In Brief

The December 1, 2015 amendments to the Federal Rules of Civil Procedure were designed to expedite substantive resolution of issues and curtail expansive, disproportionate discovery, with the ultimate goal being to focus courts and litigants on the specific claims and defenses at issue. In September 2015, Jones Day published a White Paper titled “Significant Changes to the Federal Rules of Civil Procedure Expected to Take Effect December 1, 2015: Practical Implications and What Litigators Need to Know,” which addressed the proposed amendments and the practical impact each may have on early case management, discovery, and litigation strategy.

This Commentary provides an overview of emerging trends and practical impact from the first nine months of case law interpreting amended Federal Rules 26(b), 34(b), and 37(e).

New Rules or Old? Defining “Just and Practicable”

Because the amended Rules govern in all proceedings in civil cases commenced on or after December 1, 2015, “and, insofar as just and practicable, all proceedings then pending,”[1] many litigators have had to consider whether and to what extent the new rules might apply retroactively in their long-running cases. While results thus far have been mixed, the trend in such cases is toward applying the new Rules. While some courts have applied the old Rules,[2] most have explicitly determined that it would be “just and practicable” to apply the new Rules in cases pending before December 1,[3] even to motions fully briefed but undecided before the effective date.[4] Some courts applying the amended Rules have noted that the outcome under the prior version would have been the same.[5]

Federal Rule of Civil Procedure 26(b)—Applying the Proportionality Factors to Discovery Scope and Limits

By relocating existing proportionality factors from elsewhere in the Rules into the definition of the scope of discovery, the amendments to Rule 26(b) (see “Proportionality,” White Paper, page 4) reinforce, rather than reinvent, the parties’ obligation to consider proportionality in making discovery requests, responses, and objections.[6] As expected given their new prominence, those proportionality factors have received more attention than ever from litigants and courts. It is now critical for parties to proactively address those factors in discovery requests, objections, and negotiations to demonstrate reasonableness and avoid frustrating the court.[7]

Case law emerging in the wake of the amendments reflects courts making a conscious effort to address and balance the Rule 26(b) proportionality factors, in particular when the party contesting discovery provides specific, fact-based reasons for its objections and the information sought is either irrelevant to the issues at hand or is obtainable from another source.[8] In at least two cases, courts went a step further and included in their proportionality analysis an additional factor not enumerated in Rule 26: confidentiality concerns.[9] In another case, a litigant seeking a letter rogatory to depose a non-party executive in London convinced the court that the benefit of the deposition outweighed the associated burden and expense.[10]

All this goes to show that specificity is key to a credible proportionality argument. Where parties have made specific, clear, and well-supported objections that are grounded in the proportionality factors, courts have shown an increased willingness to rule that discovery is disproportionate and impose limits accordingly.[11] On the other hand, courts are rejecting objections couched in general and boilerplate language[12] and refusing to compel responses to burdensome, overreaching requests.[13]

Notably, although the amendments removed the words “reasonably calculated to lead to the discovery of admissible evidence” from Rule 26(b), thus making clear that those words do not describe the scope of permissible discovery, some courts continue to refer to that standard, often in combination with the new proportionality factors. For example, in Marine Power Holding, LLC v. Malibu Boats, LLC, the District Court for the Eastern District of Louisiana denied a motion to compel after quoting the former “reasonably calculated” language and citing the new Rule’s proportionality definition and factors.[14] This shows that old habits die hard, and while parties should not rely on this language in seeking discovery or formulating objections, it may still be something courts will consider in evaluating discovery disputes.

Federal Rule of Civil Procedure 34(b)—Enforcing Specificity in Responding & Objecting to Requests for Production

The amendments to Rule 34(b)(2)(B) (see “Requests for Production,” White Paper, page 6)put a decisive end to oft-used general or blanket objections. Under amended Rule 34(b)(2)(B), parties responding to discovery requests must: (i) avoid general or blanket objections when responding to requests for production; (ii) state whether documents will be withheld pursuant to objections; (iii) state whether they will produce copies or permit inspection; and (iv) complete production “no later than the time for inspection specified in the request or another reasonable time specified in the response.” Proportionality objections abiding by these requirements may work to a party’s advantage in limiting unnecessary or expensive discovery.

Rule 34(b)—Specificity. In cases decided since the December 1, 2016 amendments, courts have been quick to reject boilerplate objections to discovery requests and have also penalized parties for relying on stock, general objections. In Moser v. Holland, for example, the District Court for the Eastern District of California held that defendants’ identical boilerplate objections that each request was “overbroad, unduly burdensome and oppressive, and not reasonably calculated to lead to the discovery of admissible evidence” were improper and “barred by Rule 33 and 34.”[15] The court granted plaintiff’s motion to compel, ordered defendants to produce documents responsive to plaintiff’s document requests, and awarded sanctions for plaintiff’s costs of bringing the motion.[16]

Similarly, in Sprint Communications Co. L.P. v. Crow Creek Sioux Tribal Court, the District Court for the District of South Dakota, relying on the Advisory Committee Notes regarding the 2015 amendment to Rule 34(b), emphasized that although a party could object on the grounds that a request is overbroad, it could do so only where it also stated “the scope [of the request] that is not overbroad.”[17] And in one case, the court went so far as to order plaintiffs to identify where in plaintiffs’ production defendants could find documents responsive to their requests, including by providing specific Bates numbers of documents that fell within 10 categories of documents.[18]

These decisions underscore that the courts are focusing on whether the language and spirit of the rule is being followed. Now, more than ever, it is critical to avoid boilerplate objections like “vague” and “overbroad” without further efforts to tailor the objection to the request and to meet amended Rule 34(b)’s other requirements (e.g., identifying by category or custodian what documents will be withheld on the grounds of that objection, and also stating what documents will be produced and when).[19]

Rule 34(b)—Time to Respond. Courts have also strictly enforced the requirement that parties complete production in the time specified in the request or a reasonable time specified in the response, underscoring the need for parties to plan and draft these responses carefully. In Granados v. Traffic Bar & Restaurant, Inc., the District Court for the Southern District of New York ruled that defendants’ responses to discovery requests were “thoroughly deficient” where defendants stated they would search for documents but gave no indication as to when the documents would be produced.[20] The court granted plaintiff’s motion to compel and imposed its own deadline, requiring defendants to produce all responsive documents and electronically stored information (“ESI”) as requested within 14 days.[21] Addressing similar responses, another court required amended responses and production of responsive documents within seven days.[22] In light of these holdings, the safest approach will generally be for litigants to specify their own deadlines for production rather than risk being given a court-imposed deadline that may be difficult to meet.

Federal Rule of Civil Procedure 37(e)—Determining Sanctions for Lost ESI

Rule 37(e) (see “ESI Preservation,” White Paper, page 7)was amended to resolve a circuit split as to when courts may impose certain types of sanctions for parties’ failure to preserve ESI. Amended Rule 37(e)(1) clarifies that a court may contemplate curative measures “[i]f [ESI] 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.” Rule 37(e)(2) specifies the circumstances under which a court may impose sanctions such as an adverse inference instruction, dismissal of the action, or a default judgment.

Although the amendment to Rule 37 in some ways has clarified the law on ESI spoliation, the practical effects of the amendment are still evolving. Analyzing case law to date reveals two trends: (i) courts are broadly construing what constitutes “lost ESI” subject to “measures no greater than necessary to cure the prejudice” under Rule 37(e)(1); and (ii) courts are narrowly construing what constitutes intentional deprivation of information warranting sanctions under Rule 37(e)(2).

In one case that exemplifies both trends, CAT3, LLC v. Black Lineage, Inc., the District Court for the Southern District of New York concluded after an evidentiary hearing that plaintiffs in a trademark infringement suit intentionally deleted emails from their server and replaced them with copies that had been altered to give the appearance that plaintiffs sent emails to defendants from a domain that included the trademarked name.[23] Plaintiffs argued that nothing was “lost” that could not be “restored or replaced” because only the address line of the emails was affected and because defendants had produced near-duplicates of the same emails.[24]

Nonetheless, after finding “clear and convincing evidence … that the plaintiffs manipulated the emails [] in order to gain an advantage in the litigation,” the court ruled that ESI was “lost” and could not “adequately be ‘restored or replaced.’”[25] Although the court further concluded that “the plaintiffs’ manipulation … [was] not consistent with taking ‘reasonable steps’ to preserve the evidence,” the court did not impose the sanctions outlined in Rule 37(e)(2).[26] Instead, relying on the Advisory Committee Note stating “[t]he remedy [imposed by the court] should fit the wrong, and the severe measures authorized by this subdivision should not be used when the information was relatively unimportant or lesser measures such as those specified in subdivision (e)(1) would be sufficient to redress the loss,” the court precluded plaintiffs from relying on the altered version of the emails and ordered plaintiffs to pay defendants’ costs and reasonable attorneys’ fees incurred in securing relief for the spoliation.[27]

Muting the effect of the broad definition of “lost” ESI are the limited circumstances under which courts have imposed the sanctions identified in Rule 37(e)(2). Most often, courts decline to impose an adverse inference or dismissal sanction because the party seeking sanctions fails to present evidence demonstrating that the nonpreserving party intended to deprive it of ESI.[28] Instead, courts choose to limit the curative measures imposed to those “no greater than necessary to cure prejudice,” as Rule 37(e)(1) dictates.[29]

It is important to remember that despite courts’ broad interpretation of what constitutes “lost ESI,” these cases also underscore a point that the Advisory Committee made clear: Rule 37 “does not call for perfection.” Rather, “[r]easonable steps taken to preserve,” which are assessed based on the party’s particular circumstances, generally suffice to escape sanctions under Rule 37.

One recent case where the plaintiff’s conduct fell outside this “safe harbor” is Matthew Enterprise, Inc. v. Chrysler Group, LLC, in which responsive emails were deleted when plaintiff switched to a new email vendor almost a year afterreceiving notice of the litigation.[30] In assessing the propriety of curative measures under Rule 37(e)(1), the District Court for the Northern District of California found that plaintiff did not take reasonable steps to preserve ESI and that defendant was prejudiced by the loss.[31] The court denied defendant’s request to preclude plaintiff from offering evidence in support of a central issue in its case, observing that the Advisory Committee Notes describe such preclusion as an “example of an inappropriate (e)(1) measure.”[32] Instead, the court awarded defendant attorneys’ fees associated with bringing the motion and authorized defendant to introduce at trial communications post-dating the alleged wrongdoing and also, but only ifplaintiff opened the door, evidence of spoliation.[33] The court left open the possibility that defendant could seek an adverse jury instruction pursuant to Rule 37(e)(2).[34]

Regarding the sanctions specified in Rule 37(e)(2), the drafters of the amendments did not provide a standard for what constitutes “intent to deprive another party of the information’s use in litigation.” Clearer standards for qualifying conduct will emerge in time, but for now, courts have narrowly construed what constitutes willful intent.[35] Additionally, a party’s negligent or even grossly negligent failure to preserve ESI will not warrant sanctions under Rule 37(e)(2) without evidence of bad faith or an intent to deprive.[36] For example, in Living Color Enterprises, Inc. v. New Era Aquaculture, Ltd., the District Court for the Southern District of Florida found that even if defendant’s deletion of text messages following initiation of the lawsuit was negligent, the ESI was not deleted with the intent to deprive plaintiff of the ESI in the litigation, and as a result, sanctions were improper under Rule 37(e)(2).[37]

Notably, despite the fact that the Advisory Committee’s Note amending Rule 37(e)(2) explicitly “rejects cases such as [Residential Funding Corp. v. DeGeorge Financial Corp., 306 F.3d 99, 107 (2d Cir. 2002] that authorize the giving of adverse-inference instructions on a finding of negligence or gross negligence,” some courts have continued to follow the Residential Funding standard in cases involving issues raised prior to the effective date of the amendments[38] or where tangible evidence was destroyed rather than ESI.[39]

Conclusion

In the first nine months since the December 1, 2015, amendments took effect, courts have paid close attention to the goals behind the amendments. The amendments’ influence has been particularly evident in case law applying proportionality principles in rulings regarding the scope of discovery. Case law to date also suggests that courts, by strictly adhering to Rule 37’s limits, are creating a disincentive to the filing of frivolous or even borderline motions for sanctions. The landscape will no doubt continue to evolve in the months to come.

Key Takeaways

  • With the Rule 26 proportionality factors receiving increased attention from litigants and courts, it is critical for parties to proactively address those factors in discovery requests, objections, and negotiations to demonstrate reasonableness and avoid frustrating the court.
  • Under Rule 34, specificity is the key to making proportionality and other objections that may work to a party’s advantage in limiting unnecessary or expensive discovery.
  • Courts are strictly enforcing Rule 37(e)’s new limits on curative measures and sanctions for lost electronically stored information.