Offensive Discovery after Strudley and Changes to the Colorado Rules of Civil Procedure

Toxic tort cases often involve real property, especially in areas with large mining and energy sectors like the West and Southwest. The cases frequently have large potential damage values and require extensive discovery. Numerous expert witnesses, vast amounts of real property testing, and significant document production are common. The cost of engaging in this far reaching discovery is often a significant factor in early settlement negotiations. Toxic tort defendants have a substantial incentive to settle disputes before engaging in discovery no matter the likelihood of success at trial because the discovery costs alone represent a sizeable expense that cannot be recovered even with a successful verdict at trial. This paradigm promotes plaintiffs bringing questionable claims in hopes of settling for a nuisance value at an early stage in the litigation.

Having realized the thumb toxic tort discovery places on the scales of justice, many jurisdictions have adopted what are commonly known as “Lone Pine orders,” so named after an unpublished opinion of the Superior Court of New Jersey (Lore v. Lone Pine Corp., No. L-33606-85, 1986 WL 637507 (N.J. Super. Ct. Law Div. Nov. 18, 1986)). Lone Pine orders seek to tare the judicial scales by requiring plaintiffs in toxic tort cases to provide evidence that establishes injury, exposure, and causation prior to full discovery. Plaintiffs face dismissal if they cannot provide such evidence. While Federal Rule of Civil Procedure 16(c)(2) provides for the use of Lone Pine orders in subsection (L) by allowing trial courts to adopt “special procedures for managing potentially difficult actions that may involve complex issues, multiple parties, difficult legal questions, or unusual proof problems,” Colorado Rule of Civil Procedure 16 lacks such language, despite being modeled after the federal rule. Compare Fed. R. Civ. P. 16 with C.R.C.P. 16. However, Colorado Rule of Civil Procedure 16 does not explicitly ban Lone Pine orders either; instead, it is silent on the matter.

In April of this year, the Colorado Supreme Court addressed whether Lone Pine orders are allowed under the Colorado Rules of Civil Procedure in Antero Resources Corp. v. Strudley, 347 P.3d 149 (Colo. 2015). In Strudley, the Colorado Supreme Court held that Lone Pine orders are not allowed under Colorado law, stating that “[a]lthough the comments to C.R.C.P. 16 promote active judicial case management, the rule does not provide a trial court with authority to fashion its own summary judgment-like filter and dismiss claims during the early stages of litigation.” 347 P.3d at 151. The Colorado Supreme Court implicitly left open the option for Lone Pine orders to be lawful in the future if certain changes are made to the Colorado Rules of Civil Procedure. See id. at 159 (“C.R.C.P. 16 does not currently authorize Lone Pine orders”).

Despite the Colorado Supreme Court issuing changes to the Colorado Rules of Civil Procedure that took effect on July 1, 2015, the Strudley opinion still allows plaintiffs to use discovery as an offensive tool in toxic tort litigation without threat of a Lone Pine order, leaving defendants weighing the costs of discovery against the benefits of a favorable verdict at trial. To combat this quagmire, defendants should attempt to limit the costs of discovery through citation to changes made to Colorado Rule of Civil Procedure 26 when opposing particularly burdensome discovery requests.

Antero Resources Corp. v. Strudley

The Strudleys, a husband and wife with two minor children, filed suit against Antero Resources, alleging that Antero Resources’ natural gas drilling operations near the Strudley home contaminated the air, water, and ground of the Strudley’s property—causing the Strudleys to suffer burning eyes and throats, rashes, headaches, nausea, coughing, and bloody noses. Id. at 151. The Strudleys alleged Antero Resources’ contamination of the Strudley property forced the Strudleys to move within six months of Antero Resources commencing operations. Id.

After the parties exchanged initial disclosures, Antero Resources moved the trial court for a Lone Pine order requiring the Strudleys to present evidence to support their claims before discovery would continue. Id.at 151–52. The trial court issued a modified case management order that required the Strudleys to present evidence in the form of expert witness affidavits, studies and reports, and medical records of each plaintiff’s exposure to toxic chemicals as a result of Antero Resources’ operations and prohibited further discovery until the Strudleys made such a showing. Id. at 152. Id. While the Strudleys complied with the modified case management order and submitted evidence, the affidavits, documents, records, and reports submitted only established that further investigation into Antero Resources’ operations and the Strudleys’ property were warranted, not that the Strudleys had been exposed to dangerous chemicals or that Antero Resources’ conduct caused the alleged injuries and harm to the Strudleys’ property. Id. at 153. In response to what it viewed to be a deficient evidentiary production by the Strudleys, Antero Resources filed a motion to dismiss, or in the alternative, for summary judgment, and the trial court granted the motion, finding the Strudleys’ production insufficient and dismissing the Strudleys’ claims with prejudice. Id.

On the Strudleys’ appeal of the trial court’s dismissal with prejudice, the Colorado Supreme Court granted certiorari to determine “[w]hether a district court is barred as a matter of law from entering a modified case management order requiring plaintiffs to produce evidence essential to their claims after initial disclosures but before further discovery.” at 151 n.1. While acknowledging that “[t]he Colorado Rules of Civil Procedure grant courts flexibility and discretion to address discovery disputes,” the Colorado Supreme Court held that “this judicial authority is limited.” Id. at 159. The Colorado Supreme Court then noted that “C.R.C.P. 16 does not currently authorize Lone Pine orders,” leaving open the possibility that changes to Colorado Rule of Civil Procedure 16 could allow trial courts to issue Lone Pine orders in the future. Id. (emphasis added). In reaching its holding that Lone Pine orders are not authorized by Colorado law, the Colorado Supreme Court focused on the differences between Federal Rule of Civil Procedure 16 and Colorado Rule of Civil Procedure 16. Id. at 155–57. The Colorado Supreme Court stated that had it intended previous revisions to Colorado Rule of Civil Procedure 16 “to institute a prima facie case showing akin to a Lone Pine order, we would have explicitly patterned our revised rule after Fed. R. Civ. P. 16(c).” Id. at 158.

Changes to Colorado Rule of Civil Procedure 16

After its opinion in Strudley, the Colorado Supreme Court issued changes to the Colorado Rules of Civil Procedure to take effect for all cases filed on or after July 1, 2015. The changes included significant revisions to Colorado Rule of Civil Procedure 16. Conspicuously absent in these revisions is language modeled after Federal Rule of Civil Procedure 16(c)(2)(L), which the Strudley opinion cites as providing the authority for Lone Pine orders. Id. at 155. Therefore, while the comments accompanying the changes to Colorado Rule of Civil Procedure 16 indicate the changes are intended to make “cases move more efficiently” by having judges “involved directly and early in the process” “in deciding how much discovery [is] appropriate,” the changes are not likely to alter the holding in Strudley that Lone Pine orders are not permitted under Colorado law.

Effect of Strudley and Changes to Colorado Rule of Civil Procedure 16

The Strudley opinion does not change the law in Colorado; it simply reaffirms plaintiffs’ ability to use the exorbitant toxic tort discovery costs to obtain favorable settlements from defendants early in the litigation process. The Colorado Supreme Court has refused to adopt procedures to limit plaintiffs’ use of discovery as an offensive tool in litigation, aside from those traditionally available and rarely employed to punish plaintiffs for frivolous or groundless claims or abusive discovery tactics under Colorado Rules of Civil Procedure 11 and 37.

The Colorado Supreme Court had the opportunity in Strudley to hold that Lone Pine orders might be permitted in certain circumstances. It could have reached the same outcome for the Strudleys and reversed the trial court’s dismissal by concluding that a Lone Pine order was not lawful under the specific facts of Strudley but that such an order might be appropriate under other circumstances. Instead, the Colorado Supreme Court held that the Colorado Rules of Civil Procedure never allow for Lone Pine orders.

Issuing the revisions to the Colorado Rules of Civil Procedure, the Colorado Supreme Court could have provided discretion to trial judges to issue Lone Pine orders when the facts and circumstances called for such orders without contradicting the holding in Strudley that Colorado Rule of Civil Procedure 16, as written and applicable during the Strudley litigation, did not allow for Lone Pine orders. Instead, it chose not to incorporate language similar to that in Federal Rule of Civil Procedure 16 that grants such authority.

Use of Colorado Rule of Civil Procedure 26 to Combat Offensive Discovery

Despite the changes to Colorado Rule of Civil Procedure 16 not allowing for the issuance of Lone Pine orders, changes to Colorado Rule of Civil Procedure 26 may present a different avenue for defendants to avoid the excessively burdensome costs of toxic tort discovery. Amendments to Colorado Rule of Civil Procedure 26 require trial courts to consider “the importance of the issues at stake in the action, the amount in controversy, the parties’ relative access to relevant information, the parties’ resources, the importance of the discovery in resolving the issues, and whether the burden or expense of the proposed discovery outweighs its likely benefit” when determining if requested discovery is “proportional to the needs of the case.”

Using the facts in Strudley as an example, while Antero Resources could not stay all discovery and force the Strudleys to make an evidentiary showing through receipt of a Lone Pine order under the amendments to Colorado Rule of Civil Procedure 16, Antero Resources could—under the new language in Colorado Rule of Civil Procedure 26—challenge specific discovery requests to limit its discovery costs. Antero Resources could cite the Strudleys’ access to all necessary, relevant information as a reason why proposed discovery was not proportional. Antero Resources could argue the substantial financial burden of proposed discovery outweighed any possible benefit to the Strudleys. While the Strudleys would likely counter that Antero Resources has greater resources and that the discovery sought was extremely important to the issues at stake, Antero Resources would at least have an argument that certain discovery should be quashed because it was out of proportion.

Using the new language in Colorado Rule of Civil Procedure 26 is not as effective for defendants as receiving a Lone Pine order, but considering the Colorado Supreme Court’s refusal to allow the issuance of Lone Pine orders, the changes in Colorado Rule of Civil Procedure 26 do provide greater authority for defendants to oppose abusive discovery. Such opposition to discovery does not obviate all discovery costs and may not always prove successful, but it does provide defendants the opportunity to combat plaintiffs’ attempts to force settlement through the threat of oppressively expensive discovery. How effective motions to quash discovery will prove remains to be seen as appellate decisions issue regarding the language changes in Colorado Rule of Civil Procedure 26, but for now, the new language represents one of the only options for toxic tort defendants to combat offensive discovery and avoid settling marginal claims.