Can the costs of Technology Assisted Review (TAR) be shifted from the producing party to the receiving party? Apparently so, if the court rules that the TAR process that the plaintiff insisted on was disproportionate to the needs of the case.
In Lawson v. Spirit Aerosystems, Inc., No. 18-1100-EFM-ADM (D. Kan. June 18, 2020), Kansas Magistrate Judge Angel D. Mitchell granted the defendant’s Motion to Shift Costs of Technology Assisted Review of ESI to the plaintiff, ruling “the ESI/TAR process became disproportionate to the needs of the case” after having previously warned the plaintiff that inability to focus ESI requests would result in the court shifting costs.
Case Background
This case regarded the defendant’s alleged breach of a retirement agreement with the plaintiff due to plans by an investment firm to install the plaintiff as CEO of an aircraft component manufacturer (“Arconic”) where the defendant withheld the plaintiff’s retirement benefits because the defendant claimed that he violated the non-compete provision in his retirement agreement.
The parties had a lengthy set of discovery disputes as the case continued, with the Court having previously established a search protocol for the parties to follow in April 2019, where the Court directed the parties to work together on search terms to try to achieve an 85% responsiveness rate. At one point, the defendant harvested ten custodian files, which returned 304,272 documents, or 468,595 documents including families. The defendant reviewed a 384 document sample and determined that only 7.8% were responsive. Of those, many were technically responsive but were actually irrelevant to the claims and defenses in this lawsuit.
At one point, the defendant conducted new searches of the ten custodians’ ESI using revised terms provided by the plaintiff, and this returned approximately 322,000 documents. The parties continued to negotiate back and forth and, around August 2019, the parties abandoned efforts to refine search terms to meet the 85% responsiveness-rate goal, and they began discussing the option of conducting a TAR of the 322,000 document set identified in July 2019. Despite the fact that the defendant’s sampling exercise suggested that only 5% of the 322,000 documents would be responsive to the plaintiff’s discovery and those “technically responsive documents are largely irrelevant to the dispute”, the plaintiff still pursued conducting the TAR protocol, which was completed in mid-January. Only 3.3% of the documents in the TAR set of 322,000 documents were responsive and the defendant estimated its TAR expenses to be approximately $400,000 in vendor costs and $200,000 in law firm fees.
Judge’s Ruling
Judge Mitchell noted: “At Lawson’s request, the parties spent months engaged in an ESI discovery process regarding the issue of business overlap between Spirit and non-party Arconic, Inc…using traditional ESI methods involving custodians and search terms. When that process repeatedly yielded low responsiveness rates, the court allowed the parties to proceed— again, at Lawson’s request—with a technology-assisted review (“TAR”) of approximately 322,000 documents, with the caveat that the court would decide whether to allocate the TAR expenses to Lawson.”
Ruling on the defendant’s motion, Judge Mitchell stated: “Spirit’s motion is granted. The court is mindful of the default rule that the producing party should ordinarily bear the costs of production, but the court finds good cause to allocate the TAR expenses to Lawson in order to protect Spirit from undue burden and expense. Early in the case, Lawson pursued a scattershot ESI approach on the issue of Spirit’s ‘Business,’ and the court repeatedly cautioned Lawson to better focus his ESI custodians and search terms because the court would, at some point, begin shifting costs. Spirit has already borne its fair share of expenses providing discovery on this subject matter by accommodating Lawson’s ESI requests for the custodians and search terms he selected, by running court-ordered sampling exercises, and by making targeted document productions on a separate path than the ESI process. That ESI process repeatedly yielded low responsiveness rates. But Lawson was unwilling to abandon the largely non-responsive ESI dataset and instead sought continued review via TAR that unnecessarily perpetuated and exacerbated ESI/TAR expenses. The TAR process ultimately yielded a responsiveness rate of only 3.3%. Even the documents that were technically responsive were of marginal (if any) relevance above and beyond what Spirit produced outside of the ESI/TAR process. Thus, the ESI/TAR process became disproportionate to the needs of the case.
The parties are directed to meet and confer to try to reach agreement on the amount of the TAR expenses. In the event they are unable to reach agreement, the court orders further briefing as to what dollar amount the court should award”.
So, what do you think? Should the judge have granted the motion to shift costs or could the defendant have done more to curb costs in the first place? Please share any comments you might have or if you’d like to know more about a particular topic.
Also, just a reminder that, next Tuesday, October 6th, EDRM will host the webcast Important eDiscovery Case Law Decisions for October 2020 at 1pm ET (noon CT, 10:00am PT). In this webinar, Tom O’Connor, Mary Mack, Hon. Andrew Peck (Ret.) and I will discuss key cases related to discovery about discovery, the efficacy of terminating sanctions, considerations for audio/video discovery and disputes regarding search terms and technology assisted review (TAR). Don’t miss it!
Case opinion link courtesy of eDiscovery Assistant.
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