Why Businesses May Like the "Duke Rules Package"

Posted on by John M. Erbach in Litigation

Part 1 of 4: Lightening the Load of Discovery

If you are a litigation wonk like I am, you probably already know about significant changes to the Federal Rules of Civil Procedure expected in 2015. This year, the Supreme Court considers sweeping amendments first developed at the 2010 Federal Rules Advisory Committee meeting held at Duke University and now approved by the Federal Judicial Conference. This so-called "Duke Rules Package" should also interest those businesses engaged in federal litigation, whether frequently or only occasionally. By design, these amendments could help to streamline litigation in federal courts and reduce costs. To meet this goal, the proposed amendments make significant, possibly long-lasting changes to the way lawyers and courts will handle federal lawsuits in years to come. If the Supreme Court accepts the proposed amendments, Congress must then act on them.

In a series of blog posts over the next several weeks I will address four rule amendments that may be adopted this year and may help reduce the cost and burden of litigation. In this part, I will address amendments to Rule 26(b) concerning the scope of discovery in federal court.

If you are a business person who reviews legal bills, then you know that the cost of discovery often eclipses that of other stages of litigation. For IT professionals, there is also the headache and lost productivity of eDiscovery and document management (more on that in Part 2). Much of this cost stems from Rule 26(b)'s broadly stated (and broadly interpreted) scope of discovery, which includes all information "reasonably calculated to lead to the discovery of admissible evidence." That sentence (which any litigator worth his salt has long-since memorized) is about to be deleted entirely and replaced with the following common sense "proportionality" test:

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

To be clear, federal courts already have the power to undergo a similar proportionality analysis under Rule 26(b)(2)(C)(iii), but only if the judge becomes actively involved in the discovery process. Courts try to avoid getting involved in discovery and rightly so¾it may actually increase costs through motions practice. It also undermines the judicial expectation that parties and attorneys reasonably resolve differences that arise during the case. Now, under proposed Rule 26(b), the general rule would require the parties to more actively consider proportionality from the beginning of discovery.

The proposed amendment may help reduce instances of the discovery tail wagging the litigation dog. Consider the example of a case brought against a large retailer to obtain $5,000 in overtime wages never paid. If the employee asks for all communications concerning company policies for overtime, all records of any employee working overtime and not getting paid, and all company-wide attempts to reduce labor costs, HR may be forced to comb through thousands of emails and the cost of litigation will quickly eclipse the $5,000 claim. The retailer may decide to simply pay the $5,000 and be done with the matter, even if it has legitimate defenses. Under current rules, the employer could object that the requests are unduly burdensome and overly broad, but a court will likely expect the employer to back that up with specific cost figures and explanations that are themselves costly to prepare and litigate.

Under proposed Rule 26(b), however, the employer has a new objection: disproportionality. The employer-defendant could invoke the listed factors in proposed Rule 26(b) to support an argument that the discovery requests are disproportional. As part of the parties' attempt to resolve the discovery dispute, the employer may be able to more effectively force the plaintiff to narrow his discovery requests or explain why they are not grossly out of proportion to "the needs of the case." The plaintiff might then respond, citing the public policy considerations of federal labor law and the vast resources of his employer. In the end, the analysis should account for both sides of that coin.

Time will tell whether proposed Rule 26(b) will be adopted and, if so, how lawyers and courts may apply it to reduce the burden of discovery. If it is adopted, defendants will have a new tool to push back against costly discovery demands in an effort to reign-in litigation costs. For those in the position of managing and paying litigation costs, the amendments to Rule 26(b) may help reduce discovery costs in the near future.

Next week, in Part 2 of 4, I will address proposed amendments to Rule 37(e), which aims to establish specific, concrete consequences for a party's failure to preserve electronically stored information ("ESI") in anticipation of litigation.

About the Author

John M. Erbach represents a wide variety of business entities and individuals in complex business and commercial litigation, including employment disputes, defense of consumer protection claims, and intellectual property litigation.

Spotts Fain publications are provided as an educational service and are not meant to be and should not be construed as legal advice. Readers with particular needs on specific issues should retain the services of competent counsel.