[Cross-posted at Forbes.com's "On the Docket"]
Discovery - for most, the word evokes feelings of excitement and wonder, images of Einstein or Jacques Cousteau, the voice of Leonard Nemoy or Patrick Stewart introducing a Star Trek episode. But for those who must navigate not the seas or the stars, but our tortuous civil justice system, the term conjures epic nightmares. If a plaintiff’s complaint survives a defendant’s various motions to dispose of the case, the pre-trial process of seeking and producing relevant “documents” commences. Just the specter of what might come out in this process, or the astronomical costs of discovery, regularly forces defendants to the negotiating table to settle otherwise winnable cases. Innovations in storing information and in communicating have exponentially increased the number of documents that are “discoverable,” and rules have been adopted to address such E-discovery. But as a new study conducted by the Searle Center on Law, Regulation, and Economic Growth and distilled in a recent Washington Legal Foundation Legal Backgrounder demonstrates, these rules have not kept up with technology.
As described by GlaxoSmithKline General Counsel Daniel Troy and Senior Counsel John O’Tuel in the WLF paper, “A Toolkit for Change,” the Searle Survey (which was provided to the Federal Civil Rules Advisory Committee) clearly reflects that the current Civil Rules are inadequate and are not being rigorously enforced. The Survey polled corporate counsels on litigation costs, which on average rose 73% over a six-year period. This increase, the poll found, was in large part due to wasteful and inefficient discovery. The Survey relates that it takes 1,044 pages of produced documents to yield one page worthy of use at trial. As Troy and O’Tuel note, this is a utility rate of “one-tenth of one percent for produced documents.”
When federal and state judges are willing to strictly enforce the rules, abuse of the discovery process can lead to punishing consequences. Consider, for instance, a recent case in South Carolina where a narrowly focused dispute between two business competitors inspired one of the litigants to request reams of irrelevant, though certainly revealing data. A state administrative law judge (ALJ) rubber-stamped the discovery request and the South Carolina Supreme Court, in a move it described as “as rare as the proverbial ‘hen’s tooth,’” granted a direct writ of certiorari and vacated the ALJ’s discovery order. The Court acknowledged that the discovery rules are meant to encourage broad disclosure but “there are limits, which we see trial courts generally unwilling to recognize and enforce.” For more on this ruling, Oncology & Hematology Assocs. of S.C., LLC v. South Carolina Dep’t of Health & Envtl. Control, check out the Abnormal Use blog.
The sanction can be even worse for those litigants who are caught withholding critically important documents. In a long-running dispute between military contractors L-3 Communications and Lockheed Martin, Lockheed won a $37.3 million judgment against L-3 for misappropriation of trade secrets. After trial, and while a Lockheed request for L-3 to pay $16 million in legal fees was pending, L-3 notified the judge that it had uncovered documents Lockheed failed to produce at trial. These e-mails revealed that Lockheed had shared the allegedly secret data with a third party, thus terminating the data’s intellectual property protections. Lockheed argued that the e-mails in question were deemed to be “not clearly responsive” to L-3′s discovery request, but the presiding judge disagreed. He not only rejected Lockheed’s attorneys’ fees request, but he also vacated the $37 million verdict. The Fulton County Daily Report, via law.com, has an extensive report on the dispute.
Troy and O’Tuel’s WLF Legal Backgrounder provides a number of suggestions which would reduce the crushing burden of discovery and help return this process to the search for truth that it is meant to be. None of them, of course, will put an end to all Scream-inducing discovery nightmares, but the judges and others responsible for amending the federal rules should give them serious consideration.