During the past decade, the discovery of electronically stored information (ESI) has come to the forefront of litigation. In particular, e-Discovery has created significant challenges in product liability actions where plaintiffs can seek tremendous volumes of ESI while having virtually no document production burdens of their own. Perhaps some plaintiffs are truly seeking that one kernel of critical information (the proverbial “smoking gun”) that can support their allegations. But as in cases with asymmetric discovery, it seems that broad demands for ESI are made for the purpose of driving up defense costs, thereby increasing settlement values.
The legal community has learned the hard lesson that discovery costs must be controlled. This is apparent when considering the recent movement to bring uniformity to the imposition of spoliation sanctions, the greater focus placed by courts on limiting discovery costs through proportionality and the innovative use of e-mediators to resolve discovery disputes.
Proposed Rule 37(e)
This past summer The Judicial Conference Advisory Committees on Bankruptcy and Civil Rules proposed amendments to a number of Federal Rules of Civil Procedure. Notably, this includes a proposed revision to Rule 37(e). A recent Wilson Elser e-Discovery alert provides a great overview of the proposed revision and explains that:
Many potential litigants have been aggressive in their preservation of electronically stored information (ESI) to diminish the risk of spoliation sanctions – a risk driven by courts that have imposed sanctions with little or no showing of either intent to destroy ESI or prejudice to the opposing party. [Under the proposed rule] spoliation sanctions can only be imposed based on findings that the party’s actions (1) caused substantial prejudice and were willful or in bad faith or (2) irreparably deprived a party of any meaningful opportunity to present or defend against the claims in the litigation.
Of course, it’s difficult if not impossible to quantify costs related to the “expensive over-preservation” that seems necessary under current Rule 37(e). However, should the proposed rule be implemented, it will bring about uniformity in the imposition of sanctions and hopefully with it a reduction in over preservation for the purpose of simply avoiding possible sanctions.
Application of Principles of Proportionality
The Northern District of Indiana recently applied the proportionality standard of Rule 26(b) in the multidistrict products liability matter In re: Biomet M2a Magnum Hip Implant Products Liability Litigation. The court addressed plaintiffs’ objection to the defendant’s use of both traditional keywords and predictive coding (i.e., computer-generated relevancy rankings) to reduce the scope of documents requiring manual review. The court explained as follows:
“[T]he [plaintiffs’] Steering Committee’s request that Biomet go back to Square One … and institute predictive coding at that earlier stage sits uneasily with the proportionality standard in Rule 26(b)(2)(C). Doing so would entail a cost in the low seven figures.”
Despite the fact that some relevant documents would likely slip through the cracks with defendant’s proposed document review methodology, the court simply refused to order further discovery efforts where the cost would be significant and not outweighed by the likely benefits.
Use of Mediators in e-Discovery Issues
An evolving trend in significant e-Discovery disputes is the designation of a mediator or special master for the specific purpose of resolving e-Discovery issues. The Seventh Circuit’s Electronic Discovery Pilot Program recently created an e-Mediation program intended to assist judges and litigants who lack the resources and expertise to resolve electronic discovery disputes. While the program is not limited to a specific type of litigation, it is further representative of the growing movement to minimize discovery costs and prevent e-Discovery issues from overshadowing the merits of a lawsuit.
The playing field in litigation involving asymmetric discovery, particularly regarding products liability matters, is certainly not level, but it’s slowly heading in that direction. The use of e-Discovery mediation, the application of proportionality principles and perhaps the implementation of Proposed Rule 37(e), are just a few of the avenues by which products defendants can reduce their discovery expenses.
Update: The Judicial Conference Committee on Rules of Practice and Procedure approved a revision to Rule 37(e) in May 2014. As noted in our firm’s white paper, A Guide to ESI Preservation Responsibilities, the approved revision, which appears likely to become effective in December 2015, has been amended to permit sanctions for the loss of ESI that are “no greater than necessary to cure the prejudice.” Only where a party acts with “intent to deprive another party of the information’s use in the litigation” would a court be permitted to impose an adverse inference or other severe sanction. As with the originally proposed revision, should this language be implemented it would still likely bring a degree of uniformity to the imposition of sanctions and hopefully with it a reduction in over preservation.