Ontario Master: Proportionality Requires Transparency (6/6/2014)

In Siemens Canada Limited v. Sapient Canada Inc2014 ONSC 2314 (CanLII), Master DE Short makes a number of important observations covering many aspects of e-discovery, in particular, how parties need to co-operate on the meaning of “proportionality.” I begin with some of the key points:

  1. Parties must draft a Discovery Plan at the outset of litigation to ensure agreement on the scope of discovery. Failure to do so may lead to the court imposing a plan and costs sanctions. [paras. 39, 151, 158-160]
  2. Disagreements about the details of a Discovery Plan should be mediated, if necessary with the assistance of a neutral e-discovery expert. The Court is not the best forum for resolving technical e-discovery matters. [paras. 36-40, 89, 145-6]
  3. Even though the production of documents is subject to the proportionality principle (“proportionality is now the default”), the test for production is relevance to disputed facts in the pleadings. [paras. 57, 161]
  4. Where relevant data is difficult to collect or may not be recoverable, attempts should be made to preserve it. [para. 101]
  5. A party cannot unilaterally determine what is proportional, for example, by limiting the number of custodians searched or keywords applied. These decisions should be transparent, co-operative and form part of the Discovery Plan. [paras. 119, 128, 151]
  6. The fact that a custodian may have only a few relevant emails does not justify excluding that custodian from a search. Large volumes of email and other structured data (such as a project document repository) can be dealt with by using de-duplication and search engines. [paras. 106, 111]
  7. An employer should not leave individual custodians to determine which emails they consider to be relevant. [para. 149]
  8. If no response to a litigation hold memo is received from a custodian, follow-up is required. [paras. 95, 139]
  9. records retention policy of deleting emails every thirty days “can potentially cause serious problems,” including the necessity to expensively restore back-up tapes. [paras. 136-138, 156]

FACTS

In 2007 Sapient won a five-year, $70 million SAP implementation project for Enbridge. Sapient subcontracted with Siemens for conversion and other services. Sapient assigns 120 employees and contractors to the project while Siemens as subcontractor assigns 38. Joint project staff are granted access to Sapient’s project document repository (ResultSpace).

Delays mount up and Sapient terminates the Siemens subcontract. In July 2009 Siemens sues for breach of contract for $20 million. Sapient counterclaims for $10 million for delay.

Siemens carries on discovery the old fashioned way, ignoring the 2010 rule amendments (in particular the requirement of a Discovery Plan). Siemens identifies all 38 project staff as custodians and collects all their data; performs key word searches, reviews and eventually produces some 120,000 documents. (Since it no longer has access to ResultSpace, all Siemens productions come from other sources such as email.)

Sapient also works traditionally (i.e. no meet & confer, no Discovery Plan). But they decide to unilaterally invoke the new principle of proportionality as follows:

  • Sapient identifies only 14 custodians (out of 120 project staff) as holders of potentially relevant material, because it is mere speculation that the other custodians possess any additional evidence material to the case
  • When identifying potential sources of relevant information, Sapient overlooks the project document repository.
  • Sapient asks the 14 custodians to review and select for production only what they believe to be relevant
  • When encountering technical problems with collecting from four of the custodians, Sapient makes no effort to preserve or recover the data.
  • Sapient refuses to share with Siemens any information about what sources or custodians were identified or what keywords were used.
  • Manual relevancy review does not include emails relating to the “status of the project” because Sapient asserts that project status was well documented in minutes, status reports etc.

Sapient initially produces just over 21,000 records, one-sixth of Siemens’ production, even though it has three times as many project staff.

During oral discovery, Sapient questions a Siemens representative on a document that was never produced. When pressed, Sapient admits that it inadvertently neglected the ResultSpace repository. In October 2012, two years after production was supposed to be complete, Sapient produces another 20,000 documents – effectively doubling its production.

Siemens brings a motion for further productions, including more custodians, transparency, and all documents relating to “project status”. Siemens attaches a “state-of-the-art” fifteen-page Discovery Plan (which is not appended to the reasons). While the parties agree on some elements, the main disagreement is about scope.

ISSUES

Is it really necessary (or proportional) for Sapient to add more custodians when so many documents have already been produced already, and the existence of any new emails that might be material to the issues is only speculative?

Is it really necessary for Sapient to find all emails relating to “project status” when this is already well documented in project status reports, meeting minutes and elsewhere?

Should the scope of relevance in the Discovery Plan be expressly limited by the words Subject to the principle of proportionality, as argued by Sapient?

DECISION

Siemens was granted partial relief. Sapient was ordered to:

  • Search emails and ResultSpace data for an additional eight custodians. (Assessment of the emails of these custodians would determine whether even more custodians might need to be added.)
  • Restore and search more backup tapes for the 10 original custodians.
  • Apply the original search terms to the complete email files (not just the self-selected emails).
  • Include emails about the “status of the project” when doing manual review of the search results.

Despite the Master’s concerns that what is “proportional” can be interpreted differently by each party, and that otherwise producible documents might be withheld as a result, the Master agreed that it would be useful to preface the scope of relevance with the words Subject to the principle of proportionality in order to show that the parties have paid attention to the provisions of rule 29.1.03(3)(e).[1]

COSTS

No costs were awarded under rule 29.1.05[2] because the parties did not comply with the Discovery Plan rule.

[1] “The discovery plan shall be in writing, and shall include any other information intended to result in the expeditious and cost-effective completion of the discovery process in a manner that is proportionate to the importance and complexity of the action.”

[2] “On any motion under Rules 30 to 35 relating to discovery, the court may refuse to grant any relief or to award any costs if the parties have failed to agree to or update a discovery plan in accordance with this Rule.”

Data Collection in E-Discovery: What’s the Right Approach? (1/12/2014)

The scope and method of data collection should be determined after a legal and strategic assessment of all the pertinent facts and issues in the proceedings, and in accordance with a plan, preferably as agreed with other parties, including regulators. Limited scope and improper self-collection (e.g. undocumented procedures) by clients can lead to serious problems down the road including:

  • Challenges to the admissibility or weight of the evidence
  • Time and expense of collecting data twice
  • Sanctions for missing relevant custodians or data sources
  • Possible loss of critical data and metadata leading to inability to prove or defend case
  • Court or regulatory sanctions for spoliation
  • Potential breach of employee privacy rights

On the other hand, full-bore forensic imaging can be costly, intrusive and unnecessary. There is no “right approach” or cheat sheet that covers all cases, because the proper scope and method of collection depend on many factors, including:

  • the type of proceeding – litigation, arbitration, investigation?
  • the type of matter – family law, commercial, product liability, employment?
  • factors of proportionality – what’s at stake here?
  • whether allegations of fraud have been made
  • whether communications have been or are in danger of being repudiated (“I did not send that email”)
  • trust level between the parties
  • whether an agreement has been (or can be) negotiated

In addition to the legal and strategic issues around collection are the technical ones. There are many applications that purport to collect data forensically, and many experts out there with differing and sometimes confusing qualifications. Different methods, skills and tools must be used on different sources of data, For example, collecting Facebook pages is a very different exercise from collecting Blackberry text messages or deleted emails from an Exchange server.

Effective planning is the only way to ensure that collection is done appropriately for the matter at hand and in a cost-effective but defensible way.