The amended rules aid in controlling the scope of discovery and managing its risks.

Two months have passed since the effective date of the 2015 amendments to the Federal Rules of Civil Procedure, which are applicable to all cases filed thereafter as well as cases then pending “insofar as just and practicable.” It is now becoming clear that courts are paying close attention to the significant changes made to the scope of discovery as governed by proportionality as well as the consequences of failing to preserve electronically stored information (ESI). The amendments are a “big deal” according to Chief Justice John Roberts, who addressed them at length in his Year-End Report to the Judiciary, because they “provide a concrete opportunity for actually getting something done.”

Changes to the Rules

The scope of discovery under the amended Rule 26(b)(1) is no longer defined by the oft-abused “reasonably calculated to lead to the discovery of admissible evidence” standard, but rather by the common-sense concept of proportionality. Under the new rule, parties may obtain discovery:

that is relevant to any party’s claim or defense and proportional to the needs of the case, considering the importance of the issues at stake in the action, the amount in controversy, the parties’ relative access to the 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.

Sanctions for failure to preserve ESI are no longer based on a court’s inherent, and unlimited, authority to punish spoliation, but rather are explicitly limited by amended Rule 37(e)(1) to situations where the information cannot be restored or replaced and must be “no greater than necessary” to cure the resulting prejudice. Rule 37(e)(2) further provides that a court must find a party intended to deprive its opponent of the information lost before imposing the severe sanctions of an adverse inference instruction or dismissal of the case.

Recent Decisions Under the Amended Rules

Two recent decisions illustrate the tangible and favorable results that can be obtained by application of the amended Rules. The first, Nuvasive, Inc. v. Madsen Medical, Inc., No. 13-cv-2077 BTM (RBB) (S.D. Ca. Jan. 26, 2016),  reverses a spoliation order entered prior to the effective date of the amendments in order to conform to the amended Rules’ requirement that any adverse inference instruction be based on a finding that the party intended to deprive its opponent of the ESI at issue. The second,Henry v. Morgan’s Hotel Group, Inc., No. 15-cv-1789 (ER)(JLC) (S.D.N.Y. Jan. 25, 2016), makes clear that the scope of discovery from third parties is also limited by proportionality.

In Nuvasive, the plaintiff, a medical device company, moved on December 10, 2015 for reconsideration of a July 2015 sanctions order in which the court ruled that it would give an adverse inference instruction based on a failure to preserve text messages. The court agreed that the amended Rules should apply retroactively, reasoning that it had not yet given its adverse inference instruction because the trial had not yet taken place, and that the motion for reconsideration was timely filed 10 days after the new Rules were effective. Reexamining its prior sanctions order, the court found that it did not comply with amended Rule 37(e)(1) because its adverse inference instruction would have the same effect as an order entered pursuant to Rule 37(e)(2), which requires a finding of intent to deprive an opponent of the use of ESI in the litigation. Having previously found no intent to deprive, the court revised its order to comply with amended Rule 37(e)(1) and “employ measures no greater than necessary to cure the prejudice.” Accordingly, the court removed its adverse inference instruction and instead will permit both sides to present evidence concerning the loss and will instruct the jury that it may consider that along with all other evidence in making its decision. The Nuvasive case illustrates how amended Rule 37(e)(1) can protect a party who inadvertently fails to preserve ESI.1

In Henry, the plaintiff — a waiter who alleged employment discrimination and retaliation against his former employer, defendant Morgan’s Hotel Group, Inc. — moved to quash three subpoenas served by Morgan’s Hotel Group on his prior employers. The plaintiff argued, in part, that the subpoenas sought irrelevant information. The court agreed, reasoning that the scope of discovery was no longer defined as “reasonably calculated to lead to the discovery of admissible evidence,” but rather, pursuant to the amended Rule 26(b)(1), must be “relevant to any claim or defense and proportional to the needs of the case.” Although the defendant argued its subpoenas sought relevant information because the plaintiff claimed to have been an exceptional waiter at his prior jobs, the court found that the plaintiff’s skill as a waiter had little bearing on his claims of discrimination. The Henry case makes clear that the amended Rule 26(b)(1) standard can significantly aid in limiting the abuse of third-party discovery.

Guidance on Using the New Rules

The amended Rules offer powerful tools to control the scope, and resulting cost and burden, of discovery and to manage the risks inherent in ESI and its preservation at all stages of litigation. It is never too early, or too late, to think about putting these Rules to work. From the outset of a matter, the scope of discovery should be negotiated through the prism of proportionality — is the burden and expense of the request proportional to the needs of the case? If not, amended Rule 26(b)(1) provides a sound basis to resist its inclusion in a discovery plan, or for a motion to quash or for a protective order.

If an opponent alleges spoliation of ESI, amended Rule 37 offers a framework for a response — can the information be recovered or replaced? If not, any sanction must be the minimum necessary to address it. Crucially, in the absence of a finding of intent to deprive a party of the information, adverse inference or case dispositive sanctions are not available. Even if a sanctions order has already been entered pursuant to the prior standard, a motion for reconsideration under the amended Rule 37 may offer some relief, particularly where has been no finding of intent.