e-Discovery Team ®

Continuation of Part One of Good, Better, Best: a Tale of Three Proportionality Cases.

The Best Case: DCG Systems

Compared to I-Med Pharma and U.S. ex rel McBride, DCG Systems is the best of the lot. DCG Sys., Inc. v. Checkpoint Techs, LLC, 2011 WL 5244356 (N.D. Cal. Nov. 2, 2011) It is better than the rest because of timing. The issue of proportionality of discovery was raised in DCG Systems at the beginning of the case. It was raised at the 26(f) conference and 16(b) hearing as part of discovery plan discussions. That is what the rules intended. Proportionality protection requires prompt, diligent action.

In I-Med Pharma the party responding to discovery waited to take action until after a stipulation and order to review 64,382,929 hits covering 95 Million pages. In U.S. ex rel McBride the party responding to discovery waited until after the email of 230 custodians had been produced, and, in the words of Judge Facciola, a king’s ransom had already been paid.

The lesson is clear. Be a good little lawyer hacker. Be fast, be bold, and be open to impact discovery in a proportional way.  Impactful, Fast, Bold, Open, Values: Guidance of the “Hacker Way.”  Timing is everything, in law and in life. Are we not all trapped in an hour-glass? There is no getting out!

Timing and Rule 26(g)

A key lesson of these three cases is that timing is everything. Consider proportionality from the get go, and remember that it is not only based on the protective order rule, 26(b)(2)(C), it is based on the rule governing a requesting party’s signing a discovery request. I am talking about the Rule 11 of discovery, Rule 26(g)(1)(B)(iii):

(g) Signing Disclosures and Discovery Requests, Responses, and Objections.

(1) Signature Required; Effect of Signature. Every disclosure under Rule 26(a)(1) or (a)(3) and every discovery request, response, or objection must be signed by at least one attorney of record in the attorney’s own name—or by the party personally, if unrepresented—and must state the signer’s address, e-mail address, and telephone number. By signing, an attorney or party certifies that to the best of the person’s knowledge, information, and belief formed after a reasonable inquiry: …

(B) with respect to a discovery request, response, or objection, it is: …

(iii) neither unreasonable nor unduly burdensome or expensive, considering the needs of the case, prior discovery in the case, the amount in controversy, and the importance of the issues at stake in the action.

Judge Paul Grimm calls Rule 26(g) the most overlooked and misunderstood of all of the rules of civil procedure. That is the fault of us lawyers, and, it is also the fault of our judges. Rule 26(g) in subsection (3) requires a court, “on its own,” to sanction anyone who signs a discovery request in violation of the rule. This means that judges must impose sanctions, on their own initiative, whenever they see a disproportionate discovery request. There is no discretion given to judges about this. The rule does not say “may” impose sanctions. It says the court “on motion or on its own, must impose an appropriate sanction on the signer.” Yet, in my thirty-two years of legal practice in federal court, I have never once seen this done by a judge. Have you?

Here is the language of subsection (3) of Rule 26(g). It should be in all of your discovery briefs.

(3) Sanction for Improper Certification. If a certification violates this rule without substantial justification, the court, on motion or on its own, must impose an appropriate sanction on the signer, the party on whose behalf the signer was acting, or both. The sanction may include an order to pay the reasonable expenses, including attorney’s fees, caused by the violation.

Lawyers need to start including this rule in their initial analysis of any discovery request. If one side refuses in engage in cooperative discussions to narrow discovery requests, if, for instance, they refuse to limit discovery to the actual factual issues in the case, then Rule 26(g) must be squarely brought to the attention of the supervising judge. There is no time to wait.  We are all trapped in an hour-glass, and a billable one at that!

As Judge Waxse has pointed out, there is a clear path in the rules to deal with non-cooperators, and Rule 26(g) is one of the road signs on that path. See: Judge David Waxse on Cooperation and Lawyers Who Act Like Spoiled Children. But you have to time your motions. You have to seek protection before you pay the piper, but after you make a good faith effort to cooperate. Timing is everything.

Model Patent Order

The Patent Bar is trying an experiment to try to control run away e-discovery costs in patent litigation. They have a committee composed of a handful of patent lawyers and a few key judges who are well-known in patent law, Chief Judge James Ware (ND Cal), Judge Virginia Kendall (ND Ill), Magistrate Judge Chad Everingham (ED Tex), and Chief Judge Randall Rader (Fed. Cir.). They have come up with what they call a Model Order Limiting E-Discovery in Patent Cases. They explain that the Model Order:

… is intended to be a helpful starting point for district courts to use in requiring the responsible, targeted use of e-discovery in patent cases. The goal of this Model Order is to promote economic and judicial efficiency by streamlining ediscovery, particularly email production, and requiring litigants to focus on the proper purpose of discovery—the gathering of material information—rather than permitting unlimited fishing expeditions. It is further intended to encourage discussion and public commentary by judges, litigants, and other interested parties regarding e-discovery problems and potential solutions.

The Model Order is inspired by Rule 30 that presumptively limits cases to ten depositions and seven hours per deposition. The Committee notes that since email is the biggest time-waster in patent litigation (well, except for Qualcomm of course), and so it uses this same limiting approach to email discovery. It limits initial e-discovery to email from five custodians and five keywords per custodian. The Committee is careful to note that “the parties may jointly agree to modify these limits or request court modification for good cause.” Even if they do not agree, or there is no order permitting more email discovery, a requesting party is still entitled to more if they pay for it. This is their approach to proportionality:

This is not to say a discovering party should be precluded from obtaining more e-discovery than agreed upon by the parties or allowed by the court. Rather, the discovering party shall bear all reasonable costs of discovery that exceeds these limits. This will help ensure that discovery requests are being made with a true eye on the balance between the value of the discovery and its cost.

The Model Order also addresses concerns regarding waiver of attorney-client privilege and work product protection in order to minimize human pre-production review. It does so by including Rule 502(d) non-waiver language into the standard order. The Order itself is pretty short and simple, which is one of its virtues, so I reproduce it here in its entirety:

Plaintiff,
v.
Defendant.

[MODEL] ORDER REGARDING E-DISCOVERY IN PATENT CASES

The Court ORDERS as follows:

1. This Order supplements all other discovery rules and orders. It streamlines Electronically Stored Information (“ESI”) production to promote a “just, speedy, and inexpensive determination” of this action, as required by Federal Rule of Civil Procedure 1.

2. This Order may be modified for good cause. The parties shall jointly submit any proposed modifications within 30 days after the Federal Rule of Civil Procedure 16 conference. If the parties cannot resolve their disagreements regarding these modifications, the parties shall submit their competing proposals and a summary of their dispute.

3. Costs will be shifted for disproportionate ESI production requests pursuant to Federal Rule of Civil Procedure 26. Likewise, a party’s nonresponsive or dilatory discovery tactics will be cost-shifting considerations.

4. A party’s meaningful compliance with this Order and efforts to promote efficiency and reduce costs will be considered in cost-shifting determinations.

5. General ESI production requests under Federal Rules of Civil Procedure 34 and 45 shall not include metadata absent a showing of good cause. However, fields showing the date and time that the document was sent and received, as well as the complete distribution list, shall generally be included in the production.

6. General ESI production requests under Federal Rules of Civil Procedure 34 and 45 shall not include email or other forms of electronic correspondence (collectively “email”). To obtain email parties must propound specific email production requests.

7. Email production requests shall only be propounded for specific issues, rather than general discovery of a product or business.

8. Email production requests shall be phased to occur after the parties have exchanged initial disclosures and basic documentation about the patents, the prior art, the accused instrumentalities, and the relevant finances. While this provision does not require the production of such information, the Court encourages prompt and early production of this information to promote efficient and economical streamlining of the case.

9. Email production requests shall identify the custodian, search terms, and time frame. The parties shall cooperate to identify the proper custodians, proper search terms and proper timeframe.

10. Each requesting party shall limit its email production requests to a total of five custodians per producing party for all such requests. The parties may jointly agree to modify this limit without the Court’s leave. The Court shall consider contested requests for up to five additional custodians per producing party, upon showing a distinct need based on the size, complexity, and issues of this specific case. Should a party serve email production requests for additional custodians beyond the limits agreed to by the parties or granted by the Court pursuant to this paragraph, the requesting party shall bear all reasonable costs caused by such additional discovery.

11. Each requesting party shall limit its email production requests to a total of five search terms per custodian per party. The parties may jointly agree to modify this limit without the Court’s leave. The Court shall consider contested requests for up to five additional search terms per custodian, upon showing a distinct need based on the size, complexity, and issues of this specific case. The search terms shall be narrowly tailored to particular issues. Indiscriminate terms, such as the producing company’s name or its product name, are inappropriate unless combined with narrowing search criteria that sufficiently reduce the risk of overproduction. A conjunctive combination of multiple words or phrases (e.g., “computer” and “system”) narrows the search and shall count as a single search term. A disjunctive combination of multiple words or phrases (e.g., “computer” or “system”) broadens the search, and thus each word or phrase shall count as a separate search term unless they are variants of the same word. Use of narrowing search criteria (e.g., “and,” “but not,” “w/x”) is encouraged to limit the production and shall be considered when determining whether to shift costs for disproportionate discovery. Should a party serve email production requests with search terms beyond the limits agreed to by the parties or granted by the Court pursuant to this paragraph, the requesting party shall bear all reasonable costs caused by such additional discovery.

12. The receiving party shall not use ESI that the producing party asserts is attorney-client privileged or work product protected to challenge the privilege or protection.

13. Pursuant to Federal Rule of Evidence 502(d), the inadvertent production of a privileged or work product protected ESI is not a waiver in the pending case or in any other federal or state proceeding.

14. The mere production of ESI in a litigation as part of a mass production shall not itself constitute a waiver for any purpose.

This Model Order is a terrific first experiment to try to reign in disproportionate e-discovery expenses and stop wasting everybody’s time. Still, the plaintiff in DCG Systems did not like it and tried to avoid its application in its case. I have my own criticisms of the Model Order, including the obvious one of reliance on five blind keywords, and that puzzling para five on metadata, but I will save that for the conclusion.

DCG Sys., Inc. v. Checkpoint Techs, LLC

DCG Systems is a garden variety patent case between two companies with competing patent rights. It is not another very common type of patent case where a small patent troll with only a little ESI sues a big company with lots of ESI. They call those NPE cases. This means that in the DCG Systems case both companies could find e-discovery equally troubling. The plaintiff, DCH Systems Inc., argued that the Model Order should not be applied to their case because the Order was primarily designed for the David and Goliath, troll versus big company NPE type patent case.

United States Magistrate Judge Paul S. Grewal did not agree:

The court is not persuaded by DCG’s argument for at least two reasons. First, although the undersigned will not presume to know whether Chief Judge Rader or any of the esteemed members of the subcommittee were focused exclusively on reducing discovery costs in so-called “NPE” cases, there is nothing in the language of the Chief Judge’s speech or the text of the model order so limiting its application. Second, and more fundamentally, there is no reason to believe that competitor cases present less compelling circumstances in which to impose reasonable restrictions on the timing and scope of email discovery. To the extent DCG faces unique or particularly undue constraints as a result of the limitations, it remains free, under the Model Order, to seek relief from the court. But in general copying and the availability of an injunction are issues that are impacted by such restrictions no more than the myriad of other issues (e.g., inducement, state of the art, willfulness) that are present in just about all patent cases. And if competitor cases such as this lack the asymmetrical production burden often found in NPE cases, so that two parties might benefit from production restrictions, the Model Order would seem more appropriate, not less.

I know nothing about patent cases, but I do know e-discovery, and Judge Grewal’s argument sounds compelling. Judge Grewal ends his opinion with the following cautionary comment, words that I again completely agree with:

Perhaps the restrictions of the Model Order will prove undue. In that case, the court is more than willing to entertain a request to modify the limits. But only through experimentation of at least the modest sort urged by the Chief Judge will courts and parties come to better understand what steps might be taken to address what has to date been a largely unchecked problem.

We have to take new steps to control e-discovery costs, to make them proportionate. That is why I came up with my Bottom Line Driven Proportional Review approach. But the Patent Committee approach has the advantage of far greater simplicity. Moreover, little or no skill in e-discovery is required to implement this proportionality reform. Still, I am troubled by the reliance on Go Fish keyword search methods. See Child’s Game of “Go Fish” is a Poor Model for e-Discovery Search. The lack of precision and recall in blind keyword search makes this method both expensive and ineffective.

Methods aside, the Model Order Limiting E-Discovery in Patent Cases makes an important first step in litigation reform. The DCG Systems case shows timely application of the Model Order. The opinion also includes good language explaining the order and why courts should try using it to attain proportionality. (It’s use is at the discretion of the presiding judge.) You may want to use Judge Grewal’s language in DCG Systems in your case memos, patent or otherwise, to show the need to control e-discovery:

Critically, the email production requests must focus on particular issues for which that type of discovery is warranted. The requesting party must further limit each request to a total of five search terms and the responsive documents must come from only a defined set of five custodians. These restrictions are designed to address the imbalance of benefit and burden resulting from email production in most cases. As Chief Judge Rader noted in his recent address in Texas on the “The State of Patent Litigation” in which he unveiled the Model Order, “[g]enerally, the production burden of expansive e-requests outweighs their benefits. I saw one analysis that concluded that .0074% of the documents produced actually made their way onto the trial exhibit list-less than one document in ten thousand. And for all the thousands of appeals I’ve evaluated, email appears more rarely as relevant evidence.”

Remember that statistic and use it. Only .0074% of e-docs discovered ever make it onto a trial exhibit list, much less ever get used to make a difference in a case. That is why in my Secrets of Search article, Part Three, I say Relevant Is Irrelevant and point out the old trial psychology rule of 7±2, to argue for higher culling rates in e-discovery search.

More Authorities on Proportionality

Want to learn more about proportionality? Don’t rely on a keyword search to find the cases. As seen, they often do not even use the word proportionality. Try these additional articles, cases, and Mr. Shepherd instead. Mr. Google will help you find still more.

• The Sedona Conference® Commentary on Proportionality in Electronic Discovery.
• Bottom Line Driven Proportional Review.
• Discovery As Abuse.
• An Old Case With a New Opinion Demonstrating Perfect Proportionality.
• Rimkus Consulting Group v. Cammarata, 688 F.Supp. 2d 598, 613 (S.D. Tx. 2010) (the Rules require that the parties engage in “reasonable efforts” and what is reasonable “depends on whether what was done – or not done – was proportional to that case…”)
• Moody v. Turner Corp. Case No. 1:07-cv-692. (S.D. OH, 2010) (“…the mere availability of such vast amounts of electronic information can lead to a situation of the ESI-discovery-tail wagging the poor old merits-of-the-dispute dog.”)
• Dilley v. Metro. Life Ins. Co., 256 F.R.D. 643, 644 (N.D. Cal. 2009) (“The court must limit discovery if it determines that ‘the burden or expense of the proposed discovery outweighs its likely benefit,’ considering certain factors including ‘the importance of the issues at stake in the action, and the importance of the discovery in resolving the issues.’” ) (quoting FED. R. CIV. P. 26(b)(2)(C)(iii))
• Averett v. Honda of Am. Mfg., Inc., No. 2:07-cv-1167, 2009 WL 799638, at *2 (“the court always has a duty to limit discovery under Rule 26(b)(2)(C)(i)-(iii)”)
• Wood v. Capital One Services, LLC, No. 5:09-CV-1445 (NPM/DEP), 2011 WL 2154279, at *1-3, *7 (N.D.N.Y, 2011) (the “rule of proportionality” dictated that the plaintiff’s motion be denied “without prejudice to his right to renew the motion to compel in the event he is willing to underwrite the expense associated with any such search.”)
• Thermal Design, Inc. v. Guardian Building Products, Inc., No. 08-C-828 (E.D. Wis., 2011), (Judge refused to approve plaintiff’s electronic fishing expedition simply because the defendant had the financial resources to pay for the searches. Th financial resources of the defendant are not tantamount to good cause under FRCP 26(b)(2)(C))
• General Steel Domestic Sales, LLC v. Chumley, No. 10-cv-01398 (D. Colo., 2011) (Judge rejected defendant’s request for the production of every recorded sales call on plaintiff’s database for a two-year period because it would take four years to listen to the calls to identify potentially responsive information.)
• Daugherty v. Murphy, No. 1:06-cv-0878-SEB-DML, 2010 WL 4877720, at *5 (S.D. Ind., 2010) (The cost and burden of the additional production outweighed the benefit. The defendant’s sworn testimony on burden and cost was credible.)
• Willnerd v. Sybase, 2010 U.S. Dist. LEXIS 121658 (SD Id., 2010)(“… a search of the employees’ e-mails would amount to the proverbial fishing expedition — an exploration of a sea of information with scarcely more than a hope that it will yield evidence to support a plausible claim of defamation. … In employing the proportionality standard of Rule 26(b)(2)(C), as suggested by Willnerd, the Court balances Willnerd’s interest in the documents requested, against the not-inconsequential burden of searching for and producing documents.”)
• Rodriguez-Torres v. Gov. Dev. Bank of P.R., 265 F.R.D. 40 (D. P.R., 2010) (“… the Court determines that the ESI requested is not reasonably accessible because of the undue burden and cost. The Court finds that $35,000 is too high of a cost for the production of the requested ESI in this type of action. Moreover, the Court is very concerned over the increase in costs that will result from the privilege and confidentiality review that Defendant GDB will have to undertake on what could turn out to be hundreds or thousands of documents.”
• Madere v, Compass Bank, 2011 U.S. Dist. LEXIS 124758, (WD Tx. 2011) (“As the cost to restore Compass Bank’s backup tapes “outweighs its likely benefit,” especially in light of the amount in controversy, the Court DENIES Madere’s request for production.”)
• Convolve, Inc. v. Compaq Comp. Corp, 223 F.R.D. 162 (SDNY 2004) (The production request “would require an expenditure of time and resources far out of proportion to the marginal value of the materials to this litigation.”)
• United Central Bank v. Kanan Fashions, Inc., 2010 U.S. Dist. LEXIS 83700 (DN Ill, 2010) (Restrictive date range required, but further protection from excessive burden denied due to failure to support the contentions of high cost to comply with specific facts.)
• High Voltage Beverages, LLC v. Coca-Cola Co., 2009 U.S.Dist. LEXIS 88259 (WD NC, 2009) (“Under Rule 26(b)(2)(C)(i), the court finds that requiring defendant to sift sand for documents it has already produced would be unreasonably duplicative of earlier efforts and that the material contained therein is likely available from other sources, to wit, an earlier production of documents. … Under Rule 26(b)(2)(C)(iii), defendant has made an unrebutted showing that the man-hours and expense of reviewing the collection would be extraordinary, and it appears to the court that the burden or expense of the proposed discovery outweighs its likely benefit. Thus, the court find that it would be disproportional to require defendant to review such information prior to producing it to plaintiff and deny plaintiff’s request.”)
• Bassi Bellotti S.p.A. v. Transcon. Granite, Inc., 2010 U.S. Dist. LEXIS 93055 (D. Md., 2010) (“… Federal Rules do impose an obligation upon courts to limit the frequency or extent of discovery sought in certain circumstances, such as when the discovery requested is unreasonably duplicative or cumulative, or the burden or expense of the proposed discovery outweighs the likely benefit, considering the needs of the case, the importance of the issues at stake in the action, and the importance of the discovery in resolving those issues. “)
• Call of the Wild Movie, LLC v. Does 1-1062, No. 10-455 (BAH), — F. Supp. 2d —-, 2011 WL 996786, at *18-20 (D.D.C., 2011) (granting motion to compel because the request was narrow and the ESI requested was important, compared with an insufficient showing of undue burden.)
• Hock Foods, Inc. v. William Blair & Co., LLC, No. 09-2588-KHV, 2011 WL 884446, at *9 (D. Kan. 2011) (Sebelius, Maj. J.) (denying in part a motion to compel in light of costs estimated between $1.2 and $3.6 million to search 12,000 gigabytes of data in order to answer an overbroad interrogatory.)
• Diesel Mach., Inc. v. Manitowoc Crane, Inc., No. CIV 09-cv-4087-RAL, 2011 WL 677458, at *2-3 (D.S.D., 2011) (motion to compel the production of documents in native format was denied because no explanation provided on why information contained in native format was necessary to facts of case when those same documents had already been produced as PDFs).
• Tucker v. American Intern. Group, Inc., 2012 WL 902930 (D. Conn. Mar. 15, 2012) (Plaintiff’s non-party Rule 45 subpoena to inspect hard drives asked the Court “to allow plaintiff “essentially carte blanche access to rummage through Marsh’s electronically stored information, purportedly in the hope that the needle she is looking for lurks somewhere in that haystack. … [T]he burdens of plaintiff’s proposed inspection upon Marsh outweigh the benefits plaintiff might obtain were she to obtain the emails through a Datatrack inspection. Plaintiff seeks to search, inter alia, the mirror images of eighty-three laptops — in effect, to dredge an ocean of Marsh’s electronically stored information and records in an effort to capture a few elusive, perhaps non-existent, fish. … Courts are obliged to recognize that non-parties should be protected with respect to significant expense and burden of compelled inspections under Fed. R. Civ. P. 45(c)(2)(B)(ii). … Moreover, courts have focused on the importance of the Rule 26(b)(2)(C) proportionality limit to implement fair and efficient operation of discovery. … Balancing the prospective burden to Marsh against the likely benefit to plaintiff from the proposed inspection, the Court concludes that the circumstances do not warrant compelling Marsh to endure inspection of its computer records by Datatrack.”)

Conclusion

DCG Systems, Inc. v. Checkpoint Techs, LLC is, by far, the best of the three cases, but it is still far from perfect. It embraces proportionality, and will no doubt save the parties lots of money in e-discovery, but at what cost? Litigation is about finding justice. If you lose that. You lose everything.

Rule 1 says, among other things, that litigation should be speedy and inexpensive. Limiting discovery to five keywords and five custodians will get you that. But Rule 1 also says litigation should be just. That is, after all, the whole point of litigation. In America, like most of the civilized world, we don’t just go through the motions of legal process in a fast and cursory manner. Court systems are not just an empty charade. The heart of law as we know it is due process. We decide cases on the merits, on the facts, on the evidence; not just on the whim of judges or juries. That is what justice means to us. I am concerned about arbitrary limits on e-discovery to save money, and speed things along, that do so at the price of justice.

Judge Paul S. Grewal, who decided DCG Systems, shares these concerns, I am sure. So too does the Patent Bar who adopted this Model Order, and Chief Judge Randall Rader who promotes it. They are, like all bona fide professionals in the Law, trying hard to find a proportional balance between benefit and burden, to know when enough is enough in the search for evidence. They don’t want too much, like some unscrupulous attorneys for whom e-discovery is little more than a legal tool of extortion. They don’t want too little, like some equally unscrupulous attorneys who play hide the ball. Good attorneys are like Goldilocks; they are looking for the just-right amount of e-discovery. They are looking for proportionality.

The patent judges show this concern in the pains they take to say that the five/five rule is just a starting point. They make clear that more e-discovery outside of these limits may be appropriate, that parties can always move the court for additional discovery. For instance, Judge Grewal in DCG Systems says: “Perhaps the restrictions of the Model Order will prove undue. In that case, the court is more than willing to entertain a request to modify the limits.” The Model Order shows the same concern that justice not be sacrificed at the altar of efficiency: “The Court shall consider contested requests for up to five additional custodians per producing party, upon showing a distinct need based on the size, complexity, and issues of this specific case.“

My main criticism of the case and Model Order, aside again from the bizarre comment in paragraph five against metadata, pertains to the reliance on Go Fish type keyword search. It is not so much the arbitrary limit to five keywords that bothers me, much less the limit to five custodians, which I think is fine. What bothers me about the Model Order, and bothers every other expert I have talked to, is the reliance on keyword search alone, and blind-pick keyword search at that. It should bother anyone who has read the scientific studies. The Model Order is promoting the worst kind of search: the blind keyword guessing kind. That is inadvertent I’m sure. The lawyers and judges behind the model order were not aware of the limits of blind-guessing-based-keywords. When they do, I assume they will consider appropriate revisions to the Model Order.

The Model Order should be reformed to require that basic metrics be shared on proposed keywords. It should require enough disclosure so that the keyword picks are not blind. Some keyword testing should be permitted a requesting party before five terms are settled upon. The Order is a good start, but it needs tweaking so that the keyword searches can be more effective. I am sure there are many search experts who would help the Committee if asked. I hope they do, because the Patent Bar’s heart is in the right place, a proportionality place.

Now please, would someone get me out of this damn time bottle?

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Thank You!