eDiscovery Issue: $2.8 Million in Fees Awarded to Prevailing Party for its Computer Assisted Review Costs

U.S. District Judge (S.D. Cal.) Anthony J. Battaglia recently awarded over $2.8 million in attorneys’ fees and costs for using predictive coding and over $391,000 for document review services.

Plaintiffs filed suit in 2008 for 92 patent violations and 11 causes of action. After four amended complaints and extensive discovery, plaintiffs narrowed their claims to 16 patents. During the case, the court approved an $800,000 bond, which the plaintiffs posted in order to avoid dismissal of their claims. Later, the court granted summary judgment as to all of plaintiffs’ claims. The defendants filed a motion for attorneys’ fees and costs under federal law (fees and costs to the prevailing party in “exceptional” patent cases) and state law (fees and costs for filing a misappropriation claim in bad faith). Judge Battaglia decided that the plaintiffs made frivolous claims in bad faith, making the case “exceptional,” and awarded fees and costs under both statutes. The court considered evidence including its own warning that the case lacked merit during the bond hearing and emails suggesting the plaintiffs knew they lacked requisite evidence.

Specifically, the court approved attorneys’ fees of $10,244,053, including $2,829,349.10 for using a document review algorithm developed by H5, an eDiscovery firm. The algorithm sorted 12,000,000 records into responsive and non-responsive documents, which an outside vendor then reviewed.

The court found H5’s computer-assisted review to be a “more efficient and less time consuming method of document review” that “seemingly reduced the overall fees and attorney hours.” Finally, the court sanctioned the plaintiff’s law firm for its total billing, $64,316, to erase any profit and deter frivolous filings. Note that the plaintiffs did not object to the reasonableness or amount of the sanctions.