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A federal judge in a contract case has excused compliance with a discovery agreement that would have required the plaintiff to produce an estimated 65 million documents, finding it would cost too much to screen them for privilege.
"This case highlights the dangers of carelessness and inattention in e-discovery," District Judge Dickinson Debevoise wrote in a Dec. 9 ruling. "While Plaintiff should have known better than to agree to the search terms used here, the interests of justice and basic fairness are little served by forcing Plaintiff to undertake an enormously expensive privilege review of material that is unlikely to contain non-duplicative evidence."
The materials at issue in I-Med Pharma, Inc. v. Biomatrix Inc., 03-cv-3677, were found on the computer system of I-Med Pharma, a Quebec medical supply manufacturer and distributor. It claims breach of contracts that gave it exclusive Canadian distribution rights for Biomatrix eye care products. After Biomatrix, of Ridgefield, combined with Genzyme of Cambridge, Mass., in 2000, the resulting company, Genzyme Biosurgery, allegedly began failing or refusing to provide I-Med the products.
The search of I-Med's computers was done pursuant to a May 17, 2010, stipulation that resolved discovery disputes between the parties. I-Med agreed to allow a forensic search of its computer network, servers, and related storage devices by a defense computer expert who would be required to sign a protective order.
The search would look for documents containing 58 specified keywords that included names of companies, products, and persons involved with the contracts as well as other terms like refund, FDA, credit, claim, complaint, and profit.
The search was not limited to active files or particular time periods and it included unallocated space, which holds deleted and temporary files. Part of the expert's job was to determine how and when the documents and files containing keywords were deleted or modified.
The expert was to summarize the findings for both sides. The documents and data recovered would go first to I-Med for review. Within 60 days of receiving the documents, I-Med was to designate what was confidential, create a privilege log and turn it the log over to Genzyme along with copies of everything else.
The expert gave I-Med the records in ZIP file format in September 2010, but after I-Med complained that it would require more than 10,000 hours just to open everything, the parties agreed on a more manageable format.
In an Oct. 19, 2010, filing, Genzyme reported to Magistrate Judge Michael Shipp that the search had found 187,796 active files and more than 251 gigabytes of data in the deleted files -- consisting of almost 65 million hits and more than 90 million pages, indicating "an extraordinary level of document destruction."
I-Med denied any spoliation, complained about how Genzyme handled the search process and asked for more time for privilege review, which Shipp allowed.
But days before the March 31, 2011, deadline for a document log, I-Med asked Genzyme to agree to getting only the deleted files from a laptop used by a Genzyme employee who had admitted at his deposition to deleting emails.
Genzyme responded that it would consider the request but also stated that "the parties had an extensively negotiated, agreed-upon process for electronic discovery," that I-Med had failed to institute a litigation hold, that there was "undisputable evidence of substantial deletions systemwide" and that Genzyme had "expended significant resources in anticipation of an agreed-upon output."
I-Med then asked Shipp to alter the terms of the stipulation, "due to the impossibility of complying with it without excessive, if not outrageous, expense." Shipp granted the request on Sept. 9 for "good cause," holding that I-Med need not produce the deleted files or the privilege log.
Shipp found that the burden on I-Med outweighed any potential benefit and that Genzyme had not met its burden of demonstrating relevancy since it had not identified any information actually destroyed by I-Med. He also held that the overbroad search terms meant there was only a "minimal" likelihood that the deleted materials contained evidence that would be admissible at trial.
Shipp's order further stated that Genzyme could file a motion seeking to be reimbursed by I-Med for the forensic costs related to the deleted files.
Genzyme appealed to Debevoise, contending that Shipp applied an incorrect "undue burden" standard and that in modifying the stipulation terms, Shipp "undermined the confidence parties need in order to reach negotiated solutions to discovery disputes." It argued that the correct standard required "exceptional circumstances" and "manifest injustice" and that I-Med could not demonstrate the stipulated bargain was unjust after benefiting from it by shifting to Genzyme the expense of the electronic discovery.
Debevoise affirmed on Dec. 9, holding that Shipp's Sept. 9 order was a reasonable exercise of his discretion in managing discovery. He rejected the heightened standard argument but held that even if the more stringent standard did apply, it was satisfied.
"A privilege review of 65 million documents is no small undertaking," stated Debevoise. "Even if junior attorneys are engaged, heavily discounted rates are negotiated, and all parties work diligently and efficiently, even a cursory review of that many documents will consume large amounts of attorney time and cost millions of dollars."
He also disagreed with Genzyme's suggestion at oral argument that I-Med could cut the cost of the privilege review by looking only at documents containing the word "privilege" and producing everything else. Memoranda and other documents not explicitly flagged as privileged might be, especially the fragmented, incomplete types of files found in unallocated space, he observed.
Debevoise added in a footnote that he found it "difficult to believe" that lawyers from Bingham McCutchen, which represents Genzyme, regularly disclose large quantities of information from client files without first examining it.
Even without the deleted files, Genzyme will have a valuable tool that might bolster its claim of spoliation. It told Debevoise in a brief that it had a "road map of the Deleted Files list, organized by individual machine and search terms, located in I-Med's system."
Thane Scott, of Bingham's Boston office, declines comment. I-Med attorney Gary Maitland, of Kreisberg & Maitland in New York, did not return a call.
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