United States: A BETTER WAY TO LITIGATE? – The December 1, 2015 Amendments To The Federal Rules Of Civil Procedure Aim For More Efficiency And Less Delay

Last Updated: November 20 2015
Article by George L. Kanabe and Jacob M. Heath

Civil litigation can sometimes be less than civil or efficient.  Indeed, some parties have been found to engage in "abusive" discovery practices or dilatory tactics intended to prolong and increase the costs of litigation. This has not gone unnoticed by courts, parties, and commentators, including the Advisory Committee on Rules of Civil Procedure (the "Committee"). In August 2013, the Committee proposed amendments to the Federal Rules of Civil Procedure ("the Rules") aimed at curbing certain abusive practices, amongst other things. The amendments include changes to Rules 1, 4, 16, 26, 30, 31, 33, 34, 36, and 37, and would impact numerous aspects of litigation including service of process, discovery (including electronically stored information ("ESI")), default judgments, and possibly pleadings requirements. See http://www.chamberlitigation.com/2013-proposed-amendments-federal-rules-civil-procedure. On April 29, 2015—after nearly two years of extensive revisions, over 2,000 comments, and testimony from more than 100 people—Chief Justice Roberts, on behalf of the Supreme Court, submitted the proposed amendments to Congress. See http://www.supremecourt.gov/orders/courtorders/frcv15_5h25.pdf; see also http://www.uscourts.gov/file/18481/download (showing proposed changes).

Absent an act of Congress, these amendments will take effect on December 1, 2015. They would apply to any future litigation, but could also have retroactive effect to litigation already pending:

ORDERED * * *

  1. That the foregoing amendments to the Federal Rules of Civil Procedure shall take effect on December 1, 2015, and shall govern in all proceedings in civil cases thereafter commenced and, insofar as just and practicable, all proceedings then pending. [Emphasis added].

Facilitating Party Cooperation:

From the outset, the amendments are intended to foster better cooperation among litigants. As amended, Rule 1 will now require parties to construe, administer, and employ the Rules in a manner "to secure the just, speedy, and inexpensive determination of every action and proceeding."  Previously, Rule 1 only applied to courts. This change may seem innocuous. However, the Committee felt it necessary to "emphasize" that efficient litigation is the responsibility of every party—not just the courts.  According to the Committee's comments, the amendment is intended to "improve the administration of civil justice" and "discourage over-use, misuse, and abuse of procedural tools that increase costs and results in delay."

In a more concrete effort to reduce delays and expense in the very initial stage of litigation, amended Rule 4(m) now allows 90 days—instead of the previous 120-day limit—to serve the summons and complaint. This change is presumably focused on making sure that parties use the court system to actually litigate disputes, rather than simply as a prelude for business negotiations or other non-litigation purposes.

To coincide with the shortened time for service, amendments to Rule 16(b)(2) now require a court—absent good cause—to issue a scheduling order no later than either 90 days after any defendant is served with the complaint (down from 120 days) or 60 days after any defendant has appeared (down from 90 days).

Other changes to Rule 16 are aimed at fostering better communication and accommodating e-discovery issues. For example, the Committee removed the language in Rule 16(b)(1)(B) that a scheduling conference take place by either "telephone, mail, or other means." The Committee explained that a scheduling conference is "more effective" if the court and parties "engage in direct simultaneous communication," while recognizing that the conference could be held in person, by telephone, or by more sophisticated electronic means. Amended Rule 16(b)(3) will allow parties to include in their scheduling orders: provisions for the disclosure or preservation of ESI; "clawback" agreements under Federal Rule of Evidence 502 for the treatment of privilege and work product; and provisions requiring the parties to request a conference with the court prior to moving for a discovery order.

Discovery Limits:

Beyond timing, there are also several amendments affecting the scope of discovery in recognition of the significant costs that unfettered discovery imposes on modern companies. Amended Rule 26(b)(1) allows parties to obtain discovery of any non-privileged matter relating to a party's claim or defense, so long as the proposed discovery is proportional to the needs of the case. In determining proportionality, amended Rule 26(b)(1) considers: (a) the importance of the issues at stake in the action; (b) the amount in controversy; (c) the parties' relative access to relevant information; (c) the parties' resources; (d) the importance of the discovery in resolving the issues; and (e) whether the burden or expense of the proposed discovery outweighs its likely benefit.  According to the Committee's comments, these amendments are not intended to change courts' and parties' existing responsibilities to consider proportionality when propounding discovery. Nor are the amendments intended to give one party a reason for objecting to discovery because of its purported proportionality. Instead, the Committee intended the amendments to "restore" the proportionality factors—previously found in Rule 26(b)(2)(C)(iii)—to their "original place in [in Rule 26(b)(1)] defining the scope of discovery." Ultimately, the change "reinforces the Rule 26(g) obligation of the parties to consider these factors in making discovery requests, responses, or objections."

Amended Rule 26(b)(2) requires courts to limit the frequency or extent of discovery if the proposed discovery is "outside the scope permitted by Rule 26(b)(1)." Amended Rule 26(c)(1) allows a court to issue a protective order allocating expenses. Amended Rule 26(d) allows parties to serve requests for production 21 days after service of the summons and complaint, regardless of whether the parties have held their Rule 26(f) conference. To coincide with the changes to Rule 16(b), amended Rule 26(f) requires parties to discuss the preservation of ESI and the possibility for agreements under FRE 502 during their scheduling conference.

Rules 30,31, and 33 were also amended to reflect that the proportionality factors now resident in Rule 26(b)(1). Amended Rule 34(b)(2)(A) gives a party served with requests for production prior to a Rule 26(f) conference until 30 days after the Rule 26(f) conference to respond. As amended, Rule 34(b)(2)(B)-(C) requires a responding party to state "with specificity the grounds for objecting;" whether they are withholding documents based on said objection, and whether they will produce ESI rather than permit an inspection of ESI.

As for ESI, it is apparent from the Committee's comments that Rule 37(e) has failed to adequately address "the serious problems resulting from the continued exponential growth in the volume of [ESI]." The Committee recognized that "significantly different standards for imposing sanctions or curative measures on parties" failing to preserve ESI has caused parties "to expend excessive effort and money on preservation in order to avoid the risk of severe sanctions...." Accordingly, Rule 37(e), as amended, will provides a uniform standard for courts to apply when determining how to address lost or missing ESI. If a party fails to preserve ESI and only upon a finding of prejudice, amended Rule 37(e)(1) authorizes a court to order curative measures "no greater than necessary to cure the prejudice." According to the Committee comments, curative measures may include: (a) forbidding the party that failed to preserve ESI from putting on certain evidence; (b) permitting the parties to present evidence and argument to the jury regarding the loss of ESI; or (c) giving jury instructions to assist in its evaluation of such evidence or argument.  Amended Rule 37(e)(2) allows a court to undertake more drastic measures if it finds a party acted with an intent to deprive another party of the information. Those measures include: (1) presuming that the lost information was unfavorable to the party; (2) instructing the jury that it may or must presume the information was unfavorable to the party; or (3) dismissing the action or entering a default judgment.

Other Provisions:

Other amendments to the Rules include additional language in Rule 55(c) clarifying that a court may set aside a final default judgment under Rule 60(b).

Notable especially for patent litigators, Rule 84 addressing the use of the forms, and the Rules' Appendix of Forms (including Form 18 – "Complaint for Patent Infringement"), are expected to be abrogated in their entirety. The Committee noted that neither Rule 84 nor the Appendix is necessary because the forms are now available on the website for the Administrative Office of the United States Courts and the websites of many district courts. The Committee also noted that "[t]he abrogation of Rule 84 does not alter existing pleading standards or otherwise change the requirements of Civil Rule 8." Nonetheless, some expect that the elimination of Form 18 could call into question the Federal Circuit's prior rationale for permitting bare-bones patent complaints and require that direct infringement allegations comply with the Supreme Court's Iqbal and Twombly precedent. See McZeal v. Sprint Nextel Corp., 501 F.3d 1354, 1360 (Fed. Cir. 2007) (citing Form 16 (the precursor to Form 18) as an "example of a sufficient pleading in a patent infringement suit").  Only time will tell how different courts ultimately react to the abrogation of Rule 84 and Form 18, but beginning on December 2, 2015, the courts may begin to see an influx of motions challenging the sufficiency of complaints.

The Rules amendments have the potential to profoundly affect both new and pending litigations. Parties engaged in, or preparing for, litigation will need to carefully consider whether and how these new rules will impact their litigation decisions and strategy.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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