For Over-designation of “Highly Confidential” Documents, Court Orders Expedited Re-Review, Attorney’s Fees

Procaps S.A. v. Patheon Inc., No. 12-24356-CIV-GOODMAN, 2015 WL 4430955 (S.D. Fla. July 20, 2015)

In this case, the court addressed Plaintiff’s designation of 95% of its forensically produced documents as “highly confidential” and, upon Defendant’s motion to compel Plaintiff to re-review and re-designate those documents, ordered that Defendant would be allowed to use all documents, regardless of their initial designation, unless the document was re-designated by the plaintiff in good faith within the short timeframe allowed by the court.  The court also ordered Plaintiff’s counsel to pay $25,000 in attorney’s fees.

Pursuant to a Stipulated Confidentiality Order, the parties in this case agreed that confidentiality designations would be made in good faith and that in the event of a challenge, the producing party would bear the burden to show that the mark was appropriate.  In the course of discovery, Defendant sought and was granted forensic analysis of Plaintiff’s electronic media.  Responsive ESI identified in that analysis was not produced in full until June 2015, 5 months before trial, and 95% of the documents were marked “Highly Confidential”—the most restrictive designation—and therefore could be reviewed only by Defendant’s outside counsel.

Because Defendant’s review of Plaintiff’s documents was severely restricted by the high volume of “Highly Confidential” documents, Defendant sought to compel Plaintiff to re-review and re-designate the documents.  Plaintiff conceded over-designation but nonetheless opposed the motion arguing, among other things, that the designations were made in good faith and that the over-designations were “innocuous mistakes” resulting from an expedited review.   Plaintiff also attempted to shift some blame to its vendor, who “conducted the ‘initial review of all documents,’” an argument the court was quick to dismiss:

The Court is not persuaded by Procaps’ efforts to allocate blame to the third party vendor or to the deadline. First, from an overarching perspective, the need to conduct the expedited forensic ESI analysis arose from Procaps’ failure to conduct an appropriate ESI search in the first place. Thus, to the extent there are logistical problems associated with the forensic review, Procaps is responsible because it is Procaps’ inattentiveness which created the ESI snafu. Second, Procaps should have staffed the project with sufficient team members (either from an outside vendor, its own attorneys or contract attorneys). Third, Procaps is ultimately responsible for the designations. Fourth, if Procaps realized that the review was taking longer than anticipated, then it should have immediately made adjustments and increased the number of members on the review team or increased the level of effort from team members. And fifth, the consequences of the over-designation, regardless of why it happened, should not fall on the party (i.e., Patheon) who did nothing wrong.

(Citation omitted.) To remedy the over-designation, the court granted Defendant’s request that it be allowed to use all documents, regardless of their designation, unless Plaintiff re-designated the documents in good faith by July 30, 2015—10 days from the date this opinion was filed.  Notably, in so ordering, the court recognized the “extremely tight deadline” imposed:

To be sure, Procaps will undoubtedly be under an extremely tight deadline to re-review and re-designate documents. It may need to use a dozen or more attorneys working nights and an entire weekend. This will undoubtedly be burdensome, but, given the choice of burdening Patheon (to re-review the entire production and list specific documents worthy of re-review by Procaps or the Special Master) or Procaps, the Undersigned sees no reason to shift the burden to Patheon. Procaps is responsible for its over-designations. Even if an outside vendor conducted the first level of review, Procaps cannot avoid its discovery obligations by shifting blame to the third party it hired for the project. Moreover, Procaps’ attorneys presumably performed the final review, and one or more of its attorneys realized, or should have realized, that a 95% highly confidential, AEO designation rate is problematic and questionable (or “absurd”) on its face.

“Because Procaps’ use of the highly confidential designation was significantly incorrect and over-inclusive on a grand scale,” the court also ordered attorneys fees, to be paid by counsel:  “The Undersigned finds that it would be inappropriate and unfair to impose the fees award against Procaps itself, as the over-designation is its counsel’s responsibility. Therefore, the fees award will be against only Procaps’ attorneys.”

A full copy of the court’s order is available here.