This article originally appeared in the May 2014 issue of The Barrister, a publication of the Baltimore City Bar Association.
When asked what has been the most significant development in federal litigation during his time on the bench, United States Magistrate Judge John M. Facciola of the D.C. District responded, simply: “the impact upon the judicial process of ever increasing data.” Hon. John M. Facciola, View from the Bench, Practical Law Journal, Nov 2013, at 16. Indeed, experts in the field believe that “[a]t least 90 percent of all corporate information is now created or stored in an electronic format.” Caroline Tinsley and Allison Lee, Curbing E-Discovery Costs by Promoting Predictability, For the Defense, Jan 2013, at 22. Even smaller cases can involve several terabytes of data, with each terabyte equaling roughly 500,000,000 pages. Jennifer Keadle Mason and Nathan C. Platt, e-Discovery: Making Molehills Out of Mountains, For the Defense, Jan. 2011, at 29 (citations omitted). As a result, document review and production costs now account for up to 80 to 90 percent of the total costs of discovery. IDC Executive Brief, Best Practices for Addressing eDiscovery and Legal Hold Requirements 3, (2009).
Just a few short years ago, the goal of electronic discovery (“e-discovery”) experts was simply to get lawyers and their clients thinking about e-discovery. Anne Kershaw and Joe Howie, Judge’s Guide to Cost-Effective E-Discovery 1 (E-Discovery Institute 2010). Now that the costs of e-discovery have risen exponentially, the goal “is to get them to do it in a cost-effective manner so that the costs of discovery don’t completely upset the scales of justice.” Id. While there have been technological advances that have made relevance and privilege reviews more efficient and less costly, the courts are focusing on two concepts – proportionality and cooperation – in the hopes of bringing e-discovery costs under control.
Over the past several years, several jurisdictions and courts have established rules that, absent agreement of counsel or a showing of good cause, limit the amount of e-discovery to be taken in a case. For example, the District of Delaware’s “Default Standard for Discovery, Including the Discovery of Electronically Stored Information” limits to 10 both the number of custodians from whom electronically stored information (“ESI”) must be collected and the number of search terms that a party is required to use to locate relevant documents. Even more limiting is the Federal Circuit’s new “Discovery Model Order,” which requires the collection of ESI from only five custodians and the use of only five search terms for each custodian. Judge Paul W. Grimm of the District of Maryland has issued a standard “Discovery Order” that, among other things, provides that parties do not have to collect documents that are older than five years old.
One of the express goals of the limitations contained in these rules is, as Judge Grimm put it, to get discovery in a particular case to “be proportional to what is at issue in the case.” Grimm, J., Discovery Order, at ¶ 2. The courts are now recognizing that “proportionality” is likely one of the most effective ways to control escalating e-discovery costs. See, e.g. Victor Stanley, Inc. v. Creative Pipe, Inc., 269 F.R.D. 496, 522 (D. Md. 2010) (“[A]ssessment of reasonableness and proportionality should be at the forefront of all inquiries into whether a party has fulfilled all its duty to preserve relevant evidence”). Indeed, the following changes have been proposed for Federal Rule of Civil Procedure 26, which would require courts to consider “proportionality” when dealing with discovery issues:
Scope in General. Unless otherwise limited by court order, the scope of discovery is as follows: Parties may obtain discovery regarding any nonprivileged matter that is relevant to any party's claim or defense and proportional to the needs of the case, considering the amount in controversy, the importance of the issues at stake in the action, 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. Information within this scope of discovery need not be admissible in evidence to be discoverable.
This amendment could become effective as early as 2015.
To the extent that discovery in a case is not proportional, the courts have become less hesitant to shift some or all of the costs to the party requesting the burdensome discovery. For example, in Takeda Pharmaceutical Co., Ltd v. Teva Pharmaceuticals USA, Inc., 2010 WL 2640492 (D. Del. June 21, 2010), the court found that a request for documents spanning a 13-year period was not reasonable and shifted 80 percent of the $1.5 million in vendor costs to the requesting party. Although rare, a court may even shift the costs of the privilege review of the additional discovery. See CNX Gas Co. LLC v. Miller Petroleum, Inc., 201 WL 1849082 (Tenn. Ct. App. May 11, 2011).
In July of 2008, the Sedona Conference – the leading think-tank on e-discovery issues – published the "Cooperation Proclamation." The goal of the Cooperation Proclamation was to reduce costs by having parties and their counsel work collaboratively, rather than adversarially, on e-discovery issues. In the preamble to the "The Proclamation Cooperation," the Sedona Conference stated the cause and purpose of the Proclamation:
Over-contentious discovery is a cost that has outstripped any advantage in the face of ESI and the data deluge. It is not in anyone's interest to waste resources on unnecessary disputes, and the legal system is strained by "gamesmanship" or "hiding the ball," to no practical effect. The effort to change the culture of discovery from adversarial conduct to cooperation is not utopian. It is, instead, an exercise in economy and logic. Establishing a culture of cooperation will channel valuable advocacy skills toward interpreting the facts and arguing the appropriate application of law.
Sedona Conference, Cooperation Proclamation 1 (2008)
Since its publication in 2008, a broad array of jurisdictions, courts and judges have expressly endorsed the Proclamation and have stressed the importance of cooperation in the e-discovery process. Indeed, in his Discovery Order, Judge Grimm instructs that "the parties and counsel are expected to work cooperatively during all aspects of discovery to ensure that the costs of discovery are proportional to what is at issue in the case . . ." Grimm, J., Discovery Order ¶ 3; see also, e.g., N.D. Cal. Guidelines for the Discovery of Electronically Stored Information, Guideline 1.02 (Cooperation)(" The Court expects cooperation on issues relating to the preservation, collection, search, review, and production of ESI"). The need for cooperation has become so well recognized that the Federal Rules Committee has proposed a new Comment to Federal Rule of Civil Procedure 1: "Effective advocacy is consistent with — and indeed depends upon — cooperative and proportional use of procedure."
Importantly, the Courts have made it clear that they will not hesitate to force the parties to work together – or even to deny discovery or shift costs – if one or both of the parties is not cooperating. See, e.g., Moore v. Publicis Groupe, 287 F.R.D. 182, 184 (S.D.N.Y. 2012) (advising counsel to seek agreement on the use of predictive coding); SEC v. Collins & Aikman Corp., 256 F.R.D. 403, 415 (S.D.N.Y.2009) (directing parties "to meet and confer forthwith and develop a workable search protocol").For example, Judge Grimm's Discovery Order provides that
[t]he failure of a party or counsel to cooperate will be relevant in resolving any discovery disputes, including whether the Court will permit discovery beyond Phase 1 Discovery and, if so, who shall bear the cost of that discovery. Whether a party or counsel has cooperated during discovery also will be relevant in determining whether the Court should impose sanctions in resolving discovery motions.
Grimm, J., Discovery Order ¶ 3. Likewise, in DeGeer v. Gillis, 755 F. Supp. 2d 909 (N.D.Ill. 2010) the court found that the parties had not approached e-discovery with a spirit of cooperation or efficiency and ordered the parties to share the costs of all future electronic productions so as to "encourage" them to determine whether future requests were proportionate to the expected benefit.
The cost of e-discovery continues to rise and lawyers are doing their clients a disservice if they fail to take the concepts of proportionality and cooperation to heart. At the very outset of a case, counsel should confer with their clients and make realistic judgments as to the type and amount of e-discovery that is truly needed. Counsel should then meet and discuss with opposing counsel mutually agreeable means to control e-discovery. It is critical that counsel come to those meetings prepared with concrete measures – such as phased discovery, limits on custodians or search terms, and privilege "clawback" agreements – so that a concrete plan can be put into place. Finally, if all else fails and the opposing side is demanding unreasonable discovery, counsel should be prepared to provide the Court with concrete evidence – including hard estimates of costs – showing that the discovery demanded by the opposing side is disproportionate and that costs should be shifted.