Lighthouse Healthcare Center, LLC v. National Fire & Marine Insurance, No. 2:25-cv-01651 (C.D. Cal. Oct. 20, 2026), full opinion (PDF)
A magistrate judge in the Central District of California has found that both parties failed to comply with an order to develop ESI protocols jointly. The parties had agreed to use an AI review tool the plaintiff recommended, along with an initial set of search terms. In the court's view, the order called for an overall methodology worked out together, beyond that starting point.
The dispute turned on files the tool could not process. The court found that the defendants decided how to handle those files without the plaintiff, while the plaintiff left the fix to the defendants.
What happened
In July, the court ordered the parties to meet and confer to develop ESI protocols for the two databases the defendants had identified. Each side was to bring a litigation support specialist into that process.
The defendants later reported that some records could not be reliably searched. They also excluded files that were too large for the tool or that it reported as errors. The court noted that the plaintiff was apparently told about these files eventually. It also noted that the parties never agreed on how to handle the excluded files.
The plaintiff moved for sanctions. It argued that the defendants had modified the search results without its input and conducted a "black box responsiveness review". The defendants responded that they had used the plaintiff's AI processes and prompts. They added that they had manually reviewed the documents the AI tool could not process.
The court's analysis
The court found that neither specialist meaningfully guided the parties, because each took part only in the initial meet and confer. As the court explained, the July order contemplated that the specialists would guide the parties through the issues involving the dataset. The defendants' specialist submitted a declaration that, the court noted, did not address any work resolving those issues.
The court acknowledged that the defendants had attempted to comply and had undertaken an extensive review. It found, though, that they were not transparent about the ad hoc changes they made. Much of the production methodology, in the court's words, was "unilaterally decided by the Defendants".
The court also faulted the plaintiff for leaving the defendants to solve the processing problems alone. It noted that the plaintiff never asked its specialist to propose a solution. In the court's words, "AI is but a tool and not a substitute for what the Court Ordered".
At an October 13 hearing, the court had directed the parties to retain a neutral ESI expert. The October 20 order reaffirmed that direction and gave the neutral expert access to the databases to help the parties develop comprehensive protocols. The defendants must also disclose the methodology they have used so far.
The court separately found the defendants' privilege log insufficient. Among other gaps, the log did not show whether the withheld emails were related or which message was the parent email in each thread. It also did not say whether privilege was claimed over attachments.
The court deferred the plaintiff's request for monetary sanctions until the open issues on the ESI protocols, production, and privilege log are resolved.
Why it matters
When a court orders the parties to build ESI protocols together, agreeing on the AI tool and the opening search terms is only the first step. Each later change to the dataset is part of the joint work.
A producing party whose AI tool cannot process some files should disclose the exclusion before relying on the reduced dataset. It should also propose a way to handle those files and seek the requesting party's agreement. If the parties cannot agree, the producing party should ask the court for direction.
A requesting party that recommends the tool should expect to help solve the tool's processing problems. If it leaves that work to the producing party, it risks a finding that it, too, failed to comply.
Specialists brought into the meet and confer by court order should stay involved through the design of the review, not only the opening session. Any declaration a specialist submits should describe the work that specialist did on the dataset.
For email, a privilege log entry should show thread relationships and attachments, so the receiving party can assess each claim.
The full opinion is available as a PDF.
