November’s Notable Cases and Events in E-Discovery

1. A ruling from the U.S. District Court for the Southern District of New York addressing competing motions for spoliation sanction in a large, complex antitrust case and finding that the Defendant had spoliated evidence by, among other things, failing to promptly serve litigation hold notices on certain custodians and failing to adequately interview certain custodians about their documents.

In In re Keurig Green Mountain Single-Serve Coffee Antitrust Litigation, 341 F.R.D. 474 (S.D.N.Y. Apr. 11, 2022), U.S. Magistrate Judge Sarah L. Cave addressed competing motions for sanctions from the parties based on alleged spoliation of hard drives, hardcopy documents, and various other categories of documents as well as arguments that the parties failed to satisfy their respective document preservation obligations by, among other things, failing to promptly serve litigation hold notices on certain custodians and failing to adequately interview certain custodians about their documents.

Plaintiffs brought this action against Keurig for alleged violations of the Sherman Act, the Clayton Act, and the Lanham Act for, among other things, entering into “non-competition,” tying, and exclusive dealing agreements, threatening companies that would do business with Keurig’s competitors, and redesigning its coffee makers to render competitors’ cups unusable in Keurig’s machines. Id. at 489.

At an initial status conference where a schedule was set for filing consolidated amended complaints, District Court Judge Vernon Broderick stated that he “hope[d] that all parties, the plaintiffs and defendants, have done what they need to do vis-à-vis their clients on document preservation,” and he encouraged the parties to meet and confer to submit a proposed protocol for electronically stored information (ESI). Judge Broderick later adopted the parties’ joint ESI stipulation, pursuant to which the parties agreed to “take reasonable steps in good faith to prevent the loss, destruction, alteration, overwriting, deletion, shredding, incineration, or theft of any document or data the party knows, or reasonably should know, falls within the scope of Federal Rule of Civil Procedure 26(b)(1).” Id. at 490. The parties also represented that they had “implemented a data preservation plan, issued preservation memoranda to relevant employees, and [ ] confirmed with IT personnel that auto-deletions are suspended and that measures have been implemented to prevent the manual deletion of email by individual custodians.” In addition, the parties also agreed “to ask each of their document custodians whether he or she maintains potentially responsive documents or data in any of the electronic or hard-copy sources listed [in the ESI stipulation], whether at the custodian’s office, home, or online.” If a party concluded that a source of information listed in the ESI stipulation was “inaccessible or that collection from or search of any of those sources would be unduly burdensome,” the parties agreed to meet and confer to attempt to resolve the issue.

After over a year of discovery, Plaintiffs and Keurig filed motions seeking spoliation sanctions, with Plaintiffs seeking sanctions under both Federal Rule of Civil Procedure 37(b) and 37(e) and Keurig seeking sanctions solely under Rule 37(e). Among other bases, Plaintiffs’ motion for spoliation sanctions was based on Keurig’s alleged (i) failure to conduct proper and timely custodian interviews, (ii) loss of hard drives for nine custodians, (iii) inability to access hard drives for 15 custodians, and (iv) destruction of hard-copy notes. Id. at 491. Plaintiffs sought to preclude Keurig from introducing evidence on certain issues, to deliver an adverse inference instruction, and to award Plaintiffs’ attorneys’ fees and costs, including those incurred in bringing the motion and investigating Keurig’s production deficiencies.

Magistrate Judge Cave began her analysis with a quote from Pension Comm. of Univ. of Montreal Pension Plan v. Banc of Am. Sec., LLC, 685 F. Supp. 2d 456, 461 (S.D.N.Y. 2010):

In an era where vast amounts of electronic information is available for review, discovery in certain cases has become increasingly complex and expensive. Courts cannot and do not expect that any party can meet a standard of perfection. Nonetheless, the courts have a right to expect that litigants and counsel will take the necessary steps to ensure that relevant records are preserved when litigation is reasonably anticipated, and that such records are collected, reviewed, and produced to the opposing party.... By now, it should be abundantly clear that the duty to preserve means what it says and that a failure to preserve records — paper or electronic — and to search in the right places for those records, will inevitably result in the spoliation of evidence.

Id. at 492-93. Magistrate Judge Cave next explained that spoliation is “the destruction or significant alteration of evidence, or the failure to preserve property for another’s use as evidence in pending or reasonably foreseeable litigation.” Id. at 493. For “spoliation sanctions to be appropriate, it is a necessary, but insufficient, condition that the sought-after evidence actually existed and was destroyed.”

Magistrate Judge Cave then explained the relevant standards under Rule 37. Under Rule 37(b), where a party breaches its court-ordered discovery obligations, the court supervising discovery is permitted to “issue further just orders,” including an order “(i) directing that the matters embraced in the order or other designated facts be taken as established for purposes of the action, as the prevailing party claims; [or] (ii) prohibiting the disobedient party from supporting or opposing designated claims or defenses, or from introducing matters in evidence ....” Id. (quoting Fed. R. Civ. P. 37(b)). “Even in the absence of a discovery order, a court may impose sanctions on a party for misconduct in discovery under its inherent power to manage its own affairs.” A party seeking an adverse inference sanction under Rule 37(b) must establish (1) that the party having control over the evidence had an obligation to preserve it at the time it was destroyed, (2) that the records were destroyed “with a culpable state of mind,” and (3) that the destroyed evidence was “relevant” to the party’s claim or defense such that a reasonable trier of fact could find that it would support that claim or defense. A showing of prejudice is not required.

The culpable state of mind for purposes of spoliation sanctions under Rule 37(b) requires a finding that the party acted knowingly in bad faith, through gross negligence, or through ordinary negligence. “In the discovery context, negligence is a failure to conform to the standard of what a party must do to meet its obligation to participate meaningfully and fairly in the discovery phase of a judicial proceeding.” Failing to institute a litigation hold is not gross negligence per se but a factor the court should consider, along with “whether the party implemented good document or evidence preservation practices....” Id. at 494. Under Rule 37(b)(2), both “intentional or grossly negligent destruction of evidence in bad faith” as well as “intentional or grossly negligent acts that hinder discovery ... even if those acts are not ultimately responsible for the unavailability of the evidence,” may “support an inference that the destroyed evidence was harmful to the destroying party.”

Rule 37(e) requires that “[i]f [ESI] that should have been preserved in the anticipation or conduct of litigation is lost because a party failed to take reasonable steps to preserve it, and it cannot be restored or replaced through additional discovery, the court” may, on a finding of prejudice, “order measures no greater than necessary to cure the prejudice.” Id. (quoting Fed. R. Civ. P. 37(e)(1)). On a “finding that the party acted with the intent to deprive another party of the information’s use in the litigation[,]” the court may “(A) presume that the lost information was unfavorable to the party; (B) instruct the jury that it may or must presume the information was unfavorable to the party; or (C) dismiss the action or enter a default judgment.” Id. (quoting Fed. R. Civ. P. 37(e)(2)).

Magistrate Judge Cave explained that Rule 37(e) requires a three-part analysis: (1) “decid[ing] if the rule applies at all — that is, if a party failed to take ‘reasonable steps’ to preserve ESI ‘that should have been preserved in the anticipation or conduct of litigation’”; (2) “decid[ing] if there has been ‘prejudice to another party from loss of the information,’ in which case the Court ‘may order measures no greater than necessary to cure the prejudice’”; and (3) “consider[ing] — regardless of prejudice to any other party — whether the destroying party ‘acted with the intent to deprive another party of the information’s use in the litigation,’ in which event a court may consider whether to impose the most severe of measures such as mandatory presumptions or instructions that the lost information was unfavorable or the entry of default judgment.”

Having set forth the relevant standards, Magistrate Judge Cave first addressed Plaintiffs’ motion, which challenged, among other things, Keurig’s alleged (i) failure to conduct proper and timely custodian interviews, (ii) loss of hard drives for nine custodians, (iii) inability to access hard drives for 15 custodians, and (iv) destruction of hard-copy notes.

With respect to Keurig’s preservation and collection efforts as to litigation holds and custodian interviews, Magistrate Judge Cave found that Keurig failed to distribute litigation holds to six custodians and timely interview 11 custodians, which constituted a failure to comply with the court’s order implementing the ESI stipulation under Rule 37(b)(2)(A) as well as a failure to take “reasonable steps” to preserve ESI under Rule 37(e). Id. at 503-504. She noted that even though some of the custodians at issue were former Keurig employees, this did not mitigate Keurig’s preservation obligations because “[c]ourts have insisted that corporations, at the very least, ask their former employees to cooperate before asserting that they have no control over documents in former employees’ possession.” She found that Keurig had the obligation to ensure that these former employees continued to preserve potentially responsive documents. 

With respect to Keurig’s preservation and collection efforts as to hard drives, Magistrate Judge Cave found that Keurig failed to preserve 25 hard drives, including 16 that were preserved but inaccessible and nine that were lost altogether. Id. at 505. Keurig collected over 90 hard drives and laptops, from which it collected and produced data, but Magistrate Judge Cave found that Keurig had not taken any steps “when this action commenced to determine which devices Keurig had issued to an individual were under litigation hold.” She found that Keurig’s failure was, at least, a negligent violation of the court’s order implementing the ESI stipulation under Rules 37(b)(2)(A) and a failure to take reasonable steps under Rule 37(e).

With respect to Keurig’s preservation and collection efforts as to hard-copy documents, Magistrate Judge Cave found that Keurig had violated Rule 37(b)(2)(A) by failing to preserve relevant hard-copy documents for one custodian. Id. at 505-08. Although Keurig sent a litigation hold notice to this custodian, the custodian did not recall receiving it, and Keurig’s counsel did not contact him until much later to ask whether he had any potentially responsive documents. The evidence reflected that this custodian had thrown out a binder of notes he had taken during meetings when he left Keurig. Based on this record, Magistrate Judge Cave found that identifiable, potentially responsive documents were lost because Keurig failed to take reasonable steps to confirm that the custodian had received and complied with the litigation hold notice.

Magistrate Judge Cave next turned to an analysis of whether Plaintiffs were prejudiced by Keurig’s failure to preserve hard drives. She first noted that there was a significant amount of evidence related to potential prejudice, including deposition testimony from the custodians whose hard drives were allegedly spoliated. She stated that she must consider the “full record in determining prejudice and corresponding sanctions” and that her “evaluation of prejudice from the loss of information necessarily includes evaluation of the information’s importance in the litigation.” Id. at 508. 

Magistrate Judge Cave then analyzed separately the evidence related to each of the 23 custodians that had hard drives Keurig allegedly spoliated. Id. at 508-20. She found that Plaintiffs were prejudiced by the spoliation of the hard drive evidence for certain custodians where the evidence reflected that a custodian’s practice was to save documents on his or her shared drive that were not available from other sources, such as one of Keurig’s shared drives. However, she found that there was no prejudice for certain other custodians where the evidence reflected that a custodian typically saved documents to a shared drive or where more recent hard drives were available and accessible. In this regard, Magistrate Judge Cave also took note of evidence that reflected whether there were gaps in the documents for the custodians that might suggest missing documents.

Magistrate Judge Cave next turned to an analysis of whether Keurig had “the intent of depriving Plaintiffs in this litigation of that evidence,” noting that such a finding was required to award the harsher sanctions for spoliation of ESI under Rule 37(e)(2). Id. at 519. She first noted that although Keurig’s efforts “may not have been perfect,” Keurig did largely comply with its discovery obligations, which distinguished this from cases in which the allegedly spoliating party exhibited “persistent non-responsiveness to discovery requests with no adequate explanation.” In particular, she described that Keurig “did endeavor to meet all its obligations” as Plaintiffs inquired about perceived gaps for certain custodians, as Keurig and its vendor determined that hard drives were inaccessible, and as information was produced from alternative sources, all of which tended to disprove that Keurig engaged in “intentional destruction” to “gain an advantage in the litigation.” Id. at 520.

In addition, Magistrate Judge Cave declined to find that Keurig “acted unreasonably in assuming that its employees complied with the policy that instructed them to save documents to network drives rather than local hard drives, despite Plaintiffs’ claim that employees frequently violated the policy.” She noted that “it is a better practice for a company to make a searching inquiry of all relevant employees to determine whether they violated a company policy regarding use of devices,” but she found that Keurig did not act “unreasonably in assuming the policy was followed and limiting its document search until the issue was brought to its attention.”

With respect to the specific evidence of intent, Magistrate Judge Cave first addressed Keurig’s failure to interview multiple custodians until shortly before their depositions, instead of contemporaneous with the date the custodians received litigation hold notices, which led to the spoliation of one custodian’s hard-copy notes and hard drive. She stated that “parties and their counsel must timely monitor compliance with litigation holds, and that the failure to do so constitutes, at a minimum, negligence” and found that Keurig’s counsel’s failure to conduct a timely interview of the custodian was negligent, perhaps grossly negligent. Id. at 520.

However, Magistrate Judge Cave declined to conclude that Keurig’s actions constituted clear and convincing evidence of an intent to deprive Plaintiffs of favorable information in this litigation. She noted that Keurig “cast a wide net in timely issuing litigation holds to over 700 custodians,” and even though it “sloppily implemented that litigation hold by not following up with certain of its custodians sooner to make sure that net was capturing what was required” under the ESI stipulation, that conduct constituted negligence only, not an intent to deprive.

With respect to the specific evidence of intent, Magistrate Judge Cave next addressed Plaintiffs’ allegation that Keurig “knowingly” allowed its access to a McAfee encryption server to lapse and that in doing so, Keurig “willfully violated” its obligations under the ESI stipulation sufficient to satisfy the “intent to deprive” standard under Rule 37(e)(2). Keurig performed a “rolling implementation” of the transition from McAfee to BitLocker to minimize “the risk of corrupting the drive when switching encryption from one to another.” When Keurig sought to decrypt older hard drives for production to Plaintiffs, it discovered that some of the encryption keys did not work and several hard drives remained inaccessible. However, Keurig produced tens of thousands of documents from alternative sources for each of the custodians whose hard drives could not be decrypted.

Magistrate Judge Cave stated that she had “little difficulty concluding that Keurig’s conduct with respect to the McAfee encryption server was not the behavior of a party intending to deprive its adversaries of relevant documents favorable to the adversaries’ claims.” She noted that “[e]mployees change jobs, memories fade, and technology does not always work as expected, but the loss of access to evidence in the ordinary course of business does not by itself demonstrate intent.” She found that the steps that Keurig took to restore access to the McAfee encryption server, as well as the remedial efforts it undertook (and offered to take) after informing Plaintiffs of the encryption issue, were reasonable and that Keurig’s failure to ensure that an encryption server no longer in use remained accessible was, at most, ordinary negligence, “far from the intent to deprive required for the severe sanctions under Rule 37(e)(2).” Id. at 522.

Magistrate Judge Cave also addressed Plaintiffs’ argument that intent was demonstrated by Keurig’s delay in providing notice of document preservation issues, including its inability to locate or access the 23 custodians’ hard drives. Id. at 524-26. She rejected this argument and declined to conclude, from the timing of Keurig’s disclosures about the hard drives for 23 custodians, that Keurig intended to deprive Plaintiffs of information favorable to their case. In particular, Magistrate Judge Cave found that the evidence was ambiguous with respect to when Keurig first became aware of the issue with the hard drives, and “[w]hile Keurig might have been able to notify Plaintiffs a few months earlier, even had it done so, the record does not demonstrate what additional evidence might have been saved.”

Surveying the case law on intent, Magistrate Judge Cave found that Plaintiffs’ evidence was circumstantial, at best, and “inconclusive on the issue of spoliative intent.” She could not find on the record that Keurig acted “for the specific purpose of gaining an advantage in this litigation,” but instead found that “Keurig’s negligence in executing its preservation obligations falls in line with cases where courts have found similar degrees of negligence and incompetence but, like here, an absence of evidence to show an intent to deprive Plaintiffs of information for use in this litigation.” Magistrate Judge Cave distinguished cases that found clear and convincing evidence of intent to deprive, noting that “[t]here is simply no evidence that Keurig willfully and intentionally deleted ESI,” that Keurig exhibited an “aggressively willful violation of court orders regarding the production of ESI,” or that Keurig engaged in “a near-constant stream of factual misdirection that significantly delayed — and nearly derailed” efforts to obtain ESI.

Having found that Keurig failed to comply with Rule 37(b) and 37(e) by (i) failing to issue litigation holds and interview certain custodians, (ii) failing to preserve hard drives, and (iii) failing to preserve hard-copy documents and that Plaintiffs were prejudiced by these failures, Magistrate Judge Cave next turned to determining the appropriate sanctions under Rules 37(b) and 37(e). Id. at 527. She first noted that the more severe sanction of an adverse inference under Rule 37(e)(2) was not appropriate because “the record does not contain clear and convincing evidence that Keurig acted with the intent to deprive Plaintiffs of the information’s use in this action.” Instead, under Rule 37(e)(1), the sanctions must be “no greater than necessary to cure the prejudice” to Plaintiffs. Id. (quoting Fed. R. Civ. P. 37(e)(1)). But she noted that she may continue to consider the sanctions of preclusion and adverse inference for Keurig’s violations of the ESI stipulation under Rule 37(b)(2)(A).

Magistrate Judge Cave first considered whether to award expenses, including attorneys’ fees, which she noted was mandatory “unless the failure was substantially justified or other circumstances make an award of expenses unjust.” Id. (quoting Fed. R. Civ. P. 37(b)(2)(c)). She further noted that Rule 37(e)(1) authorizes a court to award attorneys’ fees and costs to the moving party to the extent reasonably necessary to remediate any prejudice caused by the spoliation.

Magistrate Judge Cave found that an award of attorneys’ fees and costs to Plaintiffs was warranted under both Rules 37(b)(2)(C) and 37(e)(1). The evidence reflected that when Keurig represented it had substantially completed its production, it knew that it had been unable to access at least four hard drives. Although the parties later worked on remedial measures for these hard drives, Plaintiffs incurred the expense not only of investigating the deficiencies but also of continued efforts to confirm the nature, scope, and volume of information that was not preserved. Although Magistrate Judge Cave determined that actual prejudice extended to only a handful of custodians, she found that Plaintiffs did incur “expenses associated with prodding” Keurig into confirming which hard drives were lost or inaccessible and with identifying where possible gaps in Keurig’s production remained. She ordered the parties to meet and confer regarding Plaintiffs’ “reasonable expenses caused by Keurig’s violations of court orders.” Id. at 528.

Magistrate Judge Cave next found that Plaintiffs would be permitted to present evidence to the jury concerning hard-copy documents that were not preserved and the gaps left by the failure to preserve hard drives for three custodians and that the jury would be permitted to consider that evidence, along with the other evidence in the case, in evaluating Plaintiffs’ claims and Keurig’s defenses in their deliberations. She noted that this sanction was permitted under Rule 37(e)(1) without any predicate finding of intent to deprive and was appropriate for three reasons: (1) it recognizes that Plaintiffs suffered prejudice from the loss of evidence that should have been preserved and thus “help[s] rectify the evidentiary imbalance that Keurig created by spoliating relevant ESI” and hard-copy documents; (2) it provides the jury, as finder of fact, with context for that evidentiary imbalance, which is itself relevant evidence going to the parties’ credibility and other factual issues; and (3) it does not encroach on the district court’s authority to determine the scope of any spoliation evidence to be presented at trial.

Having decided Plaintiffs’ motion against Keurig, Magistrate Judge Cave turned to Keurig’s motion claiming that one of the Plaintiffs, TreeHouse, failed to implement litigation holds on a timely basis, resulting in the spoliation of discoverable evidence. Id. at 529. Keurig argued first that TreeHouse’s duty to preserve documents arose in the fall of 2013, when it began preparing to file its lawsuit, although TreeHouse started distributing hold notices on February 4, 2014. Id. at 530. TreeHouse argued that its duty to preserve began no earlier than February 5, 2014, when its board of directors began considering the possibility of litigation against Keurig. 

Magistrate Judge Cave noted that the Second Circuit “has rejected the suggestion that simply being on notice of potential injury that might give rise to litigation triggers a duty to preserve” and that in the case of alleged spoliation by a plaintiff, the preservation obligation is deemed to arise on the date the plaintiff sent a demand letter or notice of claim or filed the complaint. Id. at 532. She noted that the “preservation trigger” in cases involving spoliation sanctions by a plaintiff is when the plaintiff “decided” to sue the defendant. Accordingly, Magistrate Judge Cave found that TreeHouse’s duty to preserve arose no earlier than when it decided to sue Keurig and engaged counsel to begin drafting a complaint.

Magistrate Judge Cave next addressed Keurig’s argument that TreeHouse failed to take reasonable steps to preserve evidence when it sent additional litigation hold notices to six custodians that it identified after the litigation was filed. Id. at 533. Magistrate Judge Cave first summarized the evidence with respect to TreeHouse’s preservation efforts, including that TreeHouse issued litigation hold notices to 99 employees, including to 21 employees before the original complaint was filed; required employees to save materials “they believed to be relevant to potential litigation” regardless of whether they had received a litigation hold notice; implemented the Enterprise Vault system in September 2013 to archive all employees’ emails; has used the “litigation hold” feature of Microsoft Exchange; used email and file servers that were not enabled to perform automatic deletions; and “conducted an early round of hard drive collections.”

Magistrate Judge Cave then analyzed separately the evidence related to each of the six custodians that were the subject of Keurig’s motion. Id. at 533-37. She concluded that the steps TreeHouse took to preserve documents for each custodian were reasonable. In reaching this conclusion, she relied on evidence from the record that each of the custodians’ emails were automatically archived through Enterprise Vault, TreeHouse produced large volumes of documents from the custodians’ files, and TreeHouse produced documents from other current and former employees that worked with the custodians. However, Magistrate Judge Cave also found that TreeHouse should have sent one of the custodians a litigation hold notice at the time the complaint was being drafted because TreeHouse relied on an email involving the custodian for a key allegation in its complaint.

Magistrate Judge Cave determined that Keurig failed to establish prejudice, finding that “Keurig has simply not established that ESI existed that TreeHouse failed to preserve, let alone that Keurig suffered prejudice as would justify sanctions under Rule 37(e)(1).”

Finally, Magistrate Judge Cave denied a separate motion by Keurig against another Plaintiff, JBR, based on the claim that JBR failed to preserve relevant evidence concerning a January 31, 2014, meeting between JBR and Costco referenced in JBR’s complaint against Keurig. Id. at 538-39. Magistrate Judge Cave denied the motion because even though the evidence reflected that JBR may have been considering bringing an action against Keurig at an earlier date, Keurig had not shown any evidence that JBR “decided it was going to bring an action against” Keurig as of the date of the Costco meeting. Because Keurig had not offered any evidence establishing that JBR decided to sue earlier than the date it filed its complaint, Magistrate Judge Cave found that JBR’s preservation obligation arose on the date it filed its original complaint.

2. An order from the U.S. District Court for the Southern District of New York denying without prejudice a motion to compel the Defendants to produce documents from one of their nonparty affiliates, finding that Plaintiff had not shown facts establishing that the Defendants had possession, custody, or control of the documents, including the “practical ability” to acquire them from the affiliate.

In Signify Holding B.V. v. TP-Link Research America Corp., 2022 WL 3704001 (S.D.N.Y. Aug. 26, 2022), U.S. Magistrate Judge Katharine H. Parker addressed a motion to compel Defendants to produce documents from a nonparty affiliate on the grounds that the Defendants had possession, custody, or control of the documents, including through shared legal counsel. 

In this breach of contract dispute concerning patent royalties under a licensing agreement, Plaintiff moved to compel Defendants TP-Link Research America Corporation and TP-Link USA Corporation (together, “TP-Link”) to produce files concerning sales by nonparty TP-Link Corporation Limited (“TPC”), a Hong Kong-based affiliate of TP-Link. Id. at *1. TPC was not a defendant in the case or a party to the relevant agreement, but TPC supplied Defendant TPUSA with certain relevant products and participated in settlement negotiations along with TP-Link. TP-Link and TPC used joint counsel to represent them in those discussions.

In seeking to compel the documents, Plaintiff argued that TP-Link had possession, custody, or control of the documents at issue because its counsel has the documents by virtue of its representation of TPC and TPC’s voluntary participation in joint negotiation/settlement discussions and provision of data to Plaintiff for purposes of those discussions. Id. at *2. In opposing the motion, TP-Link argued that it does not have “control” over the files because TPC is a “separate corporation” that is “not owned or controlled” by TP-Link. Instead, TP-Link argued that Plaintiff must obtain the documents from TPC in Hong Kong through an appropriate third-party process, such as the Hague Convention.

Magistrate Judge Parker noted that the agreement at issue defines the term “affiliate(s)” and that if TPC is an affiliate within the meaning of the agreement, the files at issue would be relevant for determining damages under the agreement.

She began her analysis with a brief survey of the relevant portions of Rules 26 and 34 of the Federal Rules of Civil Procedure. She explained that Rule 26 permits discovery of information relevant to the claims and defenses and proportionate to the needs of the case, including information about damages, and that Rule 34 permits a party to serve on another party requests for information within such party’s “possession, custody or control,” subject to the restrictions of Rule 26(b). However, Rule 34 and the Advisory Notes to the rule are silent on what is meant by “possession, custody or control.” 

She further explained that courts in the Second Circuit follow the “so-called practical ability standard,” under which a party has “possession, custody, or control” over a document if it has “the practical ability to obtain and produce the documents.” This may include “a party’s ability to obtain documents on demand,” or “the practical ability to obtain and produce documents held by a parent, subsidiary, or sister corporation.” She cited to S.E.C. v. Credit Bancorp, Ltd., 194 F.R.D. 469, 471 (S.D.N.Y. 2000), as an example of a case where the court found that having access to a document held by an affiliate in the normal course of business would qualify as “control” over the document.

Citing to the Sedona Conference Commentary on “Possession, Custody or Control” under Rule 34 and Rule 45, Magistrate Judge Parker noted that this approach “has been criticized because it may conflict with international restrictions on data movement and ignore formal corporate structures, by-passing alter-ego or veil-piercing analyses,” and because it increases the burden on a party to obtain documents from a nonparty. 

But Magistrate Judge Parker noted that a “foreign law that precludes a party from producing data would be a factor in determining a party’s practical ability to obtain and produce it.” Again citing to S.E.C. v. Credit Bancorp, she noted that having access to a document in the normal course of business is a separate consideration relevant to deciding a company’s “practical ability to obtain a non-party affiliate’s document” and that routine access also could suggest that a document likely could be found, and thus possessed, in both entities’ servers and files, meaning that both entities are in possession of the document.

Magistrate Judge Parker rejected Plaintiff’s argument that TP-Link can be required to produce the documents because TPC gave the documents to its counsel, who also are counsel for TP-Link, finding “[t]his clearly is not the law.” 2022 WL 3704001 at *3. She disagreed that a client has control over its attorneys’ other clients’ documents also possessed by the attorneys, because “[s]uch a rule would turn client confidentiality on its head and ride roughshod over attorney ethical obligations to their clients.” She further explained that it was incorrect to conclude TP-Link has control over documents because its attorney has control over them when the attorney possesses them only by virtue of TPC’s providing them.

Magistrate Judge Parker found that Plaintiff, as the requesting party, has the burden of establishing possession, custody, and control, but Plaintiff had not shown facts sufficient for her to make a definitive ruling on control. Plaintiff relied on the facts that TPC voluntarily stepped into joint negotiations with TP-Link to resolve the royalties dispute, that TPC supplied relevant products to TP-Link, and that TPC and TP-Link are under the same corporate umbrella and share counsel. Magistrate Judge Parker found these facts were not sufficient.

But Magistrate Judge Parker also questioned whether TP-Link had actual possession of the documents. She noted that TP-Link had never affirmatively stated that the records do not exist on its email servers or in the files of its 30(b)(6) witness and that if the documents exist in the witness’ email or other files of TP-Link, then TP-Link is in possession of the documents and could produce them. She further noted that TP-Link has not stated that it formally requested the documents from TPC, advised TPC that the documents can be obtained regardless via the Hague process, or that TPC nevertheless denied the request.

Accordingly, Magistrate Judge Parker denied Plaintiff’s motion to compel without prejudice and ordered TP-Link to state whether it (as opposed to its counsel) is in possession of the requested documents. She ordered that if TP-Link has possession of them, it must produce them. She also ordered that Plaintiff could renew its motion if it learned facts in discovery establishing that TP-Link has possession, custody, or control over the documents.

3. A decision from the U.S. District Court for the Eastern District of Missouri rejecting a request by the Plaintiff to compel Defendants to add 63 additional custodians identified in Plaintiff’s initial disclosures, instead requiring Defendants to add only 23 additional custodians.

In Weisman v. Barnes Jewish Hospital, 2022 WL 850772 (E.D. Mo. March 22, 2022), U.S. District Judge John A. Ross addressed a request to compel Defendants to add 54 additional custodians and to compel production of messages sent using the Telegram app that Defendants argued were not in their possession.

The Plaintiff in this litigation brought a motion to compel Defendants to search documents from additional custodians. In particular, Plaintiff complained that although he had identified 63 individuals with knowledge in his initial Rule 26 disclosures and interrogatory answers, Defendants searched the email accounts of only seven people. Plaintiff argued that Defendants should be compelled to conduct a search of the email accounts of all 63 individuals because these individuals worked with, supervised, or evaluated him and “likely communicated and/or received communications concerning [his] performance and/or his research laboratory.” Defendants opposed the motion, arguing that Plaintiff had not established the relevance of searching the 63 email accounts and that, in any event, searching the accounts under the broad search terms proposed by Plaintiff would be unduly burdensome and expensive, particularly when he offered only speculation that the emails might contain some reference to him or his performance.

Judge Ross noted that while Defendants cannot unilaterally limit the scope of Plaintiff’s discovery requests, Rule 26(b)(1) does not give a party “the unilateral ability to dictate the scope of discovery based on their own view of the parties’ respective theories of the case.” He found that although Plaintiff “would have had contact with and been supervised by a number of people,” Plaintiff’s request to search the email accounts of 63 individuals “because they worked with him and might have sent emails referring to him” was “entirely overbroad and amount[ed] to a fishing expedition.”

Judge Ross then explained that because the parties failed to reach a reasonable compromise during no less than five meet-and-confer sessions, it was left to him to make a determination. He concluded that Plaintiff would be limited to a search of 23 email accounts — in addition to those that have already been identified — which was “a more realistic and reasonable number.”

Plaintiff also sought to compel Defendants to produce messages from the “Telegram App,” among other documents. Id. at *2. However, Defendants asserted that they do not require use of the Telegram app and have no control or possession of messages sent and received by residents and physicians using Telegram.

Judge Ross explained that under Federal Rule of Civil Procedure 34, a party need only produce those documents that are in its “possession, custody, or control,” and a document is not in a party’s possession, custody, or control if the document does not exist. Id. at *3. He noted that Plaintiff had not provided information sufficient to lead him to question the truthfulness of Defendants’ representations that no responsive documents exist: “A mere belief, without any evidence, that a party has not produced documents or information in its possession, is insufficient to support a motion to compel.”

While Judge Ross concluded that he had no basis upon which to compel Defendants to produce any additional documents, he nonetheless required Defendants to serve supplemental written responses affirming that they have searched all documents in their possession, custody, or control and produced all information and documents available to them that are responsive to Plaintiff’s discovery demands.

4. An order from the U.S. District Court for the Northern District of California denying a motion to compel Plaintiff to use additional search terms to search his private email account for potentially responsive documents, finding that Plaintiff was in the best position to determine how to locate responsive information within his own files.

In Weinstein v. Katapult Group, Inc., 2022 WL 4548798 (N.D. Cal. Sept. 29, 2022), U.S. District Judge Phyllis J. Hamilton denied a motion to compel Plaintiff to use additional broad search terms for his private email account, finding that Plaintiff was in the best position to determine how to locate responsive information within his own files.

In this contract dispute, Plaintiff, a former finance consultant, claimed that he was wrongfully denied stock options owed as part of his compensation and that Defendant breached a contract by failing to make certain payments. Id. at *1.

In its motion to compel, Defendant sought production of relevant email communications from Plaintiff’s private email account. Judge Hamilton explained that Plaintiff had used a range of terms to search for relevant materials in his email inbox, but Defendant argued that the list of keywords should be expanded to capture additional communications, including terms such as “options,” “advisor,” “shares,” and “equity.” Plaintiff opposed the request on relevance and overbreadth grounds and because Defendant had already obtained some information from Plaintiff’s former employers and companies where he provided similar services.

In addressing Defendant’s motion, Judge Hamilton first described the relevant standards under Federal Rule of Civil Procedure 26(b)(1), which provides a broad definition of relevance for purposes of discovery: “Parties may obtain discovery regarding any nonprivileged matter that is relevant to any party’s claim or defense and proportional to the needs of the case.” She noted that “discovery is not limited to issues raised by the pleadings, for discovery itself is designed to help define and clarify the issues,” “[n]or is discovery limited to the merits of a case, for a variety of fact-oriented issues may arise during litigation that are not related to the merits.” Finally, she noted that the party resisting discovery “has the burden to show that discovery should not be allowed, and has the burden of clarifying, explaining, and supporting its objections.”

Judge Hamilton denied Defendant’s motion, concluding that Plaintiff was in the best position to determine the appropriate scope of the search to respond to defendant’s discovery requests. Id. at *2. Quoting from the Sedona Principles, Judge Hamilton explained that “[r]esponding parties are best situated to evaluate the procedures, methodologies, and technologies appropriate for preserving and producing their own electronically stored information.” 

Judge Hamilton noted that Defendant’s insistence on compelling Plaintiff to search for and review all documents that solely mention broad generic terms such as “options,” “advisor,” “shares,” and “equity” over a seven-year period, without any reference to Defendant or the contract at issue, was “an improper fishing expedition, not proportional to the needs of the case.”