Amendments to FRCP: Status Quo or Change?

You may have heard a little something about the proposed amendments to the Federal Rules of Civil Procedure. While most of the amendments are benign and endeavor to cure the ills of overzealous discovery, i.e. scope and proportionality, a couple of the proposed amendments are stirring up a bit of controversy. Much has been written about the concept of proportionality as well as cooperation, but there remain some questions, specifically when contemplating how and if the rules will alter practice. Some of the amendments, in this writer's humble opinion, will necessarily require practitioners to change, a word feared by all lawyers. However, other amendments may be a commentary for the status quo.

Proposed Rule 37(e): Sanctions for Spoilation of Evidence

For example, let's take a look at two of the amendments to test this theory. First, proposed Rule 37(e). Rule 37(e) involves an increasingly litigated area -- sanctions for spoliation of evidence. The rise in litigation in this area has mirrored the increase in exchanging electronically stored information (ESI). With a varied learning curve and familiarity with managing ESI, attorneys have experienced inconsistent results from courts faced with Rule 37(e) motions. Currently, Rule 37(e) reads:

(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.

Due to what the Civil Rules Advocacy Committee views as severe sanctions on the very types of litigants the rule was designed to protect, the committee proposed new language in an attempt to close the rift among the courts. The proposed revision aims "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."[1]

The "Godmother" of eDiscovery Weighs In

At the center of the controversy is Judge Shira Scheindlin, known as the godmother of eDiscovery for her groundbreaking opinions in the Zubulake cases. [2] Judge Scheindlin has not refrained from vocalizing her opinion about the proposed amendments to Rule 37(e). She recently weighed in while, once again, issuing a ruling regarding the scope of the duty to preserve electronic documents.[3] In addition to her candid opposition to the proposed amendment is Judge Scheindlin's unapologetic opinion of when sanctions are warranted.

In Sekisui, Judge Scheindlin cites the controlling law of the 2nd Circuit:

[A] party seeking an adverse inference instruction based on the destruction of evidence must establish (1) that the party having control over the evidence had an obligation to preserve it at the time it was destroyed; (2) that the records were destroyed with a culpable state of mind; and (3) that the destroyed evidence was relevant to the party's claim or defense such that a reasonable trier of fact could find that it would support that claim or defense.[4]

To establish a "culpable state of mind," a party must show "that the evidence was destroyed knowingly, even if without intent to [breach a duty to preserve it], or negligently."[5] Only when the conduct is willful or grossly negligent is there an assumption that the evidence was relevant to the innocent party. When the destruction is merely negligent, the burden falls to the innocent party to prove prejudice.

While she admits that the imposition of sanctions is a "relatively rare occurrence,"[6] Judge Scheindlin does not shy away from parsing out the facts and issuing harsh consequences. Her distinction as the godmother of eDiscovery positions her as a trailblazer. Therefore, when Judge Scheindlin makes a point of calling out the errors of the proposed amendments, it is significant -- and not merely for bloggers and eDiscovery wonks -- but also for the everyday practitioner. Just as she did in the Zubulake cases, Judge Scheindlin leverages the opportunity to comment on what she believes is acceptable and unacceptable behavior as it relates to the retention of evidence. Her message seems to be that instead of blindly proceeding with business as usual, companies take a more thoughtful and deliberate approach to ESI, or suffer the consequences.

Judge Scheindlin's biggest problem with the proposed amendment is that it would permit sanctions only where the evidence is destroyed willfully or in bad faith. Additionally, Judge Scheindlin finds it troubling that the innocent party would have to prove "it has been substantially prejudiced by the loss" even when the information was destroyed willfully or in bad faith. In Judge Scheindlin's view, "imposing sanctions only where evidence is destroyed willfully or in bad faith creates perverse incentives and encourages sloppy behavior."[7] Judge Scheindlin does not expand on this thought, but she does not have to; she clearly believes that parties should be subject to sanctions if they were negligent, grossly negligent or reckless in destroying evidence. The "sloppy behavior" she mentions could be anything from failing to issue a litigation hold in a timely manner to failing to notify your client to cease a document retention/destruction policy to a client deleting emails it reasonably should have known were relevant to the action.

Further, by shouldering the innocent party with the burden to prove prejudice, the Advisory Committee fails to acknowledge the evidentiary imbalance that results when evidence is intentionally destroyed and no longer available to the innocent party. Judge Scheindlin seems to be of the mind that ignorance is no longer an acceptable excuse for failing to adopt good preservation practices. In her mind, there are basic document preservation guidelines to follow, and when those basic guidelines are not met, this is gross negligence.

Attorney: Get Up to Speed With Technology

Much has been written about Judge Scheindlin and her Sekisui opinion; however, what might get missed is the message to practitioners of the responsibility to not proceed automatically through the discovery process. If practitioners do not take the time to understand the technology, their clients' processes and the intricacies of their clients' document retention/destruction policies, then they might suffer consequences like the plaintiff in Sekisui.

Perhaps the Advisory Committee is interested in protecting those practitioners and parties who are not quite up to speed with proper preservation guidelines; however, a decade has passed since Zubulake -- a point that Judge Scheindlin highlights, most certainly deliberately, in the first sentence of her August 15, 2013 opinion. So, rather than propose a rule that moves us backward, why not raise the bar and expect attorneys to learn information management just as if it were a necessary step in discovery.[8] Necessary components to proper information management include legal holds and data retention/destruction policies. But most important is understanding how these components work as a system, not just in a vacuum. It is time to move away from the status quo.

Proposed Rule 26: Will it Encourage Cooperation? 

On the other hand, the Advisory Committee did not hold back when it came to Rule 26. If the proposed amendments to Rule 26 of the Federal Rules of Civil Procedure are adopted, the new rule will require lawyers to approach discovery very differently. Perhaps the sleeper in a series of amendments, proposed Rule 26 would have far-reaching effects not only on proportionality but on cooperation between lawyers -- a concept discussed with some frequency, but always within a "pie in the sky" kind of context. These far-reaching effects are certainly the intention; however, what occurs in practice may be a different narrative.

Here is how the amendments would change the rule:

Unless otherwise limited by court order, the scope of discovery is as follows: Parties may obtain discovery regarding any non-privileged 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). [note: bold language to be struck]

The language proposed for deletion is most instructive since the Advisory Committee merely moved the considerations already present in Rule 26(b)(2)(C)(iii) to 26(b)(1), thereby eliminating the ability of the court to extend discovery to "any matter relevant to the subject matter involved in the action." In essence, the proposed Rule 26 is not new, it has simply been stripped down to the essential requirements -- that discovery be relevant and proportional to the needs of the case. What the Advisory Committee suggests by this move is that attorneys must rein in current discovery practices and begin to police themselves when it comes to discovery disputes.

Times They Are A-Changin'

At the center of all of the change in Rule 26 is the question of how the new rule will affect the practice, i.e., the behavior of lawyers. Many attorneys are historically slow to change and adopt the newest technology, and I can say this because I am a lawyer myself and understand all too well our habits and creature comforts, one of them being paper. However, demand from clients and competition between law firms, both large and small, require that law firms eye the most cost-efficient technology. Not only is this a demand from clients, but it also satisfies common sense. Instead of associates spending countless hours manually reviewing documents, firms need to realize that there is a better, more efficient and cost-effective way. And this better way provides efficiencies that not only their clients demand, but that also free up their own associates to perform more substantive work.

In order for the proposed Rule 26 to function as the Advisory Committee intends, discovery as we know it and hate it will need to change. First, the tired, boilerplate interrogatories and requests for production of documents will need to be replaced with tailored, concisely drafted discovery requests. Will this require more time? Yes. Will attorneys be able to task their paralegals with drafting discovery requests in each case? Probably not. But, what will occur is that attorneys will investigate early and take the time to understand what documents and ESI are likely involved in the case. Attorneys will need to sit down with their clients at the outset to prepare a discovery strategy that will require early communication and cooperation with opposing counsel.

When attorneys talk about cooperation, the conversation is generally about trying to get along with the other side and limit the gamesmanship. Historically, gamesmanship has simply been just another part of how things are done. Such habits have permeated the practice for years, and a sudden change in the landscape may not be possible. However, the Advisory Committee is certainly making strides to ensure cooperation and proportionality. In order for these two concepts to thrive, the Advisory Committee needs buy-in from attorneys, and not just those attorneys who have handled large eDiscovery-laden cases. All attorneys must get on board and begin to change in order for the practice to truly adapt. Whether or not your cases involve eDiscovery has nothing to do with the kind of case, but whether or not the attorneys choose to embrace eDiscovery and are educated about their clients' documents and records management. Records management -- a subject for an entirely different article altogether -- has everything to do with early data assessment and preparing your discovery strategy.

In fact, not only will Rule 26 demand these changes, but several other amendments will alter key deadlines so as to force attorneys into early investigation and cooperation. Early case management will be crucial in light of an accelerated schedule. First, proposed Rule 4 will reduce the time for service of the Summons and Complaint from 120 days to 60 days; proposed Rule 16(b)(2) will reduce the time in which the judge must issue a scheduling order from 120 days to 90 days; and proposed Rule 16(b)(1)(B) will require that the scheduling conference cannot be conducted by telephone, mail or other means, but rather through "direct communication." These abbreviated deadlines will require that counsel discuss scheduling and discovery issues early, rather than delay. Additionally, Rule 30 will limit oral depositions from 10 to 5 and limit each deposition to six hours instead of seven; Rule 31 will limit written depositions from 10 to 5; and Rule 36 will impose a limit of 25 requests for admission. These additional changes will require that attorneys focus only on the most relevant issues with a discriminating eye on that information that satisfies the proportional requirement of Rule 26.

All of these amendments are geared toward early data/case assessment and cooperation between the parties. Attorneys, don't be afraid of terms like early case assessment and early data assessment -- both of these simply mean determining at the outset of your case what documents and information are involved and how you will manage them. The time has come to educate yourself about the myriad ways to become more efficient and to truly embrace technology. Times they are a-changin'.

The public comment period for the proposed amendments to the Federal Rules of Civil Procedure opened on August 15 and will end on February 15, 2014. It seems that more and more practitioners are taking notice of these amendments and the effects on their practice. We shall wait to see how and if the rules rein in discovery violations or whether they further the status quo.

End Notes
1. See, full text of the proposed amendments and comments. However, for ease of reference, I suggest our friend, Ralph Losey's blog.
2. See Zubulake v. UBS Warburg LLC, 217 F.R.D. 309 (S.D.N.Y. 2003) ("Zubulake 1"); Zubulake v. UBS Warburg LLC, No. 02 Civ. 1243,2003 WL 21087136 (S.D.N.Y. May 13, 2003) ("Zubulake 11"); Zubulake v. UBS Warburg LLC, 216 F.R.D. 280 (S.D.N.Y. 2003) ("Zubulake J1f"); Zubulake v. UBS Warburg LLC, 220 F.RD. 212 (S.D.N.Y. 2003) ("Zubulake IV"); Zubulake v. UBS Warburg LLC, 229 F.RD. 422 (S.D.N.Y. 2004) ("Zubulake V").
3. See Sekisui American Corp. v. Hart, No. 12 Civ. 3479, 2013 WL 4116322 (S.D.N.Y. Aug. 15, 2013).
4. Id., at *13 (citing Residential Funding Corp., 30 F.3d 99, 107 (2d Cir. 2002)).
5. See Sekisui, 2013 WL 4116322, at *14 (citing Residential Funding, 30 F.3d at 108).
6. See Sekisui, No. 12 Civ. 3479, 2013 WL 4116322, at *2, n. 2.
7. See Sekisui, No. 12 Civ. 3479, 2013 WL 4116322, at *14, n. 51.
8. Information managements is actually the first step in a proper discovery workflow, i.e., the EDRM. But ask an attorney what the EDRM is, and he/she will likely shrug and walk away.

Courtesy of Jennifer Marsnik of Xact Data Discovery.