Golden Oldie #5 – Fed.R.Civ.P. 26(g) and the “Discovery Budget”

Mancia v. Mayflower Textile Servs. Co., 253 F.R.D. 354 (D. Md. 2008), was an early decision on cooperation, boilerplate objections, waiver by failure to object properly, and a court-ordered meet-and-confer.  The case was a collective action under the Fair Labor Standards Act and Maryland wage and overtime law.

The Court outlined a process to resolve discovery issues, and wrote that “[t]he goal is to attempt to quantify a workable ‘discovery budget’ that is proportional to what is at issue in the case.” [Emphasis added].

Initially, during a hearing, the Court raised concerns about the breadth of plaintiff’s discovery requests and the nature of defense objections.  The Court’s memorandum opinion provided guidance for a meet-and-confer.

The Court wrote that: “One of the most important, but apparently least understood or followed, of the discovery rules is Fed.R.Civ.P. 26(g), enacted in 1983.”  That is the “stop and think” rule that provides that an attorney’s signature is a certification of reasonable and responsible conduct.  One purpose of the Rule is to curb discovery abuse.  The Mancia decision states that:

[Rule 26(g)] aspires to eliminate one of the most prevalent of all discovery abuses: kneejerk discovery requests served without consideration of cost or burden to the responding party….  Similarly, Rule 26(g) also was enacted over twenty-five years ago to bring an end to the equally abusive practice of objecting to discovery requests reflexively—but not reflectively—and without a factual basis.[1]

The Court explained that: “The failure to engage in discovery as required by Rule 26(g) is one reason why the cost of discovery is so widely criticized as being excessive—to the point of pricing litigants out of court.”  It added:

Rule 26(g) charges those responsible for the success or failure of pretrial discovery—the trial judge and the lawyers for the adverse parties—with approaching the process properly: discovery must be initiated and responded to responsibly, in accordance with the letter and spirit of the discovery rules, to achieve a proper purpose (i.e., not to harass, unnecessarily delay, or impose needless expense), and be proportional to what is at issue in the litigation, and if it is not, the judge is expected to impose appropriate sanctions to punish and deter.

The Mancia decision went on to explain how cooperation and Rule 26(g) should work together to reduce costs.  “However central the adversary system is to our way of formal dispute resolution, there is nothing inherent in it that precludes cooperation between the parties and their attorneys during the litigation process to achieve orderly and cost effective discovery of the competing facts on which the system depends.”

The Court wrote: “Thus, rules of procedure, ethics and even statutes make clear that there are limits to how the adversary system may operate during discovery.”  It expressly approved The Sedona Conference Cooperation Proclamation.

The Mancia Court’s multi-step solution to the problems in Mancia was:

• “First, I asked Plaintiffs and Defendants each to estimate the likely range of provable damages that foreseeably could be awarded if Plaintiffs prevail at trial.”
• “I then ordered that counsel for Plaintiffs and Defendants compare these estimates and attempt to identify a foreseeable range of damages, from zero if Plaintiffs do not prevail, to the largest award they likely could prove if they succeed.”
• “I also asked Plaintiffs’ counsel to estimate their attorneys’ fees.”

This “rough estimate” was designed to provide the range of the “amount in controversy” for proportionality analysis, i.e., a “discovery budget.”

Next the Court directed the parties to discuss the amount of discovery that had already been provided, “and then discuss the additional discovery still sought by Plaintiffs, in order to evaluate the Rule 26(b)(2)(C) factors, to determine whether Plaintiffs’ legitimate additional discovery needs could be fulfilled from non-duplicative, more convenient, less burdensome, or less expensive sources than those currently sought by the Plaintiffs.”

The parties were then directed to attempt to reach agreement – in full or in part – on what additional discovery should be provided, expressly considering “phased discovery.”

Finally, any remaining disputes were to be presented to the Court.  The opinion concluded:

[I]t is in the interests of each of the parties to engage in this process cooperatively. For the Defendants, doing so will almost certainly result in having to produce less discovery, at lower cost. For the Plaintiffs, cooperation will almost certainly result in getting helpful information more quickly, and both Plaintiffs and Defendants are better off if they can avoid the costs associated with the voluminous filings submitted to the court in connection with this dispute.

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[1] The Court wrote that: “The failure to particularize these objections as required leads to one of two conclusions: either the Defendants lacked a factual basis to make the objections that they did, which would violate Rule 26(g), or they complied with Rule 26(g), made a reasonable inquiry before answering and discovered facts that would support a legitimate objection, but they were waived for failure to specify them as required.”