The LCJ White Paper And The Duke Conference -A Seasoned Litigator's Perspective

Wednesday, June 2, 2010 - 00:00

Mr. Scordo has practiced for many years in the area of commercial litigation in state and federal courts. His experience includes the handling of complex litigation. He is based in his firm's New Jersey office.

Mr. Scordo agreed to share with our readers his reactions as a seasoned litigator after reviewing the position papers submitted to the 2010 Conference on Civil Litigation at Duke Law School on May 10-11 2010 (Conference), including the White Paper (White Paper) submitted on behalf of Lawyers for Civil Justice (LCJ), DRI - The Voice of the Defense Bar, Federation of Defense & Corporate Counsel and International Association of Defense Counsel. The Conference was sponsored by the Federal Rules Advisory Committee to review the need for changes in the Federal Rules of Civil Procedure (Rules). Mr. Scordo reviewed reports from the Conference but did not attend.

Editor: The first and probably most important recommendation made by LCJ in its White Paper was to codify Twombly and Iqbal by moving from notice to fact-based pleading.Based on your review of the White Paper and some of the other documents submitted to the Conference, do you feel that LCJ made its case?

Scordo: Yes. A fact-based pleading standard helps the court and the parties to understand what the case is about early on. By doing this, it will help limit the scope of discovery to the facts disclosed in the pleadings. The position taken in the White Paper was reinforced by the American College and Seventh Circuit positions, which also emphasize the need to incorporate in the Rules principles that cause the parties to get the facts out early.

No one can really argue against the idea that getting the facts out early is beneficial. However, to make that happen judges need to have a tool to require that more details be disclosed at the very outset of the case. Judges do not have an effective way to do that and require the parties to provide the specifics needed to narrow discovery. The present systempermits the parties to exploit discovery as an investigative tool to see whether there is any basis for their position or, because of the high cost of unfocused e-discovery, to attempt to intimidate the other party into settlement. If you flat-out start from the premise that fact pleading is the norm, the parties have a good start to enable them to cooperate early and limit e-discovery abuses.

From my experience as an active litigator, LCJ's proposed amendments, primarily to Rule 8 but also to Rules 9, 12 and 65, are a good solution. The essence of the proposed amendments would codify the Twombly-Iqbal standard by requiring that the pleadings include ". . . a short and plain statement, made with particularity, of all material facts known to the pleading party that support the claim, creating a reasonable inference that the pleader is plausibly entitled to relief . . ." It would define "material fact" as ". . . one that is necessary to the claim and without which it could not be supported." See White Paper page x.

Editor: Is better case management by judges the answer?

Scordo: Not entirely. For example, the state courts in New Jersey have a program for complex cases, similar to federal court case management, in which a single judge is used throughout the case to provide case management. This can keep abuse of e-discovery under control.However, the reality is that judges vary. Some judges are good case managers and others are not so good.You still need some standard like the tools proposed by LCJ to provide a definitive framework for more consistency.

Mandatory fact-based pleading will jumpstart the e-discovery process and make it clear that the parties must set forth at the outset all known facts on which they intend to rely.

Editor: Another principle emphasized in LCJ's White Paper was that of proportionality. Do you agree with the White Paper's approach?

Scordo: There is no doubt that discovery needs to be proportionate to what is at stake in a case. As with enforcing the principle of getting the facts out early, my experience confirms that a well-articulated rule formalizing the requirement for proportionality is needed.

If the plaintiffs come to expect that proportionality will be applied, they will not want to alienate the judge by insisting on excessive e-discovery. In fact this kind of triage happens all the time. If there is not a lot at issue, plaintiffs routinely decide not to assert certain difficult-to-prove claims or may not pursue certain lines of inquiry in their discovery efforts. I don't think there is anything wrong with having a judge recognize that there may be something material out there, but because of the magnitude of this case it doesn't warrant looking into it.

We definitely need a rule with respect to proportionality that carries more weight than the current rule. I don't think I've ever seen a court specifically say we're not going to go there because this case is just not worth enough money to take a look. An amendment to the existing rule is needed that will provide courts with an explicit guideline so that they feel comfortable in saying no - even if the evidence sought is highly relevant - if the case does not justify it. The White Paper proposes Rule 26(b)(2)(C)(iii) to explicitly invoke the principle of proportionality: "On motion or on its own, the court must limit the frequency or extent of discovery otherwise allowed by these rules or by local rule if it determines that "(iii) the burden or expense of the proposed discovery outweighs its likely benefit or is not proportional to the claims and defenses at issue considering the needs of the case, the amount in controversy, the parties' resources, the complexity and importance of the issues at stake in the action, and the importance of the discovery in resolving the issues."

Editor: Looking at the fact-based pleading and proportionality issues, what conclusions would you draw from the documents you have read?

Scordo: I didn't see a consensus on switching to mandatory fact-based pleading when the issue is framed that way. There seemed to be general agreement on the idea of getting more facts out early and not "hiding the ball." So, the difference may be more a matter of semantics than anything else. On proportionality everybody seemed to be in favor of the principle. I don't think anyone disagrees, including lawyers who typically represent plaintiffs. The hard part will be getting agreement on how that principle will be articulated. My own familiarity confirms the importance of adopting a clear and well-defined Rule.

Editor: What conclusions would you draw from the documents you read concerning preservation and sanctions?

Scordo: There was a lot of talk about the need for a Rule that states when a preservation obligation to preserve electronically stored information (ESI) should be triggered and what the scope of that obligation should be. However, the devil is in the details and drafting a rule that will satisfy all the interest groups involved will be difficult.Again, no one disputes that preservation obligations are important.It is applying the obligations in the real world, especially in a large organization facing repetitive litigation, that creates the difficulties and ambiguities.

As to sanctions for failure to preserve, there seemed to be no consensus. Because the current sanctions for spoliation today can be so uncertain and threatening, a clear simple standard is needed for their imposition like that proposed in the LCJ White Paper (set forth in a new Rule 37(e)) which provides that "Absent willful destruction, a court may not impose sanctions on a party for failing to provide relevant electronically stored information for the purpose of preventing its use in litigation."

Editor: Where do the documents come out on the issue of cost shifting?

Scordo: My reading of the Conference's documents and reports did not shed a lot of new light on this issue. The LCJ proposes that Rule 26 be amended in all cases to shift the costs to the party that seeks discovery.

I am very much in favor of the LCJ's approach.As a practical matter it makes perfect sense and, frankly, you wonder why that wasn't the way it started out in the beginning. It puts the burden on the requesting side to think carefully about what they actually want from their adversary. The courts should be encouraging the parties to give careful consideration of the factual issues, the legal issues and what they really need in the way of discovery from the other side, as opposed to what they would like to have.

With respect to certain electronic files, the LCJ proposes a new Rule 26(h)(2) that lists categories of ESI that can be very expensive to collect and review and provides that the listed categories can only be obtained by court order on a showing of substantial need.

Editor: Apparently one argument made by plaintiffs' counsel at the Conference was that I will pay the costs if you open your doors to me so I can actually do the search and determine the search criteria, but if you do that, then it's not in my control and therefore you're responsible for the cost.

Scordo: If a plaintiff's requests are narrowly tailored to what it really needs from the outset, there should be very little argument on search terms and search parameters.If the plaintiff is paying the bill in the first instance, it has an incentive to narrow the search terms. Therefore, I don't see that there is going to be a big dispute over search terms and search parameters.

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