Court Rules for Defendant on TAR and (Mostly) Custodian Disputes: eDiscovery Case Law

In a case I covered last week, a court ruled to include most of 35 custodians in discovery; this week, the requesting party wasn’t so lucky…

In Coventry Capital U.S., LLC v. EEA Life Settlements, Inc., et al. No. 17 Civ. 7417 (VM) (SLC) (S.D.N.Y. Dec. 16, 2020), New York Magistrate Judge Sarah L. Cave ruled (among other rulings) that a subset of documents (the “Guernsey Manager Documents”) “shall be excluded from the TAR review and shall be manually reviewed and produced” and also ruled that “Phase II discovery shall include: (a) a search of Barry John’s ESI but not the other six custodians; and (b) application of search terms to the Mimecast data, production of a hit report, and a meet-and-confer among the parties as to whether any responsive data shall be produced and if so, on what timeline.”

Case Background

This was a breach of contract, fraud and intentional misrepresentation case where the plaintiff alleged that the defendants “engaged in a pattern of fraudulent conduct aimed at undermining the negotiation of a contract to sell a portfolio of life insurance policies to Coventry.”  Around June 2020, the parties began discussing and negotiating the review of documents using predictive coding/technology assisted review (TAR), but the process was described as “protracted and contentious”.  One of the disputes related to the Guernsey Manager Documents, which the defendants sought to exclude from the TAR Review, arguing that the Fund and Guernsey Manager were distinct entities, separately owned and controlled to review manually instead.  The defendants proposed instead to review them manually, to limit production to the period from January 1, 2017 forward and indicated that the manual review (limited to documents from 2017 forward) could be completed within three weeks.  The plaintiff sought to include the documents in the review, stating that “they are in EEA Inc.’s possession within the meaning of Fed. R. Civ. P. 34.”

The plaintiff also proposed a Phase II discovery to include three categories of productions: “(i) documents from the remaining seven custodians who were not included in Phase I discovery (“Phase II Custodians”) per the Court’s Phase I Order (ECF No. 203); (ii) search of Mimecast data; and (iii) documents from EEA UK and EEA Guernsey predating January 1, 2017.”

Judge’s Ruling

With regard to the TAR review of Guernsey Manager Documents, Judge Cave stated: “The Court declines to order that the Guernsey Manager Documents be inserted into the TAR Review at this late stage of Phase I of discovery. Discovery in this heavily litigated action has been ongoing since 2017…, and, as Coventry recognizes, the TAR Review has been protracted…The Court’s ruling is in accordance with Judge Marrero’s order that EEA Inc. is obliged to produce responsive documents held by the Guernsey Manager.”

As for the request to add seven custodians to Phase II discovery, Judge Cave stated: “The Court agrees that Barry John should be included as a Phase II Custodian. Exhibits Five and Six to Coventry’s Letter-Motion to Compel…show that Mr. John took an active role in internal discussions assessing the contract between EEA Inc. and Coventry, including providing his feedback concerning the ‘PR assessment of the risk of the sale / non-sale scenario’ and information that would be conveyed to the Fund’s board of directors…Conversely, Coventry has not met its burden to show that a search of the remaining six Phase II Custodians’ ESI would provide unique, relevant and noncumulative evidence…After reviewing the exhibits to the parties’ filings, the Court determines that the remaining Phase II custodians either played a less active role, or, in the case of Mr. Harrop, as General Counsel, were copied on emails that appear to have largely been captured and produced in the Phase I productions.”

With regard to the plaintiff’s request to search the Mimecast data, Judge Cave stated: “The Court finds that EEA Inc.’s data privacy and proportionality concerns are not ripe until the search terms have been applied to the Mimecast data and a hit report has been generated. At that point, the parties will know if any potentially responsive documents exist in the Mimecast data, and if so, how to proceed with production most efficiently. Accordingly, the Court orders that the parties’ previously-agreed search terms be applied to the Mimecast data, a hit report be generated, and the parties thereafter meet-and-confer about the process for review and production of responsive documents.”

As for the plaintiff’s request to search pre-2017 data, Judge Cave stated: “The Court finds that the burden and expense of searching for and producing documents for a period of more than three years preceding the agreement outweighs the speculative relevance of these documents… Coventry has not pointed to any communication, meeting, or other type of interaction between the parties in this case on which to conclude that a search for pre-January 1, 2017 documents should be undertaken at this time.”

So, what do you think?  What could the plaintiff have done differently to obtain some of the discovery that they requested?  Please share any comments you might have or if you’d like to know more about a particular topic.

Case opinion link courtesy of eDiscovery Assistant, an Affinity partner of eDiscovery Today.

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