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Finding the Requested Information Relevant and Defendant’s Cost Estimates “Greatly Exaggerated,” Court Grants Plaintiffs’ Motion to Compel

Posted in CASE SUMMARIES

Spieker v. Quest Cherokee, LLC, 2009 WL 2168892 (D. Kan. July 21, 2009)

This matter was before the court on plaintiffs’ renewed motion to compel the production of electronically stored information (“ESI”).  Previously, the court denied a motion to compel without prejudice for reasons including plaintiffs’ failure to establish the relevance of the material requested and defendant’s estimated cost to comply and directed the parties to address recently enacted Fed. R. Evid. 502 in any future discussions of production and costs.  The parties were unable to reach agreement regarding production, and plaintiffs filed a renewed motion to compel.  Upon finding that plaintiffs had established the relevance of the material requested and that defendant’s estimated costs of production were “greatly exaggerated,” the court granted the motion.

The court’s analysis began with a discussion of relevance and, in short order, resulted in the determination that “relevance is no longer an impediment to an order compelling production of the requested ESI.”

Turning then to costs, the court noted the estimates provided by defendant for production of its ESI employing a third-party vendor ($82,500 to process the requested email, $38,000 to copy the information in TIFF format, and attorney’s fees amounting to $250,000 for a “privilege and relevance” review) and restated its prior instructions to the parties to explore alternative review models in an effort to reduce them.  Specifically, the court previously instructed the parties to discuss “conducting computer searches using defendant’s recently installed software and in-house IT staff” and “utilizing Rule 502 to minimize the expense of the detailed privilege review.”

Regarding those instructions, defendant argued that its software was “untested,” that it’s in-house IT staff had “no internal experience in producing ESI in litigation,” and that the process would need to be completed on nights and weekends.  Accordingly, defendant concluded that the cost of in-house production would be greater than the cost of using an outside vendor.  The court was not persuaded:

Defendant’s pessimistic arguments concerning its ability to generate the requested ESI materials in-house are not persuasive.  First, defendant’s assertions that its IT employees have no experience producing discovery in litigation carries no weight.  This court is aware of no case where a party has been excused from producing discovery because its employees "have not previously been asked to search for and/or produce discovery materials."  Moreover, the argument that the new software is "untested" is inconsistent with statements by Christopher Smith, defendant’s IT Manager.  Smith avers that he has conducted "some limited searches" and that searches are possible if the email are "archived or converted."  Smith Affidavit, Doc. 67-3.  Defendant’s estimated cost for generating ESI data responsive to plaintiffs’ production requests is greatly exaggerated.

Regarding its instruction to consider Rule 502, the court first acknowledged defendant’s objection to plaintiffs’ suggestion that defendant produce all ESI with an agreement that no waiver would result.  Failure to take any steps to preserve privilege, the court reasoned, would not satisfy Rule 502(b).  The court was not altogether persuaded by defendant’s arguments, however:

Although turning over the ESI material without taking any steps to preserve privileged materials would not satisfy Rule 502(b), defendant’s estimate of $250,000 to conduct a "privilege and relevance" review is excessive.  For example, defendant argues that search terms will likely capture employee health care information that has no relevance to this case.  The court agrees that employee health care information has no relevance to this case; however, the court is at a loss to understand why defendant would use search terms that would capture large volumes of employee health care information.  As the court previously ruled, defendant is the party most familiar with its own records and responsible for preparing search requests that gather information responsive to plaintiffs’ discovery requests.  In the unlikely event that employee health care information is captured and contained in the ESI made available to plaintiffs, the court will enter a protective order.

The court went on to identify the “most disturbing aspect of defendant’s estimate of costs:”  the failure to present any modification from the original estimates and persistence in arguing against production pursuant to Fed. R. Civ. P. 26.  Specifically, defendants argued the requested discovery was expensive (and thus not "reasonably accessible"), cumulative, and available through other means.  Reasoning that “there are multiple approaches to electronic discovery and alternatives for reducing costs and it appears that defendant asserts the highest estimates possible merely to support its argument that electronic discovery is unduly burdensome,” the court concluded defendant’s estimated cost of review was also “greatly exaggerated.”

The court then briefly addressed and rejected each of defendant’s specific arguments, as outlined above, and granted plaintiffs’ motion to compel production of defendant’s ESI.

  • http://www.thedigitalforensicgroup.com Douglas Brush

    This is a classic case that demonstrates the need for litigation readiness planning. Companies can no longer ignore the process that is necessary to produce ESI prior to litigation so there is not a fire drill and an unhappy judge.