Judge Peck Orders All Lawyers in NY to Follow the Rules when Objecting to Requests for Production, or Else …

March 5, 2017

peckJudge Peck has issued a second wake-up call type of opinion in Fischer v. Forrest,  _ F. Supp. 3rd _, 2017 WL 773694 (S.D.N.Y. Feb. 28, 2017). Judge Peck’s first wake-up call in 2009 had to do with the basics of keyword search – William A. Gross Construction Associates, Inc. v. American Manufacturers Mutual Insurance Co., 256 F.R.D. 134 (S.D.N.Y. 2009), which is still one of my favorite all time e-discovery opinions. His second wake-up call has to do with the basics of Rule 34, specifically subsections (b)(2)(B) and (b)(2)(C):

It is time, once again, to issue a discovery wake-up call to the Bar in this District:1/ the Federal Rules of Civil Procedure were amended effective December 1, 2015, and one change that affects the daily work of every litigator is to Rule 34. Specifically (and I use that term advisedly), responses to discovery requests must:

* State grounds for objections with specificity;

* An objection must state whether any responsive materials are being withheld on the basis of that objection; and

* Specify the time for production and, if a rolling production, when production will begin and when it will be concluded.

Most lawyers who have not changed their “form file” violate one or more (and often all three) of these changes.

Judge Peck is right about that. But there are so many technical rules that lawyers do not exactly follow. Nothing new here. Boring. Right? Wrong. Why. Because Judge Peck has added teeth to his observation.

dino teachersIt is well known that most lawyers will continue to use their old forms unless they are pried out of their dying hands. Mere changes in the rules and resulting technical violations are not about to interfere with the basic lethargy inherent in legal practice. The law changes so slowly, even big money saving improvements like predictive coding are met with mere lip service praise followed by general neglect (hey, it requires learning and change).

judge_peckSo how to get lawyers attention? Judge Peck knows a way, it involves threats. Here is his conclusion in Fischer.

Conclusion
The December 1, 2015 amendments to the Federal Rules of Civil Procedure are now
15 months old. It is time for all counsel to learn the now-current Rules and update their “form” files. From now on in cases before this Court, any discovery response that does not comply with Rule 34’s requirement to state objections with specificity (and to clearly indicate whether responsive material is being withheld on the basis of objection) will be deemed a waiver of all objections (except as to privilege).

waived-stampYes. Judge Peck used the “w” word that lawyers all fear – WAIVER. And waiver of all objections no less. Lawyers love their objections and do not want anyone taking them away from them. They may even follow the rules to protect them. At least, that is Judge Peck’s thinking.

Rule 34(b)(2)

34b2What does that rule say that so many are thoughtlessly violating. What has made dear Judge Peck so hot under the collar? You can read his opinion to get the answer, and I strongly recommend that you do, but here are the two subsections of Rule 34(b)(2) that no one seems to be following. You might want to read them through carefully a few times.

Rule 34. Producing Documents, Electronically Stored Information, and Tangible Things, or Entering onto Land, for Inspection and Other Purposes

(b) Procedure.

(2) Responses and Objections.

(B) Responding to Each Item. For each item or category, the response must either state that inspection and related activities will be permitted as requested or state with specificity the grounds for objecting to the request, including the reasons. The responding party may state that it will produce copies of documents or of electronically stored information instead of permitting inspection. The production must then be completed no later than the time for inspection specified in the request or another reasonable time specified in the response.

(C) Objections. An objection must state whether any responsive materials are being withheld on the basis of that objection. An objection to part of a request must specify the part and permit inspection of the rest.

As to what that means you have no higher authority than the official Comments of the Rules Committee itself, which Judge Peck also quotes in full and adds some underlines for emphasis:

Rule 34(b)(2)(B) is amended to require that objections to Rule 34 requests be stated with specificity. This provision adopts the language of Rule 33(b)(4), eliminating any doubt that less specific objections might be suitable under Rule 34. The specificity of the objection ties to the new provision in Rule 34(b)(2)(C) directing that an objection must state whether any responsive materials are being withheld on the basis of that objection. An objection may state that a request is overbroad, but if the objection recognizes that some part of the request is appropriate the objection should state the scope that is not overbroad. Examples would be a statement that the responding party will limit the search to documents or electronically stored information created within a given period of time prior to the events in suit, or to specified sources. When there is such an objection, the statement of what has been withheld can properly identify as matters “withheld” anything beyond the scope of the search specified in the objection.

Rule 34(b)(2)(B) is further amended to reflect the common practice of producing copies of documents or electronically stored information rather than simply permitting inspection. The response to the request must state that copies will be produced. The production must be completed either by the time for inspection specified in the request or by another reasonable time specifically identified in the response. When it is necessary to make the production in stages the response should specify the beginning and end dates of the production.

Rule 34(b)(2)(C) is amended to provide that an objection to a Rule 34 request must state whether anything is being withheld on the basis of the objection. This amendment should end the confusion that frequently arises when a producing party states several objections and still produces information, leaving the requesting party uncertain whether any relevant and responsive information has been withheld on the basis of the objections. The producing party does not need to provide a detailed description or log of all documents withheld, but does need to alert other parties to the fact that documents have been withheld and thereby facilitate an informed discussion of the objection. An objection that states the limits that have controlled the search for responsive and relevant materials qualifies as a statement that the materials have been “withheld.”

2015 Adv. Comm. Notes to Rule 34 (emphasis added by Judge Peck).

Going back to Judge Peck’s analysis of the objections made in Fischer v. Forrest:

Let us count the ways defendants have violated the Rules:

First, incorporating all of the General Objections into each response violates Rule 34(b)(2)(B)’s specificity requirement as well as Rule 34(b)(2)(C)’s requirement to indicate whether any responsive materials are withheld on the basis of an objection. General objections should rarely be used after December 1, 2015 unless each such objection applies to each document request (e.g., objecting to produce privileged material).

Second, General Objection I objected on the basis of non-relevance to the “subject matter of this litigation.” (See page 3 above.) The December 1, 2015 amendment to Rule 26(b)(1) limits discovery to material “relevant to any party’s claim or defense . . . .” Discovery about “subject matter” no longer is permitted. General Objection I also objects that the discovery is not “likely to lead to the discovery of relevant, admissible evidence.” The 2015 amendments deleted that language from Rule 26(b)(1), and lawyers need to remove it from their jargon. See In re Bard IVC Filters Prod. Liab. Litig., 317 F.R.D. 562, 564 (D. Ariz. 2016) (Campbell, D.J.) (“The 2015 amendments thus eliminated the ‘reasonably calculated’ phrase as a definition for the scope of permissible discovery. Despite this clear change, many courts [and lawyers] continue to use the phrase. Old habits die hard. . . . The test going forward is whether evidence is ‘relevant to any party’s claim or defense,’ not whether it is ‘reasonably calculated to lead to admissible evidence.”‘).

Third, the responses to requests 1-2 stating that the requests are “overly broad and unduly burdensome” is meaningless boilerplate. Why is it burdensome? How is it overly broad? This language tells the Court nothing. Indeed, even before the December 1, 2015 rules amendments, judicial decisions criticized such boilerplate objections. See, e.g., Mancia v. Mayflower Textile Servs. Co., 253 F.R.D. 354, 358 (D. Md. 2008) (Grimm, M.J.) (“[B]oilierplate objections that a request for discovery is ‘over[broad] and unduly burdensome, and not reasonably calculated to lead to the discovery of material admissible in evidence,’ persist despite a litany of decisions from courts, including this one, that such objections are improper unless based on particularized facts.” (record cite omitted)).

Finally, the responses do not indicate when documents and ESI that defendants are producing will be produced.

________________

34b2-please_peck

POSTSCRIPT

Attorneys everywhere, not just in Judge Peck’s Court in New York, would be well advised to follow his wake-up call. Other courts around the country have already begun to follow in his footsteps. District Court Judge Mark Bennett has bench-slapped all counsel in Liguria Foods, Inc. v. Griffith Laboratories, Inc., 2017 BL 78800, N.D. Iowa, No. C 14-3041, 3/13/17), and, like Judge Peck, Iowa D.C. Judge Bennett warned all attorneys of future sanctions. Opinion found at Google Scholar at: https://scholar.google.com/scholar_case?case=13539597862614970677&hl=en&as_sdt=40006

The quick take-aways from the lengthy Liguria Foods opinion are:

  • Obstructionist discovery responses” in civil cases are a “menacing scourge” that must be met in the future with “substantial sanctions.
  • Attorneys are addicted to “repetitive discovery objections” that are “devoid of individualized factual analysis.”
  • “Judges need to push back, get our judicial heads out of the sand, stop turning a blind eye to the ‘boilerplate’ discovery culture and do our part to solve this cultural discovery ‘boilerplate’ plague.” 
  • Only by “imposing increasingly severe sanctions” will judges begin to change the culture of discovery abuse.
  • Instead of sanctions, the court accepted the “sincere representations” from the lead attorneys that they will be “ambassadors for changing the ‘boilerplate’ discovery objection culture” in both of their law firms.
  • NO MORE WARNINGS. IN THE FUTURE, USING ‘BOILERPLATE’ OBJECTIONS TO DISCOVERY IN ANY CASE BEFORE ME PLACES COUNSEL AND THEIR CLIENTS AT RISK FOR SUBSTANTIAL SANCTIONS,” the court said in ALL CAPS as the closing sentence.

This opinion is full of colorful language, not only about bad forms, but also over-contentious litigation. Judges everywhere are tired of the form objections most attorneys still use, especially if they don’t conform to new rules (or any rules). You should consider becoming the ambassador for changing the ‘boilerplate’ discovery objection culture in your firm.

Judge Bennett’s analysis points to many form objections, including Interrogatory objections, not just those saying “overbroad” that were discussed by Judge Peck under Rule 34 in Fischer. Here are a few general boilerplate objections that he points, which all look familiar to me:

  • Objection “to the extent they seek to impose obligations on it beyond those imposed by the Federal Rules of Civil Procedure or any other applicable rules or laws.”
  • Objection “to the extent they call for documents protected by the attorney-client privilege, the work product rule, or any other applicable privilege.”
  • Objection “to the extent they request the production of documents that are not relevant, are not reasonably calculated to lead to the discovery of admissible evidence or are not within their possession, custody and control.”
  • Objection “overbroad, unduly burdensome”
  • Objection “insofar as they seek information that is confidential or proprietary.”
  • “subject to [and without waiving] its general and specific objections”
  • Objection “”as the term(s) [X and Y] are not defined.”

Here are a few quotes to give you the flavor of how many judges feel about form objections:

This case squarely presents the issue of why excellent, thoughtful, highly professional, and exceptionally civil and courteous lawyers are addicted to “boilerplate” discovery objections.[1] More importantly, why does this widespread addiction continue to plague the litigation industry when counsel were unable to cite a single reported or non-reported judicial decision or rule of civil procedure from any jurisdiction in the United States, state or federal, that authorizes, condones, or approves of this practice? What should judges and lawyers do to substantially reduce or, more hopefully and optimistically, eliminate this menacing scourge on the legal profession? Perhaps surprisingly to some, I place more blame for the addiction, and more promise for a cure, on the judiciary than on the bar.

Indeed, obstructionist discovery practice is a firmly entrenched “culture” in some parts of the country, notwithstanding that it involves practices that are contrary to the rulings of every federal and state court to address them. As I remarked at an earlier hearing in this matter, “So what is it going to take to get . . . law firms to change and practice according to the rules and the cases interpreting the rules? What’s it going to take?”

On January 27, 2017, I entered an Order To Show Cause Why Counsel For Both Parties Should Not Be Sanctioned For Discovery Abuses And Directions For Further Briefing. In the Order To Show Cause, I directed that every attorney for the parties who signed a response to interrogatories or a response to a request for documents in this case, with the exception of local counsel, appear and show cause, at a hearing previously scheduled for March 7, 2017, why he should not be sanctioned for discovery abuses.

Judge Bennett held a long evidentiary hearing before issuing this Order where he questioned many attorneys for both sides under oath. (Amazing, huh?) This lead to the following comments in the Opinion:

As to the question of why counsel for both sides had resorted to “boilerplate” objections, counsel admitted that it had a lot to do with the way they were trained, the kinds of responses that they had received from opposing parties, and the “culture” that routinely involved the use of such “standardized” responses. Indeed, one of the attorneys indicated that some clients—although not the clients in this case—expect such responses to be made on their behalf. I believe that one of the attorneys hit the nail squarely on the head when he asserted that such responses arise, at least in part, out of “lawyer paranoia” not to waive inadvertently any objections that might protect the parties they represent. Even so, counsel for both parties admitted that they now understood that such “boilerplate” objections do not, in fact, preserve any objections. Counsel also agreed that part of the problem was a fear of “unilateral disarmament.” This is where neither party’s attorneys wanted to eschew the standard, but impermissible, “boilerplate” practices that they had all come to use because they knew that the other side would engage in “boilerplate” objections. Thus, many lawyers have become fearful to comply with federal discovery rules because their experience teaches them that the other side would abuse the rules. Complying with the discovery rules might place them at a competitive disadvantage.

Heed these calls and be your law firm’s ambassador for changing the ‘boilerplate’ discovery objection culture. Stop lawyers from making form objections, especially general objections, or risk the wrath of your local judge. Or, to put it another way, using other quaint boilerplate: Please Be Governed Accordingly.

 


2015 e-Discovery Rule Amendments: Dawning of the “Goldilocks Era”

November 11, 2015

Ralph_Losey_2013_abaThis blog presents my summary, analysis, and personal editorial comments on the 2015 Amendments to the Federal Rules of Civil Procedure that pertain to electronic discovery. The new rules go into effect on December 1st, 2015.

Overall Impressions

Overall the new Rules will be helpful, especially to newbies, but hardly the godsend that many hope for. The amendments will have very little impact on my legal practice. But that is only because the doctrines of proportionality and cooperation that the Amendments incorporate are already well-established in my firm. Many experienced attorneys say the same thing. The rule changes may make it a little easier to explain our positions to opposing counsel, and the court, but that is all.

Still, these rule amendments were not designed for experts. They were written for the vast majority of U.S. lawyers who are still struggling to do discovery in the modern age. Our profession remains embarrassingly computer challenged, so these rules are a necessary and good thing.

My only regret is that new Rule 37(e) may make it a little more difficult to catch and punish the few bad guys out there who try to cheat by destroying evidence. Still, we will get them. Fraudsters are never as smart as they think they are. When judges get the drift of what is happening, they will work around vagaries in new Rule 37(e) and send them packing. I am not overly concerned about that. Experienced federal judges can sniff out fraud a mile away and they do not hesitate to sanction bad faith attempts to game the system. We have defeated plenty of spoliating plaintiffs under the old rules and I am confident we will continue to do so under the new. The protests of some commentators on this issue seem a bit over-stated to me, although I do agree that the wording of new Rule 37(e) leaves much to be desired.

An Overly-Hard-Fought Victory for Proportionality

beavis-and-butt-head-fightingThe 2015 FRCP Rules Amendments were the most politicized and hard-fought in history. E-Discovery was the focus of all the battles. (Other changes are not-controversial and, not really that important, and will not be addressed here.) Large corporate and Plaintiffs attorney groups lobbied the supposedly independent Rules Committee for years. The well-funded defense Bar largely won, but the plaintiffs’ Bar still retained some bite and won several small victories. It was classic lobbying at its worst by both sides.

The Rules Committee should never have let itself get sucked into that kind of politics. They meant well, I’m sure, but they ended up with way too many conferences and bickering everywhere you looked. I personally got sick of it and cut way down on my schedule. I even quit one well-known group that allowed this infection to spoil its true purpose. Sad, but life is short. It is full of choices on what to do and who to do it with. I decided not to waste my time with silly games, nor watch the fall of a once great dynasty. I am consoled by the words of Churchill: “History will be kind to me for I intend to write it.”

Bottom line, partisan politics for court rule making must end with these 2015 Amendments. The judiciary and Rules Committee should be above politics. Make all of your meetings closed-door if you have to, but stop the circus. Hang your heads and learn from what happened.

As a result of the contentiousness of the proceedings, the final wording of most of the rules represent sausage making at its worst. The language is just filled with compromises. Years of interpretation litigation are assured. Maybe that can never be avoided, but certainly a better job could have been done by scholars working above the fray.

Proportionality Doctrine and the Beginning of the Goldilocks Era

In spite of the sordid background two high-minded themes emerged, much like flowers growing out of manure. The primary theme of all of the Amendments is clearly Proportionality. The secondary theme is an attempt to further attorney Cooperation by communication. Two doctrines promoted by the late, great founder of The Sedona Conference, Richard Braman.

goldilocksThe victory of proportionality proponents, myself included, may well usher in a new Goldilocks era for the Bar. Everyone who bothers to read the rules will know that they must look for discovery that is not too big, and not too small, but is just right. The just right Goldilocks zone of permitted discovery will balance out well-worn considerations, including costs, which are outlined by the rules.

This is not really new, of course. Old Rule 26(b)(2)(C) had the same intent for decades to avoid undue burden, by balance with benefits. But at least now the proportionality concerns to avoid undue expenses for discovery are up front and center to all discovery disputes. This forces judges to be more cost-conscious, and not allow liberal discovery, regardless of costs, delays and other burdens.

I have been promoting the proportionality doctrine at the heart of these amendments since at least 2010. So too did Richard Braman and his Sedona Conference. I recommend to you their latest version of the Commentary on Proportionality in Electronic Discovery (2013) that can be downloaded without cost at https://thesedonaconference.org/download-pub/1778.

For some of my articles on or featuring proportionality, please see:

Some contend that the changes in the rules embodying proportionality will make a big difference. Many long-term observers say that there are no real changes at all. It is just window dressing. So nothing will change. I think a “just rightGoldilocks type analysis suggests that the truth is somewhere in the middle, but inclined towards the “little change” side. See: Losey, R., One Man’s Trash is Another Man’s Evidence: Why We Don’t Need New Rules, We Need Understanding, Diligence, and Enforcement of Existing Rules (e-Discovery Team, 9/6/11) (criticizing the drive to solve the problems of e-discovery by just adding more rules, and suggesting instead that education and enforcement of existing rules were a better response).

Still, although a small change, and a sausage-like one at that, it is an important change. It should help all fair-minded attorneys to better serve their clients by protecting them from undue burdens in discovery, and also from undue burdens in preservation.

Goldilocks_chasedWe will all be arguing about the Goldilocks Zone now, where the burden is just right, is proportional, considering the criteria stated in the rules and the facts of the case. One size fits all is a thing of the past, especially when the one size is save everything and produce everything. Papa Bear’s big chair is way too large for most cases. And, small chair or not, every litigant is entitled to a seat at the discovery table, even a trespasser like Goldilocks.

New Rule 26(b)(1) – Discovery Scope and Limits

Here is the new language of 26(b)(1) which serves as the key provision in the 2015 Amendments implementing proportionality. Note that I have added the bullet-points here for clarity of reference and the bold. The original rules are, as usual, just one long run-on sentence.

Parties may obtain discovery regarding any nonprivileged matter that is relevant to any party’s claim or defense and proportional to the needs of the case, considering the

  • the importance of the issues at stake in the action,
  • 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.

SubJect MatterThe first big change to 26(b)(1) is not seen here because it is an omission. The scope is now limited to “any  party’s claim or defense.” Previously a court could expand relevance scope to “SUBJECT MATTER” of the case, not just specific claims. This expansion was supposed to require a good cause showing, but, in practice, this condition was given little weight by judges and poorly understood by the Bar. Full subject matter discovery was commonly allowed with little or no real showing of cause. Often responding parties would simply capitulate and not demand a good cause showing. This could, in my experience, often lead to greatly expanded discovery. Now relevance cannot be expanded beyond actual claims made. This is a big improvement.

I am proud to say that this is a revision that I suggested to the Committee for adoption. I accomplished this without lobbying. My one direct conservation with the big-name Committee chair at a Bar event was about two minutes long. I outlined the idea and suggested the Committee at least consider it. The elevator-speech proposal was instantly rebuffed by her. She smiled and said that had been considered many times before over the years and simply was not “politically doable.” Silly me, to resurrect such an old, stale idea.

Still, I had a beginners mind on rule changes. I was convinced we needed to tighten the spigot of relevance to help counter-act the information deluge. I updated my prior blog on the proposal, added some more legal citations and analysis to make it more scholarly, and put forth my best argument. Rethinking Relevancy: A Call to Change the Rules to Narrow the Scope of ESI Relevance (e-Discovery Team, 1/24/2011). That’s it. I wrote a 3,700 word article. Nothing more. I knew the Committee would at least know about the article, and maybe some would read it, as I knew that some of them were regular readers.

Since the proposal had merit, as far as I was concerned, that was all that was required. No politics. No lobbying, just one chat where the chair said no-way, and then submission of an  article making my case for elimination of “subject matter” discovery. In my case that was all that was necessary. It worked. That is how it should work. I was actually completely surprised to see the elimination of the old subject matter provisions when an early draft was published by the Rule Committee. All the Committee Note says about this change is as follows:

The amendment deletes the former provision authorizing the court, for good cause, to order discovery of any matter relevant to the subject matter involved in the action. Proportional discovery relevant to any party’s claim or defense suffices. Such discovery may support amendment of the pleadings to add a new claim or defense that affects the scope of discovery.

The attention and politics of the Committee was focused on the new wording added to Rule 26(b)(1), which outlined the six criteria to consider to determine proportionality:

  1. the importance of the issues at stake in the action,
  2. amount in controversy,
  3. the parties’ relative access to relevant information,
  4. the parties’ resources,
  5. the importance of the discovery in resolving the issues, and
  6. whether the burden or expense of the proposed discovery outweighs its likely benefit.

Not sure why this was such a big deal for them because in fact none of this language is new at all. All the Committee ended up doing was use the exact same language that appeared in Rule 26(b)(2)(C) and then add the parties’ relative access to relevant information.  This last addition was a last minute addition. All it does is add the accessibility provision already in Rule 26(b)(2)(B) that was added in the 2006 Amendments. You would think the Committee would improve upon the language more to give the Bench and Bar more guidance. Still, the importance of the proportionality requirement is intended to be elevated by this move to the defined scope of relevance section, the section where discoverability is limited to information that is proportional to the needs of the case.

Here is the Committee Note explaining their revision, one that many now seize upon as some bold godsend:

The considerations that bear on proportionality are moved from present Rule 26(b)(2)(C)(iii). Although the considerations are familiar, and have measured the court’s duty to limit the frequency or extent of discovery, the change incorporates them into the scope of discovery that must be observed by the parties without court order.

Dear Committee, they are more than just familiar as your Note says, they are exactly the same! Please. Many had hoped for more, myself included. Oh well, what do you expect from political sausage?

In any in-person presentation of these rules I would now go through how these four factors play into discovery in various types of cases. In my firm I discourse at length on how this plays out in employment cases.

  1. the importance of the issues at stake in the action,
  2. amount in controversy,
  3. the parties’ relative access to relevant information,
  4. the parties’ resources,
  5. the importance of the discovery in resolving the issues.

Goldilocks ZoneThere is really nothing new here except the third point about relative access, and, in my opinion, that last minute addition by the Committee adds nothing. It was already in 26(b)(2)(B). I have been applying these factors and analysis for over thirty-five years. I have been calling it proportionality for over five years.

In most cases, but certainly not all, the main factor that comes into play is expense. Does the burden or expense of the proposed discovery outweighs its likely benefit? And what is the real, non-inflated, amount in controversy? The main change the proportionality labeled rules now force is a shift in thinking, to try to get the Bench and Bar to look at discovery as the tradeoff that it has always been, to try to get everyone thinking proportionally.

Reasonably_CalculatedThe final relevant change to 26(b)(1) already seems to be widely misunderstood by the Bar, namely the rewording of provisions in the rule pertaining to discovery and admissibility. The old rule, which many lawyers disliked for good reason, said: “Relevant information need not be admissible at the trial if the discovery appears reasonably calculated to lead to the discovery of admissible evidence.” It is true that this sentence was deleted, but it is not true that discovery is limited to admissible evidence. I have already seen at least one CLE, sponsored by the ABA no less, that incorrectly states that the old standard is dead. It is not. Weakened perhaps, but not gone. Remember, we are dealing with politics again and compromise language. The Plaintiffs’ Bar managed to keep the idea alive, but the sentence was modified and its placement shuffled. Rule 26(b)(1) still says:

Information within this scope of discovery need not be admissible in evidence to be discoverable.

Here is how the Committee Note explains this revision:

The former provision for discovery of relevant but inadmissible information that appears reasonably calculated to lead to the discovery of admissible evidence is also amended. Discovery of nonprivileged information not admissible in evidence remains available so long as it is otherwise within the scope of discovery. Hearsay is a common illustration. The qualifying phrase — “if the discovery appears reasonably calculated to lead to the discovery of admissible evidence” — is omitted. Discovery of inadmissible information is limited to matter that is otherwise within the scope of discovery, namely that which is relevant to a party’s claim or defense and proportional to the needs of the case. The discovery of inadmissible evidence should not extend beyond the permissible scope of discovery simply because it is “reasonably calculated” to lead to the discovery of admissible evidence.

I predict that we will be litigating that oh so subtle distinction for years. It remains to be seen what the Magistrates who usually rule of such issues will make of this change. It also remains to be seen what the practical impact of this change will be. I think that the “claims made” versus “subject matter of the litigation” change will have a far greater impact.

What is a Proportional Spend on e-Discovery?

Assuming that monetary factors are the primary considerations in a case, how much should be spent on electronic discovery? Do not just brush the question aside by saying every case is different. They are many similarities too. The longer you practice the more aware you become of the recurring patterns. What I want the Bench and Bar to do is start thinking proportionally. To start thinking from an over-all budgetary perspective.

Consider this hypothetical, one where all other factors being equal, money was the primary criteria to evaluate proportionality.

  • Assume a case with a real-world true value of $1,000,000.
  • What would be a proportional total cost of defense?
    • Assume $381,966 (@38%)
  • What would be a proportional total cost of all discovery in such a case?
    • Assume $145,147 (@14.6%)
  • Now for the punchline, what would be a proportional cost of e-discovery in a case like that?
    • Assume $55,157 (@5.6%)

Where am I getting these numbers?

In part I am getting these dollar amounts from my 35 years of experience as an attorney in private practice handling a wide variety of commercial litigation vases, mainly large ones, but also many smaller cases too, and lately including many, many employment law cases.

These numbers may not hold true in single plaintiff discrimination cases, or other small matters. But there may be some general truth here. You can see that from the fact that most Bar associations allow 40% recovery for fees in contingency cases. That compares to the 38% proportional expense assumed here: $381,966 in total fees and costs for a million dollar case (remember, assume true settlement value here, after weighing and discounting risks, not b.s. positions or demands). What do you think? Is approximately 38% of the true case value a proportional total expense in complex litigation? Does 38% seem appropriate? Too high, too low? What do you think is a proportional percentage? Please leave your comments below or send me a private email.

What about my assumption of a total cost for all discovery of $145,147 in a case where total fees are $381,966. Is it reasonable, proportional, to assume a spend of $145,147 for discovery of all types, including e-discovery? That represents around 14.6% of the total amount in controversy. Is that number too low? Too high?

Is it proportional to assume a spend of around 5.6% of the total amount in controversy for all e-discovery related activities in a case? Under this million dollar scenario that would be $55,157. Again, what do you think? And a different but related question, what has your experience been?

Now consider the bigger question, does a general metric for Proportionality of expenditures to true case value make sense in the law? Be it 38% or whatever?

Assuming it makes sense to talk of a general ratio for proportionality: Is the 6% of the total value of a case a reasonable amount for a party to pay for ESI discovery alone? If not, higher or lower? What ranges are you seeing in practice? I am seeing a wide variety, but I think that is because we are still in an early stage of maturity, and that it will eventually settle down into a pattern.

Did you know that Intel has gone on record many times as reporting that its e-Discovery spend in large cases averages 80% of its total spend for cost of defense? Since Intel says an average of 80% of its total litigation cost go to e-Discovery, if they spent $400,000 to defend a $1 Million case, that would be a spend of $320,000 on e-discovery, which is 32% of total case value, not 6%. Does this seem fair? Appropriate? Proportional?

I can see patterns and costs ranges, but at the same time I see outliers in cost, especially on the high-end. In my experience these are usually due to external factors such as extreme belligerence by one side or the other, attorney personality disorders, or intense spoliation issues. Sometimes it just may have to do with information management issues. But if you discount the low and high outliers a pattern starts to emerge. Hopefully someday an objective, systematic study will be done. My observations so far are just ad hoc.

Might the Golden Ratio Help Us to Navigate the Goldilocks Zone?

Aside from my long experience with what lawsuits cost, and the experience of others, the primary source of my hypothetical numbers here is from a famous ratio in math and art known as the Golden Ratio or Golden Mean: 1.61803399 to 1.0.

phisection

I came up with the numbers in the hypothetical by use of this ratio:

$1,000,000 – $381,966 (38%) – $145,147 (14.6%) – $55,1567 (5.6%)

These numbers are progressively smaller by .3819661%, and in this manner follows the proportion of the Golden Ratio.

The Golden Ratio is mathematically defined as the division where a+b is to a, as a is to b, as shown below. In other words, “two quantities are in the golden ratio if the ratio of the sum of the quantities to the larger quantity is equal to the ratio of the larger quantity to the smaller one.”

Golden_ratio_line

In Math this is known as PHI – Φ.

golden ratio shown in a model's faceIt does not matter if the math confuses you, just know that this proportion has been considered the perfect ratio to evoke feelings of beauty and contentment for thousands of years. It is well-known in all of the Arts, including especially Painting, Music and Architecture. It is the division that feels right, seems beautiful, and creates a deep intuitive sense of perfect division. It still does. Just look at the designs of most Apple products. This ratio is also found everywhere in nature, including the human body and structure of galaxies. It seems to be hardwired into our brains and all of nature.

I put together the two videos below to illustrate what I mean. There is far more to this than a math trick. The Golden Ratio seems to embody a basic truth. Every educated person should at least be familiar with this interesting phenomenon.

___

Perhaps the idea of perfect proportionality in art, math and science may also apply to law? Maybe it is a basic component of human reasonability and fairness? What do you think?

After giving a presentation much like this at a CLE I asked the question of whether the Golden Ratio in art, math and science might also apply to the law? I wanted to know what everyone thought and to get some interaction going. It was a daylong conference sponsored by Capital One and dedicated solely to the topic of Proportionality. Maura Grossman and I co-chaired the event in the Fall of 2010, when the doctrine was still new. Everyone had a clicker and answered yes or no to the question.

There was an eerie silence in the large auditorium after the results were quickly tabulated and shown on screen. Do you know what the proportion of yes and no answers were? 38% said NO, and 62% said Yes. The Golden Ratio came though in the opinion of the 200 or so attorneys and judges in attendance. You cannot make this stuff up. At first I thought maybe the boys in the tech booth were messing with me, but no. It was automatic and they were not paying attention. It was real. It was beautiful.

Facciola has proportionalityAsk Judge Facciola about it sometime. He was there and right after my opening spoke of the Golden Ratio as used in music. I remember he played an example from Bach. Judge Peck, Judge Mass and Judge Hedges were also there. So too was Judge Grimm, but by video appearance. Jason Baron, Conor Crowley, and Patrick Oot were also in attendance. So, I have a lot of witnesses to confirm what happened. It was a landmark event in many ways. One I will never forget for a whole host of reasons.

golden ratio is based in the Parthenon

A natural ratio clearly exists for proportionality in nature, art and math. I am not saying that this 38/62 ratio, 1.61803399, should apply in the law too as a general guide for proportionality. But it might. It is at least something to think about. What do you think? Again, let me know.

russian dollsFYI, I have written about this before with several examples, but never before described the Capital One conference and spooky Golden Ratio vote. My Basic Plan for Document Reviews: The “Bottom Line Driven” Approach (see especially footnote 15 and supporting text where I compare this drill-down proportionality analysis to Russian nesting dolls).

Change to Rule 37(e)

Rule 37(e) was completely rewritten and was the focus of most of the politics. That explains why the wording is such a mess. The Sedona Conference recommendations on how to revise the rules were largely ignored.

Judge Shira ScheindlinA large part of the politics here, from what I could see, was to counter-act Judge Shira Scheindlin (and a few other powerful judges, mostly in SDNY) who interpreted 2nd Circuit law to assert their right to impose case dispositive sanctions on the basis of gross-negligence alone. See: Pension Committee of the University of Montreal Pension Plan v. Banc of America SecuritiesLLC, 685 F.Supp.2d 456, 465 (S.D.N.Y.2010). Many in the defense Bar argued that there was a dangerous conflict in the Circuits, but since any large company can get sued in New York City, the SDNY views took practical priority over all conflicting views. They complained that the SDNY outlier views forced large corporations to over-preserve is a disproportionate manner.

Naturally Judge Scheindlin opposed these revisions and vigorously articulated the need to protect the judicial system from fraudsters. She proposed alternative language. The plaintiffs Bar stood behind her, but they lost. Sedona tried to moderate and failed for reasons I would rather not go into.

Other Circuits outside of New York make clear that case dispositive sanctions should only be imposed if INTENTIONAL or BAD FAITH destruction of evidence was proven. Many defense Bar types thought that this distinction with GROSS NEGLIGENCE was a big deal. So they fought hard and now pat themselves on the back. I think their celebration is overblown.

I personally do not think the difference between Bad Faith and Gross Negligence is all that meaningful in practice. For that reason I do not think that this rule change will have a big impact. Still, it is likely to make it somewhat easier for parties accused of spoliation to defend themselves and avoid sanctions, especially strong sanctions. If you think this is a good thing, then celebrate away. I don’t. The reality is this revision may well harm parties on both sides of the v., defendants and plaintiffs alike. I know we now see many Plaintiffs destroying evidence, especially cloud emails and Facebook posts. I expect they will rely upon this rule change to try to get away with it.

We will be litigating these issues for years, but as mentioned, I have faith in our federal judiciary. No matter what the rules, if they sniff out fraud, they will take appropriate action. The exact wording of the rules will not matter much. What was once labeled gross negligence will now be called bad faith. These concepts are so flexible and the entire pursuit of fraud like this is very fact intensive.

I think the best thing to do at this point is all of Rule 37(e) in full, as it bears repetitive reading:

If electronically stored information that should have been preserved in the anticipation or conduct of litigation is lost because a party failed to take reasonable steps to preserve it, and it cannot be restored or replaced through additional discovery, the court:

(1) upon finding prejudice to another party from loss of the information, may order measures no greater than necessary to cure the prejudice; or

(2) only upon finding that the party acted with the intent to deprive another party of the information’s use in the litigation may:

(A) presume that the lost information was unfavorable to the party;

(B) instruct the jury that it may or must presume the information was unfavorable to the party; or

(C) dismiss the action or enter a default judgment.

Judge Lee RosenthalI could talk up each paragraph, but this article is already overly long. I only pause to note how the rule now makes proportionality expressly relevant to preservation for the first time. Before this change our primary authority was the Order of the former Rules Committee chair, Judge Lee Rosenthal. Rimkus v Cammarata, 688 F. Supp. 2d 598 (S.D. Tex. 2010):

Whether preservation or discovery conduct is acceptable in a case depends on what is reasonable, and that in turn depends on whether what was done – or not done – was proportional to that case and consistent with clearly established applicable standards.

I strongly recommend that you read the extensive Committee Note that tries to explain this rule. The Notes can be cited and are often found to be persuasive, although, of course, never technically binding authority. Still, until we have case law on Rule 37(e), the Notes will be very important.

Minor Changes to Rules 26 & 34

Under Modified Rule 26(d)(2) a Request to Produce can be served anytime AFTER 21 days from the service of process.  You do not have to wait for the 26(f) conference. Under Modified Rule 34(b)(2)(A) a response to an early RFP is not due until 30 days after the parties’ first Rule 26(f) conference. This early service change was designed to encourage meaningful ESI discussion at 26(f) meet and greets.

Rule 34(b)(2)(B) was modified to require specific objections to request categories and “state whether any responsive materials are being withheld on the basis of that objection.” No duh, right? Yet I have seen this time and again, an objection is stated where no documents exist to begin with. Why?

Rule 26(f) was modified to include discussion of preservation, but also to include discussion of Evidence Rule 502 – Clawback Orders.

Change to Rule 16(b)

claws dementorNew language was added to Rule 16(b) as follows:

Scheduling Order may …

(iv) “… include any “agreements reached under Federal Rule of Evidence 502.”

(v) “direct that before moving for an order relating to discovery, the movant must request a conference with the court.”

Everyone is encouraged to entered into clawback agreements and 502(d) orders.

Change to Rule 1: An Already Great, But Underused Rule, Is Now Even Better

Waxse_LoseyI saved the best rule change for last, the change to Rule 1.0. Judge Waxse, the great promoter of Rule 1.0, should be happy (he often is anyway). Rule 1.0 FRCP – the JUST, SPEEDY AND INEXPENSIVE rule – is one of the most important rules in the book and yet, at the same time, one of the most overlooked and under-cited. All of the e-discovery knowledgable judges, not just David Waxse, can and do wax on and on about this rule. 

The 2015 Amendments are designed to further strengthen this important rule.  Rule 1 has long required judges to “construe and administer” all of the other rules in such a way as to not only secure “justice,” as you would expect, but also to secure “speedy and inexpensive” determinations. Surprised?

This dictate has long been an important policy for rule construction. It has been helpful to those who used it to oppose expensive, burdensome e-discovery. Nothing drives up expense more than “discovery about discovery” or detours into whether efforts to preserve, search or produce ESI have been extensive enough. Courts may allow this kind of expensive discovery if justice requires it, but only after balancing the other two equally important considerations of speed and expense. Here we have another proportionality analysis, one that applies indirectly to every other rule in the book.

The 2015 Amendments enlarged and strengthened the “just, speedy and inexpensive” dictates by making it clear that this duty not only applies to the court, the judges, but also to the parties and their attorneys. Moreover, the revised rule not only requires judges and parties to construe and administer the rules to attain just, speedy and inexpensive determinations, it also requires them to employ all of the other rules in this manner. The revised rule 1.0 reads as follows (new language in bold):

They (all of the rules) should be construed, administered, and employed by the court and the parties to secure the just, speedy, and inexpensive determination of every action and proceeding.

These revisions squarely place the burden of efficient litigation upon counsel, as well as the court. It is now a clear rule violation for an attorney to demand justice, no matter what it costs or how long it takes. All three criteria must be considered and implemented.

The Rule 1.0 change perfectly frames all of the other 2015 Amendments on proportionality and cooperation in ESI discovery and preservation.  As the Rules Committee Commentary to the Rule 1.0 amendments explains:

Most lawyers and parties cooperate to achieve these ends. But discussions of ways to improve the administration of civil justice regularly include pleas to discourage overuse, misuse, and abuse of procedural tools that increase cost and result in delay. Effective advocacy is consistent with — and indeed depends upon — cooperative and proportional use of procedure.”

Rule 1.0 now stands as powerful shield to oppose any counsel’s improper use of discovery as a weapon. Cost and delay must always be taken into consideration. Every motion for protective order should begin with a recitation to Rule One.

Conclusion

Ralph_x-mas_2013Update all of your discovery briefs to incorporate the new rules. Think proportional and act proportional. Sherlock Holmes was famous for his 7% solution, try mixing up your own 5.6% solution. That would be beautiful wouldn’t it, to only spend $5,600 total on e-Discovery in a $100,000 case? Try to come up with an overall budget. Figure out what you think is proportional to the case. Do not wait to respond to excessive demands. Be proactive. How many custodians are proportional? What is an appropriate date range? What ESI is really important and necessary to the case? How many files need be reviewed under a realistic cost-benefit analysis? What are the benefits? The burdens?

Talk about true case value with opposing counsel. Never bad mouth your client, but be honest. Get beyond the b.s. and posturing that does nothing but cause delay and expense. That is the only way your proportionality discussions will get real. The only way the judge will ever see things your way.

Other side won’t cooperate? Dealing with inept phonies? Have these discussions with the judge. Ask for a 16(b) conference to work out disagreements that surface in the 26(f) conference. Most judges have a pretty good feel for what certain kinds of cases are usually worth. Have the wake-up call early and try to save your client money. Analyze and argue benefit/burden. Also, be real and do not exaggerate what your e-discovery expenses will be. Back up your estimates with realistic numbers. Get vendors or specialists to help you.

All of this means that you must front-end your e-discovery work. It should come right after the retainer clears. The new Rule 37(e) is not a free pass to let up on preservation efforts or data collection. Find out what your problems are, if any, and talk about them asap. Bring them to the attention of the judge. Show that you are in good faith. The law never demands perfection, but does demand honest, reasonable efforts.

Make your discovery plan early. What do you want the other side to produce? Be specific. Have concrete discussions at the 26(f). The judges are getting fed up with drive-by meet and greets. It is dangerous to put off these discussions. Arrive at a fair balance between risk mitigation and cost control and move things along counsel. Speed counts, right up there with expense and justice. Your clients will appreciate that too.

Use honesty and diligence to navigate your way to the Goldilocks zone. Steer with realistic analysis. Be driven not only by the desire for justice, but also for quickness and sparse expense. Learn the new analytics, the new language and concepts of proportion. Master these new rules, as well as the e-discovery rules that remain from the 2006 Amendments, and you will prosper in the new Goldilocks Era.



Proposed Amendments to the Rules: the “Easy to Read” e-Discovery Only Version

August 16, 2013

I could not find a statement of the proposed rules on e-discovery that did not also include hundreds of pages of unrelated proposed changes to bankruptcy and other non-e-discovery rules. For my own benefit, and as a service to the e-discovery community, I created the below version of all of the proposed changes to FRCP that concern e-discovery. The full 354 pages of all of the rule changes can be found here, but I think you will find this much easier to read.

________________________

PROPOSED AMENDMENTS TO THE FEDERAL RULES OF CIVIL PROCEDURE

(New material is underlined and in blue font; matter to be omitted is lined through and in red font.)

1     Rule 1. Scope and Purpose
2     These rules govern the procedure in all civil actions
3     and proceedings in the United States district courts, except
4     as stated in Rule 81. They should be construed, and
5     administered, and employed by the court and the parties to
6     secure the just, speedy, and inexpensive determination of
7     every action and proceeding.

Committee Note
Rule 1 is amended to emphasize that just as the court
should construe and administer these rules to secure the
just, speedy, and inexpensive determination of every action,
so the parties share the responsibility to employ the rules in
the same way. Most lawyers and parties cooperate to
achieve these ends. But discussions of ways to improve the
administration of civil justice regularly include pleas to
discourage overuse, misuse, and abuse of procedural tools
that increase cost and result in delay. Effective advocacy is
consistent with — and indeed depends upon — cooperative
and proportional use of procedure.

_______________________________/

1     Rule 16. Pretrial Conferences; Scheduling;
2     Management
3     * * * * *
4     (b) Scheduling.

………

(3)     Contents of the Order.
25      * * * * *
26     (B) Permitted Contents. The scheduling
27     order may:
28     * * * * *
29     (iii) provide for disclosure, or
30     discovery, or preservation of
31     electronically stored
32     information;
33     (iv) include any agreements the
34     parties reach for asserting
35     claims of privilege or of
36     protection as trial-preparation
37     material after information is
38     produced, including
39     agreements reached under
40     Federal Rule of Evidence
41     502;
42     (v) direct that before moving for
43     an order relating to
44     discovery, the movant must
45     request a conference with the 
46     court;†
47     * * * * *

†Present (v) and (vi) would be renumbered.

Committee Note

The provision for consulting at a scheduling
conference by “telephone, mail, or other means” is deleted.
A scheduling conference is more effective if the court and parties
engage in direct simultaneous communication. The
conference may be held in person, by telephone, or by more
sophisticated electronic means.

The time to issue the scheduling order is reduced to
the earlier of 90 days (not 120 days) after any defendant
has been served, or 60 days (not 90 days) after any
defendant has appeared. This change, together with the
shortened time for making service under Rule 4(m), will
reduce delay at the beginning of litigation. At the same
time, a new provision recognizes that the court may find
good cause to extend the time to issue the scheduling order.
In some cases it may be that the parties cannot prepare
adequately for a meaningful Rule 26(f) conference and then
a scheduling conference in the time allowed. Because the
time for the Rule 26(f) conference is geared to the time for
the scheduling conference or order, an order extending the
time for the scheduling conference will also extend the time
for the Rule 26(f) conference. But in most cases it will be
desirable to hold at least a first scheduling conference in the
time set by the rule.

Three items are added to the list of permitted
contents in Rule 16(b)(3)(B).

The order may provide for preservation of
electronically stored information, a topic also added to the
provisions of a discovery plan under Rule 26(f)(3)(C).
Parallel amendments of Rule 37(e) recognize that a duty to
preserve discoverable information may arise before an
action is filed, and may be shaped by prefiling requests to
preserve and responses to them.

The order also may include agreements
incorporated in a court order under Evidence Rule 502
controlling the effects of disclosure of information covered
by attorney-client privilege or work-product protection, a
topic also added to the provisions of a discovery plan under
Rule 26(f)(3)(D).

Finally, the order may direct that before filing a
motion for an order relating to discovery the movant must
request a conference with the court. Many judges who hold
such conferences find them an efficient way to resolve
most discovery disputes without the delay and burdens
attending a formal motion, but the decision whether to
require such conferences is left to the discretion of the
judge in each case.

_______________________________/

1      Rule 26. Duty to Disclose; General Provisions
2      Governing Discovery
3       * * * * *
4       (b) Discovery Scope and Limits.
5       (1) Scope in General. Unless otherwise limited
6       by court order, the scope of discovery is as
7       follows: Parties may obtain discovery
8       regarding any nonprivileged matter that is
9       relevant to any party’s claim or defense and
10     proportional to the needs of the case,
11     considering the amount in controversy, the
12     importance of the issues at stake in the
13     action, the parties’ resources, the importance
14     of the discovery in resolving the issues, and
15     whether the burden or expense of the
16     proposed discovery outweighs its likely
17     benefit. Information within this scope of
18     discovery need not be admissible in
19     evidence to be discoverable. — including
20     the existence, description, nature, custody,
21     condition, and location of any documents or
22     other tangible things and the identity and
23     location of persons who know of any
24     discoverable matter. For good cause, the
25     court may order discovery of any matter
26     relevant to the subject matter involved in the
27     action. Relevant information need not be
28     admissible at the trial if the discovery
29     appears reasonably calculated to lead to the
30     discovery of admissible evidence. All
31     discovery is subject to the limitations
32     imposed by Rule 26(b)(2)(C).
33     (2) Limitations on Frequency and Extent.
34     (A) When Permitted. By order, the court
35     may alter the limits in these rules on
36     the number of depositions, and
37     interrogatories, and requests for
38     admissions, or on the length of
39     depositions under Rule 30. By order
40     or local rule, the court may also limit
41     the number of requests under
42     Rule 36.
43     * * * * *
44     (C) When Required. On motion or on its
45     own, the court must limit the
46     frequency or extent of discovery
47     otherwise allowed by these rules or
48     by local rule if it determines that:
49     * * * * *
50     (iii) the burden or expense of the
51     proposed discovery is outside
52     the scope permitted by
53     Rule 26(b)(1) outweighs its
54     likely benefit, considering the
55     needs of the case, the amount
56     in controversy, the parties’
57     resources, the importance of
58     the issues at stake in the
59     action, and the importance of
60     the discovery in resolving the
61     issues.
62     * * * * *
63     (c) Protective Orders.
64     (1) In General. * * * The court may, for good
65     cause, issue an order to protect a party or
66     person from annoyance, embarrassment,
67     oppression, or undue burden or expense,
68     including one or more of the following:
69     * * * * *
70     (B) specifying terms, including time and
71     place or the allocation of expenses,
72     for the disclosure or discovery;
73     * * * * *
74     (d) Timing and Sequence of Discovery.
75     (1) Timing. A party may not seek discovery
76     from any source before the parties have
77     conferred as required by Rule 26(f), except:
78     (A) in a proceeding exempted from
79     initial disclosure under
80     Rule 26(a)(1)(B),; or
81     (B) when authorized by these rules,
82     including Rule 26(d)(2), by
83     stipulation, or by court order.
84     (2) Early Rule 34 Requests.
85     (A) Time to Deliver. More than 21 days
86     after the summons and complaint are
87     served on a party, a request under
88     Rule 34 may be delivered:
89     (i) to that party by any other
90     party, and
91     (ii) by that party to any plaintiff
92     or to any other party that has
93     been served.
94     (B) When Considered Served. The
95     request is considered as served at the
96     first Rule 26(f) conference.
97     (23) Sequence. Unless, on motion, the parties
98     stipulate or the court orders otherwise for
99     the parties’ and witnesses’ convenience and
100    in the interests of justice:
101    (A) methods of discovery may be used in
102    any sequence; and
103    (B) discovery by one party does not
104    require any other party to delay its
105    discovery.
106    * * * * *
107    (f) Conference of the Parties; Planning for Discovery.
108    * * * * *
109    (3) Discovery Plan. A discovery plan must
110    state the parties’ views and proposals on:
111    * * * * *
112    (C) any issues about disclosure, or
113    discovery, or preservation of
114    electronically stored information,
115    including the form or forms in which
116    it should be produced;
117    (D) any issues about claims of privilege
118    or of protection as trial-preparation
119    materials, including — if the parties
120    agree on a procedure to assert these
121    claims after production — whether
122    to ask the court to include their
123    agreement in an order under Federal
124    Rule of Evidence 502;
125    * * * * *

Committee Note

The scope of discovery is changed in several ways.
Rule 26(b)(1) is revised to limit the scope of discovery to
what is proportional to the needs of the case. The
considerations that bear on proportionality are moved from
present Rule 26(b)(2)(C)(iii). Although the considerations
are familiar, and have measured the court’s duty to limit the
frequency or extent of discovery, the change incorporates
them into the scope of discovery that must be observed by
the parties without court order.

The amendment deletes the former provision
authorizing the court, for good cause, to order discovery of
any matter relevant to the subject matter involved in the
action. Proportional discovery relevant to any party’s claim
or defense suffices. Such discovery may support
amendment of the pleadings to add a new claim or defense
that affects the scope of discovery.

The former provision for discovery of relevant but
inadmissible information that appears reasonably calculated
to lead to the discovery of admissible evidence is also
amended. Discovery of nonprivileged information not
admissible in evidence remains available so long as it is
otherwise within the scope of discovery. Hearsay is a
common illustration. The qualifying phrase — “if the
discovery appears reasonably calculated to lead to the
discovery of admissible evidence” — is omitted. Discovery
of inadmissible information is limited to matter that is
otherwise within the scope of discovery, namely that which
is relevant to a party’s claim or defense and proportional to
the needs of the case. The discovery of inadmissible
evidence should not extend beyond the permissible scope
of discovery simply because it is “reasonably calculated” to
lead to the discovery of admissible evidence.

Rule 26(b)(2)(A) is revised to reflect the addition of
presumptive limits on the number of requests for admission
under Rule 36. The court may alter these limits just as it
may alter the presumptive limits set by Rules 30, 31, and
33.

Rule 26(b)(2)(C)(iii) is amended to reflect the
transfer of the considerations that bear on proportionality to
Rule 26(b)(1). The court still must limit the frequency or
extent of proposed discovery, on motion or on its own, if it
is outside the scope permitted by Rule 26(b)(1).
Rule 26(b)(2)(C) is further amended by deleting the
reference to discovery “otherwise allowed by these rules or
local rule.” Neither these rules nor local rules can
“otherwise allow” discovery that exceeds the scope defined
by Rule 26(b)(1) or that must be limited under
Rule 26(b)(2)(C).

Rule 26(c)(1)(B) is amended to include an express
recognition of protective orders that specify terms
allocating expenses for disclosure or discovery. Authority
to enter such orders is included in the present rule, and
courts are coming to exercise this authority. Explicit
recognition will forestall the temptation some parties may
feel to contest this authority.

Rule 26(d)(1)(B) is amended to allow a party to
deliver Rule 34 requests to another party more than 21 days
after that party has been served even though the parties
have not yet had a required Rule 26(f) conference. Delivery
may be made by any party to the party that has been served,
and by that party to any plaintiff and any other party that
has been served. Delivery does not count as service; the
requests are considered to be served at the first Rule 26(f)
conference. Under Rule 34(b)(2)(A) the time to respond
runs from service. This relaxation of the discovery
moratorium is designed to facilitate focused discussion
during the Rule 26(f) conference. Discussion at the
conference may produce changes in the requests. The
opportunity for advance scrutiny of requests delivered
before the Rule 26(f) conference should not affect a
decision whether to allow additional time to respond.
Former Rule 26(d)(2) is renumbered as (d)(3) and amended
to recognize that the parties may stipulate to case
specific sequences of discovery.

Rule 26(f)(3) is amended in parallel with
Rule 16(b)(3) to add two items to the discovery plan —
issues about preserving electronically stored information
and court orders on agreements to protect against waiver of
privilege or work-product protection under Evidence
Rule 502. Parallel amendments of Rule 37(e) recognize that
a duty to preserve discoverable information may arise
before an action is filed, and may be shaped by prefiling
requests to preserve and responses to them.

_______________________/

1     Rule 34. Producing Documents, Electronically
2     Stored Information, and Tangible Things, or Entering
3     onto Land, for Inspection and Other Purposes
4     * * * * *
5     (b) Procedure.
6     * * * * *
7     (2) Responses and Objections.
8     * * * * *
9       (A) Time to Respond. The party to
10     whom the request is directed must
11     respond in writing within 30 days
12     after being served or — if the request
13     was delivered under Rule 26(d)(2)
14     — within 30 days after the parties’
15     first Rule 26(f) conference. A shorter
16     or longer time may be stipulated to
17     under Rule 29 or be ordered by the
18     court.
19     (B) Responding to Each Item. For each
20     item or category, the response must
21     either state that inspection and
22     related activities will be permitted as
23     requested or state an objection to the
24     request the grounds for objecting to
25     the request with specificity,
26     including the reasons. The
27     responding party may state that it
28     will produce copies of documents or
29     of electronically stored information
30     instead of permitting inspection. The
31     production must then be completed
32     no later than the time for inspection
33     stated in the request or a later
34     reasonable time stated in the
35     response.
36     (C) Objections. An objection must state
37     whether any responsive materials are
38     being withheld on the basis of that
39     objection. An objection to part of a
40     request must specify the part and
41     permit inspection of the rest.
42     * * * * *

Committee Note

Several amendments are made in Rule 34, aimed at
reducing the potential to impose unreasonable burdens by
objections to requests to produce.

Rule 34(b)(2)(A) is amended to fit with new
Rule 26(d)(2). The time to respond to a Rule 34 request
delivered before the parties’ Rule 26(f) conference is 30
days after the first Rule 26(f) conference.

Rule 34(b)(2)(B) is amended to make it clear that
objections to Rule 34 requests must be stated with
specificity. This provision adopts the language of
Rule 33(b)(4), eliminating any doubt that less specific
objections might be suitable under Rule 34.

Rule 34(b)(2)(B) is further amended to reflect the
common practice of producing copies of documents or
electronically stored information rather than simply
permitting inspection. The response to the request must
state that copies will be produced. The production must be
completed either by the time for inspection stated in the
request or by a later reasonable time specifically identified
in the response. When it is necessary to make the
production in stages the response should specify the
beginning and end dates of the production.

Rule 34(b)(2)(C) is amended to provide that an
objection to a Rule 34 request must state whether anything
is being withheld on the basis of the objection. This
amendment should end the confusion that frequently arises
when a producing party states several objections and still
produces information, leaving the requesting party
uncertain whether any relevant and responsive information
has been withheld on the basis of the objections. An
objection that states the limits that have controlled the
search for responsive and relevant materials qualifies as a
statement that the materials have been “withheld.”
Examples would be a statement that the search was limited
to materials created during a defined period, or maintained
by identified sources.

_____________________________/

1      Rule 37. Failure to Make Disclosures or to Cooperate
2      in Discovery; Sanctions
3      (a) Motion for an Order Compelling Disclosure or
4      Discovery.
5      * * * * *
6      (2) Specific Motions.
7      * * * * *
8      (B) To Compel a Discovery Response. A
9       party seeking discovery may move
10     for an order compelling an answer,
11     designation, production, or
12     inspection. This motion may be
13     made if:
14     * * * * *
15     (iv) a party fails to produce
16     documents or fails to respond
17     that inspection will be
18     permitted — or fails to
19     permit inspection — as
20     requested under Rule 34.
21     * * * * *

Committee Note

Rule 37(a)(3)(B)(iv) is amended to reflect the
common practice of producing copies of documents or
electronically stored information rather than simply
permitting inspection. This change brings item (iv) into line
with paragraph (B), which provides a motion for an order
compelling “production, or inspection.”

________________________________/

1      Rule 37. Failure to Make Disclosures or to Cooperate
2      in Discovery; Sanctions
3      * * * * *
4      (e) Failure to Provide Electronically Stored
5      Information. Absent exceptional circumstances, a
6      court may not impose sanctions under these rules on
7      a party for failing to provide electronically stored
8      information lost as a result of the routine, good-faith
9      operation of an electronic information system.
10     (e) Failure to Preserve Discoverable Information.
11     (1) Curative measures; sanctions. If a party
12     failed to preserve discoverable information
13     that should have been preserved in the
14     anticipation or conduct of litigation, the
15     court may:
16     (A) permit additional discovery, order
17     curative measures, or order the party
18     to pay the reasonable expenses,
19     including attorney’s fees, caused by
20     the failure; and
21     (B) impose any sanction listed in Rule
22     37(b)(2)(A) or give an adverse-
23     inference jury instruction, but only if
24     the court finds that the party’s
25     actions:
26     (i) caused substantial prejudice
27     in the litigation and were
28     willful or in bad faith; or
29     (ii) irreparably deprived a party
30     of any meaningful
31     opportunity to present or
32     defend against the claims in
33     the litigation.
34     (2) Factors to be considered in assessing a
35     party’s conduct. The court should consider
36     all relevant factors in determining whether a
37     party failed to preserve discoverable
38     information that should have been preserved
39     in the anticipation or conduct of litigation,
40     and whether the failure was willful or in bad
41     faith. The factors include:
42     (A) the extent to which the party was on
43     notice that litigation was likely and
44     that the information would be
45     discoverable;
46     (B) the reasonableness of the party’s
47     efforts to preserve the information;
48     (C) whether the party received a request
49     to preserve information, whether the
50     request was clear and reasonable,
51     and whether the person who made it
52     and the party consulted in good faith
53     about the scope of preservation;
54     (D) the proportionality of the
55     preservation efforts to any
56     anticipated or ongoing litigation; and
57     (E) whether the party timely sought the
58     court’s guidance on any unresolved
59     disputes about preserving
60     discoverable information.
61     * * * * *

Committee Note

In 2006, Rule 37(e) was added to provide protection
against sanctions for loss of electronically stored
information under certain limited circumstances, but
preservation problems have nonetheless increased. The
Committee has been repeatedly informed of growing
concern about the increasing burden of preserving
information for litigation, particularly with regard to
electronically stored information. Many litigants and
prospective litigants have emphasized their uncertainty
about the obligation to preserve information, particularly
before litigation has actually begun. The remarkable
growth in the amount of information that might be
preserved has heightened these concerns. Significant
divergences among federal courts across the country have
meant that potential parties cannot determine what
preservation standards they will have to satisfy to avoid
sanctions. Extremely expensive overpreservation may
seem necessary due to the risk that very serious sanctions
could be imposed even for merely negligent, inadvertent
failure to preserve some information later sought in
discovery.

This amendment to Rule 37(e) addresses these
concerns by adopting a uniform set of guidelines for federal
courts, and applying them to all discoverable information,
not just electronically stored information. The amended
rule is not limited, as is the current rule, to information lost
due to “the routine, good-faith operation of an electronic
information system.” 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.
It does not provide “bright line” preservation directives
because bright lines seem unsuited to a set of problems that
is intensely context-specific. Instead, the rule focuses on a
variety of considerations that the court should weigh in
calibrating its response to the loss of information.

Amended Rule 37(e) supersedes the current rule
because it provides protection for any conduct that would
be protected under the current rule. The current rule
provides: “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.” The routine good faith operation of
an electronic information system should be respected under
the amended rule. As under the current rule, the prospect
of litigation may call for altering that routine operation.
And the prohibition of sanctions in the amended rule means
that any loss of data that would be insulated against
sanctions under the current rule would also be protected
under the amended rule.

Amended Rule 37(e) applies to loss of discoverable
information “that should have been preserved in the
anticipation or conduct of litigation.” This preservation
obligation was not created by Rule 37(e), but has been
recognized by many court decisions. It may in some
instances be triggered or clarified by a court order in the
case. Rule 37(e)(2) identifies many of the factors that
should be considered in determining, in the circumstances
of a particular case, when a duty to preserve arose and what
information should have been preserved.

Except in very rare cases in which a party’s actions
cause the loss of information that irreparably deprives
another party of any meaningful opportunity to present or
defend against the claims in the litigation, sanctions for loss
of discoverable information may only be imposed on a
finding of willfulness or bad faith, combined with
substantial prejudice.

The amended rule therefore forecloses reliance on
inherent authority or state law to impose litigation sanctions
in the absence of the findings required under Rule
37(e)(1)(B). But the rule does not affect the validity of an
independent tort claim for relief for spoliation if created by
the applicable law. The law of some states authorizes a tort
claim for spoliation. The cognizability of such a claim in
federal court is governed by the applicable substantive law,
not Rule 37(e).

An amendment to Rule 26(f)(3) directs the parties to
address preservation issues in their discovery plan, and an
amendment to Rule 16(b)(3) recognizes that the court’s
scheduling order may address preservation. These
amendments may prompt early attention to matters also
addressed by Rule 37(e).

Subdivision (e)(1)(A). When the court concludes that
a party failed to preserve information that should have been
preserved in the anticipation or conduct of litigation, it may
adopt a variety of measures that are not sanctions. One is
to permit additional discovery that would not have been
allowed had the party preserved information as it should
have. For example, discovery might be ordered under
Rule 26(b)(2)(B) from sources of electronically stored
information that are not reasonably accessible. More
generally, the fact that a party has failed to preserve
information may justify discovery that otherwise would be
precluded under the proportionality analysis of
Rule 26(b)(1) and (2)(C).

In addition to, or instead of, ordering further
discovery, the court may order curative measures, such as
requiring the party that failed to preserve information to
restore or obtain the lost information, or to develop
substitute information that the court would not have
ordered the party to create but for the failure to preserve.
The court may also require the party that failed to preserve
information to pay another party’s reasonable expenses,
including attorney fees, caused by the failure to preserve.
Such expenses might include, for example, discovery
efforts caused by the failure to preserve information.
Additional curative measures might include permitting
introduction at trial of evidence about the loss of
information or allowing argument to the jury about the
possible significance of lost information.

Subdivision (e)(1)(B)(i). This subdivision authorizes
imposition of the sanctions listed in Rule 37(b)(2)(A) for
willful or bad-faith failure to preserve information, whether
or not there was a court order requiring such preservation.
Rule 37(e)(1)(B)(i) is designed to provide a uniform
standard in federal court for sanctions for failure to
preserve. It rejects decisions that have authorized the
imposition of sanctions — as opposed to measures
authorized by Rule 37(e)(1)(A) — for negligence or gross
negligence. It borrows the term “sanctions” from Rule
37(b)(2), and does not attempt to prescribe whether such
measures would be so regarded for other purposes, such as
an attorney’s professional responsibility.

This subdivision protects a party that has made
reasonable preservation decisions in light of the factors
identified in Rule 37(e)(2), which emphasize both
reasonableness and proportionality. Despite reasonable
efforts to preserve, some discoverable information may be
lost. Although loss of information may affect other
decisions about discovery, such as those under
Rule 26(b)(1), (b)(2)(B), and (b)(2)(C), sanctions may be
imposed only for willful or bad faith actions, unless the
exceptional circumstances described in Rule 37(e)(1)(B)(ii)
are shown.

The threshold under Rule 37(e)(1)(B)(i) is that the
court find that lost information should have been preserved;
if so, the court may impose sanctions only if it can make
two further findings. First, the court must find that the loss
of information caused substantial prejudice in the litigation.
Because digital data often duplicate other data, substitute
evidence is often available. Although it is impossible to
demonstrate with certainty what lost information would
prove, the party seeking sanctions must show that it has
been substantially prejudiced by the loss. Among other
things, the court may consider the measures identified in
Rule 37(e)(1)(A) in making this determination; if these
measures can sufficiently reduce the prejudice, sanctions
would be inappropriate even when the court finds
willfulness or bad faith. Rule 37(e)(1)(B)(i) authorizes
imposition of Rule 37(b)(2) sanctions in the expectation
that the court will employ the least severe sanction needed
to repair the prejudice resulting from loss of the
information.

Second, it must be established that the party that failed
to preserve did so willfully or in bad faith. This
determination should be made with reference to the factors
identified in Rule 37(e)(2).

Subdivision (e)(1)(B)(ii). This subdivision permits
the court to impose sanctions in narrowly limited
circumstances without making a finding of either bad faith
or willfulness. The need to show bad faith or willfulness is
excused only by finding an impact more severe than the
substantial prejudice required to support sanctions under
Rule 37(e)(1)(B)(i). It still must be shown that a party
failed to preserve discoverable information that should
have been preserved. In addition, it must be shown that the
party’s actions irreparably deprived a party of any
meaningful opportunity to present or defend against the
claims in the litigation.

The first step under this subdivision is to examine
carefully the apparent importance of the lost information.
Particularly with electronically stored information,
alternative sources may often exist. The next step is to
explore the possibility that curative measures under
subdivision (e)(1)(A) can reduce the adverse impact. If a
party loses readily accessible electronically stored
information, for example, the court may direct the party to
attempt to retrieve the information by alternative means. If
such measures are not possible or fail to restore important
information, the court must determine whether the loss has
irreparably deprived a party of any meaningful opportunity
to present or defend against the claims in the litigation.
The “irreparably deprived” test is more demanding
than the “substantial prejudice” that permits sanctions
under Rule 37(e)(1)(B)(i) on a showing of bad faith or
willfulness. Examples might include cases in which the
alleged injury-causing instrumentality has been lost. A
plaintiff’s failure to preserve an automobile claimed to have
defects that caused injury without affording the defendant
manufacturer an opportunity to inspect the damaged
vehicle may be an example. Such a situation led to
affirmance of dismissal, as not an abuse of discretion, in
Silvestri v. General Motors Corp., 271 F.3d 583 (4th Cir.
2001). Or a party may lose the only evidence of a critically
important event. But even such losses may not irreparably
deprive another party of any meaningful opportunity to
litigate. Remaining sources of evidence and the opportunity
to challenge the evidence presented by the party who lost
discoverable information that should have been preserved,
along with possible presentation of evidence and argument
about the significance of the lost information, should often
afford a meaningful opportunity to litigate.

The requirement that a party be irreparably deprived
of any meaningful opportunity to present or defend against
the claims in the litigation is further narrowed by looking to
all the claims in the litigation. Lost information may appear
critical to litigating a particular claim or defense, but
sanctions should not be imposed — or should be limited to
the affected claims or defenses — if those claims or
defenses are not central to the litigation.

A special situation arises when discoverable
information is lost because of events outside a party’s
control. A party may take the steps that should have been
taken to preserve the information, but lose it to such
unforeseeable circumstances as flood, earthquake, fire, or
malicious computer attacks. Curative measures may be
appropriate in such circumstances — this is information
that should have been preserved — but sanctions are not.
The loss is not caused by “the party’s actions” as required
by (e)(1)(B).

Subdivision (e)(2). These factors guide the court
when asked to adopt measures under Rule 37(e)(1)(A) due
to loss of information or to impose sanctions under Rule
37(e)(1)(B). The listing of factors is not exclusive; other
considerations may bear on these decisions, such as
whether the information not retained reasonably appeared
to be cumulative with materials that were retained. With
regard to all these matters, the court’s focus should be on
the reasonableness of the parties’ conduct.

The first factor is the extent to which the party was on
notice that litigation was likely and that the information lost
would be discoverable in that litigation. A variety of
events may alert a party to the prospect of litigation. But
often these events provide only limited information about
that prospective litigation, so that the scope of discoverable
information may remain uncertain.

The second factor focuses on what the party did to
preserve information after the prospect of litigation arose.
The party’s issuance of a litigation hold is often important
on this point. But it is only one consideration, and no
specific feature of the litigation hold — for example, a
written rather than an oral hold notice — is dispositive.
Instead, the scope and content of the party’s overall
preservation efforts should be scrutinized. One focus
would be on the extent to which a party should appreciate
that certain types of information might be discoverable in
the litigation, and also what it knew, or should have known,
about the likelihood of losing information if it did not take
steps to preserve. The court should be sensitive to the
party’s sophistication with regard to litigation in evaluating
preservation efforts; some litigants, particularly individual
litigants, may be less familiar with preservation obligations
than other litigants who have considerable experience in
litigation. Although the rule focuses on the common law
obligation to preserve in the anticipation or conduct of
litigation, courts may sometimes consider whether there
was an independent requirement that the lost information
be preserved. The court should be sensitive, however, to
the fact that such independent preservation requirements
may be addressed to a wide variety of concerns unrelated to
the current litigation. The fact that some information was
lost does not itself prove that the efforts to preserve were
not reasonable.

The third factor looks to whether the party received a
request to preserve information. Although such a request
may bring home the need to preserve information, this
factor is not meant to compel compliance with all such
demands. To the contrary, reasonableness and good faith
may not require any special preservation efforts despite the
request. In addition, the proportionality concern means that
a party need not honor an unreasonably broad preservation
demand, but instead should make its own determination
about what is appropriate preservation in light of what it
knows about the litigation. The request itself, or
communication with the person who made the request, may
provide insights about what information should be
preserved. One important matter may be whether the
person making the preservation request is willing to engage
in good faith consultation about the scope of the desired
preservation.

The fourth factor emphasizes a central concern —
proportionality. The focus should be on the information
needs of the litigation at hand. That may be only a single
case, or multiple cases. Rule 26(b)(1) is amended to make
proportionality a central factor in determining the scope of
discovery. Rule 37(e)(2)(D) explains that this calculation
should be made with regard to “any anticipated or ongoing
litigation.” Prospective litigants who call for preservation
efforts by others (the third factor) should keep those
proportionality principles in mind.

Making a proportionality determination often depends
in part on specifics about various types of information
involved, and the costs of various forms of preservation.
The court should be sensitive to party resources; aggressive
preservation efforts can be extremely costly, and parties
(including governmental parties) may have limited
resources to devote to those efforts. A party may act
reasonably by choosing the least costly form of information
preservation, if it is substantially as effective as more costly
forms. It is important that counsel become familiar with
their clients’ information systems and digital data —
including social media — to address these issues. A party
urging that preservation requests are disproportionate may
need to provide specifics about these matters in order to
enable meaningful discussion of the appropriate
preservation regime.

Finally, the fifth factor looks to whether the party
alleged to have failed to preserve as required sought
guidance from the court if agreement could not be reached
with the other parties. Until litigation commences,
reference to the court may not be possible. In any event,
this is not meant to encourage premature resort to the court;
amendments to Rule 26(f)(3) direct the parties to address
preservation in their discovery plan, and amendments to
Rule 16(c)(3) invite provisions on this subject in the
scheduling order. Ordinarily the parties’ arrangements are
to be preferred to those imposed by the court. But if the
parties cannot reach agreement, they should not forgo
available opportunities to obtain prompt resolution of the
differences from the court.


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