Published on Dec 30, 2013 2013 was an exciting year in law; George Zimmernam, Whitey Bulger, and Jodi Arias all went on trial. We saw developments in case law about cost shifting, predictive coding and sanctions, the publication of the proposed rule changes to the Federal Rules of Civil Procedure (“FRCP”) and the opening of the comment period, and law and ESI vendors redefine their roles in the eDiscovery industry. This article is an overview of 2013’s five biggest topics in ESI and eDiscovery.
Predicative Coding Goes Big
We all know that predictive coding garnered a lot of attention in 2012, but this year it gained even more credibility. In 2013, the Supreme Court finally ended all things Da Silva Moore by denying cert. Litigants challenged the usage of Boolean searching as inadequate compared to TAR, while algorithms, latent semantic indexing, recall, seed sets, precision, and other TAR terms all further made their way into litigators’ vocabularies. This year’s cases showcase a trend that predictive coding is gaining favor with the judiciary, and that there is more than one way to skin a cat with data analytics. As more plaintiffs, defendants, and even judges ask for and use predicative coding, I expect to see even new twists in its implementation.
In Hinterberger v. Catholic Health Sys., 2013 WL 2250603 (W.D.N.Y. May 21, 2013) we saw the suggestion of coding come from the bench. Frustrated, the parties could not come to an agreement on keyword searching methodologies, and Judge Foschio encouraged them to look at Da Silva Moore and the “availability of predictive coding.” They eventually came to an agreement to use coding and conduct meetings with each other, and their consultants, about how it would best be implemented into the discovery process. In the future judges may more often look to coding as a way to end drawn out disputes about ESI and make parties work together to figure out the best approach for their discovery needs.
In the In re: Biomet M2a Magnum Hip Implant Products Liability Litigation, No. 3:12-MD-2391 (N.D. Ind. Apr. 18, 2013) Litigation, the court approved a multimodal approach to, and showed a faint sign of favoring, predictive coding. In Biomet, defendants culled ESI with a keyword search and then used coding software to sort through the remaining document universe. Plaintiffs argued that defendants had not met their burden of production because they used keyword searches, not coding, to cull their initial set of documents, and wanted production started again with coding used from the beginning the process. The court ruled in favor of the defendants, based on proportionality considerations (defendants had already spent over $1 million and forecasted that re-doing production would cost at least $2 million more). However, the court may have tacitly endorsed the use of predictive coding when it stated that if plaintiffs wanted “production of documents that can be indentified only through re-commenced processing, predictive coding, review, and production [they] w[ould] have to bear the expense.” Id. I expect multimodal approaches to become more popular as more plaintiffs and defendants ask for and use predictive coding in their productions.
Race Tires Gains Traction: Limited § 1920 Cost Shifting
Race Tires v. Hoosier Racing Tire Corp 674 F.3d 158 (3rd Cir. 2012) maybe almost two years old, but we still have plenty of disputes about what costs can be taxed. In the sprint to become the leading model for § 1920 cost shifting, the narrow recovery approach from Race Tires gained another supporter with the recent Fourth Circuit decision. The narrow view tends to tax only those costs that can be directly compared to making copies of the information while the broad recovery approach, taken in the Federal Circuit in 2011 and Northern District of California, can include awards for collecting, reviewing, and determining relevance. (See, e.g., eBay Inc. v. Kelora Sys., LLC, 2013 WL 1402736 (N.D. Cal. Apr. 5, 2013) for an example and explanation of a broad view approach.) In a 2013 case, the Fourth Circuit fell in behind the Third Circuit’s lead from Race Tires in Country Vintner of N. Carolina, LLC v. E. & J. Gallo Winery, Inc., 718 F.3d 249 (4th Cir. 2013), paving the way for the narrow approach to become the leader down the stretch.
In Country Vintner, the court found that ESI processing fees (culling, deduplication, scrubbing metadata, etc.) that lead to production will not be recoverable under § 1920, and only those costs that meet the “narrow reading to the cost statute” will be considered taxable costs (i.e. making TIFF or PDF copies). Id. However, in a footnote to the decision the court noted that if “a case directly or indirectly required production of ESI-unique information such as metadata, we assume, without deciding, that taxable costs would include any technical processes necessary to copy ESI in a format that includes such information.” Id. Although the broad view still remains in certain districts, Race Tires appears to be gaining traction in courts as the standard for ESI copying taxes.
Changes to the FRCP
This year, the proposed ESI amendments to the FRCP were made available for public comment. The Committee on Rules of Practice and Procedure hopes the new rules will lead to “increased cooperation; proportionality in using procedural tools, most particularly discovery; and early, active judicial case management.” (Available at: http://www.regulations.gov/#!documentDetail;D=USC-RULES-CV-2013-0002-0001) Much has been made about the changes to rules; as of December 15, 2013, the committee had received 376 comments. The comment period for the proposed changes closes on February 15, 2014.
As an example of the intensity of just one of the debates, we’ll highlight the new safe harbor in Rule 37(e). On the opening day of the comment period Judge Schiendlin of the SDNY made her voice heard, not in a comment to the Committee, but in an opinion. In footnote 51 of the Sekisui Am. Corp. v. Hart, No. 12 Civ. 3479(SAS)(FM), 2013 WL 2951924 (S.D.N.Y. Jun. 10, 2013) opinion, she found flaw in the proposed rule’s safe harbor that would require an innocent party to prove prejudice from spoliated evidence in order to obtain a sanction. Opponents feel the larger harbor is needed because it will allow courts to focus on the merits of the litigation rather than finer details of litigants’ discovery processes. Check out the comments for a lively debate, and remember 37(e) is only one of the proposed changes.
Sanction Uncertainty
In ESI litigation, the big picture has always been about sanctions and money. That’s why we sit up and take notice when opinions like Sekisui and In re Pradaxa Products Liability Litigation, No. 3:12-MD-02385, S.D. Ill. Sept. 25, 2013) give us judicial insight, and espouse different standards of culpability on what conduct will and will not be sanctionable. Unfortunately, the below opinions highlight the problem of different standards in different districts. Even if the new rules, as proposed, are adopted, there will be litigation before a uniform approach is applied in all districts. Regardless, expect everyone to keep an eye on sanctions next year, the year after that, and the year after that. Actually, expect this to be a trend every year for the foreseeable future.
In Sekisui, in the Southern District of New York, the magistrate judge declined to sanction a party that “willfully” deleted data due to gross negligence, rather than bad faith. Judge Scheindlin reversed, and ordered an adverse inference as a sanction, finding that gross negligence satisfies the “willful” culpability requirement.
However, in Pradaxa in the Southern District of Illinois, Judge Herndon refused to grant a request for sanctions and reaffirmed the courts’ stance of not granting sanctions absent a showing of bad faith.
The trend has come under increased scrutiny from the legal community with the proposal of the new rules (see above). Proponents of a new Rule 37(e) argue that it will standardize the culpability requirement, centralize the sanctioning power of the court for spoliation of discoverable information in the rule (not just ESI), and stop the judicial end-around of courts using their inherent authority to sanction. Others argue that keeping a Sylvestri exception (an exception that allows judges to impose sanctions on a party for spoliation of evidence that causes an “irreparable deprivation” of the other parties ability to present a case) and leaving the rule reading as “willful or in bad faith” instead of “willful and in bad faith” leaves too much room for judicial interpretation. They argue that willful, without bad faith attached, could be interpreted broadly and together with the Sylvestri exception could swallow the rule. This would do nothing to end the uncertainty about what conduct will and will not be sanctionable in different districts. Check out all the comments for arguments for, against, and in favor of totally different rules at http://www.regulations.gov/#!docketDetail;D=USC-RULES-CV-2013-0002 .
Rise of the Vendors
This was a big year for eDiscovery vendors. General counsel were not afraid to go around outside counsel and form direct relationships with vendors. The trend was spotlighted in the ABA Journal’s article “Who’s Eating Law Firms’ Lunch?” The article highlighted the value-added philosophy of ESI vendors, and decline in law firm revenues from eDiscovery. (The full article is accessible using the link below.) With a new wave of efficiency poised to hit the legal market in the forms of better algorithms and coding software, can we expect this trend to continue? How will firms fight back? Look for more discussion on this in my article predicting the trends of 2014, but expect everyone to find new ways to utilize vendors, software and big data in order to add more value for their clients.
http://www.abajournal.com/magazine/article/whos_eating_law_firms_lunch
Summary
In summary, there were a lot of changes in 2013, some surprising and some not. We expect 2014 to be yet another year of change in this fast moving industry, where the rules are still being set.
Please check in next week when we will be writing on what to expect in 2014.
