The world revolves around data. Businesses and individuals generate data each day between work and personal communication. While electronic platforms provide convenience, efficiency, and flexibility in document review for litigation, they can also spark eDiscovery disputes. To ensure all relevant data is collected and reviewed during a lawsuit, the parties must determine how custodians communicated and what data was created. The collection process can be overwhelming, costly, and lead to burdensome discovery requests.
In 2015, amendments to Federal Rule of Civil Procedure 26(c)(1)(B) were meant to help address this issue. These amendments give the courts authority to shift costs if it would protect a party from undue eDiscovery burden or expense. While this is discretionary, the advisory committee warned courts that cost shifting should not be common practice, as the party responding to a discovery request generally bears the expense. As such, eDiscovery cost-shifting decisions are rare. However, recently in Lawson v. Spirit AeroSystems, 2020 WL 3288058 (D. Kan. June 18, 2020) a federal court tackled this issue and ended up shifting costs for what the judge deemed to be burdensome requests for electronically stored information (ESI) not proportional to the case. This decision was significant for several reasons.
Overview of Lawson v. Spirit AeroSystems
The Lawson case is a dispute between Spirit AeroSystems and their former CEO, who claimed the company failed to properly pay out his retirement earnings. The company’s position was that Lawson violated a non-compete agreement by engaging in consulting services with one of their competitor’s investors. The non-compete stated that for two years, plaintiff could not be involved with any business that is competitive with Spirit AeroSystems. Lawson disagreed that these companies were competitors engaged in the same business. As such, he took the position that his consulting services did not result in any violation of the non-compete agreement and he was entitled to his payments after retirement.
Such a dispute has the potential to generate a ton of discoverable data from several interested parties involving years of work-related communications and other key documents. What’s unusual about this matter is that the plaintiff was given approval by the court to define the search terms and custodians for the defendant as long as these searches were targeted with high responsive rates. Lawson ended up requesting a multitude of ESI related to the disagreement over whether he violated his non-compete agreement. After little success with traditional eDiscovery methods involving keyword searches and custodian interviews, Lawson (the plaintiff) requested that Spirit AeroSystems (the defendant) proceed with technology-assisted review (TAR) methods to retrieve more responsive data. Spirit AeroSystems protested that this added unnecessary expense and was unlikely to yield substantively new documents. The court allowed the use of TAR to review over 300,000 documents, but warned that it might shift the expenses over to plaintiff. Defendant ended up filing a Motion to Shift Costs of Technology Assisted Review of ESI to plaintiff, which the court granted.
The court made this decision to prevent defendant from bearing undue burden and expense. The judge repeatedly warned plaintiff to narrow his ESI search. With initial discovery efforts, plaintiff failed to limit his search and pushed for more discovery even after repeatedly getting results with very low responsiveness. Plaintiff then requested they use TAR, which drove up the expenses significantly while finding little substantively new material. The court reasoned: “even the documents that were technically responsive were of marginal (if any) relevance above and beyond what Spirit produced outside of the ESI/TAR process. Thus, the ESI/TAR process became disproportionate to the needs of the case.”
Key Takeaways from the Case
The Lawson Rule 26 decision acts as a reminder that parties need to consider what is relevant and proportional when requesting ESI from an opposing party. Just because cost shifting is not the norm, it can still occur when courts feel a party is abusing the process and the proportionality factors weigh in favor of the responding party. Repeated attempts with low results and failure to narrow discovery requests are some of the factors that could make a court find the use of more technical measures to be disproportionate to the case, especially when expenses continue to pile up. However, the rulings in this case are unique because the court granted all of plaintiff’s requests for repeated ESI requests and eventual TAR usage. It is out of the norm to allow a party to dictate the eDiscovery process when there is conflict over methodology and the requesting party wants to employ more specialized discovery processes, like TAR. In response to this, Jon Lavinder, a senior director of analytics and advanced technologies at Epiq, commented that “there is a reason it is exceedingly rare to see one party successfully dictate the use of TAR on another party. Hopefully, this serves as a cautionary tale.”
In Lawson, the court could have simply decided to disallow the request for TAR because repeated discovery endeavors consistently yielded a low number of relevant documents. The case reminds litigators that courts can be unpredictable, especially when discretion is involved.
Another important takeaway from this case is how the parties projected TAR costs. First, the amount of money the defense allocated for TAR ($600,000 total – $400,00 in vendor costs and $200,000 in fees) was about tenfold higher than expected industry costs. The court directed the parties to attempt an agreement on the cost-shifting motion outside of court concerning the cost of TAR before the judge would have to intervene with a specific dollar amount. Due to the defendant’s seemingly high estimation, plaintiff will likely dispute these costs and the parties will end up back in court. To reach this decision, the court could require additional evidence or expert testimony, which would further drive up costs and delay litigation.
It is also notable how the plaintiff discussed TAR recall and precision. While initial TAR efforts yielded a recall rate of 68.5 percent, the plaintiff pushed the defense to bring that number up to 80 percent. It eventually got to an 85 percent recall rate, then plaintiff pushed to get to 100 percent, which the court denied. These requests further increased expenses while still providing a low number of responsive documents. Lavinder noted:
“In a continuous active learning/TAR 2.0 workflow, the metric recall should not determine the best stopping point for review. Rather the ratio and nature of relevant documents found as the team works from the highest scoring documents down into lower scoring ones should determine this stopping point.”
Litigators should not focus so much on the recall rate, but instead on whether there are enough relevant documents to justify continued review. Expecting perfect results is an unrealistic goal that cannot fully be achieved. Before requesting additional review and driving up expenses in a case, it is important for attorneys to consult with their providers and experts to better understand the process.
The cost-shifting decision in Lawson may end up being a key piece of case law for courts and attorneys dealing with Rule 26 disputes and can be helpful when determining how to approach eDiscovery review. First, it shows that courts can and will shift costs if discovery is becoming unduly burdensome and expensive for the responding party. While this will always depend on the facts of the case and the judge’s preferences, Lawson can provide some guidance to attorneys on when courts may decide that a party crossed a line. Additionally, this case can help courts decide when it is appropriate to use more advanced methods like TAR and the potential downfalls of allowing requesting parties to dictate this process. Lastly, Lawson is instructive to attorneys about the importance of cost estimation and technical familiarity when using advanced review solutions. As legal professionals continue to tap into resources that can help educate them on how solutions like TAR operate, the discovery process will improve, and it will be clearer when to use these technologies.