Based on the LSC estimate, Goshawk must deposit funds into the registry of the Court sufficient to cover the anticipated costs of producing “all Documents under this Order.” After all document production is complete, the Court then is to consider actual costs of compliance and determine how much to reimburse LSC.

In a June 25, 2010 letter, LSC revealed that there were 24,309 non-privileged documents that are responsive to the Goshawk subpoena and ready for delivery.[1] These documents have been drawn from what have been labeled as LSC's “2007 backup tapes.” The existence of these tapes first came to light during a required “meet and confer” session between attorneys for the parties in August of 2009.[2] This belated revelation[3] eventually led to Report and Recommendation No. 7 (“R & R 7”) [Document 506], which the Court approved on January 14, 2010. [Document 508] LSC retained Index Engines to search the 2007 backup tapes using key words proposed by Goshawk and approved by the Special Master. Goshawk deposited $39, 975 into the Registry of the Court to cover these services and payment to Index Engines has been made.[4] Neither party disputes that prepayment of anticipated outside vendor costs is required under the July 23, 2008 and R & R 7.

The immediate question is the transfer of the 24, 309 documents. Pursuant to its letter of July 6, 2010, LSC demands the pre-payment of an additional $359,574.30 into the Registry of the Court as a precondition to delivery of these documents to Goshawk.[5] The entire demand is for legal services provided to LSC between July 25, 2008 and July 1, 2010. Analysis of this issue starts with the July 23, 2008 order. It specifically delineates the subpoena compliance activity for which Goshawk must make pre-payment. This requirement applies only to “the direct cost of gathering, copying and transferring the documents to Plaintiffs....” The order refers to “the Trialgraffix (sic) cost” as an example of a direct cost. TrialGraphix was one of three outside or third party vendors that submitted estimates in April 2008 for the “hosting and production of ESI” responsive to the Goshawk subpoena.[6] While the order does not give other examples of direct costs, it does make clear that one cost category is not subject to the pre-payment requirement. That category is “attorney's fees.”

*2 LSC is preoccupied with the attorney's fee issue, apparently fearing that the July 23 order forecloses their recovery as a subpoena compliance cost under Rule 45 of the Federal Rules of Civil Procedure (“Rule 45”). Anxiety over this question prompted LSC to appeal the July 23, 2008 order to the Eleventh Circuit.[7] LSC's concerns are unwarranted. In practical effect, the order obliges LSC to litigate its entitlement to attorney's fee without the rare advantage of having funds pre-paid into the Registry of the Court to ease the risk of non-collection. While LSC might not like the line that the Court has drawn, it cannot persuasively argue that the line is an unreasonable one, particularly given Goshawk's apparent financial ability to pay any attorney's fees demand currently under consideration.

Despite regularly reminding the Special Master that he has no power to expand or alter the July 23, 2008 order,[8]LSC insists that R & R 7 did just that. LSC is incorrect. As previously mentioned, far from modifying the July 23 order, footnote eight of R & R 7 specifically refers to language excluding “attorney's fees” from the pre-payment requirement. Analytically, that resolves the immediate question whether Goshawk must make any additional pre-payments before LSC can be directed to deliver the 24,309 responsive documents.

Additional comment about R & R 7 is appropriate here. R & R 7 makes two references to attorney's fee estimates. Both are in the context of compliance with its procedures and timetable. The first reference occurs in paragraph 18 which requires LSC to “provide a detailed estimate of the anticipated time and cost for the privilege review.” Recognizing that LSC has consistently claimed the right to be reimbursed for attorney's fees incurred in complying with the Goshawk subpoena, footnote seven directs LSC to organize the privilege review estimate according to specific cost categories: “collecting, indexing, reviewing and producing ESI.” Footnote seven also directs LSC to provide “separate estimates of attorney time for in-house and outside counsel.” The object is to give Goshawk meaningful notice of its potential exposure to cost reimbursement under Rule 45 independent of whether any specific cost category was subject to the pre-payment requirement.[9] It was anticipated since this estimate would be based on a known universe of presumptively responsive ESI, it would be more realistic and precise than those provided in April and August of 2008.[10] This LSC estimate was due on or before Day 49 or March 4, 2010. R & R 7, ¶ 18. LSC never provided it.

After receipt of this estimate, the Special Master was next supposed to confer with the parties “to determine the reasonableness of LSC's time and cost estimate” and “to establish a supplemental timetable for completion of (a) LSC's privilege review and (b) the production of non-privileged, responsive ESI in native format with metadata intact.” R & R 7, ¶ 19. This conference was scheduled for Day 56 or March 11, 2010. R & R 7, ¶ 19. It also did not occur. LSC acknowledges that it has culled out many arguably privileged documents. This process transpired outside the framework of the supplemental timetable contemplated in paragraph 19 of R & R 7.[11] LSC still has not produced a privilege log despite specific language in paragraph 20 of R & R 7 requiring one. Even if pre-payment of attorney's fees were authorized for privilege review under R & R 7, which is not the case, LSC forfeited that right by failing to comply with paragraphs 18, 19 and 20 of R & R 7.

*3 The second reference to attorney's fees appears in paragraph 21 of R & R 7. It contemplates that prior to the delivery of the ESI to Goshawk, invoices would be submitted reflecting all outstanding charges for which LSC would be seeking reimbursement under Rule 45. One of the three cost categories was “attorneys' fees for collecting, indexing, reviewing and producing ESI responsive to the Goshawk subpoena.” R & R 7, ¶ 21. Footnote eight was strategically placed next to the phrase “attorneys' fees” to remind the parties about language in the July 23 order “limiting the award of attorney's fees for compliance with the Goshawk subpoena.” R & R 7, ¶ 21. While that sentence could have been worded with greater precision, footnote eight's cautionary message continues, “LSC should nevertheless submit a request for all attorneys' fees believed to be reimbursable under Federal Rule of Civil Procedure 45.” R & R 7, ¶ 21. As in the case of the paragraph 18 cost estimate for privilege review, the purpose was notice. Before taking delivery of the ESI, Goshawk would be fully aware of the scale of LSC's potential reimbursement claims under Rule 45.

The third sentence in paragraph 21 of R & R 7 provides:

Standing alone, this sentence might be read to mean that the aggregate LSC cost estimate, including attorney's fees, would be subject to pre-payment under R & R 7. That is certainly LSC's interpretation. This interpretation loses its plausibility, however, once it is considered in light of the attorney's fees caveat in footnote 8 (which appears on the same page) and the specific exclusion of attorney's fees from the pre-payment requirement in the Court's July 23, 2008 order. The bottom line is that Goshawk will not be required to make pre-payment of any attorney's fees as a precondition to the delivery of ESI responsive to its subpoena. This Report and Recommendation is made without prejudice to LSC's right to seek reimbursement of attorney's fees under Rule 45 after full compliance with the Goshawk subpoena.

Unless otherwise stated, the following actions shall be taken no later than ten (10) days following the Court's approval of this Report and Recommendation:

So ordered.