Coming into effect on January 1, 2010, the homestead exemption protecting a homeowner’s equity from judgment creditors has been increased by $25,000 across the board to $75,000 for individuals, $100,000 for married couples or family units as specified, and $175,000 for persons over 65 years, disabled, or over 55 years with limited income as specified. (Assembly Bill 1046)
The volume of digitally stored information created by business organizations is growing at an exponential pace. Recent studies report that 93% of all information is stored electronically and that 70% is never reduced to writing. Discovery practices directed at electronically stored information have become a part of almost all civil litigation. This fact is highlighted in the new Federal Rules of Civil Procedure (FRCP) which will go into effect December 1, 2006. FRCP 34 will deal with computer based information and other digitally stored data as Electronically Stored Information (“ESI”).
Failure to comply with these rules in litigation could result in an opponent gaining court ordered access to your computer systems. Even before litigation begins, there should be planning and procedures in place. To avoid the huge cost of attorney review, businesses need to adopt prior to litigation a systemized internal process to handle ESI and the eventual discovery related to it. An effective ESI management plan has five factors which address the new rules.
1. Have in place an electronic discovery and litigation readiness program. FRCP 26 will require that ESI issues be addressed as soon as practicable after initiation of litigation and at least 21 days before the first Court hearing. Waiting and dealing with ESI problems that may arise in litigation is no longer a practical option. A business cannot establish a procedure for collecting, culling and preserving its ESI after litigation is initiated. This must be a part of its regular business practices. At the commencement of litigation, there should be a procedure to search, identify and preserve relevant ESI.
2. Deletion in a normal course of business. Probably the most important provision to keep in mind is the “safe harbor” provision of FRCP 37(f) which provides, “absent exceptional circumstances, a court may not impose sanctions . . . on a party for failing to provide electronically stored information lost as a result of routine, good faith operation of an electronic information system.” For a party to establish that the deletion of ESI resulted from the routine and good faith operation of their electronic information system, a party must be able to demonstrate the existence of an established, well documented and systemized electronic records management process. Having a plan, is not enough. To be in good faith, a company must adhere to its plan. The failure to do so could result in a company being required to not just preserve, but process and review large amounts of information in the event of litigation.
3. The production of native files as part of ESI. FRCP 34(b) provides that “Electronically Stored Information be produced as it is “ordinarily maintained” or in a “reasonably usable” form. It “should not be produced in a form that removes or significantly degrades this feature.” This may require that the software necessary to effectively access and search the ESI be provided as well. Numerous recent court decisions hold that file metadata contained within ESI must be preserved and produced.
4. Preservation of relevant information. Preserving huge amounts of ESI through litigation can be quite costly. The notes to FRCP 26(f) recognizes that requests for ESI can be limited to topics or key words and date ranges, allowing other ESI to be destroyed. The key words and the date ranges should be agreed upon by counsel or the subject of a protective order before any party actually destroys ESI . The new rules are inspiring a large growth of new technology companies that specialize in efficient and consistent data collection from large computer systems.
5. The threat of an opponents access to the information systems of an opposing party if not in compliance is established. FRCP Rule 34(a) expressly permits a party to seek access to the opposing party’s computer system for inspection and copying. However, the advisory note said this should not be a routine right. Since the last thing any business needs is to have an opponent’s expert running searches on its company’s computers, it is important that a company have a policy in place that can provide an opponent with the appropriate electronic data without such a search.
Only by having planning and procedures in place before litigation begins, can a company hope to effectively deal with its ESI once litigation begins. Clients must partner with their attorney and proactively prepare systems for dealing with ESI, including implementing and uniformly enforcing a records retention program.
Since most litigation cases end in settlement, it is important to assure that the settlement agreement is both enforceable and does not lead to further litigation. Settlements are often reached on the courthouse steps and then recited “on the record” in open court before the judge. The usual procedure is for the attorneys to tell the judge the terms of the settlement and for the parties to agree. Often it is stated that a written settlement agreement will be executed by the parties within a week or two and then the case will be dismissed. Frequently the settlement provides for a series of payments or other actions to be taken over a period of time.
When the parties leave court, they shake hands and are generally relieved to have resolved their dispute. However, there are three issues burning in the back of their minds which hopefully their attorneys have considered:
1. What if the parties cannot agree upon the written settlement agreement?
2. What if the other party fails to make the payments or do what has been agreed?
3. Is the case really over? Can it be dismissed?
Even after a case is dismissed, California Code of Civil Procedure § 664.6 allows the court to “retain jurisdiction over the parties to enforce the settlement until performance in full of the terms of the settlement.” In Corkland v. Boscoe (1984) 156 C.A.3d 989, 994, the Court of Appeal “in the interest of judicial economy,” gave the statute a liberal construction. “Thus, what formerly was a nonstatutory ’speaking’ motion is now … applicable not only to judicially supervised settlement and conferences, but to stipulations of settlement in writing or orally before the court in pending litigation…. Even where there are contentions of disputed facts, if the motion is one for entry of judgment pursuant to such a settlement” it is proper. (156 C.A.3d 994.)
However, the courts power to enforces a settlement is not unlimited. In Weddington Productions v. Flick (1998) 60 C.A.4th 793, 809, the Court of Appeal cautioned, that while “Section 664.6 was enacted to provide a summary procedure for specifically enforcing a settlement contract without the need for a new lawsuit…, nothing in section 664.6 authorizes a judge to create the material terms of a settlement, as opposed to deciding what terms the parties themselves have previously agreed upon.”
Additionally the settlement agreement must either be “a writing signed by the parties outside the presence of the court or orally before the court’ to be enforceable pursuant to California Code of Civil Procedure § 664.6. In Datatronic Systems Corp. v. Speron (1986) 176 C.A.3d 1168, the Court refused to enforce an agreement that was entered into “on the record” before the court reporter following a deposition.
Thus, as long as the agreement was entered into orally before the court, the court can enforce it even if the parties never signed a written settlement agreement. It is crucial, however, that the settlement agreement provide both orally and in any writing that the court will retain jurisdiction to enforce it pursuant to California Code of Procedure §664.6. In Pietrobon v. Libarle, (2006) 137 Cal. App. 4d 992, the parties failed to do so. When the defendant failed to make the payments, the plaintiff was required to file a new lawsuit. In that case, the court found that the plaintiff had a four years to enforce the settlement in a subsequently filed lawsuit. The oral settlement agreement before the court had been entered in the court record . Therefore, the statute of limitations for written agreements applied, as opposed to a two year statute of limitations for oral agreements.
