Court considers adequacy of search terms used in discovery process

In O'Leary v Volkswagen Group Ireland Limited [2015] IESC 35, the Supreme Court considered the risks involved with the use of keyword searches in the discovery process, and the test for ordering further and better discovery. 

The plaintiff appealed against the High Court's decision and sought an order directing the defendant to comply with the order for discovery made in October 2013, and/or an order directing the defendant to make further and better discovery.  In particular, the plaintiff requested an order requiring the defendant to furnish a list of key search terms used by it, and an order permitting the plaintiff to have access to the defendant's IT system.

Laffoy J. (Murray J., MacMenamin J., concurring) at the Supreme Court, noted that the process of searching by key terms "is not a perfect or foolproof process or, indeed, a villain proof process". Recognising that, she held that the test as to whether to make an order for further and better discovery (as adapted from Murphy J. in Phelan v. Goodman [2000] 2 IR 577) was whether there was evidence before the High Court that it was probable that the key search terms used by the defendant had failed to identify documents which should have been discovered, thus giving rise to the inference that the appropriate key terms had not been utilised. 

The Supreme Court held that the defendant had produced no evidence to that effect, and rejected the appeal on all but a few issues.

In 2003, the plaintiff entered into a dealership contract with Motors Distributors Limited for the distribution of Volkswagen cars and vans at its premises in Cork.  In July 2007, the defendant acquired the interest of Motor Distributors Limited in the contracts.  The contracts were expressed to be for an indefinite term, but could be terminated by either party giving 24 months written notice.  The contract required the notice of termination given by the defendant supplier to contain a detailed statement of reasons.

In April 2011, the defendant gave notice to the plaintiff of termination which would take effect in April 2013, due to the downturn in the Irish economy and a need to reorganize its network.  Five days before the contracts were due to terminate in 2013 the plaintiff initiated these proceedings claiming, inter alia, injunctive relief, restraining the defendant from terminating the contract, on the grounds that the reason stated for the termination of the contract was not genuine.

The Discovery Order
In October 2013, Gilligan J. made an order requiring the defendant to disclose eight categories of documents, by means of the delivery of a CD Rom in searchable format to the plaintiff.  There were serious deficiencies in the defendant's discovery, which were addressed in subsequent correspondence between the parties.

In January, 2014 the plaintiff issued a motion seeking an order striking out the defendant’s defence and counterclaim for failure to comply with the discovery order.  The solicitors acting on behalf of the defendant acknowledged deficiencies in the defendant’s discovery and intimated that a full review would be carried out. A supplemental affidavit of discovery was subsequently sworn on behalf of the defendant highlighting the steps which had been taken within the defendant's organisation to source previously unlocated documents. The scale of the review undertaken was reflected in the fact that the searches resulted in over 59,700 documents, comprising both electronic and hard copy material, being presented for review by the defendant’s solicitors.

The High Court considered that the failure to make discovery was not sufficiently serious to warrant striking out the defence, and also refused the plaintiff's application for further and better discovery.  The trial judge concluded that the defendant had disclosed, insofar as reasonably possible, all documents coming within the categories agreed or directed by the court.

The Appeal
The plaintiff appealed to the Supreme Court, seeking, inter alia, an order setting aside the High Court's decision and directing the defendant to comply with the order for discovery made in October 2013, and/or an order directing the defendant to make further and better discovery. 

The plaintiff submitted that questions arose as to the adequacy of the search terms used by the defendant in conducting electronic discovery, and claimed that the Court should make an order directing the defendant to disclose key search terms used by it to the plaintiff.  In addition, the plaintiff  submitted that the defendant should be directed to permit an IT specialist, nominated by the plaintiff, to have access to the defendant's IT system, on the basis of a suspicion that the search terms used by the defendant could have excluded important documents that the defendant was obliged to discover.

The Decision
Laffoy J., at the Supreme Court, stated that the test for the Court, in determining whether to order further and better discovery, was whether the evidence presented to the High Court was sufficient to satisfy the Court that relevant documents were in the possession of the defendant which should have been, but were not, discovered in its original or supplemental affidavit of discovery.

She was satisfied that there was nothing in the evidence to suggest that the defendant had acted other than bona fide and to the best of its ability to comply with the discovery order, and rejected the plaintiff's appeal in all but a few narrow issues.

In making her decision, Laffoy J. (at paras 57-59) approved Clarke J.'s decision in Thema International Fund plc v HSBC International Trust Services [2012] 3 I.R. 528, which addressed the practical difficulties encountered in making discovery of electronically stored material.  Clarke J. had warned that any search by keywords has the potential for getting things wrong, and emphasised that the obligation on a party making discovery is to disclose, insofar as may be reasonably possible, all documents which come within the categories agreed or directed by the court.  

This decision demonstrates, once again, that whilst keyword searches are a valuable tool in reducing the number of documents which require personal review, there is a risk that relevant documents will not turn up in search results.  Accordingly, parties must exercise caution in selecting appropriate keywords. 

As Clarke J. highlighted in Thema, if the keywords used are too wide, the selection process will not do its job.  On the other hand, if the keywords used are too narrow, it will enhance the risk of false negatives. Some reasonable balance must be struck between the two.  He stated that: "Provided that a party acts bona fide…it does not seem to me that a party should face criticism or adverse consequences if it should transpire that, despite those best efforts, some documents slipped through the net."  He did, however, note that: "if truly key documents were to slip through the net that might, of itself, lead to real questions as to whether anyone could reasonably have believed that the methodology was right in the first place."

The decision in Hansfield Developments v Irish Asphalt Ltd [2010] IEHC 32 indicates that parties should, where possible, agree searches and keywords before they are conducted.  In Thema Clarke J. noted that it had not been possible to reach such agreement.

For further information please contact Davinia Brennan at or your usual contact at A&L Goodbody.

Date Published: 19 May 2015