The Revised Federal Rules of Civil Procedure: Proportionality is King

As most federal practitioners are aware, certain amendments to the Federal Rules of Civil Procedure took effect on December 1, 2015. The underlying objective of this year’s amendments is to resolve cases more quickly, more fairly, and with less expense incurred. Specifically, Rules 26 and 37 were amended to rein in out-of-control expenses associated with the collection, processing, review, and production of electronically stored information (ESI). Historically, parties have engaged in the practice of over-collecting and over-producing electronic records comprising millions of pages—a very time consuming and expensive process when one takes into account the corresponding laborious review. Yet, in most instances, only a fraction of ESI produced in discovery is ultimately admitted into evidence. In addition, whether sound or not, many attorneys (in-house and outside counsel) turn over the responsibility of collecting potentially responsive files to someone in the organization who is not an attorney (e.g., custodian of records, etc.). This “self-collection” naturally results in “self-culling.” The Rules Committee has taken note of this tedious and taxing process and, as a result, has embraced efforts to address to bring consistency and efficiency to all new cases, and to a certain extent, cases pending as of December 1, 2015.

One example of the way in which the amendments are intended to limit ESI-related expenses is an amendment to Rule 26(b)(1), which now requires that discovery sought not only be relevant to a claim or defense, but also be “proportional to the needs of the case.” While the proportionality concern has been considered by many courts in the past, the parties have to expressly consider factors such as: (1) the key issues at stake; (2) the amount in controversy; (3) a party’s access to information; (4) a party’s resources; (5) the importance of the discovery; and (6) whether the burden or expense is outweighed by its benefit. Markedly, the Committee Note cautions against an opposing party outright refusing discovery by making boilerplate objections that the discovery sought is “not proportional” to the needs of the case, noting that the parties and the court have the “collective responsibility” to consider proportionality in an effort to resolve discovery disputes—not to propagate them. Moreover, for the first time, the Committee Note to Rule 26 officially validates the use of “computer-based methods of searching” for information when dealing with large volumes of ESI, e.g., keywords or predictive coding. Additionally, and mostly attributable to the rapid increase in the amount of published information or data, parties frequently expend excessive efforts to preserve all data remotely relevant to the claims or defenses in pending or reasonably foreseeable litigation—typically undertaken with the objective of avoiding severe sanctions. Rule 37(e) now addresses this issue. Rule 37(e) attempts to demarcate culpable and intentional loss of relevant data as “sanctionable,” yet acknowledges that the unintentional loss of data that does not prejudice the requesting party is innocuous and should not be met with sanctions. In other words, the Rules Committee wants to make clear that a “strict liability rule” does not automatically apply if information is lost. Notably, the Rule does not elaborate on what is required to establish that a party was prejudiced by the loss of data, but the burden of proof is placed squarely on the party seeking curative measures.

Although many of the rules have been revised, Rules 26 and 37 certainly merit further review and analysis by every federal practitioner. Only time will tell whether these revisions will have their intended results.

André De La Cruz, an associate at Sheppard Mullin’s Orange County office, primarily focuses on intellectual property litigation, patent and trademark prosecution, counseling, and licensing. His practice also includes experience with trade secrets, general litigation, and the representation of clients before the International Trade Commission in Section 337 investigations. For more info on Andre, click here.


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