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Citing the Lack of a Clear Distinction between the Two Tiers of Discovery, Court Adopts “Practical Approach” for Addressing Disputes over Scope

Posted in CASE SUMMARIES

DCP Midstream LP v. Anadarko Petroleum Corp., —P.3d—, 2013 WL 3225846 (Colo. June 24, 2013)

In this breach of contract case, the Colorado Supreme Court addressed the court’s role in managing the scope of discovery under Colorado Rule of Civil Procedure 26(b)(1)—which was amended in 2002 “to conform to its federal counterpart.”  The court concluded that “when a scope objection is raised, C.R.C.P. 26(b) requires the trial court to take an active role managing discovery and to determine the appropriate scope of discovery in light of the reasonable needs of the case,” and held that “to resolve a dispute regarding the proper scope of discovery in a particular case, the trial court should, at a minimum, consider the cost-benefit and proportionality factors set forth in C.R.C.P. 26(b)(2)(F).” 

Plaintiff asserted eleven breach of contract claims and indicated that it anticipated adding additional claims after conducting discovery.  During discovery, Plaintiff sent one defendant 58 requests for production “seeking millions of pages of paper and electronic documents.”  When Defendant refused to produce many of the requested documents, arguing that they were outside of the scope of discovery, Plaintiff filed a motion to compel.  The trial court granted Plaintiff’s motion and reasoned that “[Plaintiff] was entitled to discovery on any issue that is or may become relevant.”  Defendant sought review by the Colorado Supreme Court and argued that the trial court erred “because it expanded the scope of discovery beyond the allegations in [Plaintiff’s] complaint and, in effect, permitted [Plaintiff] to ‘hunt’ for breach of contract claims in addition to the eleven claims pleaded.”

The court began with a discussion of the purpose of the Colorado Rules of Civil Procedure and acknowledged a “growing effort to require active judicial management of pretrial matters to reduce delay and the increased costs associated with it.”  Indeed, the court recognized that “increased costs associated with protracted litigation” can force unwarranted settlement or deter parties from bringing viable claims and specifically noted that “[i]n cases that implicate e-discovery, such as this one, these costs can be especially significant.”

Like Fed. R. Civ. P. 26(b)(1), Colorado’s Rule 26(b)(1) creates a “two-tiered process of attorney-managed and court-managed discovery” which permits, as a matter of right, discovery into non-privileged matters relevant to the claims and defenses of any party, but which requires judicial approval for broader discovery into matters relevant to the “subject matter involved in the action” upon a showing of good cause.  As the court indicated, however, the difference between what is relevant to the claims and defenses and what is relevant to the subject matter involved in the action is not clearly defined.  Nonetheless, the court reasoned that it is clear that discovery in the first tier is intended to be narrower than discovery in the second and that the rule was intended to “narrow the scope of discovery available as a matter of right in some meaningful way.”  Moreover, “as the advisory committee’s notes make clear” the rule is “also meant to address concerns about the breadth and expense of disproportionate discovery by ‘involving the court more actively in regulating the breadth of sweeping or contentious discovery.’”  (C.R.C.P. 26 incorporates the advisory committee notes to Fed. R. Civ. P. 26 from 1993 and 2000 by reference.)  Thus, the court concluded that the rule was intended to “narrow the scope of permissible discovery available as a matter of right and require active judicial management when a party objects that the discovery sought exceeds that scope.”

Stated simply, the crux of the problem identified by the court was this: although a trial court must settle disputes related to scope of discovery, the distinction between that which is discoverable by right and that which requires a showing of good cause is difficult to articulate and “any attempt to define the specific contours of this distinction may only encourage additional contention among litigants.”  Seeking a solution, the court turned to the advisory committee’s notes, which “offer a practical approach” and advise that ‘[w]hen judicial intervention is invoked, the actual scope of discovery should be determined according to the reasonable needs of the action.’”  Considering this, the court indicated it saw “no meaningful distinction between the outcome of this approach and the goal of the rule’s ‘claim or defense’ and ‘subject matter’ categories, as both require active judicial management of discovery when disagreements about the scope of discovery arise.”  The court therefore adopted the “practical approach offered by the advisory committee’s notes because it avoids the possibility of additional litigation that the ‘claim or defense’ and ‘subject matter’ categories are destined to invite.”

Thus, the court concluded that “[w]hen faced with a scope objection, the trial court must determine the appropriate scope of discovery in light of the reasonable needs of the case and tailor discovery requests to those needs.”  Noting that each case is unique and that the reasonable needs of each case will necessarily vary, the court indicated that it found the “cost-benefit and proportionality factors listed in C.R.C.P. 26(b)(2)(F) helpful” and that like the 2002 amendments (creating two-tiered discovery), the factors required “active judicial management to control excessive discovery.”  “Hence,” the court held that “to resolve a dispute regarding the proper scope of discovery in a particular case, the trial court should, at a minimum, consider the cost-benefit and proportionality factors set forth in C.R.C.P. 26(b)(2)(F).”  The court further instructed that the factors in Rule 26(b)(2)(F) were “not exclusive” and that “other pertinent factors” could also be considered.

Reasoning that the trial court “did not take an active role managing discovery,” “made no findings about the appropriate scope of discovery in light of the reasonable needs of the case and made no attempt to tailor discovery to those needs,” the Supreme Court concluded that the trial court had abused its discretion and returned the case for further proceedings consistent with its opinion.

Notably, two Justices concurred only in the result reached by the majority on this issue and were critical of the court’s analysis of C.R.C.P. 26(b)(1) and the perceived abandonment of the distinction between what is relevant to a claim or defense and what is relevant to the ”subject matter” of the litigation.

* Note, C.R.C.P. 26(b)(2)(F) is not identical to Fed. R. Civ. P. 26(b)(2)(C), but does mandate consideration of many of the same factors.