Delaware Court: Surprise! You Will Now Use Predictive Coding!

16 November 2012 IT-Lex Technology Law Publication

IT-Lex Technology Law

On October 15, 2012, Vice Chancellor J. Travis Laster of the Delaware Court of Chancery issued a sua sponte order requiring both sides in a contract dispute to use predictive coding or file a motion showing cause why predictive coding would not be a good method of discovery. This is a first.

The case, EORHB, Inc. v. HOA Holdings LLC, involves the interpretation of contract provisions in the purchase of the Hooters restaurant chain. The parties disagreed on the interpretation of the a release clause that potentially gave up the escrow. Vice Chancellor Laster characterized the case as “an ideal non-expedited case in which the parties would benefit from using predictive coding.” He asked the parties to use predictive coding for discovery or else to “show cause why this is not a case where predictive coding is the way to go.” He also suggested that they use a single eDiscovery provider – “one of these wonderful discovery super powers” – to warehouse both sides’ documents and offered to choose a vendor if both parties could not agree on one.

Vice Chancellor Laster’s decision is the latest in a string of cases across the country to address the issue of predictive coding technology. These cases include: Da Silva Moore v. Publicis Groupe SA (a New York case in which Magistrate Judge Peck approved the use of predictive coding at the request of one of the parties); Kleen Products LLC v. Packaging Corporation of America (an Illinois case in which plaintiffs asked Magistrate Judge Nolan to force defendants to use predictive coding, but eventually withdrew the request); Aerospace Inc. v. Landow Aviation (a Virginia case in which Judge Chamblin allowed one party to proceed with predictive coding for discovery purposes); and In Re: Actos (Pioglitazone) Products Liability Litigation (a Louisiana case in which Judge Doherty issued an ESI protocol that included a detailed description of the predictive coding methodology to be used during discovery). However, the Delaware decision is the first in which a judge has specifically ordered the parties to use predictive coding technology and suggested that they use the same provider.

Vice Chancellor Laster has previously taken an aggressive position on the key eDiscovery issue of document collection. In Roffe v. Eagle Rock Energy GP, he eviscerated a party’s collection methodology, which relied on self-collection of materials by the defendants. He stated: “there needs to be a lawyer who goes and makes sure the collection is done properly…we don’t rely on people who are defendants to decide what documents are responsive, at least not in this Court.” Roffe v. Eagle Rock Energy GP, L.P. and Eagle Rock Energy Partners, L.P., C.A. No. 5258-VCL (Del. Ch. 2010) (April 4, 2010 Transcript of Telephone Conference on Discovery Dispute, at pp. 9-10).

The sua sponte order on predictive coding is representative of the hands-on decision-making that has become Vice Chancellor Laster’s trademark during his tenure on the Court. Since he joined the Court of Chancery in October 2009, Vice Chancellor Laster has repeatedly come into the spotlight because of his positions on a variety of corporate law issues. Although he is both the youngest and newest judge on the Court, Vice Chancellor Laster has made a reputation by blasting first-to-file plaintiffs’ firms, dismissing lawyers for inadequate representation of their clients, approving unorthodox settlements, and refusing to grant preclusive effect to prior federal rulings.

Some eDiscovery bloggers have heralded the ruling as a major stamp of approval that predictive coding is “the way to go”. Others have questioned whether forcing predictive coding is advisable. Although the order marks new ground in the evolving relationship between the judiciary and predictive coding technology, its actual impact on both the future of predictive coding and discovery in the EORHB case is still unclear. Vice Chancellor Laster offered both parties an opportunity to file motions showing cause why predictive coding should not be used, and they are a long way from deciding on a vendor and beginning the discovery process.

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