Proposed Amendments to Federal Rules of Civil Procedure Governing Discovery and Preservation of Electronically Stored Information One Step Closer to Approval

Over the course of the past two years, litigants have faced significant changes to Federal Rules of Civil Procedure that are critical to navigating the federal litigation landscape, include rules governing subpoenas, discovery, case management, and preservation of electronically stored information (“ESI”). We previously discussed the long-awaited changes to Federal Rule of Civil Procedure 45 that were implemented on December 1, 2013 to streamline the use of subpoenas in federal civil actions (read our Rule 45 post). The wider reaching August 2013 Proposed Amendments, which were initiated to address the challenges of managing the scope of discovery and a party’s failure to meet its discovery obligations, have made it one step further to approval, albeit in a form substantially different from the initial proposal. During its September 2014 meeting, the Judicial Conference of the United States approved the latest version of the proposed amendments which had been revised by the Advisory Committee on Civil Rules based upon feedback received during the public comment period and approved by the Standing Committee on Rules of Practice and Procedure in May 2014 (“Modified Proposed Amendments”). We discussed in detail the initial proposal set forth in the August 2013 Proposed Amendments in our previous post, Proposed Amendments to Federal Rules of Civil Procedure Include Limitations on Discovery and Spoliation Sanctions Published for Comment Until February 2014. Below, we highlight the differences between key August 2013 Proposed Amendments and the Modified Proposed Amendments approved by the Judicial Conference.

The Published August 2013 Proposed Amendments Were Modified Based on Public Comment

The Advisory Committee received substantial feedback on the August 2013 Proposed Amendments that were published for public comment. The Advisory Committee reported receiving 2,345 written comments and hearing from more than 120 witnesses during the three public hearings that were held. The Advisory Committee met in April, 2014 and submitted revised proposed amendments to the Standing Committee in a May 2, 2014 report, which the Standing Committee approved at its May 29-30, 2014 meeting. The proposed amendments to Rules 1, 4, 6, 16, 26, 30, 31, 33, 34, and 36 (referred to as the “Duke Package”) were divided into three categories – cooperation among lawyers, early and active judicial case management, and proportionality in discovery. According to the Advisory Committee, the Duke Package recommendations were “little changed” from the proposals that were published for comment in August 2013. The most obvious change was the withdrawal of proposed amendments that would reduce presumptive numerical limits on some forms of discovery. The initial revisions to Rule 37 in the August 2013 Proposed Amendments were focused on broad spoliation sanctions. The Rule 37(e) Proposal, however, was substantially revised based on numerous concerns raised during the public comment period and then further revised during the April Committee meeting based on the draft that appeared in the meeting’s agenda book. The Advisory Committee, however, described the core of the published rule as remaining the same.

Cooperation: Rule 1

The proposed revisions to Rule 1 published in the August 2013 Proposed Amendments remained unchanged in the Modified Proposed Amendments.

Case Management: Rules 4, 16, 26

Several changes were made to the proposed revisions that addressed case management issues following the public comment period. The main changes are summarized in the chart below:

Case Management Rules v. final

Discovery Proportionality: Rules 26, 30, 31, 33, 34, 36

The Advisory Committee noted that surveys produced in connection with the Duke Conference showed that excessive discovery occurs “in a worrisome number of cases, particularly those that are complex, involve high stakes, and generate contentious adversary behavior.” The Advisory Committee proposed revisions to Rules 26, 30, 31, 33, 34, and 36 “to promote responsible use of discovery proportional to the needs of the case.” Several of the suggested revisions which sought to establish presumptive limits on discovery were subsequently withdrawn.
Discovery Proportionality Rules v. final

Rule 37(e): Spoliation Sanctions vs. ESI Preservation

The proposed Rule 37(e) revisions seek to rectify the divergent standards established by various jurisdictions for preservation of evidence and the imposition of related remedies for failing to preserve. However, based on public comment, the Advisory Committee recognized the need to permit broad trial court discretion in dealing with increasing challenges related to increased generation of electronically stored information (“ESI”). The August 2013 Proposed Amendments established a national standard for the imposition of sanctions, eliminating the court’s ability to impose sanctions under the court’s “inherent authority” or state law. They also sought to expand the current Rule’s application by applying to all discoverable information and not only to ESI. Under the August 2013 Proposed Amendments:

  • Rule 37(e)(1)(B)(i): Permitted sanctions or an adverse inference jury instruction “only on a finding that the party to be sanctioned has acted willfully or in bad faith” AND if the loss caused “substantial prejudice” to the opposing party; and
  • Rule 37(e)(1)(B)(ii): Permitted sanctions in the absence of a willful or bad faith act only when the loss of information “irreparably deprived a party of any meaningful opportunity to present or defend against the claims in the litigation” AND “only if the affected claim or defense was central to the litigation.”

The Advisory Committee had noted that the proposed new rule rejected case law from the 2d Circuit, which allowed sanctions in the event of negligence, but accommodated case law (e.g., 11th and 4th Cir. cases) that supported sanctions in the absence of willfulness or bad faith in exceptional circumstances.

Several key concerns were raised during the public comment period, which ultimately led the Advisory Committee to substantially revise the proposed amendments to Rule 37(e). The key concerns raised included that (1) the law regarding spoliation for non-ESI is well-developed and long-standing, and should not be supplanted without good reason; (2) the use of the term “sanctions” may be inappropriate and raise professional responsibility issues; (3) both the “willful” and “bad faith” standards for sanctions were questioned; (4) the “irreparably deprived” provision might “swallow the rule” by permitting judges to circumvent the culpability requirements for sanctions; and (5) the “substantial prejudice” standard for cases in which actions were proven to be “willful or in bad faith” was too demanding and too difficult to satisfy. Thus, the Advisory Committee revised the proposed rule 37(e) as follows under the Modified Proposed Amendments:

  • The revised rule applies only to electronically stored information;
  • The revised rule applies if ESI “that should have been preserved in the anticipation or conduct of litigation of litigation is lost because a party failed to take reasonable steps to preserve it”;
  • If reasonable steps were not taken, and information was lost as a result, the next question is whether the lost information can be restored or replaced through additional discovery;
  • The court may upon finding prejudice to another party from loss of the information, order measures no greater than necessary to cure the prejudice; and
  • Only upon finding that the party acted with the intent to deprive another party of the information’s use in the litigation, may the court:

(A) presume that the lost information was unfavorable to the party;

(B) instruct the jury that it may or must presume the information was unfavorable to the party; or

(C) dismiss the action or enter a default judgment.

Additional details regarding the Modified Proposed Amendments approved by the Judicial Conference, as well as the text of the proposed rules, are available in the September 2014 Report of the Judicial Conference Committee on Rules of Practice and Procedure. The Modified Proposed Amendments now will be reviewed by the U.S. Supreme Court and, if adopted in full or in part, will be submitted to Congress for consideration prior to May 1, 2015. Proposed Amendments that pass will become effective on December 1, 2015.