Closing The Loop

Conducting discovery on a single email account, for a relatively simple matter, shouldn’t require two to four days for data processing. It shouldn’t take two to three days to prepare a production. And it shouldn’t cost over $5,000 on vendor services alone.

But that’s exactly what one plaintiff in New York faced during an employment discrimination case, in which expensive vendors and a lopsided ESI Agreement combined to convince the court to shift discovery costs.

Not Exactly Just, Speedy, and Inexpensive

Shocking eDiscovery bills are nothing new. eDiscovery is complex, expensive and incredibly risky. It aggravates attorneys, rankles clients, and—due to its extreme cost—poses an incredible challenge to our justice system.

Discovery expenses can make up 20 to 50 percent of costs in federal civil litigation and “bet the company” litigation can easily see discovery charges rising into seven or eight figures. In just one lawsuit in the long-running patent dispute between Samsung and Apple, for example, Samsung paid its eDiscovery vendors more than $13 million over 20 months. In another long running battle over pollution in the Ecuadorian Amazon, Chevron spent almost $19 million on discovery-related attorneys’ fees alone, nearly 60 percent of the total attorneys’ racked up in a single suit. 

But when those costs come out, it’s usually a few years after the work has been done. Charging hundreds of dollars per gigabyte simply to process data must be a thing of the past, right? And no one would pay an analyst $125 an hour just to load data, right? (Not to mention $20,000 for “hibernated subcollection fees,” a recurring cost in the Samsung litigation that still baffles us, all these years later.)

 

Two Weeks, $5,350, One Email Account

If you think these costs are a thing of the past, you haven’t received an eDiscovery vendor’s bill lately. As this suit out of New York reminds us, slow and expensive eDiscovery services are still the norm for many cases, and it’s not just the million-dollar disputes that can involve ridiculous eDiscovery bills.

That case, Bailey v. Brookdale University Hospital Medical Center, involved a fairly typical, single-plaintiff discrimination claim. Lloyd Bailey, a former labor relations manager with Brookdale University Hospital in eastern Brooklyn, New York, sued his ex-employer over alleged harassment due to his national origin and age.

When it came time to conduct discovery, Bailey argued that the costs of providing requested ESI to Brookdale would cause him severe financial hardship and thus the court should shift the costs of discovery back to the hospital.

In support, Bailey put forth a cost estimate from a well-known eDiscovery vendor. For a single Yahoo email account, the vendor estimated, discovery (not including document review) would take up to two weeks and cost thousands of dollars.

You can see the full cost estimate here, along with some insights into the going rate for offline evidence locker storage, but here are some of the lowlights:

-- Email collection: 2-4 hours, $250 per hour

-- Data processing: including metadata extraction and OCRing, $135 per GB

-- Data hosting: $10 per GB per month

-- User licenses: $80 per user per month

-- TIFFing: $350 per GB

-- Technical assistance: $125 per hour, billed in 30 minute increments rounded up

For a single email account assumed to have 10 GB of data, 3 GB of which would be produced, the total cost was estimated at $5,350 plus $340 a month per GB in hosting.

It's an approach to discovery as slow as it is expensive. Data processing was estimated to take two to four days, while the production of responsive ESI would require two to three days. The whole process, the vendor calculated, could take two weeks.

 

High discovery costs for relatively small matters are one of the reasons many judges and practitioners believe eDiscovery has become a serious access to justice issue. "The costs of discovery may, in the long run, drive an entire economic class out of the federal court for lack of means to engage" United States Magistrate Judge John M. Facciolla told Logikcull in 2015. This case shows how little has changed in the intervening years.

Thankfully, there are alternatives. (Indeed, Bailey seems to have found them. In his Affidavit of Economic Hardship, he estimates that “ESI discovery will cost approximately $2,000.00 to $3,000.00," significantly less than the vendor estimated.) Alternatives such as Discovery Automation make processing ESI as easy as drag-and-drop, with thousands of processing steps that vendors otherwise nickel-and-dime users for taken care of almost instantly: OCRing, text extraction, deduplication, de-NISTing, virus scanning, file-type identification, embedded file extraction, family document grouping, and more.

Not only is this approach to discovery significantly less expensive, it’s much quicker. A 10 GB discovery matter can be started in minutes or hours, rather than days. Once ESI is reviewed, production is as simple as sharing a secure link—there are no extra $300/GB fees for TIFFing for two to three day delays while a vendor prepares the production.


Bad ESI Agreement Allows for Cost Shifting

But wait, there’s more! This case isn’t just about eDiscovery vendors, after all. It’s about discovery cost shifting. On that front, U.S. Magistrate Judge A. Kathleen Tomlinson (E.D.N.Y.) provides a succinct overview of how lopsided and seemingly excessive ESI agreement can influence courts to shift eDiscovery costs.

It is axiomatic that responding parties must bear the cost of production. But, as the court notes here, there are “limited circumstances” in which that rule may be altered, with costs shifting to the requesting party. In such circumstances, Magistrate Judge Tomlinson explains, citing Zubulake, the primary factor is whether the requested data is relatively accessible or not. “[W]hether ESI production is unduly burdensome or expensive so as to justify cost-shifting,” the court explains, “generally turns directly upon the accessibility or inaccessibility of the data being sought.”

But backup tapes aren’t the only circumstance under which courts will shift costs. The “scope and parameters of ESI should be a party-driven process,” the court notes, requiring cooperation in determining a scope of discovery fitting to the dispute. “Despite this guidance, it is clear that the above procedures were not adequately followed in this case.”

Now, the typical discovery procedures in federal court—a meet and confer and resulting discovery plan—were followed, but not with much attention to the circumstances of this case, it seems. Under the ESI Agreement entered by the parties, the hospital agreed to search “available email communications” between Bailey and three other parties and produce all relevant, nonprivileged documents “in Bates-numbered hardcopy.”

Bailey agreed to produce, “through a reputable outside discovery vendor,” all personal email containing any of 20 search terms, any email exchanged between Bailey and any current or former Brookdale employee, any emails “in any way relating to his employment with Brookdale,” “any and all current and historical records” from Facebook, Instagram, Reddit, YouTube, Myspace, LinkedIn, Twitter, since January 1, 2014, all text messages between Bailey and Brookdale employees, and all text messages “in any way relating” to his employment or the lawsuit. Some of this was to be produced in Concordance load files, some in PDF and HTML form.

Brookdale’s discovery obligations were memorialized in two points. Bailey’s required more than 20. 


Leveling the Playing Field, Just a Bit

To say that the discovery obligations were uneven here would be an understatement. As the court noted, Brookdale’s ESI agreement “appears to have been drawn for use in corporate settings as opposed to the single plaintiff employment discrimination case at issue here.”

Judge Tomlinson continues:

After engaging in a further review as to the scope and depth of the ESI Agreement, the Court can reach no other conclusion except that Plaintiff’s counsel did not engage in meaningful discussions with his client regarding the terms of the proposed agreement and what costs might be incurred by producing the information in the format Defendants sought. […]

As it stands, Plaintiff’s counsel has placed his client in the position of having to abide by an Agreement, which, in the current context, appears overly complex in light of the straightforward subject matter and claims involved here.

But if Bailey’s attorney was not a master at narrowing the scope of discovery, the court still had an “over-arching responsibility ‘to ensure a level playing field for both sides.’” Indeed, it seems that Bailey's claims of economic hardship swayed the court less, perhaps much less, than the extensive and intensive discovery requested by Brookdale. 

While the court would not rescind the ESI Agreement, it determined that, should Brookdale “insist on the production being made to the letter” of the agreement, “employing a measure of partial cost-shifting is appropriate here.” In such a case, the defendants would bear 40 percent of the cost, the plaintiffs 60.

And, as we saw above, those costs could soon become quite high for both Bailey and Brookdale, if the hospital chooses to go after Bailey’s every YouTube comment or text message—and if the parties stick with costly and time-consuming discovery technology.

This post was authored by Casey C. Sullivan, who leads education and awareness efforts at Logikcull. You can reach him at casey.sullivan@logikcull.com or on Twitter at @caseycsull.

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