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Amendments to the Federal rules of civil procedure : hearing before the Subcommittee on Intellectual Property and Judicial Administration of the Committee on the Judiciary, House of Representatives, One Hundred Third Congress, first session, June 16, 1993 online

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and transcribing a deposition, we found a number of "hidden costs". A "hidden cost
is defined as a cost associated with producing or utilizing a deposition which is not
patently visible, is less obvious than a direct cost, and is a cost which may be shifted
to government at large, tax payers, attorneys or the litigants themselves. Hidden
cost centers associated with audio and video included the time consumed by trial
and appellate judges in reviewing a tape, the cost to the litigants of additional re-
view time of tapes by trial counsel which attorneys have estimated increase by a
factor of three to four times in order to review and study a tape in preparation for
trial in contrast to hard-copy transcript, the cost of rental or purchase of playback
equipment by witnesses, the cost of playback equipment in judges chambers, and
the cost of playback equipment in attorneys offices (government attorneys and pri-
vate counsel).

After inputting all the data collected, the cost-benefit analysis model revealed that
the cost of recording a deposition by a court reporter using computer-aided tran-
scription equipment is the least costly method across the board. This is true wheth-
er the deposition is taken and the case settles, or whether a transcript is subse-
quently made of an audiotape or videotape or, even in the rare instance, where an
audiotape or videotape is utilized without a transcript in court.


Since the taking of a deposition by a court reporter using computer-aided tran-
scription equipment is less costly then employing audiotape or videotape, it is fully
compatible with the admonitions of the Civil Justice Reform Act of 1990 to reduce
the cost of civil litigation. That legislation admonished the judicial branch to fashion
methods and procedures which bring about a reduction in the cost of civil litigation.
Thus, it would seem contrary to other cost reduction movements within the Third


Branch to undertake an initiative inherent in proposed changes to FRCP 30(bX4)
which would, in fact, increase the cost of civil litigation.

Once the quantative issues have been fully satisfied, the qualitative case for a
deposition prepared by a court reporter using computer-aided transcription equip-
ment is seen in overwhelming terms. The hard -copy transcript is clearly the most
efficient vehicle for judges and lawyers who are trained to review the written word.
Additionally, the automated features of depositions on computer disk enable that
medium to be used in the most advanced and technologically based courtrooms of
the present and of the future.


A paramount issue to be addressed in strategic and long-range planning for the
federal courts is consideration of not only the technology presently available, but all
foreseeable future technologies.

In one respect, the future is known. The microcomputer is in the forefront and
has invaded virtually every aspect of business and society. The microcomputer will
be the cornerstone of future technologies.

With this in mind, it is difficult to imagine that a court system through its proce-
dural rules apparatus would encourage stand-alone audio or video technology. That
kind of single-purpose technology will very soon be obsolete when compared to com-
puter-based applications.

Stenographic reporters using computer-aided transcription equipment (CAT) em-
ploy the most advanced current technology for making a record.

Indeed, in terms of how a deposition which is computer technology based fits into
court proceedings, the debate has already advanced beyond today's discussions
about audio and video.

Both the industry and state and federal courts have already stepped into the next
generation in creating computer-integrated courtrooms (CIC).

The computer-integrated courtroom incorporates CAT technology and real-time re-
porting, along with other available computer technology, software and services. This
combined technology provides computer access in the courtroom for judges and at-
torneys to review testimony and case documents, and to utilize case law research
systems. With the use of real-time translation in a CIC, technology is in place to
conduct court proceedings in which hearing impaired witnesses, litigants, or other
parties are involved.

In real-time reporting, a court reporter's CAT equipment is utilized so that as the
reporter writes on the stenotype machine, the English translation of what is said
instantaneously appears on monitors located in the courtroom, conference room, or
elsewhere. Using real-time translation, experienced CAT writers achieve more than
98 percent accuracy, enough for complete comprehension.

A CIC courtroom also has the capability to produce or read records, including
depositions, in Braille.

Indeed, the importance of the ability to communicate in Braille was noted in the
May 17, 1993 issues of Roll Call when House clerk Donnald Anderson discussed the
new Braille letterwriting services now available to House members, which was com-
menced in January. A capability to communicate in Braille is once again computer
driven. Neither audiotape nor videotape methodologies for making a record have the
capability to produce a document in Braille.

Stated in a summary way, because a computer-centered operation is the
decisionally sound and economically sensible direction for court systems to take now
and for the foreseeable future, the encouragement for any other methodology is a
stopgap measure which will forestall systemic progress and the enhancement of
computer-based information transmission between courts, government, and the pri-
vate sector.


The increased use of audiotaping and videotaping of depositions will further limit
the rights of the hearing impaired and the visually impaired by preventing equal
access for them to participate in all phases of the judicial system as judges, trial
lawyers, jurors, witnesses, and litigants. The court reporter computer-aided tran-
scription (CAT) system, used by over 85 percent of the court reporters, is the same
system used in the House and Senate of the Congress of the United States. It is
fully compatible with the mandates of the Americans with Disabilities Act of 1990,
affording accessibility to the judicial system for the millions of Americans who are
hearing impaired or blind.



The change in Rule 30(b)(4) would weaken a profession of more than 40 thousand
Americans by replacing people, who have retooled themselves into computer literacy
at their own expense, with limited capacity technology equipment.

More than 85 percent of those people (court reporters) are women, and 16 percent
are minorities, yet equal pay has oeen maintained on a competitive basis.

For the foregoing reasons, we conclude that the case is overwhelming for the
maintenance of the federal rule regarding depositions in its present format and for
not enacting proposed Rule 30(b)(4). Neither the enhancement of accuracy nor a re-
duction in civil litigation costs will be achieved by a rule permitting a non-steno-
graphic method, such as audio or video, to be used as a >^.ubstitute for taking a depo-
sition without a court order or stipulation by the parties.

Mr. Hughes. We have a vote in progress, so I think this is prob-
ably a good time to take a break. It will take us about 10 minutes
to get back. We are going to recess for some 10 minutes.


Mr. Hughes. The subcommittee will come to order.

I apologize for these interruptions, but unfortunately we are
going to continue to have a series of votes, because we have legisla-
tion on the floor. We are going to try to keep the interruptions
down to a minimum. It is my intent to continue so that we can
complete the testimony. I know that some of the witnesses have
planes to catch, and so to try to accommodate schedules we are
going to go through and not break for lunch. That is my intent.

Ms. Pendell, welcome.


Ms. Pendell. Thank you. I will make my comments very brief.

I am here today on behalf of AIA, the American Insurance Asso-
ciation. We appreciate very much the ability to appear before you
and express our views.

I would like to add that both the U.S. Chamber of Commerce and
the National Association of Manufacturers have sent you letters en-
dorsing our comments, which focus solely on rule 11, and our con-
cern with what we perceive to be a dramatic weakening of the rule.

Because you have read our statement, I am going to say little
that is reflected in the statement. I would like to respond some-
what to what was said earlier by Attorney Frank bv simply noting
some of the results of a study the Federal Judicial Center did on
rule 11.

This was a survey of 583 Federal judges, and when asked wheth-
er or not rule 11 has led to costly satellite litigation, 72 percent of
the judges said the benefits of rule 11 outweigh any expenditure
of judge time. Sixty percent said few or none of the requests for
rule 11 sanctions have themselves been groundless. And 92 percent
said few of the rule 11 requests create a conflict of interest between
attorney and client. So they don't perceive there to be a real prob-
lem relative to litigation.

Ninety-five percent of the judges said that rule 11 had not had
a chilling effect on the development of the law. Eighty-one percent
said that overall amended rule 11 — "amended" meaning the 1983
amendments — ^has had a positive effect, and 80 percent of the
judges say it should be retained in its present form.


The study also revealed that rule 11 is in fact used rarely, but
it is our view as clients that it does have a significant deterrent
effect, and that is something that is immeasurable, what suits
never get filed because there is a rule 11 in existence which really
has some teeth.

I would like to adjust one other bit of statistic here that I think
it is useful for the committee to consider. The American Judicature
Society has also done a study of rule 11, and it, too, is recent and
I think something I would commend for your review. That study re-
vealed that the current rule is having a pervasive impact on law-
yers' practice, particularly in prompting lawyers to engage in in-
creased prefiling review of factual matters.

On the question of rule ll's effect on their practice in general,
the most frequent reaction of the lawyers who were surveyed was
that 32 percent of the plaintiffs' lawyers and 39 percent of the de-
fense lawyers said they did an extra prefiling review of pleadings,
motions or other documents prior to filing. Aiid we think that this
stop-and-think approach to litigation is essential.

We are very concerned about the permissiveness of the safe har-
bor provision. We do think that, like Justice Scalia, that the rules
should be solicitous of the abused and not the abuser. We do think
that the rules should exist to encourage profiling investigation. We
think that sanctions should be mandatory.

And we think that it does not serve the interests of justice when
a defendant has been the subject of a frivolous lawsuit, has been
required to fund a defense, and then receives no compensation for
that money that was paid out of pocket or paid by the insurer to
defend against that frivolous lawsuit.

So, in summary, I would say we are very pleased with the rule
and very concerned about its weakening.

Mr. Hughes. Thank you very much.

[The prepared statement of Ms. Pendell follows:]

Prepared Statement of Judyth W. Pendell, Vice President, Law and Regu-
latory Affairs, Aetna Life and Casualty Co., on Behalf of the American
Insurance Association

Mr. Chairman and distinguished members of the Subcommittee, my name is
Judyth W. Pendell, and I serve as Vice President — Law and Regulatory Affairs,
Aetna Life and Casualty and I am testifying on behalf of the American Insurance
Association (AIA). AIA is a national trade association representing more than 250
insurers which write a large portion of the nation's property/casualty insurance
business. AIA's member companies are substantially involved in civU litigation,
when they defend the interests of their policyholders, when they pursue their policy-
holders' rights through subrogation, when they are involved in coverage disputes,
and when they appear as plaintiff or defendant in a wide range of commercial litiga-

I am pleased to have the opportunity to speak to you, today, regarding the pro-
posed changes to the Federal Rules of Civil Procedure. AIA is committed to finding
ways to reduce the problem of unnecessary costs and delays in civil litigation. We
believe that rules reforms that can effectively address those problems are worthy
of serious consideration and debate. We therefore appreciate the opportunity to pro-
vide you with our views, at this hearing.

We have previously commented on the proposed changes to the Federal Rules of
Civil Procedure. In 1991, AIA appeared before the Advisory Committee on Civil
Rules, in response to their call for comment on proposed changes to Rule 11. At that
time, we urged the committee to preserve Rule 11 in its current form. Then, in Feb-
ruary 1992, we again expressed our concerns about various proposed rules changes.
At the same time, AIA also commended the Advisory Committee for seeking the


adoption of certain reforms which AIA believes will help to achieve the just, speedy
and inexpensive determination of civil litigation.

My testimony, today, will focus on our concerns regarding Rule 11. We are also
concerned that the Rule 26 disclosure proposal will create serious compliance prob-
lems for defendants, and that the proposed deposition limits under Rules 30 and 31
do not adequately address the discovery needs of multi-party cases which are nor-
mally more complex. However, the premature and unwise rewriting of Rule 11
causes us the greatest concern, as we believe that the current Rule provides a high-
ly effective and valuable deterrent to frivolous and abusive litigation which causes
delays in the system and costs to litigants.


AIA's concerns regarding the proposed amendments to Rule 11 are focused in the
areas of: (1) permissive, instead of the current mandatory issuance of sanctions for
frivolous or abusive tactics; (2) allowance of post -filing investigation to attempt to
support allegations and factual assertions, instead of tne current requirement for a
pre-filing inquiry; (3) 21-day "safe harbor" to withdraw a challenged pleading, with
impunity; and (4) discretionary payment of monetary sanctions to the court or the
opposing side, instead of the current authorization for an "appropriate sanction"
which may include reasonable attorney's fees paid to the side which is caused to
incur attorney's fees and expenses as a result oithe violation.


The current Rule 11, as written in 1983, works, and is supported by the federal
judiciary. In dissenting on the proposed changes to Rule 11, Justice Scalia found
that there appears to be general agreement among federal judges that Rule 11, as
written, works. He pointed out that the Federal Judicial Center's Rule 11 survey
of federal district judges shows that 80% of federal district judges believe that Rule
11 has had an overall positive effect and should be retained in its present form. Fur-
ther, 95% believed that the Rule had not impeded development of the law, and
about 75% said that the benefits justify the expenditure of judicial time. (See Ap-
pendix A.) Although Justice Scalia did not object to two specific amendments,^ his
conclusion on the overall Rule 11 changes should be heeded: "[T]he overwhelming
approval of the Rule by federal district judges who daily grapple with the problem
01 litigation is enough to persuade me that it should not he gutted as the proposed
revision suggests."

AIA opposes a discretionary Rule 11. In our opinion, a discretionary Rule will sub-
stantially decrease the current Rule's role as a highly elTective and valuable deter-
rent to frivolous and abusive tactics which cause delays in the system and costs to
the litigants.

Rule 11 is the one rule that commands the full attention of the bar as a tool to
deter litigation abuse. According to the American Judicature Society's (AJS) recent
report surveying federal court lawyers on the use and impact of Rule 11: "It may
well be that Rule 11 has become the 'generic' or 'all-purpose' sanction, the one that
is thought of and referred to for all kinds of sanctionaole activity." The proposed
amendment for permissive sanctions should not be adopted because it essentially
breaks the civil litigation system's most effective tool for policing lawyer and litigant
abuse, and decreases the likelihood that judges will use that tool.

In our opinion, allowing post-filing investigation of factual allegations will also un-
dermine the Rule's current role in deterring frivolous pleadings. More importantly,
coupled with the "safe harbor" authorization to withdraw a challenged pleading,
without penalty, the allowance of post-filing investigation will encourage abusive
conduct, increasing the costs associated with civil litigation. We foresee that mul-
tiple skirmishes will result, delaying the overall progress of the lawsuit and increas-
ing transaction costs.

A crucial element in the current Rule is the requirement for pleadings to be well-
grounded in fact when filed. It should be noted that the AJS's Rule 11 study reveals
that the current Rule is having a pervasive impact on lawyers' practice, particularly
in prompting lawyers to engage in increased pre-filing review of factual matters. On
the question of Rule ll's eitect on their practice in general, the most frequent reac-
tion was that 32.3 of plaintiffs lawyers and 39.6% of defense lawyers said they did

'^ Those two amendments are: proposed Rule 11(c) which would make law firms liable for an
attorney's misconduct under the Rule, and proposed Rule 11(b) which would provide that Rule
11 sanctions be applied when claims in pleadings that at one time were not in violation of the
Rule are pursued after it is evident that they lack support. AIA takes no position with respect
to these amendments.


an extra pre-filing review of pleadings, motions or other documents prior to filing.
AIA supports this "stop-and-think" approach to litigation.

In his dissent, Justice Scalia reminded the Supreme Court that the "safe harbor"
provision contradicts the Court's recent decision in Cooler & Gell v. Hartmarx Corp.,
496 U.S. 384 (1990). In that case, the Supreme Court upheld the trial court's juris-
diction to consider Rule 11 sanctions, despite the party's voluntary disniissal, and
said: "Baseless filing puts the machinery of justice in motion, burdening courts and
individuals alike with needless expense and delay. Even if the careless litigant
quickly dismisses the action, the harm triggering Rule ll's concerns has already oc-
curred. Therefore, a litigant who has violated Rule 11 merits sanctions even after
a dismissal."

We believe that the practical consequences of the suggested allowance of post-fil-
ing investigation and the "safe harbor" to withdraw a challenged pleading, at no
cost, will be to encourage some litigants to intentionally abuse the opportunity for
a voluntary dismissal, and concurrently, to abuse the litigation process, with impu-
nity. At the same time, they will force their opponents to incur substantial trans-
action costs without any chance of reimbursement.

AIA is also concerned that the amendments which give judges the discretion to
order payment of monetary sanctions to the court or the opponent will create a sys-
tem that is unfair, particularly to defendants and insurers required by contract to
fund or pay defenses. The Committee notes point out that, ordinarily, a monetary
sanction should be paid into court as a penalty. The notes also state that in unusual
circumstances, such as where a pleading was presented to cause needless increase
in litigation costs, some or all the monetary payment should be made to those in-
jured by the violation. However, we believe that, in practice, courts will not award
monetary sanctions to the victim of the violation, be it plaintiff or defendant. A
party which has been made to incur transaction costs in defending frivolous claims
and motions should be entitled to some reimbursement in each and every situation,
not just the unusual.


In summary, current Rule 11 is a proven and strong tool for the bench to use,
and litigants and bar to follow, in curoing or avoiding litigation abuse. We believe
that the proposed amendments are premature and unwise, and should not be adopt-
ed at this time, if at all. The solution to any perceived problem with Rule 11 does
not lie in amendments. It lies, instead, in the coordinated efibrts of the judiciary
to implement the Rule, as appropriate, and litigants as well as members of the bar
to abide by the Rule's terms. Should Congress be inclined to adopt some of the
amendments, we suggest that the concerns we have expressed be considered in de-
veloping a strong Rule which will help to achieve the fair, speedy and effective reso-
lution of civil htigation. Furthermore, we suggest that if Rule 11 is being applied
disproportionately to civil rights cases. Congress should develop a solution which re-
sponds to that issue without gutting the Rule's effectiveness in its application to a
broad category of other cases.


Thank you for the opportunity to speak to the Subcommittee, today, about the
proposed changes to Rule 11. AIA welcomes the opportunity to work further with
the Subcommittee on this issue. I will be pleased to answer any questions you may



Federal Jndicial Center Final Report on Rule 11 to the Advisory
Conuaittee on Chril Rules of the Jndicial Conference
of the United Sutes, May 1991

The Tables below are based on Tables in Section 2A of the FJCs Report

and provide further details on the judges' resposes to the 1990

Questionnaire on Rule 11 — 751 Judges were Surveyed

Table 7

Has Rule 1 1 impeded development of the law?

Percentage of 503
Judges Answering
the Question




Table 16

Do the benefits of Rule 1 1 outweigh the

J expenditure of judge time?

Percentage of 452

Judges Answering

the Question




Table 17

What has been the overall effect of Rule 1 1

on litigation in the federal courts?

Percentage of 472
Judges Answering
the Question

Rule 1 1 has had a postive effect
Rule 1 1 has had a negative effect
Rule 1 1 has had no effect




Table 18

What should be the future for Rule 1 1 ?

Percentage of 526
Judges Answering
the Question

Retain in its present form
Retum to its pre- 1983 language
Amend in some other way





Mr. Hughes. Ms. La Mothe, welcome.


Ms. La Mothe. Thank you, Mr. Chairman, members of the sub-
committee. Good afternoon, I guess I should say at this point. It
is my pleasure to appear before you today on behalf of the litiga-
tion section of the American Bar Association.

Let me emphasize that my appearance here today is not on be-
half of the American Bar Association in general, which has not
taken a specific position with respect to the matters I am about to
discuss. However, the American Bar Association is on record as ap-
proving the intent of the Civil Justice Reform Act of 1990. And I
believe that the expression of these views is consistent with that
earlier policy.

Also, I believe, consistent with our present position, is the torts
and insurance practice section of the ABA, the business law sec-
tion, and young lawyers division. And also the position that I am
about to espouse will be considered by the American Bar Associa-
tion's board of governors at its upcoming meetings this coming

As litigating lawyers and as officers of the court we have a duty
to make sure that the justice system works efficiently and fairly.
My purpose in appearing before you today is to ask you to defer
adoption of the proposed amendments to rule 26(a)(1) until Decem-
ber 31, 1995. We are choosing that date for reasons that are un-

Online LibraryUnited States. Congress. House. Committee on the JAmendments to the Federal rules of civil procedure : hearing before the Subcommittee on Intellectual Property and Judicial Administration of the Committee on the Judiciary, House of Representatives, One Hundred Third Congress, first session, June 16, 1993 → online text (page 12 of 45)