Court of Chancery Insists Upon Predictive Coding

Courts outside of Delaware have addressed the use of predictive coding in discovery and now the Court of Chancery has addressed this technology in a transcript ruling inEORHB v. HOA Holdings , C.A. No. 7409-VCL (Del. Ch.). Predictive coding is a technology that allows attorneys to train a computer program to review documents for responsiveness. Predictive coding is supposed to reduce the costs of document production by cutting down on the amount of document review by attorneys. Instead of associates, contract attorneys or overseas lawyers reviewing hundreds of thousands of documents for responsiveness, a computer program codes documents as responsive or nonresponsive. Attorneys may still review documents coded responsive by the computer program and do a quality control sampling review of documents coded as nonresponsive, but the goal is to cut down on the amount of attorney-review time. To train the computer program, attorneys will code a "seed set" of documents. The computer program then codes the remainder of the documents responsive or nonresponsive based upon the seed set. Attorneys will review some or all of the results in order to further train the computer program. According to some studies, predictive coding is at least as accurate, if not more accurate, than human review.

InEORHB , which involved indemnification claims arising from a sale transaction, the court raised predictive coding sua sponte after granting partial summary judgment in favor of the defendants and refusing to dismiss the defendants’ counterclaims for indemnification. Vice Chancellor J. Travis Laster informed the parties that he believedEORHB was the type of non-expedited case where the parties would benefit from using predictive coding. Not only did Laster indicate he was in favor of predictive coding, he also ruled that if the parties did not want to use predictive coding, they would have to show cause for why predictive coding was inappropriate. He further ordered the parties to discuss using a single discovery provider and if they could not agree upon one, to submit a list of discovery providers from which he would select a discovery provider for the parties to use.