e-Discovery Team

Magistrate Judge Nan R. Nolan has written a discovery order with perfect proportions that has not yet received the attention it deserves. Tamburo v. Dworkin, 2010 WL 4867346 (N.D. Ill. Nov. 17, 2010). Her new, state of the art e-discovery opinion invokes important principles of phased discovery, cooperation, and proportionality. This arises from an old pre-Zubulake case that started in 2004. Even though John F. Tamburo, doing business as Man’s Best Friend Software, filed suit in 2004, discovery did not even begin until late 2010.

Mr. Tamburo’s earlier pleadings had, after a mere seven attempts, all been dismissed for failure to state a cause of action. Some counts were also dismissed for lack of personal jurisdictional involving interesting Internet contact issues. The final order of dismissal with prejudice was appealed to the Seventh Circuit. The appeals court eventually affirmed the dismissal of the anti-trust claims, but reversed to allow the intentional tort claims to proceed against some of the defendants. Tamburo v. Dworkin, 2010 WL 1387299 (7th Cir., April 8, 2010). The anti-trust claims dismissals were, by the way, affirmed under Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007), an opinion barely on the horizon when Mr. Tamburo started his case. On another side note, I am sad to report that the lead defendant, Steven Dworkin, passed away before the appellate court ruling, but his Estate remains a party defendant. So much for the “speedy” part of the Rule One directive. After seven years of lawyers bills, I’m willing to bet that the “inexpensive” dictate of Rule One has also been missed. That leaves us with the important question of justice.

Eight Strikes and You’re Out

After years of procedural delays, the case was finally remanded back to the trial court to proceed on the merits. The plaintiff then filed a seventh Amended Complaint (that would make it his eighth try), as the appeals court had allowed. The defendants then responded with their eighth motion to dismiss. They had apparently come up with new arguments that the Seventh Circuit had not already addressed. I don’t know about you, but I’m impressed by such prodigious litigation efforts.

The parties were then allowed to commence discovery for the first time. I can only imagine what the Rule 26(f) conference must have been like. In any event, the first thing they did after that was get into a dispute on electronic discovery. After all, this had in the ensuing seven years become quite a fashionable thing to do.

It is a sad but familiar story. The plaintiff wanted far more in the way of writings than the surviving defendants thought they should have to provide. In fact, defendants did not think plaintiff should get any discovery yet, since a new motion to dismiss was pending, and anyway, they thought the plaintiff was asking for too much. Many angry letters were exchanged (actually in the meantime, the lawyers had moved to emails too, I’m sure). That lead to motions to compel and motions for protective order. This is where Judge Nolan comes in, who is,  by the way, the Judge assigned to the corruption case of Illinois Governor Rod Blagojevich.

Would you be surprised to learn that Judge Nolan resolved the dispute by imposing a compromise on the parties, allowing some discovery and denying the rest? That is the way of almost all disputes like this. Same old, same old. Hardly worth a mention in this blog, but for the surprisingly beautiful way in which it was done. The opinion was written in good legal English, to be sure, but that was not the source of the opinion’s beauty, at least not for me. No, I admired the concepts and doctrines she invoked to reach her just compromise. I like the way she got there, especially her use of phasing and the doctrine of proportionality. Proportionality is, as all artists since the time of Da Vinci have known, the secret to beauty. We also know, or should know by now, that it is  the secret to justice too, all protestations from Orbit One to the contrary.

The Holding in Tamburo

Judge Nolan began her analysis by considering the defendants’ motion for a stay of all discovery. She  notes that a stay of all discovery is appropriate in some circumstances, such as when, as in this case, it is pending as a purported anti-trust case and there are also jurisdictional issues.

The Court has discretion under Rule 26 to “limit the scope of discovery or to order that discovery be conducted in a particular sequence.” Builders Ass’n of Greater Chicago v. City of Chicago, 170 F.R.D. 435, 437 (N.D. Ill. 1996); see Fed. R. Civ. P. 26(c)-(d). However, a stay of discovery is generally only appropriate when a party raises a potentially dispositive threshold issue such as a challenge to a plaintiff’s standing, see United States Catholic Conference v. Abortion Rights Mobilization, Inc., 487 U.S. 72, 79-80 (1988), or pending resolution of qualified immunity claims, see Landstrom v. Illinois Dep’t of Children & Family Servs., 892 F.2d 670, 674 (7th Cir. 1990) see also Ashcroft v. Iqbal, 129 S. Ct. 1937, 1953 (2009) (“The basic thrust of the qualified-immunity doctrine is to free officials from the concerns of litigation, including avoidance of disruptive discovery.”) (internal citation and quotation marks omitted). Following the Supreme Court’s decision in Bell Atlantic Corp. v. Twomby, 550 U.S. 544 (2007), a blanket stay of discovery may also be appropriate in some antitrust actions. See DSM Desotech Inc. v. 3D Sys. Corp., 2008 WL 4812440, at *3 (N.D. Ill. 2008); In re Graphics Processing Units Antitrust Litig., 2007 WL 2127577, at *4-5 (N.D. Cal. 2007).

Still, she denied the motion to stay all discovery at this stage because the antitrust claims were gone, and so too were the jurisdictional issues. The Seventh Circuit had ruled on those. Here is her ruling including and interpretation of Twombly and Iqbal:

“However, one argument that is usually deemed insufficient to support a stay of discovery is that a party intends to file, or has already filed, a motion to dismiss for failure to state a claim under Rule 12(b)(6).” Solomon Realty Co. v. Tim Donut U.S. Ltd., 2009 WL 2485992, at *2 (S.D. Ohio 2009). …

Thus, although Rule 26 gives the Court “authority to stay discovery, this authority must be exercised so as to `secure the just, speedy and inexpensive determination of every action.'” Builders Ass’n, 170 F.R.D. at 437 (quoting Fed. R. Civ. P. 1). Where the Court finds that a stay of discovery is unlikely to significantly expedite the litigation, and may actually slow it down, it will decline to interfere. See Cohn v. Taco Bell Corp., 147 F.R.D. 154, 161-62 (N.D. Ill. 1993); Builders Ass’n, 170 F.R.D. at 437. Furthermore, Twombly and Iqbal do not dictate that a motion to stay should be granted every time a motion to dismiss is placed before the Court. Solomon Realty Co., 2009 WL 2485992, at *3 (“Despite the defendants’ interpretation of new pleading standards in the wake of Twombly and Iqbal, the Court is not persuaded that this case presents any need for departure from the general rule that a pending motion to dismiss does not warrant a stay of discovery.”).

Here, Defendants are not raising a threshold issue such as immunity from suit, their jurisdictional arguments have already been ruled upon, and Plaintiffs’ antitrust claims have been dismissed. Nor can the Court conclude that Plaintiffs’ remaining claims are utterly frivolous or patently without merit. Furthermore, Plaintiffs’ claims have been pending for over six years, and a stay of discovery will further delay resolution of this action. Thus, the Court is not persuaded that this case presents a need for departure from the general rule that a pending garden-variety motion to dismiss does not warrant a stay of discovery. See Solomon Realty, 2009 WL 2485992, at *2.

Although I do think that discovery should be stayed in many cases where a motion to dismiss is pending, I cannot argue with Judge Nolan’s exercise of discretion here. She was right primarily because the case had already been stayed for so long, almost seven years. Some discovery was now in order, but not total discovery, not yet. After seven prior strikes in his attempt to plead a cause of action, there was reason to suspect the plaintiff would whiff again. This is, after all, a question for the District Court Judge, not the Magistrate. So I can understand the magistrate’s reluctance to waste still more time and good money if the apparently quite marginal case might still be doomed to dismissal. If that happened, discovery in the meantime would be a waste.

Here is where the doctrine of proportionality comes in to do justice. As Judge Nolan explains, in the following two paragraphs of her short but beautiful opinion, paragraphs that I hope you will frequently quote and add to your memorandums:

Nevertheless, the Rule 26 proportionality test allows the Court to “limit discovery if it determines that the burden of the discovery outweighs its benefit.” In re IKB Deutsche Industriebank AG, 2010 WL 1526070, at *5 (N.D. Ill. 2010); see Fed. R. Civ. P. 26(b)(2)(C)(iii). “The `metrics’ set forth in Rule 26(b)(2)(C)(iii) provide courts significant flexibility and discretion to assess the circumstances of the case and limit discovery accordingly to ensure that the scope and duration of discovery is reasonably proportional to the value of the requested information, the needs of the case, and the parties’ resources.” The Sedona Conference, The Sedona Conference Commentary on Proportionality in Electronic Discovery, 11 Sedona Conf. J. 289, 294 (2010).[1] “If courts and litigants approach discovery with the mindset of proportionality, there is the potential for real savings in both dollars and time to resolution.” John L. Carroll, Proportionality in Discovery: A Cautionary Tale, 32 Campbell L. Rev. 455, 460 (2010).

Here, the Court notes that while this action has been pending for over six years, Plaintiffs’ claims have been in constant flux—they are on their Seventh Amended Complaint—and the pending motion to dismiss may alter the scope of discovery. Accordingly, to ensure that discovery is proportional to the specific circumstances of this case, and to secure the just, speedy, and inexpensive determination of this action, the Court orders a phased discovery schedule. See The Sedona Conference, supra, at 297 (If the litigation is in its early stages, “the court, or the parties on their own initiative, may find it appropriate to conduct discovery in phases, starting with discovery of clearly relevant information located in the most accessible and least expensive sources. Phasing discovery in this manner may allow the parties to develop the facts of the case sufficiently to determine whether, at a later date, further potentially more burdensome and expensive discovery is necessary or warranted.”); Carroll,supra, at 460-61 (“The proportionality concept also guides the court to use common sense techniques for managing discovery, like phased discovery or sequenced discovery. . . . Properly used, the proportionality tools available under the Federal Rules of Civil Procedure can go a long way toward reaching the long sought-after goal of Rule 1: securing the `just, speedy, and inexpensive determination of every action and proceeding.'”). During the initial phase, the parties shall serve only written discovery on the named parties. Nonparty discovery shall be postponed until phase two, after the parties have exhausted seeking the requested information from one another.

Judge Nolan then moves on to specific orders on what the parties must do. Her order demonstrates an understanding that proportionality should have a space (scope) dimension and a time dimension. She requires discovery to be implemented in phases, not all at once. She also understands that proportionality must be supported by cooperation, even if the cooperation is forced by court order. A shotgun wedding is better than none. Here is the language she used:

Within the next two weeks, the parties shall conduct an in-person meet and confer to prepare a phased discovery schedule. The parties are expected to be familiar with the Case Management Procedures regarding discovery on the Court’s website, the Seventh Circuit’s Electronic Discovery Pilot Program’s Principles Relating to the Discovery of Electronically Stored Information, and the Sedona Conference Cooperation Proclamation, available at http://www.thesedonaconference.org.[2] The parties are ordered to actively engage in cooperative discussions to facilitate a logical discovery flow. See Cartel Asset Mgmt. v. Ocwen Fin. Corp.,2010 WL 502721, at *13-14 (D. Colo. 2010) (“[T]he Cooperation Proclamation correctly recognizes that while counsel are `retained to be zealous advocates for their clients, they bear a professional obligation to conduct discovery in a diligent and candid manner. . . . Cooperation does not conflict with the advancement of their clients’ interests—it enhances them. Only when lawyers confuse advocacy with adversarial conduct are these twin duties in conflict.'”). For example, to the extent that the parties have not completed their initial disclosures pursuant to Rule 26(a), or if their initial disclosures require updating, the parties should focus their efforts on completing their Rule 26(a) requirement before proceeding to other discovery requests. Second, the parties should identify which claims are most likely to go forward and concentrate their discovery efforts in that direction before moving on to other claims. Third, the parties should prioritize their efforts on discovery that is less expensive and burdensome. Finally, nothing in this Order shall prejudice the parties from conducting all forms of discovery after the pending motion to dismiss has been ruled upon.

I recommend that you often quote that last paragraph too. Logical discovery flow relies on phases. Electronic discovery should almost always be conducted in phases. It is by nature iterative and fractal. That is the best, more efficient way to create order from today’s near infinite, chaotic stores of ESI. It is the way to constrain electronic discovery in a just and efficient manner. For a better understanding of what I mean by that, check out the e-discoveryteamtraining.com training program, where this, and much more is covered.

Just, Speedy, and Inexpensive Requires Proportionality, Phasing, and Cooperation

The just, speedy, and inexpensive resolution of disputes required by Rule 1, Federal Rules of Civil Procedure, requires the parties to cooperate and the judges to enforce proportionality. The discovery allowed must be proportional to the case. That includes all aspects of the case; the amount of money at issue, the respective burdens on the parties, including time and business disruptions, the public policies implicated by the dispute, if any, and the overall status and history of the case, including pending motions to dismiss. All this was considered in Tamburo. The doctrines were understood and employed to reach a correct result. It is my hope that more judges will see the wisdom of proportionality like Judge Nolan has done here. That they will allow the discovery proportional to the circumstances. No more and no less. That is beautiful.

It does not serve justice for a judge to allow any discovery requested, simply because it might be relevant. You must also consider the burdens, the costs and time involved. All that over-liberal, disproportionate discovery does is inflate the costs of litigation and extend the delays. It makes it impossible for all but a few litigants, less than 2%, to afford the costs of full proceedings, including trial. (Over 98% of all cases settle before trial.) There is a point of diminishing returns in discovery, where allowing more discovery leads to little or no additional truth.

Judges should, like Judge Nolan, be sensitive to these issues from the very start of discovery. They should always consider the use of phased discovery. The all-at-once ideas of some requesting parties, usually plaintiffs, are outdated and, frankly, suspect. Are they really after the evidence, or just on a fishing expedition designed to harass, annoy, or make the whole case so expensive that the defendant will be forced to settle.

Conclusion

The message of  Tamburo v. Dworkin is that discovery must be constrained and phased. It must be proportional. It must be based on cooperation, not war. If this message is heard across the country, maybe more cases will actually go to trial, instead of playing around with motion practice for seven years.

Proportionality, phasing, and cooperation in discovery can allow trial lawyers to be real trial lawyers again, and not just litigators. To get there, trial lawyers need the help of e-discovery lawyers. They need specialists trained in these new arts of proportionality, phasing, and strategic cooperation. They need lawyers and other professionals who can efficiently and economically wade through the mountains of written evidence that most organizations possess. That in turn requires specialist training, which has become, it seems, the current underlying theme of this blog and  the raison d’être of its training program at e-discoveryteamtraining.com.

This entry was posted on Thursday, January 13th, 2011 at 1:31 pm and is filed under Evidence, Lawyers Duties, New Rules, Related Legal Webs, Search, Spoliation/Sanctions, Technology. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.