Northstar Marine, Inc. v. Huffman, a recent case from the Southern District of Alabama, stemmed out of allegations relating to a contract to clean up the aftermath of the 2010 BP oil spill in the Gulf of Mexico. The Plaintiff demanded $1,000,000 in damages, plus interest, costs, attorneys’ fees, and punitive damages in its complaint. Defendants filed a counterclaim and discovery ensued, as it is wont to do. The parties came to an agreement on protocol for producing electronically stored information and this agreement was adopted by the court in its Supplemental Rule 16(b) Scheduling Order.

Nearly a month after the Defendant’s counsel contacted the Plaintiff’s counsel about production status, Plaintiff’s counsel admitted that it was still looking for a vendor to assist with production of electronically stored information. Plaintiff stated in a filing with the Court that “[a]t the time of the filing of the report, it was believed that providers of electronic search technology were readily available in its area and that implementation of the technology was inexpensive.” Interestingly, the Plaintiff further argued that it received a quote from an eDiscovery vendor that was “in excess $3,000.00” and that this was not affordable. Plaintiff stated it was looking into other providers.

The Court ruled that the Plaintiff’s difficulty in locating an inexpensive provider of electronic search technology did not constitute sufficient grounds to further delay production of electronically stored information and granted Defendant’s motion to enforce the parties’ document production agreement, In sum, the Court found that “Plaintiff’s attempts to find an inexpensive provider certainly do not constitute due diligence.” The Court also eloquently stated that the Scheduling Order was not a “frivolous piece of paper, idly entered, which can be cavalierly disregarded by counsel without peril.”

Proportionality is a big principle in eDiscovery- what is spent on discovery should have a reasonable balance with the amount in controversy. $3,000 is .03% of a million dollars, but it was presumably a vendor cost alone (i.e., not the cost of actually looking at the documents). So what percentage of the amount at controversy is a reasonable amount to spend on a vendor? A vendor would probably give you a much different number than a litigant, for sure, for it is a question our courts struggle with regularly. This is doubly so for cases where money isn’t really the issue- such as civil rights cases.

One lingering question is how much in fees the parties spent litigating the issue of whether they could find an inexpensive provider- most likely over $3,000.