Situational Awareness Matters: Two Courts Evaluate Whether TAR Processes Are Warranted and Reach Very Different Conclusions

Two recent decisions from the United States District Court for the District of Kansas (Lawson v. Spirit AeroSystems, Inc.) and the Northern District of Illinois, Eastern Division (Livingston v. City of Chicago), highlight the increasing prevalence of Technology Assisted Review (TAR) as an e-discovery tool and its role as an emerging source of discovery disputes. We have previously addressed courts that have “endorsed” the use of predictive coding and/or TAR and have recommended that litigants consider such technologies to promote efficiency in the discovery process. We have also noted that courts have been extremely hesitant to impose affirmative requirements upon litigants to use these technologies. As discussed below, these two recent decisions provide a useful analysis of situations – with vastly different outcomes – where a party has introduced TAR procedures into the discovery process.

In Lawson v. Spirit AeroSystems, Inc., plaintiff, the former CEO of defendant Spirit AeroSystems, Inc., filed suit based on his claim that the defendant failed to properly disburse his retirement compensation. Defendant claimed that plaintiff violated a non-compete agreement by engaging in consulting services with one of its competitors during the two-year period subject to the restrictive covenant. Plaintiff refuted these allegations, claiming that the companies he serviced did not engage in the same business as defendant.

Though the business dispute itself was relatively straightforward, the discovery process was complex. In order to prove that the defendant and the alleged competitors were not in the same “business,” plaintiff filed a motion to compel the production of electronically stored information (ESI) following the parties’ inability to agree on search terms or custodians. In adjudicating the motion to compel, the court, in consultation with the parties, developed an ESI protocol, which was subsequently modified. Several months later, after limited success pursuing traditional e-discovery methods, the parties abandoned efforts to refine search terms and began discussing the option of conducting a TAR of approximately 300,000 potentially responsive documents. Defendant expressed its reluctance to use TAR, in light of the “hundreds of thousands of dollars” it had already spent on document collection, processing, and hosting, and the results of sampling exercises indicating an extremely low responsiveness rate. Recognizing these concerns, the court raised the possibility of granting plaintiff’s request for TAR on the condition that he bear the costs of the process. The parties agreed to proceed with TAR, subject to defendant’s reservation of rights to file a motion to shift TAR-related costs at a later date.

After proceeding with TAR at the plaintiff’s insistence (despite repeated warnings to plaintiff of the estimated TAR-related costs), defendant filed a motion to shift costs for ESI, even after the motion was filed. Defendants continued to try to convince plaintiff to stop the TAR review based upon the recall rate. In response, plaintiff “doubled down” on his insistence that defendant continue with the costly TAR review.

In opposing the motion, plaintiff argued that the court may only shift costs for ESI that is not reasonably accessible. The court flatly rejected this argument, noting that Federal Rule of Civil Procedure 26(c) explicitly permits courts to allocate discovery expenses for good cause in order to protect a party from undue burden or expense. In assessing whether defendant had demonstrated “good cause,” the court performed a proportionality analysis, and concluded that cost-shifting was warranted. As the court reasoned: “even the documents that were technically responsive were of marginal (if any) relevance above and beyond what [defendant] produced outside of the ESI/TAR process. Thus, the ESI/TAR process became disproportionate to the needs of the case.”

While the Lawson decision demonstrates potential pitfalls in forcing an adversary to engage in what may be an unnecessary TAR process, Livingston v. City of Chicago demonstrates the counterpoint. In Livingston, the plaintiff moved to compel the defendant, City of Chicago, to use a particular methodology for identifying responsive ESI. The dispute arose from the parties’ inability to agree on the method by which defendant would collect and review ESI. Plaintiff proposed that defendant use a particular outside vendor to perform searches to identify the ultimate universe of responsive documents (without any additional responsiveness or privilege review), while defendant pressed to use an “active learning” TAR procedure to perform initial searches to identify a preliminary universe of documents, subject to further refinement based on relevance and privilege review. Notably, the court rejected plaintiff’s concerns that defendant’s attorney reviewers would “improperly train” the TAR tool by making incorrect responsiveness determinations, observing that even a manual review involves a level of uncertainty with respect to responsiveness determinations.

Ultimately, the magistrate judge denied plaintiff’s motion to compel and followed the tenets of Sedona Principle Six by holding that the Defendant, as the responding party, was “best situated to decide how to search for and produce emails responsive to plaintiffs’ discovery requests.” The court also determined that by disclosing the particular type of TAR software it intended to use, defendant satisfied its obligation to make the production transparent.

These decisions signify courts’ expanding acknowledgment of TAR as an e-discovery tool and its impact in the context of parties’ obligations under Rule 26. Moreover, as TAR jurisprudence develops, litigants are well-advised to consider the potentially dramatic economic consequences that result from a lack of awareness regarding technological advancements in e-discovery and their associated costs.