Avoid Drowning in Data: Keep Afloat with ESI in Construction Litigation

Maybe it is another lawyer on your team, a client, the Court. Maybe it is you. Almost every lawyer has heard (or thought, felt, or anguished over) the following: Wait — What? Discovery is going to cost how much?

The concern is real. Per a 2019 Southern District of New York opinion:

• The average case can involve collection, review and production of 100 gigabytes of data (or 6.5 million pages of Word documents).
• At a typical rate of review of 40-60 documents per hour, assuming 100,000 documents are collected, that is about 2,000 hours of attorney review time.
• Adding in fees for forensic collection, storage, and processing to maintain metadata can result in a bill totaling $500,000.

Brown v. Barnes & Noble, Inc., 474 F. Supp. 3d 637, 645 & n.3 (S.D.N.Y. 2019).

What's counsel to do? The following four points can help counsel streamline and reduce costs in discovery: (1) know your case, (2) know your data — understand it and document collection, (3) cooperate with counsel, and (4) implement a protocol for electronically-stored information ("ESI").

1. Know Your Case:

This may seem elementary or obvious, but it isn’t always so: Know your case to guide discovery. That includes both what you know and don’t know. You know the gripping opening, the devastating cross, the masterful closing that will win your case — those are your guides to discovery. What is the opposing party saying (or not saying) in its complaint or answer, in its affirmative defenses, or in its interrogatory responses? How much is the case “worth” — in damages or importance. Discovery must be [1] relevant to any party’s claim or defense and [2] proportional to the needs of the case. Fed. R. Civ. P. 26(b)(1).

Perhaps paradoxically, knowing your case also means understanding what you don’t know and why you need it. The Rules allow (Fed. R. Civ. P. 26(f)(3)(B)), for a tiered or phased approach to discovery, and the Sedona Principles (routinely cited by courts) recommend it:

The parties may begin discovery without a full appreciation of the factors that bear on proportionality. A party requesting discovery, for example, may have little information about the burden or expense of responding. A party requested to provide discovery may have little information about the importance of the discovery in resolving the issues as understood by the requesting party. Many of these uncertainties should be addressed and reduced in the parties’ Rule 26(f) conference and in scheduling and pretrial conferences with the court.

Fed. R. Civ. P. 26, Advisory Committee Notes on 2015 amendments.

Among the principles of the Sedona Conference, including Principles 3 and 8, the Parties should approach discovery as an iterative process — starting with the Rule 26(f) conference, the parties should start with the most accessible sources of information and then move along to less accessible/other sources as the case develops, if and as those sources become necessary. The Sedona Conference, The Sedona Principles: Best Practices Recommended & Principles for Addressing Electronic Document Production, 19 Sedona Conf. J. 1, 42, 73, 134 (3d ed. 2017) (“Sedona Principles”). Knowing your case — what you know, what you don’t know, and what you need — will guide this process.

2. Know the Universe, but Focus on Your Zip Code

At the start of the case, counsel is faced with a potentially vast universe of data. Sedona Principles, Principle 8, comment 8.a, 19 Sedona Conf. J. at 134–35. Don’t go with your gut-reaction if that is to grab everything! First, know where in the universe your case fits — down to the zip code — to address costs and prevent needless and wasteful discovery efforts and requests. This is part of the Rule 26(f) conference requirement, too — you should consider “the subjects on which discovery may be needed” and “whether discovery should be conducted in phases”. Fed. R. Civ. P. 26(f)(3)(B).

A.  Consider the Potential Sources of Data Important or Relevant to the Claims and Defenses in Your Case.

Construction data sources and locations can be vast and robust. Consider, for example, that a case might involve:

• E-mail
• Text/Chat Messages/Apps
• Project databases
• Drawings/Shop Drawings
• Specifications
• Project Estimating Software
• Building Information/Models/Analyses
• Scheduling Software
• Drone footage/GPS Scanning
• Labor/Materials Tracking with GPS functionality
• Testing/Balancing/Adjusting/Commissioning Documents

Yikes. Imagine all the third-party vendors who might be involved in collecting, storing, processing, and using that data.

     B. Understand Your Case and Your Client’s (and Third-Party) Data.

Again — not every case requires counsel to collect all data sources. Take a deep breath.

Consider what data will be important to proving your case. In a more straight-forward non-payment case, you may need just job records, contracts, and pay applications. In a more robust case, such as delay, you may need scheduling files. In a Spearin-type case, the drawings, BIM, labor, and/or Drone/Mapping files may be important.

Also, remember Rule 26(g)! Discovery must be conducted, and requests/objections/productions must be made, with the attorney certifying that, “to the best of the person’s knowledge, information, and belief formed after a reasonable inquiry” the request or objection “(ii) is not interposed for any improper purpose, such as to harass, cause unnecessary delay, or needlessly increase the cost of litigation; and (iii) neither unreasonable nor unduly burdensome or expensive, considering the needs of the case, prior discovery in the case, the amount in controversy, and the importance of the issues at stake in the action.” Fed. R. Civ. P. 26(g)(1)(B)(ii), (iii) (emphasis added).

To fulfill those duties, counsel can employ some (all) of the following strategies:

• Talk to the people who know the Project — and document your collection of information.
• At a minimum, this should include the person with primary responsibility for the Project, your client’s IT department (or third-party vendor), and legal.
• Expand from there — maybe five or six key people who worked on the Project, the scheduling consultant, the accounting department, the HR department.
• Consider if you have enough information — circle back as the case develops.
• Consider questionnaires.
• If it’s a relatively small/uncomplicated case with a smaller data set, you might just talk to 2-3 people and send a confirming email or memo to file about what was discussed, where the information is, what you are collecting, and why.
• If it’s a larger case with many involved in the Project, consider sending questionnaires to the relevant personnel, particularly if it would be unnecessarily difficult to interview all potential custodians. Questionnaires can include:
• Who are/were the primary people involved, particularly in the important issues to the case? Is there someone else (person or a department) that should get a questionnaire?
• What apps, communication tools, databases were used during the Project? Did everyone have access? Can these data sources be captured?
• What were the key terms you used for issues and people on the Project? Did anyone have a nickname? Were there particular names/phrases used for important issues?
• With whom in IT, legal, accounting, corporate did you interact?
• Were there key time periods? Is there a way to limit the data sources to collect?
• With questionnaires, you can document what has been done and consider other sources for follow up.
• Review sample sets of e-mails: Are there terms that questionnaires did not capture? Key personnel not mentioned? Events that expand/narrow the potential date range?
• Involve IT.
• This may be Jane, the do-it-all data wizard for your trade subcontractor. Or it be Sarah, the head of IT for East Coast Development. Or, it could be Outsource, Inc., the third-party vendor who manages data for your client.
• Whoever is the key person, counsel should work closely with him/her to consider potential sources and size of data.
• Data files can be huge and in unique file formats — particularly drawings, drone footage, and scheduling files. IT will give you information on where the information is stored and how big it is.
• Get real data about the size and cost of processing data.
• Gone are the days (if they ever existed) in which “unduly burdensome”, without more, is a sufficient objection. For instance, Fed. R. Civ. P. 26(g) and 34 require counsel:
• To object — based on reasonable inquiry and a good-faith basis — and
• If objecting, “[S]tate whether any responsive materials are being withheld on the basis of that objection.”
• To meet these obligations, counsel should determine:
• How big is data set? 
• What are the costs of gathering, processing, reviewing, and producing it?
• What should not be searched/produced?
• Do not forget proportionality/relevance — construction data can be massive.
• Just because something was used on the Project does not mean collecting it right away.
• Consider whether you can agree with opposing counsel (through stipulation, RFA, ESI protocol) to a shared set of drawings, models, schedules, etc. It may just be the case that you meet and confer and create a non-modifiable set of agreed “central” documents that are not likely contested.
• If you can agree, then you may not have to pay third-party storage or processing fees.

3. Cooperate with Opposing Counsel

Discovery can help resolve a case or be a cash-sucking enterprise. Consistent with your obligations to your client, a mutual agreement to the scope and size of discovery (including a tiered approach) can be massively helpful. It is also part of the Rule 26(f) conference requirements — specifically including Rule 26(f)(3)(C), which requires counsel to discuss “any issues about disclosure, discovery, or preservation of [ESI], including the form or forms in which it should be produced.” Counsel must be prepared and proactive with these issues, armed with facts and a reasonable view of the case.

As stated by Judge Grimm, compliance with the “spirit and purposes” of discovery rules requires cooperation by counsel to both (1) identify and fulfill legitimate needs and (2) avoid seeking the cost and burden of which is disproportionally large to what is at stake in the litigation. "Counsel cannot 'behave responsively' during discovery unless they do both, which requires cooperation rather than contrariety, communication rather than confrontation. Mancia v. Mayflower Textile Servs. Co., 253 F.R.D. 354, 357 (D. Md. 2008).

Courts’ discouragement of counsel who fail in these obligations is palpable in many opinions, including a recent decision in the Southern District of Florida, in which the court denied a motion to compel ESI and directed the parties to confer instead: “The Court does not want to see the unnecessary waste of time and money on wasteful, irrelevant or disproportionate discovery. On the other hand, the Court does want to insure that all parties obtain the relevant and proportional discovery each may need in order to effectively prosecute or defend this case.” Lan Li v. Walsh, No. 9:16-CV-81871, 2018 U.S. Dist. LEXIS 192754, at *12–13 (S.D. Fla. Nov. 9, 2018).

4. ESI Protocol and Agreement

So what should counsel address in an ESI Protocol/Agreement (whether in the Rule 26(f) Discovery Plan or otherwise)? Consider the following issues, per the wonderful resource provided by the United States District Court for the District of Maryland: Principles for the Discovery of Electronically Stored Information in Civil Cases, available at https://www.mdd.uscourts.gov/sites/mdd/files/ESI-Principles.pdf. Among the topics to address — and proactively resolve — are:

• Types of Data/Sources/Custodians that will be gathered;

• Date Range;

• Tiered/Phased Discovery — grabbing the low-hanging fruit first

• Searching methodologies for gathered data and production — Technology-Assisted Review (and level of accuracy); Search Terms; Sampling; old-fashioned document review;

• Preservation of other sources of data that will be kept safe/gathered but not reviewed unless necessary;

• Who will be each party’s eDiscovery “liaison”, responsible for overseeing the collection, processing, and production of ESI; and

• Clawback — i.e., claims for the return of privileged or confidential material.

Conclusion

The Boy Scouts’ Motto — “Be Prepared” — serves well in eDiscovery. While eDiscovery is here to stay, counsel has a large role in framing it and keeping down costs. To do so, counsel should (1) know his/her case and the key issues (separate the wheat from the chaff); (2) know what data exists, where it is, and what are the costs of processing it; (3) cooperate with opposing counsel on eDiscovery issues; and (4) work on an ESI Protocol in advance of discovery during the Rule 26(f) conference.

While the above guidance is not a panacea for sticker shock or an obstinate opposing party, it will go a long way in framing your case before the Court and can help "secure the just, speedy, and [hopefully] inexpensive determination of every action and proceeding." Fed. R. Civ. P. 1.

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Author Steve Swart is a construction attorney with Williams Mullen in Tysons, Virginia. Steve counsels owners, developers, contractors, and subcontractors in all phases of a construction project, from contract negotiation through to completion, including disputes, litigation and arbitration. Steve can be contacted at sswart@williamsmullen.com.