Delaware Court of Chancery Updates E-Discovery Guidelines

Kevin Brady

Law Technology News

01-07-2013

The Delaware Court of Chancery recently announced that it is updating its Rules 26, 30, 34, and 45, effective Jan. 1, 2013, "to account for modern discovery demands" regarding electronically stored information, and to bring the court's rules "in line with current practice."

Many of the changes mirror the amendments to the Federal Rules of Civil Procedure addressing electronic data discovery and ESI — for example, requesting a certain form of production of ESI under Rule 34. The court also is expanding it "Guidelines for Practitioners," originally released in January 2012. The "Discovery Guidelines" explain the court's expectations regarding parties' responsibility to confer early and often, about EDD procedures, the overall scope of discovery, preferred procedures for collection and review of discoverable material (including ESI), the privilege-assertion process, and the role of Delaware counsel in the discovery process.

The court also developed guidelines for expedited discovery in advance of a preliminary injunction hearing. These are designed to encourage communication among counsel and are intended to assist the bar in developing reliable, transparent EDD procedures. They provide structure for addressing ESI, and at the same time encouraging lawyers to be flexible, cooperative, transparent, and proactive.

HIGHLIGHTS: EXPEDITED AND NON-EXPEDITED MATTERS

• Active Participation by Counsel in Collection Process. Following in the trend set by U.S. District Court Judge Shira Scheindlin, of the Southern District of New York, in the Zubulake cases, the judges on the DCC have been telling practitioners for some time that the court expects Delaware counsel to play an active role in the discovery process.

The "Discovery Guidelines" clarify the role by noting that Delaware counsel should be involved in "the design and implementation of the protocol for the collection, review, and production of documents, and in the assertion of privilege." The level of involvement is highlighted where the guidelines state that:

If Delaware counsel does not directly participate in the collection, review and production of information, Delaware counsel should, at a minimum, discuss with co-counsel the Court's expectations. In addition, Delaware counsel should be involved in making important decisions about collection and review of documents and should receive regular updates, preferably in writing regarding the decisions that are made on key issues, such as the selection of custodians and search terms. The Court expects Delaware counsel to be able to answer questions regarding the manner in which the document collection and review was conducted. It is therefore recommended that Delaware counsel and co-counsel collectively maintain a written description of the discovery process, including detailed information regarding efforts to preserve documents, custodians identified, search terms used, and what files were searched.

Transparency is key in terms of the parties exchanging information concerning the scope of their respective document collections (e.g., what documents are being collected, how they are being collected, what computers or other electronic devices are being searched, and any search terms or other restrictions being used to collect documents).

The "Discovery Guidelines" state that "counsel should interview the custodians from whom they have collected to understand, among other things, any potential sources of relevant documents (e.g., centralized document repositories or systems, PDAs, work and home computers), determine the records that are kept in the ordinary course, and identify any relevant jargon, acronyms, or code names."

While the guidelines note that in many expedited matters, the nature of action will dictate what is deemed to be "reasonable" by the court, but even in highly expedited actions, the court expects the parties to discuss limitations on discovery. For example:

• Each party should make a good faith, reasonable attempt to identify the custodians who are reasonably likely to possess relevant information and prioritize information collection efforts on those custodians (note that the Discovery Guidelines refer to custodians and not key players — this is an important distinction);

• The parties should also collect from any centralized document repository or system that is likely to contain relevant documents even if there is an agreement to limit discovery to a certain number of custodians;

• If search terms are utilized to identify potentially relevant information, the parties should make a good faith, reasonable attempt to negotiate those terms with the opposing parties.

The guidelines offer an example of a checklist or outline "to assist counsel in developing a sound document collection process." The outline is meant as a starting point, and will need to be modified to fit the facts of a particular case.

Another recent "hot topic" in the DCC practice is "who" must or should do the actual collection of ESI. In the past, the court has expressed concern when "interested" individuals were solely responsible for identification, preservation, collection, or review of their own information.

"The Discovery Guidelines" clarify that issue by noting that:

[E]xperienced outside counsel should be actively involved in establishing and monitoring the procedures used to collect and review documents to determine that reasonable, good faith efforts are undertaken to ensure that responsive, non-privileged documents are timely produced. In addition, as a general matter, the Court prefers that, whenever practicable, outside counsel or professionals acting under their direction will conduct document collection and review.

While there is no formal Rule 26 "meet and confer" requirement under the Court of Chancery Rules like there is in the Federal Rules, the Court of Chancery is moving closer to one by encouraging counsel to meet and confer promptly after the start of discovery to develop a discovery plan that includes electronic discovery.

The "Discovery Guidelines" promote transparency regarding the process and parameters used to collect documents (e.g., the custodians, electronic search terms, cutoff dates used, and steps taken) which the Court views as "essential to (i) identify potential areas of disagreement early in the process, and (ii) provide some protection to parties if problems later arise. To the extent that the collection process and parameters are disclosed to the other parties and those parties do not object, that fact may be relevant to the Court when addressing later discovery disputes.

PRIVILEGE AND PRIVILEGE LOGS

The area of privilege and privilege logs garnered a great deal of attention, primarily because it is the most expensive and most confusing part of discovery. How to handle privilege in the age of digital information can be extremely taxing. In addition, there is a significant amount of confusion in the creation of the log in part because the parties are using archaic, paper-based reasoning to address ESI issues.

In the end, the privilege log is an exercise in futility from all points of view — clients, counsel, and the court. The "Discovery Guidelines" clarify some of the confusion about privilege logs by highlighting the priority that privilege logs must now take. Indeed, they spotlight the senior lawyers in the case (and especially senior Delaware lawyers) who must provide guidance about the assertion of privilege, and must also make certain that the guidance provided was actually implemented.

While the guidelines note that senior lawyers are not being required to personally conduct the privilege review or prepare the privilege log, they must take reasonable steps to ensure that privilege only has been asserted in accordance with a good faith reading of Delaware law, and that there has not been systematic over-designation. They specifically note that "the senior Delaware lawyers must personally assure themselves that the privilege assertion process has been conducted with integrity.

What does this mean in practice? It means that when there is a DDC hearing, a senior Delaware lawyer must be able to take the podium, explain the basis for the assertion of a disputed claim of privilege, and be knowledgeable about the privilege assertion process. The guidelines provide suggestions for handling privilege log issues:

1. The parties are not expected to log post-litigation communications;

2. The parties are free to agree to log certain types of documents by category instead of on a document-by-document basis; and

3. With respect to email chains, parties should attempt to agree on the procedures that both sides will use.

The assertion of privilege and the creation of a privilege log has been the subject of a great deal of debate, due to the enormous and disproportional cost and time associated with handling privilege review and preparing a privilege log.

The clear message from the court through the "Discovery Guidelines" is that parties can be flexible and creative in this area. In particular, they state that the court encourages the parties to make agreements that reduce the time, expense, and burden associated with conducting a document-by-document privilege review.

Flexibility here is important. Indeed, there does not appear to be any limitation in the "Discovery Guidelines" as to how creative the parties can be in this area even to the point where the parties could agree to forgo the need for any privilege log. This "say no to privilege logs" trend is gaining momentum in many jurisdictions as a way to hold down the skyrocketing costs of addressing privilege and privilege logs.

Kevin Brady is a member of Eckert Seamans Cherin & Mellott, based in Wilmington, De. Email: Kbrady@eckertseamans.com.