Masonry Magazine July 2007 Page. 56
Legal Issues
How Court Rules Can Impact
Your Business
* Timothy R. Hughes, Esq., and
Bradley J. Hansen, Esq.
Hughes & Associates PLLC
The Federal Rules of Civil Procedure (FRCP) govern the process that federal courts follow when hearing cases of a civil nature. Although federal courts are required to apply the substantive law of a particular state when deciding a case, they use the FRCP as their rules of procedure.
Recent changes to the FRCP have caused a ripple through not only law firms and the courts, but also through businesses of every type around the country. While procedural court rules generally reach only inside the courtroom, the new amendments to the FRCP mandate that companies change their entire approach to maintenance and preservation of electronic records.
Why Should You Care?
Federal courts have diversity jurisdiction over all cases where the parties are from different states and the amount in controversy exceeds $75,000. In addition, federal courts have jurisdiction over cases involving a violation of a federal statute or regulation, including employment, tax and immigration cases. As such, your business is exposed to at least the chance of being dragged into federal litigation.
Once in litigation, a substantial amount of time will be devoted to discovery. This phase of the case encompasses requesting and obtaining documents, taking depositions of key players, and exchanging requests and responses for written information. Accordingly, the rules relating to discovery procedure and practice are a large part of the overall rule structure.
The ubiquitous nature of e-mails has changed the entire discovery process and indeed can have major impacts on cases. In reaction, the new rules have expanded the standards and requirements upon the parties to identify, evaluate, collate and produce electronic records. A central feature of the new rules is the requirement that the parties are obliged early in litigation to divulge the existence of and describe relevant electronic records. As a result, a company that has destroyed its e-mail records prematurely, or that cannot account for the electronic records it does possess, may face greater penalties including substantive impact to its case than those provided under the earlier rules.
Companies that feel relatively insulated from federal litigation should nonetheless be aware of the rule changes. Indeed, the FRCP often represent the first wave of civil rules that wash across the various state courts. Changes at the federal level often mean parallel changes to the various state rules. Businesses should expect the federal changes to percolate through the state court systems during the next several years.
Get Organized and Stay Ahead
of the Game
Disputes regularly occur during the discovery process. Even without extensive motions and battles over discovery, the discovery process can be tedious, time-consuming and expensive. Parties must sift through all their archives in search of those documents that must be disclosed. The ability of a party to effectively manage its electronic records can provide a significant advantage over its adversary. You can only allow your counsel a timing advantage, but you also can gain strategic advantage as the lawsuit unfolds because of superior access to information and the ability to analyze it.
Parties are required to hold early-stage conferences that include discussions of e-record issues and planning for discovery. As such, litigants will be expected to quickly have a handle of what e-records they possess, where they are, what form they are in, how accessible they are, how voluminous they are and the likely costs to compile them.
Under the new federal rules, companies should have an incentive to be more