An LCJ-supported amendment to Federal Rule of Evidence 702, which took take effect on December 1, 2023, is a much-needed reform that is designed to change how courts handle expert evidence.

Rule 702 – not Daubert or any other case law – sets the standard for the admissibility of expert evidence, but many courts misunderstand the rule and its requirements. Too often, courts neglect their “gatekeeping” obligations by allowing juries to hear expert testimony without first determining whether it is the product of sufficient data and reliable methods. This practice deviates from Rule 702’s allocation of responsibility between the judge and the jury for deciding preliminary questions under Rules 104(a) (the judge decides whether evidence is admissible) and 104(b) (the jury decides how much weight to give the evidence). Unfortunately, the distinction between these tests is implied rather than stated in the current rule, and often ignored in the caselaw.

The amendment clarifies three points of existing law: (1) the court must first find that expert evidence meets Rule 702’s admissibility test before allowing it to the jury; (2) the profferor of expert evidence must prove admissibility by a preponderance; and (3) the court’s “gatekeeping” duty is continuing; it does not end with an admissibility decision, but rather requires the court to ensure that the expert’s testimony is grounded in sufficient facts and appropriate methods, reliably applied.

Although the amendment clarifies current law, it is intended to change the widespread practices that do not conform to the rule. Misapplications of Rule 702 result in the admission of unreliable opinion testimony that misleads juries, undermines civil justice, and erodes public confidence in the judiciary.

LCJ members are now engaged in advocacy for amendments to state expert evidence admissibility rules that will bring these state rules into alignment with amended FRE 702.

A variety of resources on FRE 702 and on aligned expert evidence rules are available in the website’s document directory.

Time-consuming and expensive “document-by-document” privilege logs have become the de facto standard in most courts, even though Rule 23(b)(5)(A) does not require them. That’s why LCJ asked the Advisory Committee on Civil Rules in 2020 to amend the FRCP to ensure that parties have flexibility to meet their privilege logging responsibilities in more cost-efficient ways.

Now, a package of amendments to Rules 16(b)(3) and 26(f)(3) is expected to be published for public comment in 2023. The Advisory Committee on Civil Rules drafted these proposals to reduce the burden placed on parties by providing flexibility to tailor the types of privilege logs to the circumstances of individual cases and particular sets of documents.

The proposed amendments clarify that, rather than conforming to any particular practice or format, parties can develop individualized methods to meet the disclosure requirements of Rule 26(b)(5)(a).

Cases consolidated into multidistrict litigation proceedings (MDLs) constitute 70 percent of the federal civil docket. But the Federal Rules of Civil Procedure do not mention MDLs or provide any guidance for courts and lawyers on appropriate procedures for handling the unique aspects of those proceedings.

Now, the Advisory Committee on Civil Rules is proposing a new FRCP Rule 16.1 designed to help MDL judges and lawyers—especially first-time MDL participants—make initial management decisions that set the proceedings on an appropriate course. The proposal holds promise but needs further work.

The most important subject for MDL judges to handle at the outset of a new MDL proceeding is the potential for the mass filing of unexamined claims by plaintiffs who never used the product or suffered an injury within the scope of the suit. Proposed Rule 16.1 should help avoid the well-known problems that unexamined claims cause in MDL proceedings by prompting judges to require basic due diligence such as evidence of exposure to the alleged cause and a resulting injury, early in the case.

Unfortunately, many MDL courts eschew key aspects of the FRCP despite Rule 1’s statement that the FRCP “govern the procedure in all civil actions and proceedings in the United States district courts.” While some ad hoc procedures have more merit than others, they all share the lack of transparency, uniformity, and predictability. Many common practices also cause an unbalanced litigation environment by failing to provide protections inherent in the FRCP.

Many federal judges are presiding over civil lawsuits in which a non-party investor has a direct, contingent financial interest in the proceeds produced by any lawsuit judgment or settlement. Yet, most federal judges have no idea whether interests created by TPLF are at play in litigation they are overseeing. This is because the Federal Rules of Civil Procedure and the Federal Rules of Appellate Procedure do not require disclosure as a matter of course and because local rules are largely ignored.

LCJ is proposing three procedural rule reforms. Together with the US Chamber of Commerce Institute for Legal Reform, LCJ is urging the Advisory Committee on Civil Rules to amend Rule 16 of the Federal Rules of Civil Procedure to prompt judges to inquire about TPLF during pretrial conferences. LCJ and ILR also advocate for a uniform rule requiring initial disclosure of third-party funding agreements at the outset of all civil cases.

LCJ is also asking the Advisory Committee on Appellate Rules to amend Rule 26.1 of the Federal Rules of Appellate Procedure to require disclosure of all non-party financial stakes directly tied to the proceedings.

These proposed amendments would further the Judicial Conference’s goal of promoting a greater “culture of compliance” in the federal judiciary. The various local disclosure rules are inadequate, and LCJ’s proposals will help judges avoid conflicts of interest and better manage litigation.

While federal rule makers continue to consider TPLF disclosure amendments, federal district courts and individual judges are acting. In 2022, the District of New Jersey adopted a local rule requiring disclosure of TPLF-related information within 30 days of a filing of a case. Also, the Chief Judge of the District of Delaware has a standing order requiring disclosure of non-party investor interests in litigation before him.

In 2018, the judge overseeing the opioid MDL issued this order requiring disclosure of all third-party funding in that matter.

The Northern District of California has a standing order for all judges that requires disclosure of TPLF in class actions. The order, in effect since 2017, requires that “in any proposed class, collective, or representative action, the required disclosure includes any person or entity that is funding the prosecution of any claim or counterclaim.”

States are also active in providing transparency about TPLF activity. Wisconsin state courts mandate disclosure of third-party financing agreements without a discovery request following adoption of Wisconsin Act 235 in 2018. View an in-depth analysis of the statue by LCJ member firm Bowman and Brooke here. West Virginia regulates “litigation financiers” through its West Virginia Consumer Credit and Protection Act, adopted in 2019. The provision, found in West Virginia Code sections 46A-6N-1 through 8 (“Article 6N”), amends a key statute governing consumer transactions in the state. Other states have also taken steps to regulate TPLF focusing primarily on consumer protection issues.

TPLF – A Growing Industry Impacting US Litigation

Due to the secretive nature of third-party litigation funding, there are widely varying estimates of the size of the litigation funding industry. One survey estimates that there are $11 billion worth of non-party financial rights in litigation outcomes in the United States today. The TPLF industry has experienced explosive growth over the last decade, and funding exists at all stages of litigation. A recent report issued by Swiss Re projects that global third-party litigation investment could reach $31 billion by 2028.

TPLF occurs when a person or entity with no other connection to a lawsuit acquires a right to an outcome-contingent payment from any proceeds produced by the case. Typically, the TPLF investor obtains that right by paying money to the plaintiff (or plaintiff’s counsel). In many instances, that money is used to finance prosecution of the case (e.g., discovery costs, attorneys’ fees, expert witness expenses), but the funds can also be used more like an advance on an expected payday. Among the concerns of observers of TPLF trends is that the funders could direct litigation decisions, exert influence over possible settlement decisions, or, in some cases, get involved with the medical decisions of plaintiffs in order to maximize their investment returns.

LCJ seeks to amend the Federal Rules of Civil Procedure to require parties to share the expenses of civil discovery. Doing so will preserve the purpose of discovery – access to information that enables parties and fact finders to resolve civil litigation – while aligning well-proven economic incentives with the reality of modern litigation.

By prevalent practice today, the “producer” pays all of the expenses incurred in responding to the other party’s requests, which undermines the fact-finding purpose of discovery because it provides a strong incentive to use discovery as a tool for imposing undue economic pressure in the hope of forcing parties to settle or abandon their claims for reasons other than the merits. In contrast, a rule requiring parties to share discovery expenses would focus litigants and courts on the information that’s important to claims and defenses while serving as a self-executing restraint against runaway discovery requests. Also, by placing the cost-benefit decision with the party in the best position to limit those costs – the requesting party – such a rule would significantly decrease motion practice concerning the scope of discovery.

The concept is not new. In fact, allocating the cost of discovery occurs quite frequently in U.S. courtrooms and around the world. And the idea itself is now widely discussed by judges, practitioners, and academics.

Lagging public trust in our judicial system is a problem for our country and a concern of LCJ members. Lawyers and parties who engage regularly in the civil justice system rely on public acceptance of judicial decisions and depend on jurors to respect the judicial process and judges’ instructions.

Attacks on the judiciary – both verbal and physical -- threaten the ability of courts, parties, and lawyers to achieve the “just, speedy, and inexpensive” resolution of all cases as FRCP Rule 1 aspires.

Public disparagement of judges and divisive criticisms of judicial independence contribute to the public’s decreasing regard for courts. The factors impacting public views of the judicial system have been in play for many years and will require a sustained effort in response.

LCJ is working to improve public trust in the courts by developing and deploying strategies to mitigate and offset unfair attacks on our judicial system. LCJ initiatives include:

• Publication of guidelines for LCJ members on appropriate ways to speak about judicial actions, including reacting to adverse judicial decisions, that are supportive of judicial independence and encourage public trust in the courts. (Link)

• Advocacy before Congress for appropriate resources to ensure that our judicial system maintains modern systems and is efficient and effective.

• Collaboration with bench, bar, and academic organizations on development of strategies to defend our court system from unfair attacks.

• Communication with the public on the importance of judicial independence and the rule of law.

LCJ supports ensuring appropriate resources for the federal judicial branch in order to preserve our high-quality, independent, diverse and impartial federal judiciary.

The federal bench is strongest when it attracts experienced lawyers from a variety of legal backgrounds. An erosion in judicial salaries and resources over the last decades has changed the makeup of the federal judiciary, which is increasingly composed of people at two ends of the spectrum: those wealthy enough not to care about their salaries, and those for whom a federal judicial salary represents a pay increase. The decreasing representation from the middle – most practicing lawyers – is a negative vital sign for the health of our courts.

Lifetime tenure is a critical element of judicial independence. It protects federal judges from the distractions and temptations of conforming their decisions with popular opinion. Judges are called to decide matters on the merits and not on the basis of how a decision will affect one party versus another. Confronted with inadequate compensation, however, an increasing number of federal judges have decided to leave the bench and return to private practice. Judges who have one eye on their job prospects may be more tempted than others to worry about the perceptions and effects of their decisions rather than the principles upon which the decisions are based.

In addition to civil lawsuits, our federal courts handle criminal, bankruptcy and immigration cases, among others. The courts also provide: pretrial and probation services in criminal cases; drug and mental testing and treatment services; and location monitoring both pre-trial and post-conviction. Meanwhile, court information systems are undergoing a transition to the digital age just like many industries. It is important for Congress to provide the federal courts sufficient resources to meet their obligations without forcing them to sacrifice in one area in order to perform adequately in another.

For all these reasons, LCJ supports sufficient and consistent funding for the federal courts in order to ensure continuity of service.

Rule 23(b)(3) of the Federal Rules of Civil Procedure (FRCP) requires federal courts to determine in class actions whether “a class action is superior to other available methods for fairly and efficiently adjudicating the controversy.” This “superiority” requirement was intended to ensure that a class action would achieve economies of time, effort, and expense. But it frequently fails to serve this purpose, as courts have recently re-interpreted it to prevent them from considering refunds, warranties, private claim resolution, and consent judgments.

LCJ advocates for improving the process of judicial evaluation of class actions by expressly allowing federal courts to consider whether the class action device is superior when there are non-litigation solutions that could fairly and efficiently compensate putative class plaintiffs.

Rule 23(b)(3)’s current “superiority” language leads some federal courts reluctantly to certify class actions that may delay or reduce class member redress when other available non-judicial methods for resolving disputes are superior. Some courts presiding over class actions have held that because Rule 23(b)(3) speaks of other methods of “adjudicating,” the rule prohibits judges from considering remedies already available to putative class action members outside of litigation.

Still other courts have sought to “work around” this problem by addressing the “superiority” question through use of Rule 23(a)(4)’s “adequacy” requirement. Courts in these cases have invoked Rule 23(a)(4) to find that a class representative is inadequate to protect the putative class members’ interests when there are non-litigation remedies equal to or better than what the lawsuit can deliver.

In response to the constraints on judges caused by the current “adjudication” language, at least one court has raised a “call to the rule makers” to address the problem. LCJ’s superiority proposal seeks to respond to this call by expressly allowing judicial consideration of “remedies otherwise available to putative class members” under Rule 23(b)(3).

There are multiple benefits from this proposal:

Promotes judicial efficiency by expressly allowing courts to consider remedies that are better than class actions.

Encourages companies to offer effective remedial efforts when there is an issue to address.

Speeds access to remedies for consumers in lieu of lengthy and costly litigation.

Prevents courts from certifying class actions when other available methods for resolving disputes are more complete and superior.

LCJ’s Rules Suggestion would help judges meet their duty to protect the class, avoid needless drain on judicial resources, and incentivize defendants to provide full and timely relief to consumers.