The outspoken assessments pervaded witness remarks during a virtual hearing of the Advisory Committee on Civil Rules. The committee assists the Judicial Conference of the United States with regulatory changes and is nearing the end of a six-month public comment period regarding revisions to wide-ranging rules.
A few of those proposed revisions have ignited intense interest in the defense and plaintiffs bars, and Tuesday's hearing laid bare some stark divisions. One example occurred during pointed exchanges between attorneys at defense-oriented Horvitz & Levy LLP and plaintiff-focused Hagens Berman Sobol Shapiro LLP.
There's also interest in specialized corners of the legal industry, such as the process service sector, which has flooded a rulemaking docket with highly critical correspondence.
Here's a rundown of key topics discussed at Tuesday's meeting.
Federal Rule of Civil Procedure 7.1
Amid revelations of undisclosed freebies accepted by some U.S. Supreme Court justices, a Judicial Conference ethics panel in 2024 updated its guidance concerning financial connections that require judges to bow out of cases. The civil rules committee is floating a Rule 7.1 rewrite to reflect that update and to address "concerns that the current disclosure requirements do not adequately alert judges to possible grounds for recusal," as a committee report put it.
The rule applies to entities that are parties to litigation. It describes information those entities must disclose about their owners and major shareholders, so that judges can identify conflicts of interest. Draft revisions would make the rule's language more capacious, replacing the term "corporations" with "business organizations" and replacing the term "owning" with "directly or indirectly owns."
But several speakers Tuesday pressed for an even broader rule, specifically recommending language that would encompass third-party litigation funding. That funding often comes from institutional investors and hedge funds that bankroll class actions and mass torts in exchange for shares of settlements and judgments.
Tuesday's advocates of third-party litigation funding transparency have all held positions at Lawyers for Civil Justice, a large group that includes scores of BigLaw firms and many major corporations. One of those advocates was Robert L. Levy, the LCJ's treasurer and executive counsel at Exxon Mobil Corp., who raised the specter of eroding public trust.
"Not having a requirement of disclosure of entities that have a significant interest in the outcome of the litigation could, and I think will, create situations where [observers] could look askance at the operations of the courts," Levy said, "if a judge does have an indirect interest in the outcome of the case through litigation funding."
Another LCJ member, Jonathan Redgrave of Redgrave LLP, made a similar point, saying, "When we're talking about disclosing ownership interests that could impact a judge's statutory and ethical duties, we should consider extending that to ownership over, or control of, the claims in the case itself. And yes, that's talking about litigation funding."
Committee members and researchers Tuesday didn't express much of a desire to accept that advice. But the civil rules panel — after prodding from Amazon.com Inc., Johnson & Johnson, Microsoft Corp. and other major companies — has been exploring the development of a related rule and is expected to discuss the matter at its semiannual meeting in April.
Federal Rule of Civil Procedure 45(b)
A section of Rule 45 that outlines permissible ways to serve a subpoena is set for a substantial makeover, and that makeover has elicited substantial criticism. The criticism is visible on a regulatory docket for a half-dozen revised rules; about 140 comments have been posted to the docket, and many address the proposed changes to service of process under Rule 45.
Some of those comments appear to have arrived at the urging of the National Association of Professional Process Servers, which recently announced on LinkedIn that it was "preparing a template for process servers to use, if they choose, to voice their opposition to the proposed amendment," calling it a "very important issue."
"A federal rule change of this magnitude will not remain in the federal sphere. It will reshape attorney behavior, influence state rulemaking and jeopardize the very system of personal service that safeguards litigants' rights nationwide," NAPPS board member Susan Collins wrote in one of the comment letters.
A rules committee report has stated that "service is not problematical" for most subpoenas, but that "problems have emerged with sufficient frequency to justify a rule change." The changes include allowing additional methods of delivery, such as mailing a subpoena or leaving it at the recipient's home with someone "of suitable age and discretion." The rule would also allow delayed payment of any fees owed to the subpoena recipient for expenses related their requested testimony.
Alex Dahl, general counsel of the LCJ, said at Tuesday's hearing that the amendment's risks are "much greater than any marginal need or benefit," echoing other speakers who have disputed the existence of a genuine problem.
The risks, Dahl said, include "more litigation over untested methods of service." If the revisions nonetheless go forward, then they should be altered to make it "abundantly clear that any new methods of service are only allowed if the existing methods are tried and fail," he added.
But the reshaped Rule 45 does have some supporters. Beasley Allen Law Firm attorney Navan Ward, a past president of the American Association for Justice, said Tuesday that when AAJ members discussed the concept, there was "no shortage of stories shared regarding difficulties with parties who evade service."
"Many of these individuals are extremely wealthy," Ward said. "They use their resources to hide behind gated walls, often protected by security and gated communities."
Yet another view Tuesday came from Brian T. Fitzpatrick, a Vanderbilt Law School professor who described himself as "a big supporter of the plaintiffs bar." It appears, Fitzpatrick said, that "Rule 45 has drifted very, very far from the original wisdom of the rulemakers." Those rulemakers, the professor said, believed that "if you're going to haul an innocent nonparty into your lawsuit, you need to make them whole from the very beginning."
Federal Rule of Civil Procedure 45(c)
Tweaks to Rule 45(c) would address a 2023 ruling by the Ninth Circuit in a case called In re: Kirkland; that ruling limited judicial power to compel remote testimony from witnesses not residing within 100 miles or in the same state.
Under the revision, "the place of attendance for remote testimony is the location where the person is commanded to appear in person." The effect would be to confirm that subpoena power extends nationwide, so long as witnesses don't have to travel too far to remotely testify.
Tuesday's hearing featured extensive debate about the implications of wider latitude for remote testimony. Dahl, for one, warned that there is "way too much opportunity for prejudice and mischief and gamesmanship," suggesting that defendants might be forced to station lawyers all around the country to deal with potential remote witnesses.
In contrast, Lauren Barnes, acting CEO of legal group Public Justice, called remote testimony vastly superior to videotaped depositions. Those depositions are "incredibly boring," and they were often recorded "five, six, seven, eight years before they're ever being played in front of a jury or a judge," Barnes said.
Some of the spiciest comments, however, involved Horvitz & Levy and Hagens Berman. Those comments touched on Federal Rule of Civil Procedure 43(a)
; Rule 43 allows remote testimony "for good cause in compelling circumstances and with appropriate safeguards," and advisers have been looking at deleting the "compelling circumstances" condition.Horvitz & Levy partner Steven Fleischman, who helped win the Kirkland ruling at the Ninth Circuit, spoke at Tuesday's hearing and repeatedly called attention to a related letter from Hagens Berman.
"If you go back and look at the original letter from the Hagens Berman firm, they really want to dramatically change Rule 43 to allow remote testimony in virtually all cases. And I would be opposed to that," Fleischman said. He added that "the thrust of the Hagens Berman letter" would mean that "every witness, particularly expert witnesses, are just going to show up by Zoom, because it's easier."
Later in the day, Hagens Berman partner Rachel A. Downey delivered a response that disputed Fleishman's characterization of past amendments to Rule 45. "Respectfully," Downey said, "when Mr. Fleischmann testified earlier that the intent of [those] amendments was not to allow for nationwide service of a subpoena for remote testimony, that's simply not true."
She also knocked speakers for frequently focusing not on Rule 45, but rather on the separate idea for deleting Rule 43's "compelling circumstances" condition.
"The majority of the criticism we've heard today, and in the comments filed on the [docket], have really been directed not to the proposal at issue now, but to theoretical future changes to Rule 43," Downey said. "But this amendment is ... not doing anything to alter the stringent 'good cause and compelling circumstance' requirement of Rule 43."
The public comment period on all the proposed rule changes will end Feb. 16.
--Editing by Jay Jackson Jr.
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