Federal Discovery Stays
In federal civil litigation, unless a discretionary stay is granted, discovery often proceeds while motions to dismiss are pending. Plaintiffs with non-meritorious cases can compel defendants to spend massively on electronic discovery before courts ever rule on such motions. Defendants who are unable or unwilling to incur the huge up-front expense of electronic discovery may be forced to settle non-meritorious claims. To address multiple electronic discovery issues, Congress amended the Federal Rules of Civil Procedure in 2006 and the Federal Rules of Evidence in 2008. However, the amendments failed to significantly reduce costs and failed to address the critical issue of discovery timing. This Article contends that a mandatory stay is the most effective solution to the problem of electronic discovery during the pendency of motions to dismiss. In 1995, the Private Securities Litigation Reform Act imposed a mandatory stay of all discovery while motions to dismiss are pending in actions alleging violations of securities laws, absent application of two limited statutory exceptions. This Article examines the operation of the mandatory stay in securities actions and concludes that it should be extended to electronic discovery in all federal civil litigation, unless an exception applies. Imposition of a mandatory stay of electronic discovery before the disposition of motions to dismiss is the most equitable and effective solution to the unresolved problem of coercive settlements.