Steven S. Gensler and Xavier Rodriguez 2017-11-23 02:30:44
What the form are we fighting for? A fight over the form in which computer records must be produced might seem unlikely to generate a major opinion from the Texas Supreme Court. But “form fights” are not mere technical matters of interest only to the pocket-protector crowd. Beneath the surface, battles over form of production are usually battles over content and proportionality. In In re State Farm Lloyds, the court used its mandamus jurisdiction as a platform to announce guiding principles for the bench and bar.1 That guidance isn’t just—or even mostly— about form of electronically stored information, or ESI, productions. It’s about how relevance and proportionality converge to define the scope of discovery, and the trial court’s duty to keep discovery costs reasonable. The In re State Farm Lloyds dispute. A group of plaintiffs alleged that their insurer, State Farm Lloyds, was underpaying hail damage claims and sought claim-processing documents in discovery. Ordinarily, one might expect an insurer to pull claim files from scattered offices to meet that request. But years before, State Farm had centralized all claim processing into its enterprise claim system, or ECS. State Farm agreed to produce documents but proposed to do so from the ECS repository. The plaintiffs rejected State Farm’s offer because they had requested that State Farm produce its ESI in native form— meaning the form in which the documents were created. ECS, however, stored everything as read-only image files (e.g., PDF, TIFF, or JPEG). The plaintiffs insisted on native production of everything even though that would require State Farm to track down native-form precursors for any documents that had been converted to image form when entered into ECS. State Farm refused, arguing there was no good reason to put them through that trouble and expense. When the trial court ordered production of all ESI in native, State Farm sought mandamus relief. What’s really at stake? At this point, you might be shaking your head. A party refused to accept documents because they were in the “wrong” form and the court took their side? Isn’t that formality taken to madness? Not necessarily. Image forms may or may not be adequate substitutes for their native precursors. Understanding why is the key to understanding what’s really at stake in this dispute. The biggest issue lurking behind form fights is loss of content. Image files don’t contain exactly the same content as their native precursors. Chiefly, what gets left out is metadata— information the computer application automatically records about the creation or modifications of the document. For example, Microsoft Word tracks who worked on a document and when. That type of information is contained in a native Word file but usually not in a PDF because it captures only what appears on the screen. Similarly, tracked changes and comments are often available in a native Word document but missing from a PDF version. Some of that missing information might be found elsewhere. But what if it can’t? Does that mean the image file is insufficient and native is required? Not necessarily. The critical question is whether the missing information is relevant to any of the disputed issues. For example, information about who worked on a document and when might be critical in some cases but wholly irrelevant in others. If it is relevant, how important is it? And how costly would it be to get it? Those questions, of course, go to proportionality. The other issue lurking behind form fights is usability. In the past, the biggest problem was that early-generation image files could not be term-searched. Today, that issue has receded as image-file technology has evolved to support term-searching. But other usability issues can arise. For example, native-file applications may support more advanced forms of data analysis beyond simple term searches. Then again, image files can have their own advantages, like being easier to Bates stamp and harder to alter. If the requesting party can show a substantial usability advantage for native files, does that compel production in native? Not necessarily. Here too, the trial court must balance any advantages against any costs the producing party would incur to produce in native. Six takeaways. The Supreme Court stated but did not apply the foregoing principles. Rather, it denied mandamus relief without prejudice, tacitly instructing State Farm to reassert its objections with the trial court. In doing so, the court supplied needed guidance not just for this case but to lower courts and to the bar generally. But like most opinions, it is susceptible in some places to misinterpretations, which might lead to misadventures in the hands of creative advocates. With that in mind, here are our top six takeaways: 6) No entitlements, no presumptions—just reasonableness. Neither party gets to dictate the form in which ESI will be produced. When they cannot agree, the judge must decide. There is no presumption that ESI is to be produced in any particular form. Questions about form of production turn on the same relevance and proportionality considerations that govern discovery generally. Each situation must be decided on its own facts. 5) Cost matters, but content is king. Counting the times the opinion refers to cost or expense (by our count, 55), one might conclude that cost is the major factor in resolving discovery disputes. While cost is important, it’s just one factor. Discovery is not unreasonable just because it is expensive. The real question is not what it costs, but whether it’s worth it. In that vein, the first and most important question in form fights is whether image-file production will omit relevant information. Arguments that it will must be informed and specific. “Hypothetical needs, surmise, and suspicion should be afforded no weight.”2 If relevant information is shown to be at issue, then the analysis turns to proportionality, considering the importance of the information and the cost of getting it. Neither the process nor the outcome needs to be all-or-nothing. Some probing into the native files may be needed to make an informed decision about what information is at stake and its value.3 Courts increasingly are taking this type of iterative approach to achieve proportionality when the costs and benefits are initially unclear. And the ultimate answer may be that native production is justified for some things but not others. 4) No free pass for deliberate degradation. One message we hope readers don’t take from the opinion is that they should immediately scan their records into image files as a means of short-circuiting native production. State Farm’s ECS was a pre-existing business database, not a litigation repository. The opinion in no way creates a free pass for parties to deliberately degrade their documents for litigation purposes. “Self-imposed burdens and expenses related to forms generated for the purpose of litigation, rather than in the ordinary course of business, do not factor into the analysis.”4 3) Proportionality parity—principle and process. One of the court’s obvious objectives was to promote the proportionality norm in discovery. In doing so, the court aligned Texas’ proportionality principles with the federal rules. That strikes us as reasonable and uncontroversial. In general, federal courts find discovery to be proportional where the relevance of the requested data is high and the burden of production is slight, and not proportional when vice versa. When proportionality is contested, requesting parties are expected to support their arguments about need and importance, while objecting parties are expected to support their arguments about burden. All of these concepts fit comfortably within the Texas discovery rules scheme. 2) The “reasonably usable form” benchmark. In aligning with federal practice, the court borrowed the “reasonably usable form” benchmark that appears in Federal Rule 34. Though the phrase does not appear in Tex. R. Civ. P. 196.4, the court held it to be part of the overarching proportionality norm. We agree in principle that producing in a reasonably usable form is a relevant consideration. But the differences in the text of Tex. R. Civ. P. 196.4 and Federal Rule 34 give us some pause about this particular alignment, and questions remain about how to reconcile it with Tex. R. Civ. P. 196.4’s cost-shifting mandate. One thing is certain. Now that the court has embraced the “reasonably usable form” concept, producing parties can be expected to invoke it aggressively and often. 1) Courts must impose reasonable limits. The court clearly had some things it wanted to say about how the discovery rules should be interpreted and applied and jumped at the chance to weigh in. Above all, it had one point it wanted to stress—the duty of trial courts to impose reasonable discovery limits. The “polestar” in that process is determining not just what is relevant, but what is proportional to the needs of the case.5 For those decisions to be made, both sides will need to marshal arguments and evidence—not just surmise or guesses as to what is relevant and proportional. And trial judges will need to roll up their sleeves and engage. Notes 1) In re State Farm Lloyds, 520 S.W.3d 595 (Tex. 2017). 2) Id. at 609. 3) Id. at 615. 4) Id. at 607 n.41.) 5) Id. at 615. STEVEN S. GENSLER is the Pierson professor of law at the University of Oklahoma College of Law. XAVIER RODRIGUEZ is a former justice of the Texas Supreme Court and is currently a U.S. district judge for the Western District of Texas.
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