The Current State of the Federal Circuit’s Model Order for E-Discovery and Best Practices
Now firmly settled in the digital era, where more and more companies have transitioned to paperless environments and where generation of electronic documents and correspondence is the norm, discovery of electronic data, or e-discovery, has reached new heights in litigation. So too have the costs of litigation, not only in pure economic terms, but also in terms of the time and effort burdens placed on courts and clients. E-discovery has been pegged as a major culprit in these skyrocketing costs due, in large part, to its tendency to be abused by litigants. Notably, discovery tends to be more costly in patent cases than in other types of litigation.
In his September 2011 address to the Eastern District of Texas Judicial Conference, Federal Circuit Chief Judge Rader noted that, too often, e-discovery is used as a tactical method for leveraging time and fiscal burdens on attorneys and their clients. On one side, requesting parties impose numerous and overly broad requests on their opponents that garnish voluminous documents and data. The high costs of procuring, formatting, and screening this Electronically Stored Information (ESI) is disproportionately borne by the producing party. In response, the producing party has little incentive to sift out only those documents that are germane to the parties’ claims and defenses or to provide its production in a concise, organized, and complete fashion, thereby shifting the burden of review to the requesting party. The mass collection of ESI, even when filtered by basic keyword searching, can generate hundreds of gigabytes of data, requiring tens of thousands of man-hours to review, by both the producing and requesting parties. However, typically less than one in every ten-thousand documents produced is ultimately identified on a trial exhibit list. In the end, neither party stands to gain much from this burden-shifting litigation strategy that ultimately results in relatively few relevant or useful documents.
Calling on the federal judiciary to curb e-discovery excesses, Judge Rader also introduced the Advisory Council of the Federal Circuit’s “Model Order Regarding E-Discovery in Patent Cases.” Hailed as the first formal effort to address e-discovery costs in patent litigation, the Model Order was presented as a framework for federal courts to enforce sensible e-discovery terms on litigants. The Order addresses certain shortcomings of e-discovery and explains that minimizing human review of ESI is a key component in reducing e-discovery costs to reasonable levels.
The Model Order aims to promote “just, speedy, and inexpensive determination” of e-discovery in patent cases in accordance with the directive of Rule 1 of the Federal Rules of Civil Procedure by, for example: postponing email production requests until after exchange of initial disclosures and basic patent documents; excluding email production from general document production; limiting the number of email custodians to five per producing party should a specific email production request be made; and enforcing proportionality with cost-shifting for disproportionate ESI production requests. Parties may agree to modify or supplement the Order’s proposed terms, for example, by increasing the number of custodians or search terms, and agreeing upon standard production file formats.
The Model Order has been a catalyst in spurring e-discovery reform in many courts across the country. In fact, many courts and parties have chosen to wholesale adopt the Order, or at least adapt its provisions to suit the needs or preferences of a particular jurisdiction or case. For example, on September 27, 2011, the Eastern District of Texas—a court hearing a large number of patent disputes—released its adaptation of the Federal Circuit’s Model Order, which stressed that “good cause” to modify the Model Order is at the “Court’s discretion or by agreement of the parties.” The Eastern District of Texas also removed the provision excluding email from the scope of general production requests from its Model Order in favor of promoting a more accurate determination of relevant ESI based on careful selection of custodians and search terms.
As another example, the Northern District of California released a set of guidelines on November 27, 2012 that echo many of the principles of the Federal Circuit’s Model Order. Specifically, it strongly encourages a prompt meeting between the parties at the outset of litigation to informally discuss agreeable terms regarding preservation, search, and production of ESI, as well as prospects to decrease the costs and increase the efficiency of e-discovery.
Other District Courts, such as the District of Delaware and the Southern District of New York, have also implemented modified versions of the Model Order., These adaptations set forth more precise requirements on the timing of e-discovery, data formats, and custodian limitations and emphasize procedures which maintain proportionality of e-discovery costs. While there may be marginal differences between each court’s adaptations, several common themes are promoted: cooperation between parties, expediting discovery, and utilization of modern software techniques to dial down the universe of documents subject to discovery.
The notion that cooperation between parties often leads to more efficient and productive discovery is not new. The Sedona Conference®, a nonprofit research and educational institute often discussing issues of law and policy in the areas of antitrust law, complex litigation, and intellectual property rights, has led the conversation about improving the discovery process for ESI. Their widely-endorsed publication, the Cooperation Proclamation, first published in July of 2008, aims to align e-discovery with the principles of “just, speedy, and inexpensive determination” of litigations as set forth in Federal Rule of Civil Procedure 1 and as advocated by Judge Rader. A main contention of the Cooperation Proclamation is that cooperation with the opposing party in discovery is consistent, rather than conflicting, with zealous advocacy of one’s client. With cooperation as the backbone of the pre-trial discovery process, advocacy skills may be channeled “toward interpreting the facts and arguing the appropriate application of law” rather than wasted on needless discovery disputes. As of October 31, 2012, the proclamation has been signed by 135 judges in 31 states, and has been referenced in numerous judicial opinions. The Cooperation Proclamation has gained traction, and will continue to influence more judges to order cooperation in determining e-discovery agreements between parties.
The use of technology, software and coding techniques as an aid in e-discovery is also not new. The Judges’ Guide to Cost-Effective E-Discovery, published October 1, 2010 by the Electronic Discovery Institute, aims to educate judges on the technologies available for significantly reducing the time and cost of gathering, processing and producing ESI and inform them of the best techniques for expediting the e-discovery process. The Judges’ Guide calls for lawyers to maintain technical competence in the field of discovery, stating that it is an ethical duty based on a variety of rules in the ABA Model Rules of Professional Conduct. The Judges’ Guide also emphasizes that judges should consider allowing newer ESI-filtering techniques, such as predictive coding, to considerably reduce discovery time and cost.
Despite these advances, discovery in the digital era has yet to expunge all of its faults. While conversation and movement in the realm of e-discovery has now been brought to the forefront thanks to the Cooperation Proclamation, Judges’ Guide, and the Model Order, it will take time for the rules of e-discovery to arrive at the best techniques, practices and methodology for achieving the goals of Rule 1 of the Federal Rules and, ultimately, for reducing the cost of federal litigation. It is clear, however, that judges are already penalizing the use of traditional discovery tactics and are rewarding cooperative parties who make a bona fide attempt to reduce the time and cost of discovery.
In light of this trend, we have identified some best practices to ensure an efficient e-discovery process and help maintain good standing before judges in the federal court system:
Documents should be preserved as soon as litigation is reasonably suspected. In this first step, taking a snapshot of all possible data is paramount. Having proof of diligent preservation of ESI at the onset of litigation may act as a safeguard against any future arguments claiming destruction of evidence. Failure to preserve evidence may result in sanctions levied by the court, which may include fines, an order to pay the opposing party’s costs and legal fees, and, depending on the severity of the actions, even imprisonment. Moreover, taking a proactive approach to document and email management may be key to efficient production of ESI if you ultimately find yourself in litigation.
Once litigation has begun, opposing counsels should confer and come to an agreement on the terms of e-discovery. In addition to those terms set forth in the Federal Circuit Advisory Council’s Model Order, the Northern District of California provides a “Checklist for Rule 26(f) Meet and Confer Regarding Electronically Stored Information” that may facilitate an organized discussion. Counsel should determine a time frame for e-discovery and decide on the search terms, the method of searching, whether the documents produced should be text searchable or non-searchable, and whether or not to include metadata with the files. Each party should decide on a budget and determine if cost-shifting will be required for disproportionate ESI requests.
Parties should consider using a mutually-approved third party vendor for performing ESI collection and data reduction. These service-providers are experts in the field, will be more efficient and thorough than self-collection, and their retention may be used as a defense against claims of negligence or inequitable conduct. Data and collection services are also available for performing complex, human-trained algorithms for identifying the most relevant documents with high reliability. For companies that are frequently in litigation, Software-as-a-Service (SaaS) solutions that manage email and document classification and provide a host of e-discovery services may prove beneficial.
It is also valuable to point out litigation behavior that likely will no longer be well received by judges. Many seasoned attorneys and clients alike may consider cooperation with the opposing party during discovery an act of submission, preventing the attorney from zealously advocating his client. In light of recent judge’s opinions, however, coming to an agreement on the terms of e-discovery with the opposing party is the most effective way to reduce the cost of discovery borne by the client and to prevent sanctions. Leveraging discovery as a tactic to drain the opposing party’s resources or intentionally withholding ESI relevant to the case is not tolerated by the courts and will result in heavy penalties which may amount to higher costs than settlement or damages. It is advisable to arrive at a set of e-discovery terms with the opposing party and comply with them to avoid expensive sanctions or default judgment which render potential arguments made by the evidence moot. This list of “do’s” and “don’t’s” is far from exhaustive.
The Federal Circuit’s Model Order has prompted national reform in the way that discovery is handled in the Digital Age. It has introduced a paradigm shift away from using discovery costs as a tactical threat and towards cooperation between parties to expedite the discovery process. Software techniques such as predictive coding and technology-assisted review are being proven to be more effective and efficient than purely human review, and judges are finding favor in utilizing them to expedite the e-discovery process. As more judges become informed of the faster, cheaper, and more effective software techniques to filter ESI, refusal to utilize such techniques will be seen as a hindrance to “just, speedy, and inexpensive determination.”
Yet, these software-based searching techniques are not a solution in-and-of themselves. Cooperation between parties is of the utmost importance in identifying and narrowing the ESI most relevant to the case. Impeding the discovery process by refusing to cooperate with the opposing party will likely place a party out of favor with the court, and may even result in discovery sanctions. As this shift towards cooperation continues, the wisest strategy may be to confer with the opposing party on the terms of e-discovery, particularly with respect to effective ESI searching methods and parameters. In the end, such cooperation may result not only in cost savings, but also in an increased ability to identify relevant documentary evidence.
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 See, e.g., Chief Judge Randall R. Rader, United States Court of Appeals for the Federal Circuit, The State of Patent Litigation, Address to the E.D. Texas Judicial Conference, 7 (Sept. 27, 2011); The Sedona Conference, Cooperation Proclamation (July 2008), 1-2, available for download at https://thesedonaconference.org/download-pub/1703; Edward Reines and Ping Gu, Reducing the Cost of Patent Litigation, The Recorder (Aug. 17, 2012).
 See Rader, supra, at 7.
 Id. at 7-8.
 See, e.g., Global Aerospace Inc. v. Landow Aviation, L.P., No. CL 61040, Memorandum in Support of Motion for Protective Order Approving the Use of Predictive Coding (Va. Cir. Ct. Apr. 23, 2012).
 Id at 2; see also.
 See Rader, supra, at 8.
 Federal Circuit Advisory Council, An E-Discovery Model Order and [MODEL] ORDER REGARDING E-DISCOVERY IN PATENT CASES (2011), http://www.cafc.uscourts.gov/images/stories/announcements/Ediscovery_Model_Order.pdf.
 Id. at AN E-DISCOVERY MODEL ORDER, pages 1, 4.
 Id. at [MODEL] ORDER REGARDING E-DISCOVERY IN PATENT CASES, pages 2-3, ¶8.
 Id. at [MODEL] ORDER REGARDING E-DISCOVERY IN PATENT CASES, page 2, ¶6.
 Id. at [MODEL] ORDER REGARDING E-DISCOVERY IN PATENT CASES, page 3, ¶10.
 Id. at [MODEL] ORDER REGARDING E-DISCOVERY IN PATENT CASES, page 2, ¶3.
 Id. at [MODEL] ORDER REGARDING E-DISCOVERY IN PATENT CASES, page 2, ¶2.
 See E.D. Tex. Local Civil Rules, Appendix P: Order Regarding E-Discovery in Patent Cases (Feb. 28, 2012), http://www.txed.uscourts.gov/cgi-bin2/view_document.cgi?document=22218.
 See N.D. Cal. Guidelines for the Discovery of Electronically Stored Information (Nov. 27, 2012), http://www.cand.uscourts.gov/filelibrary/1117/ESI_Guidelines.pdf.
 Id. at Guideline 1.01, 1.02, 2.01, 2.02, 2.03.
 See Report of the Judicial Improvements Committee, Pilot Project Regarding Case Management Techniques for Complex Civil Cases in the Southern District of New York (October 31, 2011), at 4-7, http://www.nysd.uscourts.gov/rules/Complex_Civil_Rules_Pilot.pdf.
 See E.D. Del. Local Rules and Standing Orders, Default Standard for Discovery, Including Discovery of Electronically Stored Information (“ESI”) (revised Dec. 8, 2011), http://www.ded.uscourts.gov/sites/default/files/Chambers/SLR/Misc/EDiscov.pdf.
 Id. at §§ 1(b), 2(a), 3(a), 5(c).
 Cooperation Proclamation, supra, at 1.
 See The Sedona Conference® Cooperation Proclamation Judicial Endorsements as of October 31, 2012 (available for download at https://thesedonaconference.org/cooperation-proclamation).
 See, e.g., Kleen Products LLC v. Packaging Corp. of Am., No. 10 C 5711, 2012 WL 4498465, at *38 (N.D. IL Aug. 28, 2012); William A. Gross Const. Associates, Inc. v. American Mfrs. Mut. Ins. Co., 256 F.R.D. 134, 136 (S.D NY Mar. 19, 2009).
 Anne Kershaw and Joe Howie, Judges’ Guide to Cost Effective E-Discovery, Electronic Discovery Institute (October 1, 2010).
 Id. at § 14.
 See Victor Stanley, Inc. v. Creative Pipe, Inc., 269 F.R.D. 497 (D. MD. 2010).
 United States District Court for the Northern District of California, Standing Order Regarding E-discovery Guidelines: Checklist for Rule 26(f) Meet and Confer Regarding Electronically Stored Information (November 27, 2012), available for download at http://www.cand.uscourts.gov/eDiscoveryGuidelines.
 An emerging solution to consider is Google Vault, which is inexpensive ($50/employee) and has a growing set of tools that may prove indispensable during e-discovery.
 Rule 1, Federal Rules of Civil Procedure.