This Sidley Update addresses the following recent developments and court decisions involving e-discovery issues:
- a U.S. Court of Appeals for the District of Columbia Circuit ruling that the district court had awarded unauthorized costs associated with predicate and ancillary steps of discovery production that did not fall within the allowable scope of 28 U.S.C. § 1920
- a U.S. District Court for the Northern District of California decision noting the contentious nature of discovery between the parties and granting in part but significantly reducing the fees awarded defendant as sanctions for plaintiff’s conduct in connection with various discovery disputes
- a U.S. District Court for the District of Kansas order denying all but one of plaintiff’s various discovery requests, holding, among other things, that intracompany instant messages not stored by default need not be produced
- a U.S. District Court for the Western District of Virginia decision granting in part defendants’ motion to compel responses about the plaintiff’s efforts to enforce its mark but limiting the scope of such responses given plaintiff’s widespread enforcement activity
1. In United States ex rel. Barko v. Halliburton Co., 2020 WL 1482398 (D.C. Cir. Mar. 27, 2020), the U.S. Court of Appeals for the District of Columbia Circuit held that the district court had awarded unauthorized costs associated with predicate and ancillary steps of discovery production that did not fall within the scope of 28 U.S.C. § 1920.
In this qui tam action, the relator, Harry Barko, filed suit under the False Claims Act against his former employer, Kellogg Brown & Root Services (KBR), and various subcontractors, alleging these parties defrauded the government by inflating costs and accepting kickbacks for military base construction in Iraq. In response to Barko’s discovery requests, KBR compiled over 2.4 million potentially responsive pages, which it hosted on Introspect e-discovery software. Ultimately, KBR identified 171,000 responsive documents, which it converted into TIFF or PDF files for production. Id. at *1.
After the district court granted summary judgment in favor of KBR, KBR filed a bill of costs with the district court clerk, seeking over $100,000 pursuant to Fed. R. Civ. P. 54(d)(1). Relying on section 1920(4), KBR sought $33,000 in Introspect licensing fees, $10,000 for preparing files to be uploaded to Introspect, $15,000 for various document review processing tasks, and $5,000 in traditional copying and printing costs. Relying on section 1920(2), KBR sought an additional $7,000 in deposition-related expenses. Despite objections from Barko, the clerk taxed the full bill. Barko’s subsequent motions to the district court to retax and to reconsider were denied. Barko appealed. Id. at *1–*2.
The D.C. Circuit first evaluated Barko’s arguments under section 1920(4), which authorized district courts to award “the costs of making copies of any materials where the copies are necessarily obtained for use in the case.” Id. at *2 (quoting 28 U.S.C. § 1920(4)). KBR relied on a 2008 amendment to section 1920(4), which changed the coverage of the statute from “[f]ees for ... copies of papers” to “the costs of making copies of any materials.” KBR argued that Congress intended the statute to be expansive enough to cover “not just the act of generating duplicates but also all the predicate and ancillary steps leading up to and facilitating the duplication.” Given the reality of the modern e-discovery process, KBR claimed that the hosting and processing costs were essential to the production process.
The Court of Appeals disagreed. Based on the slight change in wording, the reported intent of the author of the statute, and the Supreme Court’s postamendment interpretation of the statute, the Court of Appeals found that the purpose behind the statute had not changed. It was still intended only to cover “relatively minor, incidental expenses.” Id. at 3 (quoting Taniguchi v. Kan Pacific Saipan, Ltd., 566 U.S. 560, 573 (2012)).
To account for the advances in electronic discovery, the Court of Appeals determined that common sense judgments were necessary to compare electronic discovery tasks with paper-document analogs. To assess the costs in the instant case, the Court of Appeals divided the e-discovery costs sought into five stages: (1) initial conversion into formats appropriate for loading to Introspect, (2) subscription to Introspect, (3) processing costs (e.g., organizing, keyword-searching, and Bates stamping), (4) conversion into PDFs and TIFFs for production and placing on USB drives, and (5) production processing (e.g., drafting cover letters and mailing costs). Of these costs, the Court of Appeals found only the fourth category to be recoverable, as it resembled the pre-digital-age task of photocopying a stack of responsive documents to provide to opposing counsel, which would be taxable under the statute. Therefore, KBR was entitled to $362.41 in costs for this conversion. Id. at *3–*4.
The Court of Appeals further found that the expenses from stage 1 were incurred only for the convenience of the company and thus were not necessarily obtained for use in the case. Expenses from stages 2, 3, and 5 were also untaxable. In the predigital age, the steps preceding and following the actual making of the copies were not taxable. Thus, the same was true now, and those costs could not be recovered. Id. at *4.
The Court of Appeals next addressed Barko’s arguments regarding KBR’s recovery of its payment to an external vendor. The payment consisted of $500 in labor costs and $4,600 in materials, such as binders, tabs, and folders, for packaging the exhibits. While the Court of Appeals found the labor costs to be ancillary costs (and thus untaxable), it found that the materials were necessary to keep the copies together and thus “no less taxable than the cost of the ‘cop[y]’ itself.” Id. (quoting 28 U.S.C. § 1920(4)).
The Court of Appeals then turned to Barko’s arguments regarding awards made pursuant to section 1920(2), which permits taxation for “[f]ees for printed or electronically recorded transcripts necessarily obtained for use in the case.” Id. (quoting 28 U.S.C. § 1920(2)). Specifically, Barko contested $6,000 for expediting preparation of deposition transcripts and $900 for producing a video recording of a deposition. Barko conceded that these costs were covered by the statute but argued that the district court abused its discretion in finding these reasonably necessary. Id. at *4–*5. Remaining mindful that “trial judges are in a far better position than we to assess the needs of the parties in relation to the case schedule,” the Court of Appeals looked to the reasoning of the trial court, which had found the transcript-expedition costs to be justified given a pending motion to compel and dispositive motions deadline. Id. at *5 (internal quotation omitted). The district court had also reasonably accepted KBR’s explanation that the video was necessary to prepare for trial. Finding “no reason to meddle in [the district court’s] finding[s],” the Court of Appeals upheld these awards. Id. (quoting Corder v. Lucent Technologies Inc., 162 F.3d 924, 929 (7th Cir. 1998)).
The Court of Appeals remanded the case to the district court, expressing the hope that the opinion would ensure that in the D.C. Circuit, “the assessment of [litigation] costs [will] most often [be] merely a clerical matter that can be done by the court clerk.” Id. (quoting Taniguchi, 566 U.S. at 573.
2. In Glass Egg Digital Media v. Gameloft, Inc., 2020 WL 906714 (N.D. Cal. Feb. 25, 2020), Magistrate Judge Robert M. Illman after noting the contentious nature of discovery between the parties granted in part but significantly reduced the fees awarded defendant as sanctions for plaintiff’s conduct in connection with various discovery disputes.
Plaintiff Glass Egg Digital Media (Glass Egg), a British Virgin Islands producer of digital care models for the gaming industry, sued Gameloft SE (GLSE) and Gameloft Inc. (GLI and, collectively, the defendants), a French electronic game producer, for copyright infringement, conversion, and unfair competition. Id. at *1. Early in the litigation, GLSE filed a motion to dismiss for lack of personal jurisdiction. The district court granted in part and deferred ruling in part on GLSE’s motion and allowed the plaintiff to conduct jurisdictional discovery on the extent of GLSE’s business in California and the identity of the entity or entities that operate(s) the Gameloft website accessible to users within California (the Jurisdictional Discovery Order).
During the following year, the parties briefed three discovery disputes. Id. at *2. The first dispute involved defendants’ request for an order extending the response dates for the plaintiff’s third-party subpoenas until after resolution of the parties’ second and third discovery disputes, one regarding the scope of jurisdictional discovery and the other regarding the propriety of the subpoenas. On April 15, 2019, after considering the parties’ briefing, Magistrate Judge Illman issued an order addressing the parties’ scope of discovery and subpoena disputes. Id. at *3. As to the scope of discovery dispute, the magistrate judge ordered the parties to file separate briefs describing each rejected discovery request and explaining why that request did or did not fall within the two categories permitted by the Jurisdictional Discovery Order. Magistrate Judge Illman deferred ruling on the third-party subpoena dispute until after resolution of the scope of discovery dispute, and stayed compliance with the subpoenas in the meantime.
Following the magistrate judge’s order, the parties submitted separate briefing on the scope of discovery issues, but based in part on the volume of their submissions, this additional briefing “rendered disposition unnecessarily difficult.” According to Magistrate Judge Illman, the parties had “worked themselves into such depths of disagreement that they disputed the very nature of the issues presented in the letter brief” and failed to provide “an enumeration of exactly which items of discovery had been sought and declined, and for what reason.” For this reason, the magistrate judge ordered the parties to file an additional, joint brief “that would strictly adhere to a prescribed format that was calculated to avoid the obfuscation of the matters actually in dispute.”
With the filing of the joint brief, the magistrate judge was finally in a position to turn to the merits of the dispute. Id. at *4. The central issue in dispute — which the magistrate judge viewed as a motion to compel discovery from GLSE — was the definition of the word “size,” as it appeared in the district court’s order permitting jurisdictional discovery. In GLSE’s view, “size” referred only to the sales that gave rise to Glass Egg’s infringement claim. In plaintiff’s view, however, “size” included all details relating to nearly every facet of GLSE’s existence, including the extent and commercial value of its the market and the viewer base, GLSE’s commercial partners, and its promotional efforts. In the end, Magistrate Judge Illman charted a middle ground, concluding that as used in the Jurisdictional Discovery Order, “size” was neither limited to sales revenue, nor was it “so broad as to include virtually every characteristic of the entirety of a company’s operations.” Thus the magistrate judge granted in part and denied in part the plaintiff’s “motion to compel several-hundred individual discovery requests for various reasons, such as finding that some of the requests fell under the business model rubric, or that some requests sought to ascertain GLSE’s global size, or, in other cases, that they were rationally related to determining GLSE’s size in California.” Both parties appealed to the district judge, seeking relief from the magistrate judge’s order. In response to the appeals, the district court further narrowed the scope of discovery requests falling within the scope of its Jurisdictional Discovery Order.
With respect to the subpoena dispute, GLSE argued that the plaintiff’s proposed third-party subpoenas “operated as an end-run around the limits of jurisdictional discovery established in this case because Plaintiff’s subpoenas sought essentially all information in the possession of various third parties ... relating to ‘Gameloft,’ while defining that terms as including GLSE as well as GLI.” Id. at *5. The plaintiff attempted to justify the broad sweep of its subpoenas, arguing that “[t]he persistent conflation of the corporate separateness of GLI and GLSE is integral to the scope of third-party discovery.” Id. (internal quotation marks omitted). The magistrate judge concluded that the district court had effectively rejected this same argument nearly two years prior. Id. at *6. Accordingly, the magistrate judge found that “because the subpoenas were not in any way limited to seeking information within the scope of permitted jurisdictional discovery, and because they were overly broad and needlessly burdensome and costly to third parties,” he granted GLSE’s motion to quash. Also, because the vast majority of discovery the plaintiff sought from third parties could be obtained directly from a defendant, GLI, Magistrate Judge Illman independently granted GLI’s motion to quash the subpoenas as unnecessarily burdensome and overly broad. Id. The plaintiff again appealed to the district court, which summarily denied its request for relief from the magistrate judge’s order.
On October 9, 2019, GLSE moved for sanctions and fees, seeking $69,839.62 in connection with its opposition to Glass Egg’s motion to compel and $127,033.75 for its motion to quash the third-party subpoenas. The magistrate judge swiftly denied the motion (without prejudice) because it “fail[ed] to set forth a particularized itemization of the allegedly unnecessary expenses it has incurred, or a statement of the hourly rate(s) claimed, or an appropriate justification for such rate(s)[.]” On December 2, 2019, GLSE refiled its motion for sanctions and fees pursuant to Fed. R. Civ. P. 37 and 45, this time including more detail and seeking $76,675 for its opposition to the motion to compel and $81,748.40 in attorney’s fees its motion to quash the third-party subpoenas and $20,000 incurred in preparing and filing the revised motion for sanctions and fees.
Before weighing the merits of the pending motion, Magistrate Judge Illman again noted the adversarial nature of the parties’ submissions throughout the proceedings and, in particular, in connection with the instant motion for fees and sanctions: “[T]he Parties in this case have descended into such acrimony that a simple pair of disputes about discovery and subpoena practice have ballooned into a protracted back-and-forth that has lasted for nearly a full year, that has impeded the progression of the case, and that has brought the Parties to the point of attacking each other in ways that would be unbecoming for attorneys in any setting, let along in court filings.” Id. at *8. The magistrate judge thus reminded the parties of “their obligations to avoid unnecessarily strident language in pleadings, to avoid discourtesies directed at one another, to avoid unfairly attacking one another, and, to otherwise maintain an appropriate level of decorum in their filings.”
Turning to the motion’s merits, Magistrate Judge Illman considered each of GLSE’s requested fees and sanctions in turn. First, with respect to the requested $76,675.20 for having to oppose the plaintiff’s motion to compel discovery, the magistrate judge began by examining Fed. R. Civ. P. 37(a)(5): “[The Rule] governs the payment of expenses when motions to compel discovery are granted or denied; and, in cases where the motion is granted in part and denied in part, the court may, after giving an opportunity to be heard, apportion the reasonable expenses for the motion.” Id. (internal quotations and ellipses omitted). In the magistrate judge’s view, the language in Rule 37(a)(5) was generally discretionary, but “Rule 37(a)(5)(A) provides that a court must not award expenses if, among other things, ‘the opposing party’s nondisclosure, response, or objection was substantially justified; or ... [if] other circumstances make an award of expenses unjust.’ ” Id. (quoting Fed. R. Civ. P. 37(a)(5)(A)). After considering the parties’ arguments, Magistrate Judge Illman concluded that it would be unjust to grant this portion of GLSE’s motion because GLSE failed to submit a motion for clarification of the Jurisdictional Discovery Order, it added to the difficulties in connection with resolving the jurisdictional discovery dispute, and neither party’s interpretation of the word “size” was fully vindicated by the district court. Id. at *9.
Second, in connection with GLSE’s request, pursuant to Fed. R. Civ. P. 45(d)(1), for an order requiring the plaintiff to pay $81,748.40 for moving to quash the third-party subpoenas, the magistrate judge clarified that despite GLSE’s argument to the contrary, “the provision of [Rule 45] pertaining to the determination of an appropriate sanction, including an award of attorneys’ fees, is in fact discretionary.” Ultimately, Magistrate Judge Illman found that the plaintiff’s repeated argument regarding the purported lack of corporate separation between GLI and GLSE, even after the district court rejected such argument, left “little room for doubt that Plaintiff’s subpoenas were purposefully crafted to avoid the limits of jurisdictional discovery applicable to GLSE.” Id. at *11.
While the magistrate judge concluded that a fee award in connection with the subpoena dispute was appropriate, he also determined that GLSE’s requested amount, $81,748.40, was unreasonable under the circumstances. He concluded that the motion to quash was premised on only one argument of any substance — “that Plaintiff’s use of the term ‘Gameloft’ in the subpoenas failed to distinguish between GLI and GLSE and that this failure to distinguish between the two was improper and in derogation of [the] Jurisdictional Discovery Order.” For this reason, the magistrate judge stated that it was unclear why the motion required anything more than 25 hours of attorney time fees and reduced the subpoena dispute award to $13,750 (25 hours multiplied by $550 – the hourly rate of GLSE’s lead counsel). Finally, turning to GLSE’s request for $20,000 in connection with refiling the instant motion, Magistrate Judge Illman summarily denied this request because, as before, GLSE failed to provide an itemized bill or to otherwise justify its request for that sum. Id. at *12.
3. In Williams v. UnitedHealth Group, 2020 WL 528604 (D. Kan. Feb. 3, 2020), Magistrate Judge James P. O’Hara denied all but one of plaintiff’s various discovery requests, holding, among other things, that intracompany instant messages not stored by default need not be produced.
In this employment discrimination litigation, plaintiff sued her former employer alleging discrimination based on race, color, sex, and religion. Acting pro se, plaintiff moved to compel supplemental responses to 11 requests for production and five interrogatories. Id. at *1.
Judge O’Hara opened his analysis noting that Rule 26(b) required that requested discovery need be both relevant and proportional. “The proportionality standard takes into account ‘the importance of the issues at stake in the action, the amount in controversy, the parties’ relative access to relevant information, the parties’ resources, the importance of the discovery in resolving the issues, and whether the burden or expense of the proposed discovery outweighs its likely benefit.’” Id. at *2 (citation omitted).
In contesting relevance, “[w]hen the information sought appears relevant, the objecting party has the burden to establish the lack of relevance by demonstrating the requested discovery ‘(1) does not come within the scope of relevance as defined by Fed. R. Civ. P. 26(b)(1), or (2) is of such marginal relevance that the potential harm occasioned by discovery would outweigh the ordinary presumption in favor of broad discovery.’ ” Id. at *4 (citation omitted). However, “[w]hen relevance is not readily apparent, the party seeking discovery has the burden of showing the requests are relevant. Determinations of relevance are made on a case-by-case basis.”
The magistrate judge stated that defendant had no duty to produce instant message conversations that were not automatically saved. Id. at *2. Among plaintiff’s supplemental discovery requests were Jabber/instant messenger conversations between plaintiff and defendant’s employees. Judge O’Hara denied plaintiff’s request for production of Jabber/instant messenger conversations noting that “the only way the messages are preserved is if a party screenshots the message.” As defendant had already produced any screenshots that had been saved, defendant had no further duty to produce the Jabber/instant messenger conversations. Judge O’Hara also denied plaintiff’s request for Jabber/instant messenger conversations on the grounds that plaintiff did not put forth any evidence that defendant was withholding any evidence or that any additional relevant information beyond what was already produced existed. Id. at *3.
Judge O’Hara denied plaintiff’s request for additional interrogatory responses on the grounds that they were vague, ambiguous, and overbroad. Id. at *4. “Interrogatories may ask for supporting facts, but asking for a narrative account of a party’s case is generally objectionable. That is, asking for every conceivable detail and fact concerning the entire case is unduly burdensome or overly broad.”
Finally, Judge O’Hara stepped through each of plaintiff’s remaining requests, denying all but one. Id. at *4–5. The requests Judge O’Hara denied did not relate to the plaintiff’s claims or to the alleged harm. Judge O’Hara ordered supplemental discovery related to defendant’s sexual harassment policy, as the policy was at issue and the requested discovery was not unduly burdensome. Id. at *5.
4. In CFA Institute v. American Society of Pension Professionals and Actuaries, 2020 WL 555391 (W.D. Va. Feb. 4, 2020), a trademark infringement case, Magistrate Judge Robert Ballou granted in part the defendants’ motion to compel the plaintiff to respond to discovery requests about the plaintiff’s efforts to enforce its mark but limited the scope of such responses given plaintiff’s widespread enforcement activity.
Plaintiff CFA Institute (CFA) brought a trademark-infringement action against defendant American Retirement Assoc. (ARA) alleging that defendant’s CPFA mark overlapped too closely and violated CFA trademarks (CFA Marks). During discovery, defendant requested that CFA provide three general categories of information relating to CFA’s history of protecting its trademark: 1) CFA’s agreements relating to its CFA Marks; 2) CFA’s enforcement actions against third parties involving its CFA Marks, along with the resolution of any enforcement action; and 3) CFA’s awareness of third-party trademarks, including trademark watch notices and search reports. CFA objected to the discovery requests on grounds that (1) ARA had not shown that the bulk of the requested information actually existed, (2) the information sought by ARA was irrelevant, and (3) the requests imposed an undue burden that outweighed any probative value of the information sought.
The magistrate judge began by noting that the Federal Rules of Civil Procedure broadly allow discovery regarding matters that may be relevant to a claim or defense, subject to consideration of proportionality and burden. Id. at *4. After a thorough review of the record, Magistrate Judge Ballou concluded that “the categories of information sought by ARA are relevant areas of inquiry in this trademark litigation,” but it was appropriate to limit the scope of ARA’s requests “such that the discovery sought remains proportional to the needs of this case.” Id. at *2.
The magistrate judge noted that as a threshold matter, third-party trademark use “is relevant to determining the conceptual and commercial strength” of a plaintiff’s trademark and that “the strength of [a] mark is paramount” in determining the likelihood that observers would be confused by competing uses of the mark. Id. (quotation marks and citations omitted). Furthermore, a mark’s strength “is diminished if many third-parties in the same field as the mark holder have used a portion of the text of the senior mark in their own marks.” Id. (citations omitted). Thus, he ruled ARA’s request for CFA’s prior agreements to let others use its mark was a relevant discovery inquiry. For similar reasons, he also held that information regarding any actions (or lack thereof) taken by CFA against other third parties who used its mark was relevant, and therefore ARA’s request for such information was proper:
The magistrate judge emphasized that “[r]elevant ESI [electronically stored information] may still not be discoverable under Rule 26 if the [objecting] party can show that the information is not reasonably accessible because of undue burden or cost.” Id. (internal quotations omitted). Due to the scope of CFA’s previous enforcement actions — CFA stated it routinely sends out more than 100 demand letters per year, has prosecuted at least eight trademark infringement cases over the past decade, and entered into “arrangements with a number of third-party users of marks or designations” that incorporate its letters — Magistrate Judge Ballou found it appropriate to limit defendant’s discovery. Id. at *4.
First, given the scope of the plaintiff’s enforcement activity, he limited most discovery to the past five years, with a 10-year period for the specific judicial, administrative, and legal proceedings brought by the CFA and provided in a chart to the court. Magistrate Judge Ballou also held that ARA’s requests for information regarding “all third parties Plaintiff is aware of that offer certifications or credentials relating to any sort of financial analysis” and “all third-party certification marks, etc. that contain two or three of the letters ‘C’ ‘F’ ‘A’ ” were overly broad and vague and should be addressed through other discovery. With respect to enforcement activity, rather than requiring CFA to produce all documents involving its trademark-enforcement efforts, the magistrate judge limited these requests to require CFA to produce “its demand letters and any responses, charging documents (i.e. complaints, claims, etc.) and resolutions of such claims.” Id. at *5. If the defendant believed further documents were needed from particular enforcement actions, it could propound “carefully tailored requests targeted for specific information.”
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