February 18, 2014

 

Report on Proposed Amendments to the Federal Rules of Civil Procedure

 

The Federal Courts Committee (the “Committee”) of the New York County Lawyers’ Association (“NYCLA”) has approved the following Comments concerning the amendments to the Federal Rules of Civil Procedure (“Proposed Amendments”), proposed by the Judicial Conference Advisory Committee on Civil Rules (the “Advisory Committee”) and promulgated for public comment on August 15, 2013.

 

The Committee fully agrees with the intended underlying goals of the Proposed Rules to expedite and streamline litigation, and to reduce the cost and burdens of litigation to the parties and the judicial system. The Proposed Amendments seek to accomplish these goals by promoting cooperation amongst litigants, a greater focus on proportionality in discovery, and closer judicial case management.

 

NYCLA is an organization of nearly 9,000 lawyers. The Committee comprises attorneys from all areas of the practice in New York, including governmental, corporate in-house, large-firm, and small-firm practitioners. NYCLA and the Committee issue reports and position papers on matters of interest to the membership and advocate changes in law and procedure to promote the public interest.

Judge John Koeltl, one of the preeminent backers of the proposed rules changes, spoke to our Committee in September 2013. Thereafter, the Committee formed a Subcommittee to try to appraise the potential impact of the Proposed Amendments on the judicial system as a whole. The Committee supports the underlying goals of the Proposed Amendments to curtail abusive discovery practices. While the Committee endorses all the proposals, the Committee believes that some rule changes that may be considered in the future, such as the larger reform proposed to potentially move away from the American Rule that a party bear its own discovery costs, must be approached cautiously. There are also those in the Committee who are extremely wary that the changes will potentially limit access to justice, particularly for smaller claimants.

 

PROPOSED AMENDMENTS TO RULE 1

 

Proposed Amendments and Their Purpose

 

The proposed amendment to Rule 1 adds the phrase “and employed by the court and the parties.” The red-lined rule and Advisory Committee’s Note explaining the amendment’s rationale are set forth below.

 

Rule 1. Scope and Purpose

 

These rules govern the procedure in all civil actions and proceedings in the United States district courts, except as stated in Rule 81. They should be construed, and administered, and employed by the court and the parties to secure the just, speedy, and inexpensive determination of every action and proceeding.

 

Committee Note

 

Rule 1 is amended to emphasize that just as the court should construe and administer these rules to secure the just, speedy, and inexpensive determination of every action, so the parties share the responsibility to employ the rules in the same way. Most lawyers and parties cooperate to achieve these ends. But discussions of ways to improve the administration of civil justice regularly include pleas to discourage over-use, misuse, and abuse of procedural tools that increase cost and result in delay. Effective advocacy is consistent with — and indeed depends upon — cooperative and proportional use of procedure.

 

Recommendations of the Committee

 

The Committee endorses this proposed amendment.

 

Explanation for Recommendation

 

The amendment to Rule 1 would make clear that “the court and the parties” are obligated in the goal of achieving “a just, speedy, and inexpensive determination of every action and proceeding,” and would have the effect of emphasizing cooperation as a necessary component of practice in the federal courts. The amendment embraces what is already invoked in many of the local district rules.

 

The amendment is consistent with the Sedona Conference’s Cooperation Proclamation that “cooperation in discovery is consistent with zealous advocacy,” as is also set forth in the Committee Note, and aligns with the needed “paradigm shift for the discovery process” for greater cooperation.

 

Indeed, it is the interpretation of this Committee that the intent and result of the rule change are to make explicit what is implicit, that parties must cooperate, but not that the amendment will preclude parties from raising genuine discovery disputes. Thus, the Committee endorses the amendment as serving the purpose of enhancing greater cooperation and seeking to prevent litigants from utilizing abusive discovery practices. The emphasis of cooperation by the courts and the parties will hopefully serve as a reminder of, as well as give the rule more teeth for, the obligation to engage in cooperative behavior. We note, however, that in our experience Rule 1 is rarely invoked. Thus, we do not believe that the changes to Rule 1 will have a major impact on the behavior of parties and their counsel. Still, the proposed changes are a step in the right direction.

 

PROPOSED AMENDMENTS TO RULE 4(m)

 

Proposed Amendments and Their Purpose

 

The proposed amendment to Rule 4(m) reduces the time for service of a complaint from 120 days to 60 days after filing with the court. The Advisory Committee Note reasons that “this change, together with the shortened times for issuing a scheduling order set by amended Rule 16(b)(2), will reduce delay at the beginning of litigation.”

 

The final sentence is amended to make it clear that the reference to Rule 4 in Rule 71.1(d)(3)(A) does not include Rule 4(m). Dismissal under Rule 4(m) for failure to make timely service would be inconsistent with the limits on dismissal established by Rule 71.1(i)(C).

 

Recommendations of the Committee

 

The Committee endorses this proposed amendment.

 

Explanation for Recommendation

 

A 60-day period is more than sufficient for a summons and complaint to be served on a defendant. Thus, the Committee concludes that the amendment would not impose an undue burden on a plaintiff, as a 60-day period is enough time to accomplish service, and the rule allows a plaintiff to receive an extension of time upon a showing of good cause for the failure to make service within 60 days. The Advisory Committee Note to the Rule should make it explicit that extensions of time should be “liberally granted for the sake of better overall efficiency.” August Draft at 262. Courts should also retain the discretion to grant extensions even in the absence of “good cause.” See Meilleur v. Strong, 682 F.3d 56, 61 (2d Cir. 2012) (under Rule 4(m), “district courts have discretion to grant extensions and may do so even in the absence of ‘good cause.’” (citations omitted)).

 

The Committee dismissed the concern that the reduction of time for service would seriously impair a plaintiff’s ability to secure a waiver of service under Rule 4(d)(1)(F). Rule 4(d)(1) allows a plaintiff the ability to notify a defendant of the complaint and request a waiver of service of process. A plaintiff, per Rule 4(d)(1)(F), is required to give a defendant reasonable time – at least 30 days – to return the waiver. On the whole, it is believed that the waiver of service is not a reason to reject the proposed amendment. The amendment will simply compel plaintiffs to be more assiduous in availing themselves of the benefits of service of process under Rule 4(d).

 

The Committee further considered the impact the Rule change would have on Rule 15(c)(1)(C), since Rule 15(c)(1)(C) incorporates Rule 4(m) in its tests for relation back of an amendment that “changes the party or the naming of a party against whom a claim is served.” Reducing the time to serve will ultimately reduce the time allowed for a party to amend its complaint or to re-name a party relating back to the filing of the summons and complaint. This concern does not deter the Committee from endorsing the adoption of this desired change to Rule 4(m).

 

The Committee also acknowledged the concern regarding the effect the proposed amendment may have on the filing of actions that are near the expiration of the statute of limitations. It was noted that often, particularly with employment plaintiffs, a party seeks counsel close to the time allowed for filing and withholds service of the complaint to be able to investigate whether the initial complaint meets the Rule 11 threshold, and if not, to allow time to cure any defect before serving the complaint. While there is understandable concern regarding disadvantaged parties, either because of ignorance or hesitation to initiate litigation, there is still ample time, 60 days, for a party to conduct an investigation after the filing of an initial complaint and cure any defects with the initial complaint, to meet any statute of limitations deadline.

 

Another concern, regarding the shortening of the time period allotted to serve the complaint for Rule 4(m), was raised by the Department of Justice, that the need to effect service on all claimants, in conjunction with the shortened time period, would lead to an increase in dismissals of condemnation proceedings, under Rule 71.1(d)(3)(A). This concern was alleviated by the additional language to Rule 4(m) of “or to service of a notice under Rule 71.1(d)(3)(A).”

 

PROPOSED AMENDMENTS TO RULE 16(b)(1)(B)

 

Proposed Amendments and Their Purpose

 

The proposed amendment to Rule 16(b)(1)(B) deletes language authorizing a court to consult with parties by telephone, mail or other means. The red-lined rule and Advisory Committee’s Note explaining the amendment’s rationale are set forth below.

 

(b) Scheduling.

 

(1) Scheduling Order. Except in categories of actions exempted by local rule, the district judge — or a magistrate judge when authorized by local rule — must issue a scheduling order:

 

(A) after receiving the parties’ report under Rule 26(f); or

 

(B) after consulting with the parties’ attorneys and any unrepresented parties at a scheduling conference by telephone, mail, or other means.

 

Committee Note

 

The provision for consulting at a scheduling conference by “telephone, mail, or other means” is deleted. A scheduling conference is more effective if the court and parties engage in direct simultaneous communication. The conference may be held in person, by telephone, or by more sophisticated electronic means.

 

Recommendations of the Committee

 

The Committee endorses this proposed amendment.

 

Explanation for Recommendations

 

The amendment does not affect a court’s authority to issue a scheduling order upon receiving a Rule 26(f) report from the parties, or in actions exempted by local rules. However, in cases where the court conducts a scheduling conference, the Advisory Committee Note advocates direct communication, as this is a more effective way of communication. Nonetheless, while the Committee Note advocates for direct communication for the scheduling conference, the note does not preclude the use of a telephone for the conference. The removal of the word “telephone” from the rule is designed to encourage the parties to meet in person for the scheduling conference, as opposed to the parties communicating via phone, as delineated in the Committee Note. While face-to-face meetings are likely to be more conducive for the resolution of issues, the Advisory Committee recognizes that in many circumstances it is more efficient for the Rule 16(b) conference to occur via telephone.

 

The removal of the terms by “mail, or other means” is to prevent the conference from occurring without any form of direct communication. The deletion of the terms “telephone, mail, or other means” addresses some previously expressed concerns regarding parties’ failure to meet in person and to prevent the conference from taking place by email/correspondence. The Federal Judicial Center released a survey that found only 31 percent of Rule 16(b) conferences occurred in person. Moreover, the amended rule will prevent parties from having the conference occur via email/correspondence. The same survey found that 50 percent of the respondents indicated that there was no Rule 16(b) conference. Twelve percent of those respondents, who indicated that a Rule 16(b) conference had not occurred, signaled that the conference had been conducted by correspondence.

 

The Committee believes that the proposed amendment will encourage direct communication, particularly in-person meetings, for the Rule 16(b) conference, and discourage the use of agreements through e-mail/correspondence.

 

PROPOSED AMENDMENTS TO RULE 16(b)(2)

 

Proposed Amendments and Their Purpose

 

The proposed amendment to Rule 16(b)(2) reduces by 30 days the time when the court must issue a scheduling order. The red-lined rule and Advisory Committee’s Note explaining the amendment’s rationale are set forth below.

 

(2) Time to Issue. The judge must issue the scheduling order as soon as practicable, but in any event unless the judge finds good cause for delay the judge must issue it within the earlier of 120 90 days after any defendant has been served with the complaint or 90 60 days after any defendant has appeared.

 

Committee Note

 

The time to issue the scheduling order is reduced to the earlier of 90 days (not 120 days) after any defendant has been served, or 60 days (not 90 days) after any defendant has appeared. This change, together with the shortened time for making service under Rule 4(m), will reduce delay at the beginning of litigation. At the same time, a new provision recognizes that the court may find good cause to extend the time to issue the scheduling order. In some cases it may be that the parties cannot prepare adequately for a meaningful Rule 26(f) conference and then a scheduling conference in the time allowed. Because the time for the Rule 26(f) conference is geared to the time for the scheduling conference or order, an order extending the time for the scheduling conference will also extend the time for the Rule 26(f) conference. But in most cases it will be desirable to hold at least a first scheduling conference in the time set by the Rule.

 

Recommendations of the Committee

 

The Committee endorses this proposed amendment.

 

Explanation for Recommendations

 

The reduction in time for issuing a scheduling order is consistent with the change to Rule 4(m), as detailed in the Advisory Committee Note. This proposed amendment does not create an undue burden on the parties, specifically defendants, to obtain counsel, analyze the complaint, develop a litigation strategy and discovery plan, and prepare for the Rule 26(f) conference. The Committee concludes that the shorter period is not extremely onerous, especially since the amended Rule makes allowance for additional time, upon demonstrating to a judge that there was good cause for the delay.

 

PROPOSED AMENDMENTS TO RULE 16(b)(3)(B)

 

Proposed Amendments and Their Purpose

 

The proposed amendment to Rule 16(b)(3)(B) adds three items to the list of permitted contents to be incorporated into the scheduling order. The red-lined rule, Advisory Committee’s Note explaining the amendment’s rationale, and summary of the proposed changes are set forth below.

 

(3) Contents of the Order.

 

(B) Permitted Contents. The scheduling order may:

 

(iii) provide for disclosure, or discovery, or preservation of electronically stored information;

 

(iv) include any agreements the parties reach for asserting claims of privilege or of protection as trial-preparation material after information is produced, including agreements reached under Federal Rule of Evidence 502 ;

 

(v) direct that before moving for an order relating to discovery, the movant must request a conference with the court.

 

The Committee Note recognizes that three items are added to the list of permitted contents in Rule 16(b)(3)(B):

 

• The order may provide for preservation of electronically stored information, which is also addressed in the amended provisions of a discovery plan under Rule 26(f)(3)(C), and in the proposed amendments to Rule 37(e).

 

• The order also may include agreements incorporated in a court order under Evidence Rule 502, concerning disclosure of information covered by attorney client privilege or work-product protection, which is also addressed in amended provisions of a discovery plan under Rule 26(f)(3)(D).

 

• The order may direct parties to request a conference with the court prior to filing a motion relating to discovery, which many judges favor as informal mechanisms to resolve most discovery disputes.

 

Recommendations of the Committee

 

The Committee endorses these proposed amendments.

 

Explanation for Recommendations

 

The Committee approves all three of the proposed amendments to Rule 16.

 

Explanation for Recommendation Regarding the Proposed Amendment’s First Change (Adding “Preservation” to Rule 16(b)(3)(B)(iii))

 

The fact that the scheduling order may provide for the “preservation” of ESI will encourage parties to discuss preservation issues, and it is this Committee’s belief that this amendment will enhance cooperation by encouraging the parties to discuss preservation issues at an early stage. The Committee believes that discussion of issues related to “preservation” at an early stage may reduce “over-preservation.”

 

Explanation for Recommendation Regarding the Proposed Amendment’s Second Change (Adding FRE 502 Agreements for Inclusion in Scheduling Orders to Rule 16(b)(3)(B)(iv))

 

The addition of “including agreements reached under Federal Rule of Evidence 502” is important as it brings to the forefront the benefits of attorneys entering into a FRE 502 agreement.

 

FRE 502 was added to the Rules of Evidence to protect against the waiver of privilege, such as attorney-client privileged communications and work-product materials disclosed during discovery. FRE 502(b) operates to ensure that if the disclosure of privileged material was inadvertent and “reasonable steps” were taken to prevent the disclosure and to rectify the error then privilege is not waived. In contrast, FRE 502(d), which has the “controlling effect of a court order,” prevents the waiver of privilege “in any other federal or state proceeding” and does not necessitate that “reasonable steps” be taken.

 

The Committee views the addition of the specific reference to Rule 502 as an effort by the Advisory Committee to encourage attorneys to engage in discussions regarding FRE 502(d) or FRE 502(e) agreements. FRE 502(d) is an invaluable tool for lessening the time and expense associated with privilege reviews and waiver issues. Unlike FRE 502(b) the disclosure does not depend on whether the disclosure was inadvertent, nor does it require that “reasonable steps” be taken. Courts have applied a five-factor test for determining whether “reasonable steps” were taken to prevent a waiver of privilege in order to comply with FRE 502(b).

 

The Committee recognizes that this amendment is not intended to instruct lawyers to bypass a privilege review, since once privileged material has been disclosed, a party cannot “unring the bell.” The Committee views this amendment as an attempt to reduce or eliminate privilege waiver, and as an attempt to reduce the costs associated with privilege review. Accordingly, this Committee understands that a typical FRE 502(d) agreement would prevent the waiver of privilege and allow for the claw-back of privileged materials. In fact one judge has acknowledged that in his view the failure to seek a 502(d) order may constitute malpractice.

 

Explanation for Recommendation Regarding the Proposed Amendment’s Third Change (Adding a New Provision to Rule 16, Rule 16(b)(3)(B)(v))

 

The proposed addition of Rule 16(b)(3)(B)(v) that the scheduling order may “direct that before moving for an order relating to discovery the movant must request a conference with the court,” will empower the judiciary to facilitate the e-discovery process. Many courts already have local rules that are similar to this proposal, thus the addition to the Rule will enhance greater conformity across the various districts. Moreover, courts have found that pre-motion conferences have often served to resolve discovery disputes without the need for motion, briefing and orders, thereby reducing costs and delays.

 

PROPOSED AMENDMENTS TO RULE 26(b)(1)

 

Proposed Amendments and Their Purpose

 

The proposed amendments effect several changes to Federal Rule of Civil Procedure 26(b)(1), which defines the scope of all discovery. The red-lined rule and Advisory Committee’s Note explaining the amendment’s rationale and summary of the proposed changes are set forth below.

 

(b) Discovery Scope and Limits. (1) Scope in General. Unless otherwise limited by court order, the scope of discovery is as follows: Parties may obtain discovery regarding any nonprivileged matter that is relevant to any party’s claim or defense and proportional to the needs of the case, considering the amount in controversy, the importance of the issues at stake in the action, the parties’ resources, the importance of the discovery in resolving the issues, and whether the burden or expense of the proposed discovery outweighs its likely benefit. Information within this scope of discovery need not be admissible in evidence to be discoverable. — including the existence, description, nature, custody, condition, and location of any documents or other tangible things and the identity and location of persons who know of any discoverable matter. For good cause, the court may order discovery of any matter relevant to the subject matter involved in the action. Relevant information need not be admissible at the trial if the discovery appears reasonably calculated to lead to the discovery of admissible evidence. All discovery is subject to the limitations imposed by Rule 26(b)(2)(C).

 

Committee Note

 

The scope of discovery is changed in several ways. Rule 26(b)(1) is revised to limit the scope of discovery to what is proportional to the needs of the case. The considerations that bear on proportionality are moved from present Rule 26(b)(2)(C)(iii). Although the considerations are familiar, and have measured the court’s duty to limit the frequency or extent of discovery, the change incorporates them into the scope of discovery that must be observed by the parties without court order.

 

The amendment deletes the former provision authorizing the court, for good cause, to order discovery of any matter relevant to the subject matter involved in the action. Proportional discovery relevant to any party’s claim or defense suffices. Such discovery may support amendment of the pleadings to add a new claim or defense that affects the scope of discovery.

 

The former provision for discovery of relevant but inadmissible information that appears reasonably calculated to lead to the discovery of admissible evidence is also amended. Discovery of non-privileged information not admissible in evidence remains available so long as it is otherwise within the scope of discovery. Hearsay is a common illustration. The qualifying phrase — “if the discovery appears reasonably calculated to lead to the discovery of admissible evidence” — is omitted. Discovery of inadmissible information is limited to matter that is otherwise within the scope of discovery, namely that which is relevant to a party’s claim or defense and proportional to the needs of the case. The discovery of inadmissible evidence should not extend beyond the permissible scope of discovery simply because it is “reasonably calculated” to lead to the discovery of admissible evidence.

 

Summary of Proposed Amendments

 

The Committee views the proposed amendments to Rule 26(b)(1) as imposing four changes to the current Rule:

 

1. Adding proportionality language. The proposed amendments add language – “proportional to the needs of the case considering the amount in controversy, the importance of the issues, the importance of the issues at stake in the action, the parties’ resources, the importance of the discovery in resolving the issues, and whether the burden or expense of the proposed discovery outweighs its likely benefit” – to the first sentence. Much of this language presently exists in Rule 26(b)(2)(C)(iii), albeit in a different order.

 

2. Deletion of the term “reasonably calculated.” The sentence – “Relevant information need not be admissible at the trial if the discovery appears reasonably calculated to lead to the discovery of admissible evidence” – is replaced by the sentence, “Information need not be admissible in evidence to be discoverable.”

 

3. Deleting Court-Managed Discovery. The sentence – “For good cause, the court may order discovery of any matter relevant to the subject matter involved in the action.” – is deleted.

 

4. Deleting Illustrations of Discoverable Matters. The phrase – “including the existence, description, nature, custody, condition, and location of any documents or other tangible things and the identity and location of persons who know of any discoverable matter” – is deleted.

 

Recommendations of the Committee

 

The Committee endorses all of the proposed amendments to Rule 26(b)(1).

 

Explanation for Recommendation Endorsing the Proposed Amendment’s First Change (Adding Proportionality Language)

 

There is no doubt that the explosive growth of ESI has forced litigants, generally defendants and particularly corporations, to expend considerable resources to preserve perceived relevant information. A survey of corporate counsel of Fortune 200 companies found that average discovery costs per case represented about 30% of the average outside legal fees, and that discovery costs are consuming an ever increasing percentage of corporate revenue. Smaller companies also suffer from the financial burdens imposed by the broad discovery generally afforded in civil litigation.

 

The major factor driving cost increase in litigation is the volume of information that needs to be identified, preserved reviewed and produced. The larger the data set, the greater the number of custodians, the greater the E-Discovery costs. A RAND study found that the cost of producing 1 gigabyte of electronic data was $18,000. In this day and age where people are producing ESI at an ever increasing rate, the cost for production just continues to rise. Moreover, it was estimated that the ratio of pages discovered to pages entered as exhibits is as high as 1000/1. Clearly, the cost of production is not commensurate with the amount of discovery necessary for litigants to move forward with their claims. Even if it can be argued that broader discovery is required to understand the context of the opponent, this is in extreme excess.

 

Those who oppose the rule change argue that there are now various technological tools that can be utilized to contain costs. This argument ignores the fact that sophisticated technological tools are not a panacea, and that these tools are still works in development, with their ultimate utility not yet fully tested. Moreover, these tools currently are still quite expensive and in the near term will not prevent costs of E-Discovery from continuing to rise. The costs savings from these tools are also unknown because there is still little research on the issue. Furthermore, the use of these tools is continually being challenged in courts leading to expensive discovery disputes. It is also becoming clear that these tools are not always appropriate, but even in small cases the costs of E-Discovery can be overwhelming, and not proportional to the case.

 

One major point of contention is that the amendment would remove the consideration of proportionality from the hands of the court into the hands of the litigant. This argument ignores the fact that a party is often best situated to understand its own ESI and to raise it initially as an issue and that a court is unable to determine whether discovery demands are excessive. It is routine practice for counsel to make request that are “far broader” than needed.

 

Opponents further argue that the emphasis on costs will stymie civil rights cases that do not necessarily involve large sums of money. This overlooks the fact that cost is simply one factor in the proportionality test and is not determinative of whether proportionality should limit discovery. There are several factors that must be considered. Nonetheless, considering the explosion of ESI in the past few years, the emphasis on costs as the first factor is certainly warranted.

 

With all factors considered, the Committee believes that proportionality is an appropriate consideration for a court assessing the permissible scope of discovery and, in fact, is a consideration already utilized by many courts. Rule 26(b)(1) is an appropriate spot in the Rules to memorialize the consideration, protecting parties from unreasonable, rampant discovery, without curtailing the rights of adverse parties to seek and obtain information that is necessary to the case.

 

Explanation for Recommendation Endorsing the Proposed Amendment’s Second Change (Deletion of the Term “reasonably calculated”)

 

The proposed Rule also deletes the language “[r]elevant information need not be admissible at the trial if the discovery appears reasonably calculated to lead to the discovery of admissible evidence.” Instead the proposed Rule would contain the statement “[i]nformation within this scope of discovery need not be admissible in evidence to be discoverable.” The revised language reins in the language of “reasonably calculated” because it has too often been interpreted to include any and all discovery that may somehow lead to finding some relevant information.

 

Currently, a party resisting discovery “has the burden to establish the lack of relevance by demonstrating that the requested discovery (1) does not come within the broad scope or relevance as defined under Fed. R. Civ. P. 26(b)(1), or (2) is of such marginal relevance that the potential harm occasioned by discovery would outweigh the ordinary presumption in favor of broad disclosure.” Beach v. City of Olathe, Kansas, 203 F.R.D. 489, 496 (D.Kan. 2001). This is a tremendous burden for a party to overcome. It is believed that the elimination of the “reasonably calculated” language will help limit the breadth of endless and unwarranted discovery.

 

The concept that “[r]elevant information need not be admissible at trial if the discovery appears reasonably calculated to lead to the discovery of admissible evidence” was incorporated into the 1946 amendments to Rule 26 (effective 1948). The logic behind the amendment was a result of several decisions, at the time, limiting discovery based on admissibility and inquiry as not being permitted for materials that would only amount to hearsay. Accordingly, the term “reasonably calculated,” was meant to allow investigation into evidence that may not be admissible in court but would lead to the discovery of such evidence. See Fed. R. Civ. P. 26(b). The understanding of “reasonably calculated” may have been appropriate at the time; however, as information has proliferated, particularly in the digital age, the term “reasonably calculated” has become especially problematic.

 

In fact the abuse of overbroad discovery was recognized in the 1980s, as the Notes of the Advisory Committee on the 1983 Amendments to Rules stated that “[e]xcessive discovery and evasion or resistance to reasonable discovery requests pose significant problems.” In 1993, when the computer revolution and information explosion were first being felt by the legal profession, the commentary for the revisions to Rule 26(b) again recognized the problem: “The information explosion of recent decades has greatly increased both the potential cost of wide- ranging discovery and the potential for discovery to be used as an instrument for delay or oppression.”

 

The abuse of discovery to attain information is still being misconstrued by courts who issue orders that are too broad. One example of this is in McLane v. Ethicon Endo-Surgery, 2013WL 5556147 (M.D. Fla. Oct. 8, 2013), where the court relied on the term “reasonably calculated” to allow for the production of adverse event reports of every related predicate product or device that the FDA relied on to approve the product-in-dispute for the product liability action. For the FDA to give approval, the FDA requires that the product has a comparable performance, not that the products utilize the same technology. In McLane the defendant offered proof concerning how the device implanted in the plaintiff differed from the two other predicate devices for which the plaintiff sought discovery. The court ignored the evidence offered by the defendant and primarily relied on the “reasonably calculated” standard.

 

Accordingly, it is believed that the change in language will limit the scope of discovery relevant to information that goes to a party’s claim or defense.

 

Explanation for Recommendation Endorsing the Proposed Amendment’s Third Change (Deleting Court-Managed Discovery)

 

Initially, Rule 26(b)(1) was written to allow extremely broad “discovery regarding any matter, not privileged, which is relevant to the subject matter involved in the pending action.” Over the years, the Rules were amended to address concerns of abusive discovery. In fact, in 1978, the Advisory Committee published a proposed amendment, based on a recommendation from the Section of Litigation of the ABA, to delete the “subject matter” language. See FED R. CIV. PROC. 26(b)(1) Advisory Committee’s Note (2000). The proposal was eventually withdrawn because of the outcry opposing the suggested revision.

 

Eventually, in 2000, the Federal Rules were amended to create two tiers for discovery. Party-managed discovery was limited to the discovery of matter relevant to a party’s “claim or defense.” On the other hand, court-managed discovery could include matter relevant to the “subject matter involved in the action.” The purpose of the amendment was to send a signal “to the court that it has the authority to confine discovery to the claims and defenses asserted in the pleadings, and signals to the parties that they have no entitlement to discovery to develop new claims or defenses that are not already identified in the pleadings.” Id.

 

The goal of the amendment was to curtail abusive discovery practice, while still allowing the court the discretion to expand discovery upon a showing of “good cause.” The primary purpose of the amendment was to focus courts “on the actual claims and defenses involved in the action.” Id. Yet, the distinction between the two tiers of discovery was ill defined. “The dividing line between information relevant to the claims and defenses and that relevant only to the subject matter of the action cannot be defined with precision.” Id. The perceived distinction seems to be that “claims or defense” should be construed to only allow narrower discovery than the category of “subject matter” discovery.

 

The distinction in the Rule is unclear, however, the Advisory Committee Note to the 2000 Amendments makes it clear that “[w]hen judicial intervention is invoked the actual scope of discovery should be determined according to the reasonable needs of the action.” Id. The Note also makes it clear that active judicial management requires that the scope of discovery be determined simply by the needs of the action, and ultimately the distinction between the two tiers of discovery is irrelevant. The fact is that the maintenance of a separate category of discovery for “any matter relevant to the subject matter” is likely only to lead to additional satellite litigation and further burden an already overwhelmed judicial system by litigants’ requests for the discovery of information not relevant to a “claim or defense.”

 

Moreover, “[i]t is difficult to see why discovery that is not relevant to any party’s claim or defense should be allowed.” Ultimately, the change in the Rule will serve to prevent any confusion as to the distinction between the two tiers of discovery, thereby curtailing overbroad discovery, and still allow broad “discovery regarding any nonprivileged matter that is relevant to any party’s claim or defense.” Accordingly, the Committee endorses the proposed amendment to delete court-managed discovery from the Rule.

 

Explanation for Recommendation Endorsing the Proposed Amendment’s Fourth Change (Deleting Illustrations of Discoverable Matters)

 

The phrase from the current Rule contains the following language “including the existence, description, nature, custody, condition, and location of any documents or other tangible things and the identity and location of persons who know of any discoverable matter. The proposed Rule would delete this language. The Committee agrees that the deletion makes sense. The current and revised Rule allows a party to “obtain discovery regarding any nonprivileged matter relevant to any party’s claim or defense,” and this information would appear to be sufficient disclosure. The elimination of “including the existence, description, nature, custody, condition, and location of any documents or other tangible things and the identity and location of persons who know of any discoverable matter,” would serve to potentially limit the burden on the producing party and removes language that appears redundant and unnecessary considering the fact that a party has to disclose any information relevant to a party’s claim or defense.

 

PROPOSED AMENDMENT TO RULE 26(c)(1)(B)

 

Proposed Amendments and Their Purpose

 

Rule 26(c) addresses protective orders, and Rule 26(c)(1) lists a protective order’s potential directives. The proposed amendment adds the allocation of expenses to this list, making explicit a court’s implicit authority to order this directive. The red-lined rule and the Advisory Committee’s Note explaining the amendment’s rationale are set forth below.

 

(1) In General. * * *The court may, for good cause, issue an order to protect a party or person from annoyance, embarrassment, oppression, or undue burden or expense, including on or more of the following:

 

(B) specifying terms, including time and place or the allocation of expenses, for the disclosure of discovery;

 

Committee Note

 

Rule 26(c)(1)(B) is amended to include an express recognition of protective orders that specify terms allocating expenses for disclosure or discovery. Authority to enter such orders is included in the present Rule, and courts are coming to exercise this authority. Explicit recognition will forestall the temptation some parties may feel to contest this authority.

 

Explanation for Recommendation

 

The issue of cost sharing is a major issue as there is tremendous tension between the established American Rule that parties bear their own costs in litigation and the potential reduction in discovery cost if the costs were shared.

 

The Committee supports the amendment to place within a court’s authority the allocation of costs for discovery expenses, as ‘[t]his power is already implicit in Rule 26(c).” August Draft at 266. The Advisory Committee Notes to the 1970 amendments for Fed. R. Civ. Proc. 34 make it explicit that “courts have ample power under Rule 26(c) to protect respondents against undue burden or expense, either by restricting discovery or requiring that the discovery party pay costs.” (Emphasis added). The proposed amendment will simply make the court’s power explicit, thereby avoiding any potential conflict that the Rule does not provide a court the authority to allocate costs.

 

The allocation of costs is a desirable measure to be included in protective orders, especially as it has the potential to limit a party from engaging in fishing expeditions. The Rule change does not change the presumption that the burden of discovery requests should be on the responding party, although it is clear that future studies will focus on larger reform to the American Rule that parties should bear their own costs in litigation. The Committee endorses the idea of limited cost shifting as it can reduce overbroad requests, yet cautions against a total abandonment of the American Rule. The abandonment of the American Rule would likely inhibit parties from making legitimate requests because of monetary concerns.

 

The question is to what extent the allocation of costs should apply. The Committee advocates that the Advisory Committee Note for Rule 26(c) clarify the scope of what discovery expenses may be allocated under the Rule. Does the Rule permit cost shifting with respect to attorney’s fees? Presumably the allocation of expense would include the attorneys’ fees entailed in fulfilling the discovery requests. Am. Standard, Inc. v. Bendix Corp., 71 F.R.D. 443, 448 (W.D. Mo. 1976) (“[D]efendant will be directed to pay to plaintiff one-half of the reasonable costs of preparation for the interview, the interviews and the obtaining of the transcripts, including but not limited to legal and technical research and planning for the interviews”). (Emphasis added). Similarly, the Committee Note should clarify whether the rule permits the allocation of costs when the data is accessible for search and review but is excessively voluminous.

 

PROPOSED AMENDMENTS TO RULE 26(d)(2)

 

Proposed Amendments and Their Purpose

 

Rule 26(d) describes the timing and sequence of discovery and provides that absent a stipulation or court order, discovery may not be served before a Rule 26(f) conference. The proposed amendment permits a document request to be delivered before a Rule 26(f) conference, with service deemed to occur at the first Rule 26(f) conference, and recognizes that parties may stipulate to case-specific sequences of discovery. The red-lined rule and Advisory Committee’s Note explaining the amendment’s rationale are set forth below.

 

(2) Early Rule 34 Requests.

 

(A) Time to Deliver. More than 21 days after the summons and complaint are served on a party, a request under Rule 34 may be delivered:

 

(i) to that party by any other party, and

 

(ii) by that party to any plaintiff or to any other party that been served.

 

(B) When Considered Served. The request is considered as served at the first Rule 26(f) conference.

 

(23) Sequence. Unless, on motion, the parties stipulate or the court orders otherwise for the parties’ and witnesses’ convenience and in the interests of justice:

 

(A) methods of discovery may be used in any sequence; and

 

(B) discovery by one party does not require any other party to delay its discovery.

 

Committee Note

 

Rule 26(d)(1)(B) is amended to allow a party to deliver Rule 34 requests to another party more than 21 days after that party has been served even though the parties have not yet had a required Rule 26(f) conference. Delivery may be made by any party to the party that has been served, and by that party to any plaintiff and any other party that has been served. Delivery does not count as service; the requests are considered to be served at the first Rule 26(f) conference. Under Rule 34(b)(2)(A), the time to respond runs from service. This relaxation of the discovery moratorium is designed to facilitate focused discussion during the Rule 26(f) conference. Discussion at the conference may produce changes in the requests. The opportunity for advance scrutiny of requests delivered before the Rule 26(f) conference should not affect a decision whether to allow additional time to respond.

 

Recommendations of the Committee

 

The Committee endorses these proposed amendments.

 

Reasons for Recommendation

 

Rule 26(d)(1), which currently bars a party from seeking discovery prior to the Rule 26(f) conference, is also amended so as not to encompass Rule 34 requests made pursuant to Rule 26(d)(2). Further, Rule 34(b)(2)(A) is amended to provide 30 days’ time, after the first Rule 26(f) conference, to respond to the Rule 34 discovery requests made under Rule 26(d)(2).

 

The Committee believes that it is advisable to permit early Rule 34 requests, which may result in the discussion of more substantive discovery issues at the Rule 26(f) conference, promoting efficiency in the discovery process. As the August Draft notes, “[c]oncrete disputes as to the scope of discovery could then be brought to the attention of the court of a Rule 16 conference.” August Draft at 263.

 

It may be further advisable that the Rule or the Committee Note makes clear that early Rule 34(b) requests, under Rule 26(d)(2), should designate the form in which the party wants the information produced. If the form is not requested, the producing party may begin producing in a format that the requesting party does not want, potentially leading to a discovery dispute over the produced documents. Moreover, if the form is specified in the request it will allow the parties to better negotiate the format of production at the Rule 26(f) conference. One of the major topics parties are required to discuss at the Rule 26 (f) conference is the form of production.

 

PROPOSED AMENDMENTS TO RULE 26(f)(3)(D)

 

Proposed Amendments and Their Purpose

 

Rule 26(f)(3) supplies a list of topics that the parties’ discovery plan must address. The proposed amendment adds to this list the parties’ views on preserving ESI and agreements under Federal Rule of Evidence 502 (“FRE 502”). The red-lined rule is set forth below.

 

(3) Discovery Plan. A discovery plan must state the parties’ views and proposals on: * * *

 

(C) any issues about disclosure, or discovery, or preservation of electronically stored information, including the form or forms in which it should be produced;

 

(D) any issues about claims of privilege or of protection as trial-preparation materials, including — if the parties agree on a procedure to assert these claims after production — whether to ask the court to include their agreement in an order under Federal Rule of Evidence 502.

 

Recommendation of the Committee

 

The Committee endorses the proposed amendments.

 

Reasons for the Recommendation

 

The proposed amendments in Rule 26(f)(3)(D) for the discovery plan are parallel to and consistent with the amendments in Rule 16(b)(3)(B) for a scheduling order. The Committee endorses these proposed changes to Rule 26(f)(3)(D) for the same reasons described for endorsing the amendments to Rule 16(b)(3)(B).

 

PROPOSED AMENDMENT TO RULE 30

 

Proposed Amendments and Their Purpose

 

Rule 30(a)(2) currently sets the presumptive limit on the number of depositions each side can take in a case at ten. The proposed amendment would cut that in half, reducing the number to five depositions per side. Rule 30(d)(1) currently provides that the presumptive duration of each deposition is limited to seven hours. The proposed amendment reduces this to six hours.

 

With respect to the reduction in the number of depositions, the Duke Conference Subcommittee opined that “civil litigators over-use depositions, apparently holding the view that every witness who testifies at trial must be deposed beforehand.” August Draft at 267. In contrast, criminal trials, arbitration and mediation often proceed without depositions. Moreover, the judges at the conference noted the rarity of effective impeachment of witnesses with deposition transcripts. In addition, the Subcommittee cited research suggesting that five depositions per side would be sufficient in a high percentage of cases. Setting a lower presumptive limit does not preclude parties, of course, from requesting that the court authorize additional depositions.

 

The reduction in the presumptive duration of depositions is largely meant to account for the difficulty of squeezing seven hours of deposition time into a day, taking into consideration lunch and other breaks. In support of the reduction, the Subcommittee noted that earlier proposals would have capped the time at four hours, a limit in place in some state courts. There was concern, however, that many depositions cannot be taken in four hours. A limit of six hours is seen as sufficient in most cases and sufficient to allow depositions to be completed in one day.

 

Recommendations of the Committee

 

The Committee endorses these proposed amendments.

 

Explanation for Recommendations

Concerns as to the burden and cost of discovery continue to grow. Certainly, there are many cases that legitimately require more than five depositions on one side, or on both, particularly in matters with expert testimony. In those cases, application can be made to the court and an appropriate limit can be set.

 

But the data suggest that in the majority of cases, five depositions or fewer are needed on each side. Parties should be encouraged to litigate their cases efficiently, not to take depositions that are not necessary (even of a potential trial witness). Moreover, the Committee is unaware of any cases in which a court granted a motion to reduce the presumptive number of depositions allowed. It is more likely that a court would expand a five-deposition limit for good cause shown, than it would reduce a ten-deposition limit. For example, where deponents are ill equipped to answer questions but other better informed witnesses are suggested, an application for additional depositions would appear well founded. Given these factors, a presumptive limit of five depositions per side appears appropriate.

 

Limiting each side to five depositions also increases the likelihood of settlement. Parties are more likely to negotiate early if they are entitled to fewer depositions. Alternatively, where parties want to complete discovery prior to settlement negotiations, reducing the presumptive limit will get cases to the negotiation phase more promptly.

 

The Committee also supports the proposed reduction in the length of a “deposition day” from seven hours to six. The vast majority of depositions can be completed in six hours, and seven hours “on the record” is extremely difficult to fit into a single-day deposition. Again, where more time is necessary, application to the court can be made, with the court specifically informed of remaining topic areas, conduct by the deponent or defending counsel that impeded the deposition or any other factors requiring more time.

 

PROPOSED AMENDMENTS TO RULE 33(a)(1)

 

Proposed Amendments and Their Purpose

 

The present version of Rule 33(a)(1) provides that the presumptive number of interrogatories a party may serve on another party is limited to 25. The proposed amendment would reduce this limit to 15. The Duke Conference Subcommittee “concluded that 15 will meet the needs of most cases, and that it is advantageous to provide for court supervision when the parties cannot reach agreement in the cases that may justify a greater number.”

 

Recommendations of the Committee

 

The Committee endorses this proposed amendment.

 

Explanation for Recommendations

 

Interrogatories have long been disfavored as ineffective, costly and often not justified. They have been used at times simply to create work for and harass opposing parties. Local Rule 33.3 of the Southern and Eastern Districts places limitations on the type of interrogatories that may be utilized at various stages of the case, and these limitations have reduced the burden on parties without diminishing their ability to obtain necessary information. An additional reduction in the number of permitted interrogatories would be beneficial in most cases.

 

PROPOSED AMENDMENTS TO RULE 34

 

Proposed Amendments and Their Purpose

 

Rule 34(b)(2) sets forth the procedure to respond to requests for documents or an inspection of things. The proposed amendments add requirements for responding parties: (1) to state the grounds for objections with specificity; (2) to produce documents within a reasonable time; and (3) to state whether documents are being withheld based on an objection. The changes are as follows:

 

(A) Time to Respond. The party to whom the request is directed must respond in writing within 30 days after being served or — if the request was delivered under Rule 26(d)(1)(B) — within 30 days after the parties’ first Rule 26(f) conference. A shorter or longer time may be stipulated to under Rule 29 or be ordered by the court.

 

(B) Responding to Each Item. For each item or category, the response must either state that inspection and related activities will be permitted as requested or state [an objection to the request] [deleted] the grounds for objecting to the request with specificity, including the reasons. The responding party may state that it will produce copies of documents or of electronically stored information instead of permitting inspection. The production must then be completed no later than the time for inspection stated in the request or a later reasonable time stated in the response.

 

(C) Objections. An objection must state whether any responsive materials are being withheld on the basis of that objection. An objection to part of a request must specify the part and permit inspection of the rest.

 

As indicated by the Duke Conference Subcommittee, the proposed new language in Rule 34(b)(2)(B) is borrowed from Rule 33(b)(4) and requires that grounds for objecting to requests be stated with specificity. The revised Rule 34(b)(2)(C) would require that an objection “state whether any responsive materials are being withheld on the basis of that objection,” to counter the strategy of providing a “laundry list” of objections, along with documents, creating uncertainty about what if anything has been withheld. The revised Rule 34(b)(2)(B) – along with a corresponding addition to Rule 37(a)(3)(B)(iv) – would clarify the requirement for actually producing documents, and would clarify how parties should proceed when an actual production is made, as happens now in the majority of cases.

 

Recommendations of the Committee

 

The Committee endorses these proposed amendments.

 

Explanation for Recommendations

 

The proposed amendments to Rule 34 will clarify discovery obligations and expectations, in particular specifying whether and why particular documents have been withheld, thus facilitating the meet-and-confer process and any motion practice. As a result, the requesting party will know if it has reason to consider moving to compel. The procedures set forth are in line with existing law and good practice. Accordingly, the amendments should not alter any rights or expectations, nor should they create any unreasonable burdens on litigants.

 

PROPOSED AMENDMENTS TO RULE 36(a)(2)

 

Proposed Amendments and Their Purpose

 

The proposed amendment to Rule 36(a) would limit the number of requests for admission served by any one party to 25, except for requests concerning the genuineness of documents, by adding the following provision:

 

(a) Scope and Procedure.

 

* * *

 

(2) Number. Unless otherwise stipulated or ordered by the court, a party may serve no more than 25 requests to admit under Rule 36(a)(1)(A) on any other party, including all discrete subparts.

 

The proposed amendment sets forth a presumptive limit of 25 is introduced for requests to admit the truth of facts, the application of law to fact, or opinions about either. The limit does not apply to requests to admit the genuineness of any described document under Rule 36(a)(1)(B). As with other numerical limits on discovery, courts reserve the discretion to permit a greater number of requests.

 

Recommendations of the Committee

 

The Committee endorses this proposed amendment.

 

Explanation for Recommendations

 

Substantive requests for admission have also become disfavored and are largely viewed as unproductive, leading to objections and/or vague or incomplete responses and, sometimes, needless motion practice for additional responses. Like depositions, requests for admission are subject to use as make work to bog down the opposition. Nonetheless, simple requests concerning the authenticity of potential trial exhibits are less likely to become bogged down and can serve to streamline trial, benefiting the parties and the court. Accordingly, such requests are exempted from the new numerical restriction.

 

PROPOSED AMENDMENTS TO RULE 37(a)(3)(B)(iv)

 

Proposed Amendments and Their Purpose

 

The proposed amendment to Rule 37(a)(3)(B)(iv) adds the phrase “fails to produce documents.” The red-lined rule and Advisory Committee’s Note explaining the amendment’s rationale are set forth below.

 

(a) MOTION FOR AN ORDER COMPELLING DISCLOSURE OR DISCOVERY.

 

*** **

 

(3) Specific Motions.

 

*** **

 

(B) To Compel a Discovery Response. A party seeking discovery may move for an order compelling an answer, designation, production, or inspection. This motion may be made if: ***

 

(iv) a party fails to produce documents or fails to respond that inspection will be permitted – or fails to permit inspection – as requested under Rule 34

Committee Note

 

Rule 37(a)(3)(B)(iv) is amended to reflect the common practice of producing copies of documents or electronically stored information rather than simply permitting inspection. This change brings item (iv) into line with paragraph (B), which provides a motion for an order compelling “production, or inspection.”

 

Recommendation of the Committee

 

The Committee endorses this proposed amendment.

 

Explanation for Recommendation

 

The amendment to Rule 37(a)(3)(B)(iv) corresponds to the amendment in Rule 34(b)(2)(b). Rule 34(b)(2)(B) was amended to permit the production of materials rather than allowing inspection. The new provision requires a party electing to produce materials, as opposed to allowing inspection, to state that copies will be produced, and set forth that production will be completed no later than the time for inspection or a later reasonable time stated in the response. Accordingly, Rule 37 should be amended to add the authority to make a motion to compel production “if a party fails to produce documents.” See August Draft at 269.

 

PROPOSED RULE CHANGES TO RULE 37(e)

 

Rule 37(e) creates a safe harbor for the failure to preserve electronically stored information. Proposed Rule 37(e) substantially alters this rule by: (1) applying the Rule to all discovery, and not simply ESI; (2) providing for curative measures independent of fault as a remedy for the failure to preserve discoverable information; and (3) permitting the imposition of sanctions where the court finds that a party’s actions either: “(i) caused substantial prejudice in the litigation and were willful or in bad faith; or (ii) irreparably deprived a party of any meaningful opportunity to present or defend against the claims in the litigation.”

 

The red-lined amendment to Rule 37(e) is set forth below.

 

(e) Failure to Provide Electronically Stored Information. Absent exceptional circumstances, a court may not impose sanctions under these rules on a party for failing to provide electronically stored information lost as a result of the routine, good-faith operation of an electronic information system.

 

Failure To Preserve Discoverable Information.

 

(1) Curative measures; sanctions. If a party failed to preserve discoverable information that should have been preserved in the anticipation or conduct of litigation, the court may

 

(A) permit additional discovery, order curative measures, or order the party to pay the reasonable expenses, including attorney’s fees, caused by the failure; and

 

(B) impose any sanction listed in Rule 37(b)(2)(A) or give an adverse- inference jury instruction, but only if the court finds that the party’s actions:

 

(i) caused substantial prejudice in the litigation and were willful or in bad faith; or

 

(ii) irreparably deprived a party of any meaningful opportunity to present or defend against the claims in the litigation.

 

(2) Factors to be considered in assessing a party’s conduct. The court should consider all relevant factors in determining whether a party failed to preserve discoverable information that should have been preserved in the anticipation or conduct of litigation, and whether the failure was willful or in bad faith. The factors include:

 

(A) the extent to which the party was on notice that litigation was likely and that the information would be discoverable;

 

(B) the reasonableness of the party’s efforts to preserve the information;

 

(C) whether the party received a request to preserve information, whether the request was clear and reasonable, and whether the person who made it and the party consulted in good faith about the scope of preservation;

 

(D) the proportionality of the preservation efforts to any anticipated or ongoing litigation; and

 

(E) whether the party timely sought the court’s guidance on any unresolved disputes about preserving discoverable information.

 

Subsections (B)(i) and (B)(ii) of proposed Rule 37(e)(1) both apply the same types of curative remedies regardless of fault, consider the same factors in determining whether sanctions should be imposed, and look to Rule 37(b)(2)(A) for the appropriate sanction. However, while (B)(i) requires proof of willfulness or bad faith conduct, (B)(ii) requires no proof of fault, given the severity of the harm sustained by an opposing party in those rare instances of irreparable deprivation of a meaningful opportunity to present or defend claims.

 

The rationale for the proposed amendment is to adopt a uniform rule for sanctions and curative measures arising from the failure to preserve discoverable information and, thereby, eliminate conflicting case law. See August Draft 317-28.

 

Recommendations of the Committee

 

The Committee endorses proposed Rule 37(e) but believes a few modifications should be made to the Rule and responds as follows to the five questions posed by the August Draft.

 

1. Should the rule be limited to sanctions for loss of ESI?: The Committee endorses the adoption of the proposed Rule as is, which is applicable to all discoverable information and tangible evidence.

 

2. Should proposed Rule 37(e)(1)(B)(ii) be retained?: The Committee recommends adoption of this proposed subsection as is.

 

3. Should the provisions of current Rule 37(e) be retained?: The Committee opposes retaining the current Rule, assuming adoption of the proposed Rule.

 

4. Should “substantial prejudice” be defined?: The Committee does not recommend defining “substantial prejudice.”

 

5. Should “willful” and “bad faith” be defined?: The Committee recommends the removal of the term “willful,” and that the Rule state only “bad faith.” If the term “willful” is retained, the term does not necessarily need to be defined, but the term needs clarification in the Advisory Committee Note.

 

Explanation for Recommendations

 

To begin, the Committee endorses the elimination of the current Rule 37(e), as the retention of the Rule could be interpreted to permit a court to issue sanctions where the ESI was lost, except if the loss was the result of the routine operation of an electronic information system.

 

The Committee understands and supports the Advisory Committee’s decision to bifurcate curative measures from sanctions. However, the Committee believes that the Rule should distinguish between case-altering punitive measures, such as an adverse-inference instruction, including a permissive adverse-inference instruction, default judgment, or dismissal of an action, and the less punitive measures a court is allowed under Rule 37(b)(2)(A). The Committee believes that the Advisory Committee Note should make it clear that case-altering punitive measures are not warranted as sanctions under Rule 37(e)(1)(A), while a court should be permitted to take curative measures, such as issue preclusion, under Rule 37(e)(1)(A). For example, under Rule 37(e)(1)(A), as currently constituted, a court would be barred from issuing a preclusion order even if relevant information to a specific issue was accidently destroyed, without any fault, and the information is unavailable from another source.

 

It is understood that, under Rule 37(e)(1)(A), if a party acting in bad faith unsuccessfully tried to destroy evidence, and there is no prejudice, a court may order curative measures. This does not mean that a permissive adverse inference should be allowed, but that the party should be able to at least raise the issue during trial. While the Committee supports the rule change, it is concerned that the Rule does not allow a court to sanction an unsuccessful attempt to destroy crucial information that did not cause prejudice. The Committee believes that in certain instances where a party’s actions were egregious, but did not result in prejudice, a court should still have discretion to at least impose monetary penalties.

 

The Committee further agrees with the Rules Committee’s decision not to set “bright line” rules regarding preservation. Bright line rules are an inappropriate solution for what is a very fact-specific context. The idea of a broader rule encompassing a duty to preserve was previously considered in drafting the 2006 Federal Rule Amendments, but it was recognized that drafting such a rule would be too difficult. The Committee also believes that the Rule needs clarification regarding what ‘anticipation’ means. Does it mean that the duty to preserve is triggered when a party “reasonably anticipates litigation” or when a party believes “litigation is imminent”? The Rule should make it clear what standard should be employed for determining when a party is obligated to issue a litigation hold.

 

Finally, the Committee believes that the Rule should make explicit that the Proposed Rule incorporates the portion of the Advisory Committee Note stating that a court “will employ the least severe sanction needed to repair the prejudice.” This does not contradict the earlier statement that a court should be allowed to impose fines in cases of egregious conduct because those circumstances are limited, and monetary penalties will not decide the outcome of the case, as opposed to a sanction such as an adverse inference.

 

Should the Rule be limited to sanctions for loss of ESI?

 

Currently, courts have the authority under the Federal Rules of Civil Procedure to issue sanctions for the spoliation occurring during the pendency of litigation or following a court order. A court relies on its inherent power to administer justice, such as granting a court the authority to issue sanctions for pre-litigation spoliation. The proposed Rule change seeks to bring the inherent authority under the scope of the Federal Rules of Civil Procedure. Although it is true that proposed Rule 37(e) is in response to the explosion of ESI, it would be inconsistent for ESI spoliation to be governed by the Federal Rules, but other discoverable information to be governed by a court’s inherent authority. In fact, the idea of applying Rule 37(e) uniformly was originally suggested by the American College of Trial Lawyers at the time of the 2006 Amendments.

 

While Rule 34 does draw a distinction between “tangible things” and “documents or electronically stored information,” it seems prudent that the preservation standard should be applied uniformly. Consistency in the Rule would overcome any artificial distinctions in the rules and a needed reliance on common law regarding the obligation to preserve ESI and other discoverable information. Thus, the Committee believes that the broader scope in proposed Rule 37(e) is appropriate.

 

Should proposed Rule 37(e)(1)(B)(ii) be retained?

 

The Committee endorses the retention of proposed Rule 37(e)(1)(B)(ii). The proposed provision factors in that in certain exceptional circumstances, even in the absence of bad faith or willfulness, sanctions are sometimes warranted. The proposed Committee Note makes it clear that the deprivation is irreparable (not subject to curative measures) and must absolutely cripple a party’s ability to make their case. The August Draft’s comments and proposed Committee Note make it clear that a finding of “irreparably deprived” will only apply in exceedingly rare circumstances and when it was a result of “the party’s actions.” This would preclude the application of this Rule in cases where the loss of information was the result of a natural disaster/catastrophe or the cause of a third party. Otherwise sanctions may only be imposed where a party’s conduct was willful or in bad faith and caused substantial prejudice to an opposing party.

 

The Committee agrees that it is important that in certain extreme instances, regardless of intent, the absolute loss of critical information should allow a court to issue sanctions, and it is therefore important to maintain this provision. Moreover, the loss of information must be the result of “the party’s actions,” and it seems unlikely that the loss could not be attributed to the negligence of the party that lost the information. It seems highly unlikely that a party could be faultless, yet lose all the pertinent information relevant to the litigation. The August Draft also specifically emphasizes that the application of this Rule will only occur in extremely rare circumstances, and an innocent party should have some recourse if its case is crippled by the lack of discoverable information.

 

The Advisory Committee Note also makes it clear that the “irreparably deprived” standard is more demanding than “substantial prejudice,” imposing a difficult burden on a party contending that it was “irreparably deprived” from making its case. While some in the legal community may contend that this provision will lead to a spate of discovery motions alleging that the loss of information barred them from having a “meaningful opportunity” to present a case, this seems unlikely, because it is an extremely high bar to meet. In most cases, courts will dispel such motions by simply trying to alleviate the problem by ordering other curative measures. Nor does it seem that the provision could “swallow the rule” whole by allowing courts to impose sanctions because the Committee Note makes clear that “[e]xcept in very rare cases,” this provision will not apply.

 

Should the provisions of current Rule 37(e) be retained?

 

The Committee believes that it would be a mistake to retain current Rule 37(e) as it would run counter to the analysis under proposed Rule 37(e)(2)(B)(i) or (B)(ii). The retention of current Rule 37(e) would perpetuate the practice of “defensive preservation” and lead to continued spoliation/sanction battles. Hon. Shira Scheindlin has previously commented that current Rule 37(e) “is the flip side of a safe harbor. It says if you don’t put in a litigation hold when you should, there’s going to be no excuse if you lose information. That’s how I read 37(e). It says you are only excused if this was lost as a result of a routine, good-faith effort to destroy records.” If current Rule 37(e) were to be maintained, it would contradict the proposed amendments, as it would imply that only “information lost as a result of the routine, good-faith operation” would be exempt from sanctions.

 

Should “substantial prejudice” be defined?

 

A further definition for “substantial prejudice” does not appear warranted. The determination of whether a party has been subject to substantial prejudice is a fact-specific inquiry, and to give a specific definition of the term may lead to a very rigid application of the standard. Moreover, the proposed rule 37(e)(2) provides guidelines for determining the severity of the party’s action in failing to preserve. A court is in the best situated position, based on the factual context, to determine when a party has been substantially prejudiced.

 

The Committee is, however, concerned with which party should have the burden of proving “substantial prejudice.” The Committee Note says that the first step in the calculus of meeting the threshold for sanctions under Rule 37(e)(1)(B)(i) is to find “that the loss of information caused substantial prejudice in litigation.” The Note continues and states that “[a]lthough it is impossible to demonstrate with certainty what lost information would prove, the party seeking sanctions must show that it has been substantially prejudiced by the loss.” However, there is no way for the innocent party to demonstrate that the lost information “substantially prejudiced” its case. Accordingly, if the party’s actions have been established as being done willfully or in bad faith, the burden should be on the bad actor to prove that the loss of information did not amount to “substantial prejudice” to the innocent party’s case.

 

Should “willfulness” and “bad faith” be defined?

 

The Committee agrees with the Advisory Committee’s attempt to bring uniformity among the circuits regarding the different standards for what state of mind will warrant the imposition of sanctions. While state courts may adopt differing standards, it is worthwhile to have a national standard for the federal courts. Moreover, state courts often look to the federal courts in designing their discovery rules and the adoption of a uniform standard for the federal courts may ultimately lead to greater uniformity in the various state courts.

 

The Committee believes that the term “curative measures” in Rule 37(e)(1)(A) should be expanded to encompass certain measures that are currently deemed as sanctions. Courts should have discretion with respect to their ability to cure the prejudice against an innocent party, however, the harshest sanctions should be reserved strictly for bad actors. Accordingly, it would be sufficient for the Rule to simply say “bad faith.” Bad faith needs no definition as it is generally understood to mean that the action or inaction of a party was taken to mislead or deceive someone. A more definitive description of the term would not be warranted as the analysis of whether a party acted in ‘bad faith’ in failing to preserve information is a highly context-specific analysis.

 

On the other hand, the term “willful” is a very ambiguous term. According to the Rules Committee, “willful” is intended to mean something other than “bad faith” because it is listed disjunctively. If bad faith and willful were supposed to mean the same thing, the term willful should have been left out of the proposed Rule or the Rule should have combined the terms to say “willful and in bad faith.”

 

The term willful has the potential to be severely misconstrued. A court may find a party’s actions to delete ESI in the ordinary course of business as willful conduct under the Rule. Although this construction of the term willful does not appear consistent with the intent of the Rule, the deletion of the term “willful” would alleviate this problem. The alternative to deleting “willful” would be to clarify in the Advisory Committee Note what type of intent is attributed to the term “willful.” A specific definition for “willful” may be unwarranted because defining the term may lead to a rigid application of the term and may defeat the purpose of the term. At least one court has interpreted willful conduct to destroy ESI, as sufficient evidence to conclude that the destroyed information is unfavorable to that party. Sekisui Am. Corp. v. Hart, No. 12-Civ.- 379, 2013 LEXIS 115533, at *21 (S.D.N.Y. Aug. 15, 2013).

 

In Seikisui, the court expressed its discontent with the proposed Rule change, stating that “imposing sanctions only where evidence is destroyed willfully or in bad faith creates perverse incentives and encourages sloppy behavior.” Under the proposed Rule, parties who destroy evidence cannot be sanctioned (although they can be subject to ‘remedial curative measures’) even if they were negligent, grossly negligent, or reckless in doing so. Id. at *19 n.51. However, if ‘curative measures’ in proposed Rule 37(e)(1)(A) were expanded to encompass certain measures that are currently deemed as sanctions, such as issue preclusion, a party would still have a strong incentive to implement strong preservation protocols. Yet, the harshest measures, which are more likely to be case dispositive, should be reserved only for instances where a court has determined that the party has acted in bad faith.

 

It is presumed that when proposed Rule 37(e) states a court may “impose any sanction listed in Rule 37(b)(2)(A),” it is written with the intent that the court has the same power as under Rule 37(b)(2)(A). This means that a court is not limited strictly to the list of sanctions in that Rule but that a court has the discretion to fashion an appropriate sanction. The Advisory Committee Note should make this point clear.

 

PROPOSED AMENDMENT TO RULE 84

 

Proposed Amendments and Their Purpose

 

Rule 84 provides: “The forms in the Appendix suffice under these rules and illustrate the simplicity and brevity that these rules contemplate.” Thirty-six forms are appended to the Federal Rules, including 12 complaints for various claims (e.g., recover a sum certain, negligence, negligence under FELA, damages under Merchant Marine Act, conversion, specific performance of contract to convey land, patent infringement, copyright infringement).

 

The proposed amendment to Rule 84 abrogates the Rule and the forms, and amends Rule 4(d)(1)(D) to incorporate Forms 5 and 6.

 

The Standing Committee’s reasons for this amendment are (1) the forms have minimal usefulness: They are rarely used by lawyers, do not provide meaningful help to pro se litigants, and do not address most of the substantive claims that comprise the bulk of the federal docket;

(2) the minimal use of the forms does not justify the burden on the Judicial Conference to maintain and update the forms to ensure that they comply with current practice; and (3) there is a “tension” between Rule 84 and emerging pleading standards, which is made acute because the forms have hardly been amended substantively in the last 75 years.

 

Recommendations of the Committee

 

The Committee endorses this proposed amendment.

 

Explanation for Recommendation

 

There presently exists a conflict between Rule 8(a) and Rule 84, because Rule 8(a) provides the standard for what a complaint must plead to state a claim, and Rule 84 provides that the pleading forms appended to the Federal Rules suffice, although those forms do not always meet the standards of Rule 8(a). Courts have differed as to whether the use of an approved form is in itself a sufficient pleading to preclude dismissal. The situation has led to uncertainty for litigants, inconsistent outcomes among courts, and the appearance of injustice by application of different standards for evaluating the sufficiency of a claim depending on whether or not there is a pleading form for that claim.

 

The Committee believes this conflict between Rule 8 and Rule 84 can and should be resolved by the Judicial Conference. The proposed amendment resolves the conflict.

 

While updating the pleading forms to make them consistent with Rule 8(a) could also resolve the conflict between Rule 8 and Rule 84, this alternative is not preferable because it imposes continuing burdens on the Standing Committee to update and maintain the forms, and any amendment to a form takes three years under the Rules Enabling Act.

 

The History of Rule 84 and the Pleading Forms

 

The pleading forms were originally drafted in 1936 as illustrations to educate the bench and bar about the newly enacted notice pleading standards. The 1946 amendment to Rule 84, effective in 1948, elevated the status of the forms from mere illustrations to “suffice” under the Federal Rules.

 

Since 1936, the pleading forms have hardly been amended. Thus, the original 1936 version of Form 11 (formerly Form 9 – Complaint for Negligence) was amended substantively only once, in 1963, when the stated dollar amount in the wherefore clause was replaced with a blank to be filled in by the pleader. The only other time this form was amended was as part of the non-substantive restyling of the Federal Rules in 2007.

 

Similarly, Form 19 (formerly Form 17 – Complaint for Copyright Infringement and Unfair Competition) has not been substantively amended since 1946, notwithstanding the enactment of the 1976 Copyright Act, which altered the elements for a copyright infringement claim. Even before the 2007 Twombly decision, the Judicial Conference noted that the failure to update the pleading forms caused some of them to be insufficient to state a claim under Rule 8(a). The Judicial Conference’s 2007 Report proposing the restyled rules, published before Twombly, also acknowledged that the forms were outdated and some did not reflect adequate pleading. Furthermore, the 12 pleading forms omit many categories of actions that comprise the bulk of the federal docket.

 

Additionally, the Committee concurs with the Standing Committee’s observation that most lawyers are unaware of the pleading forms, and even fewer utilize them. The Committee also concurs with the Standing Committee’s observation that many alternative sources provide excellent forms. Finally, the Committee believes that the forms do not account for variations in substantive law or local practices.

 

The Conflict between Rule 8(a) and Rule 84

 

Recent Supreme Court decisions interpreting Rule 8(a) arguably heighten pleading standards by, inter alia, providing that “‘labels and conclusions’ or ‘a formulaic recitation of the elements of a cause of action will not do.'” Ashcroft v. Iqbal, 556 U.S. 652, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)).

 

Many of the pleading forms, however, contain labels and conclusions. Consequently, there is a “tension” between Rule 8(a) and Rule 84 because some of the forms arguably do not satisfy judicial interpretations of Rule 8(a). The Committee agrees with the Standing Committee’s acknowledgement that at least some of the pleading forms could be construed as inconsistent with judicial interpretations of Rule 8(a).

 

The judiciary is split on whether Rule 84 or judicial interpretations of Rule 8(a) should be used to evaluate a claim’s sufficiency. Some judges have ruled that a claim conforming to the appropriate pleading form the claim is sufficiently pled, notwithstanding Rule 8(a). “These cases often reluctantly uphold the forms because courts feel obligated to do so under Rule 84.”

 

Other judges have concluded that the sufficiency of a claim should be evaluated by judicial interpretations of Rule 8(a), notwithstanding that the claim conforms to a particular pleading form. And, while some judges have reasoned that courts are equally bound by Rule 84 and judicial interpretations of Rule 8(a) and, therefore, should try to harmonize the two standards to the extent possible, most have found that the two standards cannot be reconciled.

 

Further complicating the foregoing different views, the judges who would apply Rule 84 over judicial interpretations of Rule 8(a) appear themselves divided on whether a claim’s sufficiency can be evaluated by considering the pleading form for a different substantive claim.

 

Despite the foregoing differences, or perhaps as a result of them, there appears to be a consensus that the conflict between Rule 8(a) and Rule 84 should be resolved by the Judicial Conference, either by modifying the form pleadings, modifying or abrogating Rule 84, or abrogating Twombly and Iqbal.

 

While the Committee takes no position on which of the foregoing judicial viewpoints is preferable, it finds that the conflict itself is undesirable for many reasons, including that it creates uncertainty for litigants and produces inconsistent outcomes. The Committee also notes that the conflict fosters the appearance of injustice by applying a less rigorous pleading standard to some claims simply because a form pleading for that claim is appended to the Federal Rules.

 

Resolution of the Conflict Between Rule 8(a) and Rule 84

 

The Committee believes that the present dilemma can and should be resolved by the Judicial Conference. The Committee considered three potential options that have been suggested: (1) modify the form pleadings so that they conform to judicial interpretations of Rule 8(a); (2) amend Rule 8(a) so that it effectively abrogates judicial interpretations of Rule 8(a) that are inconsistent with the form pleadings; and (3) modify or abrogate Rule 84.

 

The Committee finds that the first option — modifying the form pleadings so that they conform to judicial interpretations of Rule 8(a) — has potential benefits because it might resolve the conflict between Rule 8(a) and Rule 84 and promote greater use of the forms, reducing the likelihood of 12(b)(6) motions. Pursuit of this option, however, would require consideration of additional pleading forms for other substantive claims. This option would impose costs and burdens on the Judicial Conference since (a) the existing forms would have to be updated now; and (b) the forms would have to be updated each and every time there is a change in substantive law or a change to Rule 8(a), whether by reason of judicial interpretation or Rule amendment, and this process takes three years under the Rules Enabling Act. In addition, should the Judicial Conference adopt the suggestion to expand the pleading forms to address additional substantive claims, forms for those claims would have to be created now and updated later when necessary. The Judicial Conference appears to have considered this proposal and deemed it “burdensome,” and the Committee defers to the judgment of the Judicial Conference.

 

The Committee finds that the second option — amending Rule 8(a) so that it effectively abrogates judicial interpretations that are inconsistent with the form pleadings — is neither practical nor desirable. This option essentially asks the Supreme Court to approve a rule amendment that overturns its recent decisions, as well as prior and subsequent jurisprudence. Practical considerations aside, the Committee believes that the rule of decision for evaluating the sufficiency of pleadings should focus on what is pled and not on whether the pleading conforms to a decades-old form.

 

The Committee finds that the third option — abrogating Rule 84 — is beneficial because it resolves the conflict between Rule 8(a) and Rule 84. In addition, this option is the least burdensome, requiring no amendments to forms, preparation of new forms, or other time- consuming efforts.

 

Accordingly, the Committee endorses the proposed amendment because it resolves the conflict between Rule 8(a) and Rule 84 and does not impose on the Judicial Conference the burdens it perceives from updating and maintaining the forms.

 

Vincent Ted Chang, Co-Chair, NYCLA Federal Courts Committee

Hon. Joseph Kevin McKay, Co-Chair, NYCLA Federal Courts Committee

 

Gregg Herbert Kanter, Co-Chair, Federal Rules of Civil Procedure Subcommittee

Yitzy Nissenbaum, Co-Chair, Federal Rules of Civil Procedure Subcommittee

Richard C. Schoenstein, Co-Chair, Federal Rules of Civil Procedure Subcommittee