The 2015 amendments to the Federal Rules of Civil Procedure: guide to proportionality in discovery and implementing a safe harbor for preservation.

• Author: Jablonski, John J.

Amendments to the Federal Rules of Civil Procedure (FRCP) will take effect on December 1, 2015 (the "2015 Amendments") unless Congress acts to modify or reject them, which is highly unlikely. (1) Collectively, the changes are designed to lower the costs of litigation by 1) providing judicial tools to encourage and enforce proportional discovery limited to information relevant to "claims and defenses," and 2) reducing costs associated with over-preservation and ancillary litigation by establishing a uniform national standard for preservation obligations and a safe harbor for parties that take reasonable steps in good faith to preserve electronically stored information ("ESI").

This article provides an overview of these and other key 2015 Amendments along with examples of analytical methodologies to help courts and lawyers apply the Amendments as envisioned and, where appropriate, providing context and support from existing cases and commentary.

1. Introduction

   The Amendments embrace a number of measures stemming from the Duke Conference of May 2010, which was convened by the Advisory Committee on Civil Rules ("Rules Committee") to address persistent complaints about the costs of discovery (especially e-discovery), preservation of ESI and standards for sanctions for the destruction of such material. (2) After the Conference, the two subcommittees assigned to respond (the "Duke" Subcommittee, for all rules other than Rule 37(e), and the "Discovery" Subcommittee for issues relating to spoliation) considered a number of potential rules and amendments through a transparent process in which public participation was deep and effective.

   This process included two "mini-conferences" held before the Rules Committee released initial proposals in August, 2013, followed by three public hearings involving 120 testifying witnesses and over 2,300 written comments. After careful consideration of competing arguments and, in some cases, substantial revisions, the Rules Committee, the Judicial Conference and the Supreme Court unanimously approved the final package of amendments. Many of the surviving proposals can be traced to discussions at the Duke Conference and the proposals and submissions relating to it, such as the LCJ White Paper. (3)

   The 2015 Amendments can have a dramatic impact if judges and lawyers implement them in the manner intended by the Rules Committee. They reflect the realities of current discovery and address many of the core issues not adequately treated in the 2006 Amendments. (4) More data exists now than any time in our history, a problem that a revised Rule 26(b) addresses by embedding proportionality principles in both the scope of discovery and in cost allocation. Moreover, the replacement for Rule 37(e) provides a uniform culpability standard, which rejects the focus on the loss of a few emails to justify sanctions (e.g. Pension Committee (5)).

   The amendments reflect agreement among a diverse spectrum of stakeholders that the high costs and burdens of discovery, especially e-discovery, are skewing the U.S. civil justice system. Unrestrained e-discovery is inordinately costly. (6) Not only does this provide perverse incentives for requesting parties to make unlimited demands (at the cost of producing parties), but the costs routinely force unfair settlements for reasons other than a lack of merits.

   Large majorities of the plaintiffs' and defense bars share the view that e-discovery demands (and the threat of sanctions) are abused. (7) The Committee concluded after the Duke Conference that "excessive discovery occurs in a worrisome number of cases." (8) A survey of the Association of Corporate Counsel administered by the Institute for the Advancement of the American Legal System ("LAALS") (9) found that 80 percent of chief legal officers or general counsel disagree with the statement that "outcomes are driven more by the merits of the case than by litigation costs." As the American College of Trial Lawyers ("ACTL") put it in advance of the Duke Conference, "[a]lthough the civil justice system is not broken, it is in serious need of repair." (10) Against this backdrop of a federal justice system in need of repair, the 2015 Amendments were drafted and unanimously approved at each milestone along their path to enactment, including meaningful improvements to rules governing proportionality, allocation of costs, preservation and sanctions.

2. Proportionality

   The Rules Committee has provided a comprehensive series of amendments to enhance the use of proportionality in discovery. The Committee concluded after the Duke Conference that "[t]he problem is not with the rule text but with its implementation --it is not invoked often enough to dampen excessive discovery demands." (11)

   Revised Rule 26(b)(1) narrows the scope of discovery to only that information which is relevant to the claims and defenses and is "proportional to the needs of the case." A court "must limit the frequency or extent of proposed discovery," on its own if necessary, where the discovery "is outside the scope permitted by Rule 26(b)(1)." (12) This contrasts with the current situation where those limits are based on a remote subsection of the Rule and are little used, despite the best efforts of past amendments. (13)

   As the Chair of the Subcommittee explained, "[a] 11 discovery must [now] be relevant to a party's claim or defense." (14) This is not radical. There is no significant difference in impact between a limitation applied after a determination of relevancy (the current rule) (15) and one where the limitation helps determine if the information is within the scope of discovery (the revised rule). The change in emphasis will force parties and courts to confront "discovery cost containment" at the outset of litigation (16) and "balance its utility against its cost." (17)

   The balance of Rule 26(b)(1)--authorizing "subject matter" discovery and alluding to matters which "appears reasonably calculated to lead to the discovery of admissible evidence"--will also be stricken. (18)

   As revised, Rule 26(b)(1) limits a party to discovery of the following:

   [A]ny nonprivileged matter that is relevant to any party's claim or defense and proportional to the needs of the case, considering the importance of the issues at stake in the action, the amount in controversy, the parties' relative access to relevant information, 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. (19) Parties and courts alike must clearly consider the proportionality factors when pursuing discovery and resolving discovery disputes with their return to Rule 26(b)(1) as an explicit component of the scope of discovery. Despite claims by critics that the scope of discovery has been changed in material and unfair ways (20) the re-insertion of proportionality factors into Rule 26(b)(1) is a "modest" adjustment. (21)

   1. Historical Context

      The Rules Committee has been trying for decades to formulate effective rules for reducing discovery abuse. Critics have raised serious concerns that discovery abuse, misuse and excessive cost pose significant danger to the administration of justice since the adoption of the Federal Rules of Civil Procedure in 1938. (22) After numerous attempts to address these concerns, the problem remained, (23) and the Committee undertook the first tentative steps in 1983 to introduce "proportionality" into the rule, albeit not by that name. Despite acknowledgment of a need for "stronger medicine," numerous amendments since then have proven ineffective to solve the problems of discovery abuse, misuse and excessive costs. (24) The history of the numerous attempts to curb discovery problems is succinctly reiterated in the proposed Committee Note:

      * The 1983 Amendments added new provisions "to deal with the problem of over-discovery." As the Committee Note explained at the time, the objective was "to guard against redundant or disproportionate discovery by giving the court authority to reduce the amount of discovery that may be directed to matters that are otherwise proper subjects of inquiry." The Committee's intent was "to encourage judges to be more aggressive in identifying and discouraging discovery overuse." (25)

      * The 1993 Amendments added two factors to the considerations relating to discovery limitations that were "intended to provide the court with broader discretion to impose additional restrictions on the scope and extent of discovery...." Those factors were (1) whether "the burden or expense of the proposed discovery outweighs its likely benefit," and (2) "the importance of the proposed discovery in resolving the issues." The 1993 Committee Note stated that "[t]he revisions in Rule 26(b)(2) are intended to provide the court with broader discretion to impose additional restrictions on the scope and extent of discovery...." (26)

      * The 2000 Amendments, acknowledging a frustration with the lack of emphasis on proportionality, added a statement to Rule 26(b)(1) that "[a] 11 discovery is subject to the limitations imposed by Rule 26(b)(2)(i), (ii), and (iii) [now Rule 26(b)(2)(C)]." The accompanying Note explained that courts were not using the proportionality limitations as originally intended, and that "[t]his otherwise redundant cross-reference has been added to emphasize the need for active judicial use of subdivision (b)(2) to control excessive discovery." (27)

      As the volume and character of discovery changed from paper to electronically stored information, the Committee added provisions in 2006 to deal with ESI. Facing a tidal wave of potential unnecessary costs accruing from unrestrained discovery of ESI, the Committee added what is now Rule 26(b)(2)(B) to require a showing of "good cause"--based on proportionality concerns...