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The Seven Commandments of Proportionality in ESI*

Tuesday, July 25, 2017   (0 Comments)
Posted by: ACEDS Marketing Team
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Extract from Kathryn Cole's article "The Seven Commandments of Proportionality in ESI*" posted on All About eDiscovery

In In Re State Farm Lloyds, (Texas Supreme Court [May 26, 2017] 2017 WL 2323099), the Supreme Court of Texas elaborated on the standard applied to evaluate and resolve production disputes. Specifically, the Court opined (perhaps not surprisingly) that of “the guiding principles informing the exercise of discretion over electronic-discovery disputes, proportionality is the polestar.” Id. at *15. More importantly however, the Court potentially opened an avenue allowing producing parties to claim an “undue burden” defense relating to, at the very least discovery demands that require production of ESI in a format other than as maintained. The Court’s opinion may have reverberating effects on the issue of ESI degradation in the future.

Relevant Facts

In connection with Plaintiffs’ allegations of insurance underpayments by Defendant for hail-damage claims, Plaintiffs (“Homeowners”) requested vast amounts of ESI during discovery and demanded production be in the “native” or “near native” form, allowing Homeowners to view the files’ metadata (which, would allow Plaintiffs to assess changes made on claims forms).

Defendants objected and proposed instead a production in the files’ “searchable static form,” arguing the “static form” was “reasonably useable,” and thus permissible under Texas Rules of Civil Procedure 192.4 and 196.4. Defendants further noted it was their routine business practice to degrade ESI to the static format and a Court directive to convert (again) the files from the static form would simply add costs.

To support their position, Defendants offered evidence that it processes more than 35,000 claims each day and when those claims are uploaded to the Enterprise Claims System, they are converted to a static form. Further, Defendants’ expert testified that a static format allowed the files to be examined without inadvertent or intentional alteration. He also testified that to produce in native file would be extraordinarily burdensome.

The trial court ruled in favor of the Homeowners, ordering that absent a showing of infeasibility the ESI must be produced in the requested format.   Defendants – and ultimately entities who filed amici briefs in support of Defendants – argued this decision effectively granted requesting parties “unlimited power” in dictating production format.

Eventually, the Supreme Court of Texas heard argument on the issue.

Read the full article here


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