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Aug 29 2016

Scope of Duty to Produce Documents May Depend on Your Legal Rights: Do You Know Them?

August 29, 2016 (Houston)

James SmithBy James Smith – “Environmental Alert” (Schirrmeister, Diaz-Arrastia, Brem LLP)

The rules that govern civil litigation in federal courts require parties to produce potentially relevant documents (including electronically stored information or “ESI”) that are in the party’s “possession, custody, or control.”  The rules do not define “possession, custody, or control,” although that phrase can apply to massive amounts of data, especially now that potentially relevant ESI is definitively included in what must be produced.

In an attempt to provide guideline to the meaning of “possession, custody, or control,” the Sedona Conference Working Group on Electronic Document Retention & Production has issued a Commentary of approximately 100 pages.  The Sedona Conference is a non-profit institute; its documents state that it facilitates Working Groups “in an effort to move the law forward in a reasoned and just way.”

Responsibility of Information Ownership

The Commentary uses the phrase “Documents and ESI” to refer to what are traditionally thought of as “documents” as well as “all forms of electronically stored information.”  The Commentary recommends that a party be deemed to have “possession, custody, or control” when that party “has actual possession or the legal right to obtain and produce the Documents and ESI on demand.”  While some courts have extended the duty to produce even beyond the scope of a party’s legal rights (such as to Documents and ESI that the party has a practical ability to produce even absent a legal right), the Commentary’s adoption of this standard indicates that companies must be prepared, at a minimum, to produce when they have “the legal right to obtain and produce the Documents and ESI on demand.”

The Commentary also states that “the party opposing the preservation or production of specifically requested Documents and ESI claimed to be outside its control, generally bears the burden of proving that it does not have actual possession or the legal right to obtain the requested Documents and ESI.”  A key step in identifying the scope of production may be to understand the applicable law.

Determining the Scope of the Legal Right May be Difficult

With the increasing use of consultants, companies may face a variety of legal structures that determine if the company has the legal right to obtain and produce on demand.  A few sources to consider:

  • The contracts that the company has with its consultants;
  • The law of the state in which a consultant and/or information may reside, such as a state law that says that an accountant’s work papers are the property of the client;
  • Professional organization pronouncements, such as the Code of Ethics of the National Society of Professional Engineers, which states: “Engineers’ designs, data, records, and notes referring exclusively to an employer’s work are the employer’s property.”

Foreign Entity Ownership Makes for Further Complication

Finally, companies that own or are owned by foreign companies may face competing layers of laws relating to ownership of and access rights to information, especially ESI.  The Commentary discusses this issue in some detail.  A party that wants to oppose producing Documents and ESI based on foreign prohibitions should expect to have the burden to explain why, under applicable law, it does not have “the legal right to obtain and produce the Documents and ESI on demand.”

Be Prepared to Show that Information Is Beyond the Reach of Your Legal Right

When faced with a request to preserve or produce Documents and ESI, companies must appreciate the scope of information, regardless of form, to which they have a legal right to obtain and produce.  It may not always be clear at the outset the extent of the legal right; this must be resolved as part of the preservation/production process.  If information appears beyond the scope of the legal right, companies will need to be able to demonstrate this to a court.

For information on obtaining a copy of the Commentary, or other Sedona Conference documents, click here.

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