E-Discovery Update

This Sidley Update addresses the following recent developments and court decisions involving e-discovery issues:

  1. a “wake-up call” by Magistrate Judge Peck of the Southern District of New York regarding boilerplate responses to Fed. R. Civ. P. 34 document requests
  2. a Western District of New York decision finding that a requesting party’s discovery had “reached the point of diminishing returns” in rejecting plaintiff’s motion to compel the production of documents
  3. an Eastern District of Michigan ruling accepting defendant’s burden arguments regarding plaintiffs’ request for several years of data; ordering the parties to meet and confer to agree on a method for sampling data covering a six-month period; and, in the absence of such an agreement, allowing plaintiffs to obtain all the data for the six-month period at their own expense
  4. an Eastern District of Louisiana decision refusing to allow a direct examination of several of defendant’s computers and a server and requiring the parties to confer and develop a draft electronically stored information (ESI) protocol to govern the examination of those machines

1. In Fischer v. Forrest, 2017 WL 773694 (S.D.N.Y. Feb. 28, 2017), Magistrate Judge Andrew Peck issued a “discovery wake-up call” regarding boilerplate responses to Fed. R. Civ. P. 34 document requests, warning litigants that failure to comply with amended Rule 34’s requirements to state objections with specificity and to indicate if material has been withheld on the basis of such objections will be deemed to have waived all objections except for privilege.

In two related cases asserting copyright and trademark claims, plaintiff served various discovery requests on defendants. Defendants filed amended Rule 34 responses listing 17 “general objections” to the requests, including to requests that “call for the disclosure of information that is not relevant to the subject matter of this litigation, nor likely to lead to the discovery of relevant, admissible evidence.” Defendants also “incorporated by reference” these general objections into their response to each of plaintiff’s discovery requests. Id.

Magistrate Judge Peck took the opportunity presented by defendants’ responses to issue a “discovery wake-up call” to lawyers in the Southern District of New York regarding the December 2015 amendments to Rule 34. As part of these amendments, he noted that Rule 34 was amended “to require that objections to Rule 34 requests be stated with specificity.” Id. (quoting Fed. R. Civ. P. 34(b)(2)(B) advisory committee’s note (2015)). Following the amendments, he stated that responses to discovery requests must “[s]tate grounds for objections with specificity” and “[s]pecify the time for production and, if a rolling production, when production will begin and when it will be concluded.” In addition, objections to discovery requests must “state whether any responsive materials are being withheld on the basis of that objection.”

Magistrate Judge Peck then reviewed defendants’ discovery responses and concluded that they violated amended Rule 34 in several responses. First, incorporating general objections into each response by reference “violate[d] Rule 34(b)(2)(B)’s specificity requirement as well as Rule 34(b)(2)(C)’s requirement to indicate whether any responsive materials are withheld on the basis of an objection.” Id. Moreover, he noted that general objections to discovery requests “should rarely be used after December 1, 2015 unless each such objection applies to each document request (e.g., objecting to produce privileged material).” Id.

Second, the magistrate judge noted that defendants’ general objection that the requests called for disclosure of information “not relevant to the subject matter of this litigation, nor likely to lead to the discovery of relevant, admissible evidence” was inconsistent with amended Rule 26(b)(1), which limits discovery to material “relevant to any party’s claim or defense.” Id. (quoting Fed. R. Civ. P. 26(b)(1)). The magistrate judge pointed out that discovery no longer extends to material “reasonably calculated to lead to admissible evidence.” Id. (citing In re Bard IVC Filters Prod. Liab. Litig., 317 F.R.D. 562, 564 (D. Ariz. 2016)).

Third, defendants’ responses to the discovery requests used “meaningless boilerplate” language, such as stating that a request was “overly broad and unduly burdensome.” Magistrate Judge Peck stated that such objections do not communicate anything of value, as the question is why a particular request is burdensome or how is it overbroad. Id.

Fourth, defendants’ responses did not indicate when defendants would be producing documents or ESI.

In light of these various deficiencies, Magistrate Judge Peck ordered defendants to submit revised discovery responses that complied with Rule 34. He pointed out that the amended rules were now 15 months old and that “[i]t is time for all counsel to learn the now-current Rules and update their ‘form’ files.” He cautioned that “[f]rom now on in cases before this Court, any discovery response that does not comply with Rule 34’s requirement to state objections with specificity (and to clearly indicate whether responsive material is being withheld on the basis of objection) will be deemed a waiver of all objections (except as to privilege).” Id.

2. In Armstrong Pump, Inc. v. Hartman, 2016 WL 7208753 (W.D.N.Y. Dec. 13, 2016), Magistrate Judge Hugh B. Scott, finding that a plaintiff’s discovery requests had “reached the point of diminishing returns,” rejected plaintiff’s motion to compel the production of documents with one limited exception.

In this case, plaintiff sought to compel production of documents that defendant considered to be the functional equivalent of proprietary source code. Id. at *1. Plaintiff claimed that the documents did not so qualify because they contained neither linear nor graphical programming and thus could not lead to the reconstruction of the exact source code that defendant uses. Id. at *2. Plaintiff argued that the information in these documents was critical to its claims and urged the court to order the documents be produced pursuant to an existing discovery protective order without any additional protections accorded to source code. Defendant objected, indicating that the documents in question contained enough technical information to allow a software engineer to build its proprietary source code based on that information, and a person skilled in software development could use these documents to recreate defendant’s products. Defendant also argued that plaintiff had already viewed all of the at-issue documents and printed “approximately half of the total pages,” albeit under strict protocols. Id.

The magistrate judge declined to compel production with one limited exception. In reaching this conclusion, Magistrate Judge Scott noted the effects of the 2015 Fed. R. Civ. P. 26 amendments, stating that “[p]roportionality has assumed greater importance in discovery disputes” and that the amended rule is intended to encourage more aggressive efforts from the judiciary to discourage discovery overuse. Id. at *2. The magistrate judge also indicated that “[i]mplicit in both the language and the spirit of the 2015 Amendments is the obligation, at any stage of a case, to prevent parties from expending increasing time and energy pursuing diminishing returns.” Id. He reasoned that while sometimes the additional discovery sought technically would “provide nominally probative information,” when obtaining a few more documents through discovery “requires five or six inches of motion papers,” including “numerous pages of expert reports ... and transcripts from depositions,” there comes a point where “courts have to tell the parties that if they cannot yet prove their claims then they probably never will.” Id. at *3.

The magistrate judge then reviewed the course of discovery in the underlying case and found that it had “reached the point of diminishing returns,” noting specifically that discovery had been ongoing for six years, plaintiff had furnished approximately 1.5 million pages of documents while defendant had furnished over 160,000 pages of documents, the parties had conducted “a dozen depositions” and retained experts and, finally, plaintiff had had the opportunity to review and print the at-issue documents. Id. Magistrate Judge Scott also indicated that plaintiff failed to clearly articulate what content was within the unprinted pages that warranted further production. Noting the extensive discovery that had already occurred, the magistrate judge concluded:

[Plaintiff] wants the Court to believe that about 150 pages not yet printed but already reviewed — 305 pages if, as [plaintiff] wants, printouts from the document and source reviews do not count — will definitively prove what six prior years of discovery could not. Really?” Id.

Having found that discovery had reached a point of diminishing returns, the magistrate judge nonetheless ordered defendant to produce documents containing search terms identified by the court from the at-issue repository pursuant to the protocol in the protective order for “highly confidential, attorney eyes only” material. With this production, the magistrate judge stated that discovery was closed. Id. at *4.

3. In Solo v. United Parcel Service Co., 2017 WL 85832 (E.D. Mich. Jan. 10, 2017), Magistrate Judge R. Steven Whalen accepted defendant’s burden arguments regarding plaintiffs’ request for several years of data and ordered the parties to meet and confer regarding a mutually agreeable method for sampling data covering a six-month period. If the parties could not agree on such a sampling methodology, plaintiffs would have the option of obtaining all the data for the six-month period at their own expense.

In this putative class action, plaintiffs alleged that United Parcel Service (UPS) had breached its contract with shippers by overcharging for shipments with a declared value over $300. Id. at *1. Plaintiffs issued an interrogatory requesting, among other things, that UPS provide the total number of shipments from each state that implicated the disputed charge going as far back as 2008, depending on the statute of limitations for a particular state.

UPS objected to the interrogatory and submitted a declaration from a senior program manager explaining why compiling and analyzing this type of “package level detail” would be excessively burdensome. UPS maintained this type of data for only a limited time period in a format that was easily accessible electronically, with the remainder being archived to backup tapes. UPS estimated that restoring archived backup tapes going back to 2008 would take at least six months and cost $120,000 in labor. Id. at *2. Once restored, analyzing the backup tapes would “require extensive additional analysis of each account number and the manual review of contract language for an individual shipper.” UPS proposed limiting plaintiffs’ request to a six-month period from June 2013 to December 2013 that, in UPS’s view, was most likely to be deemed relevant to plaintiffs’ classwide claims. Id.

Magistrate Judge Whalen began by noting that under the 2015 amendments to the Federal Rules of Civil Procedure, parties have a “heightened duty of cooperation in procedural matters such as discovery” and discovery requests under Rule 26(b)(1) should be “proportional to the needs of the case ... and whether the burden or expense of the proposed discovery outweighs the benefit.” Id. (quoting Fed. R. Civ. P. 26(b)(1)). Turning to the particulars of this request, Magistrate Judge Whalen agreed with UPS that complying with plaintiffs’ interrogatory as drafted would be “excessively burdensome” because much of the requested information was stored on backup tapes that were not “reasonably accessible.” Moreover, the costs and technical challenges inherent in restoring and analyzing the data supported a finding of undue burden.

Turning to the potential relevance of the requested information, Magistrate Judge Whalen noted that two pending legal issues in the case would determine the relevance of any shipments outside the six-month timeframe proposed by UPS. If UPS prevailed on these issues, “the burden and expense of producing such a broad range of information will have been for naught.” In addition, the burden on UPS could be further reduced through the use of statistical sampling, “without prejudice to production of the entire data set at a later time.” Id. (citing Quintana v. Claire’s Boutiques, Inc., 2014 WL 234219, at *2 (N.D. Cal. 2014) (“In the specific context of class action discovery, sampling advances the goal of proportionality advanced under Fed. R. Civ. P. 26(b)(3)(c)(iii).”)).

In light of the burden of complying with plaintiffs’ interrogatory as drafted and the limited potential relevance of all the data requested, Magistrate Judge Whalen restricted plaintiffs’ request to the six-month time period proposed by UPS and ordered the parties to meet and confer regarding a mutually agreeable approach to producing a statistical sample of package-specific data from this period. If the parties could not agree on an acceptable sampling methodology, Magistrate Judge Whalen stated that plaintiffs would have the option of bearing the cost of having UPS produce all of the package-specific data from the six-month time period. Id.

4. In Brand Services, LLC v. Irex Corp., 2017 WL 67517 (E.D. La. Jan. 6, 2017), U.S. Magistrate Judge Karen Wells Roby refused to allow plaintiff to carry out a direct examination of several of defendant’s computers and a server and required the parties to confer and develop a draft ESI protocol to govern the examination of those machines.

Plaintiff, a manufacturer of industrial scaffolds, alleged that three former employees had schemed to transfer files containing trade secrets and proprietary information to an external hard drive before leaving the company and going to work for a competitor. Id. at *1. Plaintiff sued the competitor for theft of trade secrets and sought injunctive relief and damages. As part of the first request for discovery, plaintiff sought the production of computers or full verified forensic images of computers for the three former employees. In addition, plaintiff sought the production of a full verified forensic image of one of defendant’s servers. Defendant objected to the request, arguing that plaintiff’s request was overbroad and would require the production of defendant’s trade secrets. The defendant stated that it was willing to enter into an ESI protocol for inspection of the computers via keyword searches. Id.

Plaintiff moved under Rule 34 to compel production of the three computers along with defendant’s server. Magistrate Judge Roby held that plaintiff’s request for the entire contents of the computers and the server was “overly broad and disproportional.” Id. at *2. Citing the advisory committee notes to Fed. R. Civ. P. 34(a), Magistrate Judge Roby stated that Rule 34(a) discovery requests are “‘not meant to create a routine right of direct access to a party’s electronic information system’ as ‘[i]nspection or testing of certain types of [ESI] or of a responding party’s electronic information system may raise issues of confidentiality or privacy.’” Id. at *3 (quoting M-I LLC v. Stelly, 2011 U.S. Dist. LEXIS 134300, at *7 (S.D. Tex. Nov. 2011)). Magistrate Judge Roby therefore refused to allow a direct examination of defendant’s computers and servers. Instead, she ordered the parties to formulate a draft ESI protocol that contemplated keyword searches and was proportional to the needs of the case:

[B]ecause both parties seem to acknowledge that there is some relevant information contained on the computers and server, the Court orders both parties to formulate a draft ESI protocol to govern discovery/examination of these computers and to submit that draft to the Court. As outlined during oral arguments, the parties are to develop an ESI protocol that contemplates key word searches so as to control costs and to keep discovery proportional to the needs of this case. After the parties have developed a draft, each party may inform the Court by separate letters of any concerns they might have with the draft ESI protocol. Thereafter, the Court will conduct another status conference in chambers with the Parties to resolve any remaining disputes concerning the ESI protocol. Id.