Julie Andrews Still Photo From The Sound of Music

Update (October 22, 2018): Long-time Minnesota Litigator readers will remember our TAAFOMFT series (which stands for “These are a few of my favorite things,” a sarcastic preface to posts about things we hate).

One of our favorite things (not) which we know we share with an enormous number of civil litigators, judges, and parties to civil litigation in the United States and beyond is e-discovery.

Party A gets into a dispute Party B and, because of the complexity and volume of ESI (electronically stored information), the two find themselves (or, more accurately, their money) sucked into an all consuming vortex so that “the dispute” pales in destructiveness when compared with the meta-disputes over ESI. (The disgust increases exponentially, of course, when it involves multiple parties and non-parties.)

And who pays for that? This is the subject of our earlier post, below.

Is there any recourse when the tail starts wagging the dog, when litigation costs due to ESI demands are blown out of proportion by one side (particularly in a case (or for a defense) that is eventually deemed to have been without merit)?

Fortunately for LEVENTHAL pllc and its clients, who tend to be small businesses and individuals represented by at least one reasonable lawyer (most of the time), ESI generally plays a very small part of their expenses. The lawyers tend to appreciate and respect the notion of “proportionality.”

But even relatively small litigants represented by reasonable lawyers might find themselves sucked into the all-consuming vortex. What then?

A company called East Coast Test Prep (d/b/a Achieve Test Prep (“ATP”)) brought a lawsuit against a web-site, allnurses.com, to fight anonymous criticism and unflattering statements about ATP in comments on the allnurses website.

After jumping over many time-consuming and expensive procedural hurdles, Defendants were able to get ATP’s lawsuit dismissed. (It is now on appeal to the U.S. Court of Appeals for the Eighth Circuit.)

And now the principal Defendants seek award of their substantial e-discovery expenses from Plaintiff ATP. Here is ATP’s response.

This may be a close question.

What ESI measures are “reasonable” for one party to impose on another? If the costs spiral out of control, whose fault is that?

If only from the point of view of trying to ensure “best practices” by civil litigants, we hope that courts will, at least in some cases, shift e-discovery costs.

When civil litigation gives parties a potentially devastating weapon (e.g., broad rights of discovery), courts need to hold parties (and/or their lawyers) responsible for misuse. Otherwise, the justice system itself becomes an accelerant rather than a retardant for civil litigation combat.

Update (March 2, 2016) (under the headline: TAAFOMFT, v. 2.0 (rev. 2): E-Discovery = E-Disgustery (You Are Entitled to All Your Costs If You Win! But not really.): Imagine that your company is sued based on a claim that a product your company provided for a construction project contained “foreign object debris” (“FOD”) and the FOD caused $30 million in project owner’s damages. Now imagine the claims fail and you win judgment in the case. As the prevailing party, you are entitled to your “costs” by federal statute.

“A prevailing party is presumptively entitled to recovery of all its costs.” 168th & Dodge, LP v. Rave Reviews Cinemas, LLC, 501 F.3d 945, 958 (8th Cir. 2007) (emphasis added). Yay! But wait. First, as all civil litigators know, “attorneys’ fees” are not part of “costs” so what a layperson might consider the big-ticket “cost” is not a “cost” at all as far as the cost-award statute is concerned.

Now be ready to be really disappointed and confused (if you aren’t already). When it comes to the e-discovery, our courts adopt a narrow view. “[S]canning documents and converting computer data into readable format constitute copying within the meaning of section 1920(4) [(the cost recovery statute)], but…costs associated with storing electronically stored information, or ESI, are not recoverable.” These costs can exceed $100,000 (and they did in the linked case). On the bright side:

To the extent e-discovery costs represent the conversion of native files to TIFF, the scanning of documents to create digital duplicates, and the conversion of VHS recordings to DVD format, such costs are taxable under §1920(4).

But, citing and quoting a Seventh Circuit case, Sr. U.S. District Court Judge Michael J. Davis recently pointed out:

Although there may be strong policy reasons in general, or compelling equitable circumstances in a particular case, to award the full costs of electronic discovery to the prevailing party, the federal courts lack the authority to do so, either generally or in particular cases, under the cost statute.

In other words, under federal law, a trial court may award a prevailing party its costs — it is entitled to all its costs — but the trial court will ignore hundreds of thousands of dollars of the prevailing party’s costs because the courts lack the authority to award them.

"Alice in Wonderland". Licensed under Public domain via Wikimedia Commons - http://commons.wikimedia.org/wiki/File:Alice_in_Wonderland.jpg#mediaviewer/File:Alice_in_Wonderland.jpg

“Alice in Wonderland”. Licensed under Public domain via Wikimedia Commons.

Original post (3/19/2013) (under headline: TAAFOMFT, v. 2.0 (rev. 1): E-Disgustery & “Morton’s Fork”): It is only a matter of time, in almost any litigation of a certain magnitude, when a signal gets crossed and there is an “information security breach.”  And this is where the fun begins in earnest!

Following up on yesterdays post on “some of my favorite things” (inadvertent disclosure fire-drills and motion practice), I noted a recently filed third-party complaint in a case pending before U.S. District Court Judge Donovan W. Frank (D. Minn.) (the original complaint is here), rich with a gooey layer of jam in the delicious concoction of civil litigation mille-feuille gateau de merde.

Everyone makes mistakes.  When the stakes are sufficiently high, though, there is a magical and almost inevitable human trait for all potentially responsible people and organizations to go to the greatest possible lengths to explain why a bad outcome is someone else’s fault (see, e.g., news coverage of J.P. Morgan London Whale Congressional hearings).

Another closely related widespread and widely recognized human quality — maybe unsavory but also very understandable —  is to not want to pay money to business partners when the disappointing joint feast is capped off with a $712,920.49 bill for a culinary clustercake.

A world-renowned e-discovery vendor with a facility in Eden Prairie, Minnesota, Kroll Ontrack, would like $712,920.49 for its contribution to the litigation effort of a Pennsylvania law firm on behalf of a Pennsylvania-based IT company.  Kroll Ontrack had apparently been recommended to the lawyers by the client, Devon IT.  According to Devon IT’s lawyers, however:

Kroll failed to electronically segregate “Confidential” and “Highly Confidential” documents, causing this to be done manually instead, which was very expensive and unnecessarily time consuming.

 

Kroll was unable to effectively filter out privileged search terms, causing unnecessary delays;

 

Kroll erroneously caused privileged documents to enter the “Inview “database, making it exceptionally difficult to keep privileged documents confidential and under seal pursuant to the court’s confidentiality Order in the Pennsylvania Litigation;

 

Kroll lacked the ability to safeguard inadvertent productions of privileged and non-responsive documents, again making it difficult to keep privileged documents confidential and under seal pursuant to the court’s confidentiality Order in the Pennsylvania Litigation;

 

Any searches of the Kroll database were unreliable and inaccurate, causing users to expend much more time than necessary during the review process;

 

Kroll lacked the ability to easily segregate or identify documents from third parties (opposing parties and non-parties), which significantly hampered the review process by causing delays;

 

Kroll failed to maintain a simplified version of its voluminous user manual, which was confusing to low-level document reviewers and caused them to expend more time than necessary learning Kroll’s system;

 

The manner in which Kroll processed native files (i.e. Microsoft Excel or PowerPoint files) was unduly costly, time consuming and cumbersome, because these files had to be manually renamed in order to view them;

 

Kroll was unable to maintain an accurate page count of the relevant production of native files;

 

Kroll did not perform any additional processing or quality review of documents that had been produced in OCR format, instead relying on an often-faulty computerized search process;

 

Kroll lacked an ability to augment or change certain automatic relationships within its Inview database. Kroll did not have, but should have had, a method by which this synching relationship could be stopped to ensure quality control;

 

The Kroll Case Manager lacked a comprehensive and thorough understanding and knowledge of Kroll’s system and capabilities;

 

Kroll could not efficiently prepare documents for production without counsel having substantial communication with Kroll to ensure the proper steps and checks-and-balances were performed, incurring unnecessary and substantial fees;

 

As to the process regarding processing of data from certain media sources, Kroll provided inconsistent answers regarding whether all documents must be processed through Advanceview prior to uploading onto Inview, undermining its claims of utilizing an advanced and superior technology;

 

Kroll did not have a methodology by which a user could create a search folder of documents that omit documents containing a specific search term(s). As a result, the user could not segregate “Confidential” and “Highly Confidential” documents, causing this to be done manually instead, which was an expensive and time consuming process.

These are all merely allegations, of course.  [Editor’s note: (And later discovery in the case appeared to suggest they were fabrications to dodge the big bill.)] And I note that in the nearly three years of related litigation, the docket does not reflect any fights over inadvertent production.  So maybe this is not so much a revision of the previous TAAFOMFT as a Morton’s Fork.  That is, civil litigators (and their clients) can either sup on the nauseating humble pie of inadvertent disclosure or, maybe alternately, they cough up $712,920.49 for the clustercake.  Either way, they all need to have Rolaids on hand.

Finally, the foul dessert choice is almost always related to how well the main course played out.  Devon IT’s long battle with formidable adversaries, simply by virtue of its cost and duration (and its fighting with its own lawyers), appears to be going very badly for the company.  Either the high cost of a pristine production, the challenge of huge e-discovery bills, or the set-back of inadvertent disclosure is undoubtedly palatable, maybe even delicious, with a digestif of Cuvee Leonie paid for by one’s adversaries.

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