May 01, 2017 Articles

On Balance: The “Amount in Controversy” Factor in a Proportionality Analysis

How quantifying damages may offset burden or expense of discovery sought

by Julia M. Nahigian

On December 1, 2015, significant amendments to the Federal Rules of Civil Procedure went into effect. Rule 26 was amended to result in a repositioning of certain factors that previously existed in a less prominent part of the rules. The proportionality factors are now meant to define the scope of discovery, requiring consideration of "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." Fed. R. Civ. P. 26(b)(1).

In many cases, plaintiffs may avoid identifying the precise amount of damages they seek until the final stages of discovery, or not at all if they have effectively evaded specificity throughout the discovery period. With the amendment to Rule 26, parties now may be required to specifically identify their claimed injuries and damages at the motion to compel stage if they argue that the significant amount in controversy weighs in favor of the proportionality of the discovery sought.

While courts have applied varying weight to this factor, there seems to be a consensus that "when determining motions to compel discovery in which proportionality is at issue, courts should consider the totality of the specific circumstances presented in the particular case." Trask v. Olin Corp., No. 12-340, 2016 WL 1255302, at *2 n.5 (W.D. Pa. Mar. 31, 2016). The court considered the amount in controversy factor in Trask, a products liability case in which the plaintiffs sought leave to amend their complaint to add a request for punitive damages after they learned, through extensive discovery, that grounds for such an award existed. The court acknowledged the broad discovery that had been conducted was "not out of proportion to the facts and circumstances in this case, including the claimed injuries and damages." Id.

Taking a similarly holistic approach to consideration of potential damages in a proportionality analysis, the court in Hightower v. Group 1 Automotive, Inc., No. 15-1284, 2016 WL 3430569, at *4 (E.D. La. June 22, 2016), declined to compel the defendant to provide supplemental responses to three requests for production in an employment discrimination case with approximately $13 million of potential compensatory and putative damages at stake. Noting that the potential award was "significant, but not enormous," the court "weighed [the amount in controversy] factor as merely one ingredient, and not a controlling one, among all the factors of the proportionality analysis." Id.

Describing the factors as a "proportionality restriction," the court in Duvall v. BOPCO, L.P., No. 15-2404, 2016 WL 1268343, at *2 (E.D. La. Apr. 1, 2016), minimized the significance of the amount in controversy in a proportionality analysis. The plaintiff alleged that he severely injured his hand while operating a barge as a result of the defendant barge owner's negligence, and sought an order requiring the defendant to permit an extensive inspection of the barge. Emphasizing that a high amount of damages is not necessarily enough to compel discovery, the court concluded "while the damages sought may be relatively large, this remains an ordinary personal injury case in which the anticipated amount in controversy cannot be classified as so enormous that the risks and burdens presented by the proposed testing and inspection steps are justified." Id.

Other courts, though, do not set such a high standard. In Doe v. City of Las Vegas, No. 2:16-cv-1979-GMN-VCF, 2016 WL 6905386, at *2 (D. Nev. Nov. 21, 2016), the court weighed the potential recovery that "could total hundreds of thousands of dollars" with the fact that the discovery had the possibility to lead to an easy disposal of the case. In allowing the discovery sought and declining to grant the defendants' motion for a protective order, the court emphasized that the information sought by the plaintiff was relevant to the compensatory and putative damages alleged in the complaint. Thus, the benefit of clarification of the plaintiff's damages theory and a potential efficient disposition of the case outweighed any burden or expense of the discovery sought.

Similarly, the court in Kiewit Offshore Services, Ltd. v. Dresser-Rand Global Services, Inc., No. H-15-1299, 2016 WL 6905874, at *2 (S.D. Tex. Apr. 1, 2016), weighed the damages sought by the plaintiff against the burden of allowing the defendant to seek additional depositions under Rule 30 to depose third parties in Mexico. The court weighed the amount in controversy with the burden on the plaintiff to travel to Mexico to defend the depositions, stating, "Given that both parties are seeking millions of dollars in damages, the court finds that the burden of taking these additional depositions is justified and proportional to the needs of the case." Id.

Courts also look to whether any proposed alternatives to the burdensome discovery exist as a way to obtain the necessary information. For example, in Wagoner v. Lewis Gale Medical Center, LLC, No. 7:15cv570, 2016 WL 3893135 (W.D. Va. July 13, 2016), the plaintiff asserted claims related to discrimination, retaliation, and failure to accommodate in violation of the Americans with Disabilities Act (ADA), and sought discovery of electronically stored information maintained by two of the plaintiff's supervisors during a four-month period. The defendant, after obtaining an estimate of approximately $45,570 to complete the discovery, argued that the discovery was disproportional to the plaintiff's potential recovery. The court held that "[p]roportionality consists of more than whether the particular discovery method is expensive," and in this case, the defendant failed to provide any reasonable alternative for the plaintiff to obtain the requested information. Id. at *4.

It appears there is no "magic number" of amount in controversy that will tip the scale in favor of granting seemingly burdensome discovery requests. However, parties seeking discovery in a motion to compel should provide the court with as much specificity as possible regarding each proportionality factor, including the amount in controversy.

Keywords: litigation, commercial, business, proportionality, discovery, burden, burdensome, amount in controversy

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