Monday, June 1, 2015

PROPORTIONAL DISCOVERY: THE NEW RULE 26(b)(1)


Barring unforeseen intervention, in just six months the landscape of discovery in federal civil cases will change.  Amendments to the Federal Rules of Civil Procedure, given final approval by the Supreme Court on April 29, 2015, will go into effect December 1, absent Congressional action blocking this change. The changes to the rules of Discovery are substantial.

In general, the changes to the rules governing discovery, Fed.R.Civ.P. 26-37, reflect a concerted effort to rein in discovery, to prevent, as the Advisory Committee says, “over-discovery.” (The Advisory Committee, in Notes conveyed to Congress with the Adopted Rules are available here).    The Advisory Committee proposed several changes, now adopted, intended to shrink discovery: the number of interrogatories allowable under Rule 33 will be reduced from twenty-five to fifteen.  The number of admissions will similarly be reduced to twenty five. [Requests to admit the genuineness of a document will be expressly exempted from the rule.] Depositions will no longer be presumptively “one day of seven hours”; their time will now be limited to just six hours.   Boiler-plate objections to document requests under Rule 34 will no longer be entertained: objections must be stated with specificity and must indicate whether responsive materials are being withheld on the basis of the objection.

Perhaps the most significant change, however, has been made to the definition of the scope of discovery in Rule 26(b)(1).  The present rule defines this expansively:

Parties may obtain discovery regarding any matter, not privileged, that is relevant to the claim or defense of any party, including the existence, description, nature, custody, condition, and location of any books, documents, or other tangible things and the identity and location of persons having knowledge of any discoverable matter. For good cause, the court may order discovery of any matter relevant to the subject matter involved in the action. Relevant information need not be admissible at the trial if the discovery appears reasonably calculated to lead to the discovery of admissible evidence. All discovery is subject to the limitations imposed by Rule 26(b)(2)(i), (ii), and (iii).

Fed.R.Civ.P. 26(b)(1). The proposed rule, adopted by the Supreme Court, however, provides that:

Parties may obtain discovery regarding any nonprivileged matter that is relevant to any party’s claim or defense and proportional to the needs of the case, considering the importance of the issues at stake in the action, the amount in controversy, the parties’ relative access to relevant information, 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.  Information within this scope of discovery need not be admissible to be discoverable.

Fed.R.Civ.P. 26(b)(1) (adopted but not enacted).  Two standards govern whether information is discoverable under the newly-amended rule 26(b)(1): whether it is  (1) relevant to a party’s claims or defense and (2) proportional to the needs of the case.  Gone is the “reasonably calculated” language that functioned to render the scope of discoverable material virtually unlimited  in the past.  Relevance now is limited specifically to the “claim and defense” of any party, that is, presumably, to the content of the Complaint and Answer. See Advisory Committee Notes (2013), pp. 23-24. Nevertheless, while this  may in itself serve to narrow the scope somewhat, it is the proportionality language that is likely to have a still greater effect on narrowing the breadth of discovery.

The requirement that proportionality be used to limit the scope of discovery is not new to the Federal Rules.  The Advisory Committee has, in fact, moved the proportionality requirement from Rule 26(b)(2)(iii) (“Limitations”), adding and rearranging the requirements there.  Whereas the present rule 26(b)(2)(iii) lists the following factors as considerations in deciding whether “the burden or expense of the proposed discovery outweighs its likely benefit”:

A. Needs of the case;
B. Amount in controversy;
C. Parties’ resources;
D. Importance of the issues at stake in the litigation;
E. Importance of the proposed discovery in resolving the issues.

The proportionality requirement in the new Rule 26(b)(1) changes what it has taken from 26(b)(2), replacing the controlling cost-benefit analysis of the present 26(b)(2) with a somewhat different analysis.  Requested discovery must be “proportional to the needs of the case” considering the:

A. Importance of the issues at stake;
B. Amount in controversy;
C. Parties’ relative access to relevant information;
D. Parties’ resources;
E. Importance of the discovery in resolving the issues;

as well as “whether the burden or expense of the proposed discovery outweighs its likely benefit.” Cost-benefit analysis remains a part of the analysis, but it does not control. Rather, the requested discovery must be “proportional” to the substance of the litigation, whether judged in terms of “the issues at stake” or the amount in controversy.  It must be proportional to the burden the request places on the resources of the parties.  How important the requested discovery might be in resolving the issues must be considered, as must “the parties’ relative access to relevant information.”

This last, the “parties’ relative access to relevant information,” is new to the rule.  The Advisory Committee explains that this “new text” makes explicit some considerations that are implicit in present Rule 26(b)(2)(C)(iii):

Some cases involve what often is called “information asymmetry.”  One party – often an individual plaintiff – may have very little discoverable information.  The other party may have vast amounts of information, including information that can be readily retrieved and information that is more difficult to retrieve.  In practice these circumstances often mean that the burden of responding to discovery lies heavier on the party who has more information, and properly so.

Advisory Notes 2013, sub Rule 26(b)(1), pp. 20-21.  The “and properly so” with which this Note ends suggests that the Advisory Committee recognizes that the burden of discovery will itself be asymmetrical, commensurate with the asymmetry of information inherent in “some cases.”  The asymmetry of burden is to be expected and not, in itself, a basis for challenge.  Nevertheless, we might wish that the Advisory Committee had more explicitly articulated the principle that the burdens of discovery need not –  indeed should not in “some cases” –  be evenly distributed between the parties.

Subordinating the cost-benefit analysis that controls in the present rule to a proportionality analysis appears designed to emphasize that “monetary stakes are only one factor, to be balanced against other factors” in discovery.  Id., p. 21.

[T]he rule recognizes that many cases in public policy spheres, such as employment practices, free speech, and other matters, may have importance far beyond the monetary amount involved.  Many other substantive areas also may involve litigation that seeks relatively small amounts of money, or no money at all, but that seeks to vindicate vitally important personal or public values.

Id., p. 22 (quotation omitted).  The cost-benefit analysis gives way in the new rule to consideration of a proportion, a ratio of sorts, between, not simply the amount in controversy, but, in some cases, the issue in controversy, and its importance, whether for the individual or for the public.  See The Sedona Conference Commentary on Proportionality in Electronic Discovery, January 2013, p. 13 (citing inter alia, Disability Rights Council of Greater Washington v.. Washington Metro. Transit Auth., 242 F.R.D. 139, 148 (D.D.C. 2007) as an example of public policy issues favoring disclosure in discovery).

Proportionality under the new Rule 26(b)(1) may cut both ways.  It will certainly be used to limit the breadth of discovery to material relevant to the claims and defenses in the case.  But because the amended rule subordinates the present cost-benefit analysis to a reasonable consideration of the relationship between the material requested and what is at stake – allowing that “what is at stake” to be defined variously on philosophical, social or institutional terms (Advisory Notes (2013), pp. 21-22) – it is unlikely to function only as a protection for well-funded corporate parties against suits brought by individuals.  Even a pro se plaintiff may succeed if she is able to make clear to the court the relative importance of the discovery sought against the measure of the substantive issue at stake.  The landscape of discovery will change on December 1, but not in a way that should forecloses opportunity to either party.

By Mary Kuntz

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