The United States Supreme Court Adopts Proposed Federal Rules of Procedure (FRCP) Changes

The United States Supreme Court has just approved big changes to the Federal Rules of Practice and Procedure (FRCP) that every lawyer, judge and potential litigant needs to know. If these rule changes are approved by congress, it will affect practically every single case that involves eDiscovery for both plaintiffs and defendants. In fact, a recent survey done by IPRO Tech at LegalTech New York found that 80 percent of attendees said that the proposed FRCP amendments will have an impact on eDiscovery.  

The proposed rule changes are not without controversy. Proponents say that they will bring down the costs of litigation, a major issue for many clients and law firms. On the other hand, opponents say that the changes are written to benefit big businesses at the expense of plaintiffs who have limited resources and legitimate claims.

James Sullivan, Partner at Hollingsworth LLP, called out three main rule changes to keep an eye on at the IPRO Innovations conference on April 28, 2015. With no comments expected to come from congress, which has until December 1st to act if it objects to the rule change, lawyers and eDiscovery professionals should prepare as if all of the proposed FRCP rule changes will go into effect at the end of the year.

Rule 37(e) – Failure to Preserve
The proposed changes to Rule 37(e) is the headliner for the eDiscovery industry because it aims to create greater clarification when it comes to the loss of digital data. But, many argue that it is still too vague, and will lead to more questions than answers.

The proposed changes can be broken down into two main sections.

  • Allowing a court to respond when one party loses electronically stored information (ESI), which then prejudices the other party. The proposed new rule would allow a court to take reasonable action to cure the prejudice, even if the loss of ESI was not the opponent’s fault.

  • Even in cases when there is no prejudice to the opposing party, the court may assume the ESI was unfavorable. In those cases, the court can go as far as entering default judgment in the case.

The biggest change will be allowing courts to consider sanctions only when “reasonable steps” were not taken to preserve the information. This means that in most cases, simply being negligent and reckless won’t result the the harshest of punishments. But, without clearly defining what those steps are, it could lead to multiple interpretations of the same rules, and ultimately confusion.

Meanwhile, Honorable Shira Scheindlin, Federal District Court Judge for the Southern District of New York, has been one of the most outspoken critics of the rule changes, specifically Rule 37(e).  She wrote in a footnote:

“I do not agree that the burden to prove prejudice from missing evidence lost as a result of willful or intentional misconduct should fall on the innocent party. Furthermore, imposing sanctions only where evidence is destroyed willfully or in bad faith creates perverse incentives and encourages sloppy behavior. Under the proposed rule, parties who destroy evidence cannot be sanctioned (although they can be subject to “remedial curative measures”) even if they were negligent, grossly negligent, or reckless in doing so.”

While there are strong arguments both for and against proposed the Rule 37(e) changes, it will be hard to actually know exactly how it will affect litigation until it’s put into effect. As Altep’s VP of Consulting Services, Hunter McMahon, put it, “while the amendments may have set out to provide greater guidance and certainty, it has changed what questions will be asked. We will now wait for court’s to opine on the new rules before we know how they will be applied.”

Rules 1 and 26 – Speedy and Inexpensive Trial
The proposed changes to Rules 1 and 26 were written to stress the importance of cooperation between two parties locked in a legal battle. Two of the primary driving forces behind the amendments are the goals of shortening discovery time frames and helping ensure reasonable costs—neither of which is achievable absent planning and preparation.

The changes to rule one would make it clearer that both the courts and the two parties are responsible for a just, speedy and inexpensive trial. The alterations to Rule 1 were created to make sure that the side with more financial might can’t bury the other party in documents to sift through, thereby greatly increasing the cost of the litigation.

The proposed changes to Rule 26 continue the trend of making it clear that every party in the trial, including the parties and the court itself, is responsible for creating an even playing field.

Rule 26(b)(2)(1) now lists specific proportionality factors, including:

  • The importance of the issues at stake

  • The amount in controversy

  • Access to relevant information

  • Resources

  • The importance of discovery in resolving the conflict

  • Burden versus benefit

All of these factors encourage opposing counsel to be reasonable, proportionate, and willing to cooperate. Additionally, the changes to Rules 1 and 26 make it explicitly clear that it is the responsibility of the parties to try and find resolutions to any issues before going in front of a judge.

The judiciary received more than 2,000 comments about the proposed changes to FRCP. After reading those comments and making amendments, including many that cited the same fears listed above, they sent the proposed changes to the U.S. Supreme Court, which adopted the rules and transmitted to Congress on April 29, 2015. IPRO will keep an eye on what congress decides to do, but we expect the amendments to be codified in December. If you would like more information on the exact proposed changes, you can read it here.