This Sidley Update addresses the following recent developments and court decisions involving e-discovery issues:
- A ruling from the U.S. District Court for the Northern District of Indiana granting the defendants’ motion for sanctions against the plaintiff for failure to preserve data from his Snapchat account, imposing monetary sanctions and permitting the admission of evidence regarding the relevance of the deleted data
- An order from the U.S. District Court for the Western District of Kentucky denying the plaintiff’s motion to compel one of the defendants to use additional search methodologies for electronically stored information (ESI) because the plaintiff had not met its burden to show that the defendant’s searches, which included searches within Microsoft Outlook and collections by the defendant’s employees, resulted in its withholding relevant discovery
- A decision from the U.S. District Court for the Northern District of New York granting in part the plaintiff’s motion to compel the defendants to use certain expanded search terms in identifying potentially relevant ESI but permitting the defendants to use predictive coding to review the resulting documents rather than a full linear review
- An opinion from the U.S. District Court for the Southern District of California granting the plaintiff’s motion to compel the defendant to produce financial data, including from its franchisees to the extent that the defendant had the legal right to access and audit the franchisees’ financial data under the relevant franchise agreements
1. A ruling from the Northern District of Indiana granting the defendants’ motion for sanctions against the plaintiff for failure to preserve data from his Snapchat account, imposing monetary sanctions and permitting the admission of evidence regarding the relevance of the deleted data.
In Doe v. Purdue Univ., 2021 WL 2767405 (N.D. Ind. July 2, 2021), Magistrate Judge Joshua P. Kolar granted a motion for Rule 37 sanctions filed by defendants Purdue University, Purdue University Board of Trustees, and several named individuals (Purdue) for Plaintiff’s failure to preserve data from his Snapchat account but imposed relief different from that requested by Purdue and denied sanctions for spoliation of evidence. Id. at *10.
Purdue served an interrogatory requesting Plaintiff to identify his social media accounts and a request for production (RFP) seeking Plaintiff’s social media postings from August 1, 2015, to the present. Id. at *1. In response, Plaintiff identified only accounts on Instagram and Facebook and otherwise objected to the RFP as seeking irrelevant data. Id. at *2.
In its second set of RFPs, Purdue requested all data from any Snapchat account owned or operated by Plaintiff, specifying his username and stating that this data was “the property of the Plaintiff, and may be obtained and downloaded in its entirety.” Purdue additionally provided a link containing instructions for downloading various data from Snapchat. After Plaintiff filed a motion to compel, the parties entered into a joint stipulation that included an agreement that Plaintiff would provide the requested Snapchat and Instagram data. Magistrate Judge Kolar granted the relief requested in the joint stipulation.
Purdue later filed a motion for sanctions, alleging that Plaintiff failed to provide the Snapchat data as agreed in the joint stipulation and required by the court’s order. Plaintiff filed a declaration in response, asserting that there were “limitations of what can be done as to Snapchat discovery” because Snapchat did not archive files or retain user information longer than 30 days. Plaintiff further stated that Snapchat did not retain user identity longer than 30 days or preserve user content and that all he could learn from Snapchat was the name or username of Plaintiff’s current friends. Plaintiff represented that he used the link provided by Purdue and did his own research to see if the requested content could be downloaded from Snapchat, but the information in the link made it clear that only limited information was available. Id. at *3. Plaintiff additionally represented that the data he downloaded from Snapchat regarding his profile contained no images, videos, or chats and that the data available was primarily irrelevant metadata.
Purdue responded that Plaintiff had an obligation to produce the Snapchat data and waived relevancy objections with the joint stipulation by agreeing to produce a complete data download. Purdue then explained that Snapchat collected information such as Snap history, chat history, user profile, friends, account history, location history, and search history.
The court denied without prejudice Purdue’s motion for sanctions but ordered Plaintiff to provide the Snapchat data consistent with the agreement noted in the joint stipulation. Purdue then filed the present motion for an order to show cause regarding Plaintiff’s noncompliance with a court order and spoliation of evidence, asserting that Plaintiff deleted files subject to the joint stipulation and the court’s order. The court held an evidentiary hearing and issued an order for supplemental briefing regarding what data the Snapchat app and website reflected was available for users to download when these downloads took place. The order required the parties to jointly or separately file a report with exhibits describing the screen displays that existed as Plaintiff would have seen them when completing the download of Snapchat data.
After this briefing, Magistrate Judge Kolar found that Plaintiff could not credibly deny Purdue’s representation that he deleted Snapchat data. Id. at *5. Further, Purdue showed that in response to the joint stipulation, Plaintiff produced a Snapchat download with broken links and downloads to 86 images and videos dated between 2016 and 2020. The download contained a warning noting that the download links would expire seven days from when the data file was made available and therefore had expired by the time the production took place. In response, Plaintiff produced an additional download of Snapchat data; however, this omitted 11 links to videos and images listed in the prior production. Purdue stated that Plaintiff admitted that he had deleted certain files from the memories folder within Snapchat on his phone.
Purdue argued that this deletion constituted spoliation warranting the imposition of sanctions, because Plaintiff had a duty to preserve the destroyed data, he willfully deleted the files in bad faith, and the only credible explanation for the conduct was to hide the 11 images and videos from Purdue. Id. at *6. Purdue argued that inappropriate conduct preserved on social media would undermine Plaintiff’s claim that his actions caused harm to Plaintiff’s honor and damage to his reputation. Plaintiff sent Purdue a document providing an explanation for his conduct, explaining that he was initially unaware of the seven-day time limit for downloading and viewing files saved in the memories folder and that, when he deleted the files at issue, he was unaware that they would be deleted from his Snapchat account and from Snapchat servers entirely. Plaintiff reiterated his understanding at the time of his initial production that the downloaded data primarily contained metadata and that the 11 files were “not material to this case.” Refuting an accusation of wrongdoing, Plaintiff argued he did not admit intentionally destroying any evidence. Plaintiff also disputed the claim that Plaintiff had 86 downloaded Snapchat videos and photos in his possession, reiterating the claim that the first download contained only metadata and nonworking links. Id. at *7.
Magistrate Judge Kolar provided a summary of his findings of fact before examining the spoliation claim by Purdue. He stated that in evaluating a spoliation claim, the court must determine (1) whether there was a duty to preserve the destroyed evidence, (2) whether this duty was breached, and (3) whether the destruction of evidence was done in bad faith. Bad faith in the context of spoliation meant that evidence was destroyed for the purpose of hiding adverse information.
Magistrate Judge Kolar held that the duty to preserve the relevant Snapchat data arose at the latest when Purdue sought this data in its RFPs, at which point Plaintiff had an affirmative duty to preserve his Snapchat data from August 2015 to the present. Magistrate Judge Kolar added that at least one court order separately obligated Plaintiff to preserve the Snapchat data. This included an order from 2017 ordering parties to “take reasonable steps to preserve ESI that is relevant to any claim or defense in this case … relat[ing] back to the point in time when the party or attorney reasonably anticipated litigation about these matters.” Id. at *8.
Magistrate Judge Kolar noted in reference to Plaintiff’s claims that the data was not relevant that “he is not the one who decides what is relevant.” Further, Magistrate Judge Kolar explained that the fact that Snapchat content was created after the events leading to this lawsuit did not render it irrelevant and that “a social media post need not directly reference or discuss a lawsuit for it to be relevant to the claims at issue.” Noting that the second amended complaint included allegations that Plaintiff’s “dream and hope to serve his country as a Naval officer ha[d] been destroyed” and sought damages for loss of future career prospects, Magistrate Judge Kolar found it “entirely conceivable” that the Snapchat files could be relevant. Id. at *9.
Further, Magistrate Judge Kolar determined that even if the deletion of Snapchat files did not violate the 2017 order to preserve ESI, the order to preserve these files was explicitly laid out in the order for Plaintiff to produce the Snapchat data per the agreement in the joint stipulation. Magistrate Judge Kolar added that the language in the joint stipulation provided “no interpretation … that would allow [Plaintiff] to send merely what he chose from his Snapchat account while deleting other files off the Snapchat application on his phone.” Id.
Magistrate Judge Kolar then examined whether Plaintiff breached his duty to preserve Snapchat data, stating that the “determination on this point is simple.” Magistrate Judge Kolar stated that Plaintiff conceded deleting the files from Snapchat, provided an exhibit showing he had saved files to the memories folder and was provided with a link from Purdue stating that content from the memories folder could be downloaded from Snapchat’s servers. It was therefore “hard to see how Plaintiff would think he only had metadata available via Snapchat.” Additionally, Plaintiff represented that he conducted research on what information could be obtained from Snapchat, and even a superficial internet search would show that Snapchat would erase files from its servers quickly if a user deleted content from the memories folder in his or her phone application. Magistrate Judge Kolar found that even without knowledge of the effect of deletion on the availability of data from Snapchat’s servers, Plaintiff “undertook no effort to ensure that the files would be preserved elsewhere before he deleted them from his Memories folder” and “plainly breached his duty to preserve the 11 images and videos.” Id.
Magistrate Judge Kolar then examined whether the breach was done in bad faith for the purpose of hiding adverse information. To determine whether evidence was destroyed for the purpose of hiding adverse information, a court must “(a) assess the actual evidence, which one typically cannot do because the evidence no longer exists, or (b) infer bad intent based upon when the destruction occurred in relation to the destroyer’s knowledge that the evidence was relevant to potential litigation.” Id. at *10. Even if the destroyer knew the evidence was needed for litigation, the court must look to the “totality of the circumstances” of the destruction, and a party can refute bad faith by providing a credible explanation for the destruction. As neither the court nor Purdue had seen the images and videos in question, Magistrate Judge Kolar stated that he was unable to assess the actual evidence for this determination. Further, he found the second option difficult to evaluate, as Purdue could not provide any argument to refute Plaintiff’s assertion that the images and videos were not relevant to the litigation. Magistrate Judge Kolar found that Purdue’s argument that there was no credible defense for the deletion other than bad faith was impeded by Plaintiff’s destruction of the files and that Plaintiff’s argument that he deleted the files to free up storage on his device was believable. Magistrate Judge Kolar therefore was unable to find that Plaintiff deleted the files for the purpose of hiding adverse information and held that Purdue’s spoliation claim therefore failed.
Magistrate Judge Kolar then looked to the court’s inherent power to impose sanctions for misconduct under Rule 37. He discussed the Rule 37 powers of a court in response to a party that fails to obey an order to provide or permit discovery, including payment of expenses, as well as the rules for imposing sanctions specifically for the failure to preserve ESI. Id. at *11. Under Rule 37(e)(1), after the loss of ESI causing prejudice to another party, courts may order measures no greater than necessary to cure the prejudice if the ESI should have been preserved in anticipation or conduct of litigation but it was lost because a party failed to take steps to preserve it, and the ESI cannot be restored or replaced through additional discovery. Under the advisory committee’s note to the 2015 amendment, Rule 37(e)(1) leaves judges with discretion as to how to best assess prejudice. Magistrate Judge Kolar stated that prejudice under Rule 37(e) meant that a party’s ability to obtain the evidence necessary for its case has been thwarted or that a party has been forced to unnecessarily litigate e-discovery issues when ESI is spoliated.
Magistrate Judge Kolar further stated that Rule 37(e)(1) encompassed more than financial prejudice, such as the prejudice resulting from costs incurred due to unnecessary litigation, but also substantive or merits-based prejudice. Id. at *12. Magistrate Judge Kolar stated that substantive or merits-based prejudice results from harm to the merits of the moving party’s case, the extent of which can be determined by looking to whether the content of the missing ESI was produced in other documents or whether the moving party obtained similarly relevant information from other sources. Magistrate Judge Kolar stated that district courts have wide latitude in fashioning appropriate sanctions for violations of discovery orders, but the sanctions must be proportionate to the circumstances surrounding the failure to comply with discovery, and courts must look at the procedural history as a whole. He stated that the failure to comply with a discovery order need not be due to willfulness, bad faith, or fault to impose sanctions except when dismissal or default is imposed.
Reiterating much of his prior analysis, Magistrate Judge Kolar held that Plaintiff’s deletion of Snapchat data was sanctionable under Rule 37. He stated that Plaintiff had a duty to preserve the deleted files because they were sought in formal discovery requests, pursuant to at least one court order, and pursuant to the joint stipulation with Purdue. Despite this, Plaintiff refused to provide the data due to his own finding of irrelevance, prompting the order requiring Plaintiff to comply with his previous agreement to produce the data. Because the deletion took place after the agreement between the parties to produce the data, Magistrate Judge Kolar found the conduct sanctionable.
Magistrate Judge Kolar determined that Plaintiff’s failure to comply with the court’s orders was at least the result of negligence, which is sufficient under Rule 37 for imposing sanctions. Id. at *13. Magistrate Judge Kolar suggested the conduct may indicate bad faith as well, noting that in the context of failure to obey a court’s discovery order, bad faith could constitute either intentional or reckless disregard of the party’s obligations to comply with a court order. Magistrate Judge Kolar pointed to Plaintiff’s lack of consideration toward the impact of deleting Snapchat data and reliance “on a number of self-serving assumptions about Snapchat’s ability to preserve data, many of which turned out to be wholly inaccurate.” Magistrate Judge Kolar stated that Plaintiff was not only wrong about the data available from Snapchat, but Plaintiff affirmatively knew that he had access to other files in the memories folder. Based on Plaintiff’s testimony and the fact that saving data to the memories folder requires users to take affirmative steps, Plaintiff clearly took knowing, purposeful action to save the files to his memories folder. Further, Purdue provided a link in their second set of RFPs that explicitly clarified that data contained in a user’s memories folder was available for download. Id. at *14.
Magistrate Judge Kolar stated that once Purdue served its second set of RFPs, Plaintiff and his counsel had the necessary information to understand that they could download more than mere metadata from Snapchat servers. Further, Plaintiff knew or should have known that his claim that Snapchat archives no content files was false, having been saving content to the memories folder for years. Magistrate Judge Kolar did not accept Plaintiff’s explanation for his affirmative misrepresentations that he did not think in depth about whether a data download from Snapchat’s servers would include content saved to the memories folder, calling this illogical and contradictory to Plaintiff’s other testimony. He also did not accept Plaintiff’s claim that he could not recall when he deleted the data. Magistrate Judge Kolar pointed to Plaintiff’s understanding that he was obligated by a court order to produce his Snapchat data. Magistrate Judge Kolar held that Plaintiff’s conduct showed intentional or reckless disregard of his obligations and was therefore done in bad faith for purposes of Rule 37.
Magistrate Judge Kolar stated that Plaintiff’s intentional deletion of the 11 files constituted a failure to take steps to preserve data that should have been preserved and could not be restored or replaced through additional discovery. Id. at *15. Further, the deletion “undoubtedly” prejudiced Purdue, as it caused “wholly unnecessary litigation to resolve this dispute” and may have contained evidence relevant to Plaintiff’s claims for damages based on loss of career opportunities. Magistrate Judge Kolar stated that even when viewed in the best possible light, sanctions would be “eminently appropriate.”
Magistrate Judge Kolar then examined the issue of the appropriate sanctions to impose. Purdue asked the court to order Plaintiff to show cause as to why Count I of the amended complaint alleging a claim under the 14th Amendment to the U.S. Constitution and under 42 U.S.C. § 1983 for denial of due process should not be stricken and why Plaintiff should not be held in contempt of the court’s order. Magistrate Judge Kolar denied this relief. He found striking Count I disproportionate to Plaintiff’s deletion of the files, considering the lack of anything in the record indicating whether the files were in fact adverse to Plaintiff’s case. Further, Magistrate Judge Kolar found that he needed no further explanation from Plaintiff as to whether he failed to abide by court orders. Instead, Magistrate Judge Kolar imposed monetary sanctions, allowed for the introduction of limited evidence and a jury instruction related to the deletion of Snapchat data, and awarded attorneys’ fees and costs for all litigation in connection with litigating the deletion of files from Snapchat. Magistrate Judge Kolar stated that the limited evidence related to the deletion would have to be as to the relevance of the data, for example as to Plaintiff’s claim that Purdue’s actions precluded a future career in the Navy. Magistrate Judge Kolar added that an adverse inference instruction was not warranted.
Magistrate Judge Kolar did not rule on jury instructions in this opinion but provided guidance as to how the parties could draft them. Id. at *16.
2. An order from the Western District of Kentucky denying the plaintiff’s motion to compel one of the defendants to use additional search methodologies for ESI because the plaintiff had not met its burden to show that the defendant’s searches, which included searches within Microsoft Outlook and collections by the defendant’s employees, resulted in its withholding relevant discovery.
In Maker’s Mark Distiller, Inc. v. Spalding Grp., Inc., 2021 WL 2018880 (W.D. Ky. Apr. 20, 2021), Magistrate Judge Lanny King denied the Plaintiff’s motion to compel one of the Defendants to use additional search methodologies to locate additional relevant documents because the Plaintiff did not meet its burden to show that the Defendant’s searches, which included searches within Microsoft Outlook and collections by the Defendant’s employees, resulted in its withholding relevant discovery.
In this trade dress infringement action under the Lanham Act and Kentucky common law, Plaintiff claimed that Defendant intentionally created packaging for its bourbon-infused cigars that would evoke an association with cigars that had been infused with Plaintiff’s bourbon. Id. at *1. Following depositions, interrogatories, and document production, Plaintiff filed a motion to compel Defendant to implement a new search protocol for locating responsive documents, based on five contentions: (1) “Defendants ignored the email accounts (and other records) of at least two custodians”; (2) the keyword searches used were inadequate; (3) Outlook is an inappropriate program for discovery purposes; (4) employees and not attorneys made relevance determinations; and (5) the low number of produced emails imply withholding. Id. at *4. Defendant argued that relevant documents had been produced and, to the extent they were not, any additional discovery was not proportional.
Magistrate Judge King began his analysis by discussing whether Plaintiff waived its objections to Defendant’s search methodology: “As a general rule, when a party fails to object timely to interrogatories, production requests, or other discovery efforts, objections thereto are waived.” Id. at *3 (internal quotations and citations omitted). Magistrate Judge King found that Plaintiff’s objections were untimely because it waited six months to bring any issues to Defendant’s attention and nine months to bring the dispute to the court’s attention: “Federal Courts have found more timely objections constituted waiver,” and, thus, Plaintiff’s untimely objection here also resulted in waiver. Id.
However, Magistrate Judge King made clear that even if the objection had not been waived, Plaintiff had not sufficiently alleged deficiencies that would justify forcing Defendant to start over in the discovery process. “[A]bsent credible evidence, the responding party’s representation that there are no additional documents is sufficient to defeat a motion to compel.” Furthermore, “[c]redible evidence is more than mere speculation and must permit a reasonable deduction that other documents may exist or did exist and have been destroyed.” Id. (internal quotations omitted).
Magistrate Judge King addressed each of Plaintiff’s contentions about Defendant’s discovery collection in turn. First, Plaintiff alleged that Defendant failed to search records of two named custodians and some unknown number of unnamed custodians. As to the named custodians, Magistrate Judge King found these allegations unfounded. Plaintiff had cited documents that had been in the custody of one of the named individuals indicating that the custodian had been included; Defendant had a reasonable explanation for excluding the other custodian, as that employee had started with the company after the events at issue. Further, Defendant had attempted to fix any mistake, offering to re-review and produce any relevant emails from the accounts at issue. Regarding the unnamed custodians, Plaintiff cited metadata as indicating that Defendant had employees whose names it had not disclosed. Magistrate Judge King did not find the metadata to be credible evidence of additional relevant employees of Defendant and was satisfied with Defendant’s assertion that all employees’ documents had been searched. Id. at *4.
Second, Plaintiff argued that the keywords used by Defendant in its searches were chosen unilaterally and without negotiation with Plaintiff. Magistrate Judge King found that cooperation here was immaterial as the record demonstrated that neither side had cooperated. Instead, the issue was simply the sufficiency of the terms used. To the extent Plaintiff’s objections were to the methods used, Magistrate Judge King noted that courts have held that where “the key issue is whether a party can be forced to use certain methods when the party prefers to use keyword searching, the short answer is a decisive NO.” Id. at *5 (quoting Hyles v. New York City, 2016 WL 4077114, at *1 (S.D.N.Y. Aug. 1, 2016)) (internal quotations omitted). Further, to the extent Plaintiff objected to the terms used, Magistrate Judge King saw no reason why the terms would not have led to the identification of relevant documents.
Third, Plaintiff argued that Defendant’s use of Microsoft Outlook was inappropriate because it “was not an appropriate program to use to conduct keyword searches.” Id. at *6. Magistrate Judge King dismissed this argument, stating that he saw no reason why this might be the case. Among other arguments, Plaintiff had asserted that using Outlook to perform searches was not appropriate because Outlook will display only 250 search results, but Magistrate Judge King found this to be an “exaggerated problem where it is unclear that [Defendant] has left this limit in place and even if it were, employees would be aware of the additional emails once they reach the 250th simply by clicking ‘more.’” Id.
Fourth, Plaintiff argued that “[a] proper search for discoverable documents requires careful planning, oversight, and monitoring by the party’s counsel.” Id. (quotation omitted). Plaintiff requested that the court require Defendant to start its searching over, this time led by attorneys rather than company employees. Magistrate Judge King rejected this request. “To be sure, Attorneys, and not employees, are the ones to make the legal determination of relevancy in discovery. However, while related, collecting documents and making relevancy determinations are distinct actions.” Plaintiff cited case law in which courts had required defendants to redo discovery in similar cases. But Magistrate Judge King pointed out that these cases had involved “smoking gun documents” that had not been provided by the producing party, indicating that the search it had undertaken had been inadequate. Thus, those courts had been concerned with credible evidence rather than merely process. Further, those courts had opined on the role of employees as the general document gatherers and attorneys as the advisers. Here, there were no smoking guns and Defendant had demonstrated its relevancy determinations, instruction, and oversight. Id. at *6–7.
Finally, Plaintiff cited the low volume of production as evidence that Defendant’s production was inadequate. However, Defendant had offered evidence explaining the low number of documents, including the lack of email use at the small company. Id. at *7. Therefore, Magistrate Judge King found that Plaintiff had failed to identify credible evidence of withheld evidence, and Defendant would not be required to conduct a new search.
3. A decision from the Northern District of New York granting in part the plaintiff’s motion to compel the defendants to use certain expanded search terms in identifying potentially relevant ESI but permitting the defendants to use predictive coding to review the resulting documents rather than a full linear review.
In Maurer v. Sysco Albany, LLC, 2021 WL 2154144 (N.D.N.Y. May 27, 2021), Magistrate Judge Christian F. Hummel of the Northern District of New York granted in part the Plaintiff’s motion to compel the Defendants to use certain expanded search terms in identifying potentially relevant ESI but permitted Defendants to use predictive coding to review the resulting documents.
Plaintiff in this employment discrimination litigation alleged that his former employer and certain of its employees violated the Americans with Disabilities Act, among other claims, by terminating his employment after he requested disability leave. In connection with his discovery requests, Plaintiff provided a proposed list of custodians and search terms for Defendants to use to search for documents and sought to have Defendants search for documents for the period of January 1, 2013, through the present. The parties thereafter engaged in meet-and-confer discussions regarding Plaintiff’s requests but ultimately disagreed regarding both the scope of Defendants’ collection of documents and whether Defendants would apply predictive coding to the complete email boxes of key custodians back to January 1, 2013, or a more limited timeframe of documents collected from the email boxes.
Plaintiff moved to compel Defendants to use one of two methods to find and produce additional responsive documents: either search terms including Plaintiff’s name, the names of Defendants’ employee decisionmakers, and a number of other general terms to identify documents for linear review, or, alternatively, predictive coding across the full custodial collections of documents for the period starting January 1, 2013. Id. at *5.
Defendants countered, arguing that only a narrow set of search terms was needed and that loading the full custodial set for review starting from January 1, 2013 (as Plaintiff requested), would be disproportionately burdensome. Among other arguments, Defendants claimed that the cost to host this full custodial set would be $23,755 per month and the cost of using predictive coding would exceed $200,000. Id. at *6. Defendants also argued that using individual names — including the names of the employees involved in the decision making — would return large numbers of false positives. Id. at *7. Instead, Defendants proposed collecting documents for only a two-year period, 2016 to 2018, and then applying a narrower set of search terms. Defendants stated that this approach yielded approximately 27,000 “hits,” and Defendants could then use predictive coding over this set of documents. Id. at *8. In response, Plaintiff stated that using predictive coding over the documents resulting from this narrower set of terms and time period was insufficient since “in order for predictive coding to be accurate it must be applied to a larger set of documents.” Id. at *4.
Magistrate Judge Hummel began his analysis by setting forth the relevant standards under Federal Rule of Civil Procedure 26, which provides that “[p]arties 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.” Id. at *8 (quoting Fed. R. Civ. P. 26(b)(1)). Rule 26 tasks the court to consider “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.”
As an initial matter, Magistrate Judge Hummel held that the “use of a general search-term-based search of the custodian accounts” followed by a second-level review using predictive coding was reasonable, especially in light of the fact that “the ESI relevant to the claims and defenses in this case is likely not voluminous.” Id. at *8–9. And while he noted that Defendants had not provided enough “clarity as to the time period used for their purported decision to terminate” Plaintiff, he found that Plaintiff had not established that events over seven years before his termination could possibly be relevant. Id. at *8. Therefore, Magistrate Judge Hummel found that the appropriate timeframe was the two-year time period proposed by Defendants.
Magistrate Judge Hummel next observed that “the review procedures proposed by plaintiff would result in storage and review costs that would be disproportionate to the likely limited amount of relevant ESI that will be discovered.” Id. at *9. Therefore, “conducting a linear review of every hit resulting from a search term-based search that includes all custodians’ names and name derivatives or reviewing the full custodian accounts using predictive coding dating back to 2013 is not proportional to the benefit and importance of ESI in resolving the issues presented in this case.”
Still, Magistrate Judge Hummel agreed that excluding Plaintiff’s name in Defendants’ search terms would potentially “omit relevant documents.” Id. “[A] name-only search ... for this short period of time will not result in an unduly burdensome number of emails for defendants to review, especially since defendants will be able to further filter out irrelevant hits through the use of predictive coding.” Magistrate Judge Hummel thus granted Plaintiff’s motion in this regard. But he also found that using the employee decision makers’ names as standalone search terms would result in a disproportionate volume of documents. Therefore, Magistrate Judge Hummel permitted Defendants to couple the decision makers’ names with other terms, thereby reducing the volume of returned results.
In closing, Magistrate Judge Hummel noted that “the best solution in the entire area of electronic discovery is cooperation among counsel,” and “[i]deally, the parties should agree on the search methods, including search terms or concepts.” Id. at *10 (internal quotations omitted). He therefore directed the parties to confer and submit a final ESI protocol consistent with the conclusions set forth in his decision within 30 days.
4. An opinion from the Southern District of California granting the plaintiff’s motion to compel the defendant to produce financial data, including from its franchisees to the extent that the defendant had the legal right to access and audit the franchisees’ financial data under the relevant franchise agreements.
In Hall v. Marriott Int’l, Inc., 2021 WL 1906464 (S.D. Cal. May 12, 2021), U.S. Magistrate Judge Allison H. Goddard granted Plaintiff’s motion to compel discovery over Defendant’s objections that responding would be unduly burdensome.
During discovery in this putative consumer class action alleging false and deceptive advertising in the way Defendant represented the prices for its hotel rooms, services, and amenities, Plaintiff sought (among numerous other requests at issue in its motion to compel) revenue and accounting data from Defendant that contained a breakdown of certain fees collected by both Defendant and its franchisee hotels. Id. at *11. After failing to object to these requests in their initial discovery responses, any meet-and-confer correspondence, or in any other correspondence to the court, Defendant failed to produce the requested information, and the parties informed the court that they had reached an impasse on these matters. Id. at *3. Thereafter, Plaintiff filed this motion to compel, and Defendant objected on the basis that the requests were unduly burdensome.
Magistrate Judge Goddard began her analysis by reviewing the standards applicable to claims of undue burden, id., at *10, namely, that a party claiming that discovery requests are unduly burdensome must do so with specificity — alleging the specific nature and extent of the burden usually by affidavit or other reliable evidence. Boilerplate objections are improper unless based on particularized facts. Conclusory allegations of general harm or inconvenience are insufficient, and just because complying with certain requests “will involve expense or may be time consuming, does not make it unduly burdensome.” Id. Thus, Magistrate Judge Goddard noted that she would “closely scrutinize Defendant’s description of the alleged burden and disregard conclusory speculation.”
As an initial matter, Magistrate Judge Goddard found that Defendant’s objections on undue burden grounds had been waived because they were made for the first time in Defendant’s opposition to the motion to compel: “When a party raises an objection to a discovery request for the first time in an opposition to a motion to compel, that objection is waived, unless good cause exists to excuse the objection’s untimeliness.” Courts have broad discretion in determining whether there is good cause, considering (1) the length of the delay, (2) the reason for the delay, (3) the existence of bad faith, (4) the prejudice to the party seeking the disclosure, (5) the nature of the request, and (6) the harshness of imposing the waiver. Id. at *11. Here, Magistrate Judge Goddard found that Defendant had not demonstrated good faith in making its objections because no information on the purported burden had been shared with Plaintiff before the motion to compel was filed.
However, Magistrate Judge Goddard also addressed the merits of Defendant’s undue burden objections and found them deficient. Id. Defendant objected to producing information regarding the amount of amenity and resort fees collected for franchised hotels on the grounds that it did not actually possess this data. Rather, Defendant claimed that its franchisees were in possession of the requested data. Magistrate Judge Goddard determined that this was not a “legitimate or burdensome barrier to discovery,” reasoning that Defendant’s profit from its franchise agreements is based on a percentage of revenue, and by virtue of franchise agreements, Defendant had the right to access and audit the franchisees’ books. In this context, Magistrate Judge Goddard noted that she had located Marriott franchise agreements through a simple online search, which contained audit provisions.
Magistrate Judge Goddard noted that while Defendant was required to “produce information in its possession, custody, or control,” this does not require actual possession, custody, or control. Id. at *12. Rather, “[p]roperty is deemed within a party’s possession, custody, or control if the party has ... the legal right to obtain the property on demand.” Id. (citation omitted). Magistrate Judge Goddard stated that “the fact that Defendant may have to expend time and energy to retrieve the documents does not make the documents inaccessible or outside of Defendant’s control.” Furthermore, in responding to discovery requests, a party “is under an affirmative duty to seek that information reasonably available to it from its employees, agents, or others subject to its control.” Id. (citation and alterations omitted). In this case, Magistrate Judge Goddard held that Defendant had failed to establish that it would be unduly burdensome to respond to Plaintiff’s discovery requests and that Defendant must obtain the requested revenue data from franchised hotels to the extent that it has a right to access financial data for those hotels through an audit or other contractual provision.
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