NEW YORK COUNTY LAWYERS ASSOCIATION COMMITTEE ON THE SUPREME COURT’S COMMENTS ON AMENDMENTS TO THE COMMERCIAL DIVISION RULES
The Administrative Board of the Courts has requested public comment with respect to the proposed rule changes, by the Commercial Division Advisory Council (“CDAC”), to amend Commercial Division Rules 11-c, 8, 1(b), 9(d), 11-e(f), 11-g, and Appendices A, B, E, and F (the “Amendments”). These updates are intended to provide greater guidelines for the discovery of electronically stored information (“ESI”). For the reasons detailed below, the New York County Lawyers Association (“NYCLA”) Committee on the Supreme Court, endorses these proposed rule changes.
NYCLA is an organization of nearly 9,000 lawyers. Its membership comprises attorneys from all areas of the practice in New York, including governmental, corporate in-house, large- firm, and small-firm practitioners. NYCLA issues reports and position papers on matters of interest to our membership and advocates changes in law and procedure that we believe will promote the public interest.
NYCLA commends the CDAC for its efforts to amend the rules with respect to the expanding area of ESI discovery. In the past, ESI discovery typically arose in larger matters. Today, however, it is becoming more prevalent in nearly every type of legal dispute. As technology becomes ubiquitous in everyone’s life, as nearly everyone communicates and stores their work material electronically, it is essential that the rules for ESI discovery be streamlined for greater clarity and conformity to better address these issues. Having reviewed the rules, NYCLA affirms its support that these changes are a good step toward accomplishing those goals in an ever-evolving area of law. This is accomplished by consolidating the rules regarding e-discovery and underscoring the importance of several key points, under one rule, such as the encouragement of early discussion of ESI, and for consideration of proportionality, cooperation, technical competence, form of production, prevention of the waiver of privilege, as well as guidance on when cost shifting is appropriate.
Nowadays, discovery for a legal action will almost certainly involve electronic discovery, which will frequently entail greater complexity. Consequently, it is critical that parties engage in conversations at the outset of a legal matter, to curtail any downstream issues from arising as things progress. Every case has its own factual circumstances and will therefore need to be tackled on a case-by-case basis. The Amendments focus on several facets for which counsel should discuss both with their clients and adversaries. This comment will concentrate on some of the key points and why these changes are warranted.
SCOPE OF ESI GUIDELINES
As a starting point, it is only logical that the ESI Guidelines extend to all parties and not be limited specifically to non-parties. Guidelines regarding the handling of ESI should certainly equally extend to the parties primarily involved in the dispute, with it serving as an impetus for counsel to confront complex ESI concerns in advance of the preliminary conference. Undoubtedly, early preparation and examination of potential issues by the parties will result in a more comprehensive and productive preliminary conference and facilitate the process.
While it is certainly true that a party is “best situated to evaluate the procedures, methodologies, and technologies appropriate for preserving and producing their own electronically stored information,” the Guidelines rightly encourage a producing party to “engage in a good faith exchange of information about its process and attempt to resolve any disputes regarding the process to be employed.”
CONSOLIDATION AND CLARIFICATION OF RULES
By consolidating the rules under the umbrella of one specific rule, it crystallizes the various obligations a party may have with respect to its ESI obligations. A starting point, as advocated in the Guidelines, is that the parties should engage in good faith effort to resolve any issues at the outset, in contrast to leaving potential conflicts to be dealt with, on an as needed basis, as the matter evolves. By making reference to the Guidelines, which provides in detail the topics to be discussed, it obviates the need for current Rule 1 (b) and 8(b).
NYCLA lauds the Guidelines for its emphasis that counsel is obligated to advise clients regarding a client’s obligations ranging from preservation to production. This is particularly true with respect to the preservation of electronic data, with new forms of communications appearing every day, like Slack, Teams, chat applications, social media, mobile devices, and the preservation risks of “ephemeral” messaging systems. Methods for electronically conversing are constantly evolving and it is an attorney’s ethical obligation to remain technically competent or associate with a qualified third-party e-discovery specialist for handling data from that type of medium. Moreover, it is counsel’s obligation to investigate and evaluate with specificity as to why ESI may not be reasonably accessible for a pending matter. Accordingly, in uniformity with the CPLR, proposed rule 11-c(h), requires a party take ‘reasonable steps’ to properly preserve ESI.
The rules are further clarified by subsequently listing in 11-c(c), within the same rule regarding the need to consult the Guidelines, that a requesting party may specify the format in which ESI should be produced. In line with FED R. CIV. P. 34, a party may request the format in which documents should be produced and that the responding party, if objecting to the requested format, specify with particularity the basis of its objection. Importantly, the Guidelines, however, encourages the parties “to reach agreement on a format for the production of ESI to avoid unnecessary expense and the risk of costly re-productions.”
It is also highlighted, that in the absence of an agreed upon form of production it should be produced in “the form in which it is ordinarily maintained, or in a searchable format that is usable by the party receiving the ESI.” In light of the growth of other electronic methods for communicating, for example via collaboration tools and mobile communication, there is a greater need for clarification of the form of production, for these forms of ESI, in the absence of an agreement.
The Guidelines should certainly be praised for its stressing the need for the parties to address production formats for non-document forms of ESI, “such as multimedia, text messages, instant messages, social media, and structured databases.” At the same time, the rule needs to clarify how that that type of data should be produced, in the absence of an agreement. Producing text messages, and alike, in native form is not a viable option and there is no acceptable standardized form, as to what is considered a reasonable format, for that type of ESI data. All too often, parties fail to reach an agreement on the format in which documents are to be produced, and even within ESI agreements, parties almost inevitably fail to properly address the form in which these types of ESI should be produced in.
Similarly, by placing the concept of proportionality within the same rule in 11-c(d), from Rule 9(d), it emphasizes to the parties the need to tailor its ESI request to what is reasonable and proportionate. Proportionality is essential to the concept of litigation, as the cost of litigation should not outweigh the benefit. This is not merely based on monetary considerations, as the importance of the issues is equally essential, and will now conform to federal practice. Accordingly, NYCLA concurs with the Amendment to consolidate it under one rule and as the Guidelines notes “[p]arties should not use discovery of ESI for an improper purpose, such as to harass, cause unnecessary delay, or needlessly increase the cost of litigation.”
Having incorporated the principle of proportionality with Rule 11-c, technology-assisted review (“TAR”), which is also aimed at reducing costs, should be joined into the same rule. Accordingly, NYCLA agrees with the uniting of these principles within the same rule and moving it out of current Rule 11-e(f).
Importantly, the Guidelines emphasize that the “use of TAR is not unjustifiably discouraged, its use should not be held to a higher standard than the use of search term keywords or manual review.” This is especially true considering that TAR methods only continue to improve and have been generally shown to be more efficient, with one court indicating that it may even be the required methodology employed for review someday.
Nonetheless, NYCLA particularly commends the addition to the Guidelines that “[c]ounsel employing TAR should ensure that it is sufficiently knowledgeable regarding its use and/or associate with persons with appropriate subject-matter expertise, knowledge, and competence.” This is important for two primary reasons. Firstly, it is incumbent that counsel either be sufficiently versed in TAR or associate with a subject matter expert on TAR, if it will be utilized for discovery. Secondly, TAR is certainly not appropriate in all cases, especially considering the medium of communication. With the growth of short message content, for example chat application and alike, where the individual messages lack context, TAR is likely not a suitable method.
Inadvertent Production of Privileged ESI
Importantly, the Amendments and Guidelines underscore the point that the inadvertent or unintentional production of ESI subject to attorney-client privilege, work product, or other generally recognized privilege is not a waiver if reasonable precautions were taken to prevent the disclosure and upon learning of the disclosure promptly notified the other party of the inadvertent disclosure. This is of particular import as it is not expressly addressed in the CPLR. The volume of data generated daily only continues to proliferate, with electronic discovery entailing larger sets of data requiring review for disclosure.
Commensurate with this growing population, is the growth of potentially privileged material requiring assessment and review and it is therefore untenable to expect that no privileged materials could slip through the cracks. Accordingly, NYCLA supports the effort to make this supremely clear in the rules that an inadvertent privilege disclosure should not automatically mean that privilege has been waived. Parties should also strongly consider the option of extending these protections by entering into written agreements, as noted in the amendment. Echoing the comments from the NYSBA Commercial and Federal Litigation Section, NYCLA concurs that parties should enter into written, court-ordered non-waiver agreements to prevent privilege waiver, whether inadvertently or otherwise. Entering into such agreements, thereby curtails subsequent costly disputes.
Defray Reasonable Expenses for Non-Party’s ESI Production
Significantly, the proposed change to Rule 11-c(e), embeds into the rule the jurisdiction- specific requirement that a requesting party defray the costs associated with a non-party’s production of ESI, as compelled under CPLR 3111 and 3122(d). Once again echoing the comments from the NYSBA Commercial and Federal Litigation Section, NYCLA agrees that greater guidance is needed, as to the extent and types of costs a party should try to defray. Incorporation of the examples referenced in the Commercial Division’s current Appendix A – Guidelines for discovery of ESI Discovery, may serve to accomplish this goal.
It is for the aforementioned reasons that NYCLA supports the adoption of the proposed Amendments, noting its suggestions and the need for clarification with respect to newly developing forms of ESI. The Amendments serve to merge and elucidate the Commercial Division’s Rules to promote just, speedy, efficient and cost-effective resolutions. Nonetheless, it needs to be noted that the rules will likely need to be constantly updated to keep pace with technological growth, as the legal community is often lagging behind on that front.
November 8, 2021