Proportionality In Discovery

Kristen M. Bush, Esq.
Schwartz Semerdjian Cauley & Moot LLP
Published:  06.01.2016

After receiving a request for production of documents seeking electronically stored information (“ESI”) from six custodians over a five year period, lead counsel on an interference with prospective economic advantage case contacted her e-discovery expert to determine the estimated cost of responding to the discovery request. The database exceeded 350 GB of ESI and the estimate for indexing, filtering and processing the e-mails and text messages neared the total value of the case

Advances in technology have vastly broadened the scope of available ESI. With more information available to collect, it is no surprise that e-discovery costs have grown alongside the volumes of ESI. With every discovery endeavor, litigants and courts are faced with conducting a cost-benefit analysis. In Federal practice, the focus of the cost-benefit analysis in discovery has previously been entrenched in the “undue burden” standard in Federal Rules of Civil Procedure (“FRCP”), Rule 26(b)(2)(B). However, recent changes to the FRCP have expanded upon the cost-benefit analysis of discovery by adoption of the proportionality standard.

New Rules Addressing Proportionality

Last year, the US Supreme Court adopted significant amendments to the FRCP aimed at promoting proportionality in the discovery process in light of the obvious expense to litigation. For example, changes to Rule 1 reflect that “[t]he rules should be construed, administered and employed by the court and the parties to secure the just, speedy, and inexpensive determination of every action.” This amendment emphasizes that litigating parties share the responsibility with the court to achieve a conclusion that is fair, quick and relatively inexpensive.

Perhaps an even more significant change when it comes to reining in costly discovery practice was made to Rule 26(b)(1). For litigants who are faced with massive bills associated with responding to discovery, changes to Rule 26 now impose a proportionality requirement on discovery requests. Gone is the familiar “reasonably calculated to lead to the discovery of admissible evidence” standard. The updated version includes a “proportionality” standard, which explicitly requires litigants to tailor their discovery requests under a cost-benefit analysis.  The new text of Rule 26(b)(1) provides as follows:

Parties may obtain discovery that is relevant to any party’s claim or defense and proportional to the needs of the case, considering the importance of the issues at stake in the action, the amount in controversy, the parties’ relative access to information, the parties’ resources, the importance of the discovery in resolving the issues, and whether the burden or expense of the proposed discovery outweighs its likely benefit. Information within this scope of discovery need not be admissible in evidence to be discoverable.

The Rules Committee has made clear in its Notes on the 2015 Amendments that the Rule 26(b)(1) change does not alter existing responsibilities of the court and the parties to consider proportionality, but that it “restores the proportionality factors to their original place in defining the scope of discovery.” The change reinforces the obligation under Rule 26(g) for parties to consider these factors in making discovery requests, responses, or objections.

Recent Decisions Applying the New Rule

The U.S. Supreme Court’s April 29, 2015 order implementing the amendments provides that the changes will govern all cases commenced after December 1, 2015, “and, insofar as just and practicable, all proceedings then pending.” While it is uncertain how the proportionality requirement will be practically applied across the courts for matters filed after December 1, 2015, some California courts have begun applying the amended rule to recent decisions. The early consensus suggests that, in practice, the amended rule may not be substantially different from the previous “reasonably calculated to lead to the discovery of admissible evidence” standard.

In the Northern District of California, magistrate Judge Paul S. Grewal explained that “[n]o longer is it good enough to hope that the information sought might lead to the discovery of admissible evidence. In fact, the old language to that effect is gone. Instead, a party seeking discovery of relevant, non-privileged information must show, before anything else, that the discovery sought is proportional to the needs of the case.” Gilead Scis. Inc. v. Merck & Co. Inc., No. 5:13-CV-04057-BLF, 2016 WL 146574, at *1 (N.D. Cal. Jan. 13, 2016). “Proportionality in discovery under the Federal Rules is nothing new. Old Rule 26(b)(2)(C)(iii) was clear that a court could limit discovery when burden outweighed benefit, and old Rule 26(g)(1)(B)(iii) was clear that  a lawyer was obligated to certify that discovery served was not unduly burdensome. New Rule 26(b)(1) . . . simply takes the factors explicit or implicit in these old requirements to fix the scope of all discovery demands in the first instance.” Id. The purpose of the recent amendment is to change an existing “mindset” that “it is good enough to hope that the information sought might lead to the discovery of admissible evidence.” Id.

Similarly, magistrate Judge Elizabeth D. Laporte in the Northern District of California, applied the amended rule to a matter filed before its implantation noting, “while the language of the Rule has changed, the amended rule does not actually place a greater burden on the parties with respect to their discovery obligations, including the obligation to consider proportionality, than did the previous version of the rule.” Dao v. Liberty Life Assurance Company of Boston, 14-CV-047499SI, 2016 WL 796095, at *3 (N.D. Cal. Feb. 23, 2016). Magistrate Judge Nita L. Stormes of the Southern District of California recently applied the new standard under FRCP 26(b)(1) granting a motion to compel wherein the “Plaintiff sufficiently demonstrated the information sought is relevant and proportional to the needs of the case.” Haghayeghi v. Guess?, Inc., 14-CV-20 JAH, 2016 WL 1056547, at *3 (S.D. Cal. Mar. 10, 2016).

In sum, the first few months of amended FRCP 26 indicate that the proportionality standard may be a return to the courts’ original intent with respect to the scope of permissible discovery. The added section on proportionality is not likely to be a game changer in most scenarios in light of the requirement that discovery cannot be overly burdensome, which requires a burden to benefit analysis of the case. While the differences in practice under the new rule may prove to be subtle, litigators should be prepared to conduct a full analysis of proportionality factors when propounding and responding to discovery requests. No longer will it be good enough to rely solely on the argument that the information sought might lead to the discovery of admissible evidence. If there is a large amount of information sought, there better be a large amount on the line in the case.

For an attorney faced with responding to discovery that the cost of responding nears or even exceeds the value of the case, the proportionality standard provides ample opportunity for protection. The costs associated with ESI should be analyzed early, with an eye towards utilizing the meet and confer process to tailor burdensome requests. Likewise, before propounding discovery, the scope of information sought should also be tailored towards the perceived benefits of the information. If nothing else, the amendment to Rule 26(b)(1) highlighting the proportionality requirement is an avenue to focus discovery towards more efficient and cost effective practices. Rule 26, like all Federal discovery rules “should be construed, administered and employed by the court and the parties to secure the just, speedy, and inexpensive determination of every action.” FRCP, Rule 1.