Canada: Records Management @ Gowlings - March 20, 2012 - Volume 3, Number 3

Legal Technology


Harris v. Leikin Group Inc., [2011] O.J. No. 4161 (S.C.J.)

This decision was one concerning costs following a successful summary judgment motion by the Defendant, First Capital Realty Ltd. ("First Capital"), which was heard together with the unsuccessful motions of four other Defendants.  First Capital sought its costs on a substantial indemnity basis in the amount of $437,000.51, inclusive of $333,159.00 in counsel fees and $62,174.71 in disbursements.

The Plaintiffs challenged First Capital's submissions on costs based on the following arguments:

  1. First Capital is not entitled to entitled to its costs for participating in the four other unsuccessful summary judgment motions;
  2. The hourly rates claimed are excessive;
  3. The time spent was excessive; and<
  4. The amounts claimed violate the principle of proportionality.

The court largely rejected the Plaintiffs' submissions and ordered costs in the amount of $384,465.78.  Disbursements were addressed separately and are discussed below.

Regarding the ability to claim costs for participating in adjoining summary judgment motions, the court noted that the breadth of the claims against First Capital required it to concern itself with the evidentiary record and therefore it had to participate to understand the allegations against it.  The court did however, note that the costs associated with some counsel attendance was slightly excessive as concerning attendance at the examinations of those parties to which counsel appeared on an observing basis only in order to maintain a "watching brief."

Regarding the hourly rates charged, the court stated that the appropriateness of the rates claimed should be determined by reference to the overarching principles of fairness and reasonableness.  Those principles recognize that the parties in this action retained downtown Toronto counsel from large firms and could have reasonably expected significant legal costs.  Reasonable rates therefore were assessed based on average rates of comparable firms.

Regarding the time spent on matters, the court found no merit to the Plaintiffs' submissions and noted that the division of work by counsel for First Capital was appropriate given the expertise of the respective lawyers.

Regarding proportionality, the court noted that the a plaintiff must reasonably expect that the greater the number of defendants it involves in the litigation, the greater the resulting costs incurred will be.  Further, the way the Plaintiffs pleaded their case required significant involvement by all Defendants in the action. The court cautioned future prospective plaintiffs on this basis.

On the issue of the claim for disbursements, the court focused on the $30,373.36 claimed in "electronic document production and database management" and concluded that disbursements made for electronic document management should now be regarded as a standard "disbursement reasonably necessary for the conduct of the proceeding" and should be recoverable as a matter of course when receiving an award for costs. 

The court supported its decision on the costs for electronic document management based firstly on the acknowledgement that the overwhelming majority of documents are created, stored and retrieved electronically and effective conduct of litigation involving a large number of documents requires electronic document management. 

The court regarded the references to The Sedona Canada Principles Addressing Electronic Discovery in the Rules of Civil Procedure and Best Practices regarding motions as indicating the expectations, obligations, requirements and procedures contained within those principles that are now part of the Rules of Civil Procedure.  The court went on to state that parties are expected to comply with The Sedona Canada Principles Addressing Electronic Discovery requirements and the failure to do so is non-compliance with the Rules.

The court also specifically endorsed the principles and approaches in Principle 12 of The Sedona Canada Principles Addressing Electronic Discovery and Principle 13 of the Guidelines For the Discovery of Electronic Documents in Ontario as recognizing the ability of parties to limit appropriate discovery obligations through negotiation.  Further, the scope and recoverability of costs for electronic document management should be discussed in a mandatory Discovery Plan. 

In closing remarks, Brown J. observed the irony concerning the efforts made concerning the  development of rules and principles for electronic document management, while the courts themselves are not yet prepared to accept documents in electronic format.  Brown J. referred to this issue as a "most dangerous disconnect" and noted that the court must take steps to fix the problem by taking steps to introduce practices such as e-filing in order to avoid the risk of creating a serious gap between the public and their courts, thereby endangering the legitimacy of our court system.

Monique Da Silva Moore, et al. v. Publicis Groupe & MSL Group 11 Civ. 1279 (ALC)(AJP) . Southern District of New York.

Action by the female plaintiffs against the defendants alleging gender discrimination, pregnancy discrimination and violations under the Family and Medical Leave Act, Equal Pay Act and Fair Labor Standards Act.  At issue in the proceeding was the use of predictive coding to cull the millions of documents available in the discovery process.  Neither party was opposed to the use of predictive coding, but the plaintiffs took issue with MSL's proposals for how to implement the predictive coding.  MSL had suggested reviewing and producing the top 40,000 documents.  Ultimately, this suggestion was rejected as being too simplistic and that what would be produced would depend on what the statistics showed for the results. 

Accordingly, the Court sought to further clarify the protocol for implementing the predictive coding.  The first issue was which custodians' emails would be searched.  The parties agreed to an initial thirty custodians in a first phase.  The plaintiffs sought to include a number of comparator custodians as well.  The Court held that the first phase would be limited to the thirty custodians and that other custodians could be added in a second phase once a first phase had been completed.  The Court also considered the sources of electronically stored information (ESI).  The parties agreed to several ESI sources but certain HR shared folders were left to a phase 2 since neither party could provide information as to the likely contents.  Next, the Court determined the predictive coding protocol.  The parties agreed to use a 95% confidence level to create a random sample of the email collection which sample would be reviewed to determine relevant documents for a "seed set" to use to train the predictive coding software.  All documents reviewed as a function of the seed set, whether coded relevant or not, would be produced to the plaintiffs.  The plaintiffs had some concerns about the rounds of iterative reviews to ensure that the computer was returning all relevant documents.  However, the Court held that the process was not perfect but that it was better than the alternatives without nearly as much cost.  If the seventh iterative review round revealed that the system was not working than the Court could review the protocol. 

The plaintiffs objected to the predictive coding approach on the basis that MSL counsel had a duty to certify that the document production was complete and correct as at the time it was made.  The Court held that this objection was based on a misunderstanding of the law and that certification was not required and that a principle of proportionality applied.  Finally, the Court held that in order to determine proportionality it was necessary to have more information than the parties currently had.  Accordingly, the plaintiffs' concerns that the process was not reliable were immature and reliability could only be reviewed down the road once more information was available.

The Court commented that computer-assisted review technology exists and should be used where appropriate.  It is up to the Court to supervise the process used and the interaction between man and machine.  Computer-assisted review appears better than other alternatives and should be used in appropriate cases.  The procedure is not perfect, but the rules do not require perfection.  The transparency of a search protocol will make it easier to approve.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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