In Fort Worth Employees’ Retirement Fund v. J.P. Morgan Chase & Co., No. 09 Civ. 3701 (JPO) (JFC), 2013 U.S. Dist. (S.D.N.Y. Dec.16, 2013), a complex discovery dispute arose during the process of this securities action lawsuit revolving around the defendants’ loan products and offerings with regards to a specific consumer class, in which the plaintiffs filed a motion to compel an expanded discovery.
Prior to the motion, the defendants had used approximately 80,000 search terms to produce discovery documents, which had yielded around 875,000 hits. The documents had not been turned over, as they were being reviewed for production. However, the plaintiffs argued that the defendants’ search terms were “woefully deficient” in filing the motion to compel. The specific request was for more search terms, more custodians, and an extended discovery time period in order to receive all relevant information.
Search terms already in use by the defendants included the names of the 9 securities offerings at issue within the lawsuit, the loan numbers for roughly 35,000 loans under review, CUSIP numbers assigned to more than 300 underlying certificates for the securities offerings, names and dates assigned to loan transactions, and the lead plaintiffs’ names, as well as their advisors. The defendants also used several abbreviations and variations for each term to uncover relevant electronically stored information (ESI) in which actual terms might have been truncated or modified.
In response to the motion to compel, the defendants stated the search terms were comprehensive. However, the plaintiffs complained that the number of documents was “‘actually minimal’ for a case of this size” and that the names and numbers used would turn up “just a few specific, narrow categories of information,” while excluding “broad categories of documents that do not specifically reference ‘a particular loan, loan pool or securitization in the text of the documentor e-mail’ but instead address general practices or concerns, such as ‘widespread abandonment of underwriting guidelines.’” The plaintiffs further cited the March 30, 2011, Order of the Honorable John G. Koeltl, U.S.D.J., claiming that “documents do not need to be specifically related to the loans and offerings at issue in this case to be relevant.”
The request by the plaintiffs asked that the defendants add a search protocol to incorporate “combinations of terms aimed at discovering relevant documents that are not loan specific,” to include terms like “the names of loan originators, due diligence firms, rating agencies, and ‘descriptors’ (such as ‘awful’ and ‘toxic’).” The defendants objected to the additional 116,000 proposed search terms as too broad and unduly burdensome, since its sampling indicated that the expanded terms would “yield an unreviewable pool of over 11 million documents.”
Magistrate Judge James C. Francis IV, after hearing the positions of both parties, found some truth in each side’s argument. While the plaintiffs had “provided sufficient justification for expanding search terms beyond numbers and names to ensure that the ESI search captures all of the relevant documents pertaining to the loans and offerings at issue,” the defendants would face “an unreasonable burden of production” using the plaintiffs’ proposed search terms, as they would be required to “sift through voluminous irrelevant documents added to the search results.”
In such disputes regarding discovery, a court-ordered middle ground is often supplied as a remedy. However, Judge Francis did not issue an order, stating that it would be “impractical and inappropriate” due to the “nature of this request and the complexities of crafting a search protocol.” Instead, the parties were urged to “reexamine their positions and work together in good faith to create a mutually acceptable ESI search regime.” Failing a cooperative agreement by both parties, a special master would be appointed to the case in order to recommend an appropriate search protocol, with the costs to be split between plaintiffs and defendants.
So, what do you think? Should defendants expect to produce a higher volume of electronic discovery documents in cases that are larger in scope? Is the possibility of general relevance to the issues before the court enough to expand the burden of eDiscovery for defendants? Please share any comments you might have or if you’d like to know more about a particular topic.
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