Being careless can cost you
By Elle Byram. Esq., CEDS
It never reflects positively on you when the judge starts off the opinion stating “This case highlights the dangers of carelessness and inattention in e-discovery.” Fortunately for the plaintiff in I-Med Pharma v. Biomatrix, 2011 WL 6140658 (D. N.J. 2011), it all worked in its favor. However, this case seems to emphasize the need for good records management.
In attempting to resolve plaintiff’s breach of contract and fraud dispute, the I-Med Pharma parties entered into a discovery stipulation for materials from plaintiff’s computer network, servers, and storage devices. Defendant hired an expert and ran a number of keyword searches that produced – in the unallocated space alone – 64,382,929 hits representing an estimated 95 million pages of data. Yikes. The court, to its credit, questioned the accuracy of the parties’ estimation. However, the court stated that it had no choice but to accept the parties at their word.
Of course such a vast number of documents that it would need to review for privilege produced a visceral response in plaintiff. It quickly sought relief from the stipulation that would allow it to withhold the data found in the unallocated space, which the court granted. Defendant, desiring to acquire the voluminous data, appealed asserting that the Magistrate Judge had abused his discretion in granting plaintiff relief from the stipulation.
To provide plaintiff relief, defendant claimed that there needed to be exceptional circumstances that would cause plaintiff to suffer manifest injustice if required to perform its obligations under the stipulation. In support of its claim, it used a personal injury suit in which one of the defendants stipulated to its liability in order to bifurcate the trial and have damages tried first. When things didn’t turn out so well for that defendant, it tried to back out of the stipulation.
The court easily distinguished this personal case noting that the stipulation dealt with the liability of the parties and not a discovery dispute. Even more importantly, the court found that the factors used in the personal injury dispute to determine if there would be manifest injustice went against upholding the I-Med Pharma stipulation. First, plaintiff’s privilege review of 65 million documents would be too time-consuming and too expensive to perform. Second, defendants had failed to demonstrate a likelihood that relevant non-duplicative information would be found in the unallocated space files. Third, although plaintiff should have been more cautious before stipulating to broad search terms, its failure to do so did not justify requiring the plaintiff to perform such a review.
It worked out favorably for plaintiff this time. But, the lesson to be learned: you can never be too careful in e-discovery. Not all courts will express sympathy for poor decision-making. Being cognizant of your data and managing it properly cannot be understated. In fact, tools exist today that would enable reviewers to identify the number of keyword hits instantaneously, and if coupled with proximity search capabilities, these would likely fine tune the number of hits by several orders of magnitude if not more. It is likely that many of the documents in plaintiff’s unallocated space could have been deleted before any preservation obligations had kicked in. Had they actually have been forced to adhere to the stipulation, plaintiff might have been kicking themselves for not properly managing their data to begin with.
