More Than $750,000 Awarded in TAR Fees Serves as Both Warning and Guidance to E-Discovery Practitioners

Last month, we discussed a recent decision from the United States District Court for the District of Kansas, Lawson v. Spirit AeroSystems, Inc.,  in which the court granted defendant’s motion to shift costs for electronically stored information (ESI) related to expenses incurred undertaking Technology Assisted Review (TAR) for approximately 322,000 documents, at plaintiff’s insistence. The court reasoned that there was good cause warranting cost-shifting because plaintiff insisted on pursuing TAR after it became disproportionate to the needs of the case.

Recently, the court entertained defendant’s fee application, in which defendant sought $791,700.21 in expenses incurred in connection with TAR and $83,000 in costs and fees incurred conferring with plaintiff and related motion practice. Plaintiff objected to the amount sought, arguing that reasonable TAR expenses did not exceed $330,000. The court ultimately awarded defendant $754,029.46 in TAR-related expenses and a yet-to-be determined amount of expenses in connection with the fee application.

In reviewing the fee application, the court noted that its finding of disproportionality was only reinforced by the parties’ intervening cross-motions for summary judgment, in which only one of the almost 100 exhibits submitted by plaintiff originated from defendant’s TAR production. This lone exhibit was submitted “to support an unremarkable factual contention.”

In determining the amount of expenses to allocate to plaintiff, the court examined the reasonableness of defendant’s claimed expenses. The court largely rejected plaintiff’s objections to various categories of TAR-related expenses. Of note, plaintiff objected to the approximately $455,000 spent on e-discovery vendor costs, arguing that defendant should have used a TAR 1.0 tool rather than a TAR 2.0 tool. Generally, with TAR 1.0 software, training begins by taking a random sample of documents from the TAR set and having a human reviewer code that set to create a predictive model for the remaining documents outside the sample. On the other hand, TAR 2.0 software involves continuous learning, where the model learns and continuously updates throughout the review. The court rejected this argument, finding that plaintiff’s declaration submitted in opposition to the fee application did not establish that the TAR 2.0 tool was not cost effective. The court also found that plaintiff’s argument was undermined by its prior consent for defendant to use the TAR 2.0 tool during the parties’ meet-and-confer process, and any objection to the technology should have been raised at that time.

Plaintiff also objected to the approximately $170,000 allocated to document review, arguing that defendant’s first-level review (which proceeded at a rate of 26 documents per hour) was unnecessarily slow. The court also rejected this argument, finding that the rate of review was reasonable in light of the types of documents reviewed (numerous lengthy presentations, multi-sheet Excel spreadsheets with sensitive financial data, technical data, etc.), and the fact that reviewers coded for responsiveness, confidentiality, and privilege. In total, the court subtracted only approximately $6,000 from defendant’s claimed expenses related to e-discovery vendor costs.

Of the $336,427.50 in claimed TAR-related legal fees, arising out of defendant’s motion to shift costs, privilege log preparation, and motions to compel, the court awarded $304,030.25. The court’s exclusions were based on its findings that certain legal work was outside the scope of the motion to shift costs and fee application, as well as minor adjustments based on the reasonableness of time spent on certain tasks.

This decision, in which defendant was awarded the majority of its claimed TAR-related expenses, more than twice the amount plaintiff contended was reasonable, should serve as both a warning and guidepost to attorneys engaging in TAR, from the inception of the meet-and-confer process to any post-judgment fee applications. Savvy practitioners must understand the pros and cons of TAR and heed court directives, particularly with respect to proportionality.