What Is an ESI Agreement?
What is an ESI Agreement?
For federal courts, ESI agreements are governed by the Federal Rules of Civil Procedure and should comport with the following sections:
(1) The parties who are the subject of the litigation. – This can include parties to the suit as well as any non-parties relevant to the dispute.
(2) Specifics of what will be under the obligations of the ESI agreement. – This includes information that parties must preserve or produce. It also addresses how this information must be handled by everyone involved in the litigation.
(3) The scope of the agreement. – The scope of the agreement includes all aspects of Electronic Stored Information, from the initial placement of a litigation hold, to the actual production of ESI, to storage by opposing counsel. As such, the agreement should cover what occurs to ESI once it’s in opposing counsel’s hands. This means also addressing how the ESI is safeguarded, whether or not there are limits to access to it, and how it is retrieved, reproduced, or disposed of after the litigation concludes.
(4) Should carefully define what ESI is included in the ESI agreement. – This involves specifics pertaining to the information that the agrreement applies to, which can be numerous. In particular, it needs to address the various forms that ESI can take (like email, spreadsheets, text documents, etc.). ESI agreements need to address the type of information that needs to be preserved in its specific form (as opposed to merely "maintained") . It must consider the computer systems and networks used in the workplace; the type of repositories in which the information is stored (commonly email accounts or document management systems); the practices of the business concerning the retention, preservation and deletion of information; and the time frame in which this information was produced or stored on the network.
(5) Should directly address the scope of confidentiality and privileges. – For example, in-house counsel might need to be carved out of the litigation hold or preserve agreement. Or, a privilege log might need to be developed and updated. ESI agreements need to avoid vague or overbroad definitions of confidential information, as these will likely conflict with the confidentiality information detailed in the ESI agreement.
(6) Should have a provision for resolving disputes concerning ESI. – This will likely involve formal requirements for motions or the use of alternative dispute resolution procedures. In light of the trend toward parties building dispute resolution forums into their contracts in order in order to alleviate the burden of a lengthy litigation in court, the parties might find it mutually beneficial to include a similar provision in their ESI agreement.
(7) Should contain addendum(s). – The addendum(s) are further discussed below, but serve to allow for the renegotiation of the ESI agreement in circumstances where there has been a change in the relevant law or rules regarding preservation or production. Such changes in the law include federal programs enacted in recent years under the Federal Rules of Civil Procedure pertaining to the recovery of electronically stored information.
The Key Elements of an ESI Agreement
Most ESI agreements will typically address, at a minimum, the following: Data Preservation. Every ESI agreement should include specific details regarding the preservation duties of both parties and require each party to identify the data custodians and sources of potentially relevant data. While preservation duties may differ depending on the needs of a case, the ESI agreement should provide clear protocols (and possibly sanctions) for preservation. Data Collection. The ESI agreement should address how the collection of data will occur, whether it is through in-house employees or by a third-party vendor. If a third-party vendor is used, the ESI agreement should also describe whether the hired vendor has industry standard certifications, such as ACE (AccessData Certified Examiner), EnCE (EnCase Certified Examiner), or CCE (Certified Computer Examiner). Data Processing. This component of the ESI agreement will vary widely based on the parties involved and the specific case needs. For instance, processing for some parties may need to be done in-house, while others may need to have it outsourced to a vendor. Processing may also include redactions and deduplication, and reasonable protocols for both of these processes should be outlined. Data Production. An ESI agreement should lastingly define the format and methods of production. For example, not all data may need to be produced in native format, but the details for how the data will be produced should be defined. This includes identifying which metadata fields need to be produced, such as custodian name and date created, among other fields.
Why ESI Agreements Matter in Lawsuits
Once the scope of discovery is agreed upon, it is important for the parties to evaluate whether that ordered scope includes or excludes particular forms of discovery, such as electronically stored information ("ESI"). Think of discovery as a broad net cast out over the sea of litigation. The net is supposed to catch information relevant to the facts and charges of the case, but information tends to slip through; so that net must be cast wider than you might expect. This is especially true when discovery of ESI is involved. Even a minor disagreement over discovery of ESI can result in protracted and expensive litigation over what is or is not relevant evidence. Indeed, Lahey v. D’Amato provides an example of a small disagreement over ESI that ballooned into a full-fledged discovery battle.
Lahey arose from a criminal prosecution against the defendants for theft of property by fraud in connection with a "Ponzi scheme." No need to elaborate on a Ponzi scheme which is an obvious fraud. Most relevant here, however, were the five million emails produced by the defendants during discovery. Identifying, reviewing and salvaging relevant emails from that mass turned out to be expensive. Nonetheless, the court permitted the defendant’s to select which emails they had found to be relevant and later produce only those irrelevant emails to the Commonwealth. That cost the defendants $8,091. Those disposable emails also cost the Commonwealth $39,165.00 because they were forced to pay to review and redact those emails which were deemed irrelevant. And if that were not enough, there were also more documents lost in storage and those duplicates which were not redacted for the Commonwealth. In total, the Commonwealth spent $68,000 to review 1.2 million emails. Simply put, avoiding the expense of irrelevant emails is an important reason for reaching an ESI agreement with your adversary before discovery begins.
ESI agreements are an integral part of modern litigation, especially given the sheer size of some cases, the amount of information being collected, and the significant role that digital evidence plays in many litigations today. Figuring out what electronically stored information exists and how to collect it is complicated enough without any other conflicts. Drafting, negotiating, and reaching a compromise on an agreement reduces the potential strain on the parties and their counsel once discovery begins. That is why today most ESI agreements include specific provisions detailing how the parties will handle electronic communications and how ESI will be collected and turned over in discovery.
The Difficulties of Creating ESI Agreements
Despite their growing importance, ESI agreements remain an underdeveloped area of legal practice. For electronic communications in a litigation context, parties must essentially rely on their common law duty to preserve evidence. Parties have not yet begun the process of operationalizing preservation of electronic data. Although the revised Federal Rule of Civil Procedure 26(f) requires the identification of a party’s ESI in a party conference shortly after the filing of a complaint, the implementation of ESI agreements lags the technology by years. As a result, even when the parties have created ESI agreements, and agreed as to scope, there is still the possibility that contested ESI discovery or ESI-based spoliation litigation will later arise.
Problems can arise if a data source is missed during the ESI agreement process. For example , the parties may not have discussed backup tapes because they believed backups were not required, or the parties may not yet be aware of non-traditional data sources. Also, the parties may have overlooked or misunderstood the lawyer’s duty to preserve, and the company’s duty to manage, data. The systems for preserving and collecting data are not standardized, and vary among different organizations, companies, and even between different departments within the same company.
New technological services proliferate daily. It cannot be assumed that all of these new services will enable the retention of data for discovery. Data retention and discovery issues pose many challenges as the legal industry tries to catch up with information technology.
ESI Agreements Best Practices
Best practices for preparing ESI agreements adhere to tried-and-true principles of effective contract drafting. Here are a few recommendations:
Be strategic. Even if the Rules do not spell out that custodians must be identified by a certain date or discovery responses must be adequate, we recommend that you identify the custodians before the parties narrow the scope of ESI to be discovered. This enables the requesting party to proportionally tailor its requests based on the number of custodians and the time frame during which they used their computers or other devices. ESI related to a company’s profitability might make sense to limit to a shorter time frame than would ESI from research and development or quality control. The timing of document production is another example of where it can make sense to limit your search based on the timing of events that prompted the litigation, a key event in the course of the business, or an industry trend.
The key to success for the requesting party will be to articulate its needs as early as possible so that the producing party can address those needs and respond to them efficiently. Conversely, the producing party should identify issues as soon as it becomes aware of them so that the requesting party has time to assess and evaluate them and then appropriately respond to them as necessary.
Cooperate. Allowing parties to cooperate in a process to determine the best approach to collecting and producing documents is often the best approach for both sides. You want to come to an agreement about what will and will not be produced and where applicable, in what form.
Stay up to date. Be sure to have someone on both sides tasked with tracking changes to the Rules and state rules that apply to the case. When new guidelines are published, when courts rule, and when practitioners publish suggestions, appellate decisions or other materials affecting the Rules, spend some time assessing the effect that they will have on your case and how you can use or strengthen your position based on the information.
ESI Agreements: Case Law
The foundation of current ESI agreements has been shaped in part by legal precedent in the area. A few significant cases demonstrating this are set forth below: In the 2003 case of Ceridian Corp., the District Court for the District of Minnesota held that it was unreasonable for a company to only perform keyword searches in responding to an e-discovery request because it could have done more to make the data accessible. 2003 U.S. Dist. Lexis 24444, MVDT Corp, 2003. The court found that while a party typically fulfills its duty to search emails if it performs "a good-faith search using reasonable methods," a company would not necessarily have met its discovery obligation if it merely searched through old emails from the company’s current employees using a "one-word or two-word search." The court in Treppel v. Roadway Express, Inc. also found that it was unreasonable for a party to restrict its document production process to keyword searches. 233 FRD 396, 403-405 (SDNY 2006) . The court explained that in their attempt to avoid over-processing, "[a]lmost all electronic discovery practitioners agree that a multi-tiered approach is critical in most cases." The Treppel court held that "[d]iscovery generally permits some reduction in the volume of documents to be produced through the use of keyword searches, but [it is proper] to conduct other reasonably targeted searches even after the initial phase." Duncan v. Manager, Dep’t of Park and Recreation for Maryland-National Capital Park and Planning Commission, 318 F.R.D. 127 (D.Md. 2016) was presented with a disagreement regarding how to handle the cost of producing ESI. The Plaintiff contended that the Court should adopt a model that biases the favor of payment of the costs of production to the party seeking the discovery. While the court agreed that the requesting party should always pay the cost of an initial production of ESI, it declined to "impose ‘on the producing party a presumptive obligation to bear the costs of subsequent productions.’" Id. These cases are a good starting point to understand the legal landscape that governs ESI agreements.