Much ink has already been spilled reporting on the proposed amendments to the Federal Rules of Civil Procedure (FRCP), which primarily relate to or are motivated by the impact of electronic discovery. However, now that public comments have been submitted in response to the request by the Judicial Conference Committee on Rules of Practice and Procedure, it is time to consider the reaction to the proposals. As the largest bar association in the nation, the New York State Bar Association's (NYSBA) opinion on the law is entitled to some weight. As the largest section of the NYSBA, the Commercial and Federal Litigation Section's (the “Section”) opinion is especially worthy of consideration where it concerns proposed amendments to the FRCP. This article will consider the Section's public comments on the current proposed amendments as a barometer of sentiment among sophisticated practitioners of electronic discovery. It will focus only on three areas addressed by the proposed amendments and the comments: 1) cooperation, 2) proportionality and scope of discovery, and 3) preservation.

1. Cooperation

The proposed amendment to Rule 1 would add that “the court and the parties” should use the rules to achieve the goal already explicit in the Rule — the “just, speedy, and inexpensive determination of every action and proceeding.” For reasons explained in the Advisory Committee's memo, this route was chosen to encourage cooperation without explicitly stating a duty of cooperation. The Committee found that imposing a general duty of cooperation would generate collateral litigation over the adequacy of efforts to cooperate in relation to zealous advocacy.

The Section points out that the Advisory Committee notes to the 1993 amendment to Rule 1 clearly and explicitly state that the courts and attorneys share the responsibility of achieving “just, speedy and inexpensive determination.” Accordingly, the Section notes, the proposed change is unnecessary. Moreover, if the goal of the amendment is to encourage further cooperation, it does not go far enough. This would require an explicit statement.

2. Proportionality and the Scope of Discovery

The proposed amendment to Rule 26(b)(1), which defines the scope of discovery, would expressly incorporate the principle of proportionality, using criteria identified in current Rule(b)(2)(C)(iii). This proposal follows a long history of proposals over several decades aimed at containing the scope of discovery. Proportionality is a concept that has been increasingly utilized by courts in electronic discovery cases, as well as in local rules and guidelines.

The Section supports the proposed amendments to Rule 26(b)(1). However, it notes that the amendment could initially lead to substantial litigation over how the proportionality standard should be applied under particular circumstances. In order to help contain such potential litigation, the Section suggests that the note accompanying the amended Rule state that existing case law applying Rule 26(b)(2)(C)(iii) applies to proportionality under amended Rule 26(b)(1).

The Section also supports related amendments to Rule 26(C)(1)(b). This amendment would expressly allow the court to order cost shifting (“the allocation of expenses”) as a way to protect parties from undue burden. However, the Section recommends that the Advisory Committee clarify that the amendment is not meant to change “the American rule” on attorneys' fees.

A critical issue relating to cost shifting is what costs may be shifted. It is generally agreed that the lion's share of electronic discovery costs relate to search and review of ESI. However, the case law conflicts on whether such costs may be shifted. Given the potential amount and proportion of such costs, the resolution of whether they can be shifted could easily impact whether a case is settled or taken to trial.  Accordingly, the Section's comments explicitly recognize this issue and conflict in the case law — but without taking a position on whether the Advisory Committee should address it and if so how.  This subject may well be divisive between lawyers representing different kinds of clients. Therefore, it could be a difficult for a diverse association of lawyers to reach consensus on how it should be resolved.

3. Preservation

Another divisive issue is how parties should be judged when they fail to preserve relevant ESI. The proposed amendments respond to concerns that severe sanctions for negligent preservation failures are unfair given the difficulty some parties may have in preserving large volumes of ESI from complex systems. As the Section notes, the proposed rule would govern preservation failures occurring before the commencement of litigation, which is a new extension of the Federal Rules to events currently addressed by courts' inherent powers.

The Section supports the extension, especially given the inconsistent treatment of preservation obligations in the case law. Therefore, it “applauds the Advisory Committee's attempt to bring order out of the chaos” by establishing uniform standards for spoliation sanctions. Nonetheless, certain clarifications are recommended.

Parties who willfully or in bad faith destroy relevant ESI should not benefit by a rule that places the burden of proving substantial prejudice on the other party. It is true that duplicative ESI often or even usually exists in multiple locations. However, this is not always the case. The bad faith destruction of evidence should not be rewarded “because of the difficulty of showing the content of the information destroyed.”

In addition, the Section recommends defining the standard of willfulness as “intentional or reckless conduct that is so unreasonable that harm is highly likely to occur.” The Section also recommends clarifying that omissions that lead to the destruction of evidence are treated the same as actions. Finally, it approves of the proposed amendment to allow sanctions regardless of culpability where spoliation has “irreparably deprived a party of any meaningful opportunity to present or defend against claims.”

Considering the sheer scope of the NYSBA and its Commercial and Federal Litigation Section, the Section's comments on the proposed FRCP amendments represent the sentiments of many practitioners in federal courts where some of the most complex cases are adjudicated. The comments were prepared with the input of lawyers experienced in both federal litigation and electronic discovery. Accordingly, the Section's comments may provide a meaningful barometer for an even larger population of lawyers interested in the proposed amendments.

 

The views expressed are those of the author and do not necessarily represent the views of Ernst & Young LLP.

Much ink has already been spilled reporting on the proposed amendments to the Federal Rules of Civil Procedure (FRCP), which primarily relate to or are motivated by the impact of electronic discovery. However, now that public comments have been submitted in response to the request by the Judicial Conference Committee on Rules of Practice and Procedure, it is time to consider the reaction to the proposals. As the largest bar association in the nation, the New York State Bar Association's (NYSBA) opinion on the law is entitled to some weight. As the largest section of the NYSBA, the Commercial and Federal Litigation Section's (the “Section”) opinion is especially worthy of consideration where it concerns proposed amendments to the FRCP. This article will consider the Section's public comments on the current proposed amendments as a barometer of sentiment among sophisticated practitioners of electronic discovery. It will focus only on three areas addressed by the proposed amendments and the comments: 1) cooperation, 2) proportionality and scope of discovery, and 3) preservation.

1. Cooperation

The proposed amendment to Rule 1 would add that “the court and the parties” should use the rules to achieve the goal already explicit in the Rule — the “just, speedy, and inexpensive determination of every action and proceeding.” For reasons explained in the Advisory Committee's memo, this route was chosen to encourage cooperation without explicitly stating a duty of cooperation. The Committee found that imposing a general duty of cooperation would generate collateral litigation over the adequacy of efforts to cooperate in relation to zealous advocacy.

The Section points out that the Advisory Committee notes to the 1993 amendment to Rule 1 clearly and explicitly state that the courts and attorneys share the responsibility of achieving “just, speedy and inexpensive determination.” Accordingly, the Section notes, the proposed change is unnecessary. Moreover, if the goal of the amendment is to encourage further cooperation, it does not go far enough. This would require an explicit statement.

2. Proportionality and the Scope of Discovery

The proposed amendment to Rule 26(b)(1), which defines the scope of discovery, would expressly incorporate the principle of proportionality, using criteria identified in current Rule(b)(2)(C)(iii). This proposal follows a long history of proposals over several decades aimed at containing the scope of discovery. Proportionality is a concept that has been increasingly utilized by courts in electronic discovery cases, as well as in local rules and guidelines.

The Section supports the proposed amendments to Rule 26(b)(1). However, it notes that the amendment could initially lead to substantial litigation over how the proportionality standard should be applied under particular circumstances. In order to help contain such potential litigation, the Section suggests that the note accompanying the amended Rule state that existing case law applying Rule 26(b)(2)(C)(iii) applies to proportionality under amended Rule 26(b)(1).

The Section also supports related amendments to Rule 26(C)(1)(b). This amendment would expressly allow the court to order cost shifting (“the allocation of expenses”) as a way to protect parties from undue burden. However, the Section recommends that the Advisory Committee clarify that the amendment is not meant to change “the American rule” on attorneys' fees.

A critical issue relating to cost shifting is what costs may be shifted. It is generally agreed that the lion's share of electronic discovery costs relate to search and review of ESI. However, the case law conflicts on whether such costs may be shifted. Given the potential amount and proportion of such costs, the resolution of whether they can be shifted could easily impact whether a case is settled or taken to trial.  Accordingly, the Section's comments explicitly recognize this issue and conflict in the case law — but without taking a position on whether the Advisory Committee should address it and if so how.  This subject may well be divisive between lawyers representing different kinds of clients. Therefore, it could be a difficult for a diverse association of lawyers to reach consensus on how it should be resolved.

3. Preservation

Another divisive issue is how parties should be judged when they fail to preserve relevant ESI. The proposed amendments respond to concerns that severe sanctions for negligent preservation failures are unfair given the difficulty some parties may have in preserving large volumes of ESI from complex systems. As the Section notes, the proposed rule would govern preservation failures occurring before the commencement of litigation, which is a new extension of the Federal Rules to events currently addressed by courts' inherent powers.

The Section supports the extension, especially given the inconsistent treatment of preservation obligations in the case law. Therefore, it “applauds the Advisory Committee's attempt to bring order out of the chaos” by establishing uniform standards for spoliation sanctions. Nonetheless, certain clarifications are recommended.

Parties who willfully or in bad faith destroy relevant ESI should not benefit by a rule that places the burden of proving substantial prejudice on the other party. It is true that duplicative ESI often or even usually exists in multiple locations. However, this is not always the case. The bad faith destruction of evidence should not be rewarded “because of the difficulty of showing the content of the information destroyed.”

In addition, the Section recommends defining the standard of willfulness as “intentional or reckless conduct that is so unreasonable that harm is highly likely to occur.” The Section also recommends clarifying that omissions that lead to the destruction of evidence are treated the same as actions. Finally, it approves of the proposed amendment to allow sanctions regardless of culpability where spoliation has “irreparably deprived a party of any meaningful opportunity to present or defend against claims.”

Considering the sheer scope of the NYSBA and its Commercial and Federal Litigation Section, the Section's comments on the proposed FRCP amendments represent the sentiments of many practitioners in federal courts where some of the most complex cases are adjudicated. The comments were prepared with the input of lawyers experienced in both federal litigation and electronic discovery. Accordingly, the Section's comments may provide a meaningful barometer for an even larger population of lawyers interested in the proposed amendments.

 

The views expressed are those of the author and do not necessarily represent the views of Ernst & Young LLP.