Baird v. BlackRock Institutional Trust Company, N.A. et al

Filing 255

ORDER by Judge Kandis A. Westmore Regrding 241 Joint Discovery Letter. (kawlc2, COURT STAFF) (Filed on 2/25/2019)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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CHARLES BAIRD, et al.,

Case No. 17-cv-01892-HSG (KAW)

Plaintiffs,

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ORDER REGARDING JOINT
DISCOVERY LETTER

v.

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BLACKROCK INSTITUTIONAL TRUST
COMPANY, N.A., et al.,

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Re: Dkt. No. 241

United States District Court
Northern District of California

Defendants.
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Plaintiffs filed the instant putative class action against Defendants, alleging violations of

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the Employee Retirement Income Security Act's ("ERISA") fiduciary duty and prohibited

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transactions provisions. (Second Amended Compl. ("SAC") ¶ 1, Dkt. No. 154.) On February 1,

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2019, the parties filed a joint discovery letter regarding BlackRock's1 production in response to

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Plaintiffs' Requests for Production ("RFP") Nos. 34 and 35. (Discovery Letter at 1, Dkt. No. 241.)

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Upon consideration of the parties' filings, as well as the arguments presented at the February 21,

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2019 hearing, the Court GRANTS IN PART and DENIES IN PART Plaintiffs' request for relief.

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I.

BACKGROUND

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Plaintiffs' RFP No. 34 seeks: "All Documents and Communications concerning the gross

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and net profits that BlackRock and affiliates . . . earns as a result of providing Securities Lending

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Services to the BlackRock CTIs, including but not limited to Documents and Communications

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concerning the costs of providing such services, if any." (Discovery Letter, Exh. A at 6.) RFP

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No. 35 concerns profits earned related to managing cash collateral involved in securities lending

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transactions.

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Like the parties, the Court refers to all the BlackRock-related Defendants as "BlackRock." (See
Discovery Letter at 1 n.1, Dkt. No. 241.)

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The parties previously filed a discovery letter regarding RFP No. 34. (Dkt. No. 115.)

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There, BlackRock argued that information about the costs of services was irrelevant to whether the

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fees charged for securities lending was reasonable. (Id. at 2, 4.) The Court disagreed with

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BlackRock, "find[ing] that information regarding the cost of the securities lending services

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provided by BTC is relevant to whether the fees are reasonable." (July 20, 2018 Ord. at 8, Dkt.

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No. 136.) To the extent BlackRock asserted that they do not perform profitability analyses and

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that calculations of gross and net profits did not exist, the Court found that BlackRock was "not

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required to create or produce documents that do not already exist. Defendants are, however,

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required to produce the information that does exist." (Id.)

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United States District Court
Northern District of California

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II.

DISCUSSION

The parties now dispute whether Defendant "BlackRock's existing production of cost and

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profitability information satisfies the Court's Order." (Discovery Letter at 1.) Plaintiffs point to

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four types of documents that they assert have not been produced.

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A.

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First, Plaintiffs state that they received three pages of Quarterly Business Reviews

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("QBRs"), and that "each of the three pages was extracted from three separate, electronic, multi-

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page PDF files . . . ." (Discovery Letter at 2.) Plaintiff argues that this is improper because

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"[e]xtracting a single page from a larger document removes the important context of the document

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as a whole and makes the information more difficult to understand." (Id.) BlackRock responds

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that the PDF files were compilations of QBRs for all BlackRock business lines, and that each

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QBR was a discrete, integrated, and separately created document. (Id. at 4.)

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Quarterly Business Reviews ("QBRs")

Plaintiffs do not assert that it is entitled to QBRs for other BlackRock business lines;

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rather, they argue that "nothing substantiates BlackRock's statement below that the 3 pages

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produced constitute 'discrete, integrated, and separately created' documents." (Discovery Letter at

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2.) BlackRock, however, has so stated in the discovery letter, and the Court will not presume that

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BlackRock would knowingly make a false representation to the Court. Thus, to the extent the

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three QBR pages are stand-alone documents that are part of a larger compilation of QBRs for all

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BlackRock business lines, the Court will not require production of the remaining QBRs. See Evon
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v. Law Offices of Sidney Mickell, Civ. No. S-09-0760 JAM GGH, 2010 WL 455476, at *2 (E.D.

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Cal. Feb. 3, 2010) ("In regard to multi-volume manuals or large documents separated by express

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designations, if entire sections are clearly and convincingly irrelevant, they may be redacted.").

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BlackRock, however, must produce all QBRs for the relevant business line if it has not already

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done so.
B.

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Plaintiffs also seek the native, unaltered versions of the three QBRs. (Discovery Letter at

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2.) Plaintiffs assert that BlackRock refused to search for and produce the native files, and instead

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generated spreadsheets with some -- but not all -- of the information included. Plaintiffs further

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state that these spreadsheets did not match the information in the three QBRs, including missing

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United States District Court
Northern District of California

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several years of data and having different numbers. Additionally, Plaintiffs contend that the

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metadata on several of the spreadsheets showed creation and/or last modified dates after the

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Court's prior order requiring the production of this information. (Id.)

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Native Files for the QBRs

BlackRock states that they were unable to find the native Excel files for the three QBRs.

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(Discovery Letter at 5.) As to the spreadsheet metadata, BlackRock asserts that the discrepancies

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were due to how the files were collected. After Plaintiffs raised these issues, BlackRock re-

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collected and re-produced the files with the correct metadata, which show that the produced files

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predate the Court's prior order and were not altered. (Id.)

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With respect to the native files, it does not appear that BlackRock refused to search for the

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native files; instead, BlackRock states that they were unable to find them. At the hearing,

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BlackRock agreed to again check for the native files. If they cannot be found, however, the Court

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cannot require BlackRock to produce native files that they cannot find. As to the other

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spreadsheets that were provided, it appears BlackRock has now produced the correct documents,

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and that the metadata was a technical error that has been rectified. While these spreadsheets do

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not match the QBRs, the parties seem to agree that they are not the native files of the QBRs

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because BlackRock cannot locate the native files; thus, the fact that they are different does not

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necessarily mean they were improperly altered prior to production.

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C.

Database

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Next, Plaintiffs assert that BlackRock has not produced all of the responsive cost and

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profitability information. (Discovery Letter at 3.) Plaintiffs point to notes used by Mr. Jason

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Strofs during his deposition, which referred to cost data for securities lending and cash

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management that has not been produced in BlackRock's document production. (Id.) Plaintiffs

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believe this information is contained in a single electronic database, from which BlackRock

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exports relevant responsive cost information. (Id.)

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BlackRock does not deny that there is a database that contains its financial information.

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(Discovery Letter at 4.) Instead, BlackRock states that it uses the enterprise planning platform
Cognos TM1 to maintain its financial planning data. (Id.) The TM1 database "contains a massive

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Northern District of California

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amount of data that requires specialized software to access; there is no discrete 'entire database

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file' that could be produced." (Id.) BlackRock also states there is no archive of TM1 data, apart

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from the Excel files that were contemporaneously saved, which show the TM1 data as it existed at

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the time. BlackRock also states that it cannot produce new reports because designing a template

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for a report "would take considerable time to develop." (Id.)

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At this point, it is not clear what information is available from what sources, and what can

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be produced. Accordingly, the Court ORDERS the parties to meet and confer as to further

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production. BlackRock shall confirm the scope of the data available in the TM1 database,

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including responsive information from years prior to BlackRock starting to use the TM1 database.

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BlackRock shall also inform Plaintiffs what other underlying data was imported to the TM1

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database and/or is available from other sources, including any databases that were used prior to the

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TM1 database.

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D.

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Finally, Plaintiffs "seek an order requiring BlackRock to perform a narrowly-tailored

E-Mail Communications

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search for custodial ESI responsive to RFPs 34 and 35 . . . ." (Discovery Letter at 3.) BlackRock

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responds that this demand for e-mail communications is "a new demand above and beyond the

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request already resolved by the Court." (Id. at 5.) In support, BlackRock contends that the prior

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joint letter regarding RFP No. 34 focused exclusively on cost data and did not mention e-mails.
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(Id.)

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The Court already resolved this matter in favor of Plaintiffs when it ordered BlackRock to

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produce "[a]ll responsive documents to Plaintiffs' Request for Production No. 34." (July 20, 2018

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Ord. at 14 (emphasis added).) RFP No. 34 clearly states that it seeks "Documents and

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Communications concerning the costs of providing such services, if any." (Discovery Letter at 1

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(emphasis added).) The fact that the prior discovery letter did not mention e-mails did not reflect a

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narrowing of the request. The prior discovery letter focused on whether the cost of securities

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lending services was relevant to the case; thus, there was no need to discuss e-mails separately

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when BlackRock contended that no information about the cost of security lending needed to be
produced. (Dkt. No. 115 at 3-5.) BlackRock did not challenge the request for communications in

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United States District Court
Northern District of California

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its prior letter; it is not permitted to challenge the request now, after the Court has already ordered

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production of all responsive documents. The Court therefore ORDERS the BlackRock to conduct

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a search for communications responsive to RFP Nos. 34 and 35; the parties shall meet and confer

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on search strings and custodians to narrow the search as appropriate.2

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III.

CONCLUSION

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Accordingly, the Court ORDERS BlackRock to:

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(1)

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database, and what responsive information exists from other sources; and
(2)

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Produce communications responsive to RFP Nos. 34 and 35, after meeting and

conferring with Plaintiffs regarding a narrowed search.
IT IS SO ORDERED.

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Meet and confer with Plaintiffs as to what responsive information exists in the TM1

Dated: February 25, 2019
__________________________________
KANDIS A. WESTMORE
United States Magistrate Judge

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The parties agree that the Court's ruling on RFP No. 34 applies equally to RFP No. 35.
(Discovery Letter at 1.)
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