United States: Rules Amendments Mean That Proportionality Limits Even MDL Discovery

Last Updated: September 27 2016
Article by James Beck

We've blogged several times over the past couple years about the 2015 amendments to the federal rules as they pertain to discovery, including electronic discovery.  Earlier this year, after the amendments had been in effect for a few months, we complained about how some courts were evading the new rules by citing a Supreme Court case, Oppenheimer Fund, Inc. v. Sanders, 437 U.S. 340, 351 (1978).  Oppenheimer was dependent upon language in the prior Rule 26 − "reasonably calculated to lead to discovery of admissible evidence" − that the 2015 amendments intentionally deleted.  We supported our point with empirical research showing that, of 73 citations to Oppenheimer following the amendments' effective date, more than 70% of them, 53 cases, cited to the headnote for the obsolete language.

Well, it seems that we aren't alone in recognizing a pattern of disregard for the 2015 amendments in recent discovery decisions. The MDL judge in In re Bard IVC Filters Products Liability Litigation, 2016 WL 4943393 (D. Ariz. Sept. 16, 2016), pointed out the same kind of ongoing judicial disregard for the rules that we spotted earlier.  IVC Filters held that – yes, even in an MDL – discovery requests must be proportional to their compliance costs.  It just so happens that this judge, Hon. David G. Campbell, is also chair of the Advisory Committee on the Federal Rules.  So he knows of what he speaks.

You're probably thinking that the discovery request in question in IVC Filters had to be pretty absurd, and you're right.  Despite not a single overseas plaintiff in the MDL, plaintiffs sought all communications with foreign regulators from foreign affiliated companies of the defendant.  2016 WL 4943393, at *3-4.  Specifically, plaintiffs sought to force the defendant to rummage through electronic communications of affiliates in "Canada, Korea, Australia, India, Singapore, Malaysia, Italy, Ireland, the United Kingdom, Denmark, the Netherlands, Sweden, Norway, Finland, Mexico, Chile, Brazil, and China . . . for the last 13 years."  Id. at *4.  You can imagine how expensive and time consuming it would be to sort through that many overseas computer systems.  Adding to the expense would be obsolete formats, some over a decade old, in multiple languages.  The objective would be hypothetical communications concerning other countries' regulatory schemes not at issue in the litigation.  As we've discussed before, foreign regulatory actions, as such, are neither relevant nor admissible in American product liability litigation.

That's where the 2015 rules changes came in. "The new rule defines the scope of permissible discovery as . . . non-privileged matter that is relevant to any party's claim or defense and proportional to the needs of the case."  Id. at *1.  The language before the amendments was broader.  "Before the 2015 amendments . . . inadmissible evidence was discoverable if it 'appears reasonably calculated to lead to the discovery of admissible evidence.'"  Id.  IVC Filters pointed out that deletion of the "reasonably calculated" language specifically intended to curtail discovery that had gotten out of hand:

The former provision for discovery of relevant but inadmissible information that appears "reasonably calculated to lead to the discovery of admissible evidence" is also deleted.  The phrase has been used by some, incorrectly, to define the scope of discovery.  As the Committee Note to the 2000 amendments observed, use of the "reasonably calculated" phrase to define the scope of discovery "might swallow any other limitation on the scope of discovery."  . . . The "reasonably calculated" phrase has continued to create problems, however, and is removed by these amendments.

Id. at *2 (quoting Advisory Committee Notes for 2015 Amendments, 305 F.R.D. 457, 555 (2015)).

Before proceeding to the merits of the dispute, IVC Filters indicated the same displeasure we had expressed in our prior post about courts' continuing reliance on the now-eliminated "reasonably calculated" language of pre-amendments Rule 26:

The 2015 amendments thus eliminated the "reasonably calculated" phrase as a definition for the scope of permissible discovery.  Despite this clear change, many courts continue to use the phrase. Old habits die hard.1

1Last month alone, seven cases relied on the "reasonably calculated" language to define the scope of permissible discovery.  Several other cases cited the language as though it were still part of Rule 26(b)(1).

2016 WL 4943393, at *2 & n.1 (citations to the offending cases omitted).  We can only hope that, in calling out wayward, erroneous decisions, IVC Filters publicizes the point (which obviously needs reinforcement) that the federal rules governing scope of discovery have changed significantly.

End of rant.

On the merits of the discovery dispute, IVC Filters observed that "most of the communications with foreign regulators originate in the United States and thus will be captured by the ESI [electronically stored information] searches currently underway."  2016 WL 4943393, at *4.  Thus, the amount of new information from plaintiffs' proposed wild goose chase through the files of foreign subsidiaries was small.  Likewise, the information being sought was "only marginally relevant."  Id.  The plaintiffs' "narrow purpose" was "to determine if any of those communications have been inconsistent with Defendants' communications with American regulators."  Id.  Plaintiffs offered only "mere conjecture" that somewhere an affiliate of the defendant might have said something "inconsistent" to a foreign regulator.  Id.

That's a classic fishing expedition, and an extremely costly one at that.  As all too often happens in MDLs, plaintiffs are pursuing conjectural discovery for the overwhelming purpose of running up the defendants' discovery costs, and if the foreign affiliates were at all sloppy, litigating discovery sanctions rather than the merits of the case.

Under proportionality principles, this overseas fishing expedition wasn't worth the cost:

The Court concludes that the burden and expense of searching ESI from 18 foreign entities over a 13-year period outweighs the benefit of the proposed discovery − a mere possibility of finding a foreign communications inconsistent with United States communication.

Id. at *5.  Thus IVC Filters held "the proposed discovery is not proportional to the needs of the case considering the factors set forth in Rule 26(b)(1)," and "Defendants need not search the ESI of foreign [affiliates] for communications with foreign regulators."  Id.  The court politely told the plaintiffs to stop weaponizing electronic discovery; precisely the intended purpose of the 2015 rules amendments .

The court should be sensitive to party resources; aggressive preservation efforts can be extremely costly, and parties (including governmental parties) may have limited staff and resources to devote to those efforts.  A party may act reasonably by choosing a less costly form of information preservation, if it is substantially as effective as more costly forms.

305 F.R.D. at 572-73.  Now if we can only get the stragglers to pay attention.

Thanks to our friends at Nelson Mullins for bringing this decision to our attention.

This article is presented for informational purposes only and is not intended to constitute legal advice.

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