Bar News - December 14, 2012
Business Law & Business Litigation: PAD Rules’ Disclosure Requirements: Potential Unintended Consequences in Business Litigation
By: Dan Will and Josh Wyatt
New Hampshire’s Proportional Discovery/Automatic Disclosure (PAD) rules, in general, represent a welcome update to our civil rules that, in most cases, should make the litigation process easier. But the new automatic disclosure requirements could have significant consequences, perhaps unintended, to business and commercial actions that involve large volumes of documents and electronic information.
In reaction to escalating costs and time consumption of litigation that put the delivery of justice at risk, the PAD rules aimed to modernize, streamline, and simplify state court civil practice. The rules took effect in the Strafford and Carroll county superior courts in fall 2010 and recently became effective in both superior courts in Hillsborough County. Before long, these rules will likely govern practice throughout the superior court.
The launch of the PAD rules roughly coincided with the advent of the NH Business and Commercial Dispute Docket, which seeks to create a more business-friendly litigation environment. With respect to at least the automatic disclosure provisions, keeping the goals of the PAD rules in line with the goal of a business-friendly litigation environment will require awareness and cooperation by everyone involved – parties, lawyers and judges.
Automatic discovery obligations
In what will affect most cases positively, the PAD rules remove much of document discovery from the control of the parties through sweeping automatic disclosure requirements. As the clerk’s guidance memorandum (posted on the New Hampshire Judicial Branch website) observes, "[d]iscovery will now be themed more like ‘open file’ (though not literally) as in criminal cases."
To Federal civil practitioners, the idea of automatic disclosures seems familiar because they have existed in the Federal rules for years. The PAD rules, however, set forth a much broader automatic disclosure regimen that will, in most cases, ensure that each side provides any and all potentially supportive documents to the other side, but which could create complications in document intensive cases.
Similar to FRCP 26(a), PAD Rule 3 (PR3) requires automatic disclosure of information litigants plan to rely upon to prove claims or defenses, including documentary information. While FRCP 26(a)(1)(A) allows the parties to "otherwise stipulate" concerning automatic disclosures, PR3 lacks any express opt-out option, and it remains unclear the extent to which parties will have that ability, which could vary from county to county or judge to judge.
In the federal scheme, moreover, if the parties determine to litigate pursuant to the federal disclosure rule, they have the option of either producing the actual documents or producing a description by category of the potentially relevant documents they possess. PR3, by contrast, does not allow litigants, in lieu of producing documents, to disclose a description by category. Instead, PR3 broadly requires the production of "a copy of all documents, electronically stored information, and tangible things that the disclosing party may use to support its claims or defenses unless the use would be solely for impeachment." A party can only satisfy PR3 by producing actual documents – paper and electronic.
It is not unusual for tens, if not hundreds, of thousands of documents to change hands over the course of a commercial case. Document production in larger commercial cases often involves collecting caches of electronic information from a client’s servers and running searches based on queries designed to cull the responsive material for review and production. The sheer volume can be enormous and the process time intensive for parties and counsel. Marshaling those documents for production is difficult and expensive, even in the pre-PAD realm. In the PAD realm, identifying all documents a party may use in the case, gathering them and producing them will, in document-intensive cases, present a considerable challenge.
Compounding that challenge is the timeframe for production. In contrast to the 120-day service period in federal lawsuits, the filing of a new complaint in superior court triggers a relatively brief 45-day service period, according to the clerk’s memorandum. Service of the complaint, in turn, begins the answer deadline. PR 3 requires plaintiffs to disclose within 30 days of the answer, and defendants within 60 days, so neither side has a lot of time to gather up and produce what PR 3 requires. Ostensibly, the short timeline expressed in PR3 can be extended through answer deadline extensions, or perhaps by simple agreement of counsel. Unfortunately, however, PR3 does not account for unreasonable opposing counsel, inexperienced counsel or pro se litigants, any of whom may impede the overlay of reason onto the rule; and, in many cases, the volume of production leans heavily toward one of the parties. Notably, the deadline for automatic disclosure could easily come and go before a structuring schedule is in place that includes a production protocol, which, among other things, defines the method of producing electronically stored information.
By necessity, PR3 expressly imports the full panoply of sanctions provided in Superior Court Rule 35 in the event of noncompliance. In the normal civil case, the sanctions threat will minimize the cat-and-mouse games that can accompany the document requests/response process. Parties who hold back documents and later try to spring them on their opponents will suffer the consequences in the form of evidence preclusion, or worse. The clerk’s memorandum underscores the risk of noncompliance with the PAD rules, warning attorneys that "[i]f you want to use something at trial, you must disclose it."
In a document-intensive case, however, it may be nearly impossible for the attorney and client to comply with PR 3’s timeframes. PR3 leaves it to the superior court to adjudicate the propriety of sanctions in any given case, and leaves commercial litigators uncertain about the consequences of noncompliance. While our experience reassures us as to the just and equitable application of our rules in any given instance, motion practice over compliance with PR3 will create uncertainty, expense and will also tax the court’s resources. The result may be a complication of the litigation process, which is precisely what the PAD rules seek to avoid. Or worse, aggressive counsel might try to use PR3 offensively, for tactical advantage, and create tangential motion practice.
Potential document overload
Parties receiving the automatic disclosures also may experience an unintended consequence in a document-intensive case. Not only must the receiving party undertake to meet its own disclosure requirement, but it must also review and process the massive amount of information it receives from the other side. Sifting through volumes of information a party has specifically requested in a commercial case can be daunting; in this electronic era, that sifting often involves vendors and specialized software programs and always involves many lawyer hours. Cautious counsel trying to comply with PR3 will over-produce rather than under-produce, putting the receiving party in the position of having to organize even more (and potentially unnecessary) information than it might have received in response to a targeted document request. Producing counsel, like receiving counsel, may use PR3 offensively, burying their opponent in documents on the theory that the larger the haystack, the harder to find the needle. To protect themselves, receiving parties will likely still need to propound specific document requests, but may face responses that simply refer to the automatic production.
Cooperation is key
The PAD rules’ automatic disclosure provisions represent an important step forward in New Hampshire civil procedure, and one that in many cases will go a long way toward making the courts more accessible to litigants who need their disputes adjudicated in a way that does not leave them spending more than their possible recovery. In document-intensive commercial cases, however, the disclosure requirements may be difficult if not impossible to meet, and may inadvertently increase costs rather than create efficiencies. The facial rigidity of the PAD automatic-disclosure provisions, moreover, will leave commercial litigators in doubt as to the consequences of the failure – even through inability – to meet their requirements, and may place upon the superior court the burden of adjudicating compliance issues that do not necessarily bear on the merits of the case.
Lawyers and judges should be aware of this potential scenario, so that everyone involved in the process can work to make sure the application of the PAD rules does not end up perverting their purpose. A great hallmark of litigation practice in New Hampshire is that, by and large, parties decline to use procedural mechanisms that do not bear on the substance of a case for their own tactical advantage. An equally great hallmark of litigation practice in New Hampshire is that our superior court rarely tolerates those efforts when they do occur. If those two beacons illuminate the application of PR3, then the rule will continue to serve its purpose in all cases. Whether that happens will depend on our vigilance as lawyers and judges to work together to apply the rule to its spirit as much as its letter.
Daniel E. Will is a Shareholder and member of the Commercial Litigation Practice Group at Devine, Millimet. Prior to joining Devine Millimet, Dan clerked at the federal district and appeals court levels. He is a graduate of Boston College Law School and the University of Pennsylvania.
Joshua M. Wyatt is an associate at Devine Millimet, and also a member of the Commercial Litigation Practice Group. Prior to joining Devine Millimet, Josh clerked for Justice Hicks at the New Hampshire Supreme Court. Josh is a graduate of the University of New Hampshire School of Law and the University of North Carolina at Chapel Hill.