Party Relieved from Estimated 95-Million-Page Review
By Brian A. Zemil, Litigation News Associate Editor – January 27, 2012
The U.S. District Court for the District of New Jersey affirmed a magistrate judge’s order relieving a plaintiff of its agreement to produce documents identified as part of a forensic examination of its computer network, servers, and related storage devices—a search that yielded nearly 65 million hits from the unallocated space, e.g., deleted files and temporary data. I-Med Pharma, Inc. v. Biomatrix, Inc. Commenting that the plaintiff “should have known better,” the court concluded that, under the proportionality rule of 26(b)(2)(C), the expense of reviewing those documents was not warranted by the unsubstantiated possibility that the documents would provide undisclosed evidence to the defendants.
The plaintiff, biotechnology firm I-Med Pharma, Inc., alleged breaches of exclusive distribution contracts by the defendants, Biomatrix, Inc., Genzyme Corporation, and Genzyme Biosurgery. The defendants are other biotechnology companies that manufacture medicines and medical devices. During discovery, the defendants argued that I-Med had not preserved critical documents and pressed for a forensic inspection of I-Med’s computer system to recover inaccessible deleted data. By stipulated order, the parties agreed that I-Med would produce, subject to a privilege review, the results of a forensic examination of I-Med’s computer system without limiting that search to specific custodians, time periods, metadata fields, or user-generated files.
The 58 search terms—which included “profit*,” “loss,” and “FDA”—were run on both allocated (active) and unallocated space. The expert’s search in the unallocated space alone registered nearly 65 million hits. “Experienced and competent counsel should have known that a list of over fifty search terms, applied across a corporate party’s entire computer network and without date limitations or limitations by custodian, would be likely to lead to an unwieldy volume of responsive documents,” maintains John D. Rue, New York City, cochair of the ABA Section of Litigation’s Electronic Discovery Subcommittee for the Pretrial Practice and Discovery Committee.
Balking at reviewing the estimated 95 million pages of documents from the unallocated space on which those nearly 65 million hits occurred, I-Med sought relief from the magistrate judge’s stipulated order. Magistrate Judge Michael A. Shipp excused I-Med from the discovery stipulation, focusing on the considerable costs associated with a review, the defendants’ failure to support their accusations of spoliation, and the likelihood that the documents at issue would be inadmissible at trial because a substantial portion of the data was unintelligible.
Magistrate Judge’s Order “Doubtlessly Proper”
The defendants objected, under Rule 72(a), to Magistrate Judge Shipp’s finding of good cause to modify the original discovery order, arguing that he improperly applied the “undue burden” standard applicable to discovery disputes under Rule 26(b)(2)(C) instead of the “exceptional circumstances” and “manifest injustice” standards that govern relief from stipulations. Judge Dickinson R. Debevoise affirmed the magistrate judge’s order, finding it “doubtlessly proper,” ruling that the magistrate judge had applied the correct legal standard, and reaffirming the magistrate judge’s role in ensuring reasonable discovery.
Judge Debevoise additionally ruled that the magistrate judge’s order met the heightened standard advocated by the defendants. “Discovery stipulations should be binding, but not so much so that one side can play ‘gotcha’ with the other to the tune of millions of dollars in wasted discovery expenses. Ultimately, FRCP 1 has to control,” says Rue.
The Court’s Order Offers Lessons to All Litigators
The district court’s characterization of the plaintiff’s “carelessness” and “inattention” regarding the stipulated e-discovery search terms has implications beyond the I-Med case. The parties’ search terms were “extremely broad, but this case represents a larger lesson: Be sure you fully understand an agreement before you enter it,” observes Ian H. Fisher, Chicago, cochair of the Section of Litigation’s Pretrial Practice and Discovery Committee.
“Some early due diligence, including sampling and, possibly, working with a technical expert, would have allowed the plaintiff’s attorneys to avoid the mistake,” further explains Fisher. “In today’s modern e-discovery practice, preparedness by using a forensic specialist is necessary to properly and zealously represent your client,” adds Joan K. Archer, Kansas City, MO, cochair of the Section’s Pretrial Practice and Discovery Committee.
Cooperation Is Key to Avoid Costly and Unnecessary E-Discovery
“The key here is cooperation. The dispute may have been the result of the defendants’ lawyers having caught the plaintiff’s lawyers in a mistake, and then pressing for every advantage, without sufficientconsideration of the benefit to the litigation of full performance of the literal terms of the stipulation. This situation could have been avoided by adopting meaningful stipulations at the 26(f) conference governing all discovery, e.g., incorporating by reference the provisions of the Seventh Circuit’s pilot e-discovery protocol, which, for example, creates a presumption that deleted files are not relevant,” explains Rue. Rue believes that “while this is an understandable overemphasis on zealous advocacy at the expense of cooperation, the court here resolved the issue correctly in light of the proportionality provisions of Rule 26(b)(2)(C).”
Some believe the decision is an example of overzealous advocacy. “The mere fact that plaintiff may haveentered into an ill-advised stipulation to broad search terms is an insufficient basis to require the Hobson’s choice between the waste of resources necessary to do a privilege review, or the risk of waiver. This is especially true where, as here, there appears to have been no showing that the documents are relevant, and an affirmative finding that they are unlikely to be admissible. Between the lines, the court may suspect the defendants of merely demanding that plaintiff fulfill the letter of the stipulation as a means of inflicting discovery pain, perhaps in order to exert settlement pressure,” observes Rue. “Underneath the undue burden relief valve is the belief that justice can be obtained on substantive issues and not the parties’ maneuverings,” says Archer.
Keywords: document review, Rule 26, FRCP 1, e-discovery
- » I-Med Pharma Inc., v Biomatrix, Inc., et al., Case No: 03-CV-3677, 2011 U.S. Dist. Lexis 141614 (D.N.J. Dec. 9, 2011).
- » Genger v. TR Investors, LLC, No. 572, 2010 (Del., July 18, 2011) (discussing unallocated space on a computer’s hard drive, how that unallocated space is affected by the deletion of documents, and how unallocated space interfaces with a duty to preserve electronically stored information).
- » iWitness: Reigning in Discovery by U.S. Magistrate Judge Geraldine Soat Brown discussing how to rein in the “e-discovery beast” and its expensive costs.
- » The Sedona Conference Cooperation Proclamation discussing ways to cooperate with opposing counsel in designing search terms to be used to produce electronically stored information.