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Court Declines to Issue Advisory Opinion as to What Actions State Must Take to Properly Preserve Documents for Potential Suit

Posted in CASE SUMMARIES

Texas v. City of Frisco, 2008 WL 828055 (E.D. Tex. Mar. 27, 2008)

In this case, the State of Texas sought a declaratory judgment and the court’s protection from a general litigation hold request, initiated by a letter sent by the City of Frisco.  The letter asked the Texas Department of Transportation to generally preserve all electronic data associated with a particular highway toll project, and referred to potential litigation regarding the environmental evaluation of the toll project.  The State speculated that the City would likely bring suit pursuant to the National Environmental Policy Act and the Administrative Procedures Act; however, at the time the complaint was filed, no claims had been brought.  Thus, the State asked the court to enter a declaratory judgment ruling that the City’s preservation letter "violates the Federal Rules of Civil Procedure and is contrary to rules governing a NEPA/APA claim in federal court."  The request for declaratory relief was the sole count made against the City of Frisco in the complaint.

The City of Frisco moved to dismiss, arguing that the State failed to plead the elements of any viable claim and was essentially asking the court for an advisory opinion concerning what action it must take to properly preserve those documents subject to the litigation hold.  The court agreed, and dismissed the complaint.  The court’s analysis is set out below:

Having reviewed the record in this case, the Court finds that Plaintiff has not stated a justiciable controversy and this issue is not yet ripe.  The party seeking declaratory judgment bears the burden of proving, by a preponderance of the evidence, that an actual controversy exists.  Cardinal Chem. Co. v. Morton Int’l, Inc., 508 U.S. 83, 95,113 S.Ct. 1967, 1975, 124 L.Ed.2d 1 (1993).  Here, the impetus for the State’s suit is the litigation hold letter from the City of Frisco which states, in part:

This letter is sent to request the preservation of electronic data associated with SH 121 and its conversion from a freeway to either a privatized or public tollway…. The City of Frisco expects to be profoundly and adversely impacted by this project and maintains concerns that may not be addressed [regarding an environmental re-evaluation of the project].  Therefore, the purpose of this letter is to notify the Texas Department of Transportation (TxDOT) that a potential exists for litigation in connection with the conversion of SH 121 into a tollway.  This being the case, preserving any and all information related to this project is of the utmost importance.

Notably, it is not the City’s potential claims regarding the tollway project that forms the basis of the State’s declaratory judgment action.  Rather, the State seeks a declaratory judgment as to how rules of discovery and procedure might be applied by the Court to its preservation of documents in that potential suit.  According to the State, it is "seeking a declaration of its rights under the new federal discovery rules, Federal Rules of Civil Procedure ("Rules") 26(f) and 34" and "a declaratory judgment as to the interpretation and application of Rules 26(f) and 34, pertaining to the preservation of electronic documents."  Rule 26(f) deals with planning for discovery during a lawsuit, including conferences between the parties regarding the preservation of discoverable information and the disclosure and discovery of electronically stored information.  See Fed. R. Civ. P. 26.  Rule 34 addresses the production of documents including the production of electronically stored data and the procedures to object to a document request during a suit.  See Fed. R. Civ. P. 34.  As a result of the City’s litigation hold letter, the State asks this Court to determine "[w]hether it is a violation of Rules 26(f) and 34 to require an entity to broadly preserve and retain any and all electronic documents based on a [request]made before suit is filed."

While a "threat of litigation, if specific and concrete, can indeed establish a controversy upon which declaratory judgment can be based," the facts here are not "sufficiently immediate to establish an actual controversy" between the City and the State.  Orix Credit Alliance, Inc., 212 F.3d at 896, 897 (internal citations omitted).  Neither the letter nor any of the facts alleged by Plaintiff rise to the level of controversy sufficient to confer jurisdiction.  The letter only states that potential exists for litigation regarding the tollroad project.  It does not articulate a "substantial controversy of immediacy and reality."  Shields, 289 F.3d at 835.

Moreover, even if the Court were to insert itself into the pre-litigation discovery process (which it declines to do), the correspondence attached to Plaintiff’s Complaint does not evidence any concrete or developed disagreement by the parties as to the preservation of documents.  A pre-enforcement action like Plaintiff’s is only ripe "if any remaining questions are purely legal … [and] further factual development" is not required for effective judicial review.  United Trans. Union, 205 F.3d at 857.  The facts here are not fully developed.  The dispute is abstract, "hypothetical and not suited for judicial determination."  Hillwood Development Co. v. Related Companies, Inc., 2006 WL 1140472, at *8 (N.D.Tex.2006).

Further, while they do not specifically address pre-suit litigation hold requests, the Rules of Civil Procedure contemplate that the parties will act in good faith in the preservation and production of documents.  See Fed. R. Civ. P. 37.  The Court encourages both parties to handle the preservation of documents in response to their respective litigation holds in such good faith.  The Court declines, however, to intervene now and issue an advisory opinion as to what actions by the State would constitute good faith as to the City’s request.

(References to the record omitted.)