AUSTIN - In the escalating arms race between trial lawyers and tort reformers, plaintiff’s attorneys have developed a new tactic – abusing discovery as a weapon to force settlements, says one expert.
Discovery, the requested disclosure of relevant documents in a lawsuit, can become heated but for the most part is a straightforward process.
However, trial lawyers are now overly complicating the matter by requesting electronically stored information in formats not used by the company being sued, obliging defendants to hire costly experts to recode digital documents when settling might be the more cost effective option, says George Christian, chief counselor for the Texas Civil Justice League.
“It bugs me that (some lawyers) are complicating basic discovery in order to gain,” Christian said. “It seems to me we should be above this sort of thing. You have a lawsuit, just go try it.”
The issue on whether trial lawyers are abusing discovery to profit is currently before the Texas Supreme Court.
In November, State Farm Lloyds filed two petitions for writ of mandamus with the high court, seeking to overturn a district judge’s decision to impose a protocol for the production of electronically stored information (ESI for short) in a hailstorm lawsuit brought against it by the Mostyn Law Firm in Houston.
On behalf TCJL, Christian filed an amicus brief on Dec. 11, arguing the implications of the case go far beyond the mass litigation in hailstorm claims, affecting all businesses that store data in electronic form and may be called on to respond to discovery in a civil lawsuit.
TCJL argues the only justification for the protocol is to use the discovery process to ratchet up the settlement values of each lawsuit.
When a court has jurisdiction over a civil case, during the discovery process the plaintiff can request the court to order defendants, like State Farm, to fork over ESI in formats not used by the company.
Christian says companies preserve their electronic data in a uniform way across all jurisdictions, which can lead to a costly and time consuming endeavor if the court grants the plaintiff’s request and defendants are forced to recode their systems to comply.
“It’s incredibly time consuming, incredibly expensive, incredibly inefficient and the data is the same,” said Christian. “There’s no benefit to the plaintiff to get the data in one form or another.
“It’s just a pointless expense to drive up the cost of litigation – intended to leverage a higher settlement. That’s it.”
Christian says the issue of trial lawyers using discovery to force settlements has been transpiring for the last several years and has become more common of late, pointing to the State Farm litigation as a case in point of how electronic discovery can be abused for tactical gain.
“(TCJL) has a long history of concern on this issue,” Christian said. “This isn’t a concern just for our insurance carrier members; it’s a concern for our business members generally. We’re not coming to the support of one industry; we’re really supporting business in general.”
Even if the high court finds in favor of State Farm, the issue of trial lawyers allegedly exploiting discovery will most likely not vanish over night.
“We’re hoping that (the Supreme Court’s findings) will tighten the rules in order to deal with these types of abuses,” Christian said.
“We’re hoping the court can signal the issue will be dealt with more systematically in the future, sending a message down to the trial courts to not go off the reservation on discovery protocol orders.”
If all else fails, Christian says TCJL will possibly push for a legislative solution.
“We’d prefer not to,” Christian said. “The court ought to be in charge of its rules of procedure. I suspect what we would maybe look at down the road is standards for discovery orders.”
For nearly three decades, TCJL has represented the common interests of Texas businesses and individuals in an accessible, efficient, and impartial civil justice system, according to the group’s website.
The State Farm case before the Texas Supreme Court
Court records show that on Sept. 30, 2014, District Judge Rose Reyna, who is presiding over the hailstorm MDL in Hidalgo County, granted plaintiffs Alejos and Ofelia Ramirez’s amended motion for entry of judgment of production protocol.
The plaintiffs are represented by Mostyn, who made hundreds of millions suing insurers in the aftermath of Hurricane Ike and now advertises after every major storm in search of clients.
State Farm maintains Judge Reyna’s order violates Texas Rules of Civil Procedure 192.4 and 196.4, as well as Rule 13 of Texas Rules of Judicial Administration.
The civil rules compel courts to require the production of ESI only in reasonably usable formats that are less intrusive and less burdensome means of meeting the defendant’s discovery obligations.
“In short, (Reyna’s) order allows the Plaintiffs to dictate the entire manner and method by which State Farm, as the responding party, must collect, process, review, and produce electronic documents and data based solely on what the Plaintiffs want,” the petition states.
State Farm is represented in part by Brian Chandler, attorney for the Houston law firm Ramey, Chandler, Quinn & Zito.
Case Nos. 15-0903 and 15-0905