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Possession, Custody, Or Control” IMPORTANT NOTICE: This Publication Has Been Superseded See the Most Current Publication at https://thesedonaconference.org/publication/Commentary_on_Rule_34_and_Rule_45 _Possession_Custody_or_Control The Sedona Conference Working Group Series The Sedona Conference Commentary on Rule 34 and Rule 45 “Possession, Custody, or Control” A Project of The Sedona Conference Working Group on Electronic Document Retention & Production (WG1) April 2015 Public Comment Version The Sedona Conference Working Group Series THE SEDONA CONFERENCE COMMENTARY ON RULE 34 AND RULE 45 POSSESSION, CUSTODY, OR CONTROL 2015 Public Comment Version Author: The Sedona Conference Drafting Team Victor L. Cardenas Jr. Ronni D. Solomon Alitia Faccone Martin T. Tully Susan Barrett Harty Cheryl Vollweiler Mark Kindy Kelly M. Warner Edwin Lee W. Lawrence Wescott II Lauren E. Schwartzreich James S. Zucker Team Leader and WG1 Judicial Participant Steering Committee Liaison The Honorable Kristen L. Mix Paul D. Weiner The opinions expressed in this publication, unless otherwise attributed, represent consensus views of the members of The Sedona Conference Working Group 1. They do not necessarily represent the views of any of the individual participants or their employers, clients, or any other organizations to which any of the participants belong nor do they necessarily represent official positions of The Sedona Conference. We thank all of our Working Group Series Sustaining and Annual Sponsors, whose support is essential to our ability to develop Working Group Series publications. For a listing of our sponsors, just click on the “Sponsors” navigation bar on the homepage of our website. Requests for reprints or reprint information should be directed to The Sedona Conference at [email protected] or 602-258-4910. Copyright 2015 The Sedona Conference All Rights Reserved Visit www.thesedonaconference.org The Sedona Conference Commentary on Possession, Custody, or Control April 2015 Preface Welcome to the public comment version of The Sedona Conference Commentary on Rule 34 and Rule 45 Possession, Custody, or Control, another major publication of The Sedona Conference Working Group Series (“WGS”). The Sedona Conference is a 501(c)(3) research and educational institute that exists to allow leading jurists, lawyers, experts, academics and others, at the cutting edge of issues in the areas of antitrust law, complex litigation, and intellectual property rights, to come together in conferences and mini-think tanks called Working Groups to engage in true dialogue, not debate, in an effort to move the law forward in a reasoned and just way. This Commentary reflects the culmination of over two years of dialogue, review and revision, including discussion at two of our Working Group 1 (WG1) midyear meetings. I thank all of the drafting team members for dedicating the hours needed to bring this publication to the public comment version. Team members that participated and deserve recognition for their work are: Victor L. Cardenas Jr., Alitia Faccone, Susan Barrett Harty, Mark Kindy, Edwin Lee, Lauren E. Schwartzreich, Ronni D. Solomon, Martin T. Tully, Cheryl Vollweiler, Kelly M. Warner, W. Lawrence Wescott II, and James S. Zucker. The Sedona Conference also thanks The Honorable Kristen L. Mix for her participation as a Judicial Observer. Finally, The Sedona Conference thanks Paul D. Weiner for serving as both the Team Leader and Steering Committee Liaison. Working Group Series output is first published in draft form and widely distributed for review, critique and comment, including in-depth analysis at Sedona-sponsored conferences. After sufficient time for public comment has passed, the editors will review the public comments and, to the extent appropriate, any changes in the law. The editors will determine what edits, if any, might be appropriate. Please send comments to [email protected], or fax them to 602-258-2499. We hope our efforts will be of immediate and practical assistance to judges, parties in litigation and their lawyers and database management professionals. We continue to welcome comments for consideration in future updates. If you wish to submit feedback, please email us at [email protected]. The Sedona Conference hopes and anticipates that the output of its Working Groups will evolve into authoritative statements of law, both as it is and as it should be. Craig Weinlein Executive Director The Sedona Conference April 2015 iii The Sedona Conference Commentary on Possession, Custody, or Control April 2015 Table of Contents I. Abstract ...................................................................................................................................1 II. The Sedona Conference Principles on Possession, Custody, or Control ....................................2 III. Background .............................................................................................................................3 A. Rules 34 and 45 Impose Important Obligations on Parties Deemed to Control Documents and ESI and the law Prescribes Consequences for not Meeting Those Obligations ......................................................................................................................3 B. Interpretation of Rule 34 and Rule 45 Possession, Custody, or Control is Inconsistent Across Federal Circuits, Leading to Irreconcilable Standards ............................................4 1. The Three Standards for Rule 34 and Rule 45 Possession, Custody, or Control ..........4 2. Variances in Application of the Three Standards........................................................ 8 C. A Deeper Look at the Practical Ability Standard Demonstrates that it Produces Potentially Unfair Results ...............................................................................................13 1. The Practical Ability Standard may Compromise the Ability of Parties with Cross-Border Operations to Comply with Their Legal Obligations ..........................13 2. The Practical Ability Standard may Compel an Entity to Produce Documents and ESI in Violation of an Existing Contract ...........................................................15 3. The Practical Ability Standard Often Fails to Recognize Distinctions Between Separate Sister Corporations ....................................................................................15 4. The Practical Ability Standard may Compel Individuals to Produce Documents and ESI in the Possession of Companies they Own but that are not Parties to a Case .....................................................................................................................17 5. The Practical Ability Standard may Compel Corporate Parties to Produce Documents and ESI in the Possession of Former or Current Employees or Employers even if the Employers have no Legal Right to Demand or Obtain such Documents and ESI .......................................................................................17 6. The Practical Ability Standard may Compel Service Providers to Produce Information Owned by Clients and Customers even if the Service Provider has no Legal Right to Demand or Obtain such Documents and ESI .......................19 7. Effect of “Control” Issues on Third-Party Discovery ................................................21 iv The Sedona Conference Commentary on Possession, Custody, or Control April 2015 D. How New Technologies may Influence the Rule 34 Possession, Custody, or Control Analysis ..........................................................................................................................22 1. Cloud Computing ...................................................................................................22 2. Social Media ............................................................................................................23 3. The “Bring your Own Device to Work” Movement .................................................25 4. Changing Locations/Jurisdiction .............................................................................25 IV. The Sedona Conference Principles on Possession, Custody, or Control...................................27 Principle 1: A responding party will be deemed to be in Rule 34 or Rule 45 “possession, custody, or control” of Documents and ESI when that party has actual possession or the legal right to obtain and produce the Documents and ESI on demand ........................................................27 Comments ..............................................................................................................................27 A. Interpretation of Possession, Custody, or Control for Purposes of Rules 34 and 45 Should be Consistent Across Federal Circuits .....................................................27 B. A Framework for a more Objective Definition of “Control” ...........................................27 1. Application of “Control” Under Relevant Legal Right Case Law ..............................28 2. Application of “Control” Under Restatement Law ...................................................29 3. Examples of “Control” in the Agency Context .........................................................31 C. Illustrations of What Should and Should Not Constitute Rule 34 “Control” Under a Consistent Standard .........................................................................................32 Principle 2: The party opposing the preservation or production of specifically requested Documents and ESI claimed to be outside
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