There is cautious optimism around the U.S. Judicial Conference’s Advisory Committee on considerations of revisions to the Federal Rules of Civil Procedure. In November 2012, the Committee published its proposed changes to Rules 26(b)(1) and 37(e).

Do the proposed set of amendments go further in alleviating e-discovery burdens and making litigation costs more reasonable than the last set of rules? While the jury is still out on the ultimate impact the proposed revisions will have, there is reason for hope.

Notably, the Committee has proposed to expand the protection under the “safe harbor” rule, Rule 37(e). While the current rule is designed to protect companies against sanctions for deletion of data that occurred during “routine, good faith operation” of their computer systems, it does not apply to routine information disposal activities that might otherwise not be important to litigation processes. The impact of this narrow rule has been for courts to sanction companies that may have inadvertently destroyed documents as part of their normal records retention process, prior to reasonably anticipated litigation.

Improvements to Rule 37(e)
The proposed revision to Rule 37(e) should help organizations cut the costs of preservation by creating a more uniform standard for imposing sanctions that likely will prevent parties from over-preserving data in an attempt to stave off sanctions. The proposed rule expands a court’s options beyond its “inherent power” to impose sanctions: where the spoliating party did not act in bad faith, it can require additional discovery, curative measures, or the payment of reasonable expenses and attorney fees. Furthermore, the burden would be on the courts to understand the organization’s information retention policies and evaluate a company’s decision – “whether the failure was willful or in bad faith” – based on a number of factors, including:

  • the extent to which the party was on notice that litigation was likely and that the information would be discoverable;
  • the reasonableness of the party’s efforts to preserve the information, including the use of a litigation hold and the scope of the preservation efforts;
  • whether the party received a request that information be preserved, the clarity and reasonableness of the request, and whether the person who made the request and the party engaged in good-faith consultation regarding the scope of preservation;
  • the proportionality of the preservation efforts to any anticipated or ongoing litigation;
  • and whether the party sought timely guidance from the court regarding any unresolved disputes concerning the preservation of discoverable information.

 “Proportionality” Language: Murkier, but on the Right Path
The proposed amendments also may lessen the burden of e-discovery for companies in other ways. While the current Rules do not explicitly reference proportionality, though the concept is tacitly embodied in Rule 26(b)(2)(c) [1], the proposed change to Rule 26(b)(1), indicated by the underlined text, expressly includes proportionality in the definition of relevance:

Unless otherwise limited by court order, the scope of discovery is as follows: 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 amount in controversy, the importance of the issues at stake in the action, 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. Information [within this scope of discovery]{sought} need not be admissible in evidence to be discoverable.

Open-Ended Questions to be Addressed
The explicit inclusion of “proportional” in this provision will certainly be beneficial, but there are still open-ended questions that will need to be addressed. How are the “needs of the case” defined? At what point does the amount in controversy become disproportionate? And what makes an issue “important”? A more concrete approach could be to establish tiers of discovery that depend on the amount in controversy, with the court having the power to make exceptions where necessary.

We believe the amendments are a step in the right direction, though in addition to proportionality language, there are still ambiguities that the Committee will need to clarify before organizations start applauding. For example, it fails to clarify the murky “reasonable anticipation of litigation” standard. Second, subsection 2(B) seems to create a loophole to the requirement of bad faith and willfulness for imposing harsher sanctions, such as an adverse inference instruction. Subsection 2(B) does not require intent to impose sanctions where a party’s spoliation “irreparably deprived a party of any meaningful opportunity to present a claim or defense.” Thus, deletion of data that was inadvertent—or perhaps even done in good faith under a document retention policy—might still be sanctionable.

The Committee will resume its discussions of these proposals in April, and we will continue to monitor the status.

Rachel Teisch is senior director of marketing at Xerox Litigation Services. She can be reached at info@xls.xerox.com.

[1] On motion or on its own, the court must limit the frequency or extent of discovery otherwise allowed by these rules or by local rule if it determines that . . . (iii) the burden or expense of the proposed discovery outweighs its likely benefit, considering the needs of the case, the amount in controversy, the parties’ resources, the importance of the issues at stake in the action, and the importance of the discovery in resolving the issues.

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