Amendments to the Federal Rules of Civil Procedure and How They May Affect Your Business

by Adam J. Shafran

On April 29, 2015, the U.S. Supreme Court approved and submitted to Congress proposed amendments to the Federal Rules of Civil Procedure (“FRCP”). The FRCP are the procedural rules which govern every civil lawsuit brought in any federal court in the United States. These amendments, which took effect on December 1, 2015, are considered the most significant alterations to the rules in more than two decades. While the majority of amendments are of little practical concern to businesses, there are at least two amendments that may have an immediate impact on any business that finds itself in federal court.

The first amendment relates to the scope of discovery and information that parties involved in a lawsuit can obtain from each other during the discovery process. Prior to the recent amendment, a party seeking discovery in a lawsuit in federal court was only required to demonstrate that the information sought was “reasonably calculated to lead to the discovery of admissible evidence.” In simple terms, this broad language meant that a party seeking information/discovery from the opposing party could obtain almost anything they sought in the discovery process without significant regard to the burden it imposed on the party producing the information. The recent amendment to this rule has changed the “reasonably calculated to lead to the discovery of admissible evidence” language to:

Parties may obtain discovery regarding any nonprivileged matter 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 relevant 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.

As can be easily gleaned from this amendment, courts will now place a much greater focus on determining how relevant the information sought truly is, and how much of a burden the production of the information sought places on the producing party. In large part, the purpose of this amendment was to reduce the costs of discovery, which have been increasing exponentially over the past decade. Thus, any business involved in litigation in federal court should carefully consider what information it needs to prove and/or defend against the claims brought in the litigation.

The second significant amendment to the FRCP increases the federal courts’ ability to cure harm caused to a party as a result of the loss or purposeful destruction of electronically stored information (“ESI”) by the opposing party. ESI has become increasingly prevalent in litigation, as it includes things such as emails, text messages, and files stored on computers or other electronic devices. The new rule regarding ESI is as follows:

If ESI that should have been preserved in the anticipation or conduct of litigation is lost because a party failed to take reasonable steps to preserve it, and it cannot be restored or replaced through additional discovery, the court: (1) upon finding prejudice to another party from loss of the information, may order measurers no greater than necessary to cure the prejudice; or (2) only upon a finding that the party acted with the intent to deprive another party of the information’s use in the litigation may: (A) presume that the lost information was unfavorable to the party; (B) instruct the jury that it may or must presume the information was unfavorable to the party; or (C) dismiss the action or enter a default judgment.

The purpose of this amendment is to make clear that every party has an obligation to preserve all ESI that is potentially relevant to the lawsuit. If a party is found to have purposefully destroyed ESI, a judge can enter severe sanctions against that party, including sanctions as severe as a default judgment or dismissal of the case.

To the extent your business possesses ESI, which may be relevant to a case or claim you may bring or have brought against you, it is imperative that you consult with your Rudolph Friedmann attorney to make sure you are taking all necessary and appropriate steps to ensure that all such ESI is adequately preserved.