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Corporations write letter backing amendments to Federal Rules of Civil Procedure

By Heather Isringhausen Gvillo | Feb 14, 2014

WASHINGTON, D.C. (Legal Newsline) - A group of more than 300 corporations collectively have written a letter to the Committee on Rules of Practice and Procedure of the Judicial Conference of the United States supporting select proposed amendments to the Federal Rules of Civil Procedure.

They also addressed their letter this week to Judge David G. Campbell, chairman of the Civil Rules Advisory Committee.

The Committee on Rules of Practice and Procedure opened their proposals for comment on Aug. 15, 2013. The period for comment ends Saturday.

In their letter, the group of 308 corporations argues that litigation has run rampant with "costly and inconsistent" obligations for attorneys to preserve, process and produce data for discovery, while much of it "has no real relevance to the issue in dispute," and is, often times, not even used during trial.

Such tedious actions leave corporations without "clear and consistent" guidelines for preserving information that could be required for discovery later.

In some cases, corporate parties sometimes over-preserve to prepare for future discovery and avoid "tactical threats of spoliation sanctions."

On the other hand, corporate parties may settle claims "based on high costs rather than on the merits of the litigation."

"Federal litigation today is inefficient, too expensive, and fraught with too many uncertainties that have little or nothing to do with the merits of particular cases," the letter states.

The group's interest in the proposed amendments extends beyond supporting select amendments. They also requested that the amendments be approved with "important improvements."

They begin by addressing proposed amendments to Rule 37(e), which focuses on failure to make disclosures or to cooperate in discovery and sanctions.

According to the preliminary draft of proposed amendments, Rule 37(e) "provided protection against sanctions 'under these rules' for loss of electronically stored information due to the 'routine, good-faith operation of an electronic information system.'"

However the Committee Note to this rule observed that it might need to be altered as the "amount and variety of digital information has expanded enormously in the last decade, and the costs and burdens of litigation holds have escalated as well."

The committee also seeks to broaden the rule, applying it to all discoverable information, not just what is stored electronically.

So, the committee hopes to focus on preservation decisions, making the most serious sanctions unavailable if the party who lost information acted reasonably. However, their approach would not give specific direction on when a preservation obligation arises or the scope of the obligation.

The current rule does not address resort to inherent power. The proposed amendment, however, "affirmatively provides authority for sanctions for failure to preserve discoverable information, [and] should remove any occasion to rely on inherent power.

"Sanctions (as opposed to curative measures) could be employed only if the court finds that the failure to preserve was willful or in bad faith, and that it caused substantial prejudice in the litigation," the draft of proposed amendments states.

As for curative measures, the rule "authorizes a variety of measures to reduce or cure the consequences of loss of information, and the Committee Note repeatedly recognized that those measures should be preferred to imposing sanctions if they can substantially undo the litigation harm resulting from the failure to preserve."

The group wrote in their letter that while the proposed changes are not perfect, they do hold some promise in addressing litigation problems.

"To be effective, however, it should be revised to clarify that an award of sanctions requires a showing of specific intent to deprive another party of discoverable information, and that the threshold for 'curative measures' requires a showing of significant prejudice to a party to the litigation," the letter stated.

The group of corporations then switches gears to address Rule 26(b), welcoming the changes, specifically the proposed deletion of the phrase, "'[r]elevant information need not be admissible at the trial if the discovery appears reasonably calculated to lead to the discovery of admissible evidence.'"

"This phrase has been abused by parties and misconstrued by many courts," the letter states. "As a result, it has stretched the scope of discovery beyond the reasonable intention of its original drafters."

The proposed amendment doesn't quite go as far as deleting the phrase completely from the rule. Instead, it seeks to revise the phrase, stating that it dates back to 1946 when it was intended to "overcome decisions that denied discovery solely on the ground that the requested information would not be admissible evidence."

The phrase 'relevant' was added in 2000 in order "'to clarify that information must be relevant to be discoverable.'" But the 'reasonably calculated' language is interpreted today "as though it defeines the scope of discovery, and judges often hear lawyers argue that this sentence sets a broad standard for appropriate discovery."

In an attempt to address confusion, the committee proposes to revise this sentence to read: "'Information within the scope of discovery need not be admissible in evidence to be discoverable.'"

"The limits defining the scope of discovery are thus preserved. The purpose of the amendment is to carry through the purpose underlying the 2000 amendment, with the hope that this further change will at last overcome the inertia that has thwarted this purpose," the draft of proposed amendments states.

"Taken together, these proposed amendments will address the burdens of both over-preservation and overbroad discovery," the letter stated. "More importantly, they will begin to reverse the trend favoring resolution of cases based on costs, rather than on the merits."

Judge Cheryl A. Eifert of the United States District Court for the Southern District of West Virginia referred to the current Rule 26(b) recently in an asbestos lawsuit involving a deceased mesothelioma victim through second-hand exposure.

Eifert filed a memorandum opinion and order on Feb. 5 addressing defendant Ohio Power Company's (OPC) motion for protective order against plaintiff Eldon Amick's discovery requests. She granted part and denied part of the request for protective order.

Eldon Amick, represented for deceased Barbara Amick, worked as a bookkeeper for America Gas & Electric at OPC's Muskingum River Power Plant in 1953 and 1954, where asbestos deposited on his clothing each day.

His wife, Barbara Amick, allegedly inhaled the asbestos fibers while laundering his work clothes and eventually developed mesothelioma from her exposure.

Amick filed a notice of deposition in December 2013 pursuant to the Federal Rule of Civil Procedure.

OPC objected to certain topics of inquiry mentioned in the deposition request on Jan. 7 and eventually filed a motion for protective order.

Eifert wrote that Rule 26(b) "permits a party to obtain discovery regarding any non-privileged matter that is relevant to any party's claim or defense."

"While the Federal Rules of Civil Procedure do not define 'relevant information,' the Federal Rules of Evidence define it as 'evidence having any tendency to make the existence of any fact that is of consequence to the determination of the action more probable or less probable than it would be without the evidence,'" she added.

However, admissibility is not the guideline for relevancy when it comes to discovery, Eifert noted, as the scope of relevancy is broad. Information is relevant, and thus discoverable, if it could lead to matters that bear or could bear on any issue in the case.

"Although the pleadings are the starting point from which relevancy and discovery are determined ... [r]elevancy is not limited by the exact issues identified in the pleadings, the merits of the case, or the admissibility of discovered information. Rather, the general subject matter of the litigation governs the scope of relevant information for discovery purposes. Therefore, courts broadly construe relevancy in the context of discovery,'" Eifert stated.

From Legal Newsline: Reach Heather Isringhausen Gvillo at asbestos@legalnewsline.com

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