|Is Limiting the Number of Custodians a New Trend?|
By Paul Herrmann
In September of 2011 the Federal Court issued a Model Order that placed significant limits on eDiscovery in patent cases.
The intent of the Model Order is to reduce the costs of discovery in patent cases by establishing limits on the number of email custodians and number of search terms used to locate responsive emails. These limits may be changed by agreement of the parties or by petitioning the court (with the risk of cost shifting to the requesting party).
In the Model Order, email requests must be propounded for specific issues and not general discovery. Many believe that the value of email evidence in patent cases is relatively low compared to its high cost of production. The Model Order limits email production requests to five custodians and five search terms per producing party.
The Model Order also provides a protection preventing use of inadvertent production of privileged ESI.
In DCG Systems, Inc. v. Checkpoint Technologies, LLC, No. C-11-03792 PSG (N.D. Cal. Nov. 2, 2011) a patent infringement suit between two competing companies, the court upheld the Model Order despite arguments that there was no imbalance between the parties in discovery capability. The court referred to a study representing that only .0074% of documents produced in similar cases actually became exhibits at trial and that elimination of the costs associated with the disparity was the purpose of the Model Order.
Opinion of an eDiscovery Service Provider:
Perhaps patent cases are a different animal where email is rarely a deciding factor. From my perspective however. the expansion of the Model Order’s form of cost reduction to areas of practice where emails are essential to determining the facts would be ill-advised.
There is no question that eDiscovery can be an expensive aspect of litigation. However, the costs are coming down. As technology has evolved so have early case assessment, processing, search and review tools. Where once many parts of the process had to be completed manually, they now are integrated into a single work flow. We now process ESI twice as efficiently as we did three years ago.
Another aspect courts should bear in mind is that trial statistics do not necessarily reflect the majority of cases that settle because e-discovery worked properly and the facts uncovered by the process turn out to be compelling.
In one case where we provided eDiscovery services, an overnight security guard was found incoherent and bleeding. The man suffered permanent brain injury preventing him from working. The company claimed he was likely the victim of a mugging. It would have been easy for the court to leave it there instead of permitting eDiscovery. Only through extensive discovery was a single document uncovered identifying that a roll had fallen from a shelf and struck the man in the head. The document discussed informing OSHA and asked “who goes to jail” for covering-up the situation? This case settled, and the individual was justly compensated for his life-long disability.
Some have pointed to the fact that only .0074% of produced material makes its way into a trial exhibit as evidence of the inefficiency of the process. I believe that this has more to do with two other factors: old school data dumping and the sometimes severe sanctions for failure to produce specific items. With today’s technology, data dumping is a mistake as we have methods to quickly identify the wheat from the chaff.
In practice, the winnowing down of ESI that actually makes it into a trial exhibit is a good thing, not a bad thing. Would the court actually have been happier to see 80% of produced ESI (potentially thousands of documents) in trial exhibits instead of .0074%?
For areas of practice where email is essential to determining the facts in the matter, how do you realistically go about selecting five custodians? What if you select the CFO and it later turns out she doesn’t retain any email herself? Perhaps you would have been better off selecting her administrator as one of your five custodians.
Without requiring parties to divulge some level of information concerning the quantity and quality of ESI held by custodians, the selection of custodians is a “crap shoot”. As we saw in the example above, sometimes the smoking gun that determines the outcome of a case has been deleted from the archives of the key players and only shows up as a CC in the files of a peripheral player.
The idea that somehow counsel has magical insight into how relevant information is managed in an opposing party’s infrastructure is misguided. I’m not suggesting overly-broad fishing exhibitions; far from it. Instead I am suggesting that the FRCP’s approach to requiring meet and confers and the development of an e-discovery plan is a better way to reduce cost.
We frequently find ourselves providing services without a defined, stipulated or ordered eDiscovery plan. By our estimate, based on cases we have been involved in, an eDiscovery plan reduces cost by 25-40%. The reason is simple – rework. Often decisions are made unilaterally, collections and productions are made, motions filed, and then the parameters are renegotiated. The result is that the process starts again with augmented collections, processing, searching, review and production.
I hold that the early development of an eDiscovery plan allows parties to exchange enough information to limit scope and cost appropriate to the specific matter, or in the absence of agreement, submit only the areas in dispute to the court for resolution.
The Delaware Chancellery Court’s recently released guidelines on the preservation of ESI, repeated the theme of the FRCP with the creation of an agreed preservation plan. The court even noted that the parties could agree to forego eDiscovery completely if they so chose.
By focusing the burden on counsels to agree and submit a plan, the court can better assess the need to reduce (or expand) scope in an effort to reduce costs, without requiring a one-size fits all approach.
The problem with the eDiscovery plan development approach has always been that some parties continue to apply a scorched earth approach to eDiscovery leaving no room for negotiation or exchange of information in a meet and confer, let alone the development of an e-discovery plan.
In my opinion “cooperation” is the area the court should focus if it wants to reduce cost. The lack of cooperation between parties ultimately unduly increases costs. The court can significantly reduce e-discovery cost by insisting parties cooperate and by addressing poor cooperation i.e. sanctioning poor cooperation or assigning a special master or discovery master to mediate.
Is limiting the number of custodians in eDiscovery appropriate in all cases? Will the Model Order expand into other areas of practice? Time will tell.