LCJ White Paper Provides Impetus To New FRCP Initiative

Monday, May 3, 2010 - 01:00

Barry Bauman

Executive Director Lawyers For Civil Justice (LCJ)

LCJ provided new impetus for a fundamental review of the Federal Rules of Civil Procedure by submitting the FRCP White Paper Final Draft on Reshaping the Rules of Civil Procedure for the 21st Century (White Paper) to the 2010 Duke Law School Litigation Review Conference to take place on May 10-11 (Duke Conference). The White Paper, submitted on behalf of LCJ, DRI (Voice of the Defense Bar), FDCC (Federation of Defense & Corporate Counsel) and the IADC (International Association of Defense Counsel), encourages the Federal Judicial Conference Rules Committee to move forward with recommendations to amend the Federal Rules of Civil Procedure. It summarizes the consensus of the defense bar and the more than 35 drafters of the White Paper regarding problems facing litigation in federal courts, and it offers meaningful amendments to fundamentally alter the civil litigation system.

The White Paper calls for a comprehensive reevaluation of the existing Rules governing litigation in the 21st century to include:

(1) Attempting to redefine and balance the interrelationship of pleading and discovery,

(2) Reevaluating the premises and focus of all discovery and further refining the treatment of e-discovery,

(3) Developing clear document preservation standards, and

(4) Deterring runaway litigation costs by reasonable cost allocation rules.

The White Paper demonstrates that notwithstanding the history of many amendments to the Rules of Civil Procedure, more than just tinkering at the edges of the Rules is needed and that fundamental reforms are in order to improve the administration of justice in the federal courts. The submission of the LCJ White Paper follows on the heels of two significant U.S. Supreme Court decisions ( Twombly and Iqbal ) which underscore the failure of notice pleading in the federal courts.

It also builds upon the findings of the Final Report (Final ACTL and IAALS Report) of the Joint Project of the American College of Trial Lawyers (ACTL) and the University of Denver's Institute for the Advancement of the American Legal System (IAALS) that "although the civil justice system is not broken, it is in serious need of repair."). See American College Report. The White Paper was developed with broad input from both corporate and defense counsel who engaged in intensive discussions of the Rules reexamination at the LCJ meetings in Washington and New York. Many of the contributors to the White Paper will review the recommendations at the upcoming LCJ May 3-4 Membership Meeting in Washington, DC and a final version of the White Paper will be presented to the Duke Conference by Bruce Parker of Venable LLP.

The White Paper is bold in its recommendations in four areas:

Pleadings - It recommends codification of the Twombly and Iqbal pleading standard to include fact-based rather than notice pleading and it shows from a historical perspective the need for pleading standards appropriate to modern litigation in the information age.

Limited Discovery - The Paper proposes a rule that focuses the scope of discovery to where it should be focused - on the claims and defenses in the action. It also requires that discovery requests must be in proportion to the stakes and needs of the litigation and that specific categories of electronically stored information are presumed not to be discoverable in most cases. By emphasizing proportionality in discovery and placing limits on the extent of E-Discovery, the paper strikes at the heart of current practices which fuel runaway discovery costs.

Preservation - We contend that the Rules should be amended to permit spoliation sanctions only where willful conduct was carried out for the purpose of depriving another party of the use of the destroyed evidence and the destruction results in actual prejudice to the other party. We believe that the Federal Rules can and must be amended to include clear standards for preservation of information even prior to commencement of litigation in order to counteract the trend toward sanctions for negligent preservation.

Cost Allocation - The purpose of discovery is to permit parties to access information that will enable fact finders to determine the outcome of civil litigation. Having rules that encourage the parties to police themselves and to focus on the most efficient means of obtaining the truly critical evidence is the best way to achieve that purpose. Therefore, the Rules should be amended to require that each party pay the costs of the discovery it seeks, which will encourage each party to manage its own discovery expenses by shifting the cost-benefit decision onto the requesting party.

By submitting the White Paper at the earliest stage of the process to reform the Federal Rules, LCJ continues its tradition of leadership in providing the corporate and defense perspective to the policymakers at the earliest possible time as they set about the business of reexamining the effectiveness of the current system. It is anticipated that the Duke Conference will pave the way for further consideration of specific recommendations for changes to federal Rules and Practice which LCJ and other organizations will offer. By highlighting the consensus of the many disparate views, even among the corporate and defense communities, LCJ has ensured that those recommendations will be seriously considered by the policymakers. This procedural rules reform initiative will be a focal point for participants at the upcoming LCJ May 3-4 Membership Meeting in Washington, DC.

General counsel and other senior corporate representatives from several of America's leading corporations expressed their strong support for the ongoing LCJ Procedural Rules Project at the LCJ Winter Meeting in New York City on December 3-4, 2009. Follow up statements by the corporate representatives listed below appear in the February issue of The Metropolitan Corporate Counsel:

Jeffrey Jackson, General Counsel of State Farm;

Daniel Troy, General Counsel of GlaxoSmithKline;

Timothy Pratt, General Counsel of Boston Scientific;

Carla Herron, Group Counsel, Litigation at Shell Oil;

Edward Miller, Associate General Counsel and Chief Compliance Officer of Boehringer Ingelheim.

As part of our commitment to reduce litigation costs and exposure, LCJ is currently engaged in a multi-year process to advocate beneficial changes to the Federal Rules of Civil Procedure. Our advocacy and that of the defense and corporate lawyers with whom we are working could result in changes that will dramatically improve modern litigation.

As I mentioned above, LCJ is pursuing a broad range of procedural and evidentiary rule reforms, many of which are embodied in the Final ACTL and IAALS Report. That Report supports the broad-based reforms of the principal civil rules that LCJ and its allies have been advocating for years and has spurred the federal rule makers to reexamine the fundamental precepts of the 1938 rules.

The Final ACTL and IAALS Report's stated Principles support many of LCJ's long held views on which the rule maker's reexamination will focus: 1) Pleading should be fact pleading, not notice pleading; 2) The scope of all discovery should be limited to material, proportional information, e.g., information necessary to prove a claim or defense or for impeachment; 3) Discovery should be by initial disclosure followed by severely limited discovery proportional to the nature and complexity of the case and tied to claims actually at issue; 4) Early disposition of motions should be a priority; 5) Early identification of the issues to be tried should be required; and 6) Courts should consider staying discovery in appropriate cases until after a motion to dismiss is decided.

The concerns over the costs and burdens of e-discovery - not fully addressed in the 2006 amendments - supply much of the impetus for the reexamination. And, the Final ACTL and IAALS Report's stated Principles support each of the elements of the LCJ-CJRG proposed E-Discovery and Privilege Waiver Model Rules ALEC Model 03/26/09 - Final: 1) Electronic discovery should be limited by proportionality, taking into account the nature and scope of the case, relevance, importance to the court's adjudication, expense and burdens; 2) Sanctions should be imposed for failure to make electronic discovery only upon a showing of intent to destroy evidence or recklessness; 3) Absent a showing of need and relevance, a party should not be required to restore deleted or residual electronically stored information, including backup tapes; and 4) cost shifting/co-pay rules should be considered generally and for e-discovery in particular and courts should not hesitate to allocate costs to the requesting party. The Model Rules are summarized in the following article: Skyrocketing E-Discovery Costs Require New Rules

The Final ACTL and IAALS Report has a number of other recommendations, but the key for LCJ is that the rule maker's reexamination will focus on LCJ's prime "procedural" priorities and, if made a business community high priority, could result in reform of all of the Federal Rules, including e-discovery, that would significantly reduce the costs and burdens of litigation and increase its efficiency.

Although LCJ has a long history of successfully supporting rules revisions which will improve the civil justice system, the general counsel and senior corporate counsel who provided their perspective in The Metropolitan Corporate Counsel article understand that more action is needed to address remaining deficiencies. They recognize the importance of pursuing broad-based procedural rule reforms which echo the recommendations of the American College Discovery Task Force because they have experienced first hand the injustices of the current system. Their advocacy, in follow up to their participation in the LCJ December Membership Meeting, provides powerful testimony in support of specific procedural rule reform which addresses many of the fundamental deficiencies of the current system. And they recognize the importance of providing the Federal Judicial Conference with the data and information it needs to craft new rules which go to the heart of our concerns.

We are very hopeful that the Duke Conference will soon result in the Federal Judicial Conference rule-making committees undertaking the first overall exhaustive review of the Federal Rules of Civil Procedure since they were promulgated in 1938. An important step toward making the most of this "once in a lifetime opportunity" to fundamentally reshape the Federal Rules is the presentation of the LCJ White Paper to the Duke Conference.

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