BILL ANALYSIS                                                                                                                                                                                                    Ó






                             SENATE JUDICIARY COMMITTEE
                             Senator Noreen Evans, Chair
                              2011-2012 Regular Session


          SB 1574 (Committee on Judiciary)
          As Amended April 19, 2012
          Hearing Date: May 1, 2012
          Fiscal: No
          Urgency: No
          TW   
                    

                                        SUBJECT
                                           
                    Discovery:  Electronically Stored Information

                                      DESCRIPTION  

          This bill would make changes to the Civil Discovery Act relating 
          to electronically stored information in order to address several 
          inconsistencies.

                                      BACKGROUND  

          In 2009, the Electronic Discovery Act (EDA) was enacted by AB 5 
          (Evans, Ch. 5, Stats. 2009) in order to improve the practices 
          and procedures for handling the discovery of electronically 
          stored information (ESI).  The EDA provides electronic discovery 
          statutes within the Civil Discovery Act (CDA) for obtaining 
          discovery of ESI.  

          Subsequently, the Judicial Council of California's Policy 
          Coordination and Liaison Committee and Civil and Small Claims 
          Advisory Committee (JC Committees) reviewed the CDA and 
          discovered several inconsistencies in the discovery statutes 
          that should be modified to properly address the discovery of 
          ESI.  Accordingly, the JC Committees issued a Report, which 
          included a legislative proposal to address these gaps and 
          omissions in the CDA.  (See Policy Coordination and Liaison 
          Committee and Civil and Small Claims Advisory Committee, 
          Judicial Council-Sponsored Legislation (Civil Law):  Cleanup 
          Legislation on the Discovery of Electronically Stored 
          Information (Dec. 13, 2011)  Ưas of Apr. 22, 2012].)

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          This bill, sponsored by the Judicial Council of California, 
          would implement the proposed revisions to the CDA described in 
          the Report.

                                CHANGES TO EXISTING LAW
           
          1.  Existing law  , the Electronic Discovery Act (EDA), establishes 
            procedures for obtaining the production of electronically 
            stored information (ESI) through the use of a subpoena.  (Code 
            Civ. Proc. Sec. 1985.8.)

             Existing law  provides that "electronically stored information" 
            means information that is stored in an electronic medium.  
            (Code Civ. Proc. Sec. 2016.020.)
             
            Existing law  , the Civil Discovery Act (CDA), establishes 
            procedures for obtaining records through subpoenas. (Code Civ. 
            Proc. Secs. 1985, 1985.3, 1985.6, 1987, 1987.1, 2017.010, 
            2020.020, 2020.220.)
             
            This bill  would include in these statutes the provisions in 
            the EDA for ESI among the things under a witness's control 
            that the witness would be bound by law to produce pursuant to 
            a subpoena. 
             
            This bill  would provide procedures under the EDA for objecting 
            to the specified form or forms of producing the ESI requested 
            by the subpoena.

          2.  Existing law  authorizes the court to impose monetary 
            sanctions, as specified, against any party or any attorney of 
            a party for specified discovery violations.  (Code Civ. Proc. 
            Secs. 1987.2, 2017.020, 2023.030, 2025.410, 2025.420, 
            2025.450, 2025.480.)

             This bill  would generally provide that, notwithstanding the 
            above provisions, the court is not required to impose 
            sanctions on a party or any attorney of a party for failure to 
            provide ESI that has been lost, damaged, altered, or 
            overwritten as the result of the routine, good faith operation 
            of an electronic information system.

          3.  Existing law  , under the CDA, authorizes the use of certain 
            types of technology, as defined, in conducting discovery in a 
            complex case.  (Code Civ. Proc. Secs. 2017.710 et seq.) 

                                                                      



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             This bill  would repeal those provisions, and instead generally 
            provide that when any method of discovery permits, compels, 
            prevents, or limits the production, inspection, copying, 
            testing, or sampling of documents or tangible things, the same 
            method would also apply to ESI.

          4.  Existing law  , the CDA, authorizes a party to a civil action 
            to obtain discovery, as specified, by inspecting documents, 
            tangible things, and land or other property in the possession 
            of any other party to the action.  (Code Civ. Proc. Sec. 
            2017.010.)

             This bill  would expand the scope of discovery described above 
            to include ESI. 
           
           5.  Existing law  provides for discovery propounded on nonparty 
            witnesses and deponents appearing outside of California.  
            (Code Civ. Proc. Secs. 2019.040, 2026.010, 2027.010, 
            2029.200.)

             Existing law  permits discovery, as specified, by the means of 
            copying, testing, or sampling, in addition to inspection of 
            documents, tangible things, land or other property, or ESI.  
            (Code Civ. Proc. Sec. 2031.010.)

             This bill  would conform the provisions for the means of 
            discovery propounded to nonparty witnesses and witnesses 
            appearing at depositions outside of California to the above 
            provision.

             This bill  would provide that all procedures otherwise 
            available to compel, prevent, or limit the production, 
            inspection, copying, testing, or sampling of documents or 
            tangible things shall be available for nonwitness discovery.

          6.  Existing law  establishes procedures for the production of 
            business records.  (Code Civ. Proc. Sec. 2020.220.)

             Existing law  , under the EDA, provides that, unless the 
            subpoenaing party and the subpoenaed party otherwise agree or 
            the court otherwise orders, the following shall apply:
                 if a subpoena requiring production of ESI does not 
               specify a form or forms for producing a type of ESI, the 
               person subpoenaed shall produce the information in the form 
               or forms in which it is ordinarily maintained or in a form 
               that is reasonably usable; and
                                                                      



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                 a subpoenaed person is not required to produce the same 
               ESI in more than one form. (Code Civ. Proc. Sec. 
               1985.8(c).)

             Existing law  provides that a subpoenaed person opposing the 
            production, inspection, copying, testing, or sampling of ESI 
            on the basis that the information is from a source that is not 
            reasonably accessible because of undue burden or expense shall 
            bear the burden of demonstrating that the information is from 
            a source that is not reasonably accessible because of undue 
            burden or expense.  (Code Civ. Proc. Sec. 1985.8(d).)

             Existing law  provides that, if the person from whom discovery 
            of ESI is subpoenaed establishes that the information is from 
            a source that is not reasonably accessible because of undue 
            burden or expense, the court may nonetheless order discovery 
            if the subpoenaing party shows good cause, subject to any 
            limitations, as specified.  (Code Civ. Proc. Sec. 1985.8(e).)

             Existing law  provides that, if the court finds good cause for 
            the production of ESI from a source that is not reasonably 
            accessible, the court may set conditions for the discovery of 
            the ESI, including allocation of the expense of discovery.  
            (Code Civ. Proc. Sec. 1985.8(f).)

             Existing law  provides that, if necessary, the subpoenaed 
            person, at the reasonable expense of the subpoenaing party, 
            shall, through detection devices, translate any data 
            compilations included in the subpoena into a reasonably usable 
            form. (Code Civ. Proc. Sec. 1985.8(g).)
             
            Existing law requires a court to limit the frequency or extent 
            of discovery of ESI, even from a source that is reasonably 
            accessible, if the court determines that specified conditions 
            exist. (Code Civ. Proc. Sec. 1985.8(h).)

             Existing law  provides procedures for ESI claimed by the 
            subpoenaed party to be privileged or protected as attorney 
            work product. (Code Civ. Proc. Sec. 1985.8(i).)
             
            Existing law  provides that a party serving a subpoena 
            requiring the production of ESI shall take reasonable steps to 
            avoid imposing undue burden or expense on a person subject to 
            the subpoena. (Code Civ. Proc. Sec. 1985.8(j).)
             
             Existing law  provides that an order of the court requiring 
                                                                      



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            compliance with a subpoena issued under this section shall 
            protect a person who is neither a party nor a party's officer 
            from undue burden or expense resulting from compliance. (Code 
            Civ. Proc. Sec. 1985.8(k).)

             Existing law  provides that, absent exceptional circumstances, 
            the court shall not impose sanctions on a subpoenaed person or 
            any attorney of a subpoenaed person for failure to provide ESI 
            that has been lost, damaged, altered, or overwritten as the 
            result of the routine, good faith operation of an electronic 
            information system. (Code Civ. Proc. Sec. 1985.8(l).)

             This bill  would establish these provisions under the EDA for 
            the production of business records.

          7.  Existing law  , under the EDA, provides that a party serving a 
            subpoena requiring production of ESI may specify the form or 
            forms in which each type of information is to be produced.  
            (Code Civ. Proc. Sec. 1985.8(b).)

             This bill  would require a deposition subpoena for the 
            production of business records or a deposition notice to 
            specify the form in which any ESI is to be produced, if a 
            particular form is desired.

          8.  Existing law  requires a deponent to make a timely specific 
            objection to the disclosure of privileged documents in order 
            to protect privileged documents from discovery.  (Code Civ. 
            Proc. Sec. 2025.460.)

             Existing law  , with respect to a document inspection demand, 
            provides that if a party objects to the discovery of ESI on 
            the grounds that it is from a source that is not reasonably 
            accessible because of undue burden or expense, and that the 
            responding party will not search the source in the absence of 
            an agreement with the demanding party or court order, the 
            responding party shall identify in its response the types or 
            categories of sources of ESI that it asserts are not 
            reasonably accessible.  (Code Civ. Proc. Sec. 2031.210(e).)

             This bill  would provide to a deponent the same ESI privilege 
            objections available to a person responding to a document 
            inspection demand.

          9.  Existing law  provides that a party seeking discovery may move 
            the court for an order compelling a deponent to respond to the 
                                                                      



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            party's request for production of documents.  (Civ. Code Sec. 
            2025.480.)

             Existing law  provides that a party objecting to or opposing a 
            demand for the production, inspection, copying, testing, or 
            sampling of ESI, on the basis that the information is from a 
            source that is not reasonably accessible, because of the undue 
            burden or expense, shall bear the burden of so demonstrating.  
            (Code Civ. Proc. Sec. 2031.310(d).)  If it is established that 
            the ESI is from a source that is not reasonably accessible 
            because of undue burden or expense, the court may nonetheless 
            order discovery if the demanding party shows good cause, 
            subject to specified restrictions in specified circumstances.  
            (Code Civ. Proc. Sec. 2031.310(e).)

             Existing law  provides that, if the court finds good cause for 
            the production of ESI from a source that is not reasonably 
            accessible, the court may set conditions for the discovery, 
            including the allocation of the expense of discovery. (Code 
            Civ. Proc. Sec. 2031.310(f).)

             Existing law  provides that the court shall limit the frequency 
            or extent of discovery of ESI, even from a source that is 
            reasonably accessible, if the court determines that specified 
            conditions exist.  (Code Civ. Proc. Sec. 2031.310(g).)
             
            This bill  would provide for deposition document requests these 
            motion procedures provided for inspection demands.

                                        COMMENT
           
          1.  Stated need for the bill  
          
          The author writes:
          
            This bill would address several inconsistencies in the Civil 
            Discovery Act relating to electronically stored information.  
            Specifically, this bill would:
                 conform civil subpoena statutes to provide for the 
               discovery of electronically stored information under the 
               Electronic Discovery Act; 
                 provide that discovery methods may include the 
               production, inspection, copying, testing or sampling of 
               electronically stored information;

                 conform the business records discovery statutes to 
                                                                      



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               provide for electronically stored information;

                 conform deposition statutes to provide consistency with 
               the Electronic Discovery Act;  

                 conform discovery sanctions statutes to include the safe 
               harbor provisions under the Electronic Discovery Act; and

                 repeal outdated provisions for the use of technology 
               under the Civil Discovery Act.

          The Judicial Council of California, the sponsor of this bill, 
          writes:

            SB 1574 continues the process of modernizing California's 
            statutes on civil discovery to reflect the fact that most 
            information today is created and stored in electronic form.  
            The modernization of the discovery statutes was begun a little 
            over two years ago with the passage of the Electronic 
            Discovery Act, and SB 1574 will further this important effort. 
             Although the amendments on civil discovery that were made 
            through AB 5 were extensive, they were not completely 
            comprehensive.  Some sections of the Code of Civil Procedure 
            still only refer to paper documents or records and fail to 
            mention electronically stored information in appropriate 
            places.  To be consistent with the Electronic Discovery Act, 
            these sections should be amended, which is the purpose of this 
            clean-up legislation.

          2.  This bill would repeal provisions for the use of technology  

          This bill would repeal the provisions of the Civil Discovery Act 
          (CDA) that provide for the use of technology in conducting 
          discovery in complex cases.  (Code Civ. Proc. Secs. 
          2017.710-2017.740.)  Existing law under the EDA already provides 
          for the discovery of electronically stored information (ESI).  
          In addition to the EDA, more recently enacted legislation 
          provides for e-discovery, e-service, and e-filing.  Accordingly, 
          these statutes providing for the use of technology are unused, 
          unnecessary, and inconsistent in some respects with more 
          recently enacted legislation.



          3.  The bill would conform discovery procedures for business 
            records to the EDA  
                                                                      



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           This bill would update the discovery statutes relating to the 
          production of business records.  Existing law provides that a 
          party or other witness may be compelled to produce business 
          records and the party may respond to such requests with 
          objections.  (Code of Civ. Proc. Secs. 2020.020 et seq., 
          2020.510.)  The EDA provides court procedures to resolve 
          objections to the production of subpoenaed documents.  (Code of 
          Civ. Proc. Sec. 1958.8(d)-(l).)

          Pursuant to the provisions under the EDA, if a party is 
          successful in establishing that the information is not 
          reasonably accessible because of undue burden or expense, this 
          bill would provide that, with respect to business records, a 
          court would retain discretion to order discovery if the 
          demanding party shows good cause.  If the court finds that there 
          is good cause for the production of ESI under these 
          circumstances, the court would be able to set conditions for the 
          discovery of the information, including allocation of the 
          expense of discovery.  

          Further, courts would have the authority to limit the frequency, 
          or extent of discovery of ESI, even from a source that is 
          reasonably accessible, provided that the court determines that:

          (1)  it is possible to obtain the information from some other 
            source that is more convenient, less burdensome, or less 
            expensive; 
          (2)  the discovery sought is unreasonably cumulative or 
            duplicative;
          (3)  the party seeking discovery has had ample opportunity by 
            discovery in the action to obtain the information sought; or 
          (4)  the likely burden or expense of the proposed discovery 
            outweighs the likely benefit, taking into account the amount 
            in controversy, the resources of the parties, the importance 
            of the issues, and the importance of the requested discovery 
            in resolving the issues.

          Thus, this bill would enable a court to consider all relevant 
          factors in resolving disputes regarding the production of 
          business records.

          4.  This bill would extend EDA methods and scope of discovery for 
            ESI
                                                                      



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           Existing law provides that the scope of discovery requested from 
          a party in an inspection demand may include ESI, and that the 
          methods of discovery include "copying, testing, or sampling."  
          (Code of Civ. Proc. Sec. 2031.010.)  The provisions for 
          "copying, testing, or sampling" are consistent with the Federal 
          Rules of Civil Procedure and with the Uniform Rules relating to 
          Discovery of Electronically Stored Information developed by the 
          National Conference of Commissioners on Uniform State Laws.  

          This bill would provide that, with respect to nonparty 
          discovery, when any method of discovery permits the production, 
          inspection, copying, testing or sampling of documents or 
          tangible things, those methods shall also permit the production, 
          inspection, copying, testing, or sampling of ESI.   

          While testing or sampling may sometimes be used to make the 
          discovery of ESI more cost-efficient, it also raises issues with 
          respect to confidentiality and privacy of a responding party's 
          electronic information system.  Thus, it is important to note 
          that the addition of sampling and testing is not intended to 
          create a routine right of direct access to a party's electronic 
          information system, although such access may be justified under 
          some circumstances.  Courts should accordingly guard against 
          undue intrusiveness resulting from inspecting or testing 
          electronic information systems.
              
          5.  This bill would allow propounding parties to specify the form 
            of production for ESI

           Due to its nature, the form of production is more important to 
          the exchange of ESI than it is to the exchange of paper 
          documents.   Accordingly, the EDA recognizes that ESI may exist 
          in multiple forms, and that different forms of production may be 
          appropriate in certain circumstances.

          This bill, with respect to deposition subpoenas and oral 
          deposition inspection demands, would provide that a propounding 
          party may specify the form or forms in which each type of ESI is 
          to be produced.  If a responding party objects to a specified 
          form for producing the ESI, or if no form is specified in the 
          demand, the responding party would be required to state in its 
          response the form in which it intends to produce each type of 
          ESI.  Requiring the responding party to state the intended form 
          of production would permit the parties to identify and seek to 
          resolve disputes before the expense and work of the production 
                                                                      



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          occurs.   

          In addition, if a subpoena for business records does not specify 
          a form or forms for producing a type of ESI, the responding 
          party would be required to produce the information in the form 
          or forms in which it is ordinarily maintained or in a form that 
          is reasonably usable.  The responding party would not be 
          required to produce the same ESI in more than one form.

          6.  This bill would extend EDA motion to compel procedures to 
            deposition production requests 
           
          Existing law provides that a party seeking discovery may move 
          the court for an order compelling a deponent to respond to a 
          production request.  (Civ. Code Sec. 2025.480.)  For demands for 
          production, existing law provides procedures regarding motions 
          to compel the production of documents pursuant to inspection 
          demands, which include the following:
           authorizing the court to order discovery if the demanding 
            party shows good cause, subject to specified restrictions in 
            specified circumstances; 
           if the court finds good cause for the production of ESI from a 
            source that is not reasonably accessible, the court may set 
            conditions for the discovery, including the allocation of the 
            expense of discovery; and 
           the court shall limit the frequency or extent of discovery of 
            ESI, even from a source that is reasonably accessible, if the 
            court determines that specified conditions exist.  (Code Civ. 
            Proc. Sec. 2031.310(g).)
             
           This bill would amend statutes governing motions to compel the 
          production of documents at depositions to address the discovery 
          of ESI from a source that is not reasonably accessible due to 
          undue burden or expense.  Where there is an objection to 
          producing such information, this bill would authorize a 
          propounding party to bring a motion to compel.  This bill would 
          also add provisions identical to those under the section 
          pertaining to motions for a protective order.  

          Specifically, the party or affected person objecting to or 
          opposing the production, inspection, copying, testing, or 
          sampling of ESI, on the basis that the information is from a 
          source that is not reasonably accessible because of the undue 
          burden or expense shall bear the burden of so demonstrating.  If 
          it is established that the ESI is from a source that is not 
          reasonably accessible because of undue burden or expense, the 
                                                                      



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          court may nonetheless order discovery if the demanding party 
          shows good cause, subject to specified restrictions in specified 
          circumstances.

           7.Claims of Privilege or Work Product Protection
           
          Existing law requires a deponent to make a timely specific 
          objection to the disclosure of privileged documents in order to 
          protect privileged documents from discovery.  (Code Civ. Proc. 
          Sec. 2025.460.)

          Pursuant to the EDA, with respect to a document inspection 
          demand, existing law provides that if a party objects to the 
          discovery of ESI on the grounds that it is from a source that is 
          not reasonably accessible because of undue burden or expense, 
          and that the responding party will not search the source in the 
          absence of an agreement with the demanding party or court order, 
          the responding party shall identify in its response the types or 
          categories of sources of ESI that it asserts are not reasonably 
          accessible.  (Code Civ. Proc. Sec. 2031.210.)  By so objecting 
          and providing the identifying information, the responding party 
          would preserve any objections it may have relating to such ESI.  


          This bill would provide for privileged documents requested from 
          a deponent the same ESI objections pertaining to a document 
          inspection demand.  When producing ESI, the risk of waiver can 
          increase substantially because of the volume of ESI, and the 
          difficulty of ensuring that all ESI produced has actually been 
          reviewed.  This bill would address situations where ESI that is 
          subject to a claim of privilege or protection is inadvertently 
          produced.  

          Under this bill, a party would be able to notify the party that 
          received the privileged or protected information that they 
          received that information and the basis for the claim of 
          privilege.  After being notified, the receiving party would be 
          required to either immediately return the specified information 
          and any copies, or present the information to the court 
          conditionally under seal for determination of the claim.  A 
          receiving party would not be able to disclose that information 
          until the claim has been resolved.

          8.  Prohibition on the imposition of sanctions in certain cases
           
          In order to address circumstances where ESI has been lost 
                                                                      



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          through no fault of the parties, this bill would provide 
          protections in several statutes which authorize discovery 
          sanctions.  The EDA prohibits the imposition of sanctions where 
          ESI has been lost through no fault of the parties.  

          Specifically, this bill would provide that "absent exceptional 
          circumstances, the court shall not impose sanctions on a party 
          or its attorneys for failure to provide ESI lost, damaged, 
          altered, or overwritten as a result of routine, good-faith 
          operation of an electronic information system."  These 
          provisions respond to a distinctive feature of electronic 
          information systems, the routine modification, overwriting, and 
          deletion of information which accompanies normal use. 
             
          However, this provision would not otherwise relieve parties of 
          their obligations to preserve discoverable information.  When a 
          party is under a duty to preserve information because of pending 
          or reasonably anticipated litigation, a party would still be 
          required to modify or suspend features of the routine operation 
          of a computer system to prevent loss of information. 

          9.  Subpoena Requiring Production of ESI
           
          This bill would update certain subpoena and deposition statutes 
          to provide for the subpoenaing of ESI as provided under the EDA. 
           Existing law, the EDA, provides that ESI may be subpoenaed.  
          (Code Civ. Proc. Sec. 1958.8.)  Existing law defines 
          "electronically stored information" as information that is 
          stored in an electronic medium.  (Code Civ. Proc. Sec. 
          2016.020.)  

          The term "electronically stored information" is derived from the 
          Federal Rules of Civil Procedure, Rule 34, and is intended to be 
          expansive and encompass any type of information that is stored 
          electronically.  This term provides for the discovery of 
          non-traditional writings, documents, and papers.  The Judicial 
          Council of California states that, although the EDA provided for 
          the subpoenaing of ESI, some individual subpoena statutes 
          continue to refer only to documents.  Accordingly, to avoid any 
          confusion or uncertainty, this bill would ensure that all the 
          subpoena statutes are consistent with the EDA.


           Support  :  California Defense Counsel

           Opposition  :  None Known
                                                                      



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                                        HISTORY
           
           Source  :  Judicial Council of California

           Related Pending Legislation  :  AB 2337 (Dickinson, 2012), among 
          other things, would modify the definition of "personal records" 
          relating to subpoenas to include electronic data.  AB 2337 is 
          currently in the Assembly Judiciary Committee.

           Prior Legislation  :

          AB 5 (Evans, Ch. 5, Stats. 2009) See Background.

          AB 926 (Evans, 2008) was virtually identical to AB 5 and was one 
          of the bills vetoed by Governor Schwarzenegger without comment 
          as to its merits due to the delayed passage of the 2007-2008 
          State Budget.

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