Electronic Data Discovery - Avoiding Costly Mistakes

In a somewhat scary opinion that was issued last month, the appellate court for the D.C. Circuit affirmed a lower court's order which both sanctioned and held in contempt a non-party for failing to comply with a deadline for the completion of electronic discovery that its attorneys had previously agreed to.

In its opinion, the appellate court refused to consider the non-party's arguments that this discovery request was overly broad and undly burdensome. In particular, the non-party noted that the parties' search terms returned such a broad swath of electronic documents, that several personal e-mails between employees and their spouses (which were clearly irrelevant to the case) came up, and the sheer volume of documents that these search terms returned forced this non-party agency, The Office of Federal Housing Enterprise Oversight, to hire approximately 50 contract attorneys for this document review, and to incur roughly $6 million in expenses (approximately 10% of this agency's annual budget).

Despite this incredible burden - and by a non-litigant no less - the court remained unpersuaded that the lower court had abused its discretion because OFHEO had already extended - and subsequently disregarded - several deadlines for their compliance with these discovery demands, and their obligation to comply with the terms of their own attorney's agreement was unambiguous.

The lessons to be learned here for New York small businesses that have been called into commercial litigation are clear:

(1) Make sure you have a good estimate about the scope and expense of an anticipated electronic data or document disclosure - BEFORE  any agreements are entered into regarding the time and expense of the data production;

(2) DO NOT allow the other parties to determine what the appropriate search terms will be without an appropriate mechanism to assure that you do not end up being required to produce a voluminous amout of records that bear no relation to the case;

(3) Make sure that the manner in which the electronically stored information is to be produced is reduced to writing - this could save you a great deal of time and effort, not to mention trees; and,

(4) In appropriate circumstances, that there are systems in place to assure that the demanding party bears at least some of the expense of the production (parenthetically, this is probably one of the best ways to insure that the demands are streamlined to the relevant discovery, as it is unlikely that the demanding party will want to pay for a bunch of e-mails you had with your brother about his trip to Atlantic City).