COSTS AND BURDENS OF CIVIL DISCOVERY 

HEARING 

BEFORE THE

SUBCOMMITTEE ON THE CONSTITUTION 

OF THE

COMMITTEE ON THE JUDICIARY 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED TWELFTH CONGRESS 

FIRST SESSION 

DECEMBER 13, 2011 

Serial No. 112–72 

Printed for the use of the Committee on the Judiciary 

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COSTS AND BURDENS OF CIVIL DISCOVERY 

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COSTS AND BURDENS OF CIVIL DISCOVERY 

HEARING 

BEFORE THE

SUBCOMMITTEE ON THE CONSTITUTION 

OF THE

COMMITTEE ON THE JUDICIARY 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED TWELFTH CONGRESS 

FIRST SESSION 

DECEMBER 13, 2011 

Serial No. 112–72 

Printed for the use of the Committee on the Judiciary 

( 

Available via the World Wide Web: http://judiciary.house.gov 

(II) 

COMMITTEE ON THE JUDICIARY 

LAMAR SMITH, Texas, Chairman 

F. JAMES SENSENBRENNER, JR., 

Wisconsin 

HOWARD COBLE, North Carolina 

ELTON GALLEGLY, California 

BOB GOODLATTE, Virginia 

DANIEL E. LUNGREN, California 

STEVE CHABOT, Ohio 

DARRELL E. ISSA, California 

MIKE PENCE, Indiana 

J. RANDY FORBES, Virginia 

STEVE KING, Iowa 

TRENT FRANKS, Arizona 

LOUIE GOHMERT, Texas 

JIM JORDAN, Ohio 

TED POE, Texas 

JASON CHAFFETZ, Utah 

TIM GRIFFIN, Arkansas 

TOM MARINO, Pennsylvania 

TREY GOWDY, South Carolina 

DENNIS ROSS, Florida 

SANDY ADAMS, Florida 

BEN QUAYLE, Arizona 

MARK AMODEI, Nevada 

JOHN CONYERS, JR., Michigan 

HOWARD L. BERMAN, California 

JERROLD NADLER, New York 

ROBERT C. ‘‘BOBBY’’ SCOTT, Virginia 

MELVIN L. WATT, North Carolina 

ZOE LOFGREN, California 

SHEILA JACKSON LEE, Texas 

MAXINE WATERS, California 

STEVE COHEN, Tennessee 

HENRY C. ‘‘HANK’’ JOHNSON, JR., 

Georgia 

PEDRO R. PIERLUISI, Puerto Rico 

MIKE QUIGLEY, Illinois 

JUDY CHU, California 

TED DEUTCH, Florida 

LINDA T. SA ́ NCHEZ, California 

JARED POLIS, Colorado 

SEAN MCLAUGHLIN, Majority Chief of Staff and General Counsel 

PERRY APELBAUM, Minority Staff Director and Chief Counsel 

SUBCOMMITTEE ON THE CONSTITUTION

TRENT FRANKS, Arizona, Chairman 

MIKE PENCE, Indiana, Vice-Chairman 

STEVE CHABOT, Ohio 

J. RANDY FORBES, Virginia 

STEVE KING, Iowa 

JIM JORDAN, Ohio 

JERROLD NADLER, New York 

MIKE QUIGLEY, Illinois 

JOHN CONYERS, JR., Michigan 

ROBERT C. ‘‘BOBBY’’ SCOTT, Virginia 

PAUL B. TAYLOR, Chief Counsel 

DAVID LACHMANN, Minority Staff Director 

(III) 

C O N T E N T S 

DECEMBER 13, 2011 

Page 

OPENING STATEMENTS 

The Honorable Trent Franks, a Representative in Congress from the State 

of Arizona, and Chairman, Subcommittee on the Constitution ....................... 1 

The Honorable Jerrold Nadler, a Representative in Congress from the State 

of New York, and Ranking Member, Subcommittee on the Constitution ....... 2 

The Honorable John Conyers, Jr., a Representative in Congress from the 

State of Michigan, Ranking Member, Committee on the Judiciary, and 

Member, Subcommittee on the Constitution ..................................................... 16 

WITNESSES 

Rebecca Love Kourlis, Executive Director, Institute for the Advancement of 

the American Legal System, University of Denver 

Oral Testimony ..................................................................................................... 18 

Prepared Statement ............................................................................................. 20 

William H. J. Hubbard, Assistant Professor of Law, The University of Chicago 

Law School 

Oral Testimony ..................................................................................................... 65 

Prepared Statement ............................................................................................. 68 

William P. Butterfield, Partner, Hausfeld LLP 

Oral Testimony ..................................................................................................... 135 

Prepared Statement ............................................................................................. 137 

Thomas H. Hill, Associate General Counsel, Environmental Litigation and 

Legal Policy, General Electric Company 

Oral Testimony ..................................................................................................... 318 

Prepared Statement ............................................................................................. 320 

LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING 

Letter from the Department of Justice to the Federal Judicial Conference ....... 4 

Letter from the Committee on Rules of Practice and Procedure of the Judicial 

Conference of the United States to the Honorable Jerrold Nadler, Ranking 

Member, Subcommittee on the Constitution, Committee on the Judiciary .... 11 

APPENDIX 

MATERIAL SUBMITTED FOR THE HEARING RECORD

Letter from the Committee on Rules of Practice and Procedure of the Judicial 

Conference of the United States to the Honorable Trent Franks, Chairman, 

Subcommittee on the Constitution, Committee on the Judiciary, submitted 

by the Honorable Trent Franks, a Representative in Congress from the 

State of Arizona, and Chairman, Subcommittee on the Constitution ............. 338 

Prepared Statement of Lawyers for Civil Justice, submitted by the Honorable 

Trent Franks, a Representative in Congress from the State of Arizona, 

and Chairman, Subcommittee on the Constitution ........................................... 343 

(1) 

COSTS AND BURDEN OF CIVIL DISCOVERY 

TUESDAY, DECEMBER 13, 2011 

HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON THE CONSTITUTION, 

COMMITTEE ON THE JUDICIARY, 

Washington, DC. 

The Subcommittee met, pursuant to call, at 1:39 p.m., in room 

2141, Rayburn House Office Building, the Honorable Trent Franks 

(Chairman of the Subcommittee) presiding. 

Present: Representatives Franks, Chabot, Jordan, Nadler, Conyers, Scott, and Quigley. 

Staff Present: (Majority) Holt Lackey, Counsel; Sarah Vance, 

Clerk; (Minority) Heather Sawyer, Counsel; and Veronica Eligan, 

Professional Staff Member. 

Mr. FRANKS. Well, thank you all for being here. I thank those in 

the audience and the panel members and the Members here. I 

want to welcome you to the Constitution Subcommittee hearing on 

the ‘‘Costs and Burdens of Civil Discovery.’’ 

Without objection, the Chair is authorized to declare recesses of 

the Committee at any time. 

Since January, this Committee and the House of Representatives 

as a whole have worked to identify Federal rules and regulations 

that impose undue costs and burdens and destroy American jobs. 

Today’s hearing examines whether unclear rules governing discovery in civil litigation are making our civil justice system too expensive. Rule I of the Federal Rules of Civil Procedure provides 

that all of the other rules ‘‘should be construed and administered 

to secure the just, speedy, and inexpensive determination of every 

action and proceeding.’’ Current discovery rules appear to fall short 

of this ideal. 

Instead of encouraging quick, fair and affordable fact-finding, the 

current system of civil discovery encourages parties to bury each 

other in onerous requests for more and more data of dubious evidentiary value. The problem is exacerbated by the explosion of potentially discoverable data in our digital world. The amount of data 

generated in the world is increasing geometrically today, doubling 

every 2 years. In 2010, the world created the zettabyte, which is 

1 billion terabytes of data. 

By comparison, it is estimated that if one scanned every book 

and magazine in the entire Library of Congress, it would equal 

about 136 terabytes of information. This means that in the year 

2010 alone, the world produced as much data as could be contained 

or would be contained in 7.4 million Libraries of Congress. The cost 

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of retaining, collecting, producing and reviewing all of the data that 

may be subject to discovery runs from tens of thousands of dollars 

in a typical case to many millions of dollars in a larger case. 

The costs of civil discovery are increasing because the discovery 

rules are too vague. Current law gives parties little guidance as to 

what discoverable information truly is, when they are required to 

preserve information, and what their discovery obligations are. But 

the sanctions for running afoul of a court’s interpretation of the 

discovery rules can be onerous, including striking a party’s pleadings or adverse jury instructions. These vague standards and harsh 

sanctions combine to leave parties with little or no choice but to err 

on the side of preserving more documents and data, driving costs 

higher still. 

This system imposes considerable costs on American businesses, 

forcing them to spend money that could be put to more productive 

uses. It also makes access to the justice system more expensive for 

individuals and businesses alike. Everyone agrees that parties to 

civil litigation are entitled to discovery of relevant documents in 

the other party’s possession, and that destruction of evidence for 

the purpose of preventing its use at trial should be sanctioned. 

Even a perfect discovery system would still cost money, but the 

current system is inefficient and costs far more money than needed 

to do justice. 

The high costs of discovery have led to a world in which cases 

are often resolved based upon the parties’ ability to impose discovery costs on one another instead of the merits of their respective 

cases. The result is that many meritorious cases are not brought 

because the cost of litigation exceeds the plaintiff’s likely recovery. 

Other cases settle based on the cost of litigation rather than the 

merits. As one of our distinguished witnesses, Justice Rebecca 

Kourlis has written, ‘‘The status quo is not good enough. We created the current system. We must now create a better one.’’ 

The Civil Rules Advisory Committee of the Judicial Conference 

is currently considering proposed rule changes to address many of 

these issues, and I salute their efforts and look forward to their 

recommendations. Today’s hearing is part of the same effort to create a better civil discovery system, and I hope that today’s hearing 

helps return the rules of civil procedure to their purpose, ‘‘to secure 

the just, speedy, and inexpensive determination of every action and 

proceeding.’’ 

With that, I thank you all for being here and would like to recognize now the distinguished Mr. Nadler for his opening statement. 

Mr. NADLER. Thank you, Mr. Chairman. 

Nothing in the title of today’s hearing even remotely acknowledges any upside to civil discovery or recognizes its role in allowing 

parties and the courts to uncover the facts so that cases can be resolved based on the merits and in a timely and just manner. Discovery allows for early testing of claims, helping to cull those without merit and encouraging prompt resolution where culpability is 

revealed, and it minimizes the ability of any party to conceal facts 

or otherwise rely on gamesmanship or surprise. 

Electronic discovery, while unquestionably posing new challenges 

and burdens, has proven particularly valuable in uncovering critical evidence and improving accountability. For example, in a fraud 

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lawsuit brought against the Swiss bank UBS AG related to sale of 

asset-backed securities, the types of securities that led to massive 

defaults on debt tied to subprime mortgages and to a worldwide 

credit crisis, email exchanges revealed employees referring to the 

asset-backed securities that they were selling as ‘‘vomit’’ and 

‘‘crap.’’ 

In a Medicaid fraud case brought against a pharmaceutical company for inflating prices of its drugs, the Attorney General of Mississippi attributed a $38.2 million verdict to the discovery of emails 

from a drug company executive revealing the pricing scheme. 

As Attorney General Jim Hood explained, ‘‘It took a lot of hours 

and expense for the State to uncover these types of smoking gun 

documents to make our case. The facts are clear that the company 

used voodoo math to defraud the State.’’ 

We should not lose sight of the tremendous benefits of discovery 

in our focus on its alleged costs and burdens. And while we undoubtedly will hear much today about an urgent need to change 

our civil discovery rules to address skyrocketing discovery costs, 

that claim is not shared by many of the key experts and stakeholders in our civil justice system. 

In preliminary views provided to the Advisory Committee on 

Civil Rules of the Judicial Conference of the United States regarding reform of discovery rules, the Department of Justice has expressed, ‘‘Significant concerns that a rule is being considered without adequate empirical evidence that a rule change is, in fact, 

needed.’’ 

The Justice Department is involved in one-third of all Federal 

civil cases, either as a plaintiff or a defendant. Its views on this 

issue should not be taken lightly, and I ask unanimous consent to 

include the DOJ’s September 7 letter to the Federal Judicial Conference in the record of today’s hearing. 

Mr. FRANKS. Without objection. 

[The information referred to follows:] 

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Mr. NADLER. Thank you. 

The Committee on Rules of Practice and Procedure of the Judicial Conference also sent a letter to the Subcommittee for this 

hearing. And I ask that a copy of that letter be included in the 

record as well. 

Mr. FRANKS. Without objection. 

[The information referred to follows:] 

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Mr. NADLER. Thank you. The Judicial Conference is the body 

that Congress has charged with responsibility for making rules 

governing ‘‘practice, procedure and evidence’’ in the Federal courts 

and, as explained in its letter to the Subcommittee, the ‘‘process for 

examining and addressing concerns [regarding the costs, burdens, 

and delays of discovery in civil cases] is already well underway.’’ 

The Judicial Conference Advisory Committees have conducted 

empirical research, reviewed existing statutes, regulations, and 

rules to assess how potential changes would interact with existing 


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obligations, and have sought input from hundreds of judges and 

lawyers. 

In light of the considerable work that has and will continue to 

be done, the Judicial Conference’s rules advisory committee, ‘‘Urges 

us to allow the Rules Committee to continue their consideration of 

these issues through the thorough, deliberate, and time-tested procedure Congress created in the Rules Enabling Act.’’ 

Through this same process, we recently amended the civil discovery rules to address concerns about the increased costs and burdens of electronic discovery. Those amendments were made in 

2006, a mere 5 years ago, and they emphasize greater coordination 

and cooperation among lawyers and parties to lawsuit driven by increased court oversight and management. 

Through these amendments, litigants can take advantage of the 

fact that existing rules require consideration of whether the costs 

of discovery outweighs potential benefits. 

Indeed, existing Federal Rules of Civil Procedure, 26(b)(2)(C) 

tells courts that they must limit discovery if, among other things, 

‘‘the burden or expense of the proposed discovery outweighs its 

likely benefit, considering the needs of the case, the amount of controversy, the partyies’ resources, the importance of issues at stake 

in the action, and the importance of the discovery resolving the 

issues.’’ 

Existing rules already require proportionality, and early and consistent efforts by parties and the courts to manage discovery. Before anyone rushes to amend the rules, we should first make sure 

there is a clear need to do so. 

I urge similar skepticism and exploration with regard to the 

claimed need to amend the rules to standardize preservation obligations or to revise discovery sanctions. The Justice Department is 

cautioning that language addressing these particular issues might, 

‘‘Create new unworkable burdens on the Federal Government, and 

would not result in the consistency or predictability sought.’’ 

While the need for revision of the rule seems far from clear, the 

potential for significant and unlikely—I’m sorry—the potential for 

significant and likely unintended consequences, at perhaps a much 

greater cost, from making amendments is not. 

Given that, I am particularly interested in learning from our witnesses today how the committees of the Judicial Conference who 

are studying these issues have responded to their concerns and any 

recommendations that they have made to that body. 

With that, I yield back the balance of my time. 

Mr. FRANKS. I thank the gentleman. I yield now to the distinguished Ranking Member of the full Committee, Mr. Conyers. 

Mr. CONYERS. Thank you very much, Mr. Chairman. 

We’re here today to consider what could be a very important 

issue that concerns the Judicial Conference, the Federal Judicial 

Conference and the first question that has to arise is, they have 

been working on this for a considerable period of time, and on behalf of all those that are wondering why are they not scheduled as 

witnesses at this hearing on a subject matter that they have been 

working on longer than the Committee has, and so I would yield 

to our distinguished Chairman if he cares to respond to that part 

of my opening statement. 

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Mr. FRANKS. Mr. Conyers, we conferred with those—did you ask 

me to respond to your question, sir? 

Mr. CONYERS. Yes. 

Mr. FRANKS. Okay, I am sorry. I didn’t want to—we did confer 

with some of those judges that they felt that a letter would be more 

appropriate since they were Article III judges, it wouldn’t be appropriate for them to come to the Committee, just to clarify. 

Mr. CONYERS. Well, then apparently their letter may not have 

been as persuasive upon you as they would have hoped that it 

would, because you determined to continue the hearings anyway. 

Now, let’s be clear about this, we’re talking about the largest 

kinds of cases, civil cases, that we can have. These are the very 

large corporation cases, and I should report to you that the Federal 

Judicial Conference pointed out that less than one-tenth of 1 percent of the total number of cases would fit the requirements of 

what it is we’re discussing here today. And, even so, that only a 

fraction of those one-tenth of 1 percent of the cases have the courts 

granted sanctions. 

And so what we’re talking about is a small handful of cases, and 

this suggests that this may have—this whole hearing may be based 

on some corporation insisting that they be heard about this matter, 

and it would seem to me, gathering this much evidence, is an indication of creating jobs, not costing jobs. And so it’s, to me, a very 

interesting look inside the court procedures. 

I think we have to remember that the Judicial Conference has 

been conducting themselves appropriately over the years, as far as 

I am concerned. Their recommendations, if any, could have come 

out from the Civil Rules Committee in—next spring. The Standing 

Committee of the Judicial Conference could have approval by the 

summer of next year. It would go to the full Judicial Conference 

in the fall, September of next year, then to the Supreme Court the 

end of the year. And then it would then go to the Congress in the 

summer of June, 2013, and we in the Congress—I am trusting that 

all of the Members, including myself, will be back in June of 

2013—in which time we would have 6 months to approve or disapprove the recommendations of the conference committee. 

Now, I want to ask the witnesses, the distinguished witnesses 

that will appear before us, and the Members of the Subcommittee, 

what’s wrong with this timeline and why are we complaining about 

this when it is not a confidential or secret matter, and we could get 

this with another letter. 

So I approach this hearing with the kind of skepticism that has 

been voiced in my opening statement, and I thank the Chairman. 

Mr. FRANKS. And I thank the gentleman for his opening statement. 

And now, without objection, other Members’ opening statements 

will be made part of the record and I would invite the witnesses 

to come forward and be seated at the table. I want to welcome all 

of you again here this afternoon. 

Our first witness is Rebecca Love Kourlis. She is a former justice 

of the Colorado Supreme Court. She is now the Executive Director 

of the Institute for the Advancement of the American Legal System 

at the University of Denver. One of the areas in which the InstiVerDate Aug 31 2005 16:07 Feb 14, 2012 Jkt 000000 PO 00000 Frm 00023 Fmt 6633 Sfmt 6601 H:\WORK\CONST\121311\71623.000 HJUD1 PsN: DOUGA
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tute works is its rule 1 initiative, which seeks to make the civil justice system more accessible, efficient and accountable. 

Our second witness, Professor William Hubbard, is an Assistant 

Professor of Law at The University of Chicago Law School. Professor Hubbard holds both a J.D. and a Ph.D. in economics from 

The University of Chicago. Professor Hubbard’s current research 

primarily involves economic analysis of litigation, courts and civil 

procedure, including conducting empirical research on the costs of 

electronic discovery. 

Our third witness, William Butterfield, is a partner and the chair 

of the financial services practice group at Hausfield, LLP, in Washington, D.C. Mr. Butterfield is on the steering committee of The 

Sedona Conference Working Group on Electronic Document Retention and Production, nice short name, Mr. Butterfield. Mr. 

Butterfield is also an adjunct professor at American University 

where he teaches a course in electronic discovery. He is on the faculty of Georgetown University Law Center’s Advanced E-Discovery 

Institute. 

And our fourth and final witness, Thomas Hill, is the Associate 

General Counsel For Environmental Litigation and Legal Policy at 

General Electric Company. Over his 20-year career at GE, Mr. Hill 

has managed some of the company’s most complex litigation and 

gained first-hand experience of the costs and burdens of civil discovery. Prior to joining GE, Mr. Hill practiced law in Michigan. 

And welcome again to all of you. Each of the witnesses’ written 

statements will be entered into the record in its entirety. I would 

ask that each witness summarize his or her testimony in 5 minutes 

or less. And to help you stay within that timeframe, there is timing 

light on your table. When the light switches from green to yellow, 

you will have 1 minute to conclude your testimony. When the light 

turns red, it signals that the witness’ 5 minutes have expired. 

So before I recognize the witnesses, it is the tradition of this Subcommittee that they be sworn, so if you would please stand. 

[Witnesses sworn.] 

Mr. FRANKS. Thank you. Please be seated. I would now recognize 

our first witness, Justice Rebecca Kourlis, for 5 minutes. 

TESTIMONY OF REBECCA LOVE KOURLIS, EXECUTIVE DIRECTOR, INSTITUTE FOR THE ADVANCEMENT OF THE AMERICAN LEGAL SYSTEM, UNIVERSITY OF DENVER 

Ms. KOURLIS. Mr. Chairman. 

Mr. FRANKS. Pull that microphone to you, Ms. Kourlis, just a little closer and then push the button. 

Ms. KOURLIS. Down? 

Mr. FRANKS. Yes. 

Ms. KOURLIS. There we go, thank you very much. 

Thank you for the opportunity to be here and for your interest 

in this subject. 

As a trial court judge in Colorado, and a member of the Colorado 

Supreme Court, and now as the executive director of IAALS at the 

University of Denver, I have become increasingly concerned about 

the functioning of the civil justice system. 

Over the three decades of my involvement on every side of the 

bench, it has become more and more expensive and, accordingly, inVerDate Aug 31 2005 16:07 Feb 14, 2012 Jkt 000000 PO 00000 Frm 00024 Fmt 6633 Sfmt 6601 H:\WORK\CONST\121311\71623.000 HJUD1 PsN: DOUGA
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accessible and mistrusted. As you have heard, one of the areas of 

focus for IAALS is, indeed, the civil justice process. We have done 

surveys, conducted legal research and docket studies. We have convened groups of stakeholders, including the American College of 

Trial Lawyers’ Task Force, which consists of plaintiff and defense 

attorneys, and we have promulgated recommendations for change. 

The bottom line in what we have learned is reflected in the title 

of this hearing. The civil justice system in the United States is too 

expensive and too complex. A lawsuit takes too long and costs too 

much, and this is not just about big cases. Recent studies show 

that attorneys will not even take a case unless there is at least 

$100,000 at issue and lawsuits do, indeed, frequently settle for reasons related to the costs of litigation, not the merits of the lawsuit. 

As you will hear in more detail from other witnesses, the advent 

of the electronic age has, indeed, added a whole new layer of complexity and corporate counsel will say that if a case involves $2 to 

$3 million in legal fees, electronic discovery can easily add another 

2 to 3 million. 

Civil jury trials have all but vanished, and that’s a very bad 

thing. The involvement of citizens in the court system, both infuses 

common sense and provides another check and balance. The culprit 

seems to be, to some significant extent, the way in which the pretrial process unfolds. 

All of us here at this table and most of the bench and bar across 

the country, share a commitment to the preservation and realignment of the system. I would venture to say all of us would say that 

the goal of the pretrial process is to protect the search for the 

truth, but in a way that keeps the doors of the courthouse and the 

jury box open, a way that maintains certainty, efficiency and fairness, and these are not inconsistent goals. 

The solutions to these problems that are being addressed across 

the country and that you will hear addressed here today generally 

fall into three categories, rules changes, more effective judicial case 

management and cooperation among attorneys during the discovery phase of the trial. IAALS supports all three, the need for 

early judicial intervention, attentive and astute case management 

by judges, the need for cooperation and professionalism among 

counsel. 

However, it is IAALS’ view that real change will only be institutionalized if it is accompanied by rules changes. Otherwise, it runs 

the risk of being episodic courtroom by courtroom or case by case. 

The Standing Committee and the Civil Rules Advisory Committee are struggling with these issues. The mandate of the judicial 

conference and the court is, indeed, to assure that the system is 

truly just, speedy and inexpensive. This is a problem that is bigger 

than a preservation rule. 

Some of the steps that the Judicial Conference will need to take 

to meet the goal of a just, speedy and inexpensive system will require courage and leadership. All of us defer to the Judicial Conference in that role, but all of us have a stake in the outcome far 

beyond the application of civil cases filed in Federal courts. It is not 

an overstatement to say that the public trust and confidence in the 

system is at stake. 

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Our system must work for plaintiffs and defendants alike, it 

must be accessible and efficient. Our social contract depends upon 

it. 

Thank you. 

Mr. FRANKS. Thank you, Justice Kourlis. 

[The prepared statement of Ms. Kourlis follows:] 


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APPENDIX B 


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Mr. FRANKS. And now we will recognize Mr. Hubbard for 5 minutes, sir. 

TESTIMONY OF WILLIAM H. J. HUBBARD, ASSISTANT PROFESSOR OF LAW, THE UNIVERSITY OF CHICAGO LAW 

SCHOOL 

Mr. HUBBARD. Thank you, Chairman Franks and Ranking Member Nadler for this opportunity to testify. 

I’m going to begin by simply highlighting a few of the points with 

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I’m going to begin with the data on the cost of litigation and discovery. In this context, I mean the cost of the processing, review, 

and production of documents and data in litigation. The studies 

that address the costs of litigation discovery do not include in those 

costs the costs of preservation. I’m going to address those separately in a moment. 

A recent major study shows that most cases in Federal court involve relatively modest spending on discovery. According to the 

study, the median case in Federal court has about $35,000 in litigation costs split between the Plaintiff and the defendant. And of 

these costs, about one-third is attributable to discovery. 

In the median case, then, discovery costs do not appear to be 

overwhelmingly high. One needs to be careful in interpreting this 

data, however. If cases settle in order to avoid what would have 

been high discovery costs, we are unable to observe those costs, and 

those will not show up in the data. Furthermore, the median case 

is not representative of the entire distribution of cases, and in this 

respect, I’m drawing not only on the data from the FJC study, 

which was referenced in the comments earlier, but also a number 

of other studies focusing on the costs of litigation, and my own interpretation of data that I have collected. 

The median case is not representative of the entire distribution 

of cases. In fact, the distribution of litigation and discovery costs 

has what I’d like to refer to as a long tail. There are many cases 

that have relatively modest costs, but a small but substantial number of cases whose costs vastly exceed the cost of the median case. 

In this respect, looking only at the Federal Judicial Center study 

data, we see that the top 5 percent of cases have discovery costs 

that go into the hundreds of thousands of dollars. And, in fact, the 

distribution of costs is so skewed that the top 5 percent of cases 

in terms of litigation costs account for 60 percent of all litigation 

costs. This data suggests that this long tail of extreme outliers may 

have a great impact on the overall costs of the civil justice system. 

I’ll now turn to the costs associated with the preservation of 

data. Here I’m going to highlight two findings. First, it appears 

that the costs of preservation, much like the costs of discovery, are 

highly skewed. There are a large number of matters that have a 

moderate amount of preservation and a long tail of matters in 

which the preservation burdens are very high and very costly. 

Secondly, there are many matters for which there are little or no 

discovery or litigation costs in the sense that I discussed above, but 

nonetheless have preservation costs and may, in fact, have very 

high preservation costs. This is because there are many cases that 

settle either before a lawsuit is filed or shortly after a lawsuit is 

filed and therefore have very little attorneys’ fees. 

To the eyes of judges and outside counsel, these cases appear to 

be relatively inexpensive to the system. But to a party that has had 

to preserve large amounts of data in anticipation of litigation, the 

cost of that matter could be in the tens or hundreds of thousands 

of dollars. 

This is because, under current law, which is the product of judicial decisionmaking, parties are required to disrupt or alter their 

normal business activities for the sake of preservation, even before 

a lawsuit is filed. This brings me to the question of how the FedVerDate Aug 31 2005 16:07 Feb 14, 2012 Jkt 000000 PO 00000 Frm 00072 Fmt 6633 Sfmt 6601 H:\WORK\CONST\121311\71623.000 HJUD1 PsN: DOUGA
67 

eral rulemaking process might reduce the cost and burdens of the 

civil litigation system. In this respect, the rules need to create incentives for the proper consideration of both the costs and benefits 

of preservation and discovery. 

As I mentioned, under current law, there’s an obligation imposed 

on parties not only in Federal court to abide by Federal judicial decisions on preservation, but also parties outside of Federal court, 

and, in fact, parties who may anticipate litigation but, in fact, 

never end up in Federal court, are, nonetheless, obligated to observe these rules with respect to preservation and incur the costs 

of preservation, even if, as I said, the matters for which they are 

preserving do not end up in court, let alone any Federal court. 

Clear Federal rules should help to reduce the ambiguity and 

overbreadth of current case law and reduce the costs of civil litigation to society. Thank you. 

Mr. FRANKS. Thank you, Professor Hubbard. 

[The prepared statement of Mr. Hubbard follows:] 

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WHJH-12.eps
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WHJH-13.eps
81 

APPENDIX A 


WHJHA-1.eps
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WHJHA-2.eps
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WHJHA-3.eps
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WHJHA-4.eps
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WHJHA-5.eps
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WHJHA-6.eps
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WHJHA-7.eps
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WHJHA-8.eps
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WHJHA-9.eps
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WHJHA-10.eps
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WHJHA-11.eps
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WHJHA-12.eps
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WHJHA-13.eps
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WHJHA-14.eps
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WHJHA-15.eps
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WHJHA-16.eps
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WHJHA-17.eps
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WHJHA-18.eps
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WHJHA-19.eps
100 


WHJHA-20.eps
101 

APPENDIX B 


WHJHB-1.eps
102 


WHJHB-2.eps
103 


WHJHB-3.eps
104 


WHJHB-4.eps
105 


WHJHB-5.eps
106 

APPENDIX C 


WHJHC-1.eps
107 


WHJHC-2.eps
108 


WHJHC-3.eps
109 


WHJHC-4.eps
110 


WHJHC-5.eps
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WHJHC-6.eps
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WHJHC-7.eps
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WHJHC-8.eps
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WHJHC-9.eps
115 


WHJHC-10.eps
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WHJHC-11.eps
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WHJHC-12.eps
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WHJHC-13.eps
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WHJHC-14.eps
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WHJHC-15.eps
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WHJHC-16.eps
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WHJHC-17.eps
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WHJHC-18.eps
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WHJHC-19.eps
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WHJHC-20.eps
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WHJHC-21.eps
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WHJHC-22.eps
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WHJHC-23.eps
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WHJHC-24.eps
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WHJHC-25.eps
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WHJHC-26.eps
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WHJHC-27.eps
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WHJHC-28.eps
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WHJHC-29.eps
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Mr. FRANKS. We will now hear from Mr. Butterfield. 

TESTIMONY OF WILLIAM P. BUTTERFIELD, 

PARTNER, HAUSFELD LLP 

Mr. BUTTERFIELD. Thank you, Mr. Chairman, Ranking Member 

Nadler, Members of the Subcommittee. The purpose of discovery 

under our Federal rules is not a trivial one. The purpose of our 

civil justice system is to determine the truth and decide cases on 

the merits, and this depends on discovery of the facts. Making sure 

that cases get decided on the merits is one of the primary reasons 

why Congress stressed the ability to obtain discovery when it instituted the Federal Rules of Civil Procedure in 1938. Now, you have 

heard a lot, and you will hear undoubtedly a lot more today about 

the exorbitant costs of discovery, the costs of overpreservation and 

the urgent need to rein in those costs. 

But here’s what you need to know. Let’s talk about discovery 

costs in general. There’s no question that in the electronic age, litigation has dramatically changed the way discovery is conducted 

and has increased the complexity and difficulty of discovery. But, 

even so, discovery costs are not significantly higher than they were 

15 years ago. Objective empirical data—and that primarily comes 

from the Federal Judicial Conference—demonstrates that discovery 

costs for cases involving electronic discovery are about $30,000 to 

$40,000 at the median, and they’re also modest in comparison to 

the stakes of the litigation and in comparison to the total litigation 

costs. 

Those who promote drastic changes to the Federal rules on discovery concede this because they must. Instead, they focus on what 

they admit are the outliers, and you have just heard Professor 

Hubbard talk about it. Discovery costs in the largest cases involving the largest corporations, what professor Hubbard refers to as 

cases in the long tail, the top 5 percent, most complex and costly 

cases. 

Well, it should come as no surprise to anyone here that discovery 

in those cases is costly. It always will be because there always will 

be some large, important and complex cases, but amendments to 

the Civil Rules won’t change that. And clarifying the Rules of Civil 

Procedure that apply to all 300,000 cases filed annually, to address 

the complexities in a few thousand of those cases, poses substantial 

risks to our civil justice system. 

So what do we know about the costs of preservation specifically? 

Well, as Professor Hubbard has acknowledged, our knowledge of 

that is rudimentary. We know next to nothing. 

And what about sanctions? Are they out of control? One of the 

things you are being told here today is that companies are overpreserving because there’s no clarity by courts regarding sanctions. 

They’re overpreserving and bearing the costs of that over-preservation because they sold fewer sanctions. 

What we do know is that the risks of sanctions for inadvertent 

failure to preserve documents is minimal. The data support that. 

A recent study by the Federal Judicial Conference showed that motions for sanctions were sought in just one-fifteenth of 1 percent of 

the cases that were studied, one-fifteenth of 1 percent. They were 

granted in only more than slightly half the time. 

136 

So if my math is correct, you have about a one-thirtieth of 1 percent chance of getting sanctioned for evidence spoiliation. As one 

e-discovery expert suggested the other day, you have a better 

chance of getting struck by lightning than getting sanctioned for 

failure to preserve. 

Beware of the unintended consequences here. Let me give you a 

few examples. One of the proposals would seek to apply preservation obligations only for loss of material information. Now, how do 

you know what is material? It’s hard enough to know what’s relevant before a lawsuit is filed or before we get very far in litigation. 

It’s even more difficult to figure out what’s material to that litigation. 

Another proposal would trigger preservation only on the filing of 

a complaint. So what happens when critical information gets destroyed between an event and the filing of a lawsuit where it’s obvious that litigation will follow that event? Wouldn’t this type of 

standard eviscerate long-standing statutes of limitation by forcing 

people to file lawsuits immediately without any opportunity to 

work things out before a lawsuit is filed, and wouldn’t that cause 

more lawsuits to be filed? Wouldn’t companies spend more money 

to litigate those lawsuits that were being filed? 

Companies say that they’re worried about their reputation when 

they get sanctioned. Shouldn’t they worry about their reputation 

when lawsuits are filed against them, and more lawsuits will be 

filed against them if people have to rush to the courthouse. 

Another proposal calls only for sanctions regarding willful conduct. What we do when conduct is not in bad faith, though a simple 

mistake, causes a complete loss of evidence to the other party. 

What do we tell the other innocent party in that case? Sorry, 

you’re out of luck. Tough luck, you’re out of court? We suggest that 

it’s not appropriate to rush to amend the rules at this time. The 

Federal Judiciary Conference is closely studying it, and they should 

be allowed to continue. 

Thank you. 

Mr. FRANKS. Thank you, Mr. Butterfield. 

[The prepared statement of Mr. Butterfield follows:] 

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WPB-19.eps
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WPB-20.eps
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APPENDICES 


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WPBA-2.eps
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APPENDIX 1 


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WPB1-2.eps
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WPB1-3.eps
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WPB1-4.eps
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WPB1-5.eps
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WPB1-6.eps
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WPB1-7.eps
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WPB1-8.eps
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WPB1-9.eps
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WPB1-10.eps
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WPB1-11.eps
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WPB1-12.eps
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WPB1-13.eps
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WPB1-14.eps
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WPB1-15.eps
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WPB1-16.eps
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WPB1-17.eps
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WPB1-18.eps
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WPB1-19.eps
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WPB1-20.eps
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WPB1-21.eps
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WPB1-22.eps
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WPB1-23.eps
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WPB1-24.eps
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WPB1-25.eps
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WPB1-26.eps
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WPB1-27.eps
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WPB1-28.eps
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WPB1-29.eps
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WPB1-30.eps
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WPB1-31.eps
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APPENDIX 2 


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WPB2-3.eps
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WPB2-4.eps
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WPB2-5.eps
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WPB2-6.eps
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APPENDIX 3 


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WPB3-2.eps
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WPB3-3.eps
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WPB3-4.eps
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WPB3-5.eps
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WPB3-6.eps
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WPB3-7.eps
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WPB3-8.eps
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WPB3-9.eps
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WPB3-10.eps
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WPB3-11.eps
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WPB3-12.eps
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WPB3-13.eps
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WPB3-14.eps
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WPB3-15.eps
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WPB3-16.eps
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WPB3-17.eps
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WPB3-18.eps
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WPB3-19.eps
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WPB3-20.eps
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WPB3-21.eps
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WPB3-22.eps
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WPB3-23.eps
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WPB3-24.eps
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WPB3-25.eps
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WPB3-26.eps
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WPB3-27.eps
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WPB3-28.eps
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WPB3-29.eps
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WPB3-30.eps
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WPB3-31.eps
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WPB3-32.eps
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WPB3-33.eps
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WPB3-34.eps
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APPENDIX 4 


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WPB4-3.eps
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WPB4-4.eps
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WPB4-6.eps
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WPB4-7.eps
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WPB4-8.eps
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WPB4-9.eps
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WPB4-11.eps
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WPB4-12.eps
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WPB4-13.eps
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WPB4-14.eps
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APPENDIX 5 


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WPB5-3.eps
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WPB5-23.eps
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WPB5-25.eps
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APPENDIX 6 


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WPB6-3.eps
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APPENDIX 7 


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WPB7-3.eps
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WPB7-4.eps
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WPB7-5.eps
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APPENDIX 8 


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WPB8-10.eps
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Mr. FRANKS. We will now recognize Mr. Hill. 

TESTIMONY OF THOMAS H. HILL, ASSOCIATE GENERAL COUNSEL, ENVIRONMENTAL LITIGATION & LEGAL POLICY, GENERAL ELECTRIC COMPANY 

Mr. HILL. Mr. Chairman and Members of the Subcommittee, 

thank you for the opportunity to appear here today. My name is 

Thomas Hill, and I am the associate general counsel responsible in 

part for Environmental Litigation and Legal Policy for GE. We at 

GE are pleased to assist the Subcommittee as it examines the important issues related to the cost of discovery and, in particular, 

the costs associated with preservation that burdens potential litigants in the United States. 

Today, American companies incur litigation-related costs that 

provide minimal discovery benefit to the courts, the litigants or the 

jury. In this tough economic environment, the current Federal 

Rules of Civil Procedure result in parties, primarily American companies, wasting billions of dollars on unnecessary document preservation and production. 

I was a trial attorney in Michigan before joining GE in 1991. I 

witnessed the explosion of electronically stored information, or ESI, 

and its impact on litigation and dispute resolution. Because preservation rules are unclear, American companies are forced to guess 

what claims might be brought, do their best to preserve an unspecified amount of information for an indefinite period of time and at 

great cost. Much of this information will never be reviewed, never 

be produced and never see the inside of a courtroom. 

Let me discuss two real-world examples of the costs imposed by 

the current rules and describe how the economy will benefit without harm to the judicial process if there is some increased clarity 

in these rules. 

First, it’s the cost of preservation without litigation. Under the 

current standard, GE preserves documents whenever it reasonably 

anticipates litigation, even though no case may ever be filed. The 

rules apply, but there’s no litigation. Because no court has jurisdiction, there’s no opposing counsel, GE cannot negotiate or seek direction to confirm or otherwise adjust the scope of what we preserve. 

This example, which is explained in greater detail in my written 

statement, is relatively simple. It’s a narrow case. It involves only 

96 custodians, I would point out in a company the size of General 

Electric, it wouldn’t be out of the ordinary for hundreds or even 

thousands of people to be involved in a subject matter. 

But in spite of this relatively narrow scope, over time, these 96 

people have created over 3.8 million documents, which total 16 million pages of data. Simply collecting, storing, coding these documents to comply with a potential discovery request, has cost $5.4 

million. It costs another $100,000 a month just to store the data. 

We haven’t spent any money actually looking at the information. 

We’re just saving it. 

Additionally, these individuals will create another million documents every year, adding to the cost. So let me repeat. Although 

no case has been filed, and no case may ever be filed, the rules reVerDate Aug 31 2005 16:07 Feb 14, 2012 Jkt 000000 PO 00000 Frm 00324 Fmt 6633 Sfmt 6601 H:\WORK\CONST\121311\71623.000 HJUD1 PsN: DOUGA
319 

quired GE to save these documents, and we’ve spent $5.4 million 

in fees. 

This preservation problem is exacerbated once litigation is filed. 

Storing ESI creates a disproportionate increase in discovery costs. 

I have a case where the amount in dispute is less than $4 million. 

However, in order to comply with preservation and discovery applications, we’ve collected, preserved and produced over 3 million documents generated by 57 people. Each of those documents had to be 

reviewed BY lawyers and produced in accordance with the rules. 

So that $4 million claim has resulted to date in about $6 million 

in discovery costs. As a result, opposing counsel has little incentive 

to meet and confer to reduce this burden. 

As a practical matter, courts typically assume that we will bear 

the burdens of the cost of production. Once produced, many individuals fail to actually review the vast majority of documents that 

have been produced. Rarely do courts consider cost shifting, which 

can incentivize an efficient focus on information necessary to prove 

a case. 

This creates a perverse incentive which becomes leverage to skew 

dispute resolution, not on the merits, but on the economics. This 

is money wasted. These two examples unfortunately are closer to 

the norm and not really the exception to the rule. 

With clearer rules, including a narrower scope to avoid this 

waste, the discovery process will be faster, more fair. Litigants can 

have disputes resolved on the merits, and the savings can be used 

to create jobs, invest in the future and benefit the U.S. economy. 

We will continue to work with the Judicial Conference Rules 

Committee in its efforts to develop amendments to the rules that 

will help solve some of these preservation problems, as well as others. We agree with the diverse spectrum of stakeholders who feel 

reform should be implemented now, and we applaud the efforts of 

the Subcommittee in exercising its oversight role over the Rules 

Enabling Act. Thank you. 

Mr. FRANKS. Thank you, Mr. Hill, and I would thank all of the 

witnesses for their testimony. 

[The prepared statement of Mr. Hill follows:] 

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Mr. FRANKS. I will now begin the questioning by recognizing myself for 5 minutes. 

Professor Hubbard, I’ll begin with you, sir. You estimate that 

rules clarifying a trigger and scope of preservation obligations 

would save billions of dollars for American businesses. Now while 


Hill-9.eps
329 

these savings would be most apparent in the largest cases that 

make up the long tail of discovery costs, wouldn’t it be—wouldn’t 

clearer rules save at least some money in even the other cases, in 

all cases? 

Mr. HUBBARD. I certainly would expect that to be the case, particularly with respect to preservation, because there are many situations in which, as I mentioned before, preservation costs are incurred, but litigation and discovery costs are not incurred. And 

judging from the fact that for many large companies, there have 

been statements to the effect that somewhere between perhaps 40, 

60, or 70 percent of their matters involving preservation are not— 

do not correspond to an active, filed lawsuit, a rule clearly establishing the boundary time in which the obligation to preserve is 

triggered would reduce, essentially, by 100 percent, the preservation costs associated with those cases no matter how large or how 

small they are. 

Mr. FRANKS. Well, thank you, sir. 

Justice Kourlis, some have argued that any savings realized by 

clarifying discovery and preservations rules would come at cost to 

the quality of evidence produced in litigation and the court’s ability 

to find facts and to do justice. 

Do you agree with this analysis, or do you believe that we can 

better define discovery obligations without sacrificing courts’ core 

mission? 

Ms. KOURLIS. Mr. Chairman, the latter. I clearly believe that we 

can better define and manage cases, including discovery, without 

sacrificing justice. Furthermore, I believe that the failure to do so 

sacrifices justice every day because of the cases that can’t be filed 

and the cases that are settled on the basis of the costs of litigation. 

Mr. FRANKS. Well, thank you. Mr. Hill, as far as the challenges 

faced by GE, are they the same as those faced by small businesses? 

Mr. HILL. Not really. Companies our size produce a significant 

amount of electronically stored information. I mean, it stands to 

reason that the larger the company, the more the employees, the 

more complex the organization, the more data you produce. 

So the burden on us is really in the preservation prelitigation. 

We probably can handle it a little bit better than a smaller company, it doesn’t mean that we should have to or that it’s a benefit. 

I think the impact on smaller businesses though, under the current 

rules, is once discovery has been filed. You take a small company 

that has a limited amount of staff, limited resource, but still have 

computers. Once litigation is filed, they have the same obligations 

that anyone does; they have to collect that information, sort it, review it and produce it. 

For a small company, reviewing the kind of data that even 10 

people can produce would be inordinately expensive, and I would 

suggest the burden on them is even greater than on us. 

Mr. FRANKS. Well, that seems to be a pretty compelling point 

that goes to Justice Kourlis’ points. You know, the interest of 

courts should ultimately be justice and if, indeed, it is just too expensive for some of the smaller entities to access that justice, then 

justice is denied. 

And I, again, appreciate all of your testimony. And I am now 

going to recognize the Ranking Member for 5 minutes. 

330 

Mr. NADLER. Thank you, Mr. Chairman. 

Justice Kourlis, you testified about the burden of discovery and 

so forth, as have everybody, and obviously that’s a concern to us. 

You say in your testimony the Standing Committee is the appropriate forum for the discussion, both immediate and the long-term 

discussion, but it is a discussion which all of us have legitimate 

and significant stake. So do you think that that’s the proper place 

for resolution of this, or do you see any role for Congress at this 

point in terms of any legislation? 

Ms. KOURLIS. I don’t see a role for Congress in terms of legislation. Congressman, I do, however, see a role in terms of level of attention and focus and interest. This clearly is a very significant 

problem. I welcome the opportunity to have all of you be made 

aware of the nature of the problem and aware of the efforts that 

are being undertaken to address it. 

Mr. NADLER. You think that the best forum for addressing it is 

the standing committee? 

Ms. KOURLIS. Yes, at present I do. 

Mr. CONYERS. Would the gentleman yield? 

Mr. NADLER. I’ll yield. 

Mr. CONYERS. Have you written or contacted the Judicial Conference about this subject? 

Ms. KOURLIS. Oh, yes, indeed, Congressman, yes. 

Mr. CONYERS. Well, do you—— 

Ms. KOURLIS. I think, actually, I can say that all of us have appeared—— 

Mr. CONYERS. Well, no, I don’t think all of you have. 

Ms. KOURLIS [continuing]. Have appeared in that forum for purposes of addressing these issues. 

Mr. CONYERS. No, I don’t think so. I didn’t hear anybody else 

say. Tell me about your—— 

Mr. FRANKS. Perhaps you could clarify that. Have others been to 

testify in that forum? Perhaps you could—— 

Mr. CONYERS. Yes. Let’s let everybody testify for themselves. 

Ms. KOURLIS. Okay. 

Mr. CONYERS. But tell me what it is that you recommended. 

Ms. KOURLIS. Congressman, our recommendations in my little 

corner of the world, the Institute at the University of Denver, 

where I live and work, is a streamlining and a reworking of the 

pretrial process in the civil justice system in an effort to try to assure that the process, is indeed, more streamlined, more efficient, 

more case-specific so that more cases get to jury trial, so that more 

cases can be resolved on the merits and fewer cases suffer from 

what former Chief Justice of the State of New Hampshire, John 

Broderick, calls trial by attrition as distinguished from trial by 

jury. 

Mr. NADLER. Thank you. I assume we can get a copy of some of 

that? 

Ms. KOURLIS. You bet. 

Mr. NADLER. Mr. Butterfield, some proponents of reform seek 

amendment of Rule 37 to revise rules for sanctions with particular 

focus on sanctions with regard to the duty to preserve. 

331 

How, if at all, has the 2006 amendment to Rule 37(e) to provide 

a safe harbor for loss of electronically stored information help with 

this concern? 

Mr. BUTTERFIELD. Congressman Nadler, those are those who 

criticize Rule 37(e), have said that the safe harbor is rather shallow. The safe harbor applies to sanctions for spoiliation, where the 

rules apply, so they are usually sanctions where there’s been a violation of the preservation order. 

But, if you take a look at the case law out there, and the case 

law goes far beyond Rule 37(e), the case law makes it pretty clear 

that people and companies are not getting sanctioned for conduct 

that is not egregious. That’s the key component. 

You know, there’s lots—— 

Mr. NADLER. And obviously they shouldn’t be sanctioned if their 

conduct is not egregious? 

Mr. BUTTERFIELD. They’re not getting sanctioned for good faith 

conduct. They’re getting sanctioned for conduct that’s clearly in bad 

faith, clearly egregious. So a lot of the concern here, in my opinion, 

is overblown. 

Mr. NADLER. Thank you. Mr. Hill, your focus is on the need to 

preserve in order to defend against a lawsuit. Businesses, however, 

also have an interest in preserving information because they might, 

after all, be the party bringing a lawsuit, or because otherwise required by law. 

How do you accurately separate, within your overall practices, 

for retaining requisite information, costs related solely to anticipation of litigation presumably where you might be a defendant, as 

I presume you’re not complaining about costs where you want to 

sue someone else. And how do you respond to the DOJ’s concerns 

that specific preservation rules might conflict with other existing 

obligations to retain records? 

Mr. HILL. Actually, the preservation rules impose costs whether 

you are a plaintiff or a defendant, and that raises the issue that 

there is a difference between the cost of preservation for litigation 

purposes, and the cost of preservation in the ordinary course of 

business, and I think that’s an issue that—— 

Mr. NADLER. Excuse me, why would that be? 

Mr. HILL. Because a company generates data for its normal business operations. For example, we manufacture jet engines. There 

are engineering diagrams. There’s all kinds of data that are used 

by that organization while we continue in that product line, and 

that information will exist under our normal document preservation rules for, in many instances, decades, certain kinds of data. 

Mr. NADLER. You figure out how to make a better jet engine. 

Mr. HILL. The Federal rules, however, impose a separate, distinct 

and duplicative obligation in that once we believe that there is a 

reasonable chance of litigation, we have to take that electronic information and remove it from our normal course of business, create 

a separate platform to store it and save it and incur those costs so 

that we can demonstrate in a courtroom, and only in a courtroom, 

that that information has not been, in any way, altered. 

That doesn’t, in any way, help the business model. It’s not something that we would do normally, and it is simply a cost. And as 

I indicated in my earlier testimony, we do that time and time again 

332 

when litigation is never filed, and we also do it in times where litigation is filed and then it’s not requested. 

Mr. NADLER. And the second part of my question, which is, how 

do you respond to the DOJ’s concerns that specific preservation 

rules that we might try to write might conflict with other existing 

obligations to retain records? 

Mr. HILL. It’s not clear to me that that’s accurate. We have obligations to preserve documents from regulatory reasons, for example. And I just believe that the courts and the Congress should sit 

down and determine what is the most efficient way to protect information to allow people to have a fair trial and not have the cost 

of litigation drive the outcome of that trial. 

The Justice Department is entitled to its opinion. I have seen the 

growth and cost of this, and it is impacting the system. 

Mr. NADLER. Thank you, my time has expired. 

Mr. FRANKS. I thank the gentleman. Just for point of clarification, Justice Kourlis indicated that some of the rest of you may 

have had input at some point to the Judicial Conference; is that 

correct? 

Mr. Hill? 

Mr. HILL. Yes, that’s correct, I have. 

Mr. FRANKS. Mr. Butterfield. 

Mr. BUTTERFIELD. I have. 

Mr. FRANKS. Mr. Hubbard. 

Mr. HUBBARD. Yes, I have. 

Mr. FRANKS. So that Justice Kourlis was correct and I just wanted to give everybody a chance to answer for themselves in that regard. 

We are hopeful that the Judicial Conference will come forward 

with some ideas of their own which the Congress, maybe even optimistic that they might do that, and the conference might bring 

some things that the Congress would deem worthwhile. 

So with that, I would yield to the distinguished Ranking Member 

of the full Committee, Mr. Conyers. 

Mr. CONYERS. Thank you very much, Chairman. 

Now, I notice that the Justice didn’t mention other problems that 

are raising the expenses of court litigation, like shortage of judges, 

the expense of counsel and a variety of other reasons. 

Was there any reason for those not being included in this? Because it gives you—it could give one the impression that this is the 

main problem of diminished, great, legal services in this country. 

Justice? 

Ms. KOURLIS. Congressman, you are absolutely right, it is a 

multi-faceted problem, including budgets for courts, and judicial 

vacancies, and a host of other components. What I also believe is 

that the courts themselves, the way that the civil litigation process 

is structured, have a duty to reorganize, rethink how they present 

their services, and recalibrate them to the needs of the users. I tell 

an anecdote, Congressman. 

Mr. CONYERS. Well, wait a minute. 

Ms. KOURLIS. It is really short, I promise. 

Mr. CONYERS. I believe you, but spare me. Now, here is the problem. We don’t know what the Judicial Conference is going to do. 

Maybe they got your report and were so impressed with it that 

333 

they are going to begin to deal with the questions of proportionality 

that you raised. And maybe they haven’t considered these things. 

And maybe they will. 

Ms. KOURLIS. Oh, indeed, I think they are. I think they are giving it great thought and deliberation. 

Mr. CONYERS. I am happy to hear your confidence about it. Now, 

Mr. Hubbard, we have a little problem here. Your report was based 

on four major companies, right? 

Mr. HUBBARD. The preliminary report, yes. 

Mr. CONYERS. All right. Which four? 

Mr. HUBBARD. Congressman, respectfully, I have kept those identities confidential. That was the basis upon which the data was 

shared with me. 

Mr. CONYERS. And because of what reason did you keep them 

confidential? 

Mr. HUBBARD. Concerns that information about the costs of preservation, which can be, in some cases, but not all, very high, could 

be used perhaps for strategic advantage against them. 

Mr. CONYERS. Sure. All right. I understand. Now, does that mean 

that your final report is going to be confidential, too? 

Mr. HUBBARD. The identities of specific companies will be kept 

confidential in the report. 

Mr. CONYERS. Can I ask you this? Were they large corporations? 

Mr. HUBBARD. Yes. 

Mr. CONYERS. How large? 

Mr. HUBBARD. These are, I guess, you would say very large corporations, in the order of Fortune 500 companies. 

Mr. CONYERS. Well, you were candid enough to let us know that 

your report was preliminary, and that we should not take any congressional—make any congressional decisions based upon it because it was a preliminary report. Is that right? 

Mr. HUBBARD. I think it is fair to say that we should not—— 

Mr. CONYERS. Is that right? 

Mr. HUBBARD. I think that is right, yes. 

Mr. CONYERS. Okay. All right. Thanks so much. Then in other 

words, all of us, including all of you, who I think you have all said 

that you have communicated with the conference, are going to be 

waiting, like the Subcommittee, to find out how much of your advice was taken by the conference. Is that correct? 

Mr. HUBBARD. To an extent, yes. I think that is fair. 

Mr. CONYERS. All right. Mr. Hill? Is that right? 

Mr. HILL. We certainly will see what they do. 

Mr. CONYERS. Of course. So I am heartened by the fact that 

Madam Justice seems to feel that there may be some encouraging—that they may be taking at least some of her recommendations seriously. And I hope that they are taking all of your recommendations seriously. So I guess I will be waiting, just like you. 

Maybe we should have another hearing after the report comes out, 

and see how our opinions and estimations of what was being done 

and had been done came out. I would recommend that to the 

Chairman. I hope that all of you will as well. Thank you, sir. 

Mr. FRANKS. Thank you. Is it your thought that you will ratify 

whatever the Judicial Commission comes out with? 

334 

Mr. CONYERS. No, not me. I will be critically waiting the results 

of the final report. 

Mr. FRANKS. Waiting with bated breath. Listen, I want to thank 

all of the Members, and I especially want to thank the witnesses. 

Forgive me, Mr. Scott. You snuck up on me, sir. I will recognize 

Mr. Scott for 5 minutes. 

Mr. SCOTT. Thank you, Mr. Chairman. I just had a couple of 

questions. Mr. Hubbard, what are some of the costs involved in 

preservation? Preserving electronic data shouldn’t be that expensive. What are some of the costs in preserving other data? 

Mr. HUBBARD. Thank you, Congressman. Of course the costs that 

we all think of initially with respect to preservation is the cost of 

simply housing the data on a computer drive. And that cost, as I 

think we are all aware of, has decreased exponentially over time. 

However, the costs that I have in mind when I talk about the costs 

associated with preservation are not limited merely to the costs of 

storage of data, but the fact that in the process of implementing 

what is usually referred to as a litigation hold, sometimes dozens, 

maybe even hundreds or more of employees are called upon to review the documentation for which they are responsible, their 

emails, their computer files, in order to ensure compliance with the 

litigation hold. And it is that employee time, which can run into 

the hundreds or thousands of hours, that can become a very significant cost. 

Mr. SCOTT. Okay. Now, why shouldn’t the present rules of proportionality and common sense and letting the judge determine 

what is reasonable and not reasonable based on the issues, the 

facts at issue, the size of the case, that kind of thing, proportionality, why shouldn’t that be enough? 

Mr. HUBBARD. Well, Congressman, certainly proportionality 

should be the touchstone to approaching questions of discovery and 

preservation. The question is whether it is under the current rules. 

The rules envision active judicial oversight of the proportionality 

balance. But in reality, that doesn’t occur. The most obvious reason 

being that the decisions with respect to preservation often have to 

occur before litigation is even filed, and therefore a judge cannot 

be involved. Parties are then are forced to make judgments on their 

own given the risk that depending upon which jurisdiction they end 

up in and who the plaintiffs on the other side are, how broad the 

preservation obligation will be. And that is where I think the uneven and inconsistent case law that currently exists creates this 

tendency toward overpreservation. 

Mr. SCOTT. I think we have heard from some of the witnesses the 

idea that congressional action is not needed. I suppose that means 

congressional action might make matters actually worse. Do we 

have any recommendations to make it better? I mean, litigation is 

expensive. I am not sure that there is a lot we can do about that. 

Do you have any recommendations? 

Mr. HUBBARD. Well, litigation certainly will always be expensive. 

The question is whether we can make it more efficient. Certainly, 

because the Judicial Conference’s attention is directed to these 

issues right now, I think we all agree that the proper process is to 

participate and contribute to that process in the capacity that we 

can. 

335 

Mr. SCOTT. Do we have any recommendations? 

Mr. HUBBARD. Any recommendations for specific rules? 

Mr. SCOTT. Right. 

Mr. HUBBARD. I certainly have made recommendations. First of 

all—— 

Mr. SCOTT. We are here listening to the complaints, but what can 

be done about it? 

Mr. HUBBARD. What can be done is for one, by implementing 

Federal rules that directly address preservation, there can be uniform treatment of the preservation obligation. 

Mr. SCOTT. But proportionality kind of works the other way, because some may be reasonable in some cases and others not. Does 

anybody have any specific recommendations as to what we can do 

to make the situation better? 

Mr. HILL. Congressman, I think an important role for the Subcommittee is to provide its oversight to the Committee. Because the 

Federal Rules Conference considers the way—my concern is that 

the Federal Rules Conference will consider the way litigation will 

operate once it is in a courtroom so that it appears fair and efficient, and they will draft rules that solve the problem that they 

focus on most. I think this Committee’s obligation is to make sure 

that those rules work in an economic environment, that there are 

other issues involved in litigation, as we have pointed out. Preservation costs before litigation is filed imposes a burden. I think that 

is something that Congress could bring to the attention of the Committee. 

Mr. SCOTT. I am not hearing any recommendations. 

Ms. KOURLIS. Congressman, I am not entirely sure whether your 

question is narrowly focused on recommendations for a preservation rule, or broader recommendations, or whether you are asking 

whether any of us have recommendations for action that we would 

ask Congress to be taking. 

Mr. SCOTT. I think we have heard that there are no recommendations for Congress to do anything yet. 

Ms. KOURLIS. That is correct, from my perspective. 

Mr. BUTTERFIELD. Congressman, I wrote a paper about a year 

ago, along with my colleague behind me, Ariana Tadler, and the 

subject of our paper was give the rules a chance. The 2006 rule 

amendments, the ink was barely dry when some of these surveys 

were started and people started criticizing the rules. The rules are 

abundantly flexible. They have the mechanisms in place to curb the 

costs of litigation if people simply use them. 

Mr. SCOTT. Thank you. Well, Mr. Chairman, I thank you for the 

hearing, but I think what we are hearing from people is it is not 

timely for Congress do anything about it at this point. 

Mr. FRANKS. And I thank the gentleman. And I thank all of you 

again for being here, and the audience for being so attentive. And 

without objection, all Members will have 5 legislative days to submit to the Chair additional written questions for the witnesses, 

which we will forward and ask the witnesses to respond as promptly as possible so that their answers may be made part of the 

record. 

Without objection, all Members will have 5 legislative days within which to submit any additional materials for inclusion in the 

336 

record. With that, again, I thank the witnesses, and I thank the 

Members and observers, and the hearing is now adjourned. 

[Whereupon, at 2:48 p.m., the Subcommittee was adjourned.] 

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