Executive Summary: The rule that defines the scope of discovery was amended on December 1, 2015. The scope of discovery still turns broadly on relevance. However, the amended provision now requires that requested discovery be “proportional to the needs of the case.” This can be especially helpful in curbing discovery abuse in NPE cases. One expressly enumerated factor for assessing proportionality is the “amount in controversy.” As a result, defendants now have a better benchmark to narrow or alternately cost-shift discovery requests that are disproportional to the amount in controversy, which are too often the norm in NPE cases.

Detailed Summary:

The amendments to the Federal Rules of Civil Procedure (FRCP) that took effect on December 1, 2015 include modification to Rule 26(b) which defines the scope of discovery. As amended, Rule 26(b) now provides that parties may obtain discovery that is “relevant to any party’s claim or defense and proportional to the needs of the case.” The new proportionality requirement now offers parties a means to curb abusive discovery requests. The following redlines illustrate the amendments to Rule 26(b):

Illustrated Amendments to the Scope of Discovery

Scope in General. Parties may obtain discovery regarding any nonprivileged matter that is relevant to any party’s claim or defense including the existence, description, na- ture, custody, condition, and location of any documents or other tangible things and the identity and location of per- sons who know of any discoverable matter. For good cause, the court may order discovery of any matter relevant to the subject matter involved in the action. Relevant information need not be admissible at the trial if the discovery appears reasonably calculated to lead to the discovery of admissible evidence. All discovery is subject to the limitations imposed by Rule 26(b)(2)(C). and 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. Information within this scope of discovery need not be admissible in evidence to be discoverable.

Given relevance needs to be proportional to the “needs of the case,” potentially including the “amount in controversy,” defendants need to assess whether early damages disclosures can serve to limit discovery requests that otherwise would be unduly burdensome or expensive. In other words, should a defendant make robust damages disclosures early, they are likely to provide the court with a benchmark to assess whether the plaintiff’s discovery requests are disproportional to the needs of the case. Doing so provides better arguments for narrowing discovery, cost-shift and perhaps even obtaining a protective order. To the extent early damages disclosures are not feasible or desirable, it should be noted that courts have assessed the “needs of the case” on the other enumerated factors set out in Rule 26(b).

It is too early to tell how often and under what circumstances district courts will narrow scope of discovery or impose cost-shifting to the requesting party. Docket Navigator forecasts only six decisions on this issue in 2016 with a 50/50 outcome. Decisions concerning discovery are highly fact dependent and proportionality under Rule 26(b) will be no different. At a minimum, however, defendants need to consider – preferably early in the case — how “proportionality” can help mitigate burdensome or expensive discovery requests in NPE “cost of litigation” cases.