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January 2014

Home – The Cost of Justice under a Microscope: Proposed Federal E-Discovery Rules Draw Volumes of Comments

The Cost of Justice under a Microscope: Proposed Federal E-Discovery Rules Draw Volumes of Comments

 An alien invasion. The Rapture. Changes in federal e-discovery rules. All three draw speculation and commentary around whether, when and how they will come to fruition. For now we will leave Judgment Day and Klingons for others to review; the most frightening and imminent threats are both the continuation of and proposed revisions to the Federal Rules of Civil Procedure (FRCP) on e-discovery. And, like other apocalyptic events, commentators say the revisions will be good for some and bad for others.

 

Among the commentators is Andrew J. Pincus, who argued 23 cases before the U.S. Supreme Court and served as, among other things, general counsel to the U.S. Department of Commerce before joining Mayer Brown. Pincus appeared before a Committee on the Judiciary subcommittee to answer whether limiting discovery will “leave Americans without access to justice.”

 

Pincus’ 19-page statement is surely being applauded by American businesses. He outlines how the enormous cost of our legal system is becoming even greater because of e-discovery. Pincus says this has discouraged foreign investment, hampered competitiveness, taxed already stretched federal court resources, slowed the resolution of cases, and driven up settlement values as defendants must figure escalating litigation costs―not just the merits of a case―into the equation. He cites a study that says the median cost of producing digital evidence is $1.8 million.

 

Asymmetry
“Asymmetry between the costs of litigation for plaintiffs and for defendants has increased ―largely as a result of the cost of electronic discovery,” Pincus testified.

 

The impact is that a U.S. company operates at a competitive disadvantage in global markets. He compared their burden to sending runners to the Olympic Games “with fifty-pound weights tied to their ankles.”

 

Pincus argues the case for proportionality. “Does anyone seriously believe that significant discovery burdens should be imposed on a party even when that discovery is disproportional to the needs of the case, considering not just the amount at issue but also the importance of the issues, the importance of the discovery to resolving those issues, and whether the burden outweighs the benefit?” He pointed to a Microsoft® report that said in 2011 the average case involved the collection and processing of 12.9 million pages―with just 142 pages ultimately used as evidence on average.

 

Pincus argues the case for greater clarity regarding the importance of relevance. The proposed amendments merely “clarify and emphasize pre-existing legal standards,” he said, “rather than creating new limitations on the scope of discovery.” Unfortunately, he said the proposed rules do not contain valuable suggestions such as limiting discovery to matters that are both relevant and material.

 

Pincus argues the case for the proposed limits on depositions, interrogatories and requests for admission. “These are reasonable reforms designed to encourage lawyers to be more efficient, and therefore decrease cost and delay, while preserving judicial discretion to allow discovery in appropriate cases.”

 

Pincus argues for change in the standards pertaining to sanctions for spoliation imposed when information is inadvertently deleted as a matter of routine information management policies. “[T]he sanctions standard should require proof of culpable conduct. Therefore, the standard should be revised to replace ‘willful or in bad faith’ with ‘willfully and in bad faith,’ ‘purposefully or otherwise in bad faith,’ or some other formulation that will eliminate this ambiguity.”

 

Placitella: Not So Fast!
One of the longest running areas of litigation―which the casual observer may think has long-since wrapped up―is asbestos litigation, often referred to as the Mother of All Torts. Asbestos litigation continues to involve thousands of claimants. It has bankrupt companies. Billions of dollars remain at stake both in bankruptcy trusts and litigation against new crops of defendants.

 

Christopher Placitella has been one of the standard bearers for victims of asbestos-related diseases for many years and is co-chair of the American Association for Justice’s Asbestos Litigation Group. A founding partner of Cohen, Placitella & Roth, P.C., Placitella has served on multiple plaintiff steering committees and as class counsel. Not surprisingly, he also sees things quite differently from Pincus on a couple of critical issues. Placitella offered his views in a letter to the Committee on Rules of Practice and Procedure, part of the Administrative Office of the U.S. Courts.

 

Placitella said the changes to Rule 26(B)―from its current focus on relevance to add proportionality as a deciding element―will have an “asymmetric impact on asbestos plaintiffs wrongfully injured by asbestos exposure.” He said the proportionality standard is “essentially a cost-benefit analysis that considers whether the cost of the discovery outweighs its likely benefit” and narrows relevancy by eliminating the phrase “information reasonably calculated to lead to discoverable information.”

 

The New Jersey-based plaintiff attorney said his clients start off at a disadvantage in litigation since the defendants have information that goes back 50 years. The “imbalance in the information known to the defendants is substantial,” including information about product dangers and sales. A worker can have come into contact with asbestos at 20 different worksites, each of which warrants its own discovery, he said. The proposed rule change will create a “significant new obstacle to asbestos plaintiffs’ access to relevant information” and give companies a way to “shield relevant information from discovery.”

 

“The new rule incentivizes a defendant to claim that it is too costly to produce relevant material in its custody,” he wrote, and “shifts the burden to the plaintiff to attempt to explain why evidence the plaintiff has never seen is sufficiently beneficial to outweigh the costs unilaterally alleged by the defendant.” The result, he said, will be to deny a large number of sick and dying individuals the opportunity to prove their case.

 

Placitella was equally concerned about the change to Rule 37(e) that would make it more difficult to secure sanctions for spoliation of evidence. He said the proposed change would “effectively eliminate a judge’s ability to impose sanctions in all but the most extreme cases” and create a “nearly insurmountable obstacle for litigants seeking sanctions” for destroying evidence.

 

The impact of proposed limits on depositions will have the opposite of the desired effect of limiting litigation, Placitella said. “When depositions are drastically limited, both parties will have a lessened understanding of the strengths and weaknesses of the matter,” and the proposed change would “actually hide” those elements which drive more cases to trial as opposed to the settlement table.

 

Pincus and Placitella are just two of the many commentators, but their reviews clearly reflect the very different ways defense and plaintiff counsel view the proposed rules.