Federal Court Offers an Exemplar on Defusing the E-Discovery Litigation Weapon

quickenAny civil litigation target knows that the highest costs of defending a lawsuit arise not from the courtroom or motion work, but from discovery.  Those costs have paradoxically skyrocketed in the digital era.  Though computers made it faster and cheaper to find and disclose documents, the volume of discoverable documents has infinitely increased, inspiring overwhelming production requests that courts must weigh when issuing discovery orders.

As outlined in a WLF Legal Backgrounder, those burgeoning electronic discovery (or e-discovery) demands inspired the U.S. Judicial Conference to amend the Federal Rules of Civil Procedure in 2015.  Among other changes, the amendments altered the scope of discovery under Rule 26 by imposing a stricter proportionality test for e-discovery. 

Under the e-discovery rules changes, federal magistrate and district court judges must take greater care in assessing requested documents’ “relevance to a party’s claim or defense.”  They must also make that relevance determination with several enumerated broader factors in mind, including whether the burdens outweigh the benefits of document production.

A decision from the U.S. District Court for the Middle District of Florida, Nece v. Quicken Loans Inc., is one notable recent example of how judges should weigh e-discovery burdens and benefits while also keeping a firm hand on case management.

As part of her search for a home-mortgage lender, Ms. Nece filled out an interest form on Quicken’s website that included her name and home phone number.  Shortly thereafter a representative called Nece to determine whether she would be interested in borrowing from Quicken.  Nece asked if Quicken had a local office because she preferred to deal with a local lender.  After learning Quicken did not have a local branch, Nece stated that she wasn’t interested in their business and ended the call.

Over the next week Nece received at least seven calls from seven different Quicken employees about the possibility of servicing Nece’s loan.  In response to each solicitation, Nece declined interest.  After the seventh call, Nece filed a complaint with the Florida Department of Agriculture and Consumer Services as well as a lawsuit under the federal Telephone Consumer Protection Act (TCPA).In her lawsuit, Nece alleged violations of TCPA on three counts: (1) that Quicken called with an artificial or pre-recorded voice, (2) that Quicken illegally called a number of the national no-not-call registry, and (3) that Quicken failed to institute sufficient procedures before calling a residential landline.  After engaging in discovery, both parties moved for summary judgment while Nece also moved for leave to amend the complaint to add a claim under Florida law.

The district court first tackled Nece’s motion to amend.  The seemingly frustrated district court judge noted that he had already warned Nece that further attempts to amend her complaint would be “disfavored.”  In denying her motion to amend, Chief Judge Steven D. Merryday explained why Nece’s state-law claim would be futile and how her undue delay in moving to amend warranted a denial of her motion.

Judge Merryday also properly considered the prejudice to Quicken of amending the complaint after six years of litigation.  Noting that Nece’s state-law claim “almost certainly will require extending discovery”—because it was “dependent on different facts than the TCPA claims”—Judge Merryday found that such an extension would unduly prejudice Quicken, especially considering that discovery was to close within a few weeks and a trial date had been selected.  Thus the court would not allow Nece to saddle Quicken with potentially months of additional, expensive discovery, particularly when her new claims were “futile.”

The opinion went on to analyze Nece’s complaint, ultimately granting summary judgment in favor of Quicken on two of the three counts.  But just as important, Judge Merryday used the final portion of his order to demonstrate his case management skills.  He succinctly summarized the coming deadlines for submissions, firmly reminding the parties of the limited timetable to move for class certification if Nece so choses and their pending mediation date.

Discovery is a necessary, albeit burdensome, part of litigation.  However, with assertive judicial leadership on discovery matters and active case management, parties can navigate discovery the process quickly and efficiently.  Judge Merryday’s handling of the plaintiff’s motion to amend in Nece v. Quicken Loans positively reflects what the new e-discovery rules were meant to accomplish.

Also published by Forbes.com on WLF’s contributor page.

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