Friday, February 13, 2015

2015 Proposed Amendments to the Federal Rules of Civil Procedure

The Judicial Conference of the United States approved in 2014 several proposed amendments to the Federal Rules of Civil Procedure. The amended rules will take effect on December 1 2015, subject to US Supreme Court and US Congress approval, which is likely.
Fed. R. Civ. P. 1 recites that the Federal Rules of Civil Procedure "should be construed and administered to secure the just, speedy, and inexpensive determination of every action and proceeding". In practice the Rule is rarely cited or utilized. A proposed rule would specifically require the parties and the court to cooperate so as to ensure litigation efficiency.
In addition, proposed amendments to Rules 4, 16, 26 and 34 address efficiency issues by shortening timelines and requiring parties to identify and resolve issues that may lead to discovery disputes early in litigation.
Proposed Rule 4(m) will shorten the time permitted to serve a defendant with a summons and complaint from 120 days to 90 days. If service has not occurred within the prescribed period, the court must either dismiss the action without prejudice or order that service be completed by a set date. Proposed Rule 16(b)(2) would require courts to issue a scheduling order the earlier of 90 days after any defendant is served or 60 days after any defendant makes an appearance, subject to good cause. An amendment to Rule 16(b) (1) eliminates the current reference to conferences being conducted by "telephone, mail, or other means". A note in the advisory comments explains the deletion of the language by stating that "[a] scheduling conference is more effective if the court and the parties engage in direct simultaneous communication".
Proposed changes to Rule 26(f) (3) add both "preservation" and "privilege" as topics to discuss at the Rule 16 conference. A proposed amendment to Rule 26(d)(2) permits the parties to serve document requests under Rule 34 before the conference, but no earlier than 21 days after service of the summons and complaint. This change to the existing rule that prohibits any discovery requests before the Rule 26(f) conference and allows the parties to address issues presented by the document requests at the Rule 26(f) conference. Finally, a proposed revision to Rule 16(b) allows a scheduling order to include terms requiring the parties to confer with the court before bringing any discovery-related motions.
Discovery under current Rule 26(b) (1) is extraordinarily broad: parties may obtain information "regarding any non-privileged matter that is relevant to any party's claim or defense", including any information that "appears reasonably calculated to lead to the discovery of admissible evidence". Given the volume of electronic data stored by both individuals and companies in current times, significant time and money can be spent responding to discovery requests. When the parties have similar discovery exposure, they each have an incentive to narrow discovery without court intervention. However, such self-regulation does not exist when the parties' discovery obligations are asymmetrical. Current Rule 26(b) (2) (C) requires the court to limit discovery when it finds that the "burden or expense of the proposed discovery outweighs its likely benefit", but discovery limitations are rarely raised by the court on its own and, when objections to scope are raised by a producing party, courts can be reluctant to impose restrictions.
The committee has proposed some significant changes to combat the problems associated with asymmetric discovery:
Proposed Rule 26(b) (1) deletes the phrase that discovery may include information that is "reasonably calculated to lead to the discovery of admissible evidence".
Amended Rule 26(b) (1) limits discovery to that which is "proportional to the needs of the case."
Proposed Rule 26(b) (2) (C) will require court intervention if "the proposed discovery is outside the scope permitted by Rule 26(b) (1)".

Current Rule 26(c) (1) authorizes protective orders to preclude unduly burdensome or expensive discovery. Although not stated in the rule, courts may issue protective orders that allocate some of the cost to the requesting party. Because the existing rule is silent on cost allocation, parties sometimes dispute the court's authority to shift costs. Proposed Rule 26(c) (1) states that the protective order may include "specifying terms, including time and place or the allocation of expenses, for the disclosure of discovery". As the committee explained, "[e]xplicit recognition [of cost shifting] will forestall the temptation some parties may feel to contest this authority". However, the committee was careful to note that this proposed change does not alter the standard practice of having the responding party bear the cost of responding to discovery requests.
Parties responding to Rule 34 production requests typically list a litany of objections and often fail to specify whether any of the stated objections will be relied on as grounds to withhold any of the documents sought by the requesting party. Amended Rule 34 requires responding parties to state the specific grounds on which the party is objecting and whether any documents are being withheld on the basis of a given objection. The committee intends this change to facilitate meaningful meet-and-confer discussions between the parties.
The ability of courts to penalize a party for the spoliation of evidence is limited under the Federal Rules. Rule 37(e) permits such penalties, but only when a party fails to provide electronically stored information in violation of a court order. Because Rule 37(e) applies to such a narrow set of circumstances, courts have turned to their inherent authority or state laws to penalize parties for their failure to preserve evidence resulting in disparate standards for what constitutes a party's duty to preserve and wide-ranging penalties for violations of that duty. Without clear guidance on what penalties may be imposed for the spoliation of evidence, companies often spent significant sums preserving data to avoid the risk of severe penalties.
To provide clarity and consistency on penalties for failure to preserve, Rule 37(e) was completely rewritten. The proposed rule sets forth what penalties a court may impose if electronically stored information is lost because of a party's failure to "to take reasonable steps to preserve it" and the lost information cannot be "restored or replaced through additional discovery". Under the proposed amended rule, penalties are not permitted if evidence is lost despite a party's reasonable efforts to preserve it. Further, even if a party failed to try to preserve information, penalties are not automatic. Under proposed Rule 37(e) (1), a court may order "curative measures", but only upon a finding that another party was prejudiced from losing the information. More severe penalties, such as an adverse inference or the entry of default judgment, are permitted under proposed Rule 37(e) (2), but only when the court finds that a party "acted with the intent to deprive another party of the information's use in the litigation".