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in which the parties agree that any document mistakenly produced may be requested to be returned or destroyed without waiver of any privilege.

In practice, however, cases that run up high electronic discovery costs likely are not ones with parties willing to agree to either of these mechanisms. The privilege is fiercely guarded, both out of caution for when another court may view the mechanism described above as a waiver, but also for the prejudice that could result from allowing a party to see, if not use, privileged material. Parties now routinely litigate the privileged status of documents one party recalls as inadvertently produced -- the prospect of increasing those disputes will not appeal to many parties.

b. The Two-Tier System: Rule 26(b)(2)(B) and Rule 37(f)

The proposed Rule 26(b)(2)(B) authorizes a party to “not provide discovery of electronically stored information from sources that the party identifies as not reasonably accessible because of undue burden or cost.” If the requesting party, upon motion, seeks discovery from an identified source, the responding party must show the sources are not reasonably accessible. Even if the responding party meets that burden, the court may still order discovery if the requesting party shows good cause (i.e. the benefits of discovery outweigh the burdens and costs of locating, retrieving and producing the information).

This two-tier approach will control costs by limiting retrieval efforts. In codifies existing law in some jurisdictions4 and confers the benefit of predictability and uniformity in all federal jurisdictions. In the first tier, counsel for the parties will sort through the accessible data. This will facilitate discovery without imposing even greater burdens or costs such as the expensive retrieval or retention of information contained in back-up or disaster recovery tapes or restoration of deleted or obsolete data. In the second tier, data that is not reasonably accessible will be presumptively not subject to discovery. Absent a court order, the responding party need not produce such data and may continue to manage such data in its routine manner without incurring sanctions under Rule 37 - even if such data is routinely destroyed or recycled. 5

Proposed Rule 37(f) may contribute the most to cost-effective data retention and production practices by acknowledging the dynamic nature of modern information systems at many companies. Many networks are designed to routinely delete or overwrite electronic data in order to manage the “torrent of data.”6 “Spam” and other inappropriate e-mails are automatically filtered and deleted from the servers. Companies will also recycle backup or disaster recovery tapes every few days to cut storage, replacement and management costs. The proposed rule provides limited protection against sanctions for a party that routinely manages electronically stored information pursuant to a properly established retention program in such a way:

“Absent exceptional circumstances, a court may not impose sanctions under these rules on a party for failing to provide electronically stored information lost as a result of the routine, good-faith operation of an electronic information system.”

Even if the general design or operation of a party’s system includes routine destruction of information, the proposed “safe harbor” would only apply if a party’s actions are in good faith. What does good faith mean? Taking the Uniform Commercial Code definition, it would incorporate “honesty in fact and the commercially reasonable standards of fair dealing.”7 Parties


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