The Texas Supreme Court has agreed to hear oral argument on March 9, 2017, in In re State Farm Lloyds from Hidalgo County and the Corpus Christi-Edinburg Court of Appeals.

This notable case has the potential to significantly impact future obligations and burdens on litigants in Texas cases to preserve and produce electronic data, and the resulting impact on their abilities to economically defend against the merits of claims. The main issue is whether the trial court abused its discretion by ordering production of documents in “native” or “near-native” format (with metadata) instead of static images, like Portable Document Format (PDF) or Tagged Image File Format (TIFF). The specific issues presented are:

  1. Did the trial court abuse its discretion by imposing an ESI protocol that misinterprets Texas Rule of Civil Procedure 196.4 because its order mandates specific forms of production absent a novel showing of “infeasibility,” eliminates all other available objections under the civil rules, and disregards evidence that the producing party proffered other reasonably usable formats?; and
  2. Did the trial court abuse its discretion by disregarding proportionality considerations under Texas Rule of Civil Procedure 192.4 where a party has proffered reasonably usable formats that are a less intrusive and less burdensome means of meeting the party’s discovery obligations?

State Farm, in its brief and request for Oral Argument, argues that “A new but significant battleground has emerged in Texas involving. . . .a group of plaintiffs’ attorneys who routinely sue on behalf of insureds after essentially every Texas storm and seek to inflate the value of cases simply by demanding extensive and invasive discovery that is disproportionate to the value of their claims and thereby obtain unjust, unfair, and inequitable dispositions of their cases. . . .

The latest tactic of certain plaintiffs’ attorneys is to insist on particular ‘forms of production’ for electronically stored information (“ESI”). Using an unsupported application of Texas Rule of Civil Procedure 196.4, these plaintiffs’ attorneys argue that a trial court must honor whatever form of production a requesting party demands for any case of any type or any size – regardless of the need for, or the burdens and intrusions imposed by such formats, or the availability of alternate formats that are reasonably usable. When these form of production demands are overlaid on equally draconian discovery requests of increasing scope and breadth, this combination threatens to eviscerate the tenets of Rule 1 of the Texas Rules of Civil Procedure by forcing insurance carriers to decide whether to resolve cases at vastly inflated amounts, or incur the excessive cost required to meet the discovery demand and to defend hundreds of cases after every major weather event. If plaintiffs are permitted to carry on with this strategy, the consequences for civil discovery in Texas will be dramatic. Responding parties will no longer be able to seek or obtain relief through long-honored discovery objections that exist under the Texas Rules, or rely on standard procedures, methodologies, or technologies to determine the appropriate method to produce their own electronically stored information. Instead, all responding parties will be at the mercy of burdens and expenses imposed literally at the whim of requesting parties, and these ‘whims’ could literally change from cases to case.”

The Federal Rules, amended December 2015, put a renewed emphasis on proportionality, and the decision in this case will signal whether or not Texas is going to move in the same direction.