Case Report – Defendant sanctioned for failure to produce despite partial proportionality plea

On February 13, 2008, the Supreme Court of Prince Edward Island (Trial Division) struck a statement of defence as a sanction for non-production. The judgement is notable for its strong statements in favour of full-production despite burden and despite any assignment of particular value to the evidence sought. However, the defendant’s ability to raise proportionality was limited by a number of factors, including that the burden of production appeared to have been caused by a failure to take reasonable preservation steps (i.e. there was a so-called “downgrading” of data). The defendant also raised the burden of production late in the dispute in response a contempt motion.

Thanks again to Peg Duncan for passing this on. Peg edits the case digests on LexUM’s e-Discovery Canada site. Please check them out!

Jay v. DHL, 2008 PESCTD 13 (CanLII).

Case Report – Limited forensic inspection allowed

On March 17th, Mr. Justice Perell upheld an order which allowed a plaintiff’s expert to recover and search data from a defendant’s personal computer.

In furthering its $1 million departing employee claim, the plaintiff had proven that the individual defendant used his personal computer for business purposes. It had also produced e-mails it had received from the defendant that the defendant had not produced himself because they had been deleted. The plaintiff claimed the missing e-mails were relevant to whether the defendant breached his non-solicitation duty. In these circumstances, Master Dash ordered an inspection to be be made by way of a search of recovered e-mails based on client names.

Mr. Justice Perell considered the existing jurisprudence and Sedona Canada Principle 2 (on proportionality) and upheld Master Dash’s order. He said:

Returning to the case at bar, in my opinion, the short endorsement reveals that in ordering an inspection of the computer, Master Dash either: (a) concluded that there was evidence that a relevant document in a party’s possession, control or power may have been omitted from the party’s affidavit of documents; or (b) he balanced a variety of factors to conclude that inspection should be ordered including: the relevance and importance of finding evidence that Mr. Cox had sent e-mails to Vector’s customers; the likelihood that Mr. Cox did send e-mail messages to clients given his admitted use of his personal computer for business purposes; the carefully defined parameters of the inspection; and the plaintiff’s willingness to pay for the costs of the inspection. In my opinion, whether Master Dash did (a) or (b), he applied the law correctly to the circumstances of the case at bar.

Thank you to Peg Duncan for passing this on. Please check out LexUM’s e-Discovery Canada site for its great case law digest and other information related to e-discovery in Canada.

Vector Transportation Services Inc. v. Traffic Tech Inc., 2008 CanLII 11050 (ON S.C.).

Case Report – Ireland Supreme Court on creating records and proportionality

On December 5th, a 2-1 majority of the Supreme Court of Ireland held that it was not improper to order a defendant to create and produce a special report from a database. However, a separately constituted majority held that, in the circumstances, the costs of such an order would be disproportionate to its benefit until and unless the plaintiff proved the defendant was liable.

The impugned order was made in the context of a competition law dispute. The plaintiff was a domestic seller of calling cards who claimed that the defendant network owner engaged in a discriminatory pricing practice that favoured foreign providers. It requested production of records of specific calls from one or more archived database files in order to prove liability and damages.

The parties argued the merits of the production request in light of another set of records that was also ordered to be produced. When it became apparent that the disclosure of the other set of records would not provide evidence the plaintiff felt it needed to meet its burden of proof, it pressed for production of the call records. The defendant only then strongly raised its proportionality concerns and made a factual admission which it claimed would render production unnecessary. It also claimed that the impugned order would require it to compile, analyze and present information in a form in which it never existed.

The defendant ultimately prevailed at the Supreme Court based on its proportionality argument. Fennelly J. and Kearns J.’s reasoning arguably turned on the plaintiff’s factual admission, which they held made production unnecessary to proof of liability and disproportionate in light of the cost of production (claimed to require the purchase of hardware costing approximately of 150,000 and significant other cost outlays to be made over a six month period). Both recognized the potential necessity of production to proof of damages, and held that the plaintiff may file a fresh application for discovery should it first prove liability. In reaching his finding Fennelly J. said:

I have come to the conclusion that the very unusual burden and heavy cost of the discovery in this case requires the Court to have a clear view of the litigious benefit to the plaintiff from obtaining the extremely detailed breakdown of information which is the only remaining issue.

Geoghegan J., dissenting on the proportionality issue, took the opposite view on the burden of proof, making comments that favoured a strict burden of proving disproportionate costs once evidence is shown to be relevant and necessary. He noted that the defendant had raised cost as a barrier to production well into the dispute and then had argued cost in its submissions without adducing supportive evidence. He said:

My overall impression is that essentially, the appellant was trying unsuccessfully to frighten the court by the mention of what superficially at least would be large figures but figures unsupported by solid evidence.

While the bifurcation of production in response to cost is novel and the dispute on burden of proof significant, the Court’s treatment of the “creating records” issue was dealt with on a more broadly-reasoned basis. Fennelly J. endorsed Geoghegan J.’s reasoning, and Kearns J. did not make comment. Geoghegan J. reasoned that the form in which data is stored is not relevant to the form in which its produced. He said:

It is common knowledge that a vast amount of stored information in the business world which formerly would have been in a documentary form in the traditional sense is now computerised. As a matter of fairness and common sense the courts must adapt themselves to this situation and fashion appropriate analogous orders of discovery. In order to achieve a reasonable parity with traditional documentary discovery it may well be necessary to direct a party “to create documents” within the meaning of the notice of appeal. It may indeed also be necessary to direct a party “to create documents” within the meaning of the notice of appeal even if such “documents” “do not exist at the time the order is made”. I am deliberately using quotation marks because I do not intend to adjudicate on the quasi-metaphysical argument of Mr. Paul Anthony McDermott, counsel for the respondent, that the “documents” do in fact “exist”. At any rate that matter can probably be argued both ways but I would be firmly of opinion that an order of discovery can be made which involves the creation of documents which do not exist, made in the kind of context in which it is sought in this case. Otherwise, potential litigants could operate their business computers in such a way that they would be able to evade any worthwhile discovery. In expressing the above views, I accept that superficially I am perhaps going a step further than the English authorities have done in so far as their rule of court can apparently be interpreted to cover computer discovery. I have no hesitation, however, in making that extension.

Dome Telecom v. Eircom, [2007] IESC 59.

More on proportionality and civility

Ralph Losey’s E-Discovery Team blog is my absolute favorite blog, by a long-shot even. I have not read the 185 page opinion in the October John B. v. Goetz case from Tennessee in October, but thought I’d pass on the link to Mr. Losey’s case comment because of the recent Osborne Report on civil justice reform in Ontario, which stresses the ever-increasing importance of proportionality and civility in maintaining an accessible civil justice system.

In the Goetz case the Court renewed a motion to compel discovery that would cost the defendants up to $10 million. Mr. Losey dissects District Court Judge William Haynes Jr.’s proportionality-based reasoning and also comments about his unique (and ultimately unsuccessful) attempt to facilitate dispute resolution. This attempt involved excluding counsel from the process of protocol building and turning that process over to the parties’ IT experts alone. Mr. Losey comments:

Judge Haynes seemed to be onto something here. By simply requiring experts to hash out agreements on technical e-discovery issues by themselves, these disputes could be resolved quickly and relatively inexpensively. Judge Haynes’ idea to transcend the adversarial process, at least for purposes of e-discovery, is in line with that of most experts. They all agree that complex e-discovery issues do not lend themselves to effective solution in the adversarial model. Complex technical issues are best solved with a degree of cooperation and transparency previously unheard of in our adversarial system. The Bench and Bar are being pushed in this new, and some would say “radical,” peaceful-collaborative direction out of necessity. The traditional “hide the ball” model simply does not work in complex ESI discovery. It frequently costs the parties far more than the case is worth, and can produce huge, time consuming, and sometimes outcome dispositive mistakes.

I’d encourage you to and add E-discovery Team to your feed reader and check out Mr. Losey’s comment on the Goetz case, which is posted here.

Civil justice reform report addresses discovery abuse

On November 22nd the Ontario government released the Summary of Findings and Recommendations from the Civil Justice Reform Project. The report, authored by The Honourable Coulter Osborne, contains 81 recommendations on civil justice reform. Here is a summary of the four recommendations most significant to the readers of this blog, with excerpts from Mr. Coulter’s rationale for each.

1. Establish proportionality as an overarching principle of interpretation

Proportionality, in the context of civil litigation, simply reflects that the time and expense devoted to a proceeding ought to be proportionate to what is at stake. It should be expressly referenced in the Rules of Civil Procedure as an overarching, guiding principle when the court makes any order.

2. Narrow the scope of discovery by implementing a “relevance” standard

The “semblance of relevance” test ought to be replaced with a stricter test of “relevance.” This step is needed to provide a clear signal to the profession that restraint should be exercised in the discovery process and, as the Discovery Task Force put it, to “strengthen the objective that discovery be conducted with due regard to cost and efficiency.” In keeping with the principle of proportionality, the time has come for this change to be made, which I hope in turn will inform the culture of litigation in the province, particularly in larger cities.

3. Give weight to the Ontario E-Discovery Guidelines and Sedona Canada Principles

I believe it would help if reliance on the E-Discovery Guidelines and The Sedona Canada Principles were encouraged through a Practice Direction. This would state that the court may refuse to grant discovery relief or may make appropriate cost awards on a discovery motion where parties have failed to consider and, to the extent reasonable, apply the E-Discovery Guidelines and The Sedona Canada Principles – in particular the requirement to meet and confer on the identification, preservation, collection, review and production of electronically stored information.

4. Make litigation budgets mandatory

In addition, counsel should as a matter of routine provide clients with a pro forma budget setting out, albeit in a somewhat imprecise way, the estimated cost (legal fees and disbursements, including expert witness fees) of commencing or defending a proceeding. Periodic updates should also be provided. There is, of course, no need for this in personal injury litigation where contingency fee arrangements are typical. Nor would this requirement be applicable to defence counsel retained by property (casualty) insurers who have developed their own methods of controlling solicitor and client cost exposure.

The government has stated that Mr. Coulter’s full report will be released later this year.