California Enacts Comprehensive E-Discovery Legislation Effective Immediately – Legislation Follows Federal Rules Amendments, but Also Departs in Significant Ways

June 30, 2009

Alert:  Potential Trap for the Unwary re Inaccessible Information

Governor Schwarzenegger yesterday signed into law Assembly Bill 5, the "Electronic Discovery Act," enacting significant electronic discovery amendments to the California Code of Civil Procedure.  Because the legislature deemed it "urgency" legislation, it is effective immediately.  Although the legislation largely follows the 2006 electronic discovery amendments to the Federal Rules of Civil Procedure, it differs in its treatment of inaccessible information (such as backup tapes) and in its safe harbor for lost information.  Of particular note, the Bill requires parties in their written responses to document requests to object to the production of inaccessible information to preserve their objections.  If a party fails to do so, it risks waiving its objection and being forced to produce even inaccessible electronically stored information.

No Presumption Against Production of Inaccessible Information.

The new California law largely turns the federal protection against producing inaccessible information on its head.  The federal rules explicitly acknowledge that no duty exists to produce information from an inaccessible source, providing that a party responding to requests for production need not produce (but in some cases must still preserve) electronically stored information ("ESI") from sources that it identifies as not reasonably accessible because of undue burden or cost, and the requesting party must bring a motion to compel if it wants the information.  See FRCP 26(b)(2)(B).  Thus, under the federal rules, if the ESI is inaccessible, the party simply does not need to produce the documents, although the requesting party may bring a motion to compel in which the burden then shifts to the responding party to demonstrate that it is not reasonably accessible.  Id.

The new California law, by contrast, assumes that all ESI is accessible.  It shifts the balance by not requiring the requesting party to bring a motion to compel in the first instance.  Rather, it provides that the responding party may bring a motion for a protective order.  See CCP § 2031.060(c) (as amended).  Some commentators have expressed a concern that the legislation will require the responding party to bring a motion for a protective order in every case.  The California Judicial Council in its Report on the legislation, however, states that "[t]his is not the intent of the legislation nor will it be its effect."  See Judicial Counsel Report at 5.  It further states that the "usual California discovery procedures will apply to electronic discovery," i.e., the requesting party can bring a motion to compel ESI that the responding party claims is inaccessible (as set forth in amended CCP § 2031.310) or the responding party may bring a motion for a protective order (as set forth in amended CCP § 2031.060).  

In opposing a motion to compel, the burden remains on the responding party to establish that the ESI is inaccessible.  See CCP § 2031.310(d) (as amended).  As under the federal rules, even if the responding party establishes that the ESI is inaccessible, the court for good cause may nevertheless order its production, although it may order the requesting party to share in the costs of doing so.  See CCP §§ 2031.060(e), 2031.310(f) (as amended).

ALERT:  The Responding Party Arguably Must Object to Preserve Objections to Producing Inaccessible Information.

If a party wants to avoid producing inaccessible ESI, the new California law arguably requires it to object first.  Specifically, it must identify in its written responses the sources of ESI that it asserts are not reasonably accessible.  By doing so, "the responding party preserves any objections it may have" related to that ESI.  See CCP § 2031.210(d) (as amended).  This language suggests that the inaccessibility objections may be waived if a party fails to assert them in their written responses.  Therefore, it will be important for litigation counsel to have an acute understanding of the client’s systems and their accessibility before serving written responses to document requests.  This language also suggests that, contrary to some commentators’ fears that the responding party will always have to file a motion for protective order, a responding party opposing the production of inaccessible ESI may state its objections in its written responses and thereby preserve them, leaving the requesting party with the option of bringing a motion to compel.  See CCP §§ 2031.210(d), 2031.310(d) (as amended).

Form of Production.

The new California law contains nearly identical provisions to the Federal Rules regarding the form of production of ESI.  The requesting party may specify the form or forms in which it wants ESI to be produced, and the responding party must include in its response the form it intends to use if no form is specified or if it objects to the specified form.  The responding party is not required to produce the same ESI in more than one form, and if a demand does not specify a form then the responding party must produce it either in the form in which it is ordinarily maintained or in a reasonably usable form.  See CCP §§ 2031.030(a)(2), 2031.280(c)-(d); see also FRCP 34(b).  These provisions require counsel to know the difference between different forms in which the information can be produced and the advantages and disadvantages to the client.

Inadvertently Disclosed Privileged ESI Need Not Be Returned Pending Judicial Determination.

The California legislation’s approach to inadvertently disclosed privileged ESI is similar to that of FRCP 26(b)(5)(B).  After being informed of a claim of privilege on information already produced, the party that received the information must sequester it and either return it or make a motion within 30 days contesting the claim of privilege and presenting the documents to the court under seal.  See CCP § 2031.285 (a new section added by the legislation).  Before resolution of the motion, the receiving party is precluded from using or disclosing the information.  Id.  Note that by providing the option of presenting the documents to the court instead of simply requiring their immediate return, the legislation creates an opportunity for the receiving party to engage in significant gamesmanship–such as intentionally presenting to the court sensitive, privileged documents whose contents might prejudice the court against the producing party.

Safe Harbor for Destroyed Data.

Like Federal Rule 37(e), the new California legislation contains a "safe harbor" from sanctions for information destroyed as the result of the routine, good faith operation of an electronic system.  But the safe harbor under the California law is potentially broader than its federal counterpart, which only mentions "lost" data.  The new California statute, by contrast, applies to "lost, damaged, altered or overwritten" data.  Unlike the federal rule, the statute also expressly provides that the safe harbor does not alter any obligation to preserve discoverable information, such as when there is a reasonable anticipation of litigation.  (But the Advisory Committee Notes to FRCP 37(e) state that the good faith requirement prevents a party from allowing a system to destroy data subject to a preservation obligation.)  See CCP §§ 2031.060(i), 2031.300(d), 2031.310(j), 2031.320(d) (as amended).

Courts Can Limit the Frequency or Extent of E-Discovery.

Importantly, the new California law provides that courts must limit the frequency or extent of discovery of ESI–even from a source that is reasonably accessible–where any of the following conditions exist: (1) it is possible to obtain the information from a more convenient, less burdensome or expensive source; (2) the discovery sought is unreasonably cumulative or duplicative; (3) the party seeking the discovery has had ample opportunity to previously obtain the information sought; or (4) the likely burden or expense outweighs the likely benefit, taking into account the amount in controversy, the resources of the parties, the importance of the issues, and the importance of the requested information in resolving the issues.  See CCP § 2031.060(f) (as amended); see also CCP § 1985.8(h) (new section applicable to subpoenas).  These provisions reflect the concept of proportionality, which is becoming increasingly important because of the frequently high costs of e-discovery.

Non-Parties’ ESI Can Be Subpoenaed.

The legislation introduces a new section that expressly provides for the use of subpoenas to obtain ESI from non-parties.  It contains many of the same provisions described above applicable to requests to a party for production of ESI, including the court’s ability to limit e‑discovery in light of the amount in controversy, the person’s resources, and the importance of the information.  See CCP § 1985.8 (added by the legislation).

Gibson, Dunn & Crutcher LLP

The Electronic Data Discovery Initiative ("EDDI") is a task force dedicated to issues of e-discovery and records management at Gibson, Dunn & Crutcher LLP. If you have any questions regarding this material, or how to address e-discovery in one of your matters, please contact any of the following attorneys:

Gareth T. Evans – Los Angeles (213-229-7734, [email protected])
Farrah Pepper – New York (212-351-2426, [email protected])

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