Defining the problem of cost in federal civil litigation

Duke Law Journal

Volumn 60, Issue 3, 2010, Pages 765-788

  Lee III, Emery G ^a   Willging, Thomas E ^a  

^a Federal Judicial Center   (United States)

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EID: 78650498934     PISSN: 00127086     EISSN: None     Source Type: Journal    
DOI: None     Document Type: Article

References (99)

1. The Civil Litigation Review Conference, sponsored by the Advisory Committee on Civil Rules of the Judicial Conference, was held at Duke University School of Law on May 10-11, 2010.
2. An impressive group of judges, attorneys, and researchers convened to discuss the current state of civil litigation in the federal courts and potential reforms of the Federal Rules of Civil Procedure.
3. To be clear, this is decidedly not the authors' view.
4. See AM. COLL. OF TRIAL LAWYERS & INST. FOR THE ADVANCEMENT OF THE AM. LEGAL SYS., FINAL REPORT ON THE JOINT PROJECT OF THE AMERICAN COLLEGE OF TRIAL LAWYERS TASK FORCE ON DISCOVERY AND THE INSTITUTE FOR THE ADVANCEMENT OF THE AMERICAN LEGAL SYSTEM 9-10 (2009), available at http://www.actl.com/AM/Template.cfm? Section=Home&template=/CM/ContentDisplay.cfm&ContentID=4008.
5. Am. Bar Ass'n, Report of Pound Conference Follow-Up Task Force, in THE POUND CONFERENCE: PERSPECTIVES ON JUSTICE IN THE FUTURE 295, 318 (A. Leo Levin & Russell R. Wheeler eds., 1979) ("Substantial criticism has been leveled at the operation of the rules of discovery. It is alleged that abuse is widespread, serving to escalate the cost of litigation, to delay adjudication unduly and to coerce unfair settlements. Ordeal by pretrial procedures, it has been said, awaits the parties to a civil law suit.")
6. See, e.g., Richard L. Marcus, Discovery Containment Redux, 39 B.C.L. REV. 747, 747-48 (1998) ("[S]ince 1976, proposals for amendment to the rules have generally involved retreats from the broadest concept of discovery-in essence to try to contain the genie of broad discovery without killing it.").
7. AM. COLL. OF TRIAL LAWYERS & INST. FOR THE ADVANCEMENT OF THE AM. LEGAL SYS.
8. Paul V. Niemeyer, Here We Go Again: Are the Federal Discovery Rules Really in Need of Amendment?, 39 B.C.L. REV. 517, 519-21 (1998).
9. AM. COLL. OF TRIAL LAWYERS & INST. FOR THE ADVANCEMENT OF THE AM. LEGAL SYS.
10. ("The Committee engaged the Federal Judicial Center to study the expense of discovery as well as related questions and to report to the Boston Conference.").
11. see also Thomas E. Willging, Donna Stienstra, John Shapard & Dean Miletich, An Empirical Study of Discovery and Disclosure Practice Under the 1993 Federal Rule Amendments, 39 B.C.L. REV. 525, 526 (1998) ("[T]he Advisory Committee on Civil Rules... asked the FJC to conduct research on discovery as part of a Committee decision to undertake a comprehensive examination of that subject.").
12. EMERY G. LEE III & THOMAS E. WILLGING, FED. JUDICIAL CTR., NATIONAL, CASEBASED CIVIL RULES SURVEY: PRELIMINARY REPORT TO THE JUDICIAL CONFERENCE ADVISORY COMMITTEE ON CIVIL RULES (2009).
13. [hereinafter LEE & WILLGING, CASE-BASED CIVIL RULES SURVEY], available at http://www.fjc.gov/public/pdf.nsf/lookup/dissurv1.pdf/$file/dissurv1.pdf.
14. see also EMERY G. LEE III & THOMAS E. WILLGING, FED. JUDICIAL CTR., LITIGATION COSTS IN CIVIL CASES: MULTIVARIATE ANALYSIS: REPORT TO THE JUDICIAL CONFERENCE ADVISORY COMMITTEE ON CIVIL RULES 2-4 (2010) [hereinafter LEE & WILLGING, MULTIVARIATE ANALYSIS], available at http://www.fjc.gov/public/pdf.nsf/lookup/costciv1.pdf/$file/costciv1.pdf ("This report, prepared for the Committee's March 2010 meeting, presents multivariate analysis of litigation costs in the closed cases.").
15. THOMAS E. WILLGING & EMERY G. LEE III, FED. JUDICIAL CTR., IN THEIR WORDS: ATTORNEY VIEWS ABOUT COSTS AND PROCEDURES IN FEDERAL CIVIL LITIGATION 1-2 (2010) [hereinafter WILLGING & LEE, IN THEIR WORDS], available at http://www.fjc.gov/public/pdf.nsf/lookup/costciv3.pdf/$file/costciv3.pdf.
16. ("To supplement the multivariate analysis,... the Center... interview[ed] a number of the attorneys who responded to the case-based survey.... This report documents those interviews, organizing them where possible to track the results of the multivariate analyses....").
17. See, e.g., INST. FOR THE ADVANCEMENT OF THE AM. LEGAL SYS., PRESERVING ACCESS AND IDENTIFYING EXCESS: AREAS OF CONVERGENCE AND CONSENSUS IN THE 2010 CONFERENCE MATERIALS 5 (2010), available at http://civilconference.uscourts.gov/LotusQuickr/dcc/Main.nsf/$defaultview/7B6B047956592D3A8525771900011F6A/$File/IAALS.
18. Preserving Access and Identifying Excess.pdf ("The collected survey research indicates a very strong consensus among nearly all respondent groups that broadly speaking, the civil justice system is too expensive.").
19. CASABLANCA (Warner Bros. Pictures 1942).
20. This is not to say that discovery-rule amendments tied to other goals might not be fruitfully pursued.
21. Specifically, proposed rules for issuing preservation orders or imposing sanctions seem designed primarily to bring clarity and predictability to unsettled procedures, not solely to reduce costs.
22. See, e.g., Memorandum from Judge Mark R. Kravitz, Chair, Advisory Comm. on Fed. Rules of Civil Procedure, to Judge Lee H. Rosenthal, Chair, Standing Comm. on Rules of Practice & Procedure, Report of the Civil Rules Advisory Committee 12-14 (May 17, 2010), available at http://www.uscourts.gov/uscourts/RulesAndPolicies/rules/Reports/CV05-2010.pdf (discussing preservation issues on the Committee's agenda).
23. Moreover, efforts at changing attorney behavior might yield gains that rules changes cannot.
24. See SEVENTH CIRCUIT ELEC. DISCOVERY PILOT PROGRAM, PHASE ONE: OCTOBER 1, 2009-MAY 1, 2010: STATEMENT OF PURPOSE AND PREPARATION OF PRINCIPLES 9-10 (2009), available at http://www.ilcd.uscourts.gov/Statement- Phase One.pdf.
25. ("The goal of the Principles is to incentivize early and informal information exchange on commonly encountered issues relating to evidence preservation and discovery....").
26. The Sedona Conference, The Sedona Conference Cooperation Proclamation, 10 SEDONA CONF. J. 331, 331 (Supp. 2009) ("This Proclamation challenges the bar to achieve these goals and refocus litigation toward the substantive resolution of legal disputes.").
27. In another sense, litigation may be too expensive in the aggregate compared to its general societal benefits.
28. Most of the criticisms advanced at the Duke Conference, however, focused on the micro case-level costs of discovery and litigation, and not this macro level of costs.
29. In this Article, therefore, we focus on the claim that the costs in individual cases are too high, not the much more difficult-to-assess claim that the costs of all litigation in the United States substantially outweigh any possible benefits of that litigation.
30. It should be noted, however, that even small cost savings in most cases-as a result of attorney cooperation, for example-would represent substantial savings in the aggregate.
31. For a discussion of discovery costs and the lack of agreement regarding whether discovery limits ameliorate perceived problems, see infra notes 52-66 and accompanying text.
32. Empirical sources cited in that discussion support the proposition that litigation costs as a whole are not excessive in the typical federal court case.
33. See, e.g., LAWYERS FOR CIVIL JUSTICE, CIVIL JUSTICE REFORM GRP. & U.S. CHAMBER INST. FOR LEGAL REFORM, LITIGATION COST SURVEY OF MAJOR COMPANIES 6-7 (2010), available at http://civilconference.uscourts.gov/LotusQuickr/dcc/Main.nsf/$defaultview/33A2682A2D4EF700852577190060E4B5/$File/Litigation Cost Survey ofMajor Companies.pdf (citing the ACTL-IAALS final report and joining these organizations in the call for "fundamental reforms").
34. LEE & WILLGING, CASE-BASED CIVIL RULES SURVEY.
35. (discussing the differences between the median inflation-adjusted cost of litigation and discovery in the 1997 and 2008 studies).
36. As researchers, we are acutely aware that we do not know very much about discovery costs in civil litigation, largely because of the lack of studies, which in turn is the result of the inherent difficulties of studying this topic.
37. See Judith A. McKenna & Elizabeth C. Wiggins, Empirical Research on Civil Discovery, 39 B.C.L. REV. 785, 796-97 (1998) (discussing the methodological difficulties in studying discovery).
38. Of course, not every Fortune 200 company reported costs to the LCJ. Id. app. 1 at 4.
39. See infra Appendix.
40. These figures were created using the Lattice package in R. For more information on R, see generally R DEV. CORE TEAM, R: A LANGUAGE AND ENVIRONMENT FOR STATISTICAL COMPUTING: REFERENCE INDEX (2010), available at http://cran.r-project.org/doc/manuals/refman.pdf.
41. DEEPAYAN SARKAR, LATTICE: MULTIVARIATE DATA VISUALIZATION WITH R (2008).
42. Respondents were asked to estimate, in dollars, the best and worst "likely" outcomes from the point of view of their clients. Stakes were then calculated as the "spread" between these two figures.
43. (describing in detail the variables used). For a reprint of the questions used, see id. app. C at 94-95.
44. FED. R. CIV. P. 26(b)(2)(C)(iii).
45. ARTHUR R. MILLER, FED. JUDICIAL CTR., THE AUGUST 1983 AMENDMENTS TO THE FEDERAL RULES OF CIVIL PROCEDURE: PROMOTING EFFECTIVE CASE MANAGEMENT AND LAWYER RESPONSIBILITY 32 (1984).
46. See, e.g., KIRSTEN BARRETT, RHODA COHEN & JOHN HALL, MATHEMATICA POLICY RESEARCH, INC., ACTL CIVIL LITIGATION SURVEY, FINAL REPORT 41 (2008) (finding that "76.8% of Fellows agree that judges do not invoke Rule 26(b)(2)(C) on their own initiative").
47. The unweighted sample sizes were 1,184 for plaintiffs' attorneys and 1,193 for defendants' attorneys.
48. The 1997 FJC study found that 54 percent of all respondents reported that discovery expenses in the closed case were "about right" in relation to stakes, with 15 percent reporting that such expenses were "high" and 20 percent reporting that they were "low." Eleven percent did not express an opinion.
49. For a more complete discussion of attorney responses to the question "How much discovery is enough?,".
50. (reporting that 56.6 percent of plaintiffs' attorneys and 66.8 percent of defendants' attorneys reported that the discovery in their cases had resulted in "just the right amount" of information).
51. EMERY G. LEE III & THOMAS E. WILLGING, FED. JUDICIAL CTR., ATTORNEY SATISFACTION WITH THE FEDERAL RULES OF CIVIL PROCEDURE: REPORT TO THE JUDICIAL CONFERENCE ADVISORY COMMITTEE ON CIVIL RULES 10-11 & fig.11 (2010), available at http://www.fjc.gov/public/pdf.nsf/lookup/costciv2.pdf/$file/costciv2.pdf.
52. There is a lengthy literature on the role of heuristics in cognition. For an application of this literature in the legal literature, which applies an availability heuristic to risk perception.
53. see, for example, Cass R. Sunstein, Precautions Against What? The Availability Heuristic and Cross-Cultural Risk Perception, 57 ALA. L. REV. 75, 87-89 (2005).
54. For the classic essay on availability heuristics, see Amos Tversky & Daniel Kahneman, Availability: A Heuristic for Judging Frequency and Probability, 5 COGNITIVE PSYCHOL. 207 (1973).
55. ("[A]ll other industries report an average of 0.33 percent of revenue.").
56. See INST. FOR THE ADVANCEMENT OF THE AM. LEGAL SYS., SURVEY OF THE ARIZONA BENCH & BAR ON THE ARIZONA RULES OF CIVIL PROCEDURE 26-27, 29-42 (2010) [hereinafter INST. FOR THE ADVANCEMENT OF THE AM. LEGAL SYS., THE ARIZONA RULES OF CIVIL PROCEDURE] (discussing the Arizona Rules of Civil Procedure's presumptive limits on discovery).
57. INST. FOR THE ADVANCEMENT OF THE AM. LEGAL SYS., SURVEY OF THE OREGON BENCH & BAR ON THE OREGON RULES OF CIVIL PROCEDURE 31-43 (2010) [hereinafter INST. FOR THE ADVANCEMENT OF THE AM. LEGAL SYS., THE OREGON RULES OF CIVIL PROCEDURE] (discussing restrictions on discovery under the Oregon Rules of Civil Procedure).
58. Oregon, in addition, adheres to a form of fact pleading, which the IAALS also supports.
59. See Rebecca Love Kourlis, Jordan M. Singer & Natalie Knowlton, Reinvigorating Pleadings, 87 DENV. U. L. REV. 245, 266-67 (2010) ("The Oregon Supreme Court has repeatedly reaffirmed the state's commitment to fact pleading.").
60. INST. FOR THE ADVANCEMENT OF THE AM. LEGAL SYS., THE ARIZONA RULES OF CIVIL PROCEDURE.
61. INST. FOR THE ADVANCEMENT OF THE AM. LEGAL SYS., THE OREGON RULES OF CIVIL PROCEDURE.
62. (grouping the Oregon and Arizona surveys with the ACTL, ABA Section of Litigation, and NELA surveys).
63. This latter advantage is somewhat tautological. It would be strange if respondents did not agree that limits on discovery actually limit discovery. Interestingly, 35 percent of respondents expressed just this view.
64. (providing a 95 percent confidence level at plus or minus 3.54 percent for the entire sample of 767 valid responses). 54.
65. Moreover, there are many reasons why attorneys may prefer one forum to another; procedural rules are just one-and probably not the most important one.
66. In a study of choice of forum in class action litigation, for example, 78 percent of plaintiffs' attorneys identified the source of the claims (state law) as a reason for filing in state court.
67. Only 28 percent identified the favorableness of discovery rules, and only 31 percent identified lower costs of litigation. Respondents could, however, identify more than one reason for filing in a particular forum.
68. See THOMAS E. WILLGING & SHANNON R. WHEATMAN, FED. JUDICIAL CTR., AN EMPIRICAL EXAMINATION OF ATTORNEYS' CHOICE OF FORUM IN CLASS ACTION LITIGATION 18 tbl.2 (2005).
69. Without knowing more about why attorneys prefer the state courts to federal courts, it is not clear what one should conclude from this finding with respect to procedural rules.
70. The IAALS report includes a long list of reasons why respondents preferred the state forum, but these are not given particular weights.
71. See INSTITUTE FOR THE ADVANCEMENT OF THE AM. LEGAL SYS., THE ARIZONA RULES OF CIVIL PROCEDURE.
72. INST. FOR THE ADVANCEMENT OF THE AM. LEGAL SYS., THE OREGON RULES OF CIVIL PROCEDURE.
73. The Oregon report also notes a number of commonly held complaints about the Oregon discovery limits that are worth considering.
74. Almost 40 percent of respondents complained that the complete absence of interrogatories in Oregon "diminishe[d] counsel's ability to prepare for trial," and "a majority indicated that the absence of expert discovery decreases counsel's ability to prepare for trial.".
75. WILLIAM A. GLASER, PRETRIAL DISCOVERY AND THE ADVERSARY SYSTEM 180 tbl.43 (1968).
76. David M. Trubek, Austin Sarat, William L.F. Felstiner, Herbert M. Kritzer & Joel B. Grossman, The Costs of Ordinary Litigation, 31 UCLA L. REV. 72, 91 tbl.3 (1983).
77. James S. Kakalik, Deborah R. Hensler, Daniel F. McCaffrey, Marian Oshiro, Nicholas M. Pace & Mary E. Vaiana, RAND INST. FOR CIVIL JUSTICE, DISCOVERY MANAGEMENT: FURTHER ANALYSIS OF THE CIVIL JUSTICE REFORM ACT EVALUATION DATA, at xx (1998).
78. 1 at 15 fig.11. Note that for 2006 and 2007, the number of responding corporations is only four.
79. The report itself states, however, that its numbers "understate... discovery costs, because many discovery costs may go unmeasured and unreported".
80. ("At least 70% of respondents... agreed that discovery in general is too expensive.").
81. Lee H. Rosenthal, From Rules of Procedure to How Lawyers Litigate: 'Twixt the Cup and the Lip, 87 DENV. U. L. REV. 227, 228 (2010).
82. See Paul D. Carrington, Making Rules to Dispose of Manifestly Unfounded Assertions: An Exorcism of the Bogy of Non-Trans-Substantive Rules of Civil Procedure, 137 U. PA. L. REV. 2067, 2070 (1989).
83. ("Not only is perfection [in procedural rulemaking] impossible, but even excellence is unstable, especially so in a system dependent on the adversary tradition, because of changing circumstances and the corrosive effect of perpetual exploration and exploitation of systemic weaknesses by adversaries.").
84. Charles Silver, Does Civil Justice Cost Too Much?, 80 TEX. L. REV. 2073, 2074 (2002).
85. Interestingly, we find that, in general, nature-of-suit categories of cases do not affect costs, though there are a few notable exceptions.
86. We find that, once other factors are controlled for, tort cases are less costly for plaintiffs and that intellectual property cases are much more expensive for defendants than other kinds of cases.
87. But the other nature-of-suit categories are no more or less costly, on a consistent basis, than the baseline.
88. Attorneys representing plaintiffs in the closed cases who reported using hourly billing reported costs 25 percent higher than other attorneys, all else being equal.
89. There were so few defendants' attorneys using alternative fee arrangements that we cannot say what the effects of hourly billing are on defendants' costs.
90. Fewer than 5 percent of defendants'-attorney respondents reported using a billing method other than hourly billing.
91. Not surprisingly, very few plaintiffs' attorneys reported that their clients were producing-only parties.
92. This finding is consistent with those of the RAND study, which was also presented at the Duke Conference.
93. Email from Nicholas M. Pace, Behavioral/Soc. Scientist, RAND Corp., to Thomas E. Willging, Senior Researcher, Fed. Judicial Ctr. (June 28, 2010, 16:12 EDT) (on file with the Duke Law Journal).
94. For a video of Mr. Pace's presentation at the Duke Conference.
95. see Civil Litigation Conference, DUKE UNIV. SCH. OF LAW (May 10, 2010), http://www.law.duke.edu/webcast (follow "Civil Litigation Conference - 2" hyperlink).
96. (reporting that the overwhelming majority of plaintiffs' and defendants' attorneys-72.4 percent and 78.3 percent, respectively-reported that no disputes had occurred in the closed case).
97. Many plaintiffs' attorneys argue that summary judgment practice is not tethered by the constraints of Rule 56(c)(2) that there be "no genuine issue as to any material fact.".
98. (quoting plaintiffs' attorneys who argue that summary judgment is overused).
99. Linda S. Mullenix, The Pervasive Myth of Pervasive Discovery Abuse: The Sequel, 39 B.C.L. REV. 683 (1998).