Proposed federal rule changes would limit the scope of e-discovery

The measures aim to control costs and raise the standard for preservation sanctions

Recently published proposed federal rules aim to reduce the time and costs of e-discovery, but experts disagree on their likely impact. The opinions range from predicting the amendments will have minimal effect to calling them the most significant changes to the discovery process since the 1993 amendments requiring initial disclosures. On April 12, the Advisory Committee on the Federal Rules of Civil Procedure recommended several rule changes aimed at reducing the burden of e-discovery. In early June, the Standing Committee on Rules of Practice and Procedure approved the rule changes for publication and public comment.

“In large-scale litigation, the savings in costs and time could be significant,” says Robert Ambrogi, attorney and adviser to e-discovery technology vendor Catalyst. On the opposite end of the spectrum, Milberg Senior Counsel Henry Kelston says, “The proposed amendments will do little to reduce the cost of discovery and may well have the opposite effect.”

Proportionality Codified

The rule changes would limit the scope of discovery to information that is “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,” and other factors to be evaluated by courts. Courts can currently set limits for discovery, and some have adopted the proportionality standard, but varying interpretations of the current rules have often resulted in a broad scope of discovery. The change would require the parties to follow the rule without court intervention.

“The most significant change in the proposed rules is to codify proportionality based on a cost-benefit analysis,” Ambrogi says.

Some proposed limitations are more specific. For example, they include reducing the presumptive number of oral and written depositions a party may take in a case from 10 to five and written interrogatories from 25 to 15.

The proposals have not received uniform support.

“Changes that affect a miniscule number of cases—like reducing the presumptive number of depositions and requests for admission—will not reduce costs in a meaningful way, and they will create more disputes in the cases where a significant amount of discovery really is warranted,” says Kelston, whose firm specializes in representing investors and consumers in class actions against corporations.

On the other hand, many defense litigators view the current broad scope of discovery as providing unfair leverage to plaintiffs in settlement discussions due to the sheer expense of e-discovery.

Sanctions Hurdle

Corporations also stand to benefit from proposed changes concerning sanctions for failure to preserve discoverable information.

Many courts have interpreted the current rules as permitting monetary sanctions on a finding of negligence or more significant sanctions like an adverse jury instruction upon gross negligence in electronically stored information (ESI) preservation and collection. However, framers of the current rule intended to provide a “safe harbor” for accepted information management practices aimed at better controlling huge volumes of ESI except in “exceptional circumstances.” But many courts have broadly interpreted the provision for “exceptional circumstances” when awarding sanctions.

“The inconsistency among federal courts on this issue, and the resulting fear of unpredictable sanctions, have driven corporations to incur enormous costs to preserve ESI far beyond any reasonable bounds,” Kelston says.

Apparently heeding those complaints, the proposed amendments permit a court to order sanctions only if it finds that the failure to preserve caused “substantial prejudice” in the litigation and was “willful or in bad faith,” or “irreparably deprived a party of any meaningful opportunity” to litigate the claims in the action.

According to the draft committee’s note, “The amended rule is designed to ensure that potential litigants who make reasonable efforts to satisfy their preservation responsibilities may do so with confidence that they will not be subjected to serious sanctions should information be lost despite those efforts.”

According to Philip Favro, an e-discovery lawyer for Symantec courts may be more likely to examine the nature and motives behind a company’s decision-making process. “Such an approach stands to benefit companies, which could justify information retention decisions based on best corporate practices,” he says.

Ambrogi adds that for the first time, the proposed rule would create a uniform national standard in an area where judges’ rulings have varied widely. “For these reasons, the proposed rule should reduce the overall rate at which sanctions are imposed,” he says. “The proposed changes should simplify the lives of in-house counsel when it comes to preservation and production.

Implementation Key

The ultimate success of the amendments will depend on how the rules are implemented and enforced by the courts. “Ultimately, the success of the proposed changes could depend on the willingness of judges to use a firm hand in applying them,” Favro says.

Favro also believes that educating the legal profession concerning the changes will be crucial. “Many litigators are still struggling to understand and follow the previous amendments to the Federal Rules implemented in 2006. Unless widespread education efforts are undertaken, adoption of the proposed changes will likely proceed very slowly,” he says.

If these goals can be accomplished, the amendments may help rein in an e-discovery process many believe has too often gotten out of control.

Contributing Author

Michael Kozubek

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