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Proportionality Demystified: How Organizations Can Get eDiscovery Right by Following Four Key Principles

Created: 17 Apr 2012 • 4 comments
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Talk to most any organization about legal issues and invariably the subject of eDiscovery will be raised. The skyrocketing costs and lengthy delays associated with data preservation and document review provide ample justification for organizations to be on the alert about eDiscovery. While these costs and delays tend to make the eDiscovery landscape appear bleak, a positive development on this front is emerging for organizations. That development is the emphasis that many courts are now placing on “proportionality” for addressing eDiscovery disputes.

Though initially embraced by only a few cognoscenti after 1983 and 2000 amendments to the Federal Rules of Civil Procedure (FRCP), proportionality standards are now being championed by various district and circuit courts. As more opinions are issued which analyze proportionality, several key principles are now becoming apparent in this developing body of jurisprudence. To better understand these principles, it is instructive to review some of the top proportionality cases issued this year and last. These cases provide a roadmap of best practices that, if followed, will help courts, clients and counsel reduce the costs and burdens connected with eDiscovery.

1. Discourage Unnecessary Discovery

Case: Bottoms v. Liberty Life Assur. Co. of Boston (D. Colo. Dec. 13, 2011)

Summary: The court dramatically curtailed the written discovery that plaintiff sought to propound on the defendant. Plaintiff had requested leave in this ERISA action to serve “sweeping” interrogatories and document requests to resolve the limited issue of whether the defendant had improperly denied her long term disability benefits. Drawing on the proportionality standards under Federal Rule 26(b)(2)(C), the court characterized the proposed discovery as “patently overbroad” and as seeking materials that were “largely irrelevant.” The court ultimately ordered the defendant to respond to some aspects of plaintiff’s interrogatories and document demands, but not before limiting their nature and scope.

Proportionality Principle No. 1: The Bottoms case emphasizes what courts have been advocating for years: that organizations should do away with unnecessary discovery. That does not mean “robotically recycling discovery requests propounded in earlier actions.” Instead, counsel must “stop and think” to ensure that its discovery is narrowly tailored in accordance with Rule 26(b)(2)(C). As Bottoms teaches, “the responsibility for conducting discovery in a reasonable, proportionate manner rests in the first instance with the parties and their attorneys.”

2. Encourage Reasonable Discovery Efforts

Case: Larsen v. Coldwell Banker Real Estate Corp. (C.D. Cal. Feb. 2, 2012)

Summary: In Larsen, the court rejected the plaintiffs’ assertion that the defendants should be made to redo their production of 9,000 pages of documents. The plaintiffs had argued that re-production of the documents was necessary to address certain discrepancies – including missing emails – in the production. The court disagreed, holding instead that plaintiffs had failed to establish that such discrepancies had “prevented them in any way from obtaining information relevant to a claim or defense under Fed.R.Civ.P. 26(b)(1).”

The court also reasoned that a “do over” would violate the principles of proportionality codified in Rule 26(b)(2)(C). After reciting the proportionality language from Rule 26 and referencing The Sedona Principles, the court determined that “the burden and expense to Defendants in completely reproducing its entire ESI production far outweighs any possible benefit to Plaintiffs.” There were too few discrepancies identified to justify the cost of redoing the production.

Proportionality Principle No. 2: The Larsen decision provides a simple reminder that organizations’ discovery efforts must be reasonable, not perfect. This reminder bears repeating as litigants frequently use eDiscovery sideshows to leverage lucrative settlements without having to address the merits of their claims or defenses. Such a practice, liked to a “cancerous growth” given its destructive nature, emphasizes that discovery devices should be used to “facilitate litigation rather than as weapons to wage litigation.” Calcor Space Facility, Inc. v. Superior Court, 53 Cal.App.4th 216, 221 (1997). Similar to the theme raised in our post regarding the predictive coding dispute in the Kleen Products case, principles of proportionality rightly emphasize the reasonable nature of parties’ obligations in discovery.

3. Discourage Dilatory Discovery Tactics

Case: Escamilla v. SMS Holdings Corporation (D. Minn. Oct. 21, 2011)

Summary: The court rejected an argument that proportionality standards should excuse the individual defendant from paying for additional discovery ordered by the court. The defendant essentially argued that Rule 26(b)(2)(C)(iii) foreclosed the ordered discovery given his limited financial resources. This position was unavailing, however, given that “the burden and expense of this discovery was self-inflicted by [the defendant].” As it turns out, the ordered discovery was necessary to address issues created in the litigation by the defendant’s failure to preserve relevant evidence. Moreover, there were no alternative means available for obtaining the sought-after materials. Given the unique nature of the evidence and the defendant’s misconduct, the court held that the “burden of the additional discovery [did] not outweigh its likely benefit.”

Proportionality Principle No. 3: The Escamilla decision reinforces a common refrain among proportionality cases: that proportionality is foreclosed to those parties who create their own burdens. Like the defense of unclean hands, proportionality essentially requires a litigant to approach the court with a clean slate of conduct in discovery. This is confirmed by The Sedona Conference Comment on Proportionality in Electronic Discovery, which declares that “[c]ourts should disregard any undue burden or expense that results from a responding party’s own conduct or delay.”

4. Encourage Better Information Governance Practices

Case: Salamone v. Carter’s Retail, Inc. (D.N.J. Jan. 28, 2011)

Summary: The court denied a motion for protective order that the defendant clothing retailer filed to stave off the collection and analysis of over 13,000 personnel files. The retailer had argued that proportionality precluded the search and review of the personnel files. In support of its argument, the retailer asserted that the nature, format, location and organization of the records made their review and production too burdensome: “ ‘the burden of production . . . outweigh[s] any benefit to plaintiffs’ considering the ‘disorganization of the information, the lack of accessible format, the significant amount of labor and costs involved, and defendant’s management structure’.”

In rejecting the retailer’s position, the court criticized its information retention system as the culprit for its burdens. That the retailer, the court reasoned, “maintains personnel files in several locations without any uniform organizational method,” does not exempt Defendant from reasonable discovery obligations.” After weighing the various factors that comprise the proportionality analysis under Rule 26(b)(2)(C), the court concluded that the probative value of production outweighed the resulting burden and expense on the retailer.

Proportionality Principle No. 4: Having an intelligent information governance process in place could have addressed the cost and logistics headaches that the retailer faced. Had the records at issue been digitized and maintained in a central archive, the retailer’s collection burdens would have been significantly minimized. Furthermore, integrating these “upstream” data retention protocols with “downstream” eDiscovery processes could have expedited the review process. The Salamone case teaches that an integrated information governance process, supported by effective, enabling technologies, will likely help organizations reach the objectives of proportionality by reducing the extent of discovery burdens and making them more commensurate with the demands of litigation.

Conclusion

The foregoing cases exemplify how proportionality principles can help lawyers and litigants conduct eDiscovery in an efficient and cost effective manner. And by faithfully observing these standards, courts, clients and counsel can better follow the mandate from Federal Rule 1 “to secure the just, speedy, and inexpensive determination of every action and proceeding.”

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