May 20th, 2013
A federal district court’s recent granting of $3.2 million in attorneys’ fees to cover e-discovery costs, including technology-assisted review, to a prevailing party’s request, shows that the court sees technology-assisted review as a reasonable e-discovery expense and part of a balanced strategy for managing modern document reviews.
In Gabriel Technologies Corp. v. Qualcomm, Inc. (S.D. Cal. Feb. 1, 2013), a $1 billion patent-infringement and trade-secret misappropriation lawsuit, the court dismissed the plaintiffs’ claims. Subsequently, the defendants asked the court to award reasonable attorneys’ fees under 35 U.S.C. § 285, which allows prevailing parties to recover fees in “exceptional cases.” The court found this case “exceptional” because the plaintiffs’ claims were “objectively baseless” and filed in “subjective bad faith.”
In the memorandum supporting their motion for fees, the defendants asked for discovery costs and explained their document review process. First, the parties agreed to search terms to eliminate non-responsive documents. Then, instead of performing manual review over the full set of remaining documents, the defendants retained a company to create an algorithm to perform a first-pass review for responsiveness. Finally, the defendants’ law firm retained a managed review service to perform manual review for privilege, confidentiality, and relevance issues.
The court approved the defendants’ request for $2.8 million for a third-party vendor to construct the technology-assisted review algorithm, consult on search terms, and perform other related activities—all of which decreased the review workload downstream. The court found the “decision to undertake a more efficient and less time-consuming method of document review to be reasonable under the circumstances.” Similarly, the court awarded nearly $400,000 for managed review, based on 7,000 hours at rates ranging from $55 to $67 per hour, because the fees would have “been exponentially higher” had the law firm reviewed the documents.
Not only does this decision reaffirm the reasonableness of using efficient means (for example, technology-assisted review coupled with managed review) to reduce the e-discovery costs, but it also suggests a way to recover costs recently ruled as non-taxable under 28 U.S.C. § 1920. (Interestingly, the court had rejected the defendants’ request to include e-discovery consultant fees in a bond because they constituted “intellectual effort” rather than “‘the physical preparation and duplication of documents’” under Section 1920. Gabriel Technologies Corp. v. Qualcomm Inc., (S.D. Cal. Sept. 20, 2010).)
Stuart LaRosa is a senior search consultant with Xerox Litigation Services. He can be reached at email@example.com.