[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]
COSTS AND BURDENS OF CIVIL DISCOVERY
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON THE CONSTITUTION
OF THE
COMMITTEE ON THE JUDICIARY
HOUSE OF REPRESENTATIVES
ONE HUNDRED TWELFTH CONGRESS
FIRST SESSION
----------
DECEMBER 13, 2011
----------
Serial No. 112-72
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Printed for the use of the Committee on the Judiciary
Available via the World Wide Web: http://judiciary.house.gov
COSTS AND BURDENS OF CIVIL DISCOVERY
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON THE CONSTITUTION
OF THE
COMMITTEE ON THE JUDICIARY
HOUSE OF REPRESENTATIVES
ONE HUNDRED TWELFTH CONGRESS
FIRST SESSION
__________
DECEMBER 13, 2011
__________
Serial No. 112-72
__________
Printed for the use of the Committee on the Judiciary
Available via the World Wide Web: http://judiciary.house.gov
_____
U.S. GOVERNMENT PRINTING OFFICE
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COMMITTEE ON THE JUDICIARY
LAMAR SMITH, Texas, Chairman
F. JAMES SENSENBRENNER, Jr., JOHN CONYERS, Jr., Michigan
Wisconsin HOWARD L. BERMAN, California
HOWARD COBLE, North Carolina JERROLD NADLER, New York
ELTON GALLEGLY, California ROBERT C. ``BOBBY'' SCOTT,
BOB GOODLATTE, Virginia Virginia
DANIEL E. LUNGREN, California MELVIN L. WATT, North Carolina
STEVE CHABOT, Ohio ZOE LOFGREN, California
DARRELL E. ISSA, California SHEILA JACKSON LEE, Texas
MIKE PENCE, Indiana MAXINE WATERS, California
J. RANDY FORBES, Virginia STEVE COHEN, Tennessee
STEVE KING, Iowa HENRY C. ``HANK'' JOHNSON, Jr.,
TRENT FRANKS, Arizona Georgia
LOUIE GOHMERT, Texas PEDRO R. PIERLUISI, Puerto Rico
JIM JORDAN, Ohio MIKE QUIGLEY, Illinois
TED POE, Texas JUDY CHU, California
JASON CHAFFETZ, Utah TED DEUTCH, Florida
TIM GRIFFIN, Arkansas LINDA T. SANCHEZ, California
TOM MARINO, Pennsylvania JARED POLIS, Colorado
TREY GOWDY, South Carolina
DENNIS ROSS, Florida
SANDY ADAMS, Florida
BEN QUAYLE, Arizona
MARK AMODEI, Nevada
Sean McLaughlin, Majority Chief of Staff and General Counsel
Perry Apelbaum, Minority Staff Director and Chief Counsel
------
Subcommittee on the Constitution
TRENT FRANKS, Arizona, Chairman
MIKE PENCE, Indiana, Vice-Chairman
STEVE CHABOT, Ohio JERROLD NADLER, New York
J. RANDY FORBES, Virginia MIKE QUIGLEY, Illinois
STEVE KING, Iowa JOHN CONYERS, Jr., Michigan
JIM JORDAN, Ohio ROBERT C. ``BOBBY'' SCOTT,
Virginia
Paul B. Taylor, Chief Counsel
David Lachmann, Minority Staff Director
C O N T E N T S
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DECEMBER 13, 2011
Page
OPENING STATEMENTS
The Honorable Trent Franks, a Representative in Congress from the
State of Arizona, and Chairman, Subcommittee on the
Constitution................................................... 1
The Honorable Jerrold Nadler, a Representative in Congress from
the State of New York, and Ranking Member, Subcommittee on the
Constitution................................................... 2
The Honorable John Conyers, Jr., a Representative in Congress
from the State of Michigan, Ranking Member, Committee on the
Judiciary, and Member, Subcommittee on the Constitution........ 16
WITNESSES
Rebecca Love Kourlis, Executive Director, Institute for the
Advancement of the American Legal System, University of Denver
Oral Testimony................................................. 18
Prepared Statement............................................. 20
William H. J. Hubbard, Assistant Professor of Law, The University
of Chicago Law School
Oral Testimony................................................. 65
Prepared Statement............................................. 68
William P. Butterfield, Partner, Hausfeld LLP
Oral Testimony................................................. 135
Prepared Statement............................................. 137
Thomas H. Hill, Associate General Counsel, Environmental
Litigation and Legal Policy, General Electric Company
Oral Testimony................................................. 318
Prepared Statement............................................. 320
LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING
Letter from the Department of Justice to the Federal Judicial
Conference..................................................... 4
Letter from the Committee on Rules of Practice and Procedure of
the Judicial Conference of the United States to the Honorable
Jerrold Nadler, Ranking Member, Subcommittee on the
Constitution, Committee on the Judiciary....................... 11
APPENDIX
Material Submitted for the Hearing Record
Letter from the Committee on Rules of Practice and Procedure of
the Judicial Conference of the United States to the Honorable
Trent Franks, Chairman, Subcommittee on the Constitution,
Committee on the Judiciary, submitted by the Honorable Trent
Franks, a Representative in Congress from the State of Arizona,
and Chairman, Subcommittee on the Constitution................. 338
Prepared Statement of Lawyers for Civil Justice, submitted by the
Honorable Trent Franks, a Representative in Congress from the
State of Arizona, and Chairman, Subcommittee on the
Constitution................................................... 343
COSTS AND BURDEN OF CIVIL DISCOVERY
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TUESDAY, DECEMBER 13, 2011
House of Representatives,
Subcommittee on the Constitution,
Committee on the Judiciary,
Washington, DC.
The Subcommittee met, pursuant to call, at 1:39 p.m., in
room 2141, Rayburn House Office Building, the Honorable Trent
Franks (Chairman of the Subcommittee) presiding.
Present: Representatives Franks, Chabot, Jordan, Nadler,
Conyers, Scott, and Quigley.
Staff Present: (Majority) Holt Lackey, Counsel; Sarah
Vance, Clerk; (Minority) Heather Sawyer, Counsel; and Veronica
Eligan, Professional Staff Member.
Mr. Franks. Well, thank you all for being here. I thank
those in the audience and the panel members and the Members
here. I want to welcome you to the Constitution Subcommittee
hearing on the ``Costs and Burdens of Civil Discovery.''
Without objection, the Chair is authorized to declare
recesses of the Committee at any time.
Since January, this Committee and the House of
Representatives as a whole have worked to identify Federal
rules and regulations that impose undue costs and burdens and
destroy American jobs.
Today's hearing examines whether unclear rules governing
discovery in civil litigation are making our civil justice
system too expensive. Rule I of the Federal Rules of Civil
Procedure provides that all of the other rules ``should be
construed and administered to secure the just, speedy, and
inexpensive determination of every action and proceeding.''
Current discovery rules appear to fall short of this ideal.
Instead of encouraging quick, fair and affordable fact-
finding, the current system of civil discovery encourages
parties to bury each other in onerous requests for more and
more data of dubious evidentiary value. The problem is
exacerbated by the explosion of potentially discoverable data
in our digital world. The amount of data generated in the world
is increasing geometrically today, doubling every 2 years. In
2010, the world created the zettabyte, which is 1 billion
terabytes of data.
By comparison, it is estimated that if one scanned every
book and magazine in the entire Library of Congress, it would
equal about 136 terabytes of information. This means that in
the year 2010 alone, the world produced as much data as could
be contained or would be contained in 7.4 million Libraries of
Congress. The cost of retaining, collecting, producing and
reviewing all of the data that may be subject to discovery runs
from tens of thousands of dollars in a typical case to many
millions of dollars in a larger case.
The costs of civil discovery are increasing because the
discovery rules are too vague. Current law gives parties little
guidance as to what discoverable information truly is, when
they are required to preserve information, and what their
discovery obligations are. But the sanctions for running afoul
of a court's interpretation of the discovery rules can be
onerous, including striking a party's pleadings or adverse jury
instructions. These vague standards and harsh sanctions combine
to leave parties with little or no choice but to err on the
side of preserving more documents and data, driving costs
higher still.
This system imposes considerable costs on American
businesses, forcing them to spend money that could be put to
more productive uses. It also makes access to the justice
system more expensive for individuals and businesses alike.
Everyone agrees that parties to civil litigation are entitled
to discovery of relevant documents in the other party's
possession, and that destruction of evidence for the purpose of
preventing its use at trial should be sanctioned. Even a
perfect discovery system would still cost money, but the
current system is inefficient and costs far more money than
needed to do justice.
The high costs of discovery have led to a world in which
cases are often resolved based upon the parties' ability to
impose discovery costs on one another instead of the merits of
their respective cases. The result is that many meritorious
cases are not brought because the cost of litigation exceeds
the plaintiff's likely recovery.
Other cases settle based on the cost of litigation rather
than the merits. As one of our distinguished witnesses, Justice
Rebecca Kourlis has written, ``The status quo is not good
enough. We created the current system. We must now create a
better one.''
The Civil Rules Advisory Committee of the Judicial
Conference is currently considering proposed rule changes to
address many of these issues, and I salute their efforts and
look forward to their recommendations. Today's hearing is part
of the same effort to create a better civil discovery system,
and I hope that today's hearing helps return the rules of civil
procedure to their purpose, ``to secure the just, speedy, and
inexpensive determination of every action and proceeding.''
With that, I thank you all for being here and would like to
recognize now the distinguished Mr. Nadler for his opening
statement.
Mr. Nadler. Thank you, Mr. Chairman.
Nothing in the title of today's hearing even remotely
acknowledges any upside to civil discovery or recognizes its
role in allowing parties and the courts to uncover the facts so
that cases can be resolved based on the merits and in a timely
and just manner. Discovery allows for early testing of claims,
helping to cull those without merit and encouraging prompt
resolution where culpability is revealed, and it minimizes the
ability of any party to conceal facts or otherwise rely on
gamesmanship or surprise.
Electronic discovery, while unquestionably posing new
challenges and burdens, has proven particularly valuable in
uncovering critical evidence and improving accountability. For
example, in a fraud lawsuit brought against the Swiss bank UBS
AG related to sale of asset-backed securities, the types of
securities that led to massive defaults on debt tied to
subprime mortgages and to a worldwide credit crisis, email
exchanges revealed employees referring to the asset-backed
securities that they were selling as ``vomit'' and ``crap.''
In a Medicaid fraud case brought against a pharmaceutical
company for inflating prices of its drugs, the Attorney General
of Mississippi attributed a $38.2 million verdict to the
discovery of emails from a drug company executive revealing the
pricing scheme.
As Attorney General Jim Hood explained, ``It took a lot of
hours and expense for the State to uncover these types of
smoking gun documents to make our case. The facts are clear
that the company used voodoo math to defraud the State.''
We should not lose sight of the tremendous benefits of
discovery in our focus on its alleged costs and burdens. And
while we undoubtedly will hear much today about an urgent need
to change our civil discovery rules to address skyrocketing
discovery costs, that claim is not shared by many of the key
experts and stakeholders in our civil justice system.
In preliminary views provided to the Advisory Committee on
Civil Rules of the Judicial Conference of the United States
regarding reform of discovery rules, the Department of Justice
has expressed, ``Significant concerns that a rule is being
considered without adequate empirical evidence that a rule
change is, in fact, needed.''
The Justice Department is involved in one-third of all
Federal civil cases, either as a plaintiff or a defendant. Its
views on this issue should not be taken lightly, and I ask
unanimous consent to include the DOJ's September 7 letter to
the Federal Judicial Conference in the record of today's
hearing.
Mr. Franks. Without objection.
[The information referred to follows:]
__________
Mr. Nadler. Thank you.
The Committee on Rules of Practice and Procedure of the
Judicial Conference also sent a letter to the Subcommittee for
this hearing. And I ask that a copy of that letter be included
in the record as well.
Mr. Franks. Without objection.
[The information referred to follows:]
__________
Mr. Nadler. Thank you. The Judicial Conference is the body
that Congress has charged with responsibility for making rules
governing ``practice, procedure and evidence'' in the Federal
courts and, as explained in its letter to the Subcommittee, the
``process for examining and addressing concerns [regarding the
costs, burdens, and delays of discovery in civil cases] is
already well underway.''
The Judicial Conference Advisory Committees have conducted
empirical research, reviewed existing statutes, regulations,
and rules to assess how potential changes would interact with
existing obligations, and have sought input from hundreds of
judges and lawyers.
In light of the considerable work that has and will
continue to be done, the Judicial Conference's rules advisory
committee, ``Urges us to allow the Rules Committee to continue
their consideration of these issues through the thorough,
deliberate, and time-tested procedure Congress created in the
Rules Enabling Act.''
Through this same process, we recently amended the civil
discovery rules to address concerns about the increased costs
and burdens of electronic discovery. Those amendments were made
in 2006, a mere 5 years ago, and they emphasize greater
coordination and cooperation among lawyers and parties to
lawsuit driven by increased court oversight and management.
Through these amendments, litigants can take advantage of
the fact that existing rules require consideration of whether
the costs of discovery outweighs potential benefits.
Indeed, existing Federal Rules of Civil Procedure,
26(b)(2)(C) tells courts that they must limit discovery if,
among other things, ``the burden or expense of the proposed
discovery outweighs its likely benefit, considering the needs
of the case, the amount of controversy, the partyies'
resources, the importance of issues at stake in the action, and
the importance of the discovery resolving the issues.''
Existing rules already require proportionality, and early
and consistent efforts by parties and the courts to manage
discovery. Before anyone rushes to amend the rules, we should
first make sure there is a clear need to do so.
I urge similar skepticism and exploration with regard to
the claimed need to amend the rules to standardize preservation
obligations or to revise discovery sanctions. The Justice
Department is cautioning that language addressing these
particular issues might, ``Create new unworkable burdens on the
Federal Government, and would not result in the consistency or
predictability sought.''
While the need for revision of the rule seems far from
clear, the potential for significant and unlikely--I'm sorry--
the potential for significant and likely unintended
consequences, at perhaps a much greater cost, from making
amendments is not.
Given that, I am particularly interested in learning from
our witnesses today how the committees of the Judicial
Conference who are studying these issues have responded to
their concerns and any recommendations that they have made to
that body.
With that, I yield back the balance of my time.
Mr. Franks. I thank the gentleman. I yield now to the
distinguished Ranking Member of the full Committee, Mr.
Conyers.
Mr. Conyers. Thank you very much, Mr. Chairman.
We're here today to consider what could be a very important
issue that concerns the Judicial Conference, the Federal
Judicial Conference and the first question that has to arise
is, they have been working on this for a considerable period of
time, and on behalf of all those that are wondering why are
they not scheduled as witnesses at this hearing on a subject
matter that they have been working on longer than the Committee
has, and so I would yield to our distinguished Chairman if he
cares to respond to that part of my opening statement.
Mr. Franks. Mr. Conyers, we conferred with those--did you
ask me to respond to your question, sir?
Mr. Conyers. Yes.
Mr. Franks. Okay, I am sorry. I didn't want to--we did
confer with some of those judges that they felt that a letter
would be more appropriate since they were Article III judges,
it wouldn't be appropriate for them to come to the Committee,
just to clarify.
Mr. Conyers. Well, then apparently their letter may not
have been as persuasive upon you as they would have hoped that
it would, because you determined to continue the hearings
anyway.
Now, let's be clear about this, we're talking about the
largest kinds of cases, civil cases, that we can have. These
are the very large corporation cases, and I should report to
you that the Federal Judicial Conference pointed out that less
than one-tenth of 1 percent of the total number of cases would
fit the requirements of what it is we're discussing here today.
And, even so, that only a fraction of those one-tenth of 1
percent of the cases have the courts granted sanctions.
And so what we're talking about is a small handful of
cases, and this suggests that this may have--this whole hearing
may be based on some corporation insisting that they be heard
about this matter, and it would seem to me, gathering this much
evidence, is an indication of creating jobs, not costing jobs.
And so it's, to me, a very interesting look inside the court
procedures.
I think we have to remember that the Judicial Conference
has been conducting themselves appropriately over the years, as
far as I am concerned. Their recommendations, if any, could
have come out from the Civil Rules Committee in--next spring.
The Standing Committee of the Judicial Conference could have
approval by the summer of next year. It would go to the full
Judicial Conference in the fall, September of next year, then
to the Supreme Court the end of the year. And then it would
then go to the Congress in the summer of June, 2013, and we in
the Congress--I am trusting that all of the Members, including
myself, will be back in June of 2013--in which time we would
have 6 months to approve or disapprove the recommendations of
the conference committee.
Now, I want to ask the witnesses, the distinguished
witnesses that will appear before us, and the Members of the
Subcommittee, what's wrong with this timeline and why are we
complaining about this when it is not a confidential or secret
matter, and we could get this with another letter.
So I approach this hearing with the kind of skepticism that
has been voiced in my opening statement, and I thank the
Chairman.
Mr. Franks. And I thank the gentleman for his opening
statement.
And now, without objection, other Members' opening
statements will be made part of the record and I would invite
the witnesses to come forward and be seated at the table. I
want to welcome all of you again here this afternoon.
Our first witness is Rebecca Love Kourlis. She is a former
justice of the Colorado Supreme Court. She is now the Executive
Director of the Institute for the Advancement of the American
Legal System at the University of Denver. One of the areas in
which the Institute works is its rule 1 initiative, which seeks
to make the civil justice system more accessible, efficient and
accountable.
Our second witness, Professor William Hubbard, is an
Assistant Professor of Law at The University of Chicago Law
School. Professor Hubbard holds both a J.D. and a Ph.D. in
economics from The University of Chicago. Professor Hubbard's
current research primarily involves economic analysis of
litigation, courts and civil procedure, including conducting
empirical research on the costs of electronic discovery.
Our third witness, William Butterfield, is a partner and
the chair of the financial services practice group at
Hausfield, LLP, in Washington, D.C. Mr. Butterfield is on the
steering committee of The Sedona Conference Working Group on
Electronic Document Retention and Production, nice short name,
Mr. Butterfield. Mr. Butterfield is also an adjunct professor
at American University where he teaches a course in electronic
discovery. He is on the faculty of Georgetown University Law
Center's Advanced E-Discovery Institute.
And our fourth and final witness, Thomas Hill, is the
Associate General Counsel For Environmental Litigation and
Legal Policy at General Electric Company. Over his 20-year
career at GE, Mr. Hill has managed some of the company's most
complex litigation and gained first-hand experience of the
costs and burdens of civil discovery. Prior to joining GE, Mr.
Hill practiced law in Michigan.
And welcome again to all of you. Each of the witnesses'
written statements will be entered into the record in its
entirety. I would ask that each witness summarize his or her
testimony in 5 minutes or less. And to help you stay within
that timeframe, there is timing light on your table. When the
light switches from green to yellow, you will have 1 minute to
conclude your testimony. When the light turns red, it signals
that the witness' 5 minutes have expired.
So before I recognize the witnesses, it is the tradition of
this Subcommittee that they be sworn, so if you would please
stand.
[Witnesses sworn.]
Mr. Franks. Thank you. Please be seated. I would now
recognize our first witness, Justice Rebecca Kourlis, for 5
minutes.
TESTIMONY OF REBECCA LOVE KOURLIS, EXECUTIVE DIRECTOR,
INSTITUTE FOR THE ADVANCEMENT OF THE AMERICAN LEGAL SYSTEM,
UNIVERSITY OF DENVER
Ms. Kourlis. Mr. Chairman.
Mr. Franks. Pull that microphone to you, Ms. Kourlis, just
a little closer and then push the button.
Ms. Kourlis. Down?
Mr. Franks. Yes.
Ms. Kourlis. There we go, thank you very much.
Thank you for the opportunity to be here and for your
interest in this subject.
As a trial court judge in Colorado, and a member of the
Colorado Supreme Court, and now as the executive director of
IAALS at the University of Denver, I have become increasingly
concerned about the functioning of the civil justice system.
Over the three decades of my involvement on every side of
the bench, it has become more and more expensive and,
accordingly, inaccessible and mistrusted. As you have heard,
one of the areas of focus for IAALS is, indeed, the civil
justice process. We have done surveys, conducted legal research
and docket studies. We have convened groups of stakeholders,
including the American College of Trial Lawyers' Task Force,
which consists of plaintiff and defense attorneys, and we have
promulgated recommendations for change.
The bottom line in what we have learned is reflected in the
title of this hearing. The civil justice system in the United
States is too expensive and too complex. A lawsuit takes too
long and costs too much, and this is not just about big cases.
Recent studies show that attorneys will not even take a case
unless there is at least $100,000 at issue and lawsuits do,
indeed, frequently settle for reasons related to the costs of
litigation, not the merits of the lawsuit.
As you will hear in more detail from other witnesses, the
advent of the electronic age has, indeed, added a whole new
layer of complexity and corporate counsel will say that if a
case involves $2 to $3 million in legal fees, electronic
discovery can easily add another 2 to 3 million.
Civil jury trials have all but vanished, and that's a very
bad thing. The involvement of citizens in the court system,
both infuses common sense and provides another check and
balance. The culprit seems to be, to some significant extent,
the way in which the pretrial process unfolds.
All of us here at this table and most of the bench and bar
across the country, share a commitment to the preservation and
realignment of the system. I would venture to say all of us
would say that the goal of the pretrial process is to protect
the search for the truth, but in a way that keeps the doors of
the courthouse and the jury box open, a way that maintains
certainty, efficiency and fairness, and these are not
inconsistent goals.
The solutions to these problems that are being addressed
across the country and that you will hear addressed here today
generally fall into three categories, rules changes, more
effective judicial case management and cooperation among
attorneys during the discovery phase of the trial. IAALS
supports all three, the need for early judicial intervention,
attentive and astute case management by judges, the need for
cooperation and professionalism among counsel.
However, it is IAALS' view that real change will only be
institutionalized if it is accompanied by rules changes.
Otherwise, it runs the risk of being episodic courtroom by
courtroom or case by case.
The Standing Committee and the Civil Rules Advisory
Committee are struggling with these issues. The mandate of the
judicial conference and the court is, indeed, to assure that
the system is truly just, speedy and inexpensive. This is a
problem that is bigger than a preservation rule.
Some of the steps that the Judicial Conference will need to
take to meet the goal of a just, speedy and inexpensive system
will require courage and leadership. All of us defer to the
Judicial Conference in that role, but all of us have a stake in
the outcome far beyond the application of civil cases filed in
Federal courts. It is not an overstatement to say that the
public trust and confidence in the system is at stake.
Our system must work for plaintiffs and defendants alike,
it must be accessible and efficient. Our social contract
depends upon it.
Thank you.
Mr. Franks. Thank you, Justice Kourlis.
[The prepared statement of Ms. Kourlis follows:]
__________
Mr. Franks. And now we will recognize Mr. Hubbard for 5
minutes, sir.
TESTIMONY OF WILLIAM H. J. HUBBARD, ASSISTANT PROFESSOR OF LAW,
THE UNIVERSITY OF CHICAGO LAW SCHOOL
Mr. Hubbard. Thank you, Chairman Franks and Ranking Member
Nadler for this opportunity to testify.
I'm going to begin by simply highlighting a few of the
points with respect to the empirical data on the cost of
litigation, discovery and preservation in particular.
I'm going to begin with the data on the cost of litigation
and discovery. In this context, I mean the cost of the
processing, review, and production of documents and data in
litigation. The studies that address the costs of litigation
discovery do not include in those costs the costs of
preservation. I'm going to address those separately in a
moment.
A recent major study shows that most cases in Federal court
involve relatively modest spending on discovery. According to
the study, the median case in Federal court has about $35,000
in litigation costs split between the Plaintiff and the
defendant. And of these costs, about one-third is attributable
to discovery.
In the median case, then, discovery costs do not appear to
be overwhelmingly high. One needs to be careful in interpreting
this data, however. If cases settle in order to avoid what
would have been high discovery costs, we are unable to observe
those costs, and those will not show up in the data.
Furthermore, the median case is not representative of the
entire distribution of cases, and in this respect, I'm drawing
not only on the data from the FJC study, which was referenced
in the comments earlier, but also a number of other studies
focusing on the costs of litigation, and my own interpretation
of data that I have collected.
The median case is not representative of the entire
distribution of cases. In fact, the distribution of litigation
and discovery costs has what I'd like to refer to as a long
tail. There are many cases that have relatively modest costs,
but a small but substantial number of cases whose costs vastly
exceed the cost of the median case.
In this respect, looking only at the Federal Judicial
Center study data, we see that the top 5 percent of cases have
discovery costs that go into the hundreds of thousands of
dollars. And, in fact, the distribution of costs is so skewed
that the top 5 percent of cases in terms of litigation costs
account for 60 percent of all litigation costs. This data
suggests that this long tail of extreme outliers may have a
great impact on the overall costs of the civil justice system.
I'll now turn to the costs associated with the preservation
of data. Here I'm going to highlight two findings. First, it
appears that the costs of preservation, much like the costs of
discovery, are highly skewed. There are a large number of
matters that have a moderate amount of preservation and a long
tail of matters in which the preservation burdens are very high
and very costly.
Secondly, there are many matters for which there are little
or no discovery or litigation costs in the sense that I
discussed above, but nonetheless have preservation costs and
may, in fact, have very high preservation costs. This is
because there are many cases that settle either before a
lawsuit is filed or shortly after a lawsuit is filed and
therefore have very little attorneys' fees.
To the eyes of judges and outside counsel, these cases
appear to be relatively inexpensive to the system. But to a
party that has had to preserve large amounts of data in
anticipation of litigation, the cost of that matter could be in
the tens or hundreds of thousands of dollars.
This is because, under current law, which is the product of
judicial decisionmaking, parties are required to disrupt or
alter their normal business activities for the sake of
preservation, even before a lawsuit is filed. This brings me to
the question of how the Federal rulemaking process might reduce
the cost and burdens of the civil litigation system. In this
respect, the rules need to create incentives for the proper
consideration of both the costs and benefits of preservation
and discovery.
As I mentioned, under current law, there's an obligation
imposed on parties not only in Federal court to abide by
Federal judicial decisions on preservation, but also parties
outside of Federal court, and, in fact, parties who may
anticipate litigation but, in fact, never end up in Federal
court, are, nonetheless, obligated to observe these rules with
respect to preservation and incur the costs of preservation,
even if, as I said, the matters for which they are preserving
do not end up in court, let alone any Federal court.
Clear Federal rules should help to reduce the ambiguity and
overbreadth of current case law and reduce the costs of civil
litigation to society. Thank you.
Mr. Franks. Thank you, Professor Hubbard.
[The prepared statement of Mr. Hubbard follows:]
__________
Mr. Franks. We will now hear from Mr. Butterfield.
TESTIMONY OF WILLIAM P. BUTTERFIELD,
PARTNER, HAUSFELD LLP
Mr. Butterfield. Thank you, Mr. Chairman, Ranking Member
Nadler, Members of the Subcommittee. The purpose of discovery
under our Federal rules is not a trivial one. The purpose of
our civil justice system is to determine the truth and decide
cases on the merits, and this depends on discovery of the
facts. Making sure that cases get decided on the merits is one
of the primary reasons why Congress stressed the ability to
obtain discovery when it instituted the Federal Rules of Civil
Procedure in 1938. Now, you have heard a lot, and you will hear
undoubtedly a lot more today about the exorbitant costs of
discovery, the costs of overpreservation and the urgent need to
rein in those costs.
But here's what you need to know. Let's talk about
discovery costs in general. There's no question that in the
electronic age, litigation has dramatically changed the way
discovery is conducted and has increased the complexity and
difficulty of discovery. But, even so, discovery costs are not
significantly higher than they were 15 years ago. Objective
empirical data--and that primarily comes from the Federal
Judicial Conference--demonstrates that discovery costs for
cases involving electronic discovery are about $30,000 to
$40,000 at the median, and they're also modest in comparison to
the stakes of the litigation and in comparison to the total
litigation costs.
Those who promote drastic changes to the Federal rules on
discovery concede this because they must. Instead, they focus
on what they admit are the outliers, and you have just heard
Professor Hubbard talk about it. Discovery costs in the largest
cases involving the largest corporations, what professor
Hubbard refers to as cases in the long tail, the top 5 percent,
most complex and costly cases.
Well, it should come as no surprise to anyone here that
discovery in those cases is costly. It always will be because
there always will be some large, important and complex cases,
but amendments to the Civil Rules won't change that. And
clarifying the Rules of Civil Procedure that apply to all
300,000 cases filed annually, to address the complexities in a
few thousand of those cases, poses substantial risks to our
civil justice system.
So what do we know about the costs of preservation
specifically? Well, as Professor Hubbard has acknowledged, our
knowledge of that is rudimentary. We know next to nothing.
And what about sanctions? Are they out of control? One of
the things you are being told here today is that companies are
overpreserving because there's no clarity by courts regarding
sanctions. They're overpreserving and bearing the costs of that
over-preservation because they sold fewer sanctions.
What we do know is that the risks of sanctions for
inadvertent failure to preserve documents is minimal. The data
support that. A recent study by the Federal Judicial Conference
showed that motions for sanctions were sought in just one-
fifteenth of 1 percent of the cases that were studied, one-
fifteenth of 1 percent. They were granted in only more than
slightly half the time.
So if my math is correct, you have about a one-thirtieth of
1 percent chance of getting sanctioned for evidence
spoiliation. As one e-discovery expert suggested the other day,
you have a better chance of getting struck by lightning than
getting sanctioned for failure to preserve.
Beware of the unintended consequences here. Let me give you
a few examples. One of the proposals would seek to apply
preservation obligations only for loss of material information.
Now, how do you know what is material? It's hard enough to know
what's relevant before a lawsuit is filed or before we get very
far in litigation. It's even more difficult to figure out
what's material to that litigation.
Another proposal would trigger preservation only on the
filing of a complaint. So what happens when critical
information gets destroyed between an event and the filing of a
lawsuit where it's obvious that litigation will follow that
event? Wouldn't this type of standard eviscerate long-standing
statutes of limitation by forcing people to file lawsuits
immediately without any opportunity to work things out before a
lawsuit is filed, and wouldn't that cause more lawsuits to be
filed? Wouldn't companies spend more money to litigate those
lawsuits that were being filed?
Companies say that they're worried about their reputation
when they get sanctioned. Shouldn't they worry about their
reputation when lawsuits are filed against them, and more
lawsuits will be filed against them if people have to rush to
the courthouse.
Another proposal calls only for sanctions regarding willful
conduct. What we do when conduct is not in bad faith, though a
simple mistake, causes a complete loss of evidence to the other
party.
What do we tell the other innocent party in that case?
Sorry, you're out of luck. Tough luck, you're out of court? We
suggest that it's not appropriate to rush to amend the rules at
this time. The Federal Judiciary Conference is closely studying
it, and they should be allowed to continue.
Thank you.
Mr. Franks. Thank you, Mr. Butterfield.
[The prepared statement of Mr. Butterfield follows:]
__________
Mr. Franks. We will now recognize Mr. Hill.
TESTIMONY OF THOMAS H. HILL, ASSOCIATE GENERAL COUNSEL,
ENVIRONMENTAL LITIGATION & LEGAL POLICY, GENERAL ELECTRIC
COMPANY
Mr. Hill. Mr. Chairman and Members of the Subcommittee,
thank you for the opportunity to appear here today. My name is
Thomas Hill, and I am the associate general counsel responsible
in part for Environmental Litigation and Legal Policy for GE.
We at GE are pleased to assist the Subcommittee as it examines
the important issues related to the cost of discovery and, in
particular, the costs associated with preservation that burdens
potential litigants in the United States.
Today, American companies incur litigation-related costs
that provide minimal discovery benefit to the courts, the
litigants or the jury. In this tough economic environment, the
current Federal Rules of Civil Procedure result in parties,
primarily American companies, wasting billions of dollars on
unnecessary document preservation and production.
I was a trial attorney in Michigan before joining GE in
1991. I witnessed the explosion of electronically stored
information, or ESI, and its impact on litigation and dispute
resolution. Because preservation rules are unclear, American
companies are forced to guess what claims might be brought, do
their best to preserve an unspecified amount of information for
an indefinite period of time and at great cost. Much of this
information will never be reviewed, never be produced and never
see the inside of a courtroom.
Let me discuss two real-world examples of the costs imposed
by the current rules and describe how the economy will benefit
without harm to the judicial process if there is some increased
clarity in these rules.
First, it's the cost of preservation without litigation.
Under the current standard, GE preserves documents whenever it
reasonably anticipates litigation, even though no case may ever
be filed. The rules apply, but there's no litigation. Because
no court has jurisdiction, there's no opposing counsel, GE
cannot negotiate or seek direction to confirm or otherwise
adjust the scope of what we preserve.
This example, which is explained in greater detail in my
written statement, is relatively simple. It's a narrow case. It
involves only 96 custodians, I would point out in a company the
size of General Electric, it wouldn't be out of the ordinary
for hundreds or even thousands of people to be involved in a
subject matter.
But in spite of this relatively narrow scope, over time,
these 96 people have created over 3.8 million documents, which
total 16 million pages of data. Simply collecting, storing,
coding these documents to comply with a potential discovery
request, has cost $5.4 million. It costs another $100,000 a
month just to store the data.
We haven't spent any money actually looking at the
information. We're just saving it.
Additionally, these individuals will create another million
documents every year, adding to the cost. So let me repeat.
Although no case has been filed, and no case may ever be filed,
the rules required GE to save these documents, and we've spent
$5.4 million in fees.
This preservation problem is exacerbated once litigation is
filed. Storing ESI creates a disproportionate increase in
discovery costs. I have a case where the amount in dispute is
less than $4 million. However, in order to comply with
preservation and discovery applications, we've collected,
preserved and produced over 3 million documents generated by 57
people. Each of those documents had to be reviewed BY lawyers
and produced in accordance with the rules.
So that $4 million claim has resulted to date in about $6
million in discovery costs. As a result, opposing counsel has
little incentive to meet and confer to reduce this burden.
As a practical matter, courts typically assume that we will
bear the burdens of the cost of production. Once produced, many
individuals fail to actually review the vast majority of
documents that have been produced. Rarely do courts consider
cost shifting, which can incentivize an efficient focus on
information necessary to prove a case.
This creates a perverse incentive which becomes leverage to
skew dispute resolution, not on the merits, but on the
economics. This is money wasted. These two examples
unfortunately are closer to the norm and not really the
exception to the rule.
With clearer rules, including a narrower scope to avoid
this waste, the discovery process will be faster, more fair.
Litigants can have disputes resolved on the merits, and the
savings can be used to create jobs, invest in the future and
benefit the U.S. economy.
We will continue to work with the Judicial Conference Rules
Committee in its efforts to develop amendments to the rules
that will help solve some of these preservation problems, as
well as others. We agree with the diverse spectrum of
stakeholders who feel reform should be implemented now, and we
applaud the efforts of the Subcommittee in exercising its
oversight role over the Rules Enabling Act. Thank you.
Mr. Franks. Thank you, Mr. Hill, and I would thank all of
the witnesses for their testimony.
[The prepared statement of Mr. Hill follows:]
__________
Mr. Franks. I will now begin the questioning by recognizing
myself for 5 minutes.
Professor Hubbard, I'll begin with you, sir. You estimate
that rules clarifying a trigger and scope of preservation
obligations would save billions of dollars for American
businesses. Now while these savings would be most apparent in
the largest cases that make up the long tail of discovery
costs, wouldn't it be--wouldn't clearer rules save at least
some money in even the other cases, in all cases?
Mr. Hubbard. I certainly would expect that to be the case,
particularly with respect to preservation, because there are
many situations in which, as I mentioned before, preservation
costs are incurred, but litigation and discovery costs are not
incurred. And judging from the fact that for many large
companies, there have been statements to the effect that
somewhere between perhaps 40, 60, or 70 percent of their
matters involving preservation are not--do not correspond to an
active, filed lawsuit, a rule clearly establishing the boundary
time in which the obligation to preserve is triggered would
reduce, essentially, by 100 percent, the preservation costs
associated with those cases no matter how large or how small
they are.
Mr. Franks. Well, thank you, sir.
Justice Kourlis, some have argued that any savings realized
by clarifying discovery and preservations rules would come at
cost to the quality of evidence produced in litigation and the
court's ability to find facts and to do justice.
Do you agree with this analysis, or do you believe that we
can better define discovery obligations without sacrificing
courts' core mission?
Ms. Kourlis. Mr. Chairman, the latter. I clearly believe
that we can better define and manage cases, including
discovery, without sacrificing justice. Furthermore, I believe
that the failure to do so sacrifices justice every day because
of the cases that can't be filed and the cases that are settled
on the basis of the costs of litigation.
Mr. Franks. Well, thank you. Mr. Hill, as far as the
challenges faced by GE, are they the same as those faced by
small businesses?
Mr. Hill. Not really. Companies our size produce a
significant amount of electronically stored information. I
mean, it stands to reason that the larger the company, the more
the employees, the more complex the organization, the more data
you produce.
So the burden on us is really in the preservation
prelitigation. We probably can handle it a little bit better
than a smaller company, it doesn't mean that we should have to
or that it's a benefit. I think the impact on smaller
businesses though, under the current rules, is once discovery
has been filed. You take a small company that has a limited
amount of staff, limited resource, but still have computers.
Once litigation is filed, they have the same obligations that
anyone does; they have to collect that information, sort it,
review it and produce it.
For a small company, reviewing the kind of data that even
10 people can produce would be inordinately expensive, and I
would suggest the burden on them is even greater than on us.
Mr. Franks. Well, that seems to be a pretty compelling
point that goes to Justice Kourlis' points. You know, the
interest of courts should ultimately be justice and if, indeed,
it is just too expensive for some of the smaller entities to
access that justice, then justice is denied.
And I, again, appreciate all of your testimony. And I am
now going to recognize the Ranking Member for 5 minutes.
Mr. Nadler. Thank you, Mr. Chairman.
Justice Kourlis, you testified about the burden of
discovery and so forth, as have everybody, and obviously that's
a concern to us. You say in your testimony the Standing
Committee is the appropriate forum for the discussion, both
immediate and the long-term discussion, but it is a discussion
which all of us have legitimate and significant stake. So do
you think that that's the proper place for resolution of this,
or do you see any role for Congress at this point in terms of
any legislation?
Ms. Kourlis. I don't see a role for Congress in terms of
legislation. Congressman, I do, however, see a role in terms of
level of attention and focus and interest. This clearly is a
very significant problem. I welcome the opportunity to have all
of you be made aware of the nature of the problem and aware of
the efforts that are being undertaken to address it.
Mr. Nadler. You think that the best forum for addressing it
is the standing committee?
Ms. Kourlis. Yes, at present I do.
Mr. Conyers. Would the gentleman yield?
Mr. Nadler. I'll yield.
Mr. Conyers. Have you written or contacted the Judicial
Conference about this subject?
Ms. Kourlis. Oh, yes, indeed, Congressman, yes.
Mr. Conyers. Well, do you----
Ms. Kourlis. I think, actually, I can say that all of us
have appeared----
Mr. Conyers. Well, no, I don't think all of you have.
Ms. Kourlis [continuing]. Have appeared in that forum for
purposes of addressing these issues.
Mr. Conyers. No, I don't think so. I didn't hear anybody
else say. Tell me about your----
Mr. Franks. Perhaps you could clarify that. Have others
been to testify in that forum? Perhaps you could----
Mr. Conyers. Yes. Let's let everybody testify for
themselves.
Ms. Kourlis. Okay.
Mr. Conyers. But tell me what it is that you recommended.
Ms. Kourlis. Congressman, our recommendations in my little
corner of the world, the Institute at the University of Denver,
where I live and work, is a streamlining and a reworking of the
pretrial process in the civil justice system in an effort to
try to assure that the process, is indeed, more streamlined,
more efficient, more case-specific so that more cases get to
jury trial, so that more cases can be resolved on the merits
and fewer cases suffer from what former Chief Justice of the
State of New Hampshire, John Broderick, calls trial by
attrition as distinguished from trial by jury.
Mr. Nadler. Thank you. I assume we can get a copy of some
of that?
Ms. Kourlis. You bet.
Mr. Nadler. Mr. Butterfield, some proponents of reform seek
amendment of Rule 37 to revise rules for sanctions with
particular focus on sanctions with regard to the duty to
preserve.
How, if at all, has the 2006 amendment to Rule 37(e) to
provide a safe harbor for loss of electronically stored
information help with this concern?
Mr. Butterfield. Congressman Nadler, those are those who
criticize Rule 37(e), have said that the safe harbor is rather
shallow. The safe harbor applies to sanctions for spoiliation,
where the rules apply, so they are usually sanctions where
there's been a violation of the preservation order.
But, if you take a look at the case law out there, and the
case law goes far beyond Rule 37(e), the case law makes it
pretty clear that people and companies are not getting
sanctioned for conduct that is not egregious. That's the key
component.
You know, there's lots----
Mr. Nadler. And obviously they shouldn't be sanctioned if
their conduct is not egregious?
Mr. Butterfield. They're not getting sanctioned for good
faith conduct. They're getting sanctioned for conduct that's
clearly in bad faith, clearly egregious. So a lot of the
concern here, in my opinion, is overblown.
Mr. Nadler. Thank you. Mr. Hill, your focus is on the need
to preserve in order to defend against a lawsuit. Businesses,
however, also have an interest in preserving information
because they might, after all, be the party bringing a lawsuit,
or because otherwise required by law.
How do you accurately separate, within your overall
practices, for retaining requisite information, costs related
solely to anticipation of litigation presumably where you might
be a defendant, as I presume you're not complaining about costs
where you want to sue someone else. And how do you respond to
the DOJ's concerns that specific preservation rules might
conflict with other existing obligations to retain records?
Mr. Hill. Actually, the preservation rules impose costs
whether you are a plaintiff or a defendant, and that raises the
issue that there is a difference between the cost of
preservation for litigation purposes, and the cost of
preservation in the ordinary course of business, and I think
that's an issue that----
Mr. Nadler. Excuse me, why would that be?
Mr. Hill. Because a company generates data for its normal
business operations. For example, we manufacture jet engines.
There are engineering diagrams. There's all kinds of data that
are used by that organization while we continue in that product
line, and that information will exist under our normal document
preservation rules for, in many instances, decades, certain
kinds of data.
Mr. Nadler. You figure out how to make a better jet engine.
Mr. Hill. The Federal rules, however, impose a separate,
distinct and duplicative obligation in that once we believe
that there is a reasonable chance of litigation, we have to
take that electronic information and remove it from our normal
course of business, create a separate platform to store it and
save it and incur those costs so that we can demonstrate in a
courtroom, and only in a courtroom, that that information has
not been, in any way, altered.
That doesn't, in any way, help the business model. It's not
something that we would do normally, and it is simply a cost.
And as I indicated in my earlier testimony, we do that time and
time again when litigation is never filed, and we also do it in
times where litigation is filed and then it's not requested.
Mr. Nadler. And the second part of my question, which is,
how do you respond to the DOJ's concerns that specific
preservation rules that we might try to write might conflict
with other existing obligations to retain records?
Mr. Hill. It's not clear to me that that's accurate. We
have obligations to preserve documents from regulatory reasons,
for example. And I just believe that the courts and the
Congress should sit down and determine what is the most
efficient way to protect information to allow people to have a
fair trial and not have the cost of litigation drive the
outcome of that trial.
The Justice Department is entitled to its opinion. I have
seen the growth and cost of this, and it is impacting the
system.
Mr. Nadler. Thank you, my time has expired.
Mr. Franks. I thank the gentleman. Just for point of
clarification, Justice Kourlis indicated that some of the rest
of you may have had input at some point to the Judicial
Conference; is that correct?
Mr. Hill?
Mr. Hill. Yes, that's correct, I have.
Mr. Franks. Mr. Butterfield.
Mr. Butterfield. I have.
Mr. Franks. Mr. Hubbard.
Mr. Hubbard. Yes, I have.
Mr. Franks. So that Justice Kourlis was correct and I just
wanted to give everybody a chance to answer for themselves in
that regard.
We are hopeful that the Judicial Conference will come
forward with some ideas of their own which the Congress, maybe
even optimistic that they might do that, and the conference
might bring some things that the Congress would deem
worthwhile.
So with that, I would yield to the distinguished Ranking
Member of the full Committee, Mr. Conyers.
Mr. Conyers. Thank you very much, Chairman.
Now, I notice that the Justice didn't mention other
problems that are raising the expenses of court litigation,
like shortage of judges, the expense of counsel and a variety
of other reasons.
Was there any reason for those not being included in this?
Because it gives you--it could give one the impression that
this is the main problem of diminished, great, legal services
in this country. Justice?
Ms. Kourlis. Congressman, you are absolutely right, it is a
multi-faceted problem, including budgets for courts, and
judicial vacancies, and a host of other components. What I also
believe is that the courts themselves, the way that the civil
litigation process is structured, have a duty to reorganize,
rethink how they present their services, and recalibrate them
to the needs of the users. I tell an anecdote, Congressman.
Mr. Conyers. Well, wait a minute.
Ms. Kourlis. It is really short, I promise.
Mr. Conyers. I believe you, but spare me. Now, here is the
problem. We don't know what the Judicial Conference is going to
do. Maybe they got your report and were so impressed with it
that they are going to begin to deal with the questions of
proportionality that you raised. And maybe they haven't
considered these things. And maybe they will.
Ms. Kourlis. Oh, indeed, I think they are. I think they are
giving it great thought and deliberation.
Mr. Conyers. I am happy to hear your confidence about it.
Now, Mr. Hubbard, we have a little problem here. Your report
was based on four major companies, right?
Mr. Hubbard. The preliminary report, yes.
Mr. Conyers. All right. Which four?
Mr. Hubbard. Congressman, respectfully, I have kept those
identities confidential. That was the basis upon which the data
was shared with me.
Mr. Conyers. And because of what reason did you keep them
confidential?
Mr. Hubbard. Concerns that information about the costs of
preservation, which can be, in some cases, but not all, very
high, could be used perhaps for strategic advantage against
them.
Mr. Conyers. Sure. All right. I understand. Now, does that
mean that your final report is going to be confidential, too?
Mr. Hubbard. The identities of specific companies will be
kept confidential in the report.
Mr. Conyers. Can I ask you this? Were they large
corporations?
Mr. Hubbard. Yes.
Mr. Conyers. How large?
Mr. Hubbard. These are, I guess, you would say very large
corporations, in the order of Fortune 500 companies.
Mr. Conyers. Well, you were candid enough to let us know
that your report was preliminary, and that we should not take
any congressional--make any congressional decisions based upon
it because it was a preliminary report. Is that right?
Mr. Hubbard. I think it is fair to say that we should not--
--
Mr. Conyers. Is that right?
Mr. Hubbard. I think that is right, yes.
Mr. Conyers. Okay. All right. Thanks so much. Then in other
words, all of us, including all of you, who I think you have
all said that you have communicated with the conference, are
going to be waiting, like the Subcommittee, to find out how
much of your advice was taken by the conference. Is that
correct?
Mr. Hubbard. To an extent, yes. I think that is fair.
Mr. Conyers. All right. Mr. Hill? Is that right?
Mr. Hill. We certainly will see what they do.
Mr. Conyers. Of course. So I am heartened by the fact that
Madam Justice seems to feel that there may be some
encouraging--that they may be taking at least some of her
recommendations seriously. And I hope that they are taking all
of your recommendations seriously. So I guess I will be
waiting, just like you. Maybe we should have another hearing
after the report comes out, and see how our opinions and
estimations of what was being done and had been done came out.
I would recommend that to the Chairman. I hope that all of you
will as well. Thank you, sir.
Mr. Franks. Thank you. Is it your thought that you will
ratify whatever the Judicial Commission comes out with?
Mr. Conyers. No, not me. I will be critically waiting the
results of the final report.
Mr. Franks. Waiting with bated breath. Listen, I want to
thank all of the Members, and I especially want to thank the
witnesses. Forgive me, Mr. Scott. You snuck up on me, sir. I
will recognize Mr. Scott for 5 minutes.
Mr. Scott. Thank you, Mr. Chairman. I just had a couple of
questions. Mr. Hubbard, what are some of the costs involved in
preservation? Preserving electronic data shouldn't be that
expensive. What are some of the costs in preserving other data?
Mr. Hubbard. Thank you, Congressman. Of course the costs
that we all think of initially with respect to preservation is
the cost of simply housing the data on a computer drive. And
that cost, as I think we are all aware of, has decreased
exponentially over time. However, the costs that I have in mind
when I talk about the costs associated with preservation are
not limited merely to the costs of storage of data, but the
fact that in the process of implementing what is usually
referred to as a litigation hold, sometimes dozens, maybe even
hundreds or more of employees are called upon to review the
documentation for which they are responsible, their emails,
their computer files, in order to ensure compliance with the
litigation hold. And it is that employee time, which can run
into the hundreds or thousands of hours, that can become a very
significant cost.
Mr. Scott. Okay. Now, why shouldn't the present rules of
proportionality and common sense and letting the judge
determine what is reasonable and not reasonable based on the
issues, the facts at issue, the size of the case, that kind of
thing, proportionality, why shouldn't that be enough?
Mr. Hubbard. Well, Congressman, certainly proportionality
should be the touchstone to approaching questions of discovery
and preservation. The question is whether it is under the
current rules. The rules envision active judicial oversight of
the proportionality balance. But in reality, that doesn't
occur. The most obvious reason being that the decisions with
respect to preservation often have to occur before litigation
is even filed, and therefore a judge cannot be involved.
Parties are then are forced to make judgments on their own
given the risk that depending upon which jurisdiction they end
up in and who the plaintiffs on the other side are, how broad
the preservation obligation will be. And that is where I think
the uneven and inconsistent case law that currently exists
creates this tendency toward overpreservation.
Mr. Scott. I think we have heard from some of the witnesses
the idea that congressional action is not needed. I suppose
that means congressional action might make matters actually
worse. Do we have any recommendations to make it better? I
mean, litigation is expensive. I am not sure that there is a
lot we can do about that. Do you have any recommendations?
Mr. Hubbard. Well, litigation certainly will always be
expensive. The question is whether we can make it more
efficient. Certainly, because the Judicial Conference's
attention is directed to these issues right now, I think we all
agree that the proper process is to participate and contribute
to that process in the capacity that we can.
Mr. Scott. Do we have any recommendations?
Mr. Hubbard. Any recommendations for specific rules?
Mr. Scott. Right.
Mr. Hubbard. I certainly have made recommendations. First
of all----
Mr. Scott. We are here listening to the complaints, but
what can be done about it?
Mr. Hubbard. What can be done is for one, by implementing
Federal rules that directly address preservation, there can be
uniform treatment of the preservation obligation.
Mr. Scott. But proportionality kind of works the other way,
because some may be reasonable in some cases and others not.
Does anybody have any specific recommendations as to what we
can do to make the situation better?
Mr. Hill. Congressman, I think an important role for the
Subcommittee is to provide its oversight to the Committee.
Because the Federal Rules Conference considers the way--my
concern is that the Federal Rules Conference will consider the
way litigation will operate once it is in a courtroom so that
it appears fair and efficient, and they will draft rules that
solve the problem that they focus on most. I think this
Committee's obligation is to make sure that those rules work in
an economic environment, that there are other issues involved
in litigation, as we have pointed out. Preservation costs
before litigation is filed imposes a burden. I think that is
something that Congress could bring to the attention of the
Committee.
Mr. Scott. I am not hearing any recommendations.
Ms. Kourlis. Congressman, I am not entirely sure whether
your question is narrowly focused on recommendations for a
preservation rule, or broader recommendations, or whether you
are asking whether any of us have recommendations for action
that we would ask Congress to be taking.
Mr. Scott. I think we have heard that there are no
recommendations for Congress to do anything yet.
Ms. Kourlis. That is correct, from my perspective.
Mr. Butterfield. Congressman, I wrote a paper about a year
ago, along with my colleague behind me, Ariana Tadler, and the
subject of our paper was give the rules a chance. The 2006 rule
amendments, the ink was barely dry when some of these surveys
were started and people started criticizing the rules. The
rules are abundantly flexible. They have the mechanisms in
place to curb the costs of litigation if people simply use
them.
Mr. Scott. Thank you. Well, Mr. Chairman, I thank you for
the hearing, but I think what we are hearing from people is it
is not timely for Congress do anything about it at this point.
Mr. Franks. And I thank the gentleman. And I thank all of
you again for being here, and the audience for being so
attentive. And without objection, all Members will have 5
legislative days to submit to the Chair additional written
questions for the witnesses, which we will forward and ask the
witnesses to respond as promptly as possible so that their
answers may be made part of the record.
Without objection, all Members will have 5 legislative days
within which to submit any additional materials for inclusion
in the record. With that, again, I thank the witnesses, and I
thank the Members and observers, and the hearing is now
adjourned.
[Whereupon, at 2:48 p.m., the Subcommittee was adjourned.]
A P P E N D I X
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Material Submitted for the Hearing Record