AICPA Encourages Advisory Committee to Address Overbroad Discovery Requests in Federal Civil Procedure

May 22, 2014

The American Institute of CPAs (AICPA) has expressed its support for proposed revisions to the Federal Rules of Civil Procedure, describing them as “modest steps toward making civil litigation more fair and less costly.”  In a February 14 comment letter, the AICPA applauded the effort of the Advisory Committee on Civil Rules of the Administrative Office of the United States Courts to address the serious and increasing problems of overbroad discovery requests and wasteful data-preservation policies.

In the letter, AICPA General Counsel & Secretary Michael Buddendeck noted that, “The Committee has long been aware of the rising costs of civil litigation, much of which is attributable to overbroad discovery.  The staggering costs of managing, organizing, and preserving data – which have grown an estimated 40-60% for U.S. businesses in the last year alone – present additional challenges as firms and national organizations struggle to develop information preservation policies that facilitate bona fide litigation of disputed claims, while minimizing data-retention costs and providing protection from the threat of spoliation sanctions when these entities are next pulled into court.”

The AICPA agrees that all parties have the right under the Federal Rules to obtain the relevant information necessary to develop claims or to defend against opposing parties’ claims, but observed that, “In the face of current discovery practices, the Federal Rules have been unable to deal effectively with the unfair costs imposed on parties by overbroad discovery requests.  Subjecting parties to the excessive burdens of over-production (from abusive discovery requests) and over-preservation (from fear of sanctions for mistaken or otherwise inadvertent loss of discoverable information) is both inefficient and unfair.”

The Institute believes the strengthened proportionality requirement in proposed Rule 26(b)(1), combined with further revisions to the Rule designed to tailor discovery requests to parties’ claims and defenses, are promising steps toward curtailing discovery costs while retaining flexibility for all litigants when developing claims and defending against them.  The AICPA also expressed support for the Committee’s proposed revisions to Rule 37(e) because they would provide a national standard addressing sanctions for loss of discoverable information, but asked the Committee to consider four additions.  “With these modifications, Rule 37(e) would be better able to achieve the Committee’s goal of combatting abusive discovery tactics while giving potential litigants confidence that their good-faith preservation policies will not result in severe sanctions if inadvertent mistakes occur,” the letter stated.

Now that the public comment period has ended, the Advisory Committees will decide whether to submit the proposed amendments to the Committee on Rules of Practice and Procedure.  The proposed amendments would become effective on December 1, 2015, if they are approved, with or without revision, by the relevant Advisory Committee, the Committee on Rules of Practice and Procedure, the Judicial Conference, and the Supreme Court, and if Congress does not act to defer, modify, or reject them.