Are Courts Beginning To Take Proportionality Seriously In E-Discovery?

Sunday, November 25, 2012 - 12:41

Proportionality was expressly enshrined into the Federal Rules of Civil Procedure nearly thirty years ago with the 1983 amendments. Indeed, that principle has always been there.  Rule 1 begins with a goal and a promise – the “just, speedy and inexpensive determination of every action.” Courts have long had the authority to limit or disallow discovery when “the burden or expense of the proposed discovery outweighs its likely benefit, considering the needs of the case, the amount in controversy, the parties’ resources, the importance of the issues at stake in the action, and the importance of the discovery in resolving the issues.”[1] This common sense principle, however, has not acted as a serious governor on ever-expanding discovery that threatens to choke the civil justice system. Horror stories abound. Not long ago, a non-party government office expended over $6 million – more than nine percent of the agency's annual budget – to review and produce documents in response to a subpoena, yet was nonetheless sanctioned for failing to fully satisfy its discovery obligations.[2] One commentator has remarked that “[t]he proportionality principle of Rule 26(b)(2) … is not being utilized by judges ….”[3]

But the tide may be changing. A variety of recent developments demonstrate that courts are relying on the principle of proportionality with increasing frequency and vigor when assessing the scope and limits of e-discovery. Several recent cases have limited e-discovery after expressly considering proportionality. Institutionally, the Federation of Defense & Corporate Counsel (FDCC), working with Lawyers for Civil Justice and other defense bar organizations, is engaged in sustained efforts to amend the Federal Rules of Civil Procedure in ways that bring them in line with the economic and institutional realities of burgeoning discovery obligations that threaten to drown out the promise of just, speedy and cost-effective dispute resolution. The efforts of the FDCC and other defense organizations are beginning to gain some resonance with the courts. Local rules and protocols are also taking heed of proportionality.

Kleen Products v. Packaging Corporation of America[4] is one very recent case where proportionality was given substantive effect. That decision engages in an extensive discussion of proportionality under Rule 26(b)(2)(C) citing the Sedona Conference Commentary on Proportionality in Electronic Discovery. While acknowledging that the plaintiff needed a better understanding of defendants’ key personnel, the court nonetheless granted a motion for protective order rejecting plaintiff’s demand that defendants produce electronically stored employment records for 400 employees subject to defendants’ litigation hold. The court noted that the documents sought were not centrally located, were subject to intermittent change and would require numerous interviews to locate individual records. The court also noted that plaintiff had not addressed the Rule 26 proportionality principle or explained how the value of the proposed discovery outweighed its burden. 

Kleen Products does not stand alone. There have been other recent successes in the e-discovery arena where courts have highlighted proportionality issues:

  • In the first case formally approving the use of predictive coding,[5] the court quoted Rule 26(b)(2)(C) and pointed to predictive coding’s potential to expedite production and reduce costs.[6]
  • In a qui tam action alleging fraudulent billing, after discussing Rule 26(b)(2)(C), the court denied further discovery of emails, citing the extensive cost and volume of discovery already completed and the absence of any showing that the non-produced emails were “crucial.”[7]
  • In a defamation action, after weighing the plaintiff’s interest in the documents requested against the “not-inconsequential burden” of searching for and producing emails, the court limited further discovery to one of the thirty custodians requested by plaintiff.[8]

Institutionally, courts are increasingly turning to protocols and local rules that expressly reference proportionality principles – particularly in the e-discovery context. One of the most remarkable is the E-Discovery Model Order proposed by the E-Discovery Committee of the U.S. Court of Appeals for the Federal Circuit for use in patent cases across the country.[9]   The model order puts important safeguards in place before parties dive into wholesale email discovery:

  • allowing requests for production of emails only after the parties have exchanged initial disclosures and basic documentation;
  • limiting email requests to specific issues, rather than general ones;
  • limiting email requests to five custodians per producing party and five keyword search terms per custodian per party (that must be narrowly tailored to particular issues);
  • carving out metadata from ESI requests unless a party can make a showing of good cause; and
  • cost-shifting when a party serves email production requests beyond the limits agreed to by the parties or granted by the court.

Some courts have already begun applying that model order to discovery matters.[10]  While the model order is directed to patent cases, the issues that motivated the court to recommend it are far broader – e.g., disproportionately high discovery expenses, the potential for discovery abuse, and broad and expensive discovery not directed to core issues in the case.  Advocates should look to that order – and the reasons supporting its measured and tiered approach to email discovery – to seek broader application of its methodology. 

Other courts have crafted local rules or other protocols regarding ESI discovery that provide for, among other things, limitation of production of certain types of metadata and a very robust Rule 26(f) conference that anticipates active judicial involvement in discovery. Both the Maryland and Delaware Federal District Courts have embraced consideration of the criteria set forth in Rule 26(b)(2)(C) as part of any ESI plan.[11] The pilot project on e-discovery in the Seventh Circuit identifies proportionality as a principle of e-discovery and requires consideration of proportionality in early case assessments, discovery plans, and the scope of preservation obligations.[12]

While proportionality has taken root in some recent decisions, local rules and protocols, much work remains. Even in the cases cited here, where courts have given proportionality some concrete effect, these rulings only came after extensive discovery costing hundreds of thousands of dollars. Assessments of proportionality are, by their nature, case and fact specific, which limits their ability to address systemic problems plaguing civil litigation.  Defense and corporate counsel must insist on the meaningful application of proportionality in individual cases, but also work toward broader reforms that address these issues institutionally.  The Federation of Defense & Corporate Counsel is doing just that – along with Lawyers for Civil Justice and other defense groups. The FDCC has consistently advocated to the Civil Rules Advisory Committee for the U.S. Judicial Conference and others that systemic change is needed, including adoption of meaningful pleading standards, limiting the reach of discovery to claims and defenses, defining realistic and appropriate preservation obligations, and addressing discovery costs by adopting real cost-shifting in discovery to the requesting party. As to the latter, what better and more direct way to ensure proportionality – that discovery demands are aligned with their true value and cost – than to place the economic burden of such requests on the requesting party?


[1] See Fed. R. Civ. P. 26(b)(2)(C)(iii) and Fed. R. Civ. P. 26 advisory committee notes.

[2] In Re: Fannie Mae Sec. Litig., 552 F.3d 814, 816-18 (D.C. Cir. 2009).

[3] See, e.g., Ronald J. Hedges, A View from the Bench and the Trenches: A Critical Appraisal of Some Proposed Amendments to the Federal Rules of Civil Procedure, 227 F.R.D. 123, 127 (2005).

[4] C.A. No. 1:10-cv-05711, 2012 WL 4498465 (N.D. Ill. Sept. 28, 2012).

[5] In predictive coding, smaller sets of documents are reviewed by a group of attorneys with detailed knowledge of the facts and the case.  The work product from these reviews is used to train the predictive coding software to search the remaining unreviewed documents to identify additional responsive documents.  Unlike linear review, an attorney (contract or otherwise) does not review every document for a responsiveness determination, resulting in costs and time savings.

[6] See Da Silva Moore v. Publicis Groupe, No. 11-civ-1279, 2012 WL 607412 (S.D.N.Y. Feb. 24, 2012) (Peck, M. J.), aff’d by 2012 WL 1446534 (S.D.N.Y. April 26, 2012) (Carter, J.).  See also Global Aerospace Inc. v. Landow Aviation LP d/b/a Dulles Jet Center, No. CL 00061040‐00, slip op. (Va. Cir. Ct. Apr. 23, 2012) (Chamblin, J.) (ordering the use of predictive coding over plaintiff’s objection).

[7] U.S. ex rel McBride v. Halliburton Co., 272 F.R.D. 235, 239-241 (D.D.C. 2011).

[8] Willnerd v. Sybase, Inc., No. 1:09-cv-500, 2010 WL 4736295 (D. Id. Nov. 16, 2010).

[10] See, e.g., DCG Systems, Inc. v. Checkpoint Tech., LLC, No. C-11-0379, 2011 WL 5244356 (N.D. Cal. Nov. 2, 2011).

[11] See Suggested Protocol for Discovery of Electronically Stored Information, available at http://www.mdd.uscourts.gov/news/news/esiprotocol.pdf (D.Md.); see also Default Standard for Discovery, available at http://www.ded.uscourts.gov/sites/default/files/Chambers/SLR/Misc/EDiscov.pdf. (D. Del.)

[12] Seventh Circuit Electronic Discovery Committee, Principles Relating to the Discovery of Electronically Stored Information, available at http://www.discoverypilot.com/sites/default/files/Principles8_10.pdf.

 

Howard Merten is a Partner at Partridge Snow & Hahn LLP. He represents businesses, financial services institutions and individuals in complex civil litigation. Mr. Merten is a Director of the Federation of Defense & Corporate Counsel (FDCC), an organization comprised of preeminent leaders in the insurance and corporate defense bar. FDCC membership is selective and by invitation to those who have been judged by their peers to have achieved professional distinction. He is also President of the Defense Counsel of Rhode Island. Paul M. Kessimian is a Partner at the firm and concentrates his practice in representing clients in complex civil litigation. His cases include breach of contract, commercial, insurance, intellectual property, and real estate disputes at the trial and appellate levels. Mr. Kessimian is also Co-Chair of the ABA E-Discovery Subcommittee.

Please email the authors at hm@psh.com or pk@psh.com with questions about this article.