United States: New California Laws Make Potentially Costly Changes To Civil Discovery Act

Earlier this year, California Governor Gavin Newsom signed into law two bills authored by Senator Tom Umberg (D-Orange County), SB 370 and SB 17, which make changes to civil discovery procedures that are sure to affect all California litigants and civil litigators next year.

The more impactful and potentially costly of the two, SB 370, amends California Code of Civil Procedure section 2031.280 to require that documents produced in discovery be identified by the request number to which the document corresponds. Currently, documents may be produced either as they are kept in the usual course of business, the preferred option of most litigants, or organized and labeled to correspond with the categories in the demand. While the additional organization may save the requesting party’s time, SB 370 is sure to increase the burden on those producing documents in California state court.

SB 17 would implement an optional initial disclosure procedure substantially similar to that found in the federal rules. Opposition from both sides of the “v” stalled an earlier proposal that would have mandated initial disclosures. Odds are good, however, that if SB 17 is well received, legislation to make compulsory its disclosure procedures, including an ongoing duty to supplement, will be introduced in a future legislative session.

Both laws are effective January 1, 2020.

SB 370: New document identification requirement in all active cases

SB 370 provides that "[a]ny documents or category of documents produced in response to a demand for inspection, copying, testing, or sampling shall be identified with the specific request number to which the documents respond."

Additionally, SB 370's changes will affect all active cases subject to the Civil Discovery Act, regardless of when filed. See Lazelle v. Lovelady, 171 Cal. App. 3d 34, 44 (1985) ("Legislative changes in rules of procedure are applicable to pending actions without regard to whether the action accrued before or after the amendment").

SB 370: ESI and other details to be worked out by litigants

Notably, the amended C.C.P. section 2031.280 applies to electronically stored information (ESI), as well as physical documents. The bill, however, does not specify how ESI is to be "identified with" a specific request.

Consequently, it is likely that propounding parties will attempt to impose specific requirements in discovery requests. While many such demands may be reasonable – for example, specifying that the request numbers be included in metadata – precisely how identification is made, in ESI and on physical documents too, must be sorted out in each case.

A myriad of other potentially thorny procedural questions left open by the new law could confound parties producing physical documents as well, including:

• Whether and how documents responsive to multiple requests must be identified
• The extent to which litigants may first identify each document as responsive to all requests and rely on the meet-and-confer efforts to narrow the identifications required
• Whether parties can object to the identification requirement on the grounds that determining specific responsiveness is protected attorney work product − eg requests seeking documents supporting certain contentions − as such determinations are invariably shaped by counsel's legal analysis and opinions.

SB 370: New approaches to document discovery to take shape

Given the new rules' potential for disruption, litigators of all stripes may need to consider now how to strategically and efficiently approach the new requirements. New strategies could include:

• Labeling documents in metadata through review coding, as opposed to separating the documents using labeled folders, cover sheets or lists of Bates numbers
• Updating discovery requests and instructions in requests for productions
• Updating existing or template protective orders governing confidentiality to include responsiveness labels
• Including stipulations to modify a responding party's identification requirements when entering into stipulations concerning the timing and scope of discovery generally.

SB 370: Litigation costs expected to rise

In a joint letter to the legislature, both of SB 370's two sponsors, California Consumer Attorneys and California Defense Counsel, argued that "[o]ften litigants will produce a mass quantity of documents without specifying the category to which said documents are responsive. This leads to difficulty determining whether responses were indeed submitted for each request." While right about the status quo, their letter tells only one side of the story.

As the Senate Judiciary Committee wrote in its analysis: "The ability to produce documents as they are kept in the usual course of business, which is being eliminated by this bill, arguably eases the burden of extensive discovery requests on responding parties in certain circumstances." But even this comment likely underestimates the increased burden on the responding parties due to the difficulty of identifying each of potentially thousands of documents as specifically responsive to a particular demand.

Additionally, SB 370 could incentivize broader and more numerous discovery requests by lessening the burden of reviewing broader responses. Yet, less tailored requests may allow the responding party to simply identify each document as responsive to that request, eliminating any possible benefit to offset the cost of the amplified discovery made more likely by SB 370.

SB 370: More discovery battles a possibility

By enlarging the stakes − ie the potential cost to and burden on the responding party − SB 370 could in turn increase both the number of objections to production demands and the likelihood parties will stand on those objections. Responding parties could be incentivized to litigate their objections in situations where, under the current law, they may have reached a compromise, especially when thousands of documents are involved.

If courts are sympathetic to this increased burden, SB 370 may ultimately backfire and make it harder for a demanding party to receive the documents it desires. After all, a demanding party likely would rather have all the documents it requested without organization than only some documents identified by request number.

SB 17: Trial run for initial disclosures in California state court

Unlike mandatory federal rules, the initial disclosure process created by SB 17 would only take effect "upon order of the court following stipulation by all parties to the action."

Specifically, if stipulated to and ordered by the court, this Section will require each party to provide initial disclosures within 45 days. These disclosures would include (a) names and contact information of those likely to have discoverable information and the subject of that information; (b) a copy of documents that support the party’s claims; (c) any pertinent insurance agreements; and (d) any agreement regarding potential indemnification. More notably, like the federal rules, each party will have a duty to supplement the initial disclosures.

Finally, as a possible prelude to a mandatory requirement in the future, the bill also creates Section 2023.050, which authorizes the court to impose a sanction of $250 upon "a party, person, or attorney" for non-compliance with an initial disclosure order. While SB 17's changes are relatively minor, they reflect a potentially controversial trend towards conforming California civil procedure to its federal counterpart.

An earlier version of this alert appeared on Law360 on December 16, 2019.

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