16 Rev. Litig. 255

The Creation and Evolution of Disclosure in Arizona

Anthony R. Lucia

The article explores the effectiveness of the Arizona disclosure rule. The Arizona Supreme Court revised the Arizona Rules of Civil Procedure in 1992, adding Rule 26.1 with the goal of making the court system more efficient, less expensive, and increasing cooperation among the parties. Rule 26.1 provides for “Prompt Disclosure of Information,” which imposes mandatory disclosure deadlines of both favorable and unfavorable information. Sanctions are only imposed on failure to disclose favorable information, and untimely disclosures are not allowed to be used at trial. The Arizona Supreme Court interpreted the disclosure rules as to be read with common sense and serve the purpose of not hiding information before trial and not to be used in discovery games played by attorneys. Information learned by the parties, even if not through the formal disclosure process, will be considered disclosed. Trial judges have the discretion to allow untimely disclosed information so that the cases are heard on the merits. Revisions to Rule 37(c) look at the “harmlessness” of admitting the late information and the disclosure without delay as soon as the information became known, which makes the mandatory sanctions not mandatory. The Arizona Supreme Court seeks to end discovery games played by lawyers, but the rules work best when both sides engage in full disclosure. The rules may still punish those who comply with the rules and reward those that do not.

 

   I. Introduction In 1939, Arizona became one of the first states to adopt Rules of procedure essentially identical to the Federal Rules of Civil Procedure. n1 Thereafter, whenever amendments to the Federal Rules have been enacted, similar amendments have been made to the Arizona Rules of Civil Procedure. n2 Not surprisingly, Arizona courts have regularly looked to federal decisions to aid in the interpretation of the Arizona Rules. n3    The Arizona discovery rules have always been very similar to the federal discovery rules. n4 Although most Arizona lawyers would agree that the Rules of Discovery represented a substantial improvement upon the old practice of trial by ambush, cases have become more complex in recent years and discovery has taken on a life of its own, increasing the expense of litigation. n5    In an attempt to fix the problem, in March, 1990, the Arizona Supreme Court created a Special Bar Committee to Study Civil Litigation Abuse, Cost, and Delay (the "Special Committee"), instructing the Special Committee to study problems of abuse, cost, and delay in civil litigation. n6 After extensively studying the issues, the Special Committee concluded that the current practice was "causing undue expense and delay and threatening to make the courts inaccessible to the average citizen." n7 Moreover, the Special Committee recommended modifications of current practice and amendments to the Arizona Rules of Civil Procedure in order to remedy these problems, while still preserving the traditional adversarial system of trial by jury as a means of resolving civil disputes. n8    II. The Creation of Arizona Disclosure Rules In September 1990, the Special Committee proposed revisions to the Arizona Rules of Civil Procedure designed to make the system more efficient, more expeditious, less expensive, and more accessible to the people. n9 While the Special Committee sought to eliminate unnecessary discovery, it nonetheless intended to preserve a system which would facilitate the production of all facts and information necessary for each side to process a case. n10 At the same time, the Special Committee wanted to encourage greater professionalism among attorneys, "with the ultimate goal of increasing voluntary cooperation and exchange of information." n11    After soliciting public comment and experimenting with the Rules in a few trial courts in Maricopa County, the Arizona Supreme Court enacted the proposals on December 18, 1991, to become effective on July 1, 1992. n12 This marked a substantial departure from Arizona's usual practice of conforming to federal procedure. Instead, Arizona took the initiative, and dramatically changed the manner in which litigants would prepare for trial.    The primary and fundamental change was a mandate that all parties in litigation voluntarily disclose all information necessary to process the case. n13 Specifically, a completely new rule, Rule 26.1, "Prompt Disclosure of Information," requires parties to simultaneously serve disclosure statements within forty (40) days after the filing of a responsive pleading. n14 Rule 26.1 also provides that the duty to disclose is continuing and that each party shall make additional or amended disclosures "seasonably but in no event more than thirty (30) days after the [new or different] information is revealed to or discovered by the disclosing party, ... [and no] later than sixty (60) days before trial except by leave of court." n15    The sanction for failing to comply with Rule 26.1 is that any information not timely disclosed, cannot be used at trial, except by leave of court for good cause shown. n16 However, while both unfavorable and favorable information must be disclosed, the sanction covers only undisclosed favorable information; no corresponding sanction was specifically provided for failing to disclose unfavorable information.    Because the Special Committee intended disclosure to take the place of the expensive process of discovery, it also recommended other rule changes to limit discovery. n17 Each side has the right to depose parties and expert witnesses; however, except upon stipulation, or by order of the court for good cause, depositions of other persons may not be taken, and depositions may not exceed four (4) hours in length. n18 The number of uniform and nonuniform interrogatories is limited to a total of forty, with each subpart to a nonuniform interrogatory counted as a separate interrogatory. n19 Each side may serve only one request for production, containing not more than ten categories of items. n20 Each side may serve only twenty five Requests for Admissions. n21 Finally, each side may use only one expert per issue. n22    III. The Evolution of Arizona's Disclosure Rules The first reported appellate decision interpreting the disclosure rules was Jones v. Buchanan. n23 In Jones, the plaintiff failed to file a disclosure statement as required by Rule 26.1, but had responded to interrogatories, therein providing some of the information that would have otherwise been disclosed. n24 In responding to interrogatories concerning expert witnesses, the plaintiff stated that an "unknown expert in human factors will be disclosed when known." n25 Also, in deposition, the plaintiff's treating physician denied any causal relationship between the accident and some of the plaintiff's injuries. Thereafter, in his pretrial statement, the plaintiff first identified a human factors expert, disclosed a different doctor to testify the accident caused the injury, and sought a postponement of the scheduled trial date. The trial court granted the motion to allow the recent disclosures and postponed the trial date. The defendant then filed a Petition for Special Action. n26    Although the Arizona Court of Appeals is reluctant to become involved in pretrial discovery disputes, the court accepted jurisdiction in this case because of the Arizona Supreme Court's intent to dramatically change the manner in which discovery is conducted, by adopting the disclosure rules, and because of the absence of appellate decisions interpreting those rules. n27    The court of appeals reversed the trial court, holding that the plaintiff had clearly violated the disclosure rules and had not shown good cause for the untimely disclosures. n28 The court noted that although the rules are intended to restrict the overuse of discovery devices, they are primarily designed to promote the prompt and thorough investigation and preparation of a case. n29 Therefore, because reasonable inquiry and investigation would have revealed the treating physician's testimony and the identity and opinions of the human factors expert, the plaintiff was not allowed to call the new doctor or the human factors expert at his trial. n30 The court stated that because of the clear intent of the disclosure rules, when untimely disclosure "is solely the result of a failure to engage in timely trial preparation," it cannot be excused. n31    Jones firmly upheld the most severe sanction set forth in the new rules: any information not timely disclosed cannot be used at trial. However, both the courts and legislators soon found this mandatory sanction to be too severe, and in need of revision.     The Arizona Supreme Court first interpreted the disclosure rules n32 in Bryan v. Riddell. n33 In Bryan, the trial court enforced the severe and mandatory sanction of excluding from trial certain witnesses who had not been timely disclosed. n34 Notably, while the lawsuit had been commenced prior to the effective date of the disclosure rules, the trial was scheduled to begin just a few months after that date.    The supreme court noted that the purpose of the mandatory exclusion sanction is to put "teeth" into the disclosure requirements of Rule 26.1(a). n35 The intent is to deter litigants from withholding information by precluding use of that information at trial. n36 The sanction was not designed, however, to be a weapon in the arsenal of litigators engaged in gamesmanship disguised as advocacy. n37 Because the rule amendments had been in effect for only a short time and because the defendants were well aware of the evidence that would be forthcoming at trial, the supreme court overruled the sanctions imposed by the trial court. n38 Unlike Jones, where two experts were not disclosed until shortly before trial, the experts and other witnesses in Bryan had been revealed through discovery; indeed, many of them had already been deposed. The court took the opportunity to explain the philosophy of the new rules:     The disclosure rules must be interpreted in harmony with their underlying philosophy and purpose. Presumptive limits now apply to traditional discovery methods. Ordinarily, therefore, the disclosure statement is the primary vehicle by which the parties are informed of their opponent's case. Thus, it should fairly expose the facts and issues to be litigated, as well as the witnesses and exhibits to be relied upon. Here, however, the disclosure statement was not so critical, as discovery was essentially complete. n39 The court interpreted "disclosure" to be not only what is set forth in the "disclosure statement," but also all information communicated to the other side in depositions, answers to interrogatories, and other informal communications. n40    In 1993, the Federal Rules of Civil Procedure were amended to establish a more limited form of disclosure than that adopted in Arizona. n41 Following Arizona's usual practice of conforming to the federal rules when appropriate, the Civil Practice and Procedure Committee of the Arizona State Bar (the "Bar Committee") recommended changes to the Arizona Rules based upon the 1993 federal amendments. n42 The Bar Committee did not recommend a retreat to the federal standard for disclosure. However, the Bar Committee did suggest that the sanctions for failure to disclose be moved from Rule 26.1 to Rule 37 (as in the Federal Rules), that the "harmless" test set forth in Federal Rule 37 be adopted, and that the potential sanction of informing the jury of the failure to disclose unfavorable information be adopted. The Bar Committee also recommended that serving more than one Request for Production be permitted, so long as the number of categories in the Request(s) not exceed ten. n43 The Special Committee endorsed the same amendments, but recommended an absolute cutoff of sixty days before trial for disclosures, regardless of whether any untimely disclosure was harmless. n44    While those amendments were pending before the Arizona Supreme Court, another disclosure case reached the court. In Allstate Insurance Co. v. O'Toole, n45 the issue was whether a trial court must exclude witnesses and exhibits where there has not been a showing of good cause for their untimely disclosure. After the original attorneys withdrew without having fully responded to the defendant 's request for production, the unrepresented plaintiffs failed to file a timely disclosure statement. n46 Later, the plaintiffs retained an attorney who promptly filed what was then an untimely disclosure statement. The defendant sought to exclude from trial all of the untimely disclosures. At that time, no trial date had been set. The trial court refused to exclude the untimely disclosed information, but precluded the plaintiff from subsequently amending the disclosure statement or conducting any further discovery, and assessed attorneys' fees and costs against plaintiff.    The Arizona Court of Appeals reversed the trial court and excluded the untimely disclosed information from trial. n47 The court specifically declared that trial courts have no discretion: absent a finding of good cause for the failure to make timely disclosure, exclusion is mandatory. n48    The Arizona Supreme Court reversed the court of appeals, stating that the new disclosure rules should be read with a common sense approach. n49 The court held that the words "good cause" in Rule 26.1(c) mean not only good cause for failing to make timely disclosure, but also good cause for granting relief. n50 As a result, trial judges have discretion to accept untimely disclosed information so that cases are heard on the merits. The court set forth the following criteria in determining whether good cause for relief exists: the willfulness or inadvertence of a party's conduct; prejudice to either side which may result from excluding or allowing the evidence; the opposing party's action or inaction in attempting to resolve the dispute short of exclusion; and the overall diligence with which a case had been prosecuted or defended. n51     After rendering the Allstate decision, the court dealt with the proposed amendments by moving the sanctions provision to Rule 37 and adopting the "harmless" test contained in the Federal Rule, but rejecting the proposed absolute cutoff of sixty days before trial. n52 The court also adopted the federal sanction of possibly informing the jury of the failure to disclose unfavorable information, adding that a knowing failure to disclose unfavorable information "shall be grounds for imposition of serious sanctions in the court's discretion, up to and including dismissal of the claim or defense." n53    As a result of Bryan, Allstate, and the "harmless" exception in Rule 37, lawyers and judges were left with a mandatory exclusion rule that really was not mandatory. As a result, practice in the trial courts became somewhat chaotic. Litigants began disclosing information for the first time a few days before trial, or even during trial, and claiming that the untimely disclosure was "harmless." Those same litigants argued that since both Bryan and Allstate unequivocally favored decisions on the merits and rejected arguments excluding evidence, they should be allowed to introduce their untimely disclosed evidence so that the case could be resolved on the merits. Meanwhile, adverse parties resurrected the "trial by ambush" argument. Having relied on the disclosure statements, they had not conducted discovery as they previously would have and were being punished for playing by, and relying on, the disclosure rules. Moreover, trials often had to be interrupted to conduct a hearing outside the presence of the jury to determine whether the information sought to be admitted in evidence had been disclosed, and if not, whether the failure to disclose timely was harmless. n54    Because of these problems, two trial judges petitioned the Supreme Court to promulgate an amendment essentially imposing the cutoff of sixty days before the trial date (previously proposed by the Special Committee), but with limited exceptions. n55 The Bar Committee, of which one of the petitioning judges was a member, suggested changes to the proposed amendments, which were accepted by the petitioning judges. n56    Consequently, Rule 37(c), which already contained both the mandatory exclusion clause and the "harmless exception," expanded to include two new subsections. n57 Subsection 2 provides that in order to use information first disclosed less than sixty days before trial, a party must file a motion supported by affidavit to extend the time for disclosure. n58 The motion and affidavit must demonstrate that: 1) the information passes muster under the standards of subsection 1 (the harmlessness exception); and 2) the information "was disclosed as soon as practicable after its discovery" (rather than within thirty days). n59 Subsection 3 requires a similar motion from a party seeking to use information first disclosed during trial. n60 In that case, the motion and affidavit must establish that: 1) no amount of effort, not even due diligence, would have led to earlier discovery and disclosure of the information; and 2) the information was disclosed without delay. n61    These amendments make clear what the Allstate opinion implied, but did not directly state. In Allstate, the failure to disclose did not occur close to or during trial, but prior to the setting of a trial date. n62 An extensive Committee Note was also added, expanding upon the principles stated in Allstate and providing guidelines for trial courts to determine whether to allow untimely disclosed information. n63 The Note defines "harmlessness" to mean that "the other party has a full and fair opportunity to investigate and rebut the new information." n64 The Note also suggests that a sliding scale should be implemented such that as the trial date nears, it will be more difficult to demonstrate that untimely disclosed information is "harmless." n65 Additionally, the Note points out that if one party makes substantial new disclosure shortly before sixty days before trial, then it may be appropriate to allow rebuttal by the other side. n66    Now that Arizona's disclosure rules have been in effect for almost five years, there are more appellate decisions dealing with sanctions for failure to disclose. In Taliaferro v. Taliaferro, n67 the lawyer of the husband in a domestic relations case involving a custody dispute did not disclose the husband 's hospitalization following an overdose of prescription medication. n68 The husband's lawyer knew about the hospitalization. The trial court imposed a sanction of $ 20,000 against the lawyer. The wife, who also knew about the hospitalization, argued that she would not have incurred additional attorneys' fees had the disclosure been made properly and timely. The total attorneys' fees incurred by the wife were only $ 12,555, of which $ 6,075 were incurred after the failure to disclose, and approximately $ 1,000 stemmed directly from the failure to disclose. The court of appeals n69 held that the violation was serious enough to warrant a sanction greater than the attorneys' fees incurred by the wife; however, it ruled that the $ 20,000 sanction "so far exceeded what [was] just and appropriate" that it was a clear abuse of discretion. n70    In Scottsdale Princess Partnership v. Maricopa County, n71 the court reversed a $ 5,000 sanction against the Arizona Department of Revenue for failing to disclose the name of the head of its personal property division a person who would have knowledge concerning issues involved in the case. n72 The court found that the record did not provide a basis to determine whether the amount awarded represented the reasonable attorneys' fees and expenses incurred as a result of the failure to properly disclose. n73 Therefore, the matter was remanded to the trial court with directions to assess against the Department the reasonable attorneys' fees and expenses, if any, actually incurred by the taxpayer as a result of the failure to disclose. n74    Most recently, in Zuern v. Ford Motor Co., n75 a crashworthiness case, the trial court excluded expert opinion concerning defects in the rear seat because plaintiffs had not disclosed such a theory of recovery until approximately three months before trial. n76 The court of appeals affirmed because prior to the untimely disclosure, the plaintiffs contended that a head injury incurred by the occupant of the rear seat was caused by being hit by the occupant of the front seat, as a result of the collapse of the allegedly defective and unreasonably dangerous front seat. Later, plaintiffs completely changed their theory contending that there was no contact between the occupants and that the head injury was caused solely by the occupant of the rear seat hitting his head against the defective rear seat. n77    IV. Conclusion Arizona lawyers and judges now have almost five years of experience with disclosure. The results have been mixed. Disclosure works well when the parties and their counsel comply with the letter and spirit of the disclosure rules. With disclosure, the expense of litigation can be substantially reduced, and cases can be resolved much sooner. n78 However, many attorneys complain not only that "the other side" does not abide by the rules, but also that because judges do not enforce the rules through sanctions, an attorney who makes proper and appropriate disclosure merely hurts his own client. n79    As the recent cases upholding sanctions for failure to disclose become better known, disclosure should improve. Also, now that the most recent amendments have taken effect, disclosure should occur more promptly. Presumably, a claim or defense eventually will be dismissed because unfavorable information was withheld, spurring Arizona litigants to make more revealing diclosures.    Disclosure is a good idea that should always work well with respect to the information that a party wants to use on that party's own behalf at trial. It is more controversial, however, as to whether disclosure will work well with respect to information that is unfavorable to the party making disclosure. In an adversary system, where a lawyer's primary duty is to the client and where clients believe that what is said to a lawyer is privileged, mandatory disclosure of unfavorable information may impair the attorney/client relationship, n80 punishing those who comply with the rules, while rewarding those who do not. It is often difficult in complex cases to ascertain what "unfavorable" information should be sought out so that it can be disclosed. How much effort should an attorney undertake against his own client in order to prove the claim or defense of the other side? n81    Nevertheless, the Arizona Supreme Court is committed to full disclosure of all information, favorable and unfavorable. Moreover, the United States Supreme Court, in one of its first cases concerning the then newly enacted federal discovery procedures, stated:    Mutual knowledge of all the relevant facts gathered by both parties is essential to proper litigation. To that end, either party may compel the other to disgorge whatever facts he has in his possession. n82 The discovery process has broken down because whenever there is a request to disclose facts, the response consists of an objection that the request is valueless, ambiguous, and not calculated to lead to the discovery of admissible evidence. And so the game goes on justice suffers, clients incur more expense, and court calendars remain crowded. Arizona no longer tolerates the game; instead, it seeks to limit litigation to the true factual and legal disputes that exist between the parties after both have made full disclosure. n83 In Arizona, the issue is no longer whether the other side asked the right question n84 or moved to compel following the meritless objection. Instead, each litigant is required to assume that the right questions were asked, and respond by "disgorging whatever facts he has in his possession." It takes some getting used to, but it works.
           
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