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.”

Is the Meet and Confer Dead? (From 4/10/2016)

Careful readers of the revised Sedona Canada Principles will note the demise of the “meet and confer” in favour of a more shapeless process called “co-operation.”  In my comments on the public draft I didn’t complain about this, as it had been proposed at a Sedona Conference meeting in Toronto and discussed quite thoroughly.

The issue is that lawyers felt that being shoehorned into a specific procedure is unduly restrictive. Being lawyers they start asking questions like – does the meet and confer have to be face to face? What about an exchange of emails – does that qualify as a meet and confer? Concerns about delay and cost relating to organizing in-person meetings I think are legitimate. Why have a face to face when agreement on discovery scope in a routine matter can be reached over the phone?

Of course the original meet and confer concept never required a face to face meeting and I don’t think there’s any reason to interpret it that way – at least not in 2015, when videoconferencing, web conferencing and conference calling are mature technologies.

To me, if eliminating the meet and confer was a way of making the process less restrictive, I was in favour. Let’s eliminate as many excuses and roadblocks as possible. Adding more formal procedures to the already overburdened civil litigation process is a bad idea. On the other hand, asking litigators to “co-operate” with each other  at the outset of a lawsuit without any formal process for doing so has led to failure. Co-operation and litigation do not naturally go together.

In Ontario the fallback position is that since a joint discovery plan is mandatory, the parties have no choice but to co-operate. Ultimately this means that with or without a formal meet and confer the parties must devise some method of coming to agreement on scope and format of disclosure, identity and timing of oral discoveries. But in practice this has met with resistance from the bar – so much so that some believe rule 29.1 (the Ontario rule mandating discovery plans) should be revoked.

Without a mandatory joint agreement there would be no apparent incentive whatsoever to co-operate in e-discovery matters. Of course there are real incentives – like saving the client a great deal of money or getting to the truth more quickly. But for many lawyers those are secondary considerations to the prime directive – fight and win.

Should the Ontario Rules Make Discovery Plans Optional?

In 2010 the Ontario Rules were amended to help parties cope more effectively with the demands of electronic discovery. The main aims of the reform were to increase efficiency and reduce cost. One of the key elements of the new Rules was the introduction of a mandatory Discovery Plan. The Plan was conceived as a method of encouraging parties to collaborate on e-discovery issues. The Plan has to be in writing, so there is an element of formality about it; the parties must consider the Sedona Canada Principles in drafting their plan; and if the parties fail to agree on a plan, the court can impose cost consequences or refuse to grant relief on a discovery motion.

​There is a deadline for the Plan – it must be agreed within 60 days of the close of pleadings, but the parties can extend the deadline by agreement. Supposedly, parties cannot obtain evidence either through documentary or oral discovery until the Plan is finalized. Some have argued that requiring a Discovery Plan in every single case is overkill and that the requirement should be either modified or eliminated entirely. I don’t agree, partly because I am not convinced that there are many cases today with documentary evidence that is not electronic, and partly because if circumstances dictate, the plan can be simple one. So here are my recommendations, and I’m very open to comments:

  1. We should not eliminate the rule requiring a Discovery Plan just because lawyers are not following it.
  2. E-discovery experts support the need for a Discovery Plan in every matter, even matters with straightforward legal issues. Plans can and should be tailored to the case.
  3. The outline of a plan should become a form, and the Affidavit of Documents should be amended in consequence.
  4. The plan should be mandatory; it must contain certain elements including the agreed-upon formats of exchange, scope and method of preservation and production etc.
  5. The plan should also have to filed with the court. Right now, the plan is mandatory but the court never sees it unless there’s a dispute. It is important enough to be maintained in the case file (but not as a public record).

The problem with the rule is not the mandatory plan – it’s the sanction.

  1. Two reasons: first, how do you know which party to sanction? If the plan is a joint plan, each will accuse the other of failing to agree.
  2. Second, the penalty for failing to agree on a plan is that further steps cannot be taken. Unfortunately this is precisely what some parties want – delay. So they can obstruct the litigation process itself by either failing to discuss a plan or being deliberately obstructive.
  3. A Discovery Plan should have to be filed with the court 60 days after the close of pleadings.
  4. If the parties cannot agree on a plan by the deadline, then each party must file its own proposed plan in the form provided.
  5. The penalty for failing to agree is that a plan is imposed – not (as in Nova Scotia, a “default plan”) – but a real plan. The party whose plan is not thought through, not reasonable or not proportional may end up having to comply with the other party’s plan in its entirety. This is a strong incentive to agree.
  6. E-discovery lawyers can be called upon by the court as special masters to arbitrate competing plans and determine which one “wins”, or whether a compromise is best. Arbitration is more efficient than mediation in a situation where counsel are unco-operative.
  7. There is a of course a cost to this process – but the cost of mandatory arbitration will be borne by the parties, and is only necessary if the parties don’t agree to a plan. Ultimately, the cost of arbitration would be much less than the cost of continued unnecessary hostilities.