by the Institute for the Advancement of the American Legal System, in collaboration with the American College of Trial Lawyers. 

Sedona

Sedona

As I said, most of the 29 recommendations (they call them Principles, but unlike Sedona, they are not numbered) in the IAALS / ACTL Report are well-taken.  The ones I mentioned previously mostly restate what others such as Sedona or the Rules Committee have said before, but that’s not a criticism. 

A couple that I didn’t mention yesterday are quite innovative.  These are, at page 10, fact-based instead of notice-based pleading, and at page 11, a new summary form of action by which parties can submit applications for say, interpretation of a contract, without triggering a right to discovery or trial.  This worldly outlook and and openness to the way things are done in other countries is refreshing. 

Now the two or three Principles that are either the best candy in the bag, or jagged glass.  Please forgive the lengthy direct quotations. 

First, the Report’s Principle on automatic initial disclosure, at page 7:

  • Shortly after the commencement of litigation, each party should produce all reasonably available nonprivileged, non-work product documents and things that may be used to support that party’s claims, counterclaims or defenses.

 The narrative says that this automatic initial disclosure goes further than the current Rule 26(a)(1)(ii), though let’s be fair, reading them on paper, not by a whole lot.   Taken alone, this recommendation is indisputably sensible.  But not if this is all a party has to produce, which may be the effect of the next two bullets. 

 The next bullet appears at page 8.

  •  “Discovery in general and document discovery in particular should be limited to documents or information that would enable a party to prove or disprove a claim or defense or enable a party to impeach a witness.”

 And then, at page 9:

  •  “After the initial disclosures are made, only limited additional discovery should be permitted. Once that limited discovery is completed, no more should be allowed absent agreement or a court order, which should be made only upon a showing of good cause and proportionality.”

 The report commentary continues: 

“This is a radical proposal. It is our most significant proposal. It challenges the current practice of broad, open-ended and ever-expanding discovery that was a hallmark of the federal rules as adopted in 1938 and that has become an integral part of our civil justice system. This Principle changes the default. Up to now, the default is that each party may take virtually unlimited discovery unless a court says otherwise. We would reverse the default….”

 “Efforts to limit discovery must begin with definition of the type of discovery that is permissible, but it is difficult, if not impossible, to write that definition in a way that will satisfy everyone or that will work in all cases….  Whatever the definition, broad, unlimited discovery is now the default notwithstanding that various bar and other groups have complained for years about the burden, expense and abuse of discovery.”

 “This Principle changes the default while still permitting a search, within reason, for the “smoking gun”. Today, the default is that there will be discovery unless it is blocked. This Principle permits limited discovery proportionately tied to the claims actually at issue, after which there will be no more. The limited discovery contemplated by this Principle would be in addition to the initial disclosures that the Principles also require. Whereas the initial disclosures would be of documents that may be used to support the producing party’s claims or defenses, the limited discovery described in this Principle would be of documents that support the requesting party’s claims or defenses. This Principle also applies to electronic discovery.”

Arc de TriompheNo kidding about calling this a radical proposal.  It’s essentially the continental European model, in which parties have to disclose only the documents on which they intend to rely, and whatever discovery there is after that is tightly limited.   Here’s Article 753 of France’s Nouveau Code de Procédure Civile:    “Pleadings shall set out expressly the claims of the parties as well as the issues of law and fact which are the basis of each claim. A memorandum listing the documents in support of these claims shall be annexed to the pleadings.”  (In the original French:     “Les conclusions doivent formuler expressément les prétentions des parties ainsi que les moyens en fait et en droit sur lesquels chacune de ces prétentions est fondée. Un bordereau énumérant les pièces justifiant ces prétentions est annexé aux conclusions.”)  You can search high and low through the rest of this Code and you won’t find any mention of any further right of discovery or obligation to produce.  C’est tout, mes amis.  Click here to get to the Legifrance site English translation.

 I’ve got three points about these three Principles in the IAALS Report. 

 1.  These three Principles make most of the other recommendations in the report unnecessary and academic.  If the scope of discovery is so drastically limited, then we really won’t need more proportionality, more cooperation, more frequent meet and confers, more  technical education of bench and bar about electronic discovery, etc.   Those are all sorely needed if we continue with our wide-discovery regime.  But if we’re tightening discovery’s scope so much by these three, none of the rest of the recommendations in the IAALS report are necessary.

 2.   What exactly are the mechanics of obtaining the additional limited discovery after the initial disclosures?  The report provides no guidance as to how a party is supposed to request from its opponents these documents that would support its claims or defenses. 

Clearly the drafters of the report intend something much more specific than document requests under the current practice.  But what could be more specific that would realistically be practical? 

Overly-broad discovery requests already find disfavor with the courts.  Mancia isn’t an isolated decision.  Mancia v. Mayflower Textile Servs. Co., 253 F.R.D. 354 (D. Md. 2008), discussed here.  

 Under the current practice parties request documents that fall within certain date ranges, from certain known individuals, pertaining to certain subject-matters.   So if the report’s writers are saying that the courts’ standards are still too loose, then this has to imply that the only way a litigant will be able to request documents that support its side is by identifying them specifically. In other words, already knowing exactly what they are. 

If you know this much about a document, you probably already have it, in which case, the request shouldn’t be for production, it should be a request to admit authenticity. 

3.    Nature abhors a vacuum.  As ridiculous as our broad lawyer-controlled discovery may seem, it may fulfill a function that in other countries might be the job of judicial officers or other bureaucracies we don’t have.  Delivering a guest lecture at Duke University in 2003, a German law professor remarked:

 “If a European lawyer looks at… the United States, he is impressed by the extent to which court litigation, rather than legislation and administrative action, is used as a means to cure defects in the structures and practices of important social institutions.”

 “What surprises the European observer about American product liability litigation is the stupendous volume of litigation, the size of awards made to successful claimants, and the fact that it is not uncommon for many thousands of claims to be bundled together and dealt with in a single trial.  All developed legal systems must ensure the safety of products in the interest of the consumer.  It would seem, however, that Americans, with their traditional mistrust of governmental authority, rely not so much on the initiative of administrators or private prosecutors, but rather on private litigation as the chief regulator of corporate action in the product safety field.  If this analysis is correct, a strong case can be made for the view that to the extent to which private litigation serves the vindication of a public interest, the parties must be equipped with robust discovery procedures to ferret out the truth, even at the expense of business or personal privacy.”   Hein Kotz, Civil Justice Systems in Europe and the United States, 13 Duke J. of Comp. & Int’l L. 61, at 74 -75.

As societies, the United States and most other English common-law systems have made a choice:  that it is better to find the memo that recommends adding addictive substances to tobacco, or the one that calculates that a recall of tires will cost more than injury lawsuits, or as we will no doubt soon see, the directive that lowered the underwriting standards for mortgages to the point that a loan officer had to get authorization from higher up not to approve a mortgage. 

This is not a diatribe to protect the pool of work for e-discovery consultants and vendors.  Frankly, the e-discovery industry hasn’t served the legal profession and business as well as it could have.  And the legal profession, as the IAALS / ACTL report itself observes, has to do a better job of understanding electronically stored information. 

Fifth Avenue in the Rain.  Frederick Childe Hassam.  1917.

Fifth Avenue in the Rain. Frederick Childe Hassam. 1917.

Discovery is a means to an end and not an end in itself.  But it should not be viewed as an annoying roadblock on the way to trial.  Only two percent of all federal actions go to trial.  In other words, the dispositive stage of litigation is in most instances discovery.  While the cost of discovery should not be a reason that a case has to settle, the discovery stage properly conducted should be used as the opportunity to settle. 

If we do away with broad discovery, we  reduce that opportunity.  Remember, Qualcomm v Broadcom went to trial because Qualcomm had failed to fulfill its discovery obligations.  Had it not been for that discovery abuse — concealment of thousands of highly relevant e-mails that killed Qualcomm’s case on the merits–  the trial, which was long and expensive, would not have occurred because the case clearly would have settled.  (For my article on the Qualcomm decision, click here.)    

We just amended the rules two years ago.  It’s too early to declare them a failure.  It’s also too early to declare them a success.  Let’s redouble our efforts to make the best of them by controlling discovery, not by throwing it away.  We like our disputes resolved where there’s been an opportunity for a full disclosure of all relevant facts.

NOTE TO READER:  This post alone does not do this subject justice.   Both Mary Mack and Ralph Losey have thoughtful and entertaining posts about the IAALS / ACTL Report in their respective blogs, and I highly recommend them.  For Mary’s, click here, and for Ralph’s, click here.


Candy or Jagged Glass? Part One.

May 11, 2009

Posted May 11, 2009

The amendments to the Federal Rules of Civil Procedure pertaining to electronically stored information went into effect on December 1, 2006.  If you needed me to tell you this, you’ve stumbled into the wrong blog. 

This change marked only the seventh time since 1938 that the rules have been amended.  The mean time between amendments to the Federal Rules of Civil Procedure is just under ten years.  Amending the rules is not a step taken lightly.

Some things from the 1930's are very enduring

Some things from the 1930's are very enduring

The effort that went into these amendments is obvious from reading the Commentary that accompanies them.  It spanned six years; it consumed hundreds of hours of hearings, countless meetings, and submissions from the best and brightest of bench, bar, and think-tanks like The Sedona Conference; each of these submissions in turn represents tremendous devotion of time and thought by their respective presenters. 

My point?  That this was a tremendous collective effort by the body vested with the statutory authority to promulgate the rules (28 U.S.C. § 2073) and by the professional groups providing input to the committee. 

Yet just past the two year mark, an organization that did not exist at the time the new rules were being debated is now calling for a radical overhaul of the Rules of Civil Procedure.  That organization is the Institute for the Advancement of the American Legal System (IAALS), founded in 2006.  It is affiliated with the University of Denver.

In March 2009 the IAALS issued its report titled:  “Final Report On The Joint Project Of The American College Of Trial Lawyers Task Force On Discovery and  The Institute For The Advancement Of The American Legal System.”  Click here to download a copy.

WitnessForProsecut38 Top billing in the title goes to the older organization, the American College of Trial Lawyers, founded in 1950.  To anyone who has practiced litigation in the United States or Canada, as I have, the ACTL is enormously prestigious.  Invitation to membership is a pinnacle in the career of any barrister in North America. 

 There are 29 boldface bullet points. (The authors did not number them).  If you think of this as a bag of candy, among these 29 candies there are two or three that are either the best candies of them all – or they are chunks of jagged glass.   

In general terms, the majority of the recommendations call for:

  • Proportionality as the governing principle for all discovery.  We have some provision for this in R. 26(b)(2)(C).
  • Broader initial automatic disclosures, meaning broader than currently required under Rule 26(a)(1).
  • Early meet and confer to discuss preservation and storage electronically-stored information.  This is the subject of Rule 26(f).
  • A good faith duty to preserve electronically stored information, but not to the unreasonable extent that parties must take every conceivable step to preserve all potentially relevant electronically stored information;  this is substantially Sedona Principle 5.
  • Absent a showing of need and relevance, a party should not be required to restore deleted or residual electronically-stored information, including backup tapes.  This is pretty much the “not reasonably accessible” provision of R. 26(b)(2)(B).
  • Sanctions should be imposed for failure to make electronic discovery only upon a showing of intent to destroy evidence or recklessness.  A higher misbehavior threshold than the current Rule 37(e), but no real cause for indignation on the plaintiff side of the bar.
  • The cost of preserving, collecting and reviewing electronically-stored material should generally be borne by the party producing it but courts should not hesitate to arrive at a different allocation of expenses in appropriate cases.  In other words, no change from what we have right now.  Although there is no specific cost-bearing provision in the present Federal Rules of Civil Procedure, courts in cases involving a range of issues… have recognized that Rule 26(b)(2)(C) provides the inherent authority to shift the costs of discovery to the requesting party or apply the concept of proportionality.”   Michael R. Arkfeld, Arkfeld on Electronic Discovery and Evidence, §7.4 at p. 7-75 (2nd Ed.)

As noted in blue above, some of these points are already addressed in the amended rules; others are are stated in the Sedona Principles, or in the Sedona Cooperation Proclamation, and some are even voiced in recent court decisions.  Nevertheless, they benefit greatly from a fresh restatement; all the better when that comes from an organization as respected as the ACTL or as energized as the IAALS. witnesssm

Few would argue against these points.  The IAALS and the ACTL feel compelled to sound these trumpets because we still have far too much discovery cost, delay, and gamesmanship. 

So now we get to the bullet points that are either the best bonbons in the bag, or they are chunks of jagged glass.  That’s the subject of the next post.