On May 27, 2005, the Advisory Committee issued a report to the Standing Committee, with revisions to the proposed rule changes based on the public comments. Some of the key changes include:

Revised Proposal: “Two-Tier” Process: Rule 26(b)(2)

A party need not provide discovery of electronically stored information from sources that the party identifies as not reasonably accessible because of undue burden or cost. On motion to compel discovery or for a protective order, the party from whom discovery is sought must show that the information is not reasonably accessible because of undue burden or cost. If that showing is made, the court may nonetheless order discovery from such sources if the requesting party shows good cause, considering the limitations of Rule 26(b)(2)(C).

As explained by the Advisory Committee: “Much of the criticism during the public comment period focused on specific drafting problems in the published rule, including a lack of clarity in the term ‘not reasonably accessible,’ how that term and the ‘good cause showing related to the existing Rule 26(b)(2) proportionality limits, and how a party designation or a court finding that information is not reasonably accessible related to preservation obligations. The proposed rule and Note have been revised to respond to the concerns identified.... The published rule required a party to identify potentially responsive ‘information’ that is not reasonably accessible. The problem, however, is that a responding party cannot identify information without actually searching and retrieving it. The revised rule directs the party to identify the sources of information that may be responsive but is not reasonably accessible.”

However: “In an improvement over the present practice, in which parties simply do not produce inaccessible electronically stored information, the amendment requires the responding party to identify the sources of information that were not searched, clarifying and focusing the issue for the requesting party.”

In fact, the revised proposed amendment to Rule 26(f)(2) “explicitly directs the parties to discuss the form or forms in which electronically stored information might be produced.... The issues to be addressed during the Rule 26(f) conference depend on the nature and extent of the contemplated discovery and of the parties’ information systems. It may be important for the parties to discuss those systems, and accordingly important for counsel to become familiar with those systems before the conference. With that information, the parties can develop a discovery plan that takes into account the capabilities of their computer systems.” (Committee Note, Rule 26(f))

On the other hand, the Committee Note advises that: “In many circumstances the requesting party should obtain and evaluate the information from [reasonably accessible] sources before insisting that the responding party search and produce information contained on sources that are not reasonably accessible.” (Committee Note, Rule 26(b)(2))

Moreover: “The requirement that the parties discuss preservation does not imply that courts should routinely enter preservation orders. A preservation order entered over objections should be narrowly tailored. Ex parte preservation orders should issue only in extraordinary circumstances.” (Committee Note, Rule 26(f))

Revised Proposal: “Claw-Back”: Rule 26(b)(5)(B)

If information is produced in discovery that is subject to a claim of privilege or protection as trial-preparation material, the party making the claim may notify any party that received the information of the claim and the basis for it. After being notified, a party must promptly return, sequester, or destroy the specified information and any copies it has and may not use or disclose the information until the claim is resolved. A receiving party may promptly present the information to the court under seal for a determination of the claim. If the receiving party disclosed the information before being notified, it must take reasonable steps to retrieve it. The producing party must preserve the information until the privilege claim is resolved.

The proposed amendments to Rule 16(b)(6) and Rule 26(f)(4) were also revised to reflect that orders protecting against waiver due to inadvertent disclosure should only be entered where the parties have agreed, (as opposed to the implication that such agreements should be reached and adopted).

The Committee takes the position that: “Rule 26(b)(5)(B) does not address whether the privilege or protection that is asserted after production was waived by the production.” (Committee Note, Rule 26(b)(5))

But isn’t the entire point of the rule change to facilitate the exchange of information without fear of waiver?

And, as a practical matter, doesn’t the burden of persuasion generally fall on the party attempting to change the status quo? Currently, in most cases, the status quo would be that the adverse party has the documents or other data, and the producing party has to come in and establish the privilege, (and, effectively, that the privilege has not been waived). Under the proposed changes, however, the producing party, or the court, has possession and control over the documents or other data, and the adverse party has the burden of coming in and demonstrating why he or she should get them back.

With respect to the “reasonable time” requirement, the Advisory Committee explains that: “Several concerns were raised about the ‘reasonable time’ provision that convinced the Committee to delete it from the proposed rule. Under the law of many jurisdictions, whether a party asserted a privilege claim within a reasonable time is important to determining whether there is a waiver; focusing on a reasonable time might carry implications inconsistent with the Committee’s intent to avoid the substantive law of privilege and privilege waiver. In addition, the ‘reasonable time’ formulation was not tied to any particular triggering event, such as the date of production or the date when the responding party learned or should have learned that it had produced information subject to a privilege or protection claim. A ‘reasonable time’ requirement unmoored to a particular triggering event proved confusing. It is deleted from the revised proposal.”

Revised Proposal: “Safe Harbor”: Rule 37(f)

Absent exceptional circumstances, a court may not impose sanctions under these rules on a the party for failing to provide electronically stored information lost as a result of the routine, good-faith operation of an electronic information system.

The Advisory Committee explains that: “As published, the rule included an express exception that denied protection if a party ‘violated an order in the action requiring it to preserve electronically stored information.’ This exception was deleted for fear that it would invite routine applications for preservation orders, and often for overbroad orders. The revised Committee Note observes that violation of an order is an element in determining whether a party acted in good faith.... Public commentary also emphasized the possible relationship between Rule 37(f) and the proposed amendment to Rule 26(b)(2) that – unless the court orders discovery – excuses a responding party from providing discovery of electronically stored information that is not reasonably accessible. Many commentators expressed a concern or expectation that the interaction of Rules 26(b)(2) and 37(f) meant that absent a preservation order, there would be no obligation to preserve information a party contended was not reasonably accessible because such information was not ‘discoverable’ under Rule 26(b)(2).... To respond to concerns that the proposed rule would insulate routine destruction of information on sources a party identifies as not reasonably accessible, the Notes to both Rules 37(f) and 26(b)(2) have been revised to make clear that there is no necessary linkage between these rules. Thus, the Rule 37(f) Note says that good faith may require preservation of information on sources a party believes are not reasonably accessible under Rule 26(b)(2).”

While the scope appears limited to “sanctions” under “these rules”, it seems fairly obvious that this “safe harbor” will be incorporated, over time, into the substantive law of spoliation.

Similarly, while the Committee recognizes that “a preservation obligation may arise from many sources, including common law, statutes, and regulations” (Committee Note, Rule 37(f)), it seems fairly inevitable that both state and federal courts struggling to define the circumstances under which a preservation obligation arises will cite the Federal Rule for the proposition that there is no obligation to preserve electronically stored information that might be lost as a result of the defendant’s “routine operation” of the defendant’s system.

Nevertheless, the Committee attempts to make it clear that: “Rule 37(f) applies only to information lost due to the ‘routine operation of an electronic information system’ – the ways in which such systems are generally designed and programmed to meet the party’s technical and business needs…. A party cannot exploit the routine operation of an information system to evade discovery obligations by failing to prevent destruction of stored information that it is required to preserve.... Good faith may require that a party intervene to modify or suspend certain features of the routine operation of a computer system to prevent the loss of information, if that information is subject to a preservation obligation…. When a party is under a duty to preserve information because of pending or reasonably anticipated litigation, such intervention in the routine operation of an information system is one aspect of what is often called a ‘litigation hold.’... If Rule 37(f) does not apply, the question whether sanctions should be imposed on a party, and the nature of any sanction to be imposed, are for the court.” (Committee Note, Rule 37(f))