Commercial Division Blog

Posted: February 8, 2018 / Categories Commercial, Discovery/Disclosure

Parties Not Allowed to Conduct Additional Relevance Review of Documents Found by ESI Search

On January 29, 2018, Justice Friedman of the New York County Commercial Division issued a decision in Matter of Nomura Asset Acceptance Corp. Alternative Loan Trust, Series 2007-1 v. Nomura Credit & Capital, Inc., 2018 NY Slip Op 30161(U), holding that the parties to an agreement regarding ESI search terms were not allowed to conduct an additional relevance review of the documents found by the ESI search, explaining:

These appeals are brought pursuant to the Part 60 RMBS Putback and Monoline Case Management Order, dated December 7, 2015. In both Rulings, the Special Master directed the Trustee to produce "all documents that are responsive to the Parties' agreed-upon search terms, but for any document that reasonably appears to be a 'clear mis-hit', or is subject to a claim of privilege." As discussed further below, both Rulings are based on the Special Master's reasoning that, under the circumstances of these cases, the parties' arms-length negotiations of ESI search terms reflect an agreement as to broad relevance, and that further "subjective relevance and responsiveness determinations are generally inappropriate." The Merrill Lynch Ruling does not involve the production of certificateholder documents, whereas the Nomura Ruling does.

The court holds that the Special Master's Rulings should be affirmed. The parties' ESI search terms were agreed upon following extensive negotiations that occurred after the Trustee served its responses and objections to Nomura's and Merrill Lynch's document requests, respectively. The negotiation of the search terms occurred under the general supervision of Special Master Katz, and with the benefit of guidance provided in his numerous rulings in the coordinated Part 60 RMBS Put-Back Litigation.

. . .

The court finds that the circumstances in which the ESI search tenns were negotiated support the Special Master's Merrill Lynch and Nomura Rulings that a further relevance review of documents responsive to the search terms is not appropriate. . . . The authorities on which HSBC relies do not support its claim that the Special Master erred in holding that a further relevance review was not appropriate. In Chen-Oster v. Goldman & Sachs Co., . . . as in the cases at issue on these appeals, the parties had served document demands and responses prior to negotiating ESI search terms. The Court permitted a relevance review of search results prior to production, reasoning that the parties had not agreed, and it had not ordered~ that all documents responsive to the terms must be produced. The Court noted that the parties could have agreed to another "model," in which they would "simply agree on the search methodology, for example by stipulating to search terms, with the understanding that all documents [except privileged documents] shall be produced." Similarly, in Royal Park Investments SA/NA v. HSBC Bank . . . , the Court permitted the producing party to conduct a responsiveness review of search results, based on a finding that the parties had agreed on ESI search terms but not on how to produce documents that contained those terms. The Court specifically noted that the dispute would have been avoided had the parties agreed on the ESI Search protocol used and the process for producing the documents captured by that protocol before beginning discovery. Here, in contrast, the parties' ESI search terms were not finalized until after the Special Master's November 7, 2016 ruling, in which he elucidated his position that the negotiated search terms capture relevant documents and that a further relevance review is generally not appropriate.

(Internal quotations and citations omitted).

A big part of complex commercial litigation is giving, receiving and evaluating evidence (this is called "discovery"). This decision discusses an issue that frequently arises in discovery: searching computers and e-mail accounts for evidence, something that often is done using search terms. Contact Schlam Stone & Dolan partner John Lundin at if you or a client has a question regarding discovery obligations, including search electronic evidence.