Proportionality Should Guide Production of ESI, SCOTX Says

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By Melissa Heelan Stanzione

The Supreme Court of Texas said May 26 that courts in the state must be guided by federal proportionality standards when deciding the form in which litigants must produce electronic records ( In re State Farm Lloyds , 2017 BL 177212, Tex., No. 15-0903, 5/26/17 ).

When there is a dispute about the form of production for discoverable electronic data, Texas courts must resolve it using several balancing factors, Judge Eva Guzman wrote for the court.

The court took the proportionality factors from Federal Rule of Civil Procedure 26(b)(1) and said “‘you need to apply these,’” Eric Mandel told Bloomberg BNA.

Mandel is Director, Solutions Architects, eDiscovery for RICOH Legal.

The holding confirms the importance of cooperation between the parties and that discovery needs to be “flexible and tailored to the circumstances of the case,” Monica W. Latin, an attorney with Carrington, Coleman, Sloman & Blumenthal, LLP, told Bloomberg BNA.

Latin’s areas of expertise include eDiscovery.

Proportionality Factors

In the case at issue, homeowners sued their insurer, alleging underpayment of insured hail-damage claims.

They requested all electronically stored information be produced in its native or near-native form rather than the static form the insurer offered to produce. The trial court ordered production in native form, and an intermediate appellate court left that decision in place.

On appeal, the supreme court said trial courts must weight the proportionality of a discovery request by balancing factors such as the “burden and expense” of producing the requested form against “the relative benefits of doing so.”

Courts must also look at the “needs of the case, the amount in controversy, the parties’ resources, the importance of the issues at stake in the ligation, and the importance of the requested format in resolving the issues,” it said.

The court drew upon Fed. R. Civ. Proc. 26 and 34, noting that "[t]o be sure, there are differences in language between the Texas rule and the federal rule.” Nevertheless, “‘our rules as written are not inconsistent with the federal rules or the case law interpreting them,’ even though they may not “mirror the federal language,’” the court said, quoting case law.

The court denied the insurance company’s request for relief without prejudice so that it could “seek reconsideration by the trial court in light of this opinion.”

The bottom line in the supreme court’s opinion is that eDiscovery in particular is “a collaborative process” and “proportionality is the polestar,” Latin said, quoting the court.

However, the holding is significant beyond the state court level because it’s a thoughtful analysis of the cost of eDiscovery to which other courts can look for guidance, she said.

Missing Factor

Mandel said the court should have added another factor to the proportionality analysis.

If all you’re producing is a TIFF file—a form the insurers offered to produce—you’re degrading the original evidence, he said.

The court didn’t address this issue and “it’s a very important issue,” Mandel said.

The committee notes to the 2006 amendments to Federal Rule of Civil Procedure 34 say that you are not to degrade the ESI when the duty to preserve attaches, he said.

The duty to preserve attaches when litigation “is known or reasonably anticipated,” Mandel said.

The court should have addressed whether the insurer was degrading the information and if so, whether that degradation should be a primary factor in the proportionality considerations, he said.

Even The Sedona Principles, 2d, Principle 12 says you can’t degrade information intentionally, Mandel said.

If you have the ability to search something, the other side has to have the same or similar ability, he said.

The Principles are a “highly influential” secondary authority that provides guidance to the courts on eDiscovery production issues, Mandel said.

“It’s noteworthy that the Texas Supreme Court mentions the Principles,” Latin said.

However, the court “doesn’t cite to it well because they leave off a bunch of stuff,” Mandel said.

The court “didn’t quite understand” and didn’t address the degradation issue, he said.

To contact the reporter on this story: Melissa Heelan Stanzione in Washington at

To contact the editor responsible for this story: Jessie Kokrda Kamens at

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