Wednesday, April 1, 2009

Report From Senior Litigators Proposes Dramatic Changes To The Discovery Process

Last week, the American College of Trial Lawyers (ACTL) and The Institute for the Advancement of the American Legal System at the University of Denver issued a final report that proposes dramatic changes to the federal and state court systems. The report is based on surveys sent to the 3,812 Fellows of the ACTL who were not judicial, emeritus, and Canadian Fellows, and who could be reached electronically. The response rate was a remarkably high 42 percent. On average, the respondents had practiced law for 38 years.

Twenty-four percent of the respondents represent plaintiffs exclusively, 31 percent represent defendants exclusively and 44 percent represent both, but primarily defendants. Because of the pro-defense bias, some of the recommendations, particularly in the area of electronic discovery, reflected frustration with the costs of preserving and producing electronically stored information. In other areas, primarily involving dispositive motions, no consensus could be reached. However, in most areas, both the plaintiffs? and defense bar expressed the need for dramatic reform, and reached consensus regarding how to accomplish the necessary change.

Most of this article summarizes the 35-page report using the report?s own words. This summary does not include matters that are already routinely applied to California state courts, since these would not represent a change for most of our readers. This article also does not focus on the various recommendations that would require dramatic increased funding for the courts. The report notes that ?These Principles call for greater involvement by judges. Where judicial resources are in short supply, they should be increased.? Perhaps this author is being defeatist, but legislatures have heard this comment for years. Current economic woes and government deficits are not likely to encourage changed funding anytime soon.

However, legislatures and the courts could implement many of these changes without increased government resources. These changes are possible, and could dramatically change the landscape of American litigation.

Major Themes, and the Need for Change

The report describes the following three major themes:

1. ?Although the civil justice system is not broken, it is in serious need of repair. In many jurisdictions, today?s system takes too long and costs too much. Some deserving cases are not brought because the cost of pursuing them fails a rational cost-benefit test while some other cases of questionable merit and smaller cases are settled rather than tried because it costs too much to litigate them.?

2. ?The existing rules structure does not always lead to early identification of the contested issues to be litigated, which often leads to a lack of focus in discovery. As a result, discovery can cost far too much and can become an end in itself.?

3. ?Judges should have a more active role at the beginning of a case in designing the scope of discovery and the direction and timing of the case all the way to trial. Where abuses occur, judges are perceived not to enforce the rules effectively.?

Discovery Changes

The report focuses the majority of its attention on changes to discovery rules. The most important recommendations are:

1. Notice pleadings would end. ?One of the primary criticisms of notice pleading is that it leads to more discovery than is necessary to identify and prepare for a valid legal dispute?.We would require the parties to plead, at least in complaints, counterclaims and affirmative defenses, all material facts that are known to the pleading party to support the elements of a claim for relief or an affirmative defense.?

2. ?All facts are not necessarily subject to discovery. ? Proportionality should be the most important principle applied to all discovery [including electronic discovery]. ?

3. Discovery is an initial and affirmative responsibility. ?Each party should produce, without delay and without a formal request, documents that are readily available and may be used to support that party?s claims, counterclaims or defenses. ... A sanction for failure to comply, absent cause or excusable neglect, could be an order precluding use of such evidence at trial.?

4. ?After the initial disclosures are made, only limited additional discovery should be permitted. Once that limited discovery is completed, no more should be allowed absent agreement or a court order, which should be made only upon a showing of good cause and proportionality. This is a radical proposal. It is our most significant proposal?. This Principle changes the default. Up to now, the default is that each party may take virtually unlimited discovery unless a court says otherwise. We would reverse the default.?

5. Specific limitations would be placed on the types and amounts of discovery. For example:

a. ?numerical limitations (e.g., only 20 interrogatories or requests for admissions; only 50 hours of deposition time?;

b. ?Requests for admissions and contention interrogatories should be limited by the Principle of proportionality. They should be used sparingly, if at all?;

c. ?cost shifting/co-pay rules?;

d. ?financial limitations (i.e., limits on the amount of money that can be spent)?;

6. The threat of spoliation claims would be dramatically reduced so long as certain efforts are made. ?Promptly after litigation is commenced, the parties should discuss the preservation of electronic documents and attempt to reach agreement about preservation. ? This Principle would mandate electronic-information conferences, both with counsel and the court, absent agreement. Before such a conference, there should be a safe harbor for routine, benign destruction, so long as it is not done deliberately in order to destroy evidence. ? The obligation to preserve electronically-stored information requires reasonable and good faith efforts to retain information that may be relevant to pending or threatened litigation; however, it is unreasonable to expect parties to take every conceivable step to preserve all potentially relevant electronically stored information. Absent a showing of need and relevance, a party should not be required to restore deleted or residual electronically-stored information, including backup tapes. Sanctions should be imposed for failure to make electronic discovery only upon a showing of intent to destroy evidence or recklessness.?

Expert Witnesses

The reports recommends that ?experts should be required to furnish a written report setting forth their opinions, and the reasons for them, and their trial testimony should be strictly limited to the contents of their report?.The requirement of an expert report from an expert should obviate the need for a deposition.

Damages testimony is often performed by expert witnesses. ?Discovery relating to damages should be treated differently. Damages discovery is significantly different from discovery relating to other issues and may call for different discovery procedures relating to timing and content. The party with the burden of proof should, at some point, specifically and separately identify its damage claims and the calculations supporting those claims. Accordingly, the other party?s discovery with respect to damages should be more targeted. Because damages discovery often comes very late in the process, the rules should reflect the reality of the timing of damages discovery.?

The report endorse[s] the proposed amendment to Federal Rule of Civil Procedure 26(b)(4)(B) and (C) and recommend comparable state rules that would prohibit discovery of draft expert reports and some communications between experts and counsel.

These proposals would dramatically change the economics of litigation, both for the clients and the litigators serving those clients.

Fulcrum Inquiry performs damages analysis and related expert testimony.