You Can’t Claw Your Way Out Of This One: Transparency Required In E-Discovery Protocol

Progressive Cas. Ins. Co. v. Delaney, No. 2:11-cv-00678-LRH-PAL, 2014 WL 2112927 (D. Nev. May 20, 2014)

This case is a declaratory relief action filed by Progressive in response to failed banks taken over by the FDIC as receiver. The FDIC–R filed a motion to compel plaintiff to finish production of documents responsive to discovery requests. At the time the motion was filed, the FDIC–R had not received most of Progressive’s production and had not received any ESI discovery.

The parties agreed to a Joint Proposed ESI protocol involving manual review of search terms. The judge entered a clawback order for said protocol, which gave the producing party the right to claw back any privileged documents. Plaintiff agreed to a keyword search of 1.8 million documents requested by defendants. Documents containing the mutually agreed-upon keywords were manually reviewed and marked as responsive or privileged.

After applying the agreed upon search terms, 565,000 documents remained from the original 1.8 million. Plaintiff manually reviewed these documents for one month before realizing that a minimum of six months would be required to complete the manual review. It was at this point that plaintiff decided to employ predictive coding to increase speed and accuracy.

FDIC-R objected to plaintiff’s supposed lack of cooperation related to the predictive coding method used. Plaintiff agreed that “applying predictive coding on top of search terms ‘is not always done.’”

The court voiced support for general use of predictive coding in e-discovery, and stated that it would have approved a “transparent mutually agreed upon” predictive coding protocol. The court also stated that plaintiff’s consultant was considered an e-discovery expert and should have voiced concerns related to plaintiff’s lack of transparency.

The court held that plaintiff could withhold any documents identified as privileged. While acknowledging that review cost-shifting would occur and FDIC-R would bear the burden, the court stated that defendants had the resources to finish the review quickly and allow discovery to proceed.

Plaintiff was required to produce all documents:

Under these circumstances, the court will require Progressive to produce the “hit” documents to the FDIC–R within fourteen days without further review. The court recognizes that requiring production of all of the “hit” documents will likely result in the production of documents not responsive to the FDIC–R’s discovery requests. However, the parties’ stipulated ESI protocol adopted this approach as one of two alternatives for Progressive’s production. Progressive elected and then abandoned the second option-to manually review and produce responsive ESI documents. It abandoned the option it selected unilaterally, without the FDICR’s acquiescence or the court’s approval and modification of the parties’ stipulated ESI protocol. Adopting the FDIC’s proposal of producing the “hit” documents will shift the cost of review to the FDIC–R. The FDIC–R has committed to devote the resources required to review the documents as expeditiously as possible and estimates the process could be completed in about a month by tapping into the resources of the numerous firms involved in these related actions who also have a substantially similar ESI protocol entered in their actions. It will allow discovery, which has been stalled for many months while this dispute is pending, to move forward, and reduce future disputes about Progressive’s ESI production.

The prevailing wisdom is that keyword search and manual review fail to provide complete and accurate results. The advanced technologies available today make these archaic methods cost-prohibitive and unnecessary. The court in the case at bar would likely have allowed predictive coding to proceed had plaintiff introduced it earlier in the discovery process.

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