For any maritime business interest with a connection to the United States, involvement in civil litigation in U.S. courts is likely inevitable. As such, both domestic and foreign businesses should prepare themselves for involvement in U.S. civil litigation before it is thrust upon them. In this regard, no area of current concern generates more discussion (and sometimes angst) amongst our international and domestic clients than “e-discovery,” its costs and scope, and the best practices that companies can adopt to prepare themselves for this unique aspect of U.S. litigation.
In contrast to many foreign legal regimes, it has long been the rule in the United States that, once a lawsuit is filed, the parties to the action exchange essentially all relevant documentary information shortly after the beginning of the case in a period known as “discovery.” The policy rationale for this process is to enable all sides to fully investigate the facts of the case early on and develop their respective legal arguments before trial, which will hopefully encourage settlement once the key facts are isolated. Until the last decade, a maritime lawyer’s factual investigation and discovery plan involved the searches and exchange of boxes, sifting through warehouses full of paper documents, and (through personal experience of the authors!) 2:00 a.m. use of the captain’s copier on the bridge while off- shore during shipboard investigations to collect “hard copies” of pertinent vessel logs.
Those days are essentially over, as modern business practices have almost completely shifted into the electronic arena. Indeed, some commentators assert that more than 90 per- cent of all information today is created and exists purely in electronic form. The maritime industry has followed the trend, with many “traditional” documents such as logs, cargo manifests, and communications now occurring in purely electronic format. As such, the electronic or “e”-discovery of such materials is now a critical concern to the maritime community. How a company manages its electronic records is of vital importance before the moment it actually becomes involved in U.S. civil litigation.
On December 1, 2015, significant amendments to the Federal Rules of Civil Procedure (“FRCP”)1 went into effect. These amendments included changes to the rules governing e-discovery, which, for purposes of this article, broadly refers to discovery focused on seeking/obtaining electronically stored information (“ESI”) from a litigant. As a preliminary matter, the basic scope of all discovery was amended to re- emphasize focus on a proportionality standard, as follows:
Parties may obtain discovery regarding any nonprivileged matter that is relevant to any party’s claim or defense and proportional to the needs of the case, considering 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. Information within this scope of discovery need not be admissible in evidence to be discoverable.
Even though the new “proportionality” discovery standard can be viewed as perhaps limiting the scope of discovery, the parties’ obligations to produce relevant material (electronic or otherwise) remains. With this general obligation in mind, the following four topics are general guidelines that companies should consider when preparing for the inevitable.
1. Pre-Litigation Awareness of Your Electronic Footprint
A solid e-discovery strategy begins long before the process server knocks on your door. Modern businesses (regardless of size or location) should first prepare by ensuring before litigation that in-house counsel have an in-depth understanding of the businesses’ specific computer network arrangements, the type of computer systems utilized by the company and its subsidiaries, access to key IT personnel, and how and where key company data is stored. Think of this step like a lifeboat drill—if the lawsuit were filed tomorrow, would you and your in-house counsel know where to go and who to turn to in order to fully understand your data systems? You will likely be required to immediately access those very systems during discovery, so personally having a full under- standing of that architecture now in calm waters will help to avoid problems during the subsequent storm.
2. Your Data Management and Data Retention Policies
A corollary to understanding your company’s electronic foot- print is to fully understand its data management and data retention policies. To be sure, there is no “one size fits all” approach to data management and retention—what is necessary for an international oil conglomerate may not be the best strategy for a small local tug company or NVOCC. But a common principle is universal: regardless of your company’s size, it is good business practice to have an official data management and retention plan in place now to control if, when, and how data is managed, maintained, and in many cases, appropriately purged and deleted during normal business operations. You may very well be relying on that plan in court to document your company’s “normal” electronic business practices in future litigation.
3. What to Do with Your Data Once Litigation Is Threatened or Pending
Once litigation is threatened or pending, it is critical to quickly identify and access the potential universe of electronic information implicated in the lawsuit and make important strategic determinations ASAP to secure all relevant data from key personnel. One of the first steps in this process is to immediately identify key employees who are likely to be “custodians” of electronic data that may be relevant to the litigation. Keep in mind that in the maritime arena, such custodians may very well include the ships them- selves—they are now often given their own generic e-mails, server designations, etc. (for example, “mvgreenwave@ client.com). Thereafter, it is critical to internally issue a “litigation hold” notice to key personnel advising them of the lawsuit, the relevant areas at issue, and the need to maintain all critical documents (electronic or otherwise). The reason for this strict requirement is that in certain instances, U.S. courts may penalize those parties who lose, misplace, or destroy key evidence (known as “spoliation”).
Clients should avoid spoliation pitfalls at all costs by working with counsel and implementing litigation holds immediately after threatened or pending litigation. This is now particularly important in the electronic realm, because unlike your office file cabinet, many electronic data systems will automatically purge and delete data (such as emails) after a certain time period. Again, having a solid understanding of your company’s systems and liaising with key IT personnel before litigation ensues will enable you to promptly access such systems and suspend normal data purge schedules as necessary once the lawsuit arrives.
4. Discovery Phase Collection Considerations
Very shortly after a complaint and answers are filed in federal court, counsel for all parties are required to participate in a “meet and confer” conference to develop a mutually acceptable discovery That plan now expressly contemplates and must address issues of ESI preservation. The parties will then participate in a preliminary conference with the court, which generally results in the issuance of a scheduling order. FRCP 16(b)(2) now specifies that scheduling orders may provide for the preservation of ESI, as well as include an agreement regarding the inadvertent disclosure of electronically privileged information (often called a “clawback agreement”).
It is important that you and your outside counsel begin planning at the outset for how e-discovery is going to be handled, including educating counsel about your company’s electronic systems and establishing lines of communication between counsel and your key e-discovery personnel. Keep in mind that each e-discovery collection and review is different, and the cost and scope of the project will necessarily depend upon the size and complexity of the case. In some instances, complex review tools (such as computer-assisted “predictive coding” or other types of attorney-assisted review) can be utilized to efficiently search through large portions of data. In other instances, the collection may involve only a small amount of ESI from a few custodians that can then be classically reviewed. The costs for such endeavors necessarily fluctuates depending on the scope and complexity of each case, but fortunately, the market is meeting the demand, and cost effective review platforms are now increasingly common in the industry.
By fashioning a review plan early and working with opposing counsel, your company will be better equipped to navigate the e-discovery process itself. Some of the things your counsel will be assisting with are as follows:
- Responding to general ESI discovery requests and, as necessary, establishing unique “search terms” and other search parameters with opposing parties to isolate relevant ESI that may be subject to This will entail the collection of ESI materials followed by a review and designation of materials to actually produce in discovery.
- Dealing with “overly broad and unduly burdensome” discovery requests from opposing counsel, and corollary motion practice to limit discovery, as necessary.
- Preparation and maintenance of “privileged data” sets to isolate and secure privileged communications, trade sensitive data, or other confidential commercial materials that may be potentially be exposed during discovery.
- Identification and designation of one or more of your employees representative to serve as a potential FRCP 30(b)(6) witness to confirm and describe your IT foot- print and the parameters and scope of your ESI
The creation, use, and storage of electronic data is now an integral and critical part of every modern business, but costly pitfalls can arise when such information becomes implicated in threatened or pending litigation. Being proactive and taking steps to appropriately plan and prepare for the inevitable is important and can help ensure your company’s safe passage through the electronic ocean we are all now operating in.