Second Edition of The Sedona Principles and the Need for Proportionality

July 12, 2007

Sedona Arizona in April 2007The Sedona Conference  this week published the second edition to The Sedona Principles: Best Practices Recommendations & Principles for Addressing Electronic Document Production (June 2007).  As a Sedona Conference member, I may be somewhat biased, but it is safe to say that everyone in the e-discovery world considers The Sedona Principles a key document for understanding electronic discovery and best practices.  This is especially true of the judiciary, who play an active role in Sedona.  Many district court judges across the country cite to The Sedona Principles and consider it to be authoritative.  The new  Principles can be downloaded for free at the Sedona website, so long as the copy is for your personal use only. 

If you have not read the first edition published in 2004 (with annotations revised in 2005), I strongly recommend you now go ahead and read this new and improved second edition.  To those who have studied the original Sedona Principles, relax, the 14 Principles remain the same, although they have been reworded somewhat.  This is a refined and updated version, not a radical rewrite, which is hardly necessary or appropriate after only three years.  But, you will still want to download and begin using this new version ASAP.  It is a significant improvement over the first edition in several respects. 

First, and most importantly, the second edition now ties directly into the new Federal Rules of Civil Procedure, most of which were significantly influenced by the Principles. The interface between the 14 Principles and the new rules is well explained. All of the Principle Commentaries have been updated and refined, but especially the Commentaries for Principle 12 on metadata, and Principle 14 on the imposition of sanctions. The Resources and Authorities provided with each Comment have been updated to include several new e-discovery cases and articles. In the process the total text has grown 30%, from 56 to 73 pages (excluding Appendixes). Finally, the second edition is more user-friendly and better written than before. For instance, it now includes a handy chart in the front that lists Topics correlating to the Principles, Federal Rules, and Sedona Commentary.

The new Preface makes the point that the Conference tried to keep the “rule of reasonableness” foremost in mind when writing and revising these e-discovery principles and best practices.

That rule is embodied in Rule 1 of the Federal Rules of Civil Procedure (courts should secure the just, speedy and inexpensive determination of all matters) and is applied through former Rule 26(b)(2) (now renumbered as Rule 26(b)(2)(C) – proportionality test of burden, cost and need) and in many state counterparts. The rule of reasonableness means that litigants should seek – and the courts should permit – discovery that is reasonable and appropriate to the dispute at hand while not imposing excessive burdens and costs on litigants and the court.

The best practices recommended by Sedona must always be tempered by proportionality. In other words, what may be reasonable for a ten million dollar case may be impractical for a routine case that barely makes the federal jurisdictional minimum.  That point is also embodied in Principle 2, which counsels application of the proportionality standard in making a costs-versus-needs analysis to determine what e-discovery efforts are appropriate. The Preface goes on to expand upon this point as follows:

Electronic discovery is a tool to help resolve a dispute and should not be viewed as a strategic weapon to coerce unjust, delayed, or expensive results. The need to act in good faith also extends to the efforts taken to reasonably preserve relevant electronic information, to the form of the production, and to the allocation of the costs of the preservation and production. All discovery issues should be considered in light of the nature of the litigation and the amount in controversy, as well as the cost, burden, and disruption to the parties’ operations.

If only all counsel would remember and follow these wise dictates, and judges would enforce them, we would all be better off. The reality is, many litigants are misusing e-discovery as a strategic weapon, including the so-called “weapons of mass discovery” as discussed in my June 20, 2007, Blog on discovery of computer RAM memory.

This is a key point for me, and so I am pleased that the newly revised Comment 2.b. now emphasizes how the total costs of e-discovery must be considered, not just the costs of retrieval and production:

Costs cannot be calculated solely in terms of the expense of computer technicians to retrieve the data but must factor in other litigation costs, including the interruption and disruption of routine business processes and the costs of reviewing the information. Moreover, burdens on information technology personnel and the resources required to review documents for relevance, privilege, confidentiality, and privacy should be considered in any calculus of whether to allow discovery, and, if so, under what terms. In addition, the non-monetary costs (such as the invasion of privacy rights, risks to business and legal confidences, and risks to privileges) should be considered. Evaluating the need to produce electronically stored information often requires that a balance be struck between the burdens and need for electronically stored information, taking into account the technological feasibility and realistic costs involved.

Comment 2.b. at page 17 of Sedona Principles.

This point about hidden costs needed to be emphasized.  It has been overlooked multiple times in the last several years, especially by over-reaching plaintiffs and less-discerning judges.  The disruption and privacy factors are hard to quantify, but are very real and burdensome. Further, the cost of review is skyrocketing out of control, despite some attempts to export the work to low paid hourly lawyers in India.  The attorney fees incurred to review ESI for relevance, privilege, confidentiality, and the like, now constitute the bulk of all e-discovery expenses. The estimates I have seen range from a low of 40% to a high of 60% of total e-discovery costs. 

All of these costs, especially review expenses, should, in my opinion, be considered by the courts in any proportionality analysis of whether to allow discovery, or to shift the costs of discovery.  These costs should be considered regardless of whether or not the ESI at issue is “reasonably accessible.” Unfortunately, Rule 26(b)(2)(B) does not expressly say that.  It provides for cost-shifting only if the ESI is inaccessible. For that reason, a request for accessible ESI that would impose unreasonable expenses on the producing party must be opposed on the proportionality test under Rules 1 and 26(b)(2)(C), Federal Rules of Civil Procedure, and Sedona Principle 2. Only in this way can the integrity of the judicial system be protected from the intentional misuse of e-discovery to force settlements based on expense avoidance, instead of merit.


“Save Everything” and Eventually You Will Not Be Able to Find Anything: The Sedona Conference Principles and Commentary on Defensible Disposition

August 13, 2018

If you are a data hoarder, an information pack-rat that saves everything, you will eventually drown in your own data and die. Maybe not literally killed, mind you, but figuratively. Maybe not you personally, but your enterprise, your group, your project, your network. Too much information can render you and your enterprise intellectually paralyzed, cut off and seriously misinformed or uninformed. Saving it all is physically and logistically difficult, if not possible. Even if you could, keeping it all would impede your search, making it hard to find the information you need, when you need it. I address these issues this week in my review of a new commentary by The Sedona Conference Principles and Commentary on Defensible Disposition (August 2018).

Information overload is better than physical death I know, but still very bad in today’s Google world. You end up not being able to find the information you need, when you need it. That makes it hard to determine what really happened. It allows lies and liars to fester and grow. We are now seeing firsthand in the U.S. where this can lead. It is not good. It has put the whole world into a precarious situation. We need the truth to thrive as a culture; not smoke and mirrors, not conman games. A culture built on lies is a cancer. It is a deadly disease, especially for the Law, which depends on truth, on evidence, on real facts, to attain the goal of Justice.

Saving Too Much

Over-retention is the enemy of effective, efficient search. The more ESI there is to search, the more difficult the search. There can be exceptions to this rule, but for the most part it is true. That makes a “save everything” ESI policy an enemy of search. It interferes with the ability to find the information needed, which in my case is electronic evidence in legal proceedings, when it is needed. It is important for these information needs be filled quickly and completely.

Search is powerful. That is my field. The more data the better, is often true, but not always. It depends on the data and its effective life, how long a particular type of data is of any use to anyone. Big data allows for detection of patterns that would otherwise not be seen. This analysis takes CPU power. The advances in this area have been fantastic. We have the processing power, as well as the cheap storage, but our search and retrieval software has not otherwise kept up with the data explosion in volume and complexity. Predictive coding software and other AI applications have come a long way, but are still sometimes confused by the volume, variety and complexity of useless data that plagues most company IT systems.

Retrieval of specific documents and metadata takes time and specialized human skills. The more worthless data in a collection, such as spam, the greater the number false positives in a search, no matter how powerful the algorithms or skilled the searcher. Vast volumes of data make searches longer to execute and less precise. The more noise in the data, the more difficult to hear the signal. That is a fundamental law of information.

With high data volumes you can often still find the signal, the relevant documents that you need in large chaotic data collections, but it takes time and special tools and skills. There are often too many false positives in searches of data collections containing too much spam-like, useless data. Although search is strong, search alone is inadequate to meet the needs of most organizations. They also need data destruction and retention policies that govern all information. That is one reason why the success of information governance depends on data disposition.

An organization should save as much as it needs, but not too much, and also not too little. It is a Goldilocks situation. If you do not save data, you can never find it. If you save too little, then what you later need might not be there to be found. But if you save too much, you may never be able to find what you need. The signal may be in the collection to be found, in plain view, but hidden in the vast numbers, the noise of spam and other irrelevancies.

Search v. Destroy

I have debated Information Governance leaders for years the importance of search versus file destruction. I was pretty much the only advocate for search over disposition. I favored retention over destruction in most close cases, but I had a cost and proportionality overlay. I am reminded, for instance, of my debate with Jason Baron on the subject at the IQPC 10th Anniversary of Information Governance and eDiscovery, where he managed to quote Churchill at the end and won the debate hands-down. e-Disco News, Knowledge and Humor: What’s Happening Today and Likely to Happen Tomorrow (e-Discovery Team, June 7, 2015); Information Governance v Search: The Battle Lines Are Redrawn (e-Discovery Team, Feb. 8, 2015).

I did not consider it a fair debate because of Jason’s very successful pandering to the jury during his closing argument with a quote by Churchill from his speech, We Shall Fight on the Beaches. That’s the one about never surrendering in the fight against “the odious apparatus of Nazi rule” (sadly, this exhortation still has legs today in the US).

The debate was “unfair” primarily because this was an IG conference. Everybody in IG is pro-destruction and values disposition over search. I think most IG leaders go too far, that they are trigger happy to kill data. I pointed out in my debates that once a file is deleted, it cannot be found, no matter how good your filing, no matter how good your search (forensic recovery issues aside).

I am pro-search and think that the importance of management of ESI by filing and disposition is somewhat overblown. I think search is king, not data deletion. Still, even in my most strident of debates and pro-search arguments, I never advocated for the retention of all data. I always assumed that some file disposition was required and accepted that as a given. I was not a save everything and search advocate. I advocated for both, search and destroy. I advocated for more retention than most, but have never argued to retain everything.

There is a common core of agreement that some ESI should be deleted, that all data should not be saved. The disagreement is on how much data to save. How does a person or company know what is the “just right” data destruction policy for that company? There is agreement among experts that there is no one-size-fits-all solution, so custom work is required. Different retention and destruction policies should apply depending on the company and the particularities of their data universe. Many IG specialists advise clients on the custom fit they need. It involves careful investigation of the company, its data and activities, including law suits and other investigations.

The Sedona Conference  Principles and Commentary on Defensible Disposition

Kevin Brady

Kevin Brady

These IG specialists, and the companies they serve, now have an excellent new resource tool to analyze and custom-fit data destruction policies. The Sedona Conference Principles and Commentary on Defensible Disposition (August 2018 Public Comment Version) (Editors-in-Chief, Kevin F. Brady and Dean Kuckelman). I highly recommend this new and excellent work by The Sedona Conferences. My commendations to the Drafting Team: Lauren A. Allen, Jesse Murray, Ross Gotler, Ken Prine, Logan J. Herlinger, David C. Shonka, Mark Kindy; the Drafting Team Leaders: Tara Emory and Becca Rausch; the Staff Editor: Susan McClaim, and Editors-in-Chief, Kevin F. Brady and Dean Kuckelman. Please send to them any comments you may have.

The Commentary begins in usual Sedona fashion by articulation of basic principles and comments tied to principles. The cases and legal authorities cited in all Commentaries by The Sedona Conference are excellent. This commentary on data disposition is no exception. I commend it for your detailed study and reference. Free download here from The Sedona Conference.

The Principles are:

PRINCIPLE 1.    Absent a legal retention or preservation obligation, organizations may dispose of their information.

Comment 1.a.   An organization should, in the ordinary course of business, properly dispose of information that it does not need.

Comment 1.b.   When designing and implementing an information disposition program, organizations should consider the obligation to preserve information that is relevant to the claims and defenses and proportional to the needs of any pending or anticipated litigation.

Comment 1.c. When designing and implementing an information disposition program, organizations should consider the obligation to preserve information that is relevant to the subject matter of government inquiries or investigations that are pending or threatened against the organization.

Comment 1.d.   When designing and implementing an information disposition program, organizations should consider applicable statutory and regulatory obligations to retain information.

PRINCIPLE 2.    When designing and implementing an information disposition program, organizations should identify and manage the risks of over-retention.

Comment 2.a.   Information has a lifecycle, including a time when disposal is beneficial.

Comment 2.b. To determine the “right” time for disposal, risks and costs of retention and disposal should be evaluated.

PRINCIPLE 3.    Disposition should be based on Information Governance policies that reflect and harmonize with an organization’s information, technological capabilities, and objectives.

Comment 3.a.   To create effective information disposition policies, organizations should establish core components of an Information Governance program, which should reflect what information it has, when it can be disposed of, how it is stored, and who owns it.

Comment 3.b. An organization should understand its technological capabilities and define its information objectives in the context of those capabilities.

Document Disposition and Information Governance

The Sedona Conference Principles and Commentary on Defensible Disposition builds upon Sedona’s earlier work, the Sedona Conference Commentary on Information Governance (Oct. 2014). Principle 6 of the Commentary on Information Governance provides the following guidance to organizations:

The effective, timely, and consistent disposal of physical and electronic information that no longer needs to be retained should be a core component of any Information Governance program. The Sedona Conference, Commentary on Information Governance, 15 SEDONA CONF. J. 125, 146 (2014) (“Information Governance” is “an organization’s coordinated, interdisciplinary approach to satisfying information compliance requirements and managing information risks while optimizing information value.” Id. at 126).

The Comment to Principle 6 goes on to explain:

It is a sound strategic objective of a corporate organization to dispose of information no longer required for compliance, legal hold purposes, or in the ordinary course of business. If there is no legal retention obligation, information should be disposed as soon as the cost and risk of retaining the information is outweighed by the likely business value of retaining the information. . . . Typically, the business value decreases and the cost and risk increase as information ages. Id. at 147.

The Sedona Conference concluded in 2018 that this 2014 advice, and similar advice from other sources, has not been followed by most organizations. instead, they continue to struggle to make “effective disposition decisions.” The group in Principles and Commentary on Defensible Disposition concluded in its Introduction that this struggle was caused by many factors, but identified the three main problems:

[T]he incorrect belief that organizations will be forced to “defend” their disposition
actions if they later become involved in litigation. Indeed, the phrase “defensible disposition” suggests that organizations have a duty to defend their information disposition actions. While it is true that organizations must make “reasonable and good faith efforts to retain information that is relevant to claims or defenses,” that duty to preserve information is not triggered until there is a “reasonably anticipated or pending litigation” or other legal demands for records. The Sedona Principles, Third Edition: Best Practices, Recommendations & Principles for Addressing Electronic Document Production, 19 SEDONA CONF. J. 1, 51, Principle 5, 93 (2018).

Another factor in the struggle toward effective disposition of information is the difficulty in appreciating how such disposition reduces costs and risks.

Lastly, many organizations struggle with how to design and implement effective disposition as part of their overall Information Governance program.

The Principles and Commentary on Defensible Disposition attempt to address these three factors and provide guidance to organizations, and the professionals who counsel organizations, on developing and implementing an effective disposition program.

Disposition Challenges

The Sedona Conference Principles and Commentary on Defensible Disposition (August, 2018) concludes by identifying the main challenges to data deletion.

  1. Unstructured Information.
  2. Mergers and Acquisitions.
  3. Departed, Separated, or Former Employees
  4. Shared File Sites
  5. Personally Identifiable Information (“PII”)
  6. Law Firms, eDiscovery Vendors, and Adversaries
  7. In-House Legal Departments
  8. Hoarders (my personal favorite)
  9. Regulations
  10. Cultural Change and Training

There are more, I am sure, but this is a good top ten list to start. I only wish they had included more discussion of these top ten.

Conclusion

Search is still more important for me than destroy. I prefer Where’s Waldo over Kill Waldo! I have not changed my position on that. But neither has mainstream Information Governance. They still disagree with my emphasis on Search. But everyone agrees that we should do both: Search and Destroy. Even I do not want companies to save all of their data. Some data should be destroyed.

I agree with mainstream IG that saving everything forever is not a viable information governance policy, no matter how many resources you also put into ESI search and retrieval. I have never said that you should rely solely on search, just that you should give Search more importance and, when in doubt, that you should save more documents than less. The Search and Destroy argument has always been one of a matter of degree and balance, not whether there should be no destruction at all. The difficult questions involve what should be saved and for how long, which are traditional information management problems.

Where to draw the line on destruction is the big question for everyone. The answer is always company specific, even project specific. It involves questions of varying retention times, files type and custodian analysis. When it comes down to specific decisions, and close questions, I generally favor retention. What may appear to be useless today, may prove to be relevant evidence tomorrow. I hate not being able to prove my case because all of the documents have already been deleted. Then it is just one person’s word against another. IG experts, who usually no longer litigate, or never litigated, do not like my complaints. They are eager to kill, to purge and destroy data. I am more inclined to save and search, but not save too much. It is a question of balance.

Data destruction – the killing of data – can, if done properly, make the search for relevant content much easier. Some disposition of obviously irrelevant, spam and otherwise useless information makes sense on every level. It helps all users of the IT system. It also helps with legal compliance. Too much destruction of data, too aggressive, and you may end up deleting information that you were required by law to keep. You could lose a law suit because of one mistake in a data disposition decision. Where do you draw the line between save and delete? What is the scope of a preservation duty? What files types should be retained? What retention times should apply? How much is too much? Not enough?

The questions go on and on and there is no one right answer. It all depends on the facts and circumstances of the organization and its data. The new Sedona Conference Principles and Commentary on Defensible Disposition is an important new guide to help IT lawyers and technologists to craft custom answers to these questions.

 


Proportionality Analysis Defeats Motion for Forensic Examination

May 28, 2018

It is rare of a judge to change their mind after making a decision. It is rarer still for a judge to celebrate doing so in a written opinion for the world to see. But that is exactly what Magistrate Judge Jeffrey Cole has done in his opinion dated May 17, 2018 in Motorola Sols., Inc v. Hytera Communications Corp., No. 17 C 1973 (N.D. Ill.).

This celebration is one reason that Judge Cole’s Order denying Motorola’s motion for forensic inspection is so remarkable. Another is that it begins with a quote, a rare occurrence in judicial orders, one that I always like. The quote celebrates the better late than never philosophy of changing your mind to follow a new understanding, a personal wisdom. The quote is by the late, great Supreme Court Justice, Felix Frankfurter. Felix served as a judge on the Supreme Court from 1939 to 1962.  Before that he was, among other things, a Harvard Law Professor and co-founder of the American Civil Liberties Union. Here is the quote with which Cole begins his order:

“Wisdom too often never comes, and so one ought not to reject it merely because it comes late.”

Henslee v. Union Planters Nat. Bank & Trust Co., 335 U.S. 595, 600, 69 S. Ct. 290, 93 L. Ed. 259, 1949-1 C.B. 223 (1949)

(Frankfurter, J., dissenting)

Another unusual thing about Judge Cole’s order, and the real reason I am writing about it, is that the wisdom that came to him was from the doctrine of proportionality and Rule 26(b)(1). This was the basis for Judge Cole to deny plaintiff’s motion for a forensic inspection of defendant’s computers, in China no less.

District Court Judge Ronald Norgle had previously allowed the parties until October 6, 2017, to conduct discovery on the statute of limitations defense only and stayed all other discovery. The parties had one month in which to take discovery on a very limited topic of fraudulent concealment, which is a type of tolling within the doctrine of equitable estoppel of the limitations defense. Nothing else. After all, Motorola has waited almost ten years before filing a trade-secret theft suit against a Chinese corporation for allegedly stealing its radio wave technology. As Judge Cole colorfully described the situation (citations to record removed in all quotes) with a reference to Hannibal:

While the inquiry should have been uncomplicated, it has become a long, drawn out, pitched battle — one, in a rhetorical sense, to rival the Punic Wars — albeit without the elephants and the Alps and the sheer drama.

After that, the parties exchanged motions to compel repeatedly. Deadlines were extended, from one month to several. Thousands of pages of memoranda and exhibits were filed. 1  And, again, this was all over the supposedly limited discovery on a limited topic that ought to have taken little time and effort. The very nature of what occurred tends to sustain the all too prevalent observation that discovery has become more important than the actual case. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 595, n.13, 127 S. Ct. 1955, 167 L. Ed. 2d 929 (2007); A.H. Robins Co. v. Piccinin, 788 F.2d 994, 1013 (4th Cir. 1986).

1 The filings and orders in this case which, again, is only in the preliminary stage of determining whether Motorola’s filing is timely, already cover more than 7,500 pages. See also n. 5, infra.

Five months into this “limited” discovery process Motorola asked to conduct a forensic examination of the computers of “key Hytera witnesses who have been involved in the use of Motorola’s confidential information and any relevant Hytera servers … on which Hytera has stored Motorola documents,” all of which are located in China. Motorola said it wanted to “begin with forensic inspection of the computers” of seven Hytera employees. Judge Cole said this request reminded him of Winston Churchill’s famous quip: “Now this is not the end. It is not even the beginning of the end.”

Flip Flopping Towards Wisdom

After several hearings Judge Cole was persuaded by the siren songs of plaintiff’s counsel from the well-known firm of Kirkland & Ellis LLP. They must have been very good orators and put on a compelling argument to support their motion. They convinced Judge Cole to allow them to begin a forensic examination process in China under elaborate Hague Convention procedures. Only after the hearings and oral decision to compel the inspection did Judge Cole realize the error of that decision. Judge Cole to his credit does not blame Kirkland and Ellis litigators for leading him astray. Following standard judicial protocol Judge Cole assumed full responsibility for the initial error:

Over the course of two lengthy hearings on March 21 and April 4, 2018, I tentatively concluded that forensic examination of Hytera’s computers would be appropriate, but only if the parties could arrive at a suitable protocol that would not, among other things, run afoul of Chinese law. As we discuss, infra at 5, that was a mistake. But the law frowns on relying on a blunder to gain an opportunistic advantage. Cf. Architectural Metal Systems, Inc. v. Consolidated Systems, Inc., 58 F.3d 1227, 1231 (7th Cir.1995); Market Street Associates; Packer Trading Co. v. CFTC, 972 F.2d 144, 150 (7th Cir 1992); Centex Construction v. James, 374 F.2d 921, 923 (8th Cir.1967). 2

2 We should not be understood as ascribing fault to plaintiff’s counsel. After all, in our adversary system, lawyers properly play a partisan role. Masias v. Secretary of Health and Human Svcs, 2009 U.S. Claims LEXIS 281, at *27 (Fed. Cl. 2009); Philips Medical Systems Intern. B.V. v. Bruetman, 8 F.3d 600, 606 (7th Cir.1993) (Posner, J.). See also Smith v. Robbins, 528 U.S. 259, 293, 120 S. Ct. 746, 145 L. Ed. 2d 756 (2000) (Souter, J., dissenting) (“a partisan scrutiny of the record and assessment of potential issues, goes to the irreducible core of the lawyer’s obligation to a litigant in an adversary system … .”). Mistakes are ultimately (and in most cases) the responsibility of the court.

Judge Cole went on to celebrate a jurists right to change their mind in order to get things right.

The scope of discovery that I was initially inclined to allow was, in the context of the present inquiry that had been narrowed by the district court to the limitations issue, overbroad. What is being sought goes beyond the issue of equitable tolling. In the end, Motorola’s counsel and I were talking about relevance to allegations in Motorola’s complaint. And so, well beyond the statute of limitations, by the end of the April 4 hearing, discovery was encompassing documents related to Motorola’s entire case.

As we have said, “all judges make mistakes,” Fujisawa Pharm. Co., 115 F.3d at 1339, and, when possible, it is best that judges put them right.

Proportionality Applied to Restrain Discovery

In the May 17, 2018 order Judge Cole found the wisdom to say no and forbid the forensic examination of the computers in China. He did so because he found that this discovery was “out of proportion with the needs of this case, as presently limited by the district court” and cited Rule 26 (b)(1), Federal Rules of Civil Procedure. Although I am sure that he heard extensive argument and evidence concerning the estimated costs and burdens imposed by the forensic exams, his decision did not focus on costs. Instead it focused on one of the other very important factors in 26(b)(1), “the importance of the discovery in resolving the issues.” Judge Cole realized that the computers in China could not possibly have information in them of any real relevance to equitable tolling of the statute of limitations defense.

At a minimum, even if relevant to the present limited issue, discovery of computers in China is not proportional to the importance of discovery in resolving the issues and the burden and expense of the proposed discovery manifestly outweighs its likely benefit to the very limited question of equitable tolling. Although the federal discovery rules are permissive, they are not, as Judge Moran wisely put it, “a ticket to an unlimited … exploration of every conceivable matter that captures an attorney’s interest.” Sapia v. Bd. of Educ. of the City of Chi., 2017 U.S. Dist. LEXIS 73153, 2017 WL 2060344, at *2 (N.D. Ill. 2017); see also Leibovitch v. Islamic Republic of Iran, 2018 U.S. Dist. LEXIS 31713, 2018 WL 1072567, at *11 (N.D. Ill. 2018). “[J]udges should not hesitate to exercise appropriate control over the discovery process.” Herbert v. Lando, 441 U.S. 153, 177, 99 S. Ct. 1635, 60 L. Ed. 2d 115 (1979). Failure to exercise that control results in needless and enormous costs to the litigants and to the due administration of justice.

Judge Cole also understood that a forensic inspection is a drastic remedy that requires good cause not shown by plaintiff here:

The original idea here was for a month or so of discovery focused on the very limited issue of the statute of limitations. While it is rare for parties to complete discovery even by dates chosen by their counsel, there can be no dispute that things have already gone far beyond what was intended and what was necessary in the statute of limitations portion of this case, in terms of time and scope. Now, Motorola wants things to go very much further. Forensic examination is generally regarded as a drastic step even in general discovery. See, e.g.,John B. v. Goetz, 531 F.3d 448, 460 (6th Cir. 2008) (“mere skepticism that an opposing party has not produced all relevant information is not sufficient to warrant drastic electronic discovery measures.”). As the court said in In re Ford Motor Company, 345 F.3d 1315 (11th Cir. 2003):

““In the absence of a strong showing that the responding party has somehow defaulted in this obligation, the court should not resort to extreme, expensive, or extraordinary means to guarantee compliance. Forensic inspection of computer hard drives is an expensive process, and adds to the burden of litigation for both parties, as an examination of a hard drive by an expert automatically triggers the retention of an expert by the responding party for the same purpose. Furthermore, examination of a hard drive inevitably results in the production of massive amounts of irrelevant, and perhaps privileged, information … . This court is therefore loathe to sanction intrusive examination of an opponent’s computer as a matter of course, or on the mere suspicion that the opponent may be withholding discoverable information.”

The Advisory Committee Notes to Rule 34 recognize that courts must use caution in evaluating requests to inspect an opposing party’s electronic devices or systems for ESI, in order to avoid unduly impinging on a party’s privacy interests:

Inspection or testing of certain types of electronically stored information or of a responding party’s electronic information system may raise issues of confidentiality or privacy. The addition of testing and sampling to Rule 34(a) with regard to documents and electronically stored information is not meant to create a routine right of direct access to a party’s electronic information system, although such access might be justified in some circumstances. Courts should guard against undue intrusiveness resulting from inspecting or testing such systems.

Fed. R. Civ. P. 34, Advisory Committee Notes—2006 Amendment (emphasis added). Likewise, the Sedona Principles urge general caution in this area:

Civil litigation should not be approached as if information systems were crime scenes that justify forensic investigation at every opportunity to identify and preserve every detail … . [M]aking forensic image backups of computers is only the first step of an expensive, complex, and difficult process of data analysis that can divert litigation into side issues and satellite disputes involving the interpretation of potentially ambiguous forensic evidence.

The Sedona Principles, supra, at 34, 47. 4

Conclusion

Judge Cole’s wrap up is wise and witty and something you may want to quote in many discovery disputes, especially the footnote:

Parties are entitled to a reasonable opportunity to investigate the relevant facts — and no more. Upjohn Company v. United States, 449 U.S. 383, 390, 101 S. Ct. 677, 66 L. Ed. 2d 584 (1981); Vakharia v. Swedish Covenant Hosp., 1994 U.S. Dist. LEXIS 2712, at *2 (N.D. Ill. 1994) (Moran, J.). Motorola has already had that reasonable opportunity and far more. What was intended to be a month-long process of discovery on a very limited issue has turned into a protracted affair in which Motorola has received 700,000 documents — nearly 3 million pages — over a period of eight months. 5

5 A ream of paper is 500 sheets, which is 2 inches tall. Three million pages is 6,000 reams, meaning that 3 million pages of discovery, which is about 1,000 feet high or 100 stories high. By any measure, that is extraordinary.

Yet, apparently for Motorola, it’s not enough. It now wants a forensic inspection of several computers in China — and it warns that that is only the “beginning.” What should have been limited discovery on a “straightforward [issue has] spiral[ed] out of control.” Montanez v. Simon, 755 F.3d 547, 552 (7th Cir. 2014). The time has come to say: “enough is enough.” Walker v. Sheahan, 526 F.3d 973, 981 (7th Cir. 2008). Eight months of “limited,” single-issue discovery are now at an end. Motorola’s motion for forensic inspection is denied.

Enough is enough. To go further would have been a disproportionate burden, especially considering the very narrow issue allowed in discovery. Judge Cole at first made a mistake, and then he changed his mind and made it right. He is a wise judge. I wish there were more like him. Except of course if you change your mind to rule against me! <‘_’>


Guest Blog: “Follow the Money” and Metrics: A User’s Guide to Proportionality in the Age of e-Discovery

April 8, 2018

This is a guest blog by a friend and colleague, Philip Favro. Phil is a consultant for Driven, Inc. where he serves as a trusted advisor to organizations and their counsel on issues relating to the discovery process and information governance. Phil is also currently active in The Sedona Conference. He obtained permission from them to include a description of a recent event they sponsored in Nashville on Proportionality.

“Follow the Money” and Metrics: A User’s Guide to Proportionality in the Age of e-Discovery

Moviegoers and political junkies have flocked to theaters over the past few months to watch period-piece epics including Darkest Hour and The Post. While there is undoubted attraction (especially in today’s political climate) in watching the reenactment of genuine leadership and courageous deeds these movies portray, The Post should have particular interest for counsel and others involved in electronic discovery.

With its emphasis on investigation and fact-gathering; culling relevant information from marginally useful materials; and decision-making on how such information should be disclosed and presented to adversaries, The Post features key traits associated with sophisticated discovery counsel.

Not coincidentally, those same attributes were on display in another drama from the 1970s of which The Post viewers were reminded: All The President’s Men. That investigative journalism classic depicts Washington Post correspondents Bob Woodward and Carl Bernstein as dogged reporters determined to identify the culprits responsible for the Watergate Hotel break-in in June 1972.

A critical aspect of their work involved Woodward’s furtive meetings with Mark Felt, who served at that time as the deputy director of the FBI. Known only as “Deep Throat” (until Felt revealed himself in 2005), Felt provided cryptic yet key direction that aided the reporters’ investigation. One of Felt’s most significant tips (as portrayed in the movie) was his suggestion that Woodward investigate the cash contributions made to help reelect then President Richard Nixon in 1972. Played by iconic actor Hal Holbrook in All The President’s Men, Felt’s soft-spoken but serious demeanor underscored the importance of his repeated direction to Woodward to “just follow the money.” By following the money, the Washington Post reporters helped discover many of the nefarious tactics that eventually brought down the Nixon presidency.

Proportionality

The directive to “follow the money” applies with equal force to counsel responsible for handling discovery. This is particularly the case in 2018 since courts now expect counsel to address discovery consistent with proportionality standards. Those standards – as codified in Federal Rule of Civil Procedure 26(b)(1) – require counsel, clients, and the courts to consider various factors bearing on the discovery analysis. They include:

(1) the importance of the issues at stake in this action; (2) the amount in controversy; (3) the parties’ relative access to relevant information; (4) the parties’ resources; (5) the importance of the discovery in resolving the issues; and (6) whether the burden or expense of the proposed discovery outweighs its likely benefit.

While all of the factors may be significant, monetary considerations – elements of which are found in both the “amount in controversy” and “burden or expense” factors – frequently predominate a proportionality analysis. As Ralph Losey (the owner, host, and principal author of this blog) has emphasized many times, “[t]he bottom line in e-discovery production is what it costs.” By following the money or, perhaps more appropriate for discovery, focusing on the money, counsel can drive an effective discovery process and obtain better results for the client.

As lawyers do so, they will find an increasingly sophisticated judiciary who expect counsel to approach discovery through the lens of proportionality. This certainly was the case in Oxbow Carbon & Minerals LLC v. Union Pacific Railroad Company, which has been prominently spotlighted in this blog. In Oxbow, the court applied the Rule 26(b)(1) proportionality factors to a disputed document request, holding that it was not unduly burdensome and that it properly targeted relevant information. While the court examined all of the Rule 26(b)(1) proportionality standards, money was the clearly determinative factor. The amount in controversy, coupled with the comparative costs of discovery – discovery completed and still to be undertaken, tipped the scales in favor of ordering plaintiffs to respond defendants’ document requests.

The Critical Role of Metrics

Essential to Oxbow’s holding were the metrics the parties shared with the court. Metrics – typically defined as a standard of measurement or (as used in business world) a method for evaluating performance – offer counsel ways to assess the “performance” of a particular document production. Metrics can measure the extent to which a production contains relevant materials, undisclosed privileged information, and even nonresponsive documents. Metrics can also estimate – as was the case in Oxbow – the resources (including time, manpower, and costs) a party may be forced to incur to comply with a discovery request.

Metrics enable a court to follow the money and properly balance the burdens of discovery against its benefits. Without metrics, a responding party could hardly expect to establish that a request is disproportionate and thereby prevail in motion practice. As Ralph observed in his post entitled Judge Facciola’s Successor, Judge Michael Harvey, Provides Excellent Proportionality Analysis in an Order to Compel:

Successful arguments on motions to compel require hard evidence. To meet your burden of proof you must present credible estimates of the costs of document review. This requires . . . reliable metrics and statistics concerning the ESI that the requesting party wants the responding party to review.

As discussed later on, other courts have also emphasized the critical role of metrics in evaluating the proportionality of a particular discovery request.

The Sedona Conference, Proportionality, and Metrics

For counsel who wish to better understand the role of metrics in discovery, the directive to “follow the money” will bring them to The Sedona Conference (“Sedona”). Sedona is the preeminent legal institution dedicated to advancing thoughtful reforms on important legal issues. While Sedona addresses matters ranging from patent litigation and trade secret misappropriation to data privacy and cross-border data protection, the organization is best known for its work on electronic discovery.

Renowned for its volunteer model and for attracting many of the best minds in the legal industry, Sedona prepares authoritative resources that are regularly relied on by judges, lawyers, and scholars. This is particularly the case with proportionality standards and how they should drive the determination of discovery issues.

Sedona published its first Commentary on Proportionality in Electronic Discovery (“Commentary” or “Proportionality Commentary”) in 2010 and a second version in 2013. Last spring, Sedona released a third iteration of the Commentary. Collaboratively prepared by a group of renowned judges and practitioners, the third version of the Commentary provides common sense direction on how metrics can help achieve proportional results in discovery:

Burden and expense should be supported by hard information and not by unsupported assertions. For example, if a party claims that a search would result in too many documents, the party should run the search and be prepared to provide the opposing party with the number of hits and any other applicable qualitative metrics. If the party claims that the search results in too many irrelevant hits, the party may consider providing a description or examples of irrelevant documents captured by the search.

Quantitative metrics in support of a burden and expense argument may include the projected volume of potentially responsive documents. It may also encompass the costs associated with processing, performing data analytics, and review, taking into consideration the anticipated rate of review and reviewer costs, based upon reasonable fees and expenses.

As the Commentary makes clear, metrics can provide insights regarding the effectiveness of search methodologies or the nature and extent of a party’s burden in responding to a particular discovery request. By sharing these metrics with litigation adversaries, counsel can informally address legitimate discovery questions or crystallize the issues for resolution by a court. Either way represents a more cost effective approach to discovery than the opacity of traditional meet and confers or motion practice.

Framing the Issues through Sedona’s TSCI Event

These issues were on display last month at Sedona’s TSCI conference in Nashville, Tennessee. The TSCI event typically provides attendees with an annual opportunity to stay current on developing trends in e-Discovery. The 2018 TSCI event remained consistent with that objective, spotlighting practice developments for counsel “from ‘eDiscovery 1.0’ to New and Evolving Legal Challenges.” Expertly chaired by Jerone “Jerry” English and Maura Grossman, TSCI featured sessions covering discovery and other issues relating to artificial intelligence (AI), the Internet of Things (IoT), mobile applications, data breaches, cross-border discovery, and the always engaging case law panel and judicial round-table.

One of the more practical sessions focused on the importance of using metrics, analytics, and sampling to achieve proportionality in discovery. Entitled Using Data Analytics and Metrics to Achieve Proportionality, the purpose of this session was to help attendees understand how counsel should present analytics, metrics, and sampled data to a court. The session featured a fantastic line-up of speakersGareth Evans, Maura Grossman, U.S. Magistrate Judge Anthony Porcelli, U.S. Magistrate Judge Leda Dunn Wettre – who were well situated to provide views on these topics. Audience members additionally offered insightful comments on the issues.[1]

The most important guidance the speakers and audience emphasized was the need for more complete disclosure of supporting metrics. Unless specific metrics are disclosed, neither adversaries nor the court can address issues as varied as the performance of particular search terms, the reasonableness of a production made using TAR or other search methodologies, or the burdens of a particular discovery request.

On the latter issue of substantiating arguments of undue burden, one particularly insightful comment offered during the session concisely summarized the interplay between metrics, proportionality, and cost: “Follow the money.” This admonition dovetailed nicely with the discussion of two recent cases during that session – Duffy v. Lawrence Memorial Hospital, No. 2:14-cv-2256-SAC-TJJ, 2017 WL 1277808 (D. Kan. Mar. 31, 2017) and Solo v. United Parcel Service Co., No. 14-cv-12719, 2017 WL 85832 (E.D. Mich. Jan. 10, 2017). Both of these cases spotlight how reliable metrics enable a court to follow the money and resolve discovery disputes consistent with proportionality standards.

Duffy v. Lawrence Memorial Hospital

In Duffy, the court modified a discovery order issued less than two months beforehand that granted plaintiff’s requests for various categories of emergency room patient records. In that first round of motion practice, defendant had argued that plaintiff’s requests were disproportionate and unduly burdensome. The court overruled those objections, explaining that defendant failed to provide any substantive metrics to support those objections:

Defendant objects to every document request as being unduly burdensome, but provides no facts to support the objection. Neither does Defendant provide evidence of the costs it would incur in responding to the requests.

In summary, defendant’s failure to share any meaningful metrics regarding the time, manpower, or costs it would incur to comply with plaintiff’s requests ultimately left its arguments bereft of any evidentiary support.

In the second round of motion practice, defendant adopted a different approach that yielded a more proportional result. Confronted by the staggering reality of the court’s production order and having learned how to properly use supporting metrics in motion practice, defendant moved for a protective order.

In contrast to its prior briefing, defendant shared specific metrics associated with the burdens of production. Those burdens involved the deployment of staff to individually review 15,574 electronic patient files so as to identify particular patient visit information. Such a process would be labor intensive and cost well over $230,000:

Defendant estimates it would take 7,787 worker hours to locate and produce responsive information for 15,574 patient records. If Defendant had ten employees working on the task, they would spend more than ninety-seven days working eight hours a day, at an estimated cost to Defendant of $196,933.23.

After aggregating the information, Defendant asserts it would need to redact patients’ personal confidential information . . . redaction would take ten reviewers fourteen days at a cost of $37,259.50. The process would include a quality control attorney reviewer who would spend two hours a day, and reviewers who would review 15 documents per hour for eight hours a day.

In sum . . . producing the information relevant to RFP Nos. 40, 41, 43, and 58 would take 8,982 hours of work and cost in excess of $230,000 if done by contract staff.

Simply put, defendant urged the court to follow the money. By substantiating its proportionality arguments with appropriate metrics, the court recognized its initial production order placed an undue burden on defendant.

As a result, the court adopted a modified order that instead allowed defendant to produce a random sample of 257 patient records. While advancing a number of justifications for its modified order, the court ultimately relied on the tripartite mandate from Federal Rule of Civil Procedure 1. The order would provide the parties to the litigation with a substantively better, more efficient, and less expensive method for producing relevant information.

Solo v. United Parcel Service

Solo v. United Parcel Service reached a result analogous to the Duffy holding, ordering that defendant produce only a sample of the information sought by plaintiff. In Solo, plaintiffs served an interrogatory that sought identification of shipment information relating to its putative class action claims (plaintiffs claimed that defendant overcharged certain customers for “shipments that had a declared value of over $300”). The interrogatory sought shipping record information that spanned a period of six years.

Defendant argued in response that the interrogatory was unduly burdensome and would impose a disproportionate production obligation on the company. Because most of the requested information was archived on backup tapes, defendant shared specific metrics regarding the “overwhelming” burdens associated with responding to the interrogatory:

UPS estimates that it would take at least six months just to restore the archived tapes as described above, at a cost of $120,000 in labor . . . that estimate does not include the time and expense of analyzing the data once extracted in order to answer Interrogatory No. 1, which would require extensive additional analysis of each account number and the manual review of contract language for individual shipper. Such a process would also require a substantial amount of time and resources on the part of UPS.

Based on the metrics defendant disclosed and given that plaintiffs’ claims had yet to be certified as a class action, the court found the interrogatory to be disproportionate. Following the money and drawing on the linked concepts of cooperation and proportionality from Rule 1, the court instead ordered that defendant produce a sample of the requested information from a six-month period. The court also directed the parties to meet and confer on developing an agreeable sampling methodology.

Conclusion

Duffy and Solo reinforce the critical interplay between metrics, proportionality, and money. Just like Oxbow, the responding parties from Duffy and Solo could hardly expect to substantiate arguments regarding undue burden and disproportionality without metrics. Indeed, the court in Duffy initially rejected such arguments when defendant failed to support them with actual information. However, by disclosing metrics with reasonable estimates of time, manpower, and costs, Duffy and Solo resulted in production orders more consistent with proportionality limitations.

All of which translated into substantial cost savings for the responding parties. Defendant in Duffy was facing a discovery bill of over $230,000 to review 15,574 patient files. Dividing the projected cost of the entire review process into the number of patient records – $230,000 ÷ 15,574 – reveals that defendant would pay approximately $15 to review an individual patient record. Under the modified production order, the new projected cost – $15 multiplied by 257 patient records – equals $3,855. Follow the money: the tactical use of metrics apparently saved the client over $225,000!

Duffy and Solo are consistent with and confirmed by Oxbow, the Proportionality Commentary, and the Federal Rules of Civil Procedure. These authoritative resources collectively teach that counsel who use metrics and focus on cost can drive an effective discovery process. Lawyers that do so will ultimately obtain better results for the client in discovery.

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[1] To encourage candid and robust debate during its events, Sedona has promulgated a nondisclosure rule. Known as “The Sedona Rule,” it proscribes attendees from identifying the speakers or audience members by name who share particular insights. It also forbids divulging the contents of particular brainstorming or drafting projects that have yet to be released for publication. The Sedona Rule otherwise allows for the anonymous disclosure of session content from its events.


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