The is the second in a series of posts summarizing the 7 most important eDiscovery cases in Delaware in 2014.

The second case is 112359 Factor Fund, LLC and Five Nine Group, LLC v. Flux Carbon Starter Fund, LLC, Mary Carroll, Kevin Kreisler, and James L. Sonageri, C.A. No. 9568–VCL, Telephonic Oral Argument on Plaintiffs’ Motion to Compel and Rulings of the Court, 06/20/2014.

In response to Plaintiffs’ Motion to Compel, the Defendants claimed they did not have sufficient time or resources to review all 73,000 documents yielded by the search terms used.  Vice Chancellor Laster was not swayed by these arguments.  An Order had been entered earlier in the case requiring the parties to not only meet and confer regarding search terms, but to also “do more than the standard” and “confer regarding the use of an early data assessment tool…to focus on the custodians and time periods most likely to have responsive electronic documents”.  Defendants’ reasons for missing the production deadline included delays in collecting the documents from their clients and insufficient manpower to properly review them.  The Vice Chancellor found these explanations to be insufficient.  The Court explained that in an expedited case, the parties need to think about approaches other than the “old school attorney-by-attorney review”.  Had an early data assessment tool been appropriately used, as instructed, the number of search hits would not have come as a surprise and counsel could have thought ahead and planned appropriately to meet the discovery deadlines.  The Court ordered that a copy of the transcript be given to Defendants clients, to help them understand that not complying with a discovery order will have serious consequences.

The Vice Chancellor reminded the parties that while there is no magic number to define substantial completion of a production, it generally means getting the bulk of the production done with the understanding that there could conceivably be some undiscovered documents that will trickle in later.  What was clear was that Defendants review of approximately 16,000 of the 73,000 documents was not substantial completion of their production by the negotiated and scheduled date.  Therefore, the Motion to Compel was granted.

Because this was the first Motion to Compel, Vice Chancellor Laster felt that a combination of fee-shifting and setting additional timelines was sufficient.  However, he cautioned that Rules 26 and 37 contemplate escalating sanctions and that next time inferences or adverse determinations would be an appropriate starting point.

Because the responsiveness rate on the documents reviewed thus far had seemed reasonable, indicating that the search terms were not faulty, Plaintiffs requested implementing a quick peek review of the remaining documents where Defendants would immediately produce all documents from their main custodian that hit on any of the search terms.  In order to protect the Defendants’ potentially privileged documents, the Court added a “hard date cutoff as to when people became adverse” and a clawback agreement for any privileged documents that did get produced.  Defendants were instructed to pay not only the Plaintiffs fees in bringing the Motion to Compel, but also 50% of the costs of the quick peek review, since Plaintiffs were taking on the burden of reviewing these documents, some of which would be determined to be nonresponsive.