11/6/2014 - njd.uscourts.gov

11/6/2014

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Basic Principles, Practical Implications

Honorable Joseph H. Rodriguez, U.S.D.J.Honorable Joel Schneider, U.S.M.J.

Anthony J. DiMarino, Esq. (A.J. DiMarino, P.C.)William F. Cook, Esq. (Brown & Connery, LLP)

1pro·por·tion·al

: having a size, number, or amount that isdirectly related to or appropriate for something

: having parts that are the correct orappropriate size in relation to each other

Merriam-Webster Dictionary

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Overview of rule changes expected for

December 2015

Understanding “proportionality”

Practical impact of the new Rule 26(b)(1)◦ Document requests

◦ Interrogatories

◦ Depositions

Rule 37(e) – ESI

Additional changes

Rule 1: Scope and Purpose

Rule 4(m): Time for Service; “Appendix”

Rule 16(b): Scheduling

Rule 26(b): Scope of Discovery

Rule 26(c): Protective Orders

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Rule 26(d): Early document requests

Rule 26(f): Joint Discovery Plan

Rule 34: Document Requests

Rule 37(e): Failure to Provide Preserve ESI

Rule 55(c): Setting Aside a Default or a DefaultJudgment

Rule 84: Forms

Appendix of Forms

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Rule changes will go into effect onDecember 1, 2015

(assuming Supreme Court approvalby May 1, 2015 and no action by

Congress)

Civil Rules Advisory Committee(“Advisory Committee”)

Committee on Rules of Practice and Procedure of theJudicial Conference

(“Standing Committee”)

Judicial Conference of the United States

Supreme Court

Congress

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Mounting complaints about cost, delays andburdens of civil litigation in federal courts

Average outside litigation cost per Fortune 200company was nearly $115 million in 2008, up 73%from percent from $66 million in 2000

1000:1

◦ Ratio of pages discovered to exhibit pages

Civil Justice Reform Group, et al.,“Litigation Cost Survey of Major Companies”

81% of ACTL Fellows agreed that the civil justice system istoo expensive

69% of Fellows said that the civil justice system takes too long

68% of Fellows agree that the potential of litigation costsinhibits the filing of civil cases

“There is a serious concern that the costs and burdens ofdiscovery are driving litigation away from the court systemand forcing settlements based on the costs,

as opposed to the merits, of cases.”

ACTL & IAALS, Interim Report on the Joint Project of the American College of TrialLawyers Task Force on Discovery and the Institute for the Advancement of theAmerican Legal System (2008)

Late 2008: Standing Committee asks AdvisoryCommittee to hold a conference on the issues of costand delay in the federal civil-litigation system

January 2009: Advisory Committee schedulesconference to be held at Duke University School ofLaw in May 2010 to determine whether it isnecessary to “totally rethink the current approachtaken by the civil rules to litigation.”

Hon. John Koeltl, “Progress in the Spirit of Rule 1,” 60 DukeL.J. 537 (2010); Mary Kay Kane, Pretrial Procedural Reformand Jack Friedenthal, 78 GEO. WASH. L. REV. 30, 38(2009).

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Two-day conference with eleven panels attended by judges,lawyers, academics, and users of the system, includinggovernment, corporations, and groups representing individuallitigants and public interest causes

Scores of articles, studies, and commentary submitted

“[N]early unanimous agreement that the disposition of civilactions could be improved, reducing cost and delay, byadvancing cooperation among the parties, proportionality inthe use of available procedures, and early and active judicialcase management.”

Hon. John Koeltl, “Progress in the Spirit of Rule 1,” 60 DukeL.J. 537 (2010); Advisory Committee Report to StandingCommittee, May 2014.

Advisory Committee prepares rule proposals; vetsthem at “mini-conferences”

August 2013: Standing Committee approvespublication of “Duke Package”

Maximum capacity hearings in Washington, D.C.,Phoenix, and Dallas

120 testifying witnesses

Thomas Y. Allman, “The Civil Rules Package As ApprovedBy the Judicial Conference” (September 18, 2014)

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Over 3200 written comments

Includes extensive comments from the Lawyersfor Civil Justice (“LCJ”), American Associationfor Justice, the Federal Magistrate JudgesAssociation, the Association of CorporateCounsel, the Department of Justice, and theSedona Conference®

Thomas Y. Allman, “The Civil Rules Package AsApproved By the Judicial Conference” (September 18,2014)

April 2014: Advisory Committee reviews andfinalizes proposals; recommends adoption

May 2014: Standing Committee acceptsrecommendations of Advisory Committee

September 2014: Judicial Conference acceptsrecommendations; submits to Supreme Court foradoption

Report of the Advisory Committee on Civil Rules (May2014); Thomas Y. Allman, “The Civil Rules Package AsApproved By the Judicial Conference” (September 18, 2014)

Rules currently pending before Supreme Court

If the rules are adopted and submitted toCongress prior to May 1, 2015, they wouldbecome effective on December 1, 2015 iflegislation is not adopted to reject, modify, ordefer them

Thomas Y. Allman, “The Civil Rules Package As ApprovedBy the Judicial Conference” (September 18, 2014)

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Rule 26(b)(1)

Rule 37(e)

Unless otherwise limited by court order, the scope ofdiscovery is as follows: Parties may obtain discoveryregarding any nonprivileged matter that is relevant to anyparty's claim or defense--including the existence,description, nature, custody, condition, and location of anydocuments or other tangible things and the identity andlocation of persons who know of any discoverable matter.For good cause, the court may order discovery of anymatter relevant to the subject matter involved in theaction. Relevant information need not be admissible at thetrial if the discovery appears reasonably calculated to leadto the discovery of admissible evidence. All discovery issubject to the limitations imposed by Rule 26(b)(2)(C).

Scope in General. Unless otherwise limited by courtorder, the scope of discovery is as follows: Parties mayobtain discovery regarding any nonprivileged matterthat is relevant to any party's claim or defense andproportional to the needs of the case, consideringthe importance of the issues at stake in the action,the amount in controversy, the parties relativeaccess to relevant information, the parties’resources, the importance of the discovery inresolving the issues, and whether the burden orexpense of the proposed discovery outweighs itslikely benefit. Information within this scope ofdiscovery need not be admissible in evidence to bediscoverable.

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The cost-benefit factors included in present Rule26(b)(2)(C)(iii) are moved up to become part of thescope of discovery, identifying elements to beconsidered in determining whether requesteddiscovery is “proportional” to the needs of the case.

The examples recognizing discovery of the existenceof documents or tangible things and the identity ofpersons who have knowledge of discoverable matterare eliminated as “no longer necessary.”

Advisory Committee Note to Rule 26 (2014); Reportof the Advisory Committee on Civil Rules (May2014)

The distinction between discovery of matterrelevant to the parties’ claims or defenses anddiscovery of matter relevant to the subjectmatter of the action, on a showing good cause, iseliminated.

and….

Advisory Committee Note to Rule 26 (2014); Report ofthe Advisory Committee on Civil Rules (May 2014)

The provision allowing discoveryof inadmissible information

“reasonably calculated to lead tothe discovery of admissible

evidence” is eliminated

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Widespread support at the Duke Conference forthe proposition that discovery should be limitedto what is proportional to the needs of the case

As to meaning, Advisory Committee borrowsthe factors prescribed by Rule 26(b)(2)(C)(iii),which courts now use to consider in limiting thefrequency or extent of discovery

Advisory Committee Note to Rule 26 (2014);Report of the Advisory Committee on Civil Rules(May 2014)

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“Information is discoverable under revised Rule26(b)(1) if it is relevant to any party’s claim ordefense and is proportional to the needs of the

case.”

Advisory Committee Note to Rule 26 (2014)

Surveys from groups representing various and diverseinterests generally agreed that outcomes are moredriven by discovery costs than the merits of the case

While proportionality has been in Rule 26 since 1983, ithas not been given proper emphasis; placement in Rule26(b)(1) will make it more prominent

“The present amendment restores the proportionalityfactors to their original place in defining the scope ofdiscovery.”

Advisory Committee Note to Rule 26 (2014); Reportof the Advisory Committee on Civil Rules (May2014)

“Restoring the proportionality calculation toRule 26(b)(1) does not change the existingresponsibilities of the court and the parties toconsider proportionality, and the change doesnot place on the party seeking discovery theburden of addressing all proportionalityconsiderations.”


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“Nor is the change intended to permit theopposing party to refuse discovery simply bymaking a boilerplate objection that it is notproportional. The parties and the court have acollective responsibility to consider theproportionality of all discovery and consider itin resolving discovery disputes.”


The “issues at stake in the action”

The amount in controversy

The parties relative access to relevantinformation

The parties’ resources

The importance of the discovery inresolving the issues

Whether the burden or expense of theproposed discovery outweighs its likelybenefit

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“considering the importance of the issues at stakein the action, the amount in controversy…”

Advisory Committee switched the order of these twoitems from current Rule 26(b)(2)(C)(iii)

The “rearrangement adds prominence to the importanceof the issues at stake, avoiding any possible implicationthat the amount in controversy is the first and thereforemost important concern.”

Report of the Advisory Committee on Civil Rules(May 2014)

“…the parties’ relative access to relevantinformation”

Not currently in Rule 26(b)(2)(C)(iii)

“This factor addresses the common concern that thefrequently asymmetric distribution of informationmeans that discovery often will impose greaterburdens on one party than on another.”

Report of the Advisory Committee on CivilRules (May 2014)

Current Rule 26:

“including the existence, description, nature,custody, condition, and location of any documents

or other tangible things and the identity andlocation of persons who know of any discoverable

matter.”

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“Discovery of such matters is so deeplyentrenched in practice that it is no longernecessary to clutter the long text of Rule 26with these examples.”

“The discovery identified in these examplesshould still be permitted under the revised rulewhen relevant and proportional to the needs ofthe case.”


The distinction between discovery of matterrelevant to the parties’ claims or defenses anddiscovery of matter relevant to the subject matter ofthe action, on a showing good cause, is eliminated.

“The Committee has been informed that thislanguage is rarely invoked. Proportional discoveryrelevant to any party’s claim or defense suffices,given a proper understanding of what is relevant toa claim or defense.”


The distinction between matter relevant to aclaim or defense and matter relevant to thesubject matter was introduced in 2000.

The Rule was amended in 2000 in response tocomplaints that discovery should be confined tothe parties’ claims or defenses, not “subjectmatter.”

Advisory Committee Note to Rule 26 (2014);Report of the Advisory Committee on Civil Rules(May 2014)

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“The 2000 Note offered three examples ofinformation that, suitably focused, would berelevant to the parties’ claims or defenses. Theexamples were ‘other incidents of the same type,or involving the same product’; ‘informationabout organizational arrangements or filingsystems’; and ‘information that could be used toimpeach a likely witness.’ Such discovery is notforeclosed by the amendments.”

Advisory Committee Note to Rule 26 (2014);

The provision allowing discoveryof inadmissible information

“reasonably calculated to lead tothe discovery of admissibleevidence” is eliminated.

“The former provision for discovery of relevantbut inadmissible information that appears‘reasonably calculated to lead to the discovery ofadmissible evidence’ is also deleted.”

“The phrase has been used by some, incorrectly,to define the scope of discovery.”


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“As the Committee Note to the 2000 amendmentsobserved, use of the ‘reasonably calculated’ phraseto define the scope of discovery ‘might swallow anyother limitation on the scope of discovery.’”

The 2000 amendments sought to prevent suchmisuse by adding the word “Relevant” at thebeginning of the sentence, making clear that“‘relevant’ means within the scope of discovery asdefined in this subdivision . . . .”


“The ‘reasonably calculated’ phrase has continuedto create problems, however, and is removed bythese amendments. It is replaced by the directstatement that ‘Information within this scope ofdiscovery need not be admissible in evidence to bediscoverable.’”

“Discovery of nonprivileged information notadmissible in evidence remains available so long asit is otherwise within the scope of discovery.”


Global discovery versus the individual case

“Relevant” versus “Relevant”

Rule application versus case lawdevelopment

Rule 26(b) and Bell/Twombly

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Current Rule 26(b) Analysis

◦ Discovery is broader than admissibility

◦ Is it reasonably likely to lead to the discovery ofadmissible evidence?

◦ Is it privileged or otherwise protected?

◦ Should probably produce, if not privileged

New Rule 26(b) Analysis

◦ “Information is discoverable under revised Rule26(b)(1) if it is relevant to any party’s claim or defenseand is proportional to the needs of the case.”

◦ “Not Proportional” cannot be used as a boilerplateobjections

◦ Is the document “relevant to any party’s claim ordefense”?

New Rule 26(b) Analysis (cont.)

◦ Document does not have to be admissible

◦ Information may be withheld if privileged or non-responsive

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“The 2000 Note offered three examples of informationthat, suitably focused, would be relevant to the parties’claims or defenses. The examples were ‘other incidents ofthe same type, or involving the same product’;‘information about organizational arrangements or filingsystems’; and ‘information that could be used to impeacha likely witness.’ Such discovery is not foreclosed by theamendments.”



◦ “Discovery that is relevant to the parties’ claims ordefenses may also support amendment of thepleadings to add a new claim or defense that affectsthe scope of discovery.”


Effect on common objections (vague, undulyburdensome)

Use of “not proportional” or “disproportionate”

“Not relevant to any party’s claim or defense”

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During the deposition

Persons/entities to depose

◦ 30(b)(6) Notice

Protective orders

Discussion

Current Rule:

(e) Failure to Provide ElectronicallyStored Information. Absent exceptionalcircumstances, a court may not imposesanctions under these rules on a party forfailing to provide electronically storedinformation lost as a result of the routine,good-faith operation of an electronicinformation system.

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“[I]t is no exaggeration to say that many of themore than 90% of American adults who own a cellphone keep on their person a digital record ofnearly every aspect of their lives—from themundane to the intimate.”

Chief Justice John Roberts,

Riley v. California, -- U.S. –(2014)

“While a litigant is under no duty to keep or retainevery document in its possession, even in advanceof litigation it is under a duty to preserve what itknows, or reasonably should know, will likely berequested in reasonably foreseeable litigation.”

Scott v. IBM Corp., 196 F.R.D. 233 (D.N.J. 2000)

Once a party reasonably anticipates litigation, itmust suspend its routine documentretention/destruction policy and put in place alitigation hold to ensure the preservation ofrelevant documents.

Counsel must oversee compliance with the litigationhold, monitoring the party's efforts to retain andproduce relevant documents.

Major Tours, Inc. v. Colorel, 2009 WL 2413631 (D.N.J.Aug. 4, 2009) (citing Zubulake v. UBS Warburg LLC,

220 F.R.D. 212 (S.D.N.Y.2003) (“Zubulake IV” ))

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Spoliation is defined as thedestruction or significant

alteration of evidence, eitherduring or prior to reasonably

foreseeable litigation.

Bensel v. Allied Pilots Association, et al., 263F.R.D. 150 (D.N.J. 2009)

Spoliation exists where:

The evidence in question must be within the party’scontrol.

The evidence destroyed or withheld was relevant toclaims or defenses.

It must appear that there has been actualsuppression or withholding of evidence.

It was reasonably foreseeable that the evidencewould later be discoverable.

Bensel, 263 F.R.D. at 152

Bull v. United Parcel Service, Inc.,665 F.3d 68 (3d Cir. 2012)

Third Circuit resolves uncertainty

Bad faith is required to show “actual suppression”:

“[A] finding of bad faith is pivotal to a spoliationdetermination. This only makes sense, since spoliation

of documents that are merely withheld, but notdestroyed, requires evidence that the documents are

actually withheld, rather than—for instance—misplaced. Withholding requires intent.”

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(e) Failure to Provide PreserveElectronically Stored Information. Absentexceptional circumstances, a court may notimpose sanctions under these rules on a partyfor failing to provide electronically storedinformation lost as a result of the routine, good-faith operation of an electronic informationsystem.

If electronically stored information that should have beenpreserved in the anticipation or conduct of litigation is lostbecause a party failed to take reasonable steps to preserve it,and it cannot be restored or replaced through additionaldiscovery, the court:

◦ (1) upon finding prejudice to another party from loss of the information,may order measures no greater than necessary to cure the prejudice; or

◦ (2) only upon finding that the party acted with the intent to depriveanother party of the information’s use in the litigation may:

(A) presume that the lost information was unfavorable to the party;

(B) instruct the jury that it may or must presume the information wasunfavorable to the party; or

(C) dismiss the action or enter a default judgment.

Should the ESI have been preserved in theanticipation or conduct of litigation?

Was the ESI lost because a party failed to takereasonable steps to produce it?

Can the ESI be restored or replaced throughadditional discovery?

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Did the party act “with the intent to depriveanother party of the information’s use inthe litigation”?

◦ Court may, but is not required to impose sanctions inthe form of a presumption, adverse inference,dismissal, or default

Prejudice alone is insufficient for presumption,adverse inference, dismissal, or default

Adverse inference or other sanctions require ashowing that a party acted “with the intent todeprive another party of the information’suse in the litigation”

New rule “forecloses reliance on inherentauthority or state law to determine whencertain measures should be used.”


Analysis applies only to ESI, and only applieswhen such information is actually lost

“[L]oss from one source may often be harmlesswhen substitute information can be foundelsewhere.”

New rule does not create a new duty to preserve


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“Courts should consider the extent to which aparty was on notice that litigation was likelyand that the information would be relevant. Avariety of events may alert a party to theprospect of litigation. Often these eventsprovide only limited information about thatprospective litigation, however, so that thescope of information that should be preservedmay remain uncertain. It is important not to beblinded to this reality by hindsight arising fromfamiliarity with an action as it is actually filed.”


“The fact that a party had an independentobligation to preserve information does notnecessarily mean that it had such a duty withrespect to the litigation, and the fact that theparty failed to observe some other preservationobligation does not itself prove that its efforts topreserve were not reasonable with respect to aparticular case.”


“The rule does not place a burden of proving ordisproving prejudice on one party or the other.”

“The rule leaves judges with discretion todetermine how best to assess prejudice inparticular cases.”

◦ Uniformity versus case law development

◦ Risk of inconsistency


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No adverse inference permitted based solely onfinding of negligence or gross negligence

“Intent” may require jury determination

◦ Defeating the purpose?

(e)(2) does not require a separate finding ofprejudice


“Courts should exercise caution, however, in usingthe measures specified in (e)(2).”

Court is not required to impose (e)(2) sanctionswhere intent to deprive exists

“The remedy should fit the wrong, and the severemeasures authorized by this subdivision should notbe used when the information lost was relativelyunimportant or lesser measures such as thosespecified in subdivision (e)(1) would be sufficient toredress the loss.”


Rule 1

◦ Amended to make clear that the just, speedy, andinexpensive determination of civil actions is theresponsibility of the parties, not just the court

Rule 4

◦ Time to serve defendant after filing the Complaint isreduced from 120 days to 90 days

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Rule 16

◦ Scheduling Conferences are to be permitted in person or bytelephone

◦ Issuance of the first Scheduling Order is reduced from 120days to 90 days after any defendant has been served, or 60days after any defendant has appeared

◦ The first Scheduling Order may provide for thepreservation of ESI, incorporate claw-back agreements, andrequire parties to request a conference before filing adiscovery motion

Rule 26(d)(2)

◦ “Early” document requests are permitted where theyare served more than 21 days after service ofsummons and complaint

◦ The requests are considered “served” at the first Rule26(f) conference

Rule 34(b)(2)(C)

◦ Responses to document requests must indicatewhether anything is actually being withheld on thebasis of an asserted objection

Rule 55(c)

◦ Amended to make clear that a default judgment can berevised at any time until it becomes a final defaultjudgment

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Rule 84 – Forms

◦ Rule 84 and the Appendix of Forms “are no longernecessary and have been abrogated” given “manyexcellent alternative sources for forms”

◦ The “Waiver of Service” form used in connection withRule 4 is now incorporated into Rule 4

QUESTIONS AND ANSWERS

11/6/2014 - njd.uscourts.gov

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