Testimony on Changes to FRCP 26(b) And 37(e) Reflects Continuing Discord

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By Tera E. Brostoff  

Nov. 12 --The Advisory Committee on the Civil Rules convened the first public hearing on the proposed amendments to the Federal Rules of Civil Procedure Nov. 7 in Washington, D.C. More than 40 witnesses gave testimony regarding the suggested changes, with the majority of comments focusing on the proposed language of 26(b) and 37(e). The testimony responding to 26(b) indicated a sharp divide between the plaintiffs' and the defendants' bar, while the comments on 37(e) generally spoke to the necessity of preservation language and the definition of vague terms such as “willful.”

The major issues in 26(b) that drew both scrutiny and praise were the addition of the requirement in 26(b)(1) that a party may obtain discovery “proportional to the needs of the case” and the removal of the language “relevant information need not be admissible at the trial if the discovery appears reasonably calculated to lead to the discovery of admissible evidence.”

Defense Bar Favors 26(b) Changes

Defense attorney Jack McCowan stated he supports the committee's goal of advancing early and effective case management, as well as proportional discovery and attorney cooperation. He noted that the cost of discovery drives settlements of claims that would otherwise go to trial. McCowan praised the proportionality language of the amendment 26(b)(1), as well as the deletion of the “reasonably calculated” phrase.

“I've been involved in many product liability cases where plaintiff's counsel has successfully argued that discovery on products totally unrelated to the product at issue must be produced because of the reasonably calculated language,” McCown said. “The phrase is too broad to define.”

Jeana Littrell, vice president of employment litigation at FedEx Express, agreed. She stated that while “some suggested an amendment is not needed and argue we need to simply better educate judges and litigants,” according to Littrell, there is no better education than moving the proportionality language currently housed in 26(g) to the forefront of Rule 26(b).

Jonathan Redgrave, who stated his views were his own rather than those of the firm he founded, Redgrave LLP, or the Sedona Conference® Working Group 1, with which he is also closely associated, said “proportionality is inherently elastic upon proper justification” and that the standard is “party and position neutral.” Advisory Committee member Parker Folse asked Redgrave whether, despite his stance that the standard is neutral, he agreed that in certain cases, there is an imbalance in possession of information.

“I don't believe this is providing disparate tools, or giving additional tools to large defendants,” Redgrave responded.

Dan Troy, Senior Vice President and General Counsel at GlaxoSmithKline also concurred the amendments to 26(b) are a step in the right direction, but advocated the addition of a materiality requirement.

The Costs Issue

John Pierce, speaking on behalf of DRI, said DRI is committed to preserving the right to a civil trial by jury, and the amendments will result in putting the focus back on the merits of a case and not the costs. Pierce said that while he tries cases on behalf of larger companies, he usually represents smaller companies, including Chapter S businesses and 'mom and pops'. According to Pierce, for these clients, one of the key concerns in litigation is cost. Pierce said he was in favor of amendments to Rules 30, 31, 33, and 34, which limit the number of depositions, interrogatories, and requests for admissions that may be taken.


“Having made the investment [in TAR], we frequently find that we can't use it because the other side won't agree.”

 

David Cohen
eDiscovery Practice Group
Reed Smith

David Cohen, who heads the Global Records & eDiscovery Practice Group at Reed Smith, echoed the sentiment that expense is what drives trials and praised the new focus on the proportionality standard in 26(b)(1). Cohen said that his clients are settling cases all the time because discovery costs are disproportional. Cohen related an example from his firm, stating that Reed Smith employs more than 60 attorneys in the eDiscovery Practice Group who spend the majority of the day reviewing documents. According to Cohen, of the documents produced, less than .1 percent are used as exhibits at trial or during depositions.

In addition, Cohen commented that a few years ago, he convinced his firm to invest in Technology-Assisted Review, with “the idea that this would help cut down the cost.”

“But having made the investment, we frequently find that we can't use it because the other side won't agree,” Cohen explained. “In multi-jurisdiction litigation, it's even harder to get all the judges to agree.”

And, according to Cohen, plaintiffs have very little incentive to agree to the technology if they know it will reduce the burden on the defendant.

Plaintiffs' Attorneys Give David and Goliath Comparisons

Though many people spoke in support of the changes to 26(b), a significant number of individuals testified against the amendments. Burton LeBlanc, President of the American Association of Justice, the world's largest trial bar, stated AAJ is extremely concerned with the impact the proposed rules will have on justice. According to AAJ, the changes to 26(b) will make it far more difficult for consumers and small business owners to make defendants responsible, and the new proportionality standard will shift the focus in discovery from relevancy to cost proportionality.

Darpana M. Sheth, who spoke on behalf of the Institute for Justice, argued that relocating the proportionality factor from 26(g) to 26(b)(1) shifted the burden for proving the need for specific discovery to the plaintiff. However, Advisory Committee Member Judge Paul W. Grimm asked Sheth, “how in practical terms are you able to meet the requirements under 26(g)? You have to make the proportionality assessment, so how does moving the language in to the scope of discovery significantly change what you have to do?”

Sheth responded that the amendments invite more disputes over whether discovery is proportional, while the current rules leaves that determination to court-controlled discovery.

Daniel Hedlund, of the Committee to Support Antitrust Laws, expressed serious concerns that the proposed changes to 26(b) could substantially curtail the ability of litigants to gather information from defendants and third-parties. He stated that plaintiffs in antitrust cases are faced with substantial information asymmetry, and that price-fixing conspiracies are often proved by stringing together circumstantial evidence.

“Decades of law students have learned the 'reasonably calculated language,' ” Hedlund said. “The new rule proposes to eliminate the familiar language without replacing it with an equivalent.”

According to Hedlund and others who testified, the new rule will subject every discovery request to scrutiny.

37(e): Defining Willful, eDiscovery's Role

The proposed changes to 37(e) was the other big player in the initial rules amendment hearing. Bloomberg BNA's Digital Discovery and e-Evidence Report Advisory Board member and University of Cincinnati College of Law Adjunct Professor Thomas Y. Allman spoke in favor of the amendments to 37(e). Allman served on the 2010 eDiscovery Panel at the Duke Conference.

Allman stated he was “here to endorse 37(e) and to plead an evolution in my thinking.” He said he originally proposed 37(e) should be tweaked, but now agrees with the Advisory Committee's decision not to do so.

“I do that because of the role of inherent power,” Allman explained. “The occupation of the field of spoliation sanctions is such that it effectively cabins the sanctioning power of the judges and will discourage the unnecessary and overuse of inherent power.”

Allman said a lack of circuit uniformity on sanctions exists and is an affront to the litigation system. He commented that the goal of alleviating confusion is important, and will help litigants and attorneys to have certainty in their preservation planning.

Allman did suggest some changes to the current amendment, including either eliminating the factors in 37(e)(2), or dropping them down to the Advisory Committee notes. Judge Grimm asked Allman “if the goal is to have a uniform standard that will be applied in the same fashion in all jurisdictions as much as possible, is there not a greater risk in not having uniformity if there is no guidance whatsoever?” Allman disagreed, however, stating that the addition of the factors was what he called “rule-making by committee note.” According to Allman, the type of language guidance the Advisory Committee was attempting was best left to the Sedona Conference®.


“Decades of law students have learned the 'reasonably calculated language.' The new rule proposes to eliminate the familiar language without replacing it with an equivalent.”

 

Daniel Hedlund
Committee to Support Antitrust Laws

Wayne B. Mason, of Sedgewick LLP, noted that eDiscovery has “changed the world,” but, when asked by Advisory Committee Member Judge Gene E. K. Pratter if he believed the use of predictive coding would be useful, Mason called the use of such technology “an evolving idea.” According to Mason, his firm has not bought all the software previously spoken about, though he finds TAR to be a “good idea.”

Concern Over Preservation Persists

Robert Levy spoke on behalf of Exxon Mobile Corp., noting that over-preservation of electronically stored information costs the company tens of millions of dollars and countless hours a day focused on dealing with litigation holds. He believes the amendments to 37(e) will set a guiding standard for Exxon Mobile and similar companies in the area of preservation.

Alexander Dahl, counsel for Lawyers for Civil Justice, argued that “if the committee is going to adhere to its goal of ensuring that potential litigants will make reasonable efforts to satisfy their preservation obligations, then the committee should change 'willful or bad faith' to 'willful and in bad faith.' ” Dahl suggested, in the alternative, that the committee could define willful in a manner that makes clear that there is a culpability requirement attached to the term.

Dahl cited the example of Sekisui Am. Corp. v. Hart, 2013 BL 212982 S.D. N.Y, 1:12-cv-03479-SAS, 08/15/2013as a case that defines willfulness without a culpability requirement, adding strain on litigants who do not know how much to preserve because they cannot predict in which jurisdiction future litigation will occur.

Reed Smith attorney David Cohen also commented that the amendment to 37(e) was “absolutely necessary” because he has observed that in major litigation, sanctions motions are being used as a tactic, and parties do not know what and how much to preserve. Cohen joined the camp of those who supported defining willful (or rewriting the rule to state willful and in bad faith). Cohen defined willful as “intentionally hiding evidence,” and urged the committee to include the definition.

Michael Rakower, of the New York State Bar Association, also advocated for defining willfulness. He stated the term should be defined in terms of intentional conduct or conduct that is significantly reckless so as to enable somebody to foresee a high likelihood of harm.

Jennifer Klar, of Relman, Dane & Colfax PLLC, spoke out against the proposed changes to 37(e), arguing the new standards for remedial measures and sanctions will impede the search for truth, change the substantive law of multiple circuits, and hurt civil rights plaintiffs. Klar argued negligence or gross negligence should be the appropriate standard because the proposed bad faith or wilfulness standard is too difficult to prove.

Next Hearings and Submitting Comments

The Advisory Committee met on Nov. 8 as well, and announced at that meeting that the next public hearing will take place on Jan. 9 in Phoenix.

The final hearing will be held on Feb. 7 in Dallas.

Comments on the proposed amendments can be submitted by e-mail to Rules_Comments@ao.uscourts.gov, or by U.S. mail to the following address: Committee on Rules of Practice and Procedure Administrative office of the United States Courts, One Columbus Circle NE, Washington, D.C., 20544.

The incoming comments will be publicly posted at http://www.uscourts.gov/RulesAndPolicies/rules/proposed-amendments/civl-rules-comments.aspx, and a link to them is available on the eDiscovery Resource Center.

 

To contact the reporter on this story: Tera Brostoff in Washington at tbrostoff@bna.com.

To contact the editor responsible for this story: Carol Eoannou at ceoannou@bna.com.


Bloomberg BNA will present a webinar entitled “Amending the Federal eDiscovery Rules: Fallout From the First Public Hearing on Nov. 14 from 12:30 to 2:00 PM ET. Register at /amending-federal-ediscovery-w17179877799/.