TAKING CONTROL OF ESI IN ARBITRATION
Posted on Oct 01, 2017 |Publications
By: Richard P. Byrne Esq.
When I was a younger lawyer, I would often hear the adage: “Parties who are in litigation wish they were in Arbitration and parties who are in Arbitration wish they were in litigation”. One reason for that saying, of course, was that both vehicles carried negative aspects to their respective processes. The parties in litigation would bemoan the high costs and delay of lawsuits while the parties in Arbitration would complain of the proceedings often resembling “trial by ambush”.
The other reason for the saying, though, was that both means of resolving disputes also carried positive aspects to their processes. The foremost in litigation being the availability of discovery on the one hand, and the efficiency of Arbitration on the other hand.
As time has passed, Arbitration, which is a creature of contract, has evolved, and efforts have been made to bring over some of the more positive aspects of litigation to the Arbitration forum – without the attendant delay and cost. But reaching and maintaining this “best of both worlds” balance becomes difficult when we begin talking about Electronically Stored Information or ESI. How does one manage ESI in the context of an Arbitration to avoid the process devolving into litigation-style discovery? What some have called “Arbigation”.
First, given the realities today with respect to electronic data and communications, the parties should look to address the issues in the first instance in the Arbitration clause. The question becomes a matter of degree. One basic approach is to include language along the lines that: “There shall be no e-discovery beyond the production of relevant, active e-mails and other current electronic records” as a means of reflecting the parties' pre-dispute intentions to avoid the prohibitive expense of otherwise having to access and retrieve materials that may not be “live”, including those that may be on back-up servers or platformed on out of date technology. While such language is admittedly basic, if the level of detail is pressed too far, the Arbitration provision begins to take on the attributes of a pre-nuptial agreement, with the lawyers throwing cold water on their clients' arrangements, by focusing too intently on the details of the divorce before the marriage ever takes place. Another option which can be employed to avoid that scenario, but to indirectly layer in some further detail, is to incorporate by reference recognized guidelines – for example, the Sedona Principles. In either instance, though, at a minimum, the parties should take care to ensure that there is some type of “claw back” provision in the Arbitration clause to address the recovery of confidential information that is inadvertently produced.
Beyond addressing the issue up front in the Arbitration provision, the next opportunity to manage ESI is at the Preliminary Hearing. If you know you are going to need ESI to establish your claims or defenses, the Preliminary Hearing is the time and place to get matters on the table. It is important in this regard to come in prepared – well-versed on your end as to the location and accessibility of the electronic information and data. Be prepared to agree, for example, on the individual sources of ESI that should be preserved and produced.
Ideally, this should be a collaborative exercise with the Arbitrator. The goal is to ensure that the most relevant ESI is shared in the most productive and cost-efficient fashion. Bear in mind, the dollar value of the dispute should not be the measurement of how much ESI should be exchanged. Do not let the dollar amount at issue blind the parties to the overall goal of having chosen Arbitration in the first instance as the vehicle for dispute resolution – that being, to resolve the parties' differences in the most timely, efficient and cost-effective fashion possible.
If the parties do not come to the Preliminary Hearing adequately prepared, the Arbitrator should not allow counsel to kick the ESI can down the road. A second session should then be scheduled to specifically address the issues because once the ESI genie begins to leave its lamp, it becomes increasingly difficult to effectively reverse course and place controls on the discovery.
With that said, the final opportunity for ESI to be managed in an Arbitration is with the Arbitrator – and that is where the buck must ultimately stop. In dealing with ESI discovery, the Arbitrator should have two guiding principles – relevancy and proportionality. He or she must look to the usefulness and economy of the requested production and avoid the parties drawing the proceedings into full-blown discovery. The Arbitrator should endeavor to limit the parties' discovery to the most material facts needed to fairly and adequately present their positions in the spirit of Arbitration. Otherwise, once again, you have lost the benefit of agreeing to arbitrate in the first instance – with the parties finding themselves instead in the midst of an Arbigation.
Richard P. Byrne, Esq., is a member of NAM's (National Arbitration and Mediation) Hearing Officer Panel and is available to arbitrate and mediate cases throughout the United States. In 2018, for the fourth year in a row, he was voted one of the Top 3 Mediators in the country by National Law Journal Reader Rankings Survey and for the second year in a row, he was named a National Law Journal 2017 Alternative Dispute Resolution Champion, as part of a select group of only 37 nationwide. Further, for the fourth straight year, he was voted a Top Ten Mediator in New York State by the 2017 New York Law Journal Reader Rankings Survey.
For any questions or comments, please contact Jacqueline I. Silvey, Esq. / NAM General Counsel, via email at firstname.lastname@example.org or direct dial telephone at 516-941-3228.