Document review often is the most expensive component of discovery in large, complex cases. Wouldn’t it be great if you could shift that cost to the party that requested the documents, along with the burden of performing the tedious, time-consuming review? Well, maybe you can. A federal magistrate judge in the N.D. Florida recently did exactly that.

In FDIC v. Brudnicki, No. 5:12-cv-00398, 2013 WL 2948098 (June 14, 2013) , the FDIC, as receiver for a bank, sued eight of the bank’s former directors, including one officer. The defendants moved to compel documents from the FDIC and sought sanctions against the FDIC “for delaying discovery.” Id. at *3. The FDIC had “agreed to produce responsive documents under a proposed protocol.” Id. at *4. The court observed, however: “The parties sharply disagree on the method of production and the ESI protocol.” Id.
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More than seven months after the International Trade Commission proposed changes to its procedural rules relating to e-discovery “in order to increase the efficiency of its section 337 investigations” and “to address concerns that have arisen about the scope of discovery in Commission proceedings,” on May 21, 2013 the Commission issued final rules adopting the proposed amendments with some revisions. The new rules are applicable to investigations instituted after June 20, 2013. Section 337 investigations are administrative proceedings before the ITC, authorized under 19 U.S.C § 1337, to determine whether there has been unfair competition—typically patent infringement—in the importation of articles into the U.S. The only remedy is injunctive relief, typically an order excluding the articles from entry into the U.S. The amended rules are intended “to reduce expensive, inefficient, unjustified, or unnecessary discovery practices in” Section 337 proceedings.
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A recent court ruling illustrates the significant value of Federal Rule of Evidence 502 for preserving privilege in a cost-effective and expedient manner. In Chevron v. Weinberg Group, Misc. Action No. 11-409 (D.D.C.), Magistrate Judge John Facciola entered a Rule 502(d) order that allows the defendant to knowingly produce purportedly privileged materials without waiving any privileges applicable to those materials. In entering the order, the court expressed dismay that the defendant had “just now discovered Rule 502(d), the use of which may have prevented the protracted litigation and discovery battles that have plagued this case for the past two years.”

In September 2012, Judge Facciola — who is widely regarded as a leading jurist in the field of e-discovery — admonished the defendant “for the inadequacy of its privilege log and attendant refusal to disclose documents that could not, in fact, be regarded as privileged.” The court had ordered the defendant “to begin production of certain documents, previously withheld under a claim of work product privilege, at a rate of 100 documents per day until complete, redacting only those portions of the documents that constituted true opinion work product.” In that same order, Judge Facciola graciously threw the defendant a life-line by noting sua sponte that he would enter a Rule 502(d) order if requested by the parties. Apparently faced with the burden of redacting and quickly producing hundreds of documents, the defendant accepted the court’s offer and requested such an order, admitting that it was “willing to disclose all of the requested documents ‘without redacting opinion work product,’ so long as disclosure would not amount to a waiver of the [defendant’s] right to assert a privilege when [the plaintiff] attempts to make use of those documents.” As promised, Judge Facciola entered an order affording the defendant the privilege protection it sought without having to redact the documents, but not without first resolving another dispute.
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On October 5, 2012, the U.S. International Trade Commission (ITC) published proposed amendments to its rules of procedure that would limit e-discovery and provide guidance regarding the assertion of privilege claims in Section 337 proceedings. The goal of the proposed amendments “is to reduce expensive, inefficient, unjustified, or unnecessary discovery practices in agency proceedings while preserving the opportunity for fair and efficient discovery for all parties.” Based largely upon Rule 26 of the Federal Rules of Civil Procedure, the proposed amendments (1) provide specific limitations on the discovery of electronically stored information that is not reasonably accessible due to undue burden or cost, is duplicative or can be obtained from a less burdensome source, or where the burden of discovery outweighs its likely benefits; and (2) require the production of a privilege log with specified categories of information, set forth a procedure for promptly resolving privilege disputes, and allow parties to enter into agreements regarding the inadvertent production of privileged information. 

The ITC is proposing changes to Section 210.27 of its rules of procedure (19 CFR Part 210) to address concerns regarding the large volumes of electronically stored information (ESI) often produced in Section 337 proceedings. In July 2011, The George Washington University Law School held a conference on this issue, and many participants expressed frustration that parties in Section 337 matters often have to search and produce vast amounts of ESI, particularly email, but that only a tiny fraction of that volume will ever be admitted into the record. The potential for “gaming” the process whereby the costs of unnecessarily broad discovery either discourage parties from bringing complaints or disproportionately influence settlement decisions was identified as a major concern. The Commission also focused on the increased risk of inadvertent disclosure of attorney-client privileged information or attorney work product due to the inherent nature of ESI and the modern technologies and methods used to process and produce such information in discovery. 
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On September 27, 2012, the Federal Trade Commission published final revisions to the Commission’s Rules of Practice governing its investigatory process (16 CFR Part 2) and attorney discipline (16 CFR Part 4). Spurred in large part by the challenges posed by discovery of electronically stored information, the Commission explained that the final rules will “update and improve the Commission’s Part 2 investigation process by accounting for and incorporating modern discovery methods, facilitating the enforcement of Commission compulsory process, and generally increasing efficiency and cooperation.” After the Commission published its proposed revisions on January 23, 2012, a number of individuals and organizations, including Crowell & Moring, submitted public comments regarding the FTC’s proposed amendments. While the Commission adopted the bulk of the proposed rules changes without modification, it agreed that “some of the proposed rules can be modified to better reduce the burdens of the Part 2 process without sacrificing the quality of the investigation.” Accordingly, the Commission’s modifications to the proposed rules include (1) a revision of the privilege log specifications to decrease the burden on respondents, while still accounting for staff’s need to effectively evaluate privilege claims; (2) extending the deadline for the first meet and confer to decrease the burden on recipients of process and their counsel; and (3) implementing a “safety valve” provision allowing parties showing good cause to file a petition to limit or quash before any meet and confer has taken place.

Revisions to Proposed Rules Based on Public Comments

The original proposed amendments required additional detailed and specific information for withheld privileged material to be provided on a privilege log, which must be attested by the lead or supervising attorney responsible for asserting the privilege claims [Rule 2.11(a)]. This amendment largely was adopted as proposed, but the staff responded to certain concerns raised by commenters in the final rule by permitting respondents to (1) append a legend to the log enabling them to more conveniently identify the titles, addresses, and affiliations of authors, recipients, and persons copied on privileged material; (2) more conveniently identify authors or recipients acting in their capacity as attorneys by identifying them with an asterisk on a privilege log; and (3) forego providing the number of pages or bytes of a withheld document, and instead provide document control numbers.
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On January 13, 2012, the Federal Trade Commission announced a number of proposed changes to Parts 2 and 4 of the Commission’s Rules of Practice governing its investigatory process, “[e]specially in response to growing reliance upon and use of electronic media in document discovery.”  Given the challenges posed by the routine discovery of large, non-uniform, broadly dispersed volumes of electronically stored information (“ESI”), the Commission expressed its interest in making its “procedures more efficient and less burdensome for all parties.”  It claims the proposed changes will “expedite investigatory processes” and “keep pace with technology.”

In many ways, the recognized need for reform of the Commission’s investigatory process is likely welcomed by lawyers and parties involved in Commission investigations.  For example, some may argue that the Commission historically has been hesitant to recognize the effectiveness and efficiencies that can result from advanced technologies used in modern e-discovery.  The introduction to the proposed Rules, however, states that “searches, identification, and collection all require special skills and, if done properly, may utilize one or more search tools such as advanced key word searches, Boolean connectors, Bayesian logic, concept searches, predictive coding, and other advanced analytics.”  Nevertheless, the proposed Rules create additional requirements with which practitioners and parties before the Commission should familiarize themselves.  Some of these may impose substantial risk and burdens.
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