FRCP Overhaul

Some 75 years after the adoption of the Federal Rules of Civil Procedure (FRCP), an overhaul is imminent and it will fundamentally affect product liability litigation practice. The proposed amendments are categorized into early, active, and sustained judicial case management; discovery practice addressing scope, proportionality, and sanctions; and cooperation by lawyers in an adversarial process. The article herein takes up the first two, in that order. The amendments involving cooperation between lawyers are much more modest.

This article explains the most important amendments. The focus is primarily on discovery, because that is the crux of so many product liability cases, and the discovery amendments are more far-reaching. The cases have involved unduly burdensome discovery, and skirmishes over sanctions that have troubled courts, practitioners and companies alike. They have struggled to sort through a morass of conflicting standards over the duties of preservation of evidence (especially electronically stored information, dubbed ESI), the standards for imposing discovery sanctions, and the severity of the sanctions. The amendments should alleviate these problems.

Before explaining the amendments themselves, an overview of the rigorous and laborious rulemaking process, its status, and the history behind these amendments is important because a few more steps must still be completed before the rules are adopted. At this point, however, approval of the new rules is expected.

The Rulemaking Process

Under the Rules Enabling Act, the Supreme Court promulgates rules of practice and procedure for the federal courts, subject to Congressional approval. The Court delegated that responsibility to the Judicial Conference. The Chief Justice of the United States is the presiding officer, and its members include the chief judge of each judicial circuit as well as a district judge from each regional judicial circuit. The Judicial Conference has the responsibility of continuously studying the operation of the rules and recommending amendments. The Conference has a Committee on Rules of Practice and Procedure (also called the Standing Committee) chaired by a federal circuit court judge and assisted by a reporter (a law professor), and it in turn has five Advisory Committees. Those five include an Advisory Committee on Civil Rules (Advisory Committee).

The Advisory Committee is led by a federal district court judge and also has a reporter (again a law professor), a few practicing lawyers and other professors, but mostly other judges. The Advisory Committee has Subcommittees, including a Discovery Subcommittee (chaired by another district court judge) that here was deeply involved in the rulemaking. Each Subcommittee may send recommendations to the Advisory Committee, which after obtaining approval from the Standing Committee will publish them for a notice and comment period.

After consideration of the comments, the Advisory Committee may (and in this instance did) revise and submit them to the Standing Committee. From there they go to the Judicial Conference, which then approves and transmits them to the Supreme Court for review. The Court would ultimately send them to Congress, and if Congress does not object, these specific amendments if unchanged will become effective on Dec. 1, 2015. It is an iterative seven-stage process with hearings ' three fully packed ones for these amendments ' and comments (over 2,300 submissions by plaintiffs' lawyers and organizations; defense bar; judges; corporations; law professors; federal, state, and local governments; and more).

These proposed amendments stem from a conference held at Duke University in May 2010, which brought together about 200 highly experienced lawyers, law professors, and judges who recognized that the time for change had come. They worked together to advance a balanced package of rules that advance “the just, speedy, and inexpensive determination” of every case. That package ultimately made its way up, following four years of multiple drafts and careful consideration by the Subcommittees, Advisory Committee, and the Standing Committee, which on May 29-30 formally approved the proposed amendments. The stage is set for final submission to the Supreme Court, expected when the Conference meets this month. Here are the amendments:

Early, Active Case Management

This begins with Rule 4(m), service of process. The time for serving a complaint has been shortened from 120 to 90 days. If the complaint has not been filed within 90 days, the court must dismiss the action without prejudice. Service on a foreign corporation outside of a judicial district is exempted from Rule 4(m) time limits.

There are other important changes involving scheduling orders that will affect practitioners. Under Rule 16(b)(1), the court needed to issue the order after receiving the parties' Rule 26(f) discovery plan or after consulting with the parties' attorneys at a scheduling conference or “by telephone, mail or other means.” As amended, Rule 16(b)(1)(B) will allow a telephone conference, but mail or an exchange of messages will not permitted, nor are any “other means” that do not involve direct simultaneous communication allowed.

Moreover, the time to issue a scheduling order under Rule 16(b)(2) has been reduced. The judge must issue the scheduling order as soon as practicable, but “unless the court finds good cause for delay,” the judge must issue it within the earlier of 90 days (instead of 120) after any defendant has been served or 60 days (no longer 90) after any defendant has appeared. The shorter time limits are tempered by the newly inserted “cause for delay,” which was added with highly complex cases or litigation involving the federal government in mind.

Three other noteworthy changes: The preservation of ESI ' not simply the disclosure or discovery of it ' has been added to the list of topics in the scheduling order, as well as in the Rule 26(f) discovery plan, and the scheduling order may by agreement of the parties provide that before filing any discovery motion the parties hold a conference with the court. (Originally it was a “must confer,” but the Advisory Committee abandoned that.)

Now we turn to the most significant proposals ' the amendment of the discovery rules.

Scope of Discovery and Proportionality

Rule 26(b)(1) would be significantly modified to alter the scope of discovery, emphatically requiring that the discovery must be proportional to the needs of the case, considering the amount in controversy and other factors. Rule 26(b)(1) would still begin with the familiar “Parties may obtain discovery regarding any nonprivileged matter that is relevant to any party's claim or defense,” but the rest of Rule 26(b)(1) ' in its entirety ' would be gone. That includes deletion of the penultimate sentence: “Relevant information need not be admissible at the trial if the discovery appears reasonably calculated to lead to the discovery of admissible evidence.”

Before, Rule 26(b)(1), which was adopted in 1983 and amended in 2000, paid lip service to proportionality by providing that “discovery is subject to the limitations imposed by Rule 26(b)(2)(C),” namely whether the burden or expense outweighed the benefits and other factors. In reality, the courts mostly ignored it. Now it is forceful and up front and center.

Under the new Rule 26(b)(1), the phrase “relevant to any parties claim or defense” is immediately followed by “and proportional to the needs of the case,” taking these specific factors into consideration: 1) The importance of the issues at stake in the action; 2) The amount in controversy; 3 The parties' relative access to relevant information; 4) The parties' resources; 5) The importance of the discovery in resolving the issues; and 6) Whether the burden or expense of the proposed discovery outweighs its likely benefit.

Rule 26(b)(2)(C) in turn would be amended to provide simply that the court by motion or on its own must limit discovery if it is outside the scope of Rule 26(b)(1).

Regarding the “calculated to lead” sentence, it is now rewritten as: “Information within this scope of discovery need not be admissible in evidence to be discoverable.” According to the Advisory Committee Note, “the [original] sentence has never been intended to define the scope of discovery. It is merely a ban on admissibility-based refusals to provide relevant discovery. And yet lawyers and courts often rely on this provision as an independent definition of the scope of discovery that extends beyond information relevant to the parties' claims or defenses, or even the subject matter of the action.”

ESI and Rule 37 Sanctions

The amendments to Rule 37(e) will bring clarity and uniformity to the duty to preserve ESI, the standard for sanctions for failure to preserve, and the severity of sanctions. The policy is to move from punitive to curative measures. The Advisory Committee Note is essential reading for a full understanding of this important shift.

In particular, the Committee Note explains that severe sanctions such as an adverse inference instruction or dismissal are impermissible absent an intent to deprive the other party of the information. The revised Rule “rejects cases such as Residential Funding Corp. v. DeGeorge Financial Corp., 306 F.3d 99 (2dCir. 2002), that authorize the giving of adverse-inference instructions on a finding of negligence or gross negligence.”

Proposed Rule 37(e) completely differs from the current version. The one-sentence provision about the so-called “safe harbor provision” for the loss of data through the operation of a good-faith routine purge system has been eliminated. In its place, Rule 37(e) as proposed states that if ESI should have been preserved in the anticipation or conduct of litigation, but a party failed to take reasonable steps to do so and it cannot be restored or replaced through additional discovery, then under Rule 37(e)(1) “upon finding prejudice to another party from loss of the information, may order measures no greater than necessary to cure the prejudice ' .” (emphasis added). “Reasonable” does not mean perfect. The Committee Note identifies factors used to assess reasonableness.

Even more significantly, Rule 37(e)(2) provides that it is only upon finding that the party acted with the intent to deprive another party of the information's use in the litigation that the court may presume that the lost information was unfavorable to the party; instruct the jury that it may or must presume the information was unfavorable to the party; or dismiss the action or enter a default judgment.

The Committee Note explains that although serious measures may be needed to cure the prejudice under (e)(1), they “must not have the effect of measures permitted under (e)(2) ' .”

Other Discovery Amendments

The original proposals placed presumptive limits on the number of depositions, requests for admissions, and interrogatories. Those have been abandoned. There are several other proposals that remain, however, and some will affect how and when lawyers need to respond to discovery requests. For example, Rule 34(b)(2)(C) adds a requirement that objections to discovery must state whether any responsive materials are being withheld on the basis of that objection. There is also a new subsection 26(d)(2) enabling an early delivery of requests for production to help make Rule 26(f) conferences more efficient. The requests for production are not deemed served until that conference, and the responses will be due within 30 days of the conference.

Another noteworthy change is that when issuing motions for a protective order, a court will be authorized under 26(c)(1)(B) to allocate the expenses of discovery.

Conclusion

In sum, the new rules, taken together, should promote faster and more efficient case management, with tighter deadlines to serve the summons and complaint; require earlier scheduling conferences with contemporaneous discussions involving the courts and attorneys, and possibly earlier discussions between attorneys about requests for production. Moreover, they inject much-needed concepts of proportionality in discovery (and possibly even cost-shifting) where one party attempts to inflict unduly burdensome and costly discovery on the other; more reasonable and uniform standards for the imposition of sanctions; and a welcome shift from punitive to curative measures; and last, in the Committee Notes, clearer guidance to corporations about what is expected of them for the reasonable preservation and retrieval of ESI.

(All of the proposed amendments originally published amendments, summary of comments, minutes of meetings, and the May 2, 2014 Report of the Advisory Committee to the Standing Committee are included in a May 29-30, 2014 Standing Committee Meeting Report: http://1.usa.gov/1lHY3GT.)

Nicholas J. Wittner is a Professor of Law in Residence at the Michigan State University College of Law. He also serves as Counsel for Dykema Gossett LLP in Bloomfield Hills, MI.

Some 75 years after the adoption of the Federal Rules of Civil Procedure (FRCP), an overhaul is imminent and it will fundamentally affect product liability litigation practice. The proposed amendments are categorized into early, active, and sustained judicial case management; discovery practice addressing scope, proportionality, and sanctions; and cooperation by lawyers in an adversarial process. The article herein takes up the first two, in that order. The amendments involving cooperation between lawyers are much more modest.

This article explains the most important amendments. The focus is primarily on discovery, because that is the crux of so many product liability cases, and the discovery amendments are more far-reaching. The cases have involved unduly burdensome discovery, and skirmishes over sanctions that have troubled courts, practitioners and companies alike. They have struggled to sort through a morass of conflicting standards over the duties of preservation of evidence (especially electronically stored information, dubbed ESI), the standards for imposing discovery sanctions, and the severity of the sanctions. The amendments should alleviate these problems.

Before explaining the amendments themselves, an overview of the rigorous and laborious rulemaking process, its status, and the history behind these amendments is important because a few more steps must still be completed before the rules are adopted. At this point, however, approval of the new rules is expected.

The Rulemaking Process

Under the Rules Enabling Act, the Supreme Court promulgates rules of practice and procedure for the federal courts, subject to Congressional approval. The Court delegated that responsibility to the Judicial Conference. The Chief Justice of the United States is the presiding officer, and its members include the chief judge of each judicial circuit as well as a district judge from each regional judicial circuit. The Judicial Conference has the responsibility of continuously studying the operation of the rules and recommending amendments. The Conference has a Committee on Rules of Practice and Procedure (also called the Standing Committee) chaired by a federal circuit court judge and assisted by a reporter (a law professor), and it in turn has five Advisory Committees. Those five include an Advisory Committee on Civil Rules (Advisory Committee).

The Advisory Committee is led by a federal district court judge and also has a reporter (again a law professor), a few practicing lawyers and other professors, but mostly other judges. The Advisory Committee has Subcommittees, including a Discovery Subcommittee (chaired by another district court judge) that here was deeply involved in the rulemaking. Each Subcommittee may send recommendations to the Advisory Committee, which after obtaining approval from the Standing Committee will publish them for a notice and comment period.

After consideration of the comments, the Advisory Committee may (and in this instance did) revise and submit them to the Standing Committee. From there they go to the Judicial Conference, which then approves and transmits them to the Supreme Court for review. The Court would ultimately send them to Congress, and if Congress does not object, these specific amendments if unchanged will become effective on Dec. 1, 2015. It is an iterative seven-stage process with hearings ' three fully packed ones for these amendments ' and comments (over 2,300 submissions by plaintiffs' lawyers and organizations; defense bar; judges; corporations; law professors; federal, state, and local governments; and more).

These proposed amendments stem from a conference held at Duke University in May 2010, which brought together about 200 highly experienced lawyers, law professors, and judges who recognized that the time for change had come. They worked together to advance a balanced package of rules that advance “the just, speedy, and inexpensive determination” of every case. That package ultimately made its way up, following four years of multiple drafts and careful consideration by the Subcommittees, Advisory Committee, and the Standing Committee, which on May 29-30 formally approved the proposed amendments. The stage is set for final submission to the Supreme Court, expected when the Conference meets this month. Here are the amendments:

Early, Active Case Management

This begins with Rule 4(m), service of process. The time for serving a complaint has been shortened from 120 to 90 days. If the complaint has not been filed within 90 days, the court must dismiss the action without prejudice. Service on a foreign corporation outside of a judicial district is exempted from Rule 4(m) time limits.

There are other important changes involving scheduling orders that will affect practitioners. Under Rule 16(b)(1), the court needed to issue the order after receiving the parties' Rule 26(f) discovery plan or after consulting with the parties' attorneys at a scheduling conference or “by telephone, mail or other means.” As amended, Rule 16(b)(1)(B) will allow a telephone conference, but mail or an exchange of messages will not permitted, nor are any “other means” that do not involve direct simultaneous communication allowed.

Moreover, the time to issue a scheduling order under Rule 16(b)(2) has been reduced. The judge must issue the scheduling order as soon as practicable, but “unless the court finds good cause for delay,” the judge must issue it within the earlier of 90 days (instead of 120) after any defendant has been served or 60 days (no longer 90) after any defendant has appeared. The shorter time limits are tempered by the newly inserted “cause for delay,” which was added with highly complex cases or litigation involving the federal government in mind.

Three other noteworthy changes: The preservation of ESI ' not simply the disclosure or discovery of it ' has been added to the list of topics in the scheduling order, as well as in the Rule 26(f) discovery plan, and the scheduling order may by agreement of the parties provide that before filing any discovery motion the parties hold a conference with the court. (Originally it was a “must confer,” but the Advisory Committee abandoned that.)

Now we turn to the most significant proposals ' the amendment of the discovery rules.

Scope of Discovery and Proportionality

Rule 26(b)(1) would be significantly modified to alter the scope of discovery, emphatically requiring that the discovery must be proportional to the needs of the case, considering the amount in controversy and other factors. Rule 26(b)(1) would still begin with the familiar “Parties may obtain discovery regarding any nonprivileged matter that is relevant to any party's claim or defense,” but the rest of Rule 26(b)(1) ' in its entirety ' would be gone. That includes deletion of the penultimate sentence: “Relevant information need not be admissible at the trial if the discovery appears reasonably calculated to lead to the discovery of admissible evidence.”

Before, Rule 26(b)(1), which was adopted in 1983 and amended in 2000, paid lip service to proportionality by providing that “discovery is subject to the limitations imposed by Rule 26(b)(2)(C),” namely whether the burden or expense outweighed the benefits and other factors. In reality, the courts mostly ignored it. Now it is forceful and up front and center.

Under the new Rule 26(b)(1), the phrase “relevant to any parties claim or defense” is immediately followed by “and proportional to the needs of the case,” taking these specific factors into consideration: 1) The importance of the issues at stake in the action; 2) The amount in controversy; 3 The parties' relative access to relevant information; 4) The parties' resources; 5) The importance of the discovery in resolving the issues; and 6) Whether the burden or expense of the proposed discovery outweighs its likely benefit.

Rule 26(b)(2)(C) in turn would be amended to provide simply that the court by motion or on its own must limit discovery if it is outside the scope of Rule 26(b)(1).

Regarding the “calculated to lead” sentence, it is now rewritten as: “Information within this scope of discovery need not be admissible in evidence to be discoverable.” According to the Advisory Committee Note, “the [original] sentence has never been intended to define the scope of discovery. It is merely a ban on admissibility-based refusals to provide relevant discovery. And yet lawyers and courts often rely on this provision as an independent definition of the scope of discovery that extends beyond information relevant to the parties' claims or defenses, or even the subject matter of the action.”

ESI and Rule 37 Sanctions

The amendments to Rule 37(e) will bring clarity and uniformity to the duty to preserve ESI, the standard for sanctions for failure to preserve, and the severity of sanctions. The policy is to move from punitive to curative measures. The Advisory Committee Note is essential reading for a full understanding of this important shift.

In particular, the Committee Note explains that severe sanctions such as an adverse inference instruction or dismissal are impermissible absent an intent to deprive the other party of the information. The revised Rule “rejects cases such as Residential Funding Corp. v. DeGeorge Financial Corp. , 306 F.3d 99 (2dCir. 2002), that authorize the giving of adverse-inference instructions on a finding of negligence or gross negligence.”

Proposed Rule 37(e) completely differs from the current version. The one-sentence provision about the so-called “safe harbor provision” for the loss of data through the operation of a good-faith routine purge system has been eliminated. In its place, Rule 37(e) as proposed states that if ESI should have been preserved in the anticipation or conduct of litigation, but a party failed to take reasonable steps to do so and it cannot be restored or replaced through additional discovery, then under Rule 37(e)(1) “upon finding prejudice to another party from loss of the information, may order measures no greater than necessary to cure the prejudice ' .” (emphasis added). “Reasonable” does not mean perfect. The Committee Note identifies factors used to assess reasonableness.

Even more significantly, Rule 37(e)(2) provides that it is only upon finding that the party acted with the intent to deprive another party of the information's use in the litigation that the court may presume that the lost information was unfavorable to the party; instruct the jury that it may or must presume the information was unfavorable to the party; or dismiss the action or enter a default judgment.

The Committee Note explains that although serious measures may be needed to cure the prejudice under (e)(1), they “must not have the effect of measures permitted under (e)(2) ' .”

Other Discovery Amendments

The original proposals placed presumptive limits on the number of depositions, requests for admissions, and interrogatories. Those have been abandoned. There are several other proposals that remain, however, and some will affect how and when lawyers need to respond to discovery requests. For example, Rule 34(b)(2)(C) adds a requirement that objections to discovery must state whether any responsive materials are being withheld on the basis of that objection. There is also a new subsection 26(d)(2) enabling an early delivery of requests for production to help make Rule 26(f) conferences more efficient. The requests for production are not deemed served until that conference, and the responses will be due within 30 days of the conference.

Another noteworthy change is that when issuing motions for a protective order, a court will be authorized under 26(c)(1)(B) to allocate the expenses of discovery.

Conclusion

In sum, the new rules, taken together, should promote faster and more efficient case management, with tighter deadlines to serve the summons and complaint; require earlier scheduling conferences with contemporaneous discussions involving the courts and attorneys, and possibly earlier discussions between attorneys about requests for production. Moreover, they inject much-needed concepts of proportionality in discovery (and possibly even cost-shifting) where one party attempts to inflict unduly burdensome and costly discovery on the other; more reasonable and uniform standards for the imposition of sanctions; and a welcome shift from punitive to curative measures; and last, in the Committee Notes, clearer guidance to corporations about what is expected of them for the reasonable preservation and retrieval of ESI.

(All of the proposed amendments originally published amendments, summary of comments, minutes of meetings, and the May 2, 2014 Report of the Advisory Committee to the Standing Committee are included in a May 29-30, 2014 Standing Committee Meeting Report: http://1.usa.gov/1lHY3GT.)

Nicholas J. Wittner is a Professor of Law in Residence at the Michigan State University College of Law. He also serves as Counsel for Dykema Gossett LLP in Bloomfield Hills, MI.