In response to the escalating costs of discovery in the US, the federal Advisory Committee on Civil Rules (Committee) is contemplating a series of discovery-related changes to the Federal Rules of Civil Procedure (FRCP). Although the proposed changes address the substantial burdens on a defendant imposed by the current rules, John Beisner and Jessica Miller of Skadden, Arps, Slate, Meagher & Flom LLP suggest that additional measures are necessary to sufficiently protect defendants from discovery abuse.

Two major discovery-related changes to the FRCP are being considered by the federal Advisory Committee on Civil Rules (Committee). The first is a package of changes to Rule 26 intended to promote cooperation, proportionality and early hands-on case management that would reduce the cost and delay associated with complex discovery in civil cases. The second is an amendment to Rule 37(e) that would establish clearer standards for imposing remedial measures when discoverable information is lost.

The proposed changes to Rule 26 address, among other things, the lack of proportionality under the current system. The current Rule 26(b) is largely ineffective at limiting the costs of discovery, as it requires the producing parties to bear the costs of their own production. The proposed Rule 26 addresses this shortcoming by requiring the requesting party to make reasonable discovery requests and permitting discovery only if the requests are proportional to the needs of the case based on:

The Committee is also considering the following proportionality changes:

(Advisory Committee on Civil Rules (Apr. 11-12, 2013), at 84-87.)

The Committee is also considering an amendment to Rule 37(e), which governs sanctions for failure to preserve electronically stored information (ESI). Rather than merely ensuring that parties properly preserve ESI, the current rule is frequently used offensively by parties seeking to impose sanctions through, for example, excessive claims that the adverse party's routine destruction of ESI had a more sinister motive (or at least was negligently performed).

The amended Rule 37(e) not only clarifies when sanctions for failure to preserve ESI are appropriate, but also places greater emphasis on curative measures (such as permitting at trial introduction of evidence about the loss of information, or allowing argument to the jury about the possible significance of lost information). The Judicial Conference of the United States' Standing Committee on Rules of Practice and Procedure approved both amendments for public comment on June 3.

The Committee's efforts to reform the current civil discovery rules are laudable, but they are not sufficient to rein in the costs and burdens inherent in complex civil discovery. Proposed Rule 26(b), which mandates that all discovery be proportionate to the needs of the case, may reduce the overall scope of discovery in certain cases. However, this requirement still does not address a fundamental shortcoming of our current civil discovery system, the fact that the producing party generally bears all of the costs associated with production. With the proliferation of ESI, these costs are often substantial. A recent study of Fortune 500 companies by the RAND Institute found that the median total cost for electronic discovery among participants totaled $1.8 million per case (RAND Institute for Civil Justice, Where the Money Goes: Understanding Litigant Expenditures for Producing Electronic Discovery (2012), at 17).

The reality for most civil litigation is that the defendants' obligation to bear these exorbitant discovery costs incentivizes plaintiffs to serve defendants with burdensome discovery requests with little downside or risk to themselves. Because defendants want to avoid exorbitant discovery costs, discovery is often used by plaintiffs as a weapon to coerce settlement, regardless of the merit of their case. Although the proposed changes are a step in the right direction, they are not enough to alleviate the tremendous burden of discovery costs on a producing party.

The proposed rules still place the burden on a defendant to bear all of the costs of responding to the other side's discovery requests. That is, a defendant is forced to pay significant discovery expenses (without any contribution from the plaintiff) before a judge or a jury finds the defendant liable, without an opportunity to be heard on the necessity or reasonableness of the discovery, much less the underlying merits of the action.

Further, the proposed rules do not sufficiently protect a defendant from the risk of contempt under Rule 37 for failure to comply with unnecessary or unreasonable discovery demands. Under both the current and proposed rules, a defendant has little opportunity to argue against the inappropriateness of certain broad discovery demands before it is forced to expend significant resources complying with them.

One solution is to establish a general rule that each party pays the costs of the discovery it requests, subject to adjustments by the court. Some of the factors a court might consider in determining whether any adjustments are required would include whether the producing party:

This approach would help ensure that discovery is used to obtain legitimately needed information and that neither side uses discovery simply as a means to cause the adverse party to incur heavy financial burdens and disruptions to their business. It would also protect a defendant from spending huge amounts of money producing discovery before a court finds that it engaged in improper conduct. This approach is consistent with the principal purpose behind the proposed amendments, as it would facilitate greater and more direct court involvement in discovery by giving courts a direct role in balancing the burdens of discovery between the parties.

Another more modest option is to require cost shifting for electronic discovery alone, since that is one of the driving forces behind abusive and expensive discovery requests. An amendment mandating that courts consider the use of cost shifting when a party seeks electronic discovery would place the onus of burdensome discovery requests on the party making the requests and reduce the risk that the producing party will spend a large amount of money on unnecessary discovery. This approach would also encourage discovery requests that are more narrowly tailored to obtaining relevant evidence.

A sensible starting point for the Committee to create cost-shifting guidelines would be the seven factors enunciated by Judge Shira Scheindlin in Zubulake v. UBS Warburg LLC (217 F.R.D. 309, 322 (S.D.N.Y. 2003)). Additionally the Committee could use the 16 factors articulated by the American Bar Association (American Bar Association: Section of Litigation, Civil Discovery Standards (2004), at 59-61). Incorporating some form of these factors in the federal rules would be a significant advancement over the current system.

While the proposed rules do not go far enough in addressing the costs and burdens of civil discovery, they are an important first step that can be invoked to narrow discovery requests. Given the focus on proportionality reflected in the proposed amendment to Rule 26, a party facing overbroad discovery requests will have an additional tool to narrow those requests and lower the cost of responding to them. The notion that discovery must be "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," should help put an end to fishing expeditions. (Advisory Committee on Civil Rules (Apr. 11-12, 2013), at 83.)

A party could demonstrate a lack of proportionality, for example, by pointing to prior discovery that has already been produced, and which is more relevant to the party's claims or defenses than the information later requested. Under these circumstances, the later request arguably would be much less important in resolving the issues in the case.

In addition, the proposed amendment to Rule 26 would limit all discovery to information relevant to a party's claims or defenses, rather than the "subject matter involved in the action." As the Committee Notes accompanying this amendment explain, "[p]roportional discovery relevant to any party's claim or defenses suffices. Such discovery may support amendment of the pleadings to add a new claim or defense that affects the scope of discovery." (Advisory Committee on Civil Rules (Apr. 11-12, 2013), at 93.)

Therefore, when there is no likelihood that requested information would have any bearing on a party's claims or defenses, the responding party could invoke the amended Rule 26 to oppose that production. A party seeking to narrow discovery could advance all of these arguments during meet and confer sessions. If those efforts are unsuccessful, discovery motions would remain an option, and courts would likely be more receptive to these motions given Rule 26's renewed emphasis on both proportionality and relevancy for a party's claims or defenses.