Six Proportionality Factors

Six Proportionality Factors Used to Decide on Search Terms: eDiscovery Case Law

In Edwards v. McDermott Int’l, Inc., No. 4:18-cv-04330 (S.D. Tex. May 18, 2022), Texas Magistrate Judge Andrew M. Edison used the six proportionality factors in Rule 26(b)(1) to decide on the proper scope of search terms in a dispute between the parties.

Case Discussion

In this purported class action securities fraud case, Judge Edison introduced the order and opinion by stating “I am faced with a good old-fashioned discovery dispute: I must decide the appropriate scope of discovery.” The dispute arose over the appropriate scope of search terms. The plaintiffs put together a list of proposed search terms that would result in 773,508 documents with search hits (with an additional 519,337 family-member documents), for a total of roughly 1.3 million documents (773,508 + 519,337) that the defendants would have to review for privilege and relevance. Claiming that Plaintiffs’ proposed list is too expansive and will result in exorbitant costs, the defendants countered with search terms that would require review of approximately 650,000 documents for privilege and relevance.

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Judge’s Ruling

Judge Edison stated in deciding to use the six proportionality factors to decide the search terms dispute: “The present dispute focuses on the proportionality requirement. Simply put, are Plaintiffs’ proposed search terms—which will require Defendants to review close to 1.3 million documents—proportional to the needs of the case? Or are Defendants’ proposed search terms—which will result in the review of about half as many documents—more proportional to the needs of the case? There is no cut-and-dried application of the proportionality factors that leads to one inescapable conclusion. I can see respected jurists reaching different outcomes based on the same underlying facts. In reaching my decision, I bring to this discovery squabble my years on the bench and my experience in private practice as a lawyer representing both plaintiffs and defendants in securities litigation.”

Judge Edison decided each of the six proportionality factors, as follows:

  1. The Importance of the Issues at Stake: “Given that a central purpose of these securities laws is to protect investors and would-be investors in the securities market against misrepresentations, there can be little debate that the issues at stake in this case are meaningful.”
  2. The Amount in Controversy: “The large amount Plaintiffs are seeking to recover (more than $1 billion in damages) weighs heavily in favor of allowing the sought-after discovery.”
  3. The Parties’ Relative Access to Relevant Information: “The requested documents consist of emails and other electronic communications maintained by Defendants. Because Defendants have complete and exclusive control over McDermott’s electronic platforms, Plaintiffs have no way of obtaining such information other than from Defendants through the discovery process. This factor also weighs in favor of the proportionality of the sought-after discovery.”
  4. The Parties’ Resources: “I really do not have much to go by here. I know that McDermott has been through a bankruptcy proceeding, and Plaintiffs’ main source of recovery is expected to be through an insurance agreement. But I am unaware of the specific policy limits, and neither side has offered any argument or evidence on this factor. As a result, I view this factor as neutral.”
  5. The Importance of the Discovery in Resolving the Issues: “Plaintiffs’ search terms appear, for the most part, to be tailored to obtaining documents that are relevant to the claims and defenses in this case. As I have noted before: ‘I am well aware of the costs associated with email pulls. I am also mindful of how important email searches can be to unlocking the truth in securities fraud cases.’…Nobody, of course, knows what the email searches will reveal until the documents are reviewed and non-privileged, relevant documents are produced. But it is awful likely that the sought-after documentation is relevant and highly probative of Plaintiffs’ claims and Defendants’ defenses in the case.”
  6. Whether the Burden or Expense of the Proposed Discovery Outweighs its Likely Benefit: “The truth of the matter is that I cannot say, with absolute certainty, that Plaintiffs’ requested search terms will provide substantially more information than Defendants’ proposed search terms. One would expect that the additional search hits will yield more information, but where do you draw the line?…What ultimately sways me here is the fact that Judge George C. Hanks, Jr. has denied Defendants’ motions to dismiss the claims brought under §§ 10(b) and 14(a)…The discovery door has been flung wide open, and Plaintiffs should be allowed to probe inside. The purported damages in this case are huge, and that indicates to me that Plaintiffs’ proposal is proportional to the needs of the case. It is a close call, but I ultimately conclude that the scales tip in favor of Plaintiffs on the proportionality analysis.”

As a result of the analysis of the six proportionality factors, Judge Edison stated: “For the reasons set forth above, I order Defendants to promptly apply Plaintiffs’ proposed search terms, review responsive documents expeditiously for privilege and relevance, and produce relevant and non-privileged documents on a rolling basis.”

So, what do you think? What do you think of the Court’s approach to apply the six proportionality factors to decide search term disputes? Should all courts be doing that?  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.

Disclaimer: The views represented herein are exclusively the views of the author, and do not necessarily represent the views held by my employer, my partners or my clients. eDiscovery Today is made available solely for educational purposes to provide general information about general eDiscovery principles and not to provide specific legal advice applicable to any particular circumstance. eDiscovery Today should not be used as a substitute for competent legal advice from a lawyer you have retained and who has agreed to represent you.

3 comments

  1. Stop me if I ever am commenting too much. Otherwise, once more into the breach:

    “For the reasons set forth above, I order Defendants to promptly apply Plaintiffs’ proposed search terms, review responsive documents expeditiously for privilege and relevance, and produce relevant and non-privileged documents on a rolling basis.”

    Ordering the defendants to review responsive documents expeditiously certainly doesn’t sound like the judge is telling the Defendants the specific manner in which they need to be expeditious. Only that they need to be expeditious.

    If I’m looking at this through a Principle 6 lens, what this order says to me is still that the producing party gets to the method. But whatever method they , they will need to know that it is efficacious. Otherwise, they will not succeed at “review[ing] responsive documents expeditiously”. And so how will they know whether or not what they’re planning to do is efficacious? To continue my effulgent alliteration: Evaluation.

    That is to say, does not this judges orders directly connect to Principle 6’s literal verbiage to ?

    /broken record

    🙂

    • Oops.. the blog software swallowed some of my words because I put them in angle brackets. I.e. they got interpreted as html tags. This should actually read:

      If I’m looking at this through a Principle 6 lens, what this order says to me is still that the producing party gets to [CHOOSE] the method. But whatever method they [CHOOSE], they will need to know that it is efficacious. Otherwise, they will not succeed at “review[ing] responsive documents expeditiously”. And so how will they know whether or not what they’re planning to do is efficacious? To continue my effulgent alliteration: Evaluation.

      That is to say, does not this judges orders directly connect to Principle 6’s literal verbiage to [EVALUATE]?

  2. Going off the topic but being a legal tech consultant, I believe the defendants could have asked for use email threading, denisting, near duplicate analysis and ofcourse active learning or TAR to trim down the scope. Also, I saw some cases where in the families of the documents were only reviewed after the search term hit document is determined as responsive.

    Assuming a situation of later case they would be required to review 773,508 less non-inclusive, less MD5 dupes, less system files etc.

    Again the entire calculation is hypothetical but let’s assume 40% of records are culled out by using the above aspects and they will be left with only 773k-40% = 464k. On average let’s assume 10% of documents at max to be responsive and then 46k + 30k family members (families calculated in the same proportion). In this way, they would be reviewing only 464+30=494k documents which is about 24% less than what defendants were ready to review. Again all this is based on day-to-day experience and still, we have not used TAR / CAL. Had that been incorporated, the review population could have been further trimmed down.

    Thanks,

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