Don’t lose sleep over U.S. e-discovery nightmares

E-discovery has been a hot topic ever since changes made to the U.S. Federal Rules of Civil Procedure broadened the scope of electronic evidence back in 2006.

But Canadian IT departments shouldn’t lose sleep over e-discovery nightmares taking place in the U.S., according to one lawyer with experience practising on both sides of the border.

“The sky is not falling, No. 1,” said Stephen Maddex, associate in the Commercial Litigation Group at Lang Michener LLP in Ottawa, who is a member of the bar in Ontario and Texas.

“No. 2, organization is key,” he said. “The more businesses do get organized, the simpler it all becomes.”

Broadly speaking, there are two major differences between general Canadian practice and the U.S. federal rules, said Maddex.

One is the scope of discovery. “In the U.S., you can ask for pretty much anything, which is why e-mail has become such an important problem there,” he said. But Canadians “don’t have that same problem because the scope is narrower.”

For example, in the U.S., a company may be asked to file through its entire database and produce everything it has, which could be billions of e-mail messages, he said. “The cost to go through that and figure out what you need and what you don’t need to provide is extremely expensive,” he said.

Second is the duty to disclose. “In the U.S., parties have the right to compel the other side to produce whatever they ask for, whereas here in Canada, by and large, litigants have an affirmative duty to search their own records for themselves and produce what they think is relevant,” he said.

Canadian businesses and individuals are required to keep certain records, but this is governed by specific legal requirements like tax laws, he said. “Other than that, you have no real obligation to keep anything,” he said.

A dispute between Air Canada and WestJet Airlines back in 2006 was described as the largest case of corporate espionage in Canadian history, said Maddex. Thousands of e-mail messages were exchanged, but that “would be like afternoon tea” in the States, he said.

The difference between e-discovery laws in Canada and the U.S. is “kind of like the difference between Canadian English and British English,” said Maddex. “The rules are so totally different that it is often not fully appreciated here.”

Thomas Sutton, a litigation partner at McCarthy Tétrault LLP in Toronto, takes a different spin. “I always see the fact that the onus is on the parties themselves … makes it harder,” he said.

“In Ontario, parties have an obligation to disclose all documents that are relevant to issues in the action without being asked by the other side. My understanding (of the U.S. federal rules) is that the opposing parties often make a document request and then you produce in response to those requests,” he said.

E-discovery laws in Canada and the U.S. “are fundamentally the same,” said Sutton. “The same principles apply, but they have to take into account the slight variances in our procedure.” 

“I’m an advocate of, wherever possible, speak to counsel early and find out what they want rather than guess what they want; whereas if you just base it on what is relevant to the action, you could be searching and searching for things and producing things that you think are relevant that the other side doesn’t even care about,” he said.

The Sedona Canada Principles Addressing Electronic Discovery, developed by the Sedona Canada Working Group, are a good starting point for IT managers seeking a basic understanding of e-discovery laws, said Sutton.

The principles were developed in Canada in part to build upon the lessons learned in the United States, he said. “It was clear there was a growing need for comparable principals here in Canada,” he said.

“They needed to be adjusted to take into account the unique aspects of Canadian litigation and more specifically, the unique aspects of Quebec litigation,” he said.

The Sedona Canada Principles aren’t laws per se, “but that can happen,” said Sutton. What the courts often do is make reference to these principles when making decisions in relation to the preservation, production or use of electronic evidence in the hearings, he said.

Once the court makes reference to it, they give it “judicial blessing,” he said. “It becomes law in the sense that a judge has relied upon them and decided them as authoritative and therefore to be considered and referred to,” he said.

Recent amendments made to the Rules of Civil procedure in Ontario in January 2010 did incorporate one of the principles, said Sutton. “That’s a first in Canada and that’s an important development,” he said.

So in a sense, the principles are something that Ontario, counsel and the court must take into consideration when faced with electronic evidence issues, he said. “They have narrowed the scope of disclosure and introduced this idea of a discovery plan, which is the Sedona Principle of meet and confer,” he said.

“The rule amendments are meant to encourage parties to talk up front so that you can manage electronic evidence,” said Sutton.

Theoretically, before the parties even start to look for electronic evidence, counsel is encouraged to sit down and answer questions such as what they are looking for, what they need, in what format, and what database platform will be used, he said.

Many new amendments that have come into effect in Ontario and British Columbia look to U.S. authorities and think they can generally apply here, but “they really can’t, because it is so completely different,” said Maddex.

“I think there is a general perception in Ontario that Ontario has become similar to the U.S., but it hasn’t,” he said.

Still, e-discovery is a developing area of law, most of the guidance available comes from the States, and Canadian lawyers and judges thinking about the topic are looking at U.S. precedents, he said.

“U.S. authorities aren’t relevant except that people here who are in positions of authority believe they are … so in a way, you do have to understand U.S. precedents to be knowledgeable, because it is on the table, but it is being misused,” he said.

What the U.S. federal rules changed wasn’t necessarily what people were responsible for demonstrating, but that IT had to get involved as part of the discovery process, said George Goodall, senior research analyst at Info-Tech Research Group Ltd.

You can “squirm around various element of legality,” but the legal issue for IT is relatively similar in Canada the U.S., said Goodall. “At the end of the day, if there is evidence that needs to be produced and you have access to it and you don’t produce it, that is contempt,” he said.

While Canadian IT departments don’t have as much experience with e-discovery, they do have good tools to choose from because of what has happened in the U.S., said Dave Pearson, senior research analyst at IDC Canada.

“Canada isn’t as tight in terms of compliance and e-discovery as the U.S. is, but it is certainly something that is slowly building in Canada,” he said.

E-discovery lawsuits have been heating up in the U.S., the U.K. and Australia, said Patrick Eitenbichler, director of worldwide product marketing, information management, software at Hewlett-Packard Co.

But “any company that does business with an organization in the U.S. will fall under the same e-discovery regulations, and since there is a lot of trade between Canada and the U.S., e-discovery is important for Canadian companies as well,” he said.

The key is to set a policy and then follow it, said Eitenbichler.

Follow me on Twitter @jenniferkavur 

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