Proposed Rules Address The Costs And Burdens Of Modern Discovery Practice

Wednesday, October 23, 2013 - 12:31

The Editor interviews Marc E. Williams, President of Lawyers for Civil Justice (LCJ) and Partner, Nelson Mullins Riley & Scarborough LLP.

Editor: During your term as President of Lawyers for Civil Justice (LCJ), the Advisory Committee on Civil Rules published (on August 15) a proposal to amend the Federal Rules of Civil Procedure in order to address the costs and burdens of modern discovery practice (proposed rules). Why was there a need to amend the discovery rules?

Williams: The discovery process in litigation has become much too expensive and burdensome. In recent years the problems associated with discovery have been exacerbated by a tremendous growth of electronically stored information (ESI), which has resulted in a grossly inefficient system. For companies that produce large amounts of ESI, the costs associated with preservation, collection and discovery have become astronomical. Discovery has become a process of exerting leverage against the opposing party to force a resolution, rather than a process to discover the true facts underlying a dispute.

The current system encourages significant over-preservation because the rules don’t define a party’s duty to preserve information. Instead, individual judges are defining the rules for preservation for their specific courts. This has created massive uncertainty and caused companies to err on the side of extreme caution. In doing so, they are incurring a huge cost by creating protocols that preserve documents that are very unlikely to be used in litigation.

Editor: Describe LCJ’s role in encouraging the Advisory Committee to address the issues dealt within the proposed rules.

Williams: LCJ advocates positions designed to support improvements in the civil justice system before the Rules Committee and Standing Committee. LCJ submits formal comments throughout the rulemaking process, just as it had done in earlier efforts leading to the 2000 discovery amendments, the 2006 e-discovery amendments and amendments to the rules governing summary judgment, expert testimony, subpoenas and protective orders. The position papers illustrate the scope and depth of the current LCJ rulemaking project reaching back to its 2010 white paper, “Reshaping the Rules for the 21st Century,” which laid the foundation for the progress to come on what LCJ considers the three pillars of discovery – scope, preservation and costs.

The formal comments combined with full engagement in the public rulemaking process can provide compelling reasons for judges, members of Congress and rule makers to give serious consideration to fundamental rules reform. Recently, we submitted two formal comments to the U.S. Judicial Conference – “A Meaningful Step towards Addressing Preservation, Discovery and Costs” and “The Un-American Rule.” These comments, which are publicly available at www.lfcj.com, detail the problems surrounding the rise of electronic information, the ways in which these problems are burdening the civil justice system and several proposed solutions that could lessen the costs and burdens of litigation.

In addition to submitting formal comment in response to the published rules proposals, LCJ encourages its members to testify at hearings and provides support to witnesses who wish to testify – all designed to assist judges in evaluating specific proposed rules changes.

Editor: Did LCJ find that similar burdens were imposed on cases tried outside the U.S.?

Williams: According to our members and those who are required to litigate in other countries, the United States’ system of discovery is unique in the world. Nowhere else is there a system of discovery that compares with that of the United States and is so open-ended and burdensome.

Editor: Was LCJ aware of situations where companies decided not to invest – or increase their investment – in the United States because of the expense of e-discovery associated with U.S. litigation (federal and state)?

Williams: Yes, absolutely. The cost of U.S. litigation – especially e-discovery – has become an important factor that companies consider in deciding to start or expand a business here. A survey that Lawyers for Civil Justice conducted in 2010 revealed that Fortune 200 corporations found that the costs associated with e-discovery in U.S. cases were vastly greater than in non-U.S. cases, so by changing these rules we would also increase the global competitiveness of the United States in the world marketplace.

Editor: Did LCJ find that its law firm supporters experienced situations where their clients settled (or otherwise refrained from using the federal or state courts) because of the high cost of e-discovery, including the associated preservation expense resulting from lack of clarity as to the circumstances in which sanctions may be applied?

Williams: Yes. Unfortunately, parties are giving up their right to access the courts because the costs of discovery are just too high. This includes parties who have legitimate claims and can’t afford to prosecute their suit to conclusion, and defendants who have meritorious defenses. We found that litigants frequently settle to avoid the costs regardless of merits. It has become a tactical weapon. The amendments proposed by the Advisory Committee are a major step in making our judicial system more efficient and effective in administering justice for all.

Editor: The proposed rules limit the amount of data that must be preserved by permitting destruction of documents where it is not in bad faith or willful. Does LCJ believe they should be further amended to provide that sanctions may only be applied where the conduct is both in bad faith and willful to avoid application of sanctions to conduct that is intentional but not in bad faith?

Williams: Yes, because as we have advocated in our various submissions and testimony, a willful destruction of documents doesn’t show a culpable state of mind. It only proves that the action was intentional, which can be something as simple as setting up a standard auto-delete function. Conversely, bad faith implies something malicious. Ensuring that sanctions apply only to situations where both are present is a necessary clarification to the rule.

Editor: Another major change in the proposed rules is that discovery must be proportional to the needs of the case. Will this cause courts to limit oppressive e-discovery designed to effect a settlement?

Williams: Yes, the proposed amendment to Rule 26(b)(1) would do just that. Proportionality has been in the FRCP for years but has never been effectively applied to limit discovery. This change would reduce overbroad costs and burdens associated with discovery while still ensuring that parties obtain the information they need. It emphasizes proportionality by moving it into the rule section defining permissible discovery. This is an appropriate way to let parties and judges know that they should keep the proportionality of the case in mind when they undertake discovery.

Editor: Does LCJ believe that proposed Rule 37(e) needs to be further changed by the Rules Advisory Committee to eliminate the irreparable deprivation standard? Why?

Williams: Yes, we believe that further revisions should be made. The Rule 37 (e) exception is unfortunately an exception that could possibly swallow the rule. It would allow sanctions – even without a finding of willfulness or bad faith – if the loss of information “irreparably deprives” a party of its ability to prosecute or defend the action. This proposed rule has been included to address a very rare case, but we believe it could be used as a back-door vehicle to impose sanctions even if there is no indication of a deliberate effort to destroy information. Furthermore, we feel this rule isn’t even needed because the rule draft gives the trial judge the power to avoid an unfair result by imposing curative measures, therefore avoiding the situation it is meant to address.

Editor: What is LCJ’s program for supporting the proposed rules with the amendments mentioned by you earlier in this interview?

Williams: LCJ’s current rule initiative, the “Rules Project,” is the latest and most significant effort we have made to improve the rules pertaining to discovery. It began with working to form a consensus in support of reform, and now we are working to achieve specific rule reforms by providing the committee with consensus proposals developed by LCJ and corporate and defense practitioners. We are currently in a six-month period of the rules amendment process, which calls for public comment on the proposed rules. LCJ has submitted a series of formal comments and is encouraging its members to submit comments as well. We are also rallying support for the three hearings and asking our members to testify.

Editor: Does LCJ plan to advocate reforms similar to those embodied in the proposed rules in state rules that need reform?

Williams: State rule reform is critical because so many states model their rules after the rules adopted by the federal courts, and since most cases are tried in state court, it is essential that we extend this program to the states. Overall, LCJ is also very concerned with broader civil justice reform issues pertaining to the ways in which cases are litigated at the federal and state level and how these issues can have such a dramatic effect on our members. In the coming year, we will want to continue our primary focus on discovery and class action reform both at the state and federal levels.

 

 

Please email the interviewee at marc.williams@nelsonmullins.com with questions about this interview.