Data Law Insights

On October 1st, I attended an all-day series of presentations hosted by Huron Legal Institute and Sandpiper Legal LLP in New York, which included several leading federal jurists and well-regarded practitioners offering their insights.

The event featured five hypothetical cases covering a range of topics, with attorneys appearing before one of more of the judges to conduct a mock discovery conference or to argue motions. This structure proved to be an engaging means of discussing the issues, and the more astute members of the audience recognized that a couple of the scenarios were drawn from recent cases, including the Biomet case that I discussed a few months ago and Pippins v. KPMG, which we posted about last year. The format also played to the judges’ strengths, allowing them to tease out issues and express their opinions. While the discussion was “off the record”, I will discuss the overall themes and provide some highlights (without attribution) of the discussions of predictive coding and proposed amendments to the Federal Rules on proportionality and preservation.

Technology-Assisted Review (TAR) / Predictive Coding and the Biomet Scenario

Using the Biomet decision as a foundation, one panel explored the degrees of cooperation between adversaries in discovery matters involving TAR as well as the role of statistics in assessing the defensibility of a production from a TAR-based workflow. The judges emphasized that they wanted to hear disputes about TAR early in discovery in order to reduce the likelihood of a core dispute – one in which a party demands a “do over” or costly revisions to the TAR review process. The lawyer “representing” “Hippomet” noted that the procedural history of this hypothetical MDL matter resulted in a more extreme failure to cooperate than most cases. Hippomet had already begun production before the cases were consolidated, meaning that there was no opportunity to negotiate with the plaintiff that had brought the motion. This advocate pointed out that since the cost of using search terms to cull the data was virtually nil, he wanted to utilize keywords as a gateway feature to reduce the number of documents subject to the TAR-based analysis, in order to reduce costs. The judges, noting that the “null set” of documents that did not hit on the search terms had not turned up any “smoking guns”, reiterated that reasonableness is the standard, not perfection. Although predictive coding technology may be more accurate than the use of search terms, the cost of requiring a “do over” in an effort to achieve “perfection” (even if it does exist) is likely unreasonable in light of the potential damages at issue in the hypothetical case.

The panel of judges also emphasized their desire to have informed advocates before the court because in many disputes, the attorneys are ill-equipped to provide the judge with the information necessary to render a decision. The judges suggested that parties should bring their “geek to court” – a phrase coined by Judge Peck, Magistrate Judge for the Southern District of New York. The judges debated whether the parties would need to qualify that “geek” as an expert under Daubert v. Merrell Dow Pharmaceuticals, concluding that in most instances it would not be necessary, but that the Daubert process would nevertheless provide the parties and the court with a useful framework to examine the issues. The panel ended with a discussion of one of the more controversial subjects involving TAR – whether the parties should exchange non-responsive documents. None of the judges committed either way but they did encourage parties to explore alternative methods of validating the TAR results because the Federal Rules require the production only of relevant documents.

Proportionality and Preservation Under the Proposed Amendments to the Federal Rules

A separate presentation focused on preservation and proportionality, using employment law scenarios as the backdrop. The anticipated changes to F.R.Civ.P. 26 framed the discussion, including the proposed amendment providing that discovery should be “proportional to the needs of the case.” Here, the judges were willing to require broad preservation, especially in class action matters, so as to avoid the specter of a spoliation motion in the future. The distinction was made between preservation and production – as the judges made clear that the parties would have to develop a strategy for the production of documents at a later juncture (but sooner rather than later). One panelist noted that courts are typically not involved in preservation decisions at the time they are made, but encouraged counsel with clients that are subject to these types of litigation issues – in particular class actions – to be cognizant of preservation requirements in light of most judges’ general desire to preserve more information in the early stages to avoid prejudice later in the dispute.

As with the predictive coding panel, the judges emphasized the role of statistics, here looking at how many putative plaintiffs’ records should be produced: just the named plaintiffs, the opt-ins, or all of the potential class members. The judges wanted a means of confirming that the production was representative in the same ways that the named class members were representative. Another insight into proportionality was the panel’s desire to use the damages calculations submitted pursuant to Rule 26(a)(1) as a data point to contend with the parties’ divergent perspectives on the amount of money that should be spent on production – the costs of the litigation clearly should not exceed, or even approach, the damages expected.

The panels also focused on the scope of preservation necessary at the initial stage of the litigation. As in most cases, the litigation preservation efforts can be quite expansive for the company, but are parties required to preserve all possible repositories for each individual listed? Here the defendant claimed that expanding preservation efforts from the seven named plaintiffs to all 98 employees would be exponentially expensive, but one judge remarked that she would want to see the bills or cost estimates before allowing the “it’s too expensive” argument to prevail. Another panel member described how a potential compromise would involve forensic collection for the plaintiffs and perhaps their closest colleagues, but that less rigorous efforts could be used for those custodians that were unlikely to be called as witnesses. One judge noted that sanctions would be more appropriate when the failure to preserve involved key custodians, but that he would not be inclined to take a harsh approach in the absence of a strong showing that prejudice had occurred.

Sanctions Under the Proposed Amendments to the Federal Rules

The final panel explored the proposed change to F.R.Civ.P. Rule 37(e) through the lens of an employment discrimination matter where key players received only an oral litigation hold notice during the three months between the filing of the complaint and the Rule 26(f) conference. In this hypothetical, outside counsel also had discovered that the e-mail and text messages from plaintiff’s supervisors had been lost after the duty to preserve had kicked in. Other repositories of information were inadvertently deleted during a forensic examination of plaintiff’s computer.

The proposed change to the Rules would resolve a perceived split in which some courts, including some in the Second Circuit, permit severe sanctions (such as an adverse inference instruction) for the negligent failure to preserve, while the others, such as the Fourth Circuit, are far less likely to order severe sanctions for conduct that is not in bad faith. The amendment would allow the imposition of severe sanctions only where the moving party demonstrates willfulness or bad faith or where the failure to preserve “irreparably deprived a party of any meaningful opportunity” to present a claim or defense. Reasonableness would govern the inquiry as to whether sanctions should be granted and sanctions would not be permitted where the relevant evidence had not actually been lost. The judges explained how sanctions motions are inherently difficult to decide and returned to their theme that the best sanctions motion is the one that never needs to be filed.

For more information, head over to the website for Huron’s E-Discovery Advocacy Institute.