[Revised] Proposed Amendments to the Federal Rules of Civil Procedure

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Posted on: April 4th, 2014 by Angel Falconer and Josh Ross

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Now that the public comments period has closed for the Proposed Amendments to the Federal Rules of Civil Procedure, we thought it was time to do a more in-depth follow up to our post about Judge Scheindlin’s criticism of the proposed changes.  Rather than reading all of the thousands of written submissions (you can do that here) we did a breakdown of all of the speakers’ comments at the public hearings before the advisory committee and reviewed the materials that will be considered at their next meeting here in Portland, OR next week. 

One noticeable observation of the public comments is that the published proposed amendments garnered virtually unanimous support from in-house and defense counsel and overwhelming opposition from plaintiffs’ lawyers.  Understandably, in-house and defense counsel are concerned with the high costs associated with preserving too much information.  Some accuse the plaintiffs’ bar of turning discovery into fishing expeditions, conducting discovery for discovery’s sake to force defendants to settle frivolous lawsuits.  On the other side, plaintiffs’ attorneys complain that the real problem is a lack of transparency and true cooperation from the parties who control most of the information.  They argue that arbitrary limits on discovery and new proportionality tests will jeopardize their clients’ access to justice by making it easier for defense counsel to “hide the ball” (the subcommittee just announced that it is dropping the proposal that would have reduced the number of depositions, interrogatories, and requests for admission, and capped the length of depositions to 6 hours).  As we reported earlier, Judge Scheindlin fears the new rules will incentivize bad behavior.

This polarized response was probably most colorfully described by Bill Curtis, a lawyer from Texas speaking at the hearing in Dallas: “The rules of procedure are designed to make it a fair playing field for both sides.  If you change the rules in baseball one set of teams ought not be jumping up and screaming that that’s an unfair change, while the other side is jumping up and saying we love that change, we should do more changes like that.”

A significant portion  of Stoll Berne’s practice is spent defending corporate and institutional clients involved a wide array of litigation.  The firm’s diverse practice also includes a significant plaintiffs-side practice, including suing large organizations on behalf of plaintiffs in class actions.  Further still, much of our work involves disputes between entities that are relatively equal in size and sophistication.  In litigating these cases, we spend a lot of time advising clients about discovery obligations, including how to manage electronically stored information.  So we can understand the arguments on both sides of the debate.  It is true that the costs associated with e-discovery can be enormous, especially for a large organization involved in complex litigation.  But it is also true that those same organizations are often the ones that control most of the relevant information, so we tend to agree with Judge Scheindlin when she warns, essentially, that removing the threat of sanctions would “allow parties who have destroyed evidence to profit from that destruction.”  The newly revised proposed Rule 37(e) restores court discretion in ordering curative measures, but it continues to require proof of prejudice (but specifically does not state upon whom that burden falls) and limits “severe measures” to cases in which the spoliating party “acted with the intent to deprive another party of the information’s use in the litigation.”  The revision lists four factors that a court may consider (in addition to all other relevant factors that may be present in any given dispute) when applying Rule 37(e) and may offer some guidance to parties when undergoing preservation efforts.

From this broad perspective, we have witnessed questionable e-discovery practices on all sides and we know that ignorance and abuse can have expensive consequences.  But a major factor influencing rising costs and something that appears to be missing from this conversation entirely is any discussion about attorneys who still don’t “get it” and the vendors who are more than happy to oblige them.  For every good, experienced litigation support firm, there are a handful of vendors whose work may keep costs high unnecessarily.  Recently we got a call from a solo practitioner who had received an astronomically high quote from a vendor to handle a single computer image.  If that case had involved a large corporation with dozens of custodians spread all over the globe, using this vendor would have cost many millions of dollars.  If the attorney hadn’t had the sense to seek out someone else to do the job, surely he would have determined that the cost to discover this valuable information was not proportionate to his case.  Faced with these kinds of costs it is no wonder that in-house and defense counsel are pushing for change.

Not all vendors will take advantage of a lawyer who is inexperienced with e-discovery, and we have built solid relationships with some very reliable ones.  In addition to working with trusted consultants, our strategy for containing rising costs has been to take very seriously our obligation to understand our clients’ ESI and, when we can, deliver e-discovery services to our clients directly.  When we can’t handle the work in house, we rely on trustworthy vendors with whom we work very closely to understand and manage the projects.  That model is working for us.  But even lawyers who decide to take the opposite approach and outsource all e-discovery services must educate themselves about their clients’ information and the most efficient processes to manage it in litigation so that they can demand better service from vendors, who, good or bad, have little incentive to bring down costs.

A final thought about the proposed rules.  We were disappointed that the committee abandoned the effort to require cooperation among the parties by rule despite widespread calls for action and agreement from all sides that hyper-adversary behavior contributes to skyrocketing e-discovery costs.  Instead, the Note to amended Rule 1 encourages cooperation by lawyers and parties.  Failing to address one of the biggest factors driving up costs was a missed opportunity, but we expect that the members in our community will continue to exhibit the goodwill and professionalism that we have come to expect in Oregon.  We agree with the committee that most lawyers and parties conduct discovery in a cooperative manner, but the rules are necessary for the rare occasion when the parties can’t come to reasonable and proportional agreements without the court.