By: Daniel Garrie and Peggy Leen
Tuesday, June 16, 2020
How to Use Discovery Special Masters, Forensic Neutrals and Technical Special Masters
Disputes are becoming increasingly complex. The average civil litigation in federal courts takes upwards of 24 months to resolve on the merits.2 Thus, the bench and bar are increasingly looking to alternative processes, such as the appointment of special masters or referees, to reduce time and cost. While litigants and their counsel may be reluctant to suggest the appointment of a special master due to concerns over delays and the additional expense, these judicial adjuncts can be effective in reducing both the cost and time required to resolve a litigation, as well as providing the expertise necessary to keep a case moving forward.
In many jurisdictions, the most common complaint about the judicial system is the delay associated with moving cases forward. Lawyers and their clients need decisions, even adverse ones, to make strategic decisions. Crowded dockets, the volume of pending motions and the constitutional and statutory requirements to give priority to criminal cases are responsible for significant delays in civil cases. In the appropriate case, appointment of a special master or forensic specialist can expedite resolution.
Further, there is a wide disparity in the technical proficiency of judges, which can cause significant delays and additional expense litigating cases involving electronically stored information and other forensic disputes. Some judges are technically proficient and can comprehend and address these types of disputes. State and federal judges are contributing to a growing body of law deciding and guiding a myriad of recurring issues. However, virtually every lawyer has come across a judge who lacks the technical expertise to fully comprehend a dispute, let alone decide it. A lawyer with specialized expertise or a forensic specialist with knowledge of the judicial system would be better equipped to identify and resolve forensic issues in a timely and cost-effective manner.
Still, in some cases, especially those in which the disputes are caused by recalcitrant parties and/or their counsel, who may be operating in bad faith, litigants and their counsel may be concerned about the additional expense incurred by the appointment of a special master. The Federal Rules of Civil Procedure (FRCP) give judges broad discretion to address discovery abuses and apportion expenses to appoint a special master. FRCP Rule 53(a)(3) requires the court to consider the fairness of imposing expenses on the parties and to protect against unreasonable expenses or delay before appointing a special master. Rule 53(g)(2) provides that compensation for the special master must be paid by the parties or “from a fund or subject matter of the action within the court’s control.” Significantly, Rule 53(g)(3) authorizes the court to allocate payment among the parties “considering the nature and amount of the controversy, the parties’ means, and the extent to which any party is more responsible than other parties for the reference to a master.” This fee-shifting provision is an important and powerful tool in the court’s arsenal to ensure equitable allocation of the additional expense.
The benefits of using special masters in applicable disputes is well settled, but the rules governing the use of these adjuncts are idiosyncratic and not as well known. This article will offer practical advice and guidance regarding selecting and working with three main types of special masters and referees in federal court: (1) a discovery special master, (2) a forensic neutral and (3) a technical special master.
Using a Discovery Special MasterDiscovery special masters work at the direction of the courts across all facets of the discovery process. They are the most common and widely used type of special master. Discovery special masters can be used in banking, bankruptcy, corporate dispute, class action or product liability cases, among others.
In federal court, the appointment of a discovery special master is made under FRCP Rule 53(a)(1), which provides that a court “may appoint a master only to: (A) perform duties consented to by the parties [or] (B) hold trial proceedings and make or recommend findings of fact on issues to be decided without a jury if appointment is warranted.” Under this rule, when the court appoints a special master, it provides a detailed appointment order outlining the special master’s authority. FRCP Rule 53(b)(2) requires the order to delineate several things, including (1) the master’s duties, (2) the rules for ex parte communications, (3) timing for the master’s report and related matters and (4) the master’s compensation. In summary, the intent is for an individual to adjudicate the discovery dispute and, if appropriate, file a report with findings of fact and law that resolves the pending legal issues.
While a firm grasp of federal law specific to discovery is a prerequisite for an attorney looking to utilize a discovery special master, it is a necessary but not sufficient condition. A critical driver of a discovery special master’s ability to resolve discovery issues is his or her technical experience. For example, in insider trading cases, possession of material, non-public information is a critical element that can be proven through employee access rights, emails, texts and other forms of communication. In a large enterprise, it may be difficult to know which devices and accounts people have, whether they are communicating on personal devices or via undisclosed email addresses and whether missing data is the result of imperfect retention policies or willful spoliation. Ascertaining these things may require a discovery special master, who can work with stakeholders and evaluate the situation from both a technical and a legal perspective.
A Discovery Special Master with technical expertise can greatly assist the bench and the bar in efficiently and effectively resolving discovery disputes, particularly when parties allege spoliation and other forms of material noncompliance.
Using a Forensic NeutralAnother, but less frequently utilized, type of court-appointed neutral is the forensic neutral. Generally, a forensic neutral is appointed by the court to conduct a forensic investigation and submit his or her findings, most commonly in a forensic report, which summarizes the process for collecting, processing, analyzing and reviewing the parties’ data. A well-prepared forensic report focuses on the 1s and 0s contained on the examined systems, presenting no legal findings or factual conclusions; those are reserved for the court and the parties.
Lawyers seeking the aid of a forensic neutral should submit an order that clearly outlines what investigations he or she is to undertake, as well the procedures that the parties will use to engage with him or her. Lawyers and the court can engage a forensic neutral to assist in a variety of capacities, such as (1) determining the existence or veracity of digital evidence, (2) overseeing the implementation of data-related injunctions, (3) monitoring compliance with data-related injunctions and (4) forensically analyzing deleted or corrupted data for evidence of wrongdoing.
An illustrative example of a forensic neutral’s work can be seen in the context of an employment contract’s noncompete clause. For example, let’s say a court awards an employer a preliminary injunction against some of its former employees for starting a business similar to the employer’s business within the specified noncompete zone. How can the court ensure that these former employees comply with the order? A forensic neutral can investigate the employees’ new business and review the noncompete agreement to determine the appropriate boundaries of prohibition. The forensic neutral can then ensure that the former employees cease all competitive business activities within the identified noncompete zone and certify to the best of his or her knowledge that the former employees no longer pose a competitive threat to the employer.
A forensic neutral can be very valuable in the right dispute, but it is important to keep in mind that a forensic neutral is a fact gatherer, not a problem solver. The facts may lead to an inevitable conclusion; however, a forensic neutral will resolve questions surrounding the existence and veracity of factual evidence.
Using a Technical Special MasterA technical special master is a neutral appointed by the court to assist the court in understanding pending technical issues or resolving complex technical issues that may exceed the court’s expertise. Parties will generally prompt the court to appoint a technical special master, but there are circumstances that would lead the court to appoint one on its own. Often, the court may consider using a technical special master when trying to resolve a legal issue intimately connected to a technical issue.
However, the parties are generally the ones who seek the aid of a technical special master, and there are certain hallmarks that will indicate that the parties should seek the aid of one. It is important that the court and the parties seek not only a generally technically savvy and experienced individual, but one with specific experience with the systems at the heart of the dispute. For example, in patent cases, judges and attorneys may require the assistance of someone who possesses the technical knowledge to understand the nuances of a patented technology. In such circumstances, a technical special master with expertise in patent law and the particular technological area under scrutiny can add significant value.
It is difficult to know exactly when and under what circumstances to seek the services of a technical special master, as each case is unique. Parties should consider each candidate’s credentials as a lawyer and technologist, as well as his or her specific related experience.
The demand for discovery special masters, forensic neutrals and technical special masters will likely increase. Their value can be substantial and knowing when and how to use these resources is key to maximizing it. To realize the greatest benefit, parties should seek experts with the requisite technological and legal expertise and experience.
Daniel B. Garrie is the co-founder of Law & Forensics, a global forensic, e-discovery and cybersecurity engineering firm. He is also a neutral, discovery referee, arbitrator, technical special master and forensic neutral with JAMS. You can contact him at firstname.lastname@example.org.
Hon. Peggy A. Leen (Ret.) is a JAMS neutral who served more than 18 years as a United States magistrate judge in the District of Nevada. Before her appointment to the bench, she was a trial lawyer for more than 20 years, during which time she litigated both civil and criminal cases. You can contact her at email@example.com.
1 The authors thank Shradhha V. Patel, a student at Rutgers University Law School, for her hard work and contribution to this article.
2 Judicial Facts and Figures, USCOURTS.GOV.
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