The Federal Rules of Civil Procedure govern all civil litigation in the federal courts. Recent major amendments to these rules—which became effective December 1, 2015—will impact the scope and cost. The amendments highlight the importance of electronic discovery in litigation, and reflect an effort on the part of the drafters to reduce its burden and cost. The result of the amendments, however, may lead to increased costs in the initial stages of litigation, given new rules that shift certain actions to earlier in the proceeding. The ultimate impact of these new rules will become clearer as courts apply and interpret them. Courts that have dealt with the new rules so far, have, by and large, found that they do not radically alter the nature of discovery in the federal courts. Still, several changes are particularly notable and discussed below.
Litigants Will Need to Mobilize Resources More Quickly
Several amendments are aimed at reducing delay in the early stages of litigation. First, Rule 4(m) has been revised to reduce the time to serve a defendant with the summons and complaint from 120 to 90 days. Similarly, the time in which a court must issue a scheduling order is reduced to 90 days (from 120 days) after any defendant has been served, or 60 days (from 90 days) after any defendant has appeared. These changes will require litigants to gear up quickly once a complaint is filed and served.
Second, the new Rules allow litigants to propound discovery sooner. Under the prior Rules, a de facto "discovery hold" applied in most cases until the parties’ initial case management conference—called a Rule 26(f ) conference—which often did not occur until many months after a complaint was filed. Rule 26 has now been amended (via Rule 26(d)) to allow discovery requests to be served to the opposing party “more than 21 days” after the summons and complaint are served. While discovery requests may be propounded sooner, the time for responding to those early requests does not begin to run until the 26(f ) conference.
The amendment is intended to make the parties’ 26(f ) conference more productive by facilitating focused discussion. In theory, if the parties know what documents will be requested earlier, they can discuss agreements to facilitate document searches and production, thereby streamlining discovery. The parties may also discuss revisions to their initial requests, thereby avoiding motion practice.
Views on this amendment to Rule 26(d), however, are mixed. Because the new rule allows discovery to be served sooner, but stays the period for responding, parties may chose to forgo early discovery and instead wait until after the Rule 26(f ) conference to propound discovery in order to avoid giving their adversary an enlarged time period to respond. Alternatively, aggressive parties may use the opportunity to serve broad requests to gain leverage at the 26(f ) conference. Regardless, to make these strategic decisions, litigants will need to have a good understanding of their case and the scope of their clients' relevant documents well in advance of the 26(f ) conference, as it will be important to set the tone and expectations at the beginning of the litigation.
The Scope of Discovery May Be Narrowed
Perhaps the most significant and controversial change to the Federal Rules involves Rule 26 which defines the scope of discovery. The amendment to Rule 26 expressly incorporates a discovery rule of “proportionality.” Under the amended rule, the factors to be considered in determining whether the discovery is “proportional to the needs of the case” are: (1) the importance of the issues; (2) the amount in controversy; (3) the parties’ relative access to relevant information; (4) the parties’ resources; (5) the importance of discovery in resolving the issues; and (6) whether the burden or expense of the proposed discovery outweighs its likely benefit.
The amendment is intended to reduce "fishing expedition" discovery by identifying and discouraging discovery overuse. While the enumerated factors (except the parties’ relative access to relevant information) are not new, their changed location within Rule 26 requires that they now are considered by both the parties and the court in determining the overall scope of discovery from the outset, rather than during later motion practice. (In the prior Rule, these factors were in the section regarding protective orders; they have been moved to the section regarding the scope of discovery.) It seems likely that making this proportionality analysis front-and-center will benefit parties that prefer less discovery—usually defendants. Of course, it is possible that litigants will attempt to use the proportionality factors to justify greater discovery in some cases.
Importantly, the Advisory Committee has made clear that this amendment is not intended to place the sole responsibility to address proportionality on the party seeking discovery. Likewise, the amendment is not intended to allow the responding party to make “boilerplate” objections that the request is not proportional. Rather, the parties and the court must collectively consider the proportionality of all discovery. In fact, the Advisory Committee notes accompanying the amendments encourage “close judicial involvement” in discovery. We anticipate that some courts may therefore take more active involvement in the management of discovery, particularly in complicated cases, early on.
Another change is the elimination of the provision of one of the most oft-quoted clauses in the Federal Rules that allowed for discovery of information that appears “reasonably calculated to lead to the discovery of admissible evidence.” This change was made out of a concern that the “reasonably calculated” language may “swallow” any other limitation imposed on the scope of discovery. In its place, the amended rules state: “Information within this scope of discovery need not be admissible in evidence to be discoverable.” While intended more as a clarification of the current rule, the amendment may have the effect of reducing a responding party’s options when faced with a plainly overbroad discovery request. However, because discovery is still limited to “nonprivileged matter[s] that [are] relevant to any party’s claim or defense,” basic relevance objections should remain a viable alternative.
Discovery Responses Must Be Specific
Substantial changes have also been made to Rule 34, which controls the procedures for propounding and responding to requests for production of documents and materials. Amended Rule 34(b) requires that the party responding to the RFPs: (1) state any objections with specificity; (2) produce documents within a “reasonable time”; and (3) expressly state whether any responsive materials are being withheld on the basis of any objection.
Under the new rules, a responding party may be required to specify precisely why a discovery request is “vague or ambiguous” or “unduly burdensome” rather stating that the request as a whole is. This change will likely result in greater time, effort and expense spent responding to written discovery requests, as the amended rule may require responses be tailored to the facts of the case. However, it may reduce costly disputes later in the discovery process, as the parties will have more information and thus be in a better position to reach mutually agreeable compromises.
Additionally, in its response, a party may have to commit to the production of documents by a date certain, either by the date requested in the RFP or within a reasonable time identified by the responding party. This change is likely to generate disagreement over the meaning of “reasonable time,” with different courts arriving at different conclusions. This change may also be difficult to adopt, as it imposes new urgency on the time consuming and expensive process of collecting, reviewing, and producing documents in the electronic discovery era.
Finally, a responding party will need to state whether any documents are being withheld as a result of a stated objection. Importantly, the responding party need not identify which documents are being withheld. This amendment is aimed at ending the “confusion” that may arise when a producing party states an objection but still produces documents in response to the request. This change may require parties to devote early resources to conducting a document review in order to learn the universe of documents implicated by discovery requests before responses are due. Moreover, we anticipate that this amendment may require multiple amendments to discovery responses over the life of a case, as more is learned about the nature of potentially responsive documents.
Document Preservation Efforts Must Be“Reasonable”
To many in-house and outside counsel, electronic discovery has become the bane of modern litigation. Amended Rule 37 provides a safe harbor of sorts amidst a slew of amended rules focused on Electronically Stored Information (“ESI”). Under 37(e), courts may only impose sanctions on a party for failure to preserve ESI if: (1) prejudice results; or (2) the party acted with intent to deprive another party of information. This rule eliminates the possibility that a party may face certain severe sanctions (such as dismissal of the action or a jury instruction stating the jury should presume the lost evidence was unfavorable) upon a finding of negligence or gross negligence alone. But such a change should not encourage complacency. If prejudice is found as a result of negligent failure to preserve, the court may still order measures no greater than necessary to cure the prejudice. If, on the other hand, intentional destruction is found, the court may go so far as to dismiss the action or enter a default judgment against the party responsible for the failure to preserve.
To ensure that they fall within this safe harbor, companies must take reasonable steps to preserve ESI. The “reasonableness” standard is likely to be the focus of significant motion practice in the coming years, as “reasonable steps to preserve” is not defined by the Rule or the Committee Notes. In defending against a motion for sanctions, it may be important to have evidence of clear document retention policies that are reviewed and monitored on a regular basis. Additionally, when litigation does become reasonably foreseeable, it is advisable for a litigation hold letter to be sent to relevant persons. Clients will need to work with their lawyers to determine appropriate guidelines for document preservation, such as relevant date ranges for preservation and whether documents post-dating the filing of litigation need to be preserved rather than recycled. Having a process in place for imposing such holds will greatly expedite that effort once the possibility of litigation arises, thereby reducing the likelihood of facing a motion for sanctions.
These Amendments May Be Retroactive in Many Cases
Will these rules apply to cases already pending when they became effective on December 1, 2015? The answer is “likely, yes” in many cases. The amended rules are to “govern in all proceedings in civil cases thereafter commenced and, insofar as just and practicable, all proceedings then pending.”
The few courts that have had an opportunity to apply the amended rules have mostly found that retroactive application is appropriate. See Brown v. Dobler, No.1:15-CV-00132-CWD, 2015 WL 9581414, at *2 (D. Idaho Dec. 29, 2015) (citing amended rules in ruling on motion filed prior to the rules’ effective date); Meeker v. Life Care Centers of Am., Inc., No.14-CV-02101-WYD-NYW, 2015 WL 7882695, at*5 (D. Colo. Dec. 4, 2015) (same); Granados v. Traffic Bar & Rest., Inc., No. 13CIV0500TPGJCF, 2015 WL 9582430, at *5 (S.D.N.Y. Dec. 30, 2015) (noting amended Rule 37 would apply to spoliation of any ESI); but see Fowler v. City of New York, No. 13-CV-2372(KAM)(RML), 2015 WL 9462097, at *3 (E.D.N.Y. Dec. 23, 2015) (declining to apply shorter 90-day time period for service of complaint to case filed prior to effective date of amendments); Trowery v. O'shea, No. 12-6473 (NLH/AMD), 2015 WL 9587608, at *5 n.11 (D.N.J. Dec. 30, 2015) (finding that, as the parties briefed the pending motions for sanctions under the prior rule, it would not be “just and practicable” to apply the amended rules).
In applying the amended rules, however, Courts have found that the analysis of some discovery disputes is much the same as before. A District of Columbia court explained that “like before, relevance is still to be ‘construed broadly to encompass any matter that bears on, or that reasonably could lead to other matter that could bear on’ any party’s claim or defense.” United States v. CA, Inc., 2016 WL 74394, *7 (D.C. Jan. 6, 2016). A court in the Northern District of Texas likewise found that the “amendments to Rule 26 do not alter the burdens imposed on the party resisting discovery” and that the “party seeking discovery, to prevail on a motion to compel or resist a protective order, may well need to make its own showing of many or all of the proportionality factors.” McKinney/Pearl Rest. Partners, L.P. v. Metropo. Life Ins. Co., No. 3:14-CV-2498-B, 2016 WL 98603, *4 (N.D. Tex. Jan. 8, 2016).
These recent amendments to the discovery rules have the potential to reshape how discovery is conducted and litigated in federal court. Parties engaged in, or preparing for, litigation should consider how to best leverage these amendments to meet their objectives, avoid sanctions and reduce costs.