One of the biggest burdens in litigation is the cost, in terms of money and time, in responding to filings and going through discovery. There are some proposed amendments to the Federal Rules of Civil Procedure that theoretically should reduce those costs by eliminating unnecessary discovery requests and zeroing in on the key issues, but the amendments also have shortened time frames to respond to filings, meaning you will need to get your stuff together even faster than usual. There is also a proposed revision that could impact your data retention policy which I detail at the end of this blog. If the amendments are accepted the proposed version will be published on or before May 1, 2014 and will take effect on or after December 1, 2014, possibly as late as December 1, 2015.
A summary of the changes I thought most pertinent from an in-house counsel perspective are below. Remember these are proposed amendments to Federal Rules of Civil Procedure only, each state has its own respective Rules of Civil Procedure. However, many (all?) state rules of civil procedure are modeled after the Federal Rules of Civil Procedure so I’d expect them to eventually adopt the amendments also if they are accepted. If you think you will likely never be sued in federal court and you are a technology company this just means you haven’t been sued by a patent troll yet so read on.
(1) The discovery scope/limits proposed revision suggests that discovery be ““proportional to the needs of the case considering the amount in controversy, the importance of the issues . . . the parties’ resources, the importance of the discovery in resolving the issue, and whether the burden or expense of the proposed discovery outweighs its likely benefit” and eliminates the following phrases that cause angst from departments responsible for production, that data be produced “…including the existence, description, nature, custody, condition, and location of any documents or other tangible things and the identity and location of persons who know of any discoverable matter…” and “[r]elevant information need not be admissible at the trial if the discovery appears reasonably calculated to lead to the discovery of admissible evidence.”
What does this mean? It means if you are a small company, less time burned that could have been spent on revenue producing activities instead of responding to discovery requests. Previously information regarding the very EXISTENCE of something made it subject to discovery up until the point the producing party decides to file a motion objecting to the discovery as overly broad or the court on its own initiative decides it is too broad. If information is prohibitively expensive or time consuming to produce (for example, if it is stored on a wiki where you must click, print as pdf, click, print as pdf, click, SIGH, print as pdf instead of being stored in email form which is capable of being keyword searched and exported in a single click) and it isn’t helpful in resolving the issue the assumption is you will not have to produce it unless ordered by the court.
(2) The time between the filing of the complaint to serving the complaint would be halved, from 120 to 60 days. The filing of the complaint is what triggers all the deadlines to respond/act (besides of course getting your litigation hold in place the second you reasonably anticipate litigation). With a 50% reduction in time this means all your deadlines and thus all your expenses are going to hit sooner than they usually would otherwise, unless you get some extensions. It also means less time to get your key documents such as your contracts, bills/shipment records, insurance policy (always start the insurance policy process asap to check on your claim coverage anyway) in order, identification and interview of key employees involved in the claim complete, and (if the suit occurs outside of your main litigation counsel’s geographical area of practice) counsel chosen.
(3) The scheduling order, which sets the pace of the case, would be entered 90 days after the defendant is served, cut down from 120 days.
(4) Oral depositions would be cut from a maximum of 10 depositions allowed to 5 depositions. This is great if you are dealing with a plaintiff who thinks every witness who might appear at trial should be deposed. It means less disruption to your company caused by having employees out all day at depositions. Written depositions would be cut from 10 to 5, interrogatories from 25 to 15, and a limit would be placed on the number of requested admissions (previously there was no limit) setting it at 25. Also, on the oral depositions the maximum number of hours the deposition can last would be cut from 7 to 6. An hour makes a big difference when you have a key employee out of the office! Note- all of these can be increased with court permission, these are the maximums allowed without court permission.
(4) If you are an in-house attorney or in your company’s IT department odds are most of your time in discovery and preparing your data retention policy has been heavily focused on electronic data. Currently 37(e) focuses on the failure to preserve electronic information and reads as appears below.
(e) Failure to Provide Electronically Stored Information. Absent exceptional circumstances, a court may not impose sanctions under these rules on a party for failing to provide electronically stored information lost as a result of the routine, good-faith operation of an electronic information system.
The proposed revision expands this to any kind of information, not just electronic. So if your data retention policy does not cover those cardboard boxes full of contracts and bills in your locked filing room you will need to update your policy if this particular amendment goes through.
The proposed revision also contains a new standard under which sanctions would be imposed. The court would impose sanctions only if the court finds that the party’s actions caused “substantial prejudice in the litigation and were willful or in bad faith” or “irreparably deprived a party of any meaningful opportunity to present or defend against the claims in the litigation.” Under the proposed revised standard I think the ““irreparably deprived a party of any meaningful opportunity to present or defend against the claims in the litigation” could potentially make this safe harbor provision useless so it is more important than ever that you have your data retention policy in place and know that one of the most key parts of data retention is knowing how to stop routine destruction under your policy for data subject to the hold.
(5) The proposed amendment to 34(2) (b) would add more certainty to when discovery production must be complete. The proposed amendment would revise to say the responding party must provide responsive documents “no later than the time for inspection stated in the request or a later reasonable time stated in the response.” Currently when a discovery request is received a party may respond by the date in the request with an objection and produce the discovery at a later unspecified time on a continuous but rolling basis. Under the proposed rule if a party will not respond with the complete production by the date requested instead of merely objecting the party must provide a date by which the production will be complete. This means the breadth of discovery will have to be adequately scoped early in the process in order to be accurate in selecting the date.
In summary, hopefully the amended rules will have the effect of stopping the unnecessary sideshow circuses that come with discovery and focus on the merits of the claim. But with the amendments comes having to act faster, expecting expenses to occur sooner, having to scope discovery production early on, and potentially making data retention policy changes.