June 26, 2018 Articles

Tiered Discovery: An Efficient Proportionality Solution?

A tiered system of discovery has different rules to handle different cases depending on their size and complexity.

By Steven C. Bennett

A debate rages among civil procedure academics, policy makers, and practitioners about the best means to achieve “proportionality” in the discovery process. One promising method is “tiered” discovery.

Proportionality: Two Methods of Discovery
Over the past several decades, the framers of the Federal Rules of Civil Procedure have increasingly emphasized the value of judicial case management, premised on the notion that parties, with the active involvement of district courts and magistrate judges, can “right size” the discovery process to fit the needs of the individual case. The underlying assumption of the Federal Rules of Civil Procedure is that a uniform, but broadly worded, set of rules—sometimes called “trans-substantive,” in the sense that they apply without regard to the substance of the particular dispute—should be adapted, as appropriate, by parties and courts rather than applying specific subsets of rules depending on the characteristics of the specific case.

A contrary assumption, which has gained significant support, especially at the state court level, is that a tiered system of discovery, with different rules to handle different cases depending on their size and complexity, can more easily and efficiently produce proportionality in discovery. This kind of system—sometimes called “differentiated case management” or “tiered” discovery—acts on the recognition that a very large percentage of state court cases involve relatively small amounts of money and present relatively straightforward questions of law and fact. Indeed, at the state court level, statistics suggest that a majority of cases involve at least one party unrepresented by counsel (and thus relatively unfamiliar with court processes) and that a very large percentage of cases may be resolved without any judicial intervention (e.g., by default judgment). For many of these cases, the preferred proportionality solution is not more judicial case management; rather, the solution is simple, clear directions as to the form of essential disclosures, with the possibility (but only where necessary) of additional judicial supervision.

Tiered Discovery
What does a tiered discovery system look like?

Arizona’s system includes three tiers. The state of Arizona recently implemented a comprehensive reform of its civil procedure rules, including a tiered system for the categorization of cases. See generally Court Rules Forum, Azcourts.gov (2018). The system divides cases into three tiers. Tier 1 cases are the simplest, with minimal documentary evidence and few witnesses; and they are subject to trial in one or two days. Tier 2 cases have more than minimal documentary evidence and more than a few witnesses (including experts), but they are not otherwise complex. Tier 3 cases are factually, logistically, or legally complex and may include class actions, multiparty commercial cases, medical malpractice actions, and product liability cases. The rules provide a list of characteristics for each tier.

Cases may be assigned a tier by stipulation of the parties, on motion of a party to have the court assign a tier, or on the court’s own evaluation of the case. If a case is not assigned through one of these methods, then it is assigned based on the requested damages ($50,000 and $300,000 maximum for Tiers 1 and 2, respectively, and over $300,000 for Tier 3). A case may also be reassigned a tier based on one of these methods.

Based on the tier, the Arizona rules apply different time limits for discovery (120, 180, and 240 days for Tiers 1, 2, and 3, respectively). The rules also apply presumptive limits on the scope of discovery. In Tier 1 cases, for example, each side is limited to five requests for production, five interrogatories, 10 requests to admit, and five hours of fact witness depositions. Tiers 2 and 3 each presumptively authorize relatively more discovery process. Parties may stipulate, with court approval, to discovery beyond the limits of the assigned tier or may move the court for additional discovery.

Mandatory initial disclosures complement the tiered system. An essential companion to the tiered discovery system is a robust system of mandatory initial disclosures.

The Arizona rules provide an expansive list of disclosure requirements and require production of hard-copy documents at the time of initial disclosures. Parties are required to confer promptly regarding, among other things, treatment of electronically stored information (ESI); and, within 40 days after their initial disclosures, which include a description of the categories of ESI that the party intends to use at trial, the party must produce such ESI. The rules mandate sanctions, including preclusion, for failure to make required initial disclosures. As the framers of the Arizona rules indicate in comments on the new rules, “mandatory initial disclosure of relevant material” serves as the “bedrock” of civil litigation under the rules.

Effectiveness of Tiered Discovery
Will tiered discovery rules, such as the new Arizona rules, help to achieve proportionality in litigation?

The answer lies, at least in part, in the recognition that “big-discovery” disputes represent a small minority of cases at the state court level and even at the federal level. With relatively clear guidelines as to the scope of disclosures required in a case, and with vigorously enforced rules of mandatory disclosure, the bulk of cases may be resolved through cooperation of the parties with little need for judicial supervision. That improvement in efficiency should be welcome news for resource-strapped state courts. But more, if judges are freed from managing cases that are largely self-sufficient, they may direct their attention to providing “hands-on” guidance in cases where large-scale, complicated disputes may otherwise permit the discovery process to run amok. Close judicial supervision of cases where parties may be most tempted to engage in excessive or evasive discovery may help deter such discovery gamesmanship.

A study of a similar set of rules changes in Utah suggests that a tiered system can be effective. See Utah: Impact of the Revisions to Rule 26 on Discovery Practice in the Utah District Courts: Final Report (Apr. 2015). The study found an increase in settlement rates (across all tiers of cases) and a decrease in time to final disposition of cases. After implementation of the tiered system, parties sought additional discovery (above the presumptive limits) in only a small percentage of cases; and when additional discovery was requested, the requests occurred most frequently in Tier 3 cases. Outside that category, the data showed dramatic decreases in discovery disputes in all other cases.

The study revealed some significant criticisms, however, including complaints that some counsel would game the system by inflating claim amounts to achieve a higher tier status.

Court Usage of Tiered Discovery
Does tiered discovery have a future in the federal court system? Several federal district courts have already begun to experiment with differentiated case management and tiered discovery systems. Although the federal courts do not generally maintain small-claims dockets (the minimum claim amount for diversity jurisdiction is $75,000), federal courts increasingly recognize through local rules, standing orders, standardized case management orders, and other procedural directions that certain cases may be placed on an expedited track for resolution—including relatively limited discovery.

Based on results from experiments in various federal districts, expanded use of such tiered discovery systems is likely. Improvements may develop in applications of such systems, such as the development of automated tier assignments through the use of questionnaires or other input into electronic filing systems.

Usage in Arbitration
An interesting sidelight to the use of tiered discovery systems in state and federal courts is the development of similar systems for use in arbitration.

In 2008, the Institute for Conflict Prevention and Resolution (CPR) issued its Protocol on Disclosure of Documents & Presentation of Witnesses in Commercial Arbitration. The protocol suggests that in order to give themselves greater assurance of predictability as to the scope and form of discovery in arbitration, parties may wish to provide, in their agreement to arbitrate or separately thereafter, for certain specified “modes of disclosure” to be used in arbitration of any dispute between them. The modes offered in the CPR protocol include the most basic (no disclosure of documents other than disclosure, prior to the evidentiary hearings, of documents that each side will present in support of its case) plus three more modes, with increasingly expanded discovery in each mode.

What the CPR protocol suggests is that tiered forms of discovery may become more broadly available in all forms of dispute resolution, not just the individual state or federal courts that have begun to experiment with such systems. Further, it is conceivable that parties might develop contract forms that specify forms of (and limitations on) discovery that will apply regardless of whether their disputes are heard in court, arbitration, or otherwise.

Conclusion
Like all procedural reforms, a tiered discovery system cannot work miracles. The key to long-term success in the implementation of such systems is careful study of pilot programs and other experiments to extract valuable lessons as to what works (and might be adopted) and what does not work (or what requires further adaptation to work most effectively). Ours is a large country with major commercial, income, cultural, and other variations. There is no one-size-fits-all solution to ensure efficiency and proportionality in the discovery process. But the use of tiered discovery systems offers an important additional tool for managing that process.


Steven C. Bennett is a partner at Park Jensen Bennett LLP in New York, New York, and is an adjunct professor of e-discovery procedure at Hofstra Law School. The views expressed are solely those of the author and should not be attributed to the author’s firm or its clients.