Throughout the course of a day, everyone is presented with choices. As a result, subconsciously each one of us performs multiple cost-benefit analyses every day. Go for a run or sit on the couch? Take the stairs or the take the elevator? We continuously weigh the pros versus the cons when making decisions.
This same kind of cost-benefit analysis is conducted by courts, which is called a proportionality analysis. Under Federal Rules of Civil Procedure (FRCP) 26(b)(1), “A court may limit discovery of relevant material if it determines that the…burden or expense of the proposed discovery outweighs the likely benefit."
The Benefit: “The likelihood that the discovery will uncover relevant information, and the potential value of that information in resolving the issues in the case."
The Burden/Expense: The cost burden resulting from discovery, “particularly the total cost of the production compared to the amount in controversy, and…the resources available to each party."
In an era of rising e-discovery costs and growing volumes of electronically stored information (ESI)), in-house legal teams are afforded a great opportunity – the ability to argue for reasonable e-discovery parameters, which can consequently reduce legal spend by shifting or sharing costs with the opposing party. For example in Connecticut General Life Insurance Company v. Earl Scheib (S.D. Ca. Feb. 6, 2013), the defendant, Earl Schieb, successfully argued for limited e-discovery parameters by proving that additional productions would be “unduly burdensome," saving him more than $120,000 in e-discovery costs.
In Connecticut General Life Insurance, a discovery dispute arose around the defendant's supplemental responses to the plaintiff's, Connecticut General Life Insurance, additional production requests of 219 GB of emails. The defendant objected to the plaintiff's requests for production because the cost of the production, when considered against the amount in controversy within the case, rendered production “unduly burdensome." The defendant produced documentation to the court showing cost breakdowns for searching and producing the requested ESI, along with other cost estimates for alternative search parameters based on the plaintiff's discovery requests.
To fully produce 219 GB of emails from 19 different email accounts, the defendant provided documentation that it would cost over $121,000 to index, filter and process the information, exceeding the amount at stake in the case (Note: This cost estimate did not include project management or attorney review costs.)
Based on the documentation and metrics produced by the defendant, the court ruled for the defendant, stating, “The Court will not order Defendant to absorb the incredible expense associated with responding to these five RFPs (requests for production), especially when Defendant has been working to produce documents and information in response to Plaintiff's various other discovery requests." The court found the e-discovery cost projections as “persuasive, credible, and reliable," which proved that the cost of producing the requested emails “far exceeds what is at stake in the instant litigation, and therefore, the Court concludes the requests are unduly burdensome." Even though the court noted that the plaintiff requests may be helpful, the fact that the plaintiff will and already had received a significant amount of ESI from the defendants, combined with the high costs of producing the plaintiff's additional ESI heavily favored the court siding with the defendant.
The court did leave the plaintiff the option to fund the costs for additional e-discovery themselves.
THE E-DISCOVERY BEAT'S TAKE
“The purpose of this rule of proportionality is to guard against redundant or disproportionate discovery by giving the court authority to reduce the amount of discovery that may be directed to matters that are otherwise proper subjects of inquiry." – United States District Court, S.D. California
Remember FRCP 1, the court's first goal is to “secure the just, speedy, and inexpensive determination of every action and proceeding." With the advent of digital information, no longer will courts allow parties to put their counterparts on expensive, time-consuming fishing expeditions for thousands to millions of documents. There is just too much ESI out there.
As evidenced in Connecticut General Life Insurance, courts won't hesitate to reject a requesting party's attempts to pursue overly burdensome e-discovery production requests. The creation of proportional, reasonable e-discovery parameters is essential under the FRCP. This judicial embrace of proportionality has incentivized parties, especially the producing ones, to generate e-discovery metrics that back up their arguments for a narrower scope of e-discovery. Parties can achieve this by employing advanced technologies, such as in-place early case assessment and predictive intelligence, to quickly search their own databases and develop defensible data culling processes that identify sufficient, but not over-inclusive, production parameters that comply with the cost-benefit, proportionality test under FRCP 26(b)(2)(c).
By utilizing technology that empowers organizations to project e-discovery costs before collection and processing, in-house legal teams will have the necessary evidence to prove to the court that a production request is overly burdensome, like the defendants did in Connecticut General Life Insurance. Analyzing ESI before agreeing to or actually collecting, processing and producing ESI offers a proactive, smart approach to reduce the costs and risks in e-discovery.
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 Google+, Twitter and Linkedin.