Just two years after the 2007 amendments to the Federal Rules of Civil Procedure (Rules), the American College of Trial Lawyers and the ABA both published reports that articulated concerns of both the plaintiff and defense bars regarding discovery practice in federal court.1 The Advisory Committee on the Federal Rules of Civil Procedure (or the Advisory Committee) held a series of meetings at the Duke Civil Litigation Conference in 2010 to facilitate greater discussion regarding thematic challenges, proposed solutions and in particular whether further amendments to the Rules were needed to reduce cost and delay in civil litigation. Through these efforts the Advisory Committee drafted, and now presents for comment, proposed amendments to the Rules.2 The discovery-related amendments, coined the “Duke Rules Package” by the Advisory Committee,3 are below.4

Cooperation

• Rule 1 now states expressly that the court and parties should use the Rules for the just, speedy and inexpensive resolution of actions. Previously, Rule 1 merely stated that the Rules should be interpreted and administered to effect the just, speedy and inexpensive resolution of actions.

• Rules 16(b)(3) and 26(f) now state that scheduling orders and discovery plans may include FRE 502 “clawback” or “non-waiver” agreements. Previously, these rules did not expressly allow scheduling orders and discovery plans to provide for the preservation of electronically stored information or include agreements reached under FRE 502.

• Rules 34 and 26(d)(1)(b) allow parties to serve requests for production prior to the Rule 26(f) conference but the requests are not considered served until the first Rule 26(f) conference. Previously, requests for production could generally not be served until after the Rule 26(f) conference.

• Rule 34(b)(2)(C) provides that objections must include a statement regarding whether any material is being withheld based on the stated objection.

Proportionality

• Rules 26(b)(1) and 26(b)(2)(C)(iii) limit the scope of discovery to what is proportional to the needs of the case, and empower the court to limit the scope of discovery accordingly. The amendments also remove the phrase “any matter relevant to the subject matter involved in the action” from the definition of information falling within the scope of discovery.

• Rule 34(b)(2)(B) requires that objections must be stated with specificity.

• Rules 30, 31, 33 and 36 further reduce the presumptive limits on the number of interrogatories, the number of depositions, and the length of depositions. It also creates a presumptive limit of 25 requests for admission. Presumptive limits, however, were not added for requests for production.5

• Rule 26(c)(1)(B) now includes explicit recognition of the court’s power to enter protective orders that re-allocate discovery expenses.

Judicial Case Management

• Rule 16(b) reduces the presumptive deadline for issuing a scheduling order to the earlier of 90 days after the defendant is served or 60 days after the defendant appears (down from 120 and 90 days, respectively).

• Rule 16(b)(3) affords the court the option to include in its scheduling order the requirement to participate in a court conference prior to the filing of discovery motions.

• Rule 26(b)(2)(B) permits the court to alter the limit on the number of requests for admission consistent with its current power to alter presumptive limits under Rules 30, 31 and 33.

Opportunity for Further Progress

The changes related to proportionality and judicial case management have the potential to reduce disputes and facilitate timely and focused discovery in civil litigation. In pursuit of the same goals, many court protocols and local rules have put in place additional ground rules and presumptive limits. The Federal Circuit’s Model E-Discovery Order includes presumptive limits on data sources, search terms and custodians.6 The Southern District of New York’s Joint Electronic Discovery Submission requires the parties to certify that they have discussed limits on: (i) the number of custodians, (ii) document sources and (iii) file types.7 The Southern District publication also includes a “Pretrial Conference Checklist” that requires parties to demonstrate their adherence to the principle of discovery proportionality by agreeing to limit the breadth of document preservation, reduce the scope of discovery and to limit or prohibit preservation depositions.8

The amendments already reduce the presumptive limits for depositions and interrogatories, and create limits for requests for admission. The creation of presumptive limits on requests for production and commentary in the notes endorsing the practice of limiting the number of custodians, search terms and data sources would do much to reduce cost, provide predictability and facilitate the meet and confer process. Local rules and protocols have already proven the effectiveness of these types of additional guidelines.

Preservation

• Rules 16(b)(3) and 26(f) state that scheduling orders and discovery plans may expressly provide for the preservation of electronically stored information.

• The original language of Rule 37(e) was deleted and the rule reconstructed to create a uniform standard for the imposition of sanctions for spoliation. The new language rejects case law permitting sanctions for negligence. In response to the quantity and variety of views on this amendment, the Advisory Committee poses five questions in hopes of further guidance. The text of the proposed rule and related questions follow:

(e) 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 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.

Questions:

1. Should the rule be limited to sanctions for loss of electronically stored information?

2. Should Rule 37(b)(1)(B)(ii) be retained in the rule?

3. Should the provisions of current Rule 37(e) be retained in the rule?

4. Should there be an additional definition of “substantial prejudice” under Rule 37(e)(1)(B)(i)?

5. Should there be an additional definition of willfulness or bad faith under Rule 37(e)(1)(B)(i)?

The reconstruction of Rule 37(e) has a two-fold purpose: (i) to provide clarity with respect to what is sanctionable conduct in the context of the duty to preserve so that a litigants behavior is guided by rational analysis instead of fear; and, (ii) to expressly permit a “proportionality defense,” consistent with many of the other discovery rules.

One need only take a look back at Judge Paul W. Grimm’s now-legendary Victor Stanley chart to appreciate the current level of uncertainty in the law.9 Indeed, many articles have been devoted to discussing the potential revision of Rule 37. Here we do not comment on the prudence of the currently proposed revisions, but rather raise for consideration the following issues in response to the open questions posed by the Advisory Committee.

First, the risk of future litigation and uncertainty could be further limited by revising the standard proposed for Rule 37(e)(1)(B)(i) to require both willful and bad faith misconduct. Limiting the standard in this way would address concerns that parties could be sanctioned for knowing but good faith decisions of the sort made routinely regarding disposal of transient, inaccessible and duplicative sources of information, akin to those presumed non-discoverable by the Seventh Circuit Protocol.10

Second, while Rule 37(e)(2) is intended to provide guidance to the courts when determining whether conduct was willful or in bad faith, these factors as enumerated could undermine, if not eliminate, the very safe harbor Rule 37(e) was drafted and now revised to create. While thoughtful, this non-exhaustive list includes some factors that don’t address the question of bad faith or willfulness, while failing to ask the most determinative question: namely, did the actor intend to conceal or destroy probative and unique information? For instance, Rule 37(e)(2)(B) weakens the original Rule’s protections by introducing a subjective reasonableness test into bad faith analysis. Together these factors focus not on whether the producing party acted in bad faith or wilfully destroyed potential evidence at the time the preservation decision was made, but rather on ex post actions and knowledge. For example, how is the court to apply Rule 37(e)(2)(C) when the request for preservation occurs after the determination to preserve has already been made and some data may have been lost? If included in the final rule, Rule 37(e)(2) will likely create new fears regarding ancillary litigation over the scope of the safe harbor protections and inconsistency in the interpretation, weight and application of its five factors.

Third, while the language of the rule eliminates much of the present uncertainty, certain provisions could empower courts to sanction parties for good faith actions. The question of whether to retain Rule 37(e)(1)(B)(ii) illustrates the Advisory Committee’s awareness of these concerns. Removing Rule 37(e(1)(B)(ii) and the entirety of Rule 37(e)(2) should preclude courts from imposing sanctions without a finding of either bad faith or willfulness. Removing these provisions should also avoid litigation over whether the receiving party was denied “a meaningful opportunity to present or defend” its case.

Together these changes would reduce the risk of collateral preservation disputes and litigant gamesmanship.

Finally, while the Advisory Committee asks whether there should be an additional definition of “willfulness” or “bad faith,” it is unlikely and unnecessary for the Rule to include such a definition. Courts have been effective in making fact specific determinations relying on available case law. It would be best to allow courts flexibility in conducting this analysis, guided by the factors identified in proposed Rule 37(e)(2), rather than risk imposing a new definition that will lead to uncertainty and additional litigation until a substantial body of case law applying the definition develops.

Similar to the 2007 amendments, these rule changes are well designed to reduce cost and delay in civil litigation. Regardless of one’s own opinion on any given rule, all should agree that these amendments reflect extraordinary efforts by the Advisory Committee, and will have an important impact on future litigation.

Wendy Butler Curtis is an e-discovery of counsel at Orrick, Herrington & Sutcliffe in New York. Jonathan Palmer is the assistant general counsel for litigation at Microsoft Corporation. Siobhan A. Handley is a partner in Orrick’s mass torts and product liability practice group in New York.

Endnotes:

1. American College of Trial Lawyers & Institute for the Advancement of the American Legal System, Final Report of the Joint Project of the American College of Trial Lawyers Task Force on Discovery and the Institute for the Advancement of the American Legal System (2009), available at http://www.actl.com/AM/Template.cfm?Section=Home&template=/CM/ContentDisplay.cfm&ContentID=4053; ABA Section of Litigation, Member Survey on Civil Practice: Full Report (2009), available at http://www.americanbar.org/content/dam/aba/migrated/litigation/survey/docs/report_aba_report.authcheckdam.pdf.

2. Hearings of the Judicial Conference Advisory Committees on Rules of Bankruptcy and Civil Procedure, 78 Fed. Reg. 49768 (proposed Aug. 15, 2013).

3. Advisory Committee on the Rules of Bankruptcy and Civil Procedure, Proposed Amendments to the Federal Rules of Bankruptcy and Civil Procedure, at 260 (August 2013), available at http://www.uscourts.gov/uscourts/rules/preliminary-draft-proposed-amendments.pdf.

4. Id. at 260-77.

5. Id. at 267-68, 300-05,

6. E-Discovery Committee of the Advisory Council of the Federal Circuit, An E-Discovery Model Order, at 3 (2011),

7. Judicial Improvements Committee of the Southern District of New York, Pilot Project Regarding Case Management Techniques for Complex Civil Litigation, at 18 (2010).

8. Id. at 15.

9. Victor Stanley v. Creative Pipe, 269 F.R.D. 497, 542-553 (D. Md. 2010).

10. Seventh Circuit Electronic Discovery Pilot Program Committee, Proposed Standing Order Relating to the Discovery of Electronically Stored Information, Princ. 2.04(d) (2009).