February 23, 2016 Articles

Proportionality: A Case Law Analysis

By Patricia Daza-Luu

Where . . . the proposed discovery ‘outweighs its likely benefit’—where the book is not worth the candle—it ought not be allowed[.]

—Magistrate Judge Jeffrey Cole in Uppal v. Rosalind Franklin University of Medicine & Science, No. 15 C 3806, 2015 WL 5026228 (N.D. Ill. Aug. 26, 2015)

 

On December 1, 2015, Federal Rule of Civil Procedure (FRCP) 26(b)(1) was amended to more sharply focus the scope of discovery with the requirement that discovery be “proportional to the needs of the case.” This should come as a welcomed change to seasoned litigators, especially those well versed in e-discovery, who have been forced to spend time litigating costly discovery disputes that, in many instances, are starkly disproportionate to the value of the case. While the concept of proportionality already was mentioned in the former FRCP 26(b)(2)(C), the amended FRCP 26(b)(1) redefines the scope of discovery at the outset:

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. Information within this scope of discovery need not be admissible in evidence to be discoverable.—including the existence, description, nature, custody, condition, and location of any documents or other tangible things and the identity and location of persons who know of any discoverable matter. For good cause, the court may order discovery of any matter relevant to the subject matter involved in the action. Relevant information need not be admissible at the trial if the discovery appears reasonably calculated to lead to the discovery of admissible evidence. All discovery is subject to the limitations imposed by Rule 26(b)(2)(C).

This article explores case law leading up to the recent FRCP amendments, focusing on the growing trend of federal courts deciding discovery disputes based on what is “proportional to the needs of the case.” To the extent practitioners previously ignored proportionality concerns, the new FRCP 26(b)(1) demands that parties consider the true needs of their cases before commencing discovery, to ensure they are able to enforce their requests if necessary.

The case Chen-Oster v. Goldman, Sachs & Co., 285 F.R.D. 294, 295 (S.D.N.Y. 2012), illustrates the pre-amendments application of proportionality. In Chen-Oster, former Goldman Sachs employees asked for pre-class certification discovery of their former employer’s computerized compensation, promotion, and performance evaluation data in a putative class action alleging gender discrimination. Considering the plaintiffs’ request, Magistrate Judge James C. Francis IV looked to FRCP 26(b)(2)(C), which provides that a court must limit the “extent of discovery” if it determines that:

    (i) the discovery sought is unreasonably cumulative or duplicative, or can be obtained from some other source that is more convenient, less burdensome, or less expensive;

    (ii) the party seeking discovery has had ample opportunity to obtain the information by discovery in the action; or

    (iii) the burden or expense of the proposed discovery outweighs its likely benefit, considering the needs of the case, the amount in controversy, the parties’ resources, the importance of the issues at stake in the action, and the importance of discovery in resolving the issues.

Chen-Oster, 285 F.R.D. at 303 (quoting former Fed. R. Civ. P. 26(b)(2)(C)). Based on this framework, Judge Francis ordered the production of the sought-after records, finding that “the needs of this case justify the discovery sought by the plaintiffs.” Id. at 305. The court considered factors such as the amount in controversy (although not “specifically quantified,” likely substantial given the probable number of female employees of Goldman Sachs), Goldman Sachs’s resources and ability to respond to discovery, and the “important public interest” served by the litigation. Id. at 305–06.

The same proportionality analysis was applied two years later in United States v. University of Nebraska at Kearney, No. 4:11CV3209, 2014 WL 4215381 (D. Neb. Aug. 25, 2014), but with a different result. In University of Nebraska, the court denied the government’s discovery requests, considering such factors as the parties’ resources, prior productions of information, and whether electronically stored information (ESI) was an economical method of production—ultimately determining that the government’s request was overly broad and any benefit was outweighed by the expense. See also Assured Guar. Mun. Corp. v. UBS Real Estate Sec. Inc., No. 12 Civ. 1579 (HB) (JCF), 2013 WL 1195545, at *3 (S.D.N.Y. Mar. 25, 2013) (“The ‘metrics’ set forth in Rule 26(b)(2)(C)(iii) provide courts significant flexibility and discretion to assess the circumstances of the case and limit discovery accordingly to ensure that the scope and duration of discovery is reasonably proportional to the value of the requested information, the needs of the case, and the parties’ resources.”).

The amended FRCP 26(b)(1) is not a dramatic change to the rules, but reflects what courts increasingly have been wont to do: apply a proportionality analysis to disputes over discovery. The following themes are gleaned from relevant case law:

Courts are more likely to limit discovery where the responding party submits evidence demonstrating how prohibitively expensive the discovery demands are, coupled with evidence that the responding party already produced a significant amount of information bearing on the requesting party’s request. See Labaty v. UWT, Inc., No. SA-13-CV-389-XR, 2015 WL 1393641, at *3–4 (W.D. Tex. Mar. 24, 2015) (denying request for documents relating to over 200 customer accounts, which would require an estimated 460 attorney hours for privilege review, after taking into account facts such as the amount in controversy versus the extensive discovery already completed); Univ. of Nebraska at Kearney, 2014 WL 4215381, at *3, *7 (denying additional ESI discovery demanded based on defendants’ showing that they already paid $120,000 to process government’s discovery requests, and absent any evidence of impropriety); Boeynaems v. LA Fitness Int’l, LLC, 285 F.R.D. 331, 341 (E.D. Pa. 2012) (limiting plaintiffs’ discovery requests where defendant already complied with prior production requests, and borne all costs to date).

To address cost and proportionality concerns, courts may limit the temporal and geographic scope of requests. See United States ex. rel. Oughatiyan v. IPC the Hospitalist Co., No. 09 C 5418, 2015 WL 4249195, at *2–3 (N.D. Ill. July 14, 2015) (limiting discovery in case involving potentially national Medicare fraud to only seven states and a specific time period in the interests of proportionality); Glenn v. Williams, 209 F.R.D. 279, 281 (D.D.C. 2002).

Courts may engage in cost-shifting where the principles of fairness demand it. See Boeynaems, 285 F.R.D. at 335 (affirming the court’s power to allocate discovery costs based on principles of fairness); Zubulake v. UBS Warburg LLC, 216 F.R.D. 280, 284, 289 (S.D.N.Y. 2003) (applying seven-factor test for allocation of discovery costs).

Despite the breadth of the former relevance standard, courts may deny motions to compel where the requested documents or information would not have any bearing on disputed issues and facts in the case. See Ossola v. Am. Express Co., No. 13 C 4836, 2015 WL 5158712, at *4, *6 (N.D. Ill. Sept. 3, 2015) (denying document requests to American Express for dialing records where plaintiffs themselves admitted American Express did not make at-issue calls); Uppal, 2015 WL 5026228, at *4 (quashing nonparty subpoena where subpoenaed party determined to have no information related to issues in case); Cohen v. Cohen, No. 09 Civ. 10230(LAP), 2015 WL 4469704, at *4–5 (S.D.N.Y. June 29, 2015) (denying discovery where documents had no bearing on facts of the case or party credibility).

As indicated by the case law leading up to the recent FRCP amendments, courts already have been incorporating proportionality analyses in discovery disputes. The factors set forth by FRCP 26(b)(2)(C)—before amendment—were not regularly applied, however, and they typically only came into play in the context of a motion for protective order. The new FRCP 26(b)(1) allows parties to argue more easily that discovery does not meet proportionality requirements based on the FRCP themselves. As a result, litigators must become more precise in requesting the documents and information actually needed to support their clients’ claims and defenses. If not, they may be left without relief in the event court intervention becomes necessary.

Keywords: litigation, woman advocate, Federal Rules amendments, Rule 26, e-discovery, discovery, proportionality, document requests


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