Business law synthesis, Summaries of Business Finance

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R. W. Emerson,

Business law

Main content

Chapter 8

Overview of the Discovery Process

Overview

of the

Discovery

Process

• Chapter Introduction
• 8 - 1 The Nature of Discovery
  • 8 - 1a Developments Concerning Discovery
  • 8 - 1b Electronically Stored Information
  • 8 - 1c The Objectives of Discovery
  • 8 - 1d Preliminary Decisions Regarding Discovery
  • 8 - 1e Amendments to the Federal Rules of Civil Procedure
  • 8 - 1f Ethical Considerations in Discovery
• 8 - 2 The Extent of Allowable Discovery
  • 8 - 2a The Scope of Discovery
  • 8 - 2b Limits on Discovery Chapter

coast of Florida. Sunshine Aeronautics claims that the explosion was caused by a design defect in the Atomic-Angel. Craig and Kristin Benson, of Austin, Texas, the owners of Victory Eagle, Ltd., an engineering firm contracted to provide the Reagan Racer III with its outer hull heat-resistant tiles, have filed the current lawsuit. Both Craig and Kristin were injured in the explosion and their specialized launch tower maintenance rig, the Solar Star, was destroyed. The Bensons have sued both Geo-Central and Sunshine Aeronautics. Your firm represents Dr. Zimmerman and Geo-Central Enterprises. The complaint and the answer have been filed. The next step is discovery. This morning you and your supervising attorney will discuss the best discovery devices to use in the case. You will “discover” that the discovery process takes a lot of advanced planning and that the court will frequently, and not so subtly, “push” that process along.

Objectives

In previous chapters, you had the opportunity to explore the steps involved in the litigation process. In this chapter, you will be introduced to another critical part of the litigation process—discovery. After completing this chapter, you should be able to:

• define discovery.
• identify the five major methods of discovery.
• outline the factors involved in choosing discovery methods.
• explain the new amendments to the discovery rules.
• describe the ethical considerations involved in the discovery process.
• determine the types of evidence that can be obtained during discovery.
• differentiate among the attorney–client privilege, the work product privilege, the common interest privilege, and the Fifth Amendment privilege against self-incrimination.
• discuss the purpose of the confidentiality agreement and protective orders.
• indicate the objectives of quick peek and clawback agreements.
• indicate the types of disclosures that must be made by the parties under Rule 26 of the Federal Rules of Civil Procedures.
• indicate the content of a discovery plan as required under Rule 26 of the Federal Rules of Civil Procedure.
• discuss the need for voluntary cooperation in the discovery process.
• relate the process used to compel compliance with discovery and the sanctions that result from noncompliance.

8 - 1 The Nature of Discovery

Discovery is the legal process by which the parties to a lawsuit search for facts relevant to a particular case. Most nonlawyers are surprised to learn that all the parties involved in a lawsuit have the opportunity to gather all the facts relevant to that lawsuit before the case even reaches trial. Accustomed as they are to the surprise witness produced at the last minute by a wide variety of television lawyers, most people believe that the attorney who wins a case is the one who manages to trap his or her opponent by concealing crucial evidence until the last possible second. The truth is almost exactly opposite to this fiction. Pretrial discovery is allowed because the law supports the principle that lawsuits should be decided on the facts and on the legal merits of the case, not on the ability of one attorney to conceal evidence or ambush the other attorney with surprise witnesses. In this chapter, you will explore the objectives of discovery, some preliminary considerations in the discovery process, some recent amendments to the rules of discovery, and some ethical considerations in discovery. The discovery stage is very important not only because it reveals the facts in a suit but also because it helps shape the direction of the case. The results of an effectively conducted discovery process may encourage your attorney to proceed with the case. However, those results may also indicate that a settlement or a voluntary dismissal is in order. 8 - 1aDevelopments Concerning Discovery The courts have long encouraged parties to cooperate with one another in the discovery process in order to promote full disclosure of relevant facts before trial. Regrettably, attorneys often ignore the spirit of this law and engage in a behavior that, although technically, not a true violation of the law, nevertheless, slows down and sometimes completely stops the process of discovery. The Federal Rules of Civil Procedure are designed to facilitate discovery and discourage any attempt to circumvent its true purpose. In particular, Rule 26 of the Federal Rules requires the parties to disclose certain information to the other party without the necessity of formal discovery requests.

configured in so many different formats, that even the most skilled practitioner can get lost trying to compile a basic discovery plan. Other problems arise because computers duplicate and preserve much of the data filed in their memories, yet they do not always have a consistent and predictable method for keeping track of that data. Additional problems arise when practitioners fail to search ESI adequately and, thus, either miss critical data completely or, sometimes even worse, retrieve and produce ESI that should have been protected by one of the many privileges provided by the law. The Federal Rules of Civil Procedure have been amended to deal with the problems caused by the proliferation of ESI. All of these amendments have had an impact on the nature and conduct of discovery, one way or the other. Paralegals, perhaps more than anyone else in the legal profession, must become as familiar as possible with these new amendments because the task of organizing and tracking ESI often becomes the responsibility of the paralegal. Fortunately, many state court systems have added ESI amendments to their rules that closely parallel the 2006 ESI amendments to the Federal Rules of Civil Procedure. This is good news for paralegals on two fronts. First, the fact that so many states have adopted the federal rules testifies to the effectiveness of those rules. Second, from a very practical perspective, the similarities that exist among federal and state rules greatly reduce a paralegal’s learning curve when moving between the two court systems. Of course, the federal and state rules are rarely identical and some states have developed rules that are peculiar to their own jurisdictions, and so the paralegal cannot ignore the need to learn state rules. Moreover, few states have still elected to avoid the entire issue and are yet to make any rules that address ESI. 8 - 1cThe Objectives of Discovery As noted, one of the primary objectives of discovery is to prevent one of the parties from winning the lawsuit by surprise or trickery. Another goal is to determine the truth or falsity of

the alleged facts that form the basis of the lawsuit. A third objective of discovery is to examine the facts and weigh the advisability of proceeding with the case or settling early. Frequently, a case that looks promising in the opening stages loses its viability as more facts come to light. For example, in the Geo-Central case, if your supervising attorney uncovers evidence that a Dr. Allen Marsh helped Dr. Zimmerman to falsify an inspection report on the Atomic-Angel, she may decide to settle the case with the Bensons’ attorney. In contrast, early discovery may reveal that your client’s case is so strong that a trial would be a waste of time, money, and resources. In such a situation, your attorney will file a summary judgment motion. For instance, in the Geo-Central case, your supervising attorney may discover that another engineer at Sunshine Aeronautics actually falsified the report, not Dr. Marsh. In such a situation, the law would clearly support Geo-Central and a summary judgment motion would be appropriate. A fourth objective of discovery is to preserve testimony that might be lost should a witness disappear or become incapacitated or should records be lost or destroyed. Finally, some discovery methods can be used to impeach the credibility of a witness should that witness offer testimony at trial that contradicts his or her earlier statements made during discovery 8 - 1dPreliminary Decisions Regarding Discovery Conducting all discovery, but especially conducting the discovery of ESI, is difficult and complicated but not impossible. During the preliminary stages in a case, an attorney must decide which discovery techniques are best suited to the lawsuit. In making these decisions, the attorney must consider the cost and the amount of time involved. Informal Discovery The fact that formal discovery is an important part of the pretrial process does not mean that the informal process of uncovering information and evidence can be overlooked. Often a great deal of information can be gathered before the formal

control over the discovery process and spends far too much time patching up errors that could have been avoided had a strategic approach been developed during the earliest stages of the lawsuit. The key to success in developing a discovery strategy is to have a set routine that can be used as a pattern or a model in any case. Such a routine would involve a checklist of things that must be done before the discovery process begins. A good portion of this can be completed during the informal discovery process. However, some of it cannot be done until formal discovery begins. One of the first steps in the discovery strategy is to evaluate some of the new electronic discovery tools available to practitioners today. Another initial step involves identifying the type of ESI that is discoverable, as well as identifying those individuals who are responsible for the client’s and the opponent’s computer system. Your supervising attorney will most likely evaluate which of the traditional discovery methods would be best in each case. Electronic Discovery Tools Electronic discovery, e-discovery, cyber discovery, and digital discovery are all terms used to describe the discovery of ESI. No matter what it is called, however, e-discovery has become an inescapable part of the routine in most law firms today. Personal computers, which store data, create forms, and send e-mail, are as common in law firms today as the typewriter was in the past. Moreover, the use of digital recording as well as online audio and videoconferencing is becoming commonplace in firms across the country. In addition, many law firms now take advantage of the convenient and economical resources available on the Internet. E-discovery involves the use of a wide variety of electronic resources to conduct discovery. The use of electronic resources can make the paralegal’s work more efficient and economical or more expensive and time- consuming. Consequently, electronic discovery tools must be used properly when your attorney draws up her discovery plan.As we investigate each discovery technique in the chapters that follow, we will consider the available electronic versions of these techniques. For instance, in Chapter 9 on depositions, we will examine not only the use of traditional in person depositions, but also the use of electronic techniques such as

videoconferencing to conduct long distance depositions in ways that are efficient and economical, and in Chapter 10 on interrogatories, we will look at the use of interrogatories as an aid in structuring the discovery of electronic evidence. Nevertheless, at this stage in the discovery process your supervising attorney may want to consider the use of some electronic discovery devices to conduct informal discovery. The advent of e-discovery means that attorneys and paralegals must remain current with all amendments to the Federal Rules of Civil Procedure concerning discovery and ESI. Accordingly, we find that

• (1) the rules now require attorneys to develop discovery plans, including ESI issues, early in the litigation process;
• (2) the rules have been changed to deal specifically with forms of ESI production;
• (3) the rules now handle special problems involving matters of privilege;
• (4) the rules have been changed to facilitate the discovery of hard-to-find ESI and to apportion the money spent on such activities;
• (5) the rules now hand out sanctions against those who do not cooperate with discovery but limit those sanctions when the loss of ESI is unavoidable; and
• (6) the rules now adjust several time limits involved in discovery so that each time period is a multiple of seven in order to accommodate the realities of the working week.

judge will take that plan into consideration as he or she maps out the scheduling order. Under the old rule, the parties and the judge could meet by “telephone, mail, or other means.” The amended rule makes no mention of the means by which a scheduling conference is to be held. However, since the rules have eliminated the ability to meet by phone or by mail (and since it is not yet technically feasible to hold holographic meetings, to bi-locate, or to travel faster than the speed of light), such meetings ought to be held in person. Rule 16 also shortens the time period in which the court can issue its SO from 120 to 90 days after any defendant has been properly served or 60 (not 90) days after the appearance of any defendant. This amendment is also designed to speed things up and make the litigation process more efficient. In addition, Rule 16 also empowers the judge to include in the SO provisions regarding the preservation of ESI and any Rule 502 agreements (that is Federal Rules of Evidence Rule 502, not civil procedure Rule 502) that involve a waiver of the work product or attorney–client privilege. Finally, Rule 16 also empowers the court to demand a conference prior to any discovery motion that the parties plan to file. While not one of these changes requires the judge to act, the mere addition of the amendments places new duties on the shoulders of all attorneys as they prepare their discovery plans. Rule 26 (Duty to Disclose; General Provisions Governing Discovery) has also been amended extensively with the intent to speed up the discovery process. The amendments are designed to fine-tune the handling of ESI during the discovery phase of a lawsuit. Under Rule 26 (b) (1), discovery can focus on all relevant, non- privileged matters as well as those matters that are “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.” Amended Rule 26 (c) now states that the court is empowered to set up a protection order to shield a party or nonparty from “annoyance, embarrassment, oppression, or undue burden or

expense.” This power includes expressly setting the time and the place of discovery and allocating the costs between the requesting and the responding parties. Rule 26 (d) (2) permits the parties to file a Rule 34 production of documents request 21 days after a party receives the summons and the complaint. However, the response is not due until after a conference has been scheduled under Rule 26 (f). Hopefully, once the parties are armed with an early set of document requests, they can begin to compile the required documents and the necessary ESI with due diligence. Moreover, planning conferences should be much more meaningful when the parties know what to expect as they move forward to one of the most difficult, expensive, and time-consuming parts of litigation—the search for ESI. An early understanding of what will be expected in gathering ESI may also set the stage for cost-sharing requests. Similarly, Rule 26 (f) (3) requires that the parties structure their discovery plan to include their position on the need to preserve ESI. Like the early document request provision of Rule 26 (D) (2), the amendment to Rule 26 (f) (3) should motivate the parties to have an earnest, sincere, and productive discussion about the cold, hard realities of compiling ESI. This discussion ought to result in a proper streamlining of such requests and, therefore, a more productive preconference meeting. Rules 16 and 26 are not the only rules to be updated during the most recent round of amendments. Rule 34 was also amended to improve everyone’s favorite part of the document request process—the objections. Under the old version of Rule 34, the parties were not required to give detailed objections or to discuss the need to withhold documents. Rule 34 (b) (2) changed all that. Under the new amendments, the parties must present one another and the court with detailed objections. This rule is designed to prevent the tired, old practice of listing a series of meaningless garden variety objections (“the request is vague, ambiguous, unintelligible, overbroad, unduly burdensome, irrelevant, inadmissible, immaterial, not reasonably calculated to lead to admissible evidence, and, well, just plain boring”). Moreover, the party making the objection must indicate that part of the request that needs clarification. Thus, it is no longer acceptable to simply state that the request

cameras, videotapes, and VHS cassettes, all of which have become nearly obsolete. Nevertheless, terms like video , taping , and tapes used to refer to the recording process are likely to stay in the vocabulary of the legal profession for some time to come, despite their technical inaccuracy. This habit is not unlike the continued use of a word such as typing , which is inaccurate but which is still used instinctively by most people. A more inclusive term is recording because it best describes the process without referring to the technology. Consequently, we will use the term recording here.) If your firm has not yet adopted videoconferencing, take heart. In short order, once virtual reality conferencing becomes technically feasible, the videoconference will become as obsolete as the VHS recorder. Choice of Discovery Methods An attorney has five methods of discovery from which to choose: the deposition; interrogatories; a request for the production of documents, ESI, and tangible things or entry upon land for inspection and other purposes; a request for physical or mental examinations; and a request for admission. As noted earlier, in federal court, the discovery process is regulated by Rule 16, Rules 26 through 37, and Rule 45 of the Federal Rules of Civil Procedure (see Exhibit 8 - 1 ) as well as Rules 502 and 702 of the Federal Rules of Evidence. As explained previously, Rule 16 authorizes the court to issue a scheduling order that, among other things, limits the time that the parties have to finish the discovery process. The rule makes it clear that this order can include any arrangements that the parties have made regarding the revelation or the discovery of ESI, as well as any promises regarding assertions of privilege or protection. Rule 26 sets out the general provisions concerning discovery. Rules 27 through 36 explain the various discovery techniques that can be used by litigants in federal court. The final rule, Rule 37, outlines the sanctions that are available when a party does not cooperate with discovery. A deposition is an out-of-court question and answer session under oath, conducted in advance of a lawsuit as a part of the discovery process. Depositions are regulated by Rules 27 through 32 of the Federal Rules of Civil Procedure. Interrogatories are written questions requiring written answers under oath and directed to a party, in which

another party seeks information related to the litigation. Interrogatories are governed by Rule 33 of the Federal Rules. A request for the production of documents, electronically stored information (ESI), and tangible things, or entry upon land for inspection and other purposes , which is covered by Rule 34, is a request that a party or other individual involved in a lawsuit provide specific documents, ESI, or other physical evidence to the party making the request. As the name implies, this request may also involve a request to enter land to inspect that land to gain facts related to the lawsuit. A request for a physical or mental examination asks a party to undergo a physical or mental examination provided that the examination involves a condition at issue in the pending action. A request for admission asks a party to admit the truth of certain facts or the genuineness of a document so that these issues do not have to be proven at trial. An attorney must consider both the expense and the time available when choosing from among these methods. Requests for physical and mental examinations and for admissions are regulated by Rule 35 and Rule 36, respectively. Rule 45 outlines provisions regarding subpoenas. The new amendments to this rule add ESI to the list of evidence that can be contained within a subpoena. The new rule also asserts that subpoenas may indicate the form of ESI to be used by the party answering the subpoena. Rule 502 of the Federal Rules of Evidence protects the attorney–client privilege and the work product privilege, while Rule 702 covers the use of expert witnesses.

Exhibit 8 - 1

Federal Rules of Civil Procedure

RULE PRETRIAL CONFERENCES; SCHEDULING; MANAGEMENT 16 Rule 16 has been amended to make sure that the court is noti昀椀ed in advance that it wil to consider how to deal with the ESI involved in the case. It also includes an early warn the court that the case may involve claims of privilege. RULE DUTY TO DISCLOSE; GENERAL PROVISIONS GOVERNING DISCOVERY 26 Rule 26 covers general provisions of discovery, including the duty to disclose certain

RULE INTERROGATORIES TO PARTIES 33 Rule 33 explains the procedure for using interrogatories, the allowable scope of the interrogatories, and the use of interrogatories at trial. The rule also indicates when busi records can be produced in lieu of answering interrogatories. RULE PRODUCING DOCUMENTS, ELECTRONICALLY STORED INFORMATION, AND TAN 34 THINGS, OR ENTERING ONTO LAND FOR INSPECTION AND OTHER PURPOSES Rule 34 explains the scope of this discovery device as well as the process for its use. T speci昀椀es that this request can be made of nonparties. RULE PHYSICAL AND MENTAL EXAMINATIONS OF PERSONS 35 Rule 35 explains when a physical and/or mental examination can be ordered. It also ex the disposition of the report of the examining physician. RULE REQUESTS FOR ADMISSION 36 Rule 36 outlines the procedure for requesting admissions. It also explains the effects of admission. RULE FAILURE TO MAKE DISCLOSURE OR COOPERATE IN DISCOVERY; SANCTIONS 37 Rule 37 presents the procedure for 昀椀ling a motion for an order compelling discovery. It details the negative consequences of failing to comply with such an order, among othe things. RULE SUBPOENA 45 Rule 45 was changed to add ESI to the list of types of evidence that can be the subject subpoena. The new rule also states that the subpoena is permitted to indicate the form to be used by the party responding to the subpoena. Discovery and ESI During the initial discovery strategy, your attorney must make certain that she considers not only techniques for recovering ESI, but also the types of ESI that are discoverable and the individuals who are responsible for that data. Discoverable ESI falls into three categories:

types of ESI based on the configuration of the computer system,

• (2) types of ESI based on the nature of the evidence itself, and
• (3) types of ESI based on its storage status. Your supervising attorney must remember that her client may have to furnish this information to the opposing party, which means that she will have to develop a discovery plan that includes all three categories of ESI, as well as the people responsible for managing that ESI. The first type of ESI that should be included in a preliminary discovery plan is the configuration of the opposing party’s computer system. This involves an understanding of the number and types of computers that are used in the party’s ordinary business routine. During the planning stage, it is important to remember that the term computer includes desktop PCs, tablets, laptops, notebooks, mobile phones, digital recorders, GPS units, smartphones, scanners, fax machines, readers, copy machines, and home computers that are part of a network, as well as apps. It would also be helpful to know about any intranet systems that are located within the party’s operation, as well as the number and location of all workstations and all network servers. Another difficulty associated with the configuration of a party’s computer system is the problem of ownership. Recently, it has become more and more acceptable, and in some firms even required, for staff members to use their own tablets, smartphones, and laptops at work. The trend has developed because people are so accustomed to their own machines that they are more efficient when they use the same devices on the job that they use in their personal lives. The trend makes sense and was probably inevitable as computerized devices became more compact, more user-friendly, more mobile, and more interchangeable. Companies generally handle this development in one of the two ways. Some firms prefer to distribute