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Controlling E-Discovery Spending Sprees: Will the courts put a stop to the madness?!

Created on April 4, 2012

Vice President, E-Discovery


Electronic discovery is expensive. Identifying, collecting, processing, analyzing and finally producing electronically stored information (ESI) to opposing counsel is time consuming and resource intensive. Besides the costs of producing data, expenses are multiplied by the current adversarial nature of litigation. “In some cases discovery becomes a tool with which to bludgeon the other side into submission," wrote Judge Joe Brown in a recent ruling. “Rather than monitoring and moderating the process," parties are in many cases simply “throwing gasoline on the fire."

Judge Brown's pointed rebuke was in response to Lubber, Inc. vs. Optari LLC (M.D. Tenn. Mar. 15, 2012). In this all-too-familiar, “tit-for-tat" discovery dispute, the defendants, Optari, motioned for a protective order to restrict the discovery parameters to a time interval between October 4, 2010, and February 8, 2011, or require that the plaintiff, Lubber, Inc., foot the bill. The defendants justified the motion based on two factors:

(1) A prior settlement between the parties

(2) Testimony by the president of the Plaintiff

Both of these factors inferred that the plaintiff would have a restricted time period from which to recover damages.

E-Discovery costs are usually borne by the producing party. Because of the adversarial nature of litigation, this methodology has led to a troubling trend causing requesting parties to act like kids in a candy shop, leaving the requesting party with as Judge Brown stated, "little incentive not to ask for everything possible." As a result overly broad production requests are made. But when costs are shifted to the requesting party, “the amount of material requested drops significantly." Based on this reasoning and within the power invested in him under FRCP 26(b)(2)(C)(in which judges are given “great deal of latitude in controlling discovery") Judge Brown denied the defendants motion and ordered that each party split the costs of future discovery productions. He expressed amazement over the “amount of money that both sides are spending on a case in which neither the claims nor counterclaims are likely to be worth the legal fees" and observed that the “parties have shown little effort to resolve this matter on their own."

Lubber, Inc. v. Optari LLC is a spot on example of the reality of high stakes litigation in today's legal climate. As much as legal experts preach the importance of cooperation, the real culture change will occur as more judges follow the lead of Judge Brown and wield their considerable power to control the pre-litigation bullying and spending sprees that take place over e-discovery.

Fortunately, Judge Brown is not alone in condemning this type of behavior. Several state and federal courts (7th U.S. Circuit Court of Appeals, Western District of Pennsylvania, Southern District of New York, Eastern District of Texas) have adopted pilot programs or rules based around controlling the out-of-control costs and breadth of e-discovery requests. As judges continue to place the validity of e-discovery requests under a closer microscope, litigants are becoming more incentivized to gain a better handle of the ESI they possess. This includes the identification of key custodians, date ranges and data volumes at the very outset of a matter and being prepared to deliver that information to opposing counsel and the judge. If Judge Brown's ruling is any indication of what lay ahead, the era of baseless e-discovery requests could be drastically curtailed.

Mike Hamilton, J.D. is a Sr. E-Discovery Analyst at Exterro, Inc., focusing on educating Exterro customers, prospects and industry experts on how to solve e-discovery issues proactively with technology. His e-discovery knowledge, legal acumen and practical experience give him a valuable perspective on bridging the gap between IT and legal teams. You can find him on Twitter and Linkedin.