Thursday, August 14, 2014
Echoing the May 2, 2014 Report to the Standing Committee by the Advisory Committee on Civil Rules, the chair of the Advisory Committee, Judge David G. Campbell, has signaled that he would adopt the position of the proposed change to FRCP 37(e). Vicente v. City of Prescott, No. CV–11–08204–PCT–DGC (D. Ariz. Aug. 8, 2014), 2014 WL 3894131.
The proposed amendment to Rule 37(e) provides:
If electronically stored information 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 may:
(1) upon finding prejudice to another party from loss of the information, order measures no greater than necessary to cure the prejudice; or
(2) only upon finding that the party acted with the intent to deprive another party of the information’s use in the litigation:
(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.
Thus, the proposal rejects cases that permit an adverse inference instruction on a showing of negligence or gross negligence. As the Advisory Committee reported to the Standing Committee:
Circuits that permit adverse inference instructions on a showing of negligence or gross negligence adopt [the] rationale . . . that the adverse inference restores the evidentiary balance, and that the party that lost the information should bear the risk that it was unfavorable. See, e.g., Residential Funding Corp. v. DeGeorge Finan. Corp., 306 F.3d 99 (2d Cir. 2002). Although this approach has some logical appeal, the Advisory Committee has several concerns with this approach when applied to ESI. First, negligently lost information may have been favorable or unfavorable to the party that lost it. Consequently, an adverse inference may do far more than restore the evidentiary balance; it may tip the balance in ways the lost evidence never would have. (click here and go to page 314)
In Vicente, Judge Campbell stated that "the Court tends to believe that such an instruction requires a showing of bad faith," although the case did not require a decision on the point. (n. 10) Footnote 10 goes on to use the sentences quoted above almost verbatim, but without attribution.
Friday, July 18, 2014
The ABA is presenting a free (to members) Webinar called "The Mobile Transformation: The Extraordinary Legal Implications of Billions of Mobile Devices" on Monday, July 21, 2014 from 1:00-2:30 p.m.
Information on the Webinar is here.
Saturday, June 28, 2014
Plaintiff Barko worked for Kellogg Brown & Root, a defense contractor and former subsidiary of Halliburton. He filed a False Claims Act claim against KBR:
In essence, Barko alleged that KBR and certain subcontractors defrauded the U.S. Government by inflating costs and accepting kickbacks while administering military contracts in wartime Iraq. During discovery, Barko sought documents related to KBR’s prior internal investigation into the alleged fraud. KBR had conducted that internal investigation pursuant to its Code of Business Conduct, which is overseen by the company’s Law Department.
KBR argued that the internal investigation had been conducted for the purpose of obtaining legal advice and that the internal investigation documents therefore were protected by the attorney-client privilege. . . .
After reviewing the disputed documents in camera, the District Court determined that the attorney-client privilege protection did not apply because, among other reasons, KBR had not shown that “the communication would not have been made ‘but for’ the fact that legal advice was sought.” . . . KBR’s internal investigation, the court concluded, was “undertaken pursuant to regulatory law and corporate policy rather than for the purpose of obtaining legal advice.”
. . . The District Court . . . ordered KBR to produce the disputed documents to Barko . . .
The D.C. Circuit granted KBR's petition for writ of mandamus, holding that the District Court's privilege ruling was clearly legally erroneous under Upjohn v. United States, and that it was otherwise appropriate to grant the writ:
[T]he District Court also distinguished Upjohn on the ground that KBR’s internal investigation was undertaken to comply with Department of Defense regulations that require defense contractors such as KBR to maintain compliance programs and conduct internal investigations into allegations of potential wrongdoing. The District Court therefore concluded that the purpose of KBR’s internal investigation was to comply with those regulatory requirements rather than to obtain or provide legal advice. In our view, the District Court’s analysis rested on a false dichotomy. So long as obtaining or providing legal advice was one of the significant purposes of the internal investigation, the attorney-client privilege applies, even if there were also other purposes for the investigation and even if the investigation was mandated by regulation rather than simply an exercise of company discretion.
The D.C. Circuit rejected KBR's request to reassign the case to a different District Judge. In re Kellogg Brown & Root, Inc., No. 14-5055 (D.C. Cir. June 27, 2014).
Friday, June 20, 2014
SCOTUS: IRS Summons Challenger Must Show Facts Giving Rise to Plausible Inference of Improper IRS Motive
The IRS examined the tax returns of Dynamo Holdings Limited Partnership, and issued summonses to the respondents, "four individuals associated with Dynamo whom the Service believed had information and records relevant to Dynamo’s tax obligations. None of the respondents complied with those summonses."
The IRS instituted proceedings in District Court to compel the respondents to comply with the summonses. The IRS submitted an investigating agent’s declaration that the testimony and records sought were necessary to “properly investigate the correctness of [Dynamo’s] federal tax reporting” and that the summonses were “not issued to harass or for any other improper purpose.” In reply, the respondents pointed to circumstantial evidence suggesting that the IRS had “ulterior motives” for issuing the summonses: to “punish [Dynamo] for refusing to agree to a further extension of the applicable statute of limitations,” and to “evad[e] the Tax Court[’s] limitations on discovery.” Accordingly, the respondents asked for an opportunity to question the agents about their motives.
The District Court ordered the respondents to comply with the summonses. The Court of Appeals for the Eleventh Circuit reversed, holding that a simple “allegation of improper purpose,” even if lacking any “factual support,” entitles a taxpayer to “question IRS officials concerning the Service’s reasons for issuing the summons.”
The Supreme Court, in a unanimous opinion authored by Justice Kagan, vacated the Eleventh Circuit's opinion and remanded, holding that the Eleventh Circuit had applied an incorrect legal standard:
A person receiving an IRS summons is . . . entitled to contest it in an enforcement proceeding. . . . As part of the adversarial process concerning a summons’s validity, the taxpayer is entitled to examine an IRS agent when he can point to specific facts or circumstances plausibly raising an inference of bad faith. Naked allegations of improper purpose are not enough: The taxpayer must offer some credible evidence supporting his charge. But circumstantial evidence can suffice to meet that burden; after all, direct evidence of another person’s bad faith, at this threshold stage, will rarely if ever be available. And although bare assertion or conjecture is not enough, neither is a fleshed out case demanded: The taxpayer need only make a showing of facts that give rise to a plausible inference of improper motive. That standard will ensure inquiry where the facts and circumstances make inquiry appropriate, without turning every summons dispute into a fishing expedition for official wrongdoing. . . . But that is not the standard the Eleventh Circuit applied. . . . [T]he Court of Appeals viewed even bare allegations of improper purpose as entitling a summons objector to question IRS agents.
United States v. Clarke, No. 13-301 (U.S. June 19, 2014).
Wednesday, June 18, 2014
Tuesday, June 17, 2014
In the continuing worldwide drama over Argentina's 2001 debt default, Argentina loses another round. Republic of Argentina v. NML Capital, Ltd., No. 12-842 (U.S. June 16, 2014). Its creditor, NML Capital, which Argentina owes about $2.5 billion, has pursued postjudgment execution on Argentina's property since 2003. In 2010, NML subpoenaed two nonparty banks, Bank of America and an Argentinian bank with a branch in New York City. The subpoenas sought documents relating to accounts maintained by Argentina.
Argentina and BoA moved to quash the BoA subpoena (the Argentinian bank just didn't comply), and NML moved to compel. The district court granted the motion to compel, and the Second Circuit affirmed.
The Supreme Court also affirmed, rejecting Argentina's argument that the Foreign Sovereign Immunities Act prohibited discovery of Argentina's extraterritorial assets. Before its discussion of the FSIA, the Court discussed a Federal Rule of Civil Procedure -- Rule 69 -- that is rarely, if ever, mentioned in first-year civil procedure casebooks. (Hint, hint, casebook authors!) The Court noted that "[t]he rules governing discovery in postjudgment execution proceedings are quite permissive," citing Rule 69(a)(2), which allows a judgment creditor to take discovery "from any person -- including the judgment debtor -- as provided in the rules or by the procedure of the state where the court is located." The Court assumed without deciding that "in a run-of-the-mill execution proceeding [one where the judgment debtor is not a foreign state] . . . the district court would have been within its discretion to order the discovery from third-party banks about the judgment debtor's assets located outside the United States."
The question was thus whether the FSIA required a different result when the judgment debtor was, in fact, a foreign state. The FSIA, passed in 1976, confers two kinds of immunity on foreign states, jurisdictional (which Argentina waived) and execution immunity, which immunizes property in the United States of a foreign state from attachment and execution, with some exceptions.
"There is no third provision forbidding or limiting disocvery in aid of execution of a foreign-sovereign judgment debtor's assets," notes Justice Scalia for the majority. "[T]he reason for these subpoenas is that NML does not yet know what property Argentina has and where it is, let alone whether it is executable under the relevant jurisiction's law." The Court also dismissed concerns about international relations, suggesting that such an argument was better addressed to Congress.
Justice Ginsburg dissented. Justice Sotomayor took no part.
Monday, June 9, 2014
The opinion of the Massachusetts Appeals Court begins:
The plaintiffs appeal from the denial of their motion for sanctions against Bingham McCutchen LLP (Bingham), intervener, the law firm that defended Merrill Lynch, Pierce, Fenner & Smith, Inc. (Merrill), in the 2002 jury trial of this action. The plaintiffs claim that in that litigation Bingham wrongfully withheld documents relevant to the issue whether Merrill, in handling the accounts of Benistar Property Exchange Trust Company, Inc. (Benistar), knew that Benistar was trading with money belonging to third parties. We hold that Bingham lacked an adequate legal basis, under the guise of the work product doctrine, for its decisions to withhold information that Merrill employees had viewed certain Benistar Web pages describing its business as an intermediary for third-party funds and then to present a defense claiming that no Merrill employees had viewed the very same Web pages. As a result, we vacate that portion of the final judgment entering judgment in favor of Bingham on the plaintiffs' motion for sanctions. As explained below, there remain certain issues that require resolution by a fact finder, and thus, we remand for further proceedings consistent with this opinion.
Cahaly v. Benistar Property Exchange Trust Co., Inc. No. 12-P-956 (Mass. Ct. App. June 6, 2014).
Hat tip: The American Lawyer
Saturday, June 7, 2014
The Standing Committee met on May 29-30, 2014 in D.C. and unanimously approved the amendments as they were modified by the Advisory Committee at its meeting in April.
Hat tip: Center for Constitutional Litigation
Wednesday, May 28, 2014
Tired of using Mosley v. General Motors for an illustration of joinder under Rule 20? The D.C. Circuit has provided a great new case. The court quaintly began its opinion:
Generally speaking, our federal judicial system and the procedural rules that govern it work well, allowing parties to resolve their disputes with one another fairly and efficiently. But sometimes individuals seek to manipulate judicial procedures to serve their own improper ends. This case calls upon us to evaluate—and put a stop to— one litigant’s attempt to do just that.
AF Holdings, LLC v. Does 1-1058, No. 12-7135 (D.C. Cir. May 27, 2014).
Plaintiff AF Holdings, represented by a law firm related to one that was called a "porno-trolling collective" in another case, allegedly (there was some question of forgery) acquired the copyright to a pornographic film called "Popular Demand." It sued 1,058 "John Doe" defendants in federal court in D.C. for copyright infringement for downloading the film on a file-sharing service known as BitTorrent.
Moving for leave to take immediate discovery, AF Holdings then sought to serve subpoenas on the five Internet service providers linked to the 1,058 IP addresses it had identified: Cox Communications, Verizon, Comcast, AT&T, and Bright House Networks. The district court granted the motion . . . . The providers refused to comply. Invoking Federal Rule of Civil Procedure 45(d)(3)(A), . . . they asserted that the administrative expense involved was necessarily an “undue burden” because AF Holdings had failed to establish that the court would have personal jurisdiction over the defendants or that venue would lie in this district. . . . The providers also argued that any burden was necessarily undue because AF Holdings had failed to provide any reason to think that joinder of these 1,058 defendants in one action was proper. The district court rejected these arguments, . . . [but] certified its order for immediate appeal.
The D.C. Circuit vacated, holding that AF Holdings had failed to make a threshold showing of a good faith belief that the discovery would enable it to show that the court had personal jurisdiction over the unknown defendants; thus, the information sought from the service providers was not relevant.
The court then turned "to the question of joinder, which provides a separate and independent ground for reversal":
. . . Federal Rule of Civil Procedure 20(a)(2) sets forth that multiple defendants may be joined in one action if the plaintiff seeks relief “with respect to or arising out of the same transaction, occurrence, or series of transactions or occurrences” and “any question of law or fact common to all defendants will arise in the action.” In a multi-Doe copyright infringement lawsuit such as this, at least one issue of law or fact will generally be common to all defendants—here, that issue might be whether AF Holdings has a valid copyright in Popular Demand. But whether all of these Doe defendants could possibly have been a part of the same “transaction, occurrence, or series of transactions or occurrences” so as to support joinder is a more difficult question. . . . For purposes of this case, we may assume that two individuals who participate in the same swarm [a type of peer-to-peer file sharing] at the same time are part of the same series of transactions within the meaning of Rule 20(a)(2). In that circumstance, the individuals might well be actively sharing a file with one another, uploading and downloading pieces of the copyrighted work from the other members of the swarm. But AF Holdings has provided no reason to think that the Doe defendants it named in this lawsuit were ever participating in the same swarm at the same time.
The D.C. Circuit left the question of sanctions to the district court on remand.
Tuesday, May 27, 2014
Corina D. Gerety and Brittany K.T. Kauffman, of The Institute for the Advancement of the American Legal System at the University of Denver, have published a Summary of Empirical Research on the Civil Justice Process: 2008-2013.
An explanation of its Scope provides, "This report provides a synthesis of the relevant empirical research on the civil justice process released from 2008 to 2013. In addition to IAALS research, it contains studies conducted by a variety of organizations and individuals, including the Federal Judicial Center, the National Center for State Courts, the RAND Corporation, and others. We, the authors, refer to 39 studies in total, representing a relatively even mix of case file/docket studies and surveys/interviews."
Wednesday, May 7, 2014
The State Bar of California has published a proposed formal opinion for public comment on the question, "What are an attorney’s ethical duties in the handling of discovery of electronically stored information?"
The digest of the opinion states:
An attorney’s obligations under the ethical duty of competence evolve as new technologies develop and then become integrated with the practice of law. Attorney competence related to litigation generally requires, at a minimum, a basic understanding of, and facility with, issues relating to e-discovery, i.e., the discovery of electronically stored information (“ESI”). On a case-by-case basis, the duty of competence may require a higher level of technical knowledge and ability, depending on the e-discovery issues involved in a given matter and the nature of the ESI involved. Such competency requirements may render an otherwise highly experienced attorney not competent to handle certain litigation matters involving ESI. An attorney lacking the required competence for the e-discovery issues in the case at issue has three options: (1) acquire sufficient learning and skill before performance is required; (2) associate with or consult technical consultants or competent counsel; or (3) decline the client representation. Lack of competence in e-discovery issues can also result, in certain circumstances, in ethical violations of an attorney’s duty of confidentiality, the duty of candor, and/or the ethical duty not to suppress evidence.
The deadline for public comments is 5 p.m., June 24, 2014.
Friday, May 2, 2014
As a break from writing or grading your final exams (and to walk down the memory lane of law practice for some of us), here's a great reenactment of an argument during a deposition about the definition of a photocopier. The short video by writer and director Brett Weiner is part of the New York Times Op-Docs series and is a verbatim transcript of a deposition from an Ohio case.
Wednesday, April 16, 2014
We covered earlier the agenda for the Civil Rules Advisory Committee’s April meeting, which took place in Portland, Oregon last week and was an important step for the recently proposed amendments to the Federal Rules of Civil Procedure. Bloomberg BNA’s U.S. Law Week has this report on the result of the meeting.
The Advisory Committee’s recommendations go next to the Standing Committee on the Rules of Practice and Procedure, which will meet in May.
Hat Tip: Tom Rowe
Thursday, April 3, 2014
As we’ve been covering, the Judicial Conference Committee on Rules of Practice and Procedure (a.k.a. the Standing Committee) has proposed a significant batch of amendments to the Federal Rules of Civil Procedure. The public comment period on that proposal ended in February, with over 2,300 comments submitted.
The next step in the process is a meeting of the Civil Rules Advisory Committee that will take place on April 10-11 in Portland, Oregon. As covered earlier, the agenda book for that meeting has now been posted on the US Courts website and is available here. At this meeting, the Civil Rules Committee will make recommendations to the Standing Committee, which will meet at the end of May.
The materials in the 580-page agenda book suggest that there could be some important changes to the original package of amendments that was circulated last August. Most significantly, the Duke Conference Subcommittee (named for a conference convened by the Civil Rules Advisory Committee in May 2010) recommends withdrawal of amendments that would have (1) lowered the presumptive numbers of depositions and interrogatories, (2) limited the presumptive number of requests to admit, and (3) reduced the presumptive length of depositions.
Abandoning these proposals is certainly a step in the right direction. Unfortunately, the subcommittees recommend moving forward with other troubling changes, including (1) amendments to the scope of discovery under Rule 26(b), and (2) the abrogation of Rule 84 and the Forms that appear in the Civil Rules Appendix (which are especially significant with regard to pleading standards).
In February, some colleagues and I submitted a joint comment opposing these changes. That comment was submitted by myself, Helen Hershkoff (NYU), Lonny Hoffman (Houston), Alex Reinert (Cardozo), Elizabeth Schneider (Brooklyn), and David Shapiro (Harvard) [Direct link to the pdf available here]. Thereafter, Janet Alexander (Stanford), Judith Resnik (Yale), and Steve Yeazell (UCLA) submitted a letter – on behalf of themselves and 168 other law professors – supporting our comments in opposition to these changes [direct link to the pdf available here]. Numerous other law professors have also submitted critical comments (e.g., here, here, here, here, here, here, here, and here).
I hope these critiques will prompt the various committees to reconsider these problematic proposals. As we stated in the introduction to our joint comment:
As in 1993 and in 2000, evidence of system-wide, cost-multiplying abuse does not exist, and the proposed amendments are not designed to address the small subset of problematic cases that appear to be driving the Rule changes. We anticipate that, as with past Rule changes, untargeted amendments will fail to eliminate complaints about the small segment of high-cost litigation that elicits headlines about litigation gone wild; instead they will create unnecessary barriers to relief in meritorious cases, waste judicial resources, and drive up the cost of civil justice. The amendments are unnecessary, unwarranted, and counterproductive.*** In our view, the amendments are likely to spawn confusion and create incentives for wasteful discovery disputes. Even more troubling, by increasing costs and decreasing information flow, the proposed amendments are likely to undermine meaningful access to the courts and to impede enforcement of federal- and state-recognized substantive rights.
Tuesday, March 25, 2014
Friday, February 14, 2014
Over on the ACS blog is a post by Prof. Brooke Coleman (Seattle) entitled The Real Cost of Litigation Reform: Justice, Not Discovery Costs, Are at Stake, which discusses the current proposals to amend the discovery provisions of the Federal Rules of Civil Procedure. It concludes:
Our litigation system necessarily costs money. But, the purpose of the system is to achieve justice. No doubt, the costs should be contained as much as possible, but that containment should be achieved without sacrificing basic access to our federal system of courts. The proposed discovery rules incentivize producing parties to hold back information that is necessary to get to the truth, and they further burden requesting parties with proving that they need materials before they can even know what that information is. These proposals may make CEOs and general counsels feel more sanguine about the bottom line of their litigation costs, but they should provoke a great amount of dread in the rest of us. Corporations are less likely to be held accountable for their misdeeds if these changes are made. That cost alone renders the current litigation reform proposals unjustified.
Thursday, February 6, 2014
Tomorrow, the Judicial Conference Committee on Rules of Practice and Procedure is holding its final public hearing on the recent set of proposed amendments to the Federal Rules of Civil Procedure. Here are some links:
- The draft of the proposed amendments
- Comments received (over 500 uploaded so far)
- Transcript of November hearing in Washington, D.C.
- Transcript of January hearing in Phoenix
The public comment period closes on February 15, 2014. You can submit comments here.
Wednesday, January 1, 2014
Happy new year to everyone! I've spent some time between shopping, cooking, and eating – will the holidays NEVER END?? – looking at the public comments submitted on the proposed amendments to the Federal Rules of Civil Procedure.
I looked at all the comments filed up to December 19, 2013. Most of the comments were filed by self-identified plaintiffs' lawyers. A fair number of commenters did not explicitly identify the type of client they primarily represented. As 2013 progressed, a smattering of self-identified defendants' attorneys commented. I counted only three full-time law professors among the commenters and two federal judges (most were opposed to the amendments). I plan to comment and am presently working on my draft. I oppose most of the amendments.
The results so far: of 328 non-duplicate filings, 281 commenters, or 86%, were opposed to all the amendments they commented on. (Most commenters did not address all of the amendments.) Thirty-one commenters (9%) were opposed to some of the amendments and supported some of the amendments. These were primarily lawyers who opposed most of the amendments but found one or two amendments to say something nice about, probably for the sake of politeness or credibility.
That leaves 11 commenters (3%) supporting the amendments. Of those 11, six were self-identified defendants' lawyers, and five did not identify the type of client primarily represented.
Plaintiffs' lawyers gave example after example of meritorious cases they had handled where the proposed presumptive limits on discovery and the proposed redefinition of the scope of discovery would have stopped them from surviving a summary judgment motion.
Before the so-called "Duke Conference" that germinated these proposals, the Federal Judicial Center surveyed attorneys who handled cases that terminated in the last quarter of 2008. The results of private attorney responses to the statement "The outcomes of cases in the federal system are generally fair" were:
Federal Judicial Center Survey, 2009
Private Attorney Responses to the Statement
"The outcomes of cases in the federal system are generally fair"
(frequencies are estimated, not provided by FJC)
Agree or Strongly Agree
Disagree or Strongly Disagree
"Neither Agree Nor Disagree" or "Can't Say"
Number of Private Attorneys
Private attorneys primarily representing plaintiffs
N = 436
N = 182
N = 192
Private attorneys primarily representing defendants
N = 769
N = 40
N = 149
These results were not included in the FJC's final report on the survey. They are contained in the preliminary report, although not in the detail above, which I estimated from other information the FJC provided.
Plaintiffs' attorneys, in other words, were more than five times more likely than defendants' attorneys to believe that the outcome of cases in the federal system is substantively not fair. Now, as evidenced by the public comments, the vast majority of plaintiffs' attorneys oppose the proposed amendments to the FRCP while the vast majority of defendants' attorneys support the amendments.
Please, someone convince me not to give in to cynicism. We're starting a new semester on Monday.
See you at AALS.
Sunday, December 1, 2013
Wednesday, November 13, 2013
Last week the Advisory Committee on the Civil Rules held a hearing in Washington, D.C. on the most recent round of proposed amendments to the Federal Rules of Civil Procedure. See below for links to:
- The witness list from last week’s hearing: Download Confirmed Civil Rules Hearing Witnesses
- The draft of the proposed amendments
- Notice of future hearings
- Comments received so far (over 300)
The public comment period closes on February 15, 2014.