IN RE EQUIFAX INC. SECURITIES LITIGATION

Filing 64

ORDER GRANTING IN PART AND DENYING IN PART #52 Motion for Limited Modification of the PSLRA Discovery Stay. The Motion is granted as to Defendant Equifax, only. The Court orders that the Lead Plaintiff and Equifax: (a) Meet and confer, and, within 30 days of this Order, seek entry of orders governing the treatment of confidential material and the production of Electronically Stored Information; (b) Meet and confer, and, within 30 days of this Order, seek entry of a proposed discovery schedule and Case Management Order; (c) May serve initial requests for the production of documents; (d) Meet and confer regarding the custodians whose ESI will be searched and what search terms should be used to search for ESI in response to any initial requests for the production of documents, and report to the Court within 75 days of this Order on any disagreements or issues with respect to that process; and (e) May serve necessary document preservation subpoenas on Third Parties that have not been served in the MDL. Signed by Judge Thomas W. Thrash, Jr. on 6/15/18. (jkl)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF GEORGIA
ATLANTA DIVISION
IN RE EQUIFAX INC. SECURITIES
LITIGATION

CIVIL ACTION FILE
NO. 1:17-CV-3463-TWT

OPINION AND ORDER
This is a securities fraud class action. It is before the Court on the Lead
Plaintiff’s Motion for Limited Modification of the PSLRA Discovery Stay [Doc.
52]. For the reasons set forth below, the Lead Plaintiff’s Motion for Limited
Modification of the PSLRA Discovery Stay [Doc. 52] is GRANTED in part and
DENIED in part.
I. Background
This case arises out of a massive data breach incident. On September 7,
2017, the Defendant Equifax Inc. (“Equifax”) announced that it was the subject
of a data breach affecting approximately 140 million consumers. The Lead
Plaintiff Union Asset Management Holding AG seeks to represent a putative
class of investors that purchased the securities of Equifax from February 25,
2016 through September 15, 2017. The Lead Plaintiff alleges that the Defendants committed fraud in connection with the data breach incident that caused
a loss to the value of the class’s investments. The Lead Plaintiff now moves for
a limited modification of the PSLRA’s automatic stay of discovery in this case.
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It asks that the Court modify the discovery stay to allow the parties to engage
in case management and discovery planning activities similar to those that are
currently ongoing in the parallel multidistrict litigation arising out of the data
breach (the “MDL”). The Court concludes that the Lead Plaintiff’s requested
modification should be granted as to the Defendant Equifax Inc., but should be
denied as to the Defendants Richard F. Smith, John W. Gamble, Jr., Rodolfo O.
Ploder, and Jeffrey L. Dodge (the “Individual Defendants”).
II. Discussion
The Private Securities Litigation Reform Act of 1995 (the “PSLRA”)
imposes an automatic stay of discovery in private securities class actions until
a district court can determine the legal sufficiency of the class action claims.1
Specifically, the PSLRA provides:
In any private action arising under this chapter, all discovery and
other proceedings shall be stayed during the pendency of any
motion to dismiss, unless the court finds upon the motion of any
party that particularized discovery is necessary to preserve
evidence or to prevent undue prejudice to that party.2
“Thus a party asking a court to lift the PSLRA’s stay must show that (1) the
discovery sought is particularized and (2) necessary to (a) preserve evidence or
(b) prevent undue prejudice to the party.”3 “The legislative history of the PSLRA

1

Behlen v. Merrill Lynch, 311 F.3d 1087, 1091 (11th Cir. 2002).

2

15 U.S.C. § 78u-4(b)(3)(B).

3

N.Y. State Teachers’ Ret. Sys. v. Gen. Motors Co., No. 14-11191,

2015 WL 1565462, at *3 (E.D. Mich. Apr. 8, 2015).
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indicates that Congress enacted the discovery stay in order to minimize the
incentives for plaintiffs to file frivolous securities class actions in the hope either
that corporate defendants will settle those actions rather than bear the high cost
of discovery . . . or that the plaintiff will find during discovery some sustainable
claim not alleged in the complaint . . . .”4
The Lead Plaintiff argues that a modification of the discovery stay is
necessary to prevent undue prejudice. District courts have construed the phrase
“undue prejudice” to mean “improper or unfair treatment amounting to
something less than irreparable harm.”5 “In determining whether to lift the
stay, courts may take all facts into account to determine whether undue burden
would exist.”6 “Courts have found undue prejudice where plaintiffs would be
unable to make informed decisions about their litigation strategy in a rapidly
shifting landscape because they are the only major interested party without
documents forming the core of their proceedings.”7 Undue prejudice has also

4

In re WorldCom, Inc. Secs. Litig., 234 F. Supp. 2d 301, 305

(S.D.N.Y. 2002).

See N.Y. State Teachers’ Ret. Sys., 2015 WL 1565462, at *3 (citing
cases defining “undue prejudice”); see also In re Bank of Am. Corp. Secs.,
Derivative, & ERISA Litig., No. 09 MDL 2058(DC), 2009 WL 4796169, at *2
5

(S.D.N.Y. Nov. 16, 2009) (“District courts have construed ‘undue prejudice’ to
mean ‘improper or unfair treatment amounting to something less than
irreparable harm.’”).
6

In re Bank of Am. Corp., 2009 WL 4796169, at *2.

Id. at *2 (citing In re Worldcom, Inc. Secs. Litig., 234 F. Supp. 2d
301, 305 (S.D.N.Y. 2002)).
7

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been found “where the plaintiff lacks access to documents already produced to
governmental and other agencies and in other lawsuits.”8 In making this
determination, courts often weigh the burden to the defendants against the
possibility of prejudice to the plaintiffs.9 The Lead Plaintiff argues that it will
suffer undue prejudice if it cannot engage in discovery planning and preparation
efforts that are already underway in the related MDL proceedings.10 Otherwise,
according to the Lead Plaintiff, it will fall far behind the MDL plaintiffs and will
be severely disadvantaged in the discovery process because certain tasks, such
as serving document requests and negotiating custodians and search terms, can
take months to complete.11
The Court agrees that the Lead Plaintiff will suffer undue prejudice
absent a modification of the discovery stay. Without allowing it to engage in the
requested case management and discovery planning efforts, the Lead Plaintiff
will fall behind the parties in the parallel proceedings and will be disadvantaged
in making important decisions about how to proceed with the case. The Lead
Plaintiff would be unable to make “informed decisions about their litigation

8

cases).

N.Y. State Teachers’ Ret. Sys., 2015 WL 1565462, at *3 (collecting

9

In re Bank of Am. Corp., 2009 WL 4796169, at *2.

10

Lead Pl.’s Mot. for Limited Modification of the PSLRA Discovery

Stay, at 10.
11

Id.

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strategy in a rapidly shifting landscape.”12 For instance, the Lead Plaintiff may
be forced to begin taking depositions with only a short amount of time to
prepare, or may be forced to seek a stay of the taking of depositions. Allowing
the Lead Plaintiff to coordinate discovery planning with Equifax will help keep
this case apace with the MDL proceedings without subjecting Equifax to the
burdens of actual document production. If this case were to proceed past the
motion to dismiss stage, the parties would be able to efficiently begin the
discovery process and minimize the disparity in timelines between this case and
the related MDL proceedings.
In similar cases involving complex parallel proceedings, courts have found
that a securities action plaintiff will suffer undue prejudice if it falls behind the
plaintiffs in other related proceedings. For example, in In re Bank of America

Corporation Securities, Derivative, & ERISA Litigation, the court concluded
that the plaintiffs would be unduly prejudiced if they were not permitted to stay
apace with the plaintiffs in the related cases.13 The court noted that:
Discovery is moving apace in parallel litigation. Without access to
documents produced in these other proceedings, plaintiffs in these
cases will be unduly prejudiced and will be less able to make
informed decisions about litigation strategy. Plaintiffs’ pursuit of
discovery will also “fall substantially behind the SEC and other

In re Bank of Am. Corp., 2009 WL 4796169, at *2 (citing In re
WorldCom, Inc. Secs. Litig., 234 F. Supp. 2d 301, 305 (S.D.N.Y. 2002)).
12

13

Id. at *3 (“I conclude that they would be unduly prejudiced if the

discovery stay is not lifted.”).

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government actions.” Plaintiffs are not seeking this discovery now
merely to engage in a fishing expedition.14
Other courts have come to similar conclusions.15 And, importantly, in each of
these cases, the plaintiffs were requesting the actual production of documents,
as opposed to the mere discovery preparation that the Lead Plaintiff seeks here.
Thus, due to the risk that it could fall far behind the plaintiffs in the related
cases, the Court finds that the Lead Plaintiff has satisfied its burden in showing
undue prejudice.
The Defendants argue that the Lead Plaintiff has not demonstrated that
the delay in discovery caused by the stay would constitute undue prejudice.

14

Id. (internal citations omitted).

15

See, e.g., N.Y. State Teachers’ Ret. Sys. v. Gen. Motors Co., No. 14-

11191, 2015 WL 1565462, at *3 (E.D. Mich. Apr. 8, 2015) (“NYSTRS also shows
that the discovery sought from the MDL Litigation is necessary to prevent
undue prejudice.”); Westchester Putnam Heavy & Highway Laborers Local 60
Benefit Funds v. Sadia S.A., No. 08 Civ. 9528(SAS), 2009 WL 1285845, *1
(S.D.N.Y. May 8, 2009) (“Given the existence of parallel litigation, without
access to the report, plaintiffs are disadvantaged vis-à-vis Brazilian litigants.”);
Singer v. Nicor, Inc., No. 02 C 5168, 2003 WL 22013905, at *2 (N.D. Ill. Apr. 23,
2003) (“Plaintiffs here may well be unfairly disadvantaged if they do not have
access to the documents that the governmental and other agencies already have,
during the pendency of the motion to dismiss.”); In re Tyco Int’l, Ltd.
Multidistrict Litig., No. MDL NO. 02-1335-B, 2003 WL 23830479, at *4 (D.N.H.
Jan. 29, 2003) (“Other courts have invoked this exception to give plaintiffs in
securities cases access to information that has been made available to
investigative agencies and plaintiffs in other actions.”); In re WorldCom, Inc.
Secs. Litig., 234 F. Supp. 2d 301, 305 (S.D.N.Y. 2002) (“Based upon the unique
circumstances of this case, the documents requested by NYSCRF must be
produced in order to prevent undue prejudice to the interests of the putative
investor class it represents. All of the investigations and proceedings concerning
WorldCom are moving apace.”).
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Instead, according to the Defendants, this is the exact type of prejudice that
Congress intended to impose with the PSLRA.16 Under this view, the harm that
the Lead Plaintiff will experience is the result of a deliberate balancing of the
pros and cons by Congress. However, the cases the Defendant relies upon for
this proposition are distinguishable from the situation here. For instance, in In

re CFS-Related Securities Fraud Litigation, the court concluded that the
discovery delay caused by the automatic stay did not amount to undue prejudice
because “[t]he concerns which Plaintiffs raise are presented in all securities
cases in which the PSLRA’s discovery stay is triggered.”17 The court noted that
“[p]rejudice caused by the delay inherent in the PSLRA’s discovery stay cannot
be ‘undue’ prejudice because it is prejudice which is neither improper nor
unfair.”18 Instead, the court emphasized, “it is prejudice which has been
mandated by Congress after a balancing of the various policy interests at stake
in securities litigation, including a plaintiff’s need to collect and preserve
evidence.”19

16

Defs.’ Br. in Opp’n to Lead Pl.’s Mot. for Limited Modification of the
PSLRA Discovery Stay, at 6-7.
17

In re CFS-Related Secs. Fraud Litig., 179 F. Supp. 2d 1260, 1265

(N.D. Okla. 2001).
18

Id.

19

Id.

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However, the undue prejudice at risk here is different from the prejudice
alleged in In re CFS-Related Securities Fraud Litigation. The plaintiffs in that
case asserted that undue prejudice would result because the stay had lasted too
long, and that witnesses’ memories could begin to fade or evidence could be lost.
However, those concerns are present in any case in which a discovery stay is
imposed, which the court in that case correctly noted. Congress, in enacting the
discovery stay, chose to impose such burdens on securities plaintiffs. The
situation here is different. While the PSLRA did intend to impose some
prejudice on plaintiffs with a delay in discovery, it did not necessarily intend to
disrupt a court’s management of complex, parallel proceedings or delay
discovery to the point that the securities plaintiffs would be irretrievably
disadvantaged in relation to plaintiffs in related actions. The concerns
highlighted by the Lead Plaintiff here about falling too far behind are not
present in every securities case, unlike the concerns in In re CFS-Related

Securities Fraud Litigation. In fact, these concerns only arise in cases like this,
where there are multiple complex, parallel proceedings.
In another case cited by the Defendants, In re Initial Public Offering

Securities Litigation, the court rejected the plaintiffs’ argument that a discovery
stay was “unduly prejudicial in this particular case given the size and
complexity of the litigation.”20 It acknowledged that “[i]t is true that this case
20

In re Initial Pub. Offering Secs. Litig., 236 F. Supp. 2d 286, 287

(S.D.N.Y. 2002).

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‘represents a consolidation of unique proportions,’” but concluded that such an
argument failed to support a finding of undue prejudice because “nothing in
language of the PSLRA . . . supports giving more weight to the delay . . . because
the case is unusually complex,” and because the plaintiffs’ resources are more
abundant in a large case such as that.21 In contrast, the Lead Plaintiff will not
experience undue prejudice in this case just because of its size and complexity.
Instead, the Lead Plaintiff will experience undue prejudice due to the existence
of multiple parallel cases arising out of this data breach incident, each of which
are uniquely large and complex on their own. This case is not just a complicated
securities action – it also coincides with multiple other complex proceedings
where discovery preparations are underway and where the Lead Plaintiff risks
being left behind. For this reason, In re Initial Public Offering Securities

Litigation is distinguishable.
The Defendants also argue that the cases relied upon by the Lead
Plaintiff as to undue prejudice are inapposite because the Defendants in those
cases were bankrupt or insolvent.22 According to the Defendants, the plaintiffs
in those cases were at risk of experiencing irreparable harm because the
discovery stay would have prevented them from “vying for a piece of a limited

21

Id.

22

Defs.’ Br. in Opp’n to Lead Pl.’s Mot. for Limited Modification of the
PSLRA Discovery Stay, at 10-11.
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pie.”23 Under this reasoning, the plaintiffs in those cases risked missing out on
the limited remaining assets of bankrupt defendants since they would arrive
late to the settlement table due to the discovery delay. It is true that this is part
of the reasoning in the court’s decision in In re Worldcom. Nonetheless, much
of the reasoning of Worldcom still applies to this case. In Singer v. Nicor, Inc.,
the defendants made the same argument that the Defendants make here.24 The
court rejected this distinction, noting that “even if Nicor is not bankrupt, the
concerns expressed by the Enron and WorldCom courts are valid and present in
this case” since the plaintiffs still risked being unfairly disadvantaged by falling
behind the other plaintiffs.25 Furthermore, many of the cases cited by the Lead
Plaintiff involve defendants that were not bankrupt or insolvent. And, this
distinction is further tempered by the fact that the Lead Plaintiff is only
requesting that certain preparations for discovery be taken, as opposed to the
actual production of documents that the plaintiffs in Worldcom sought.

23

Id. at 10.

See Singer v. Nicor, Inc., No. 02 C 5168, 2003 WL 22013905, at *2
(N.D. Ill. Apr. 23, 2003) (“Defendants here attempt to distinguish this case from
Enron and WorldCom by noting that the defendants in those cases were
bankrupt and subject to other civil lawsuits in which the PSLRA did not
apply.”).
24

Id.; see also N.Y. State Teachers’ Ret. Sys. v. Gen. Motors Co., No.
14-11191, 2015 WL 1565462, at *4 (E.D. Mich. Apr. 8, 2015) (“However, not all
of the cases cited by NYSTRS involved bankrupt or sold entities.”).
25

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The Defendants further argue that the Lead Plaintiff “falling behind” the
plaintiffs in the other related actions does not constitute undue prejudice within
the meaning of the PSLRA.26 The Defendants argue that discrepancies between
securities plaintiffs and non-securities plaintiffs in parallel proceedings such as
this is the deliberate result of Congress’s intention to treat securities actions
differently.27 In the cases cited by the Defendants, the courts emphasize that the
plaintiffs were not at risk of suffering undue prejudice because they were not
dealing with bankrupt defendants and were not missing out on ongoing
settlement negotiations. Thus, no real danger was presented solely from falling
behind the parties in the related proceedings.28 From this, the Defendants
argue, undue prejudice cannot result solely from falling behind the parties in
parallel proceedings.
However, the cases cited by the Lead Plaintiff more closely reflect the
circumstances of this case. In those cases, in which there was a myriad of
complex, parallel proceedings, the courts concluded that the risk of “falling

26

Defs.’ Br. in Opp’n to Lead Pl.’s Mot. for Limited Modification of the
PSLRA Discovery Stay, at 7-8.
27

Id.

28

See, e.g., In re Spectranetics Corp. Secs. Litig., Nos.

08–cv–02048–REB–KLM, 08–cv–02055–CMA–CBS, 08–cv–02078–MSK–BNB,
08–cv–02267–MSK–CBS, 08–cv–02420–PAB, 08–cv–02603–MSK–BNB, 2009
WL 3346611, at *4 (D. Colo. Oct. 14, 2009); In re Refco, Inc., No. 05 Civ.
8626(GEL), 2006 WL 2337212, at *2 (S.D.N.Y. Aug. 8, 2006).
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behind” amounted to undue prejudice.29 Likewise, the case at hand involves a
uniquely complicated group of parallel proceedings. The MDL is not a gardenvariety multidistrict litigation – it is comprised of a consolidation of hundreds
of different cases. Thus, even though Equifax is not bankrupt and has not
already entered into settlement agreements with other plaintiffs, the unusually
massive nature of this case presents a serious risk of undue prejudice to the
Lead Plaintiff if it falls too far behind the parties in the related actions. For this
reason, this case is more analogous to the cases cited by the Lead Plaintiff as to
this issue. Furthermore, in each of the cases cited by the Defendants, the
plaintiffs were seeking the actual production of documents. In contrast, the Lead
Plaintiff only seeks permission to begin various discovery and case management
preparations. Given this, the risk of prejudice to the Lead Plaintiff in falling
behind the parties in the related proceedings far outweighs the burden to
Equifax in engaging in these preparations.
However, the Court concludes that the Lead Plaintiff will not be unduly
prejudiced if the discovery stay remains in place as to the Individual Defendants. Presumably, the vast majority of documents are in the custody of
Equifax, and not the Individual Defendants. Additionally, the bulk of discovery
preparation efforts will involve the Lead Plaintiff and Equifax, and not the

See, e.g., N.Y. State Teachers’ Ret. Sys. v. Gen. Motors Co., No. 1411191, 2015 WL 1565462, at *1-2 (E.D. Mich. Apr. 8, 2015); In re Bank of Am.
Corp. Secs., Derivative, & ERISA Litig., No. 09 MDL 2058(DC), 2009 WL
29

4796169, at *2 (S.D.N.Y. Nov. 16, 2009).

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Individual Defendants. Excluding the Individual Defendants from these
discovery and case management preparations will not result in the Lead
Plaintiff falling far behind the plaintiffs in the parallel actions. Thus, the Lead
Plaintiff has failed to show that it would be unduly prejudiced if the discovery
stay remains in place as to the Individual Defendants.
The modification of the stay as to Equifax is also warranted because the
burden on the Defendant would be slight. The discovery planning activities
requested by the Lead Plaintiff are already underway in the MDL proceedings,
and ordering Equifax to engage in these same activities in the securities action
would not impose an undue burden on it. The Defendants acknowledge this
much.30 Other courts have found that “[t]he burden on the defendants is slight
when a defendant ‘has already found, reviewed and organized the documents.’”31
Likewise, the burden on Equifax here would be slight since it will already be
30

See Defs.’ Br. in Opp’n to Lead Pl.’s Mot. for Limited Modification

of the PSLRA Discovery Stay, at 9 (“[M]uch of the work needed to adapt
elements of discovery ‘planning’ already undertaken or underway in the MDL
. . . will be ‘incremental’ to work already done or in progress in the MDL.”). The
Defendants make this argument for the proposition that the Lead Plaintiff will
not be unduly prejudiced since much of this preparation is already being taken
care of in the MDL. However, as discussed already, the Lead Plaintiff will be
prejudiced by its exclusion from these ongoing preparations because it will fall
behind the rest of the parties involved in these proceedings. Instead, this
argument shows that the burden of such discovery preparations will be small as
to Equifax.
31

In re Bank of Am. Corp. Secs., Derivative, & ERISA Litig., No. 09

MDL 2058(DC), 2009 WL 4796169, at *2 (S.D.N.Y. Nov. 16, 2009) (quoting
Waldman v. Wachovia, No. 08 Civ 2913(SAS), 2009 WL 86763, at *2 (S.D.N.Y.
Jan. 12, 2009)).
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engaged in many of these same discovery preparations in the MDL anyway. As
one court noted in support of its decision to lift the PSLRA stay, “in a sense this
discovery has already been made, and it is merely a question of keeping it from
a party because of the strictures of a statute designed to prevent discovery
abuse.”32 Equifax will inevitably engage in most of these discovery preparations
anyway. The only question is whether the Lead Plaintiff should be excluded
from these preparations due to the “strictures” of the PSLRA, which the Court
declines to do. Furthermore, as the Lead Plaintiff has repeatedly emphasized,
this case is distinct from all of the cases cited by the Defendants because the
Lead Plaintiff does not request the production of documents. Instead, it merely
seeks to begin discovery preparation and management efforts, which imposes
a smaller burden than the production of documents.
The Defendants argue that the requested modification will impose a
heavy burden on them.33 They contend that these discovery preparations,
including identifying and organizing the documents in the Lead Plaintiff’s
document requests, constitute a large undertaking. Furthermore, they contend
that the Lead Plaintiff’s requests may be mooted or substantially narrowed by
the Court’s eventual ruling on a motion to dismiss. Although Equifax will

In re LaBranche Secs. Litig., 333 F. Supp. 2d 178, 183 (S.D.N.Y.
2004) (quoting In re Enron Corp. Secs., Derivative & ERISA Litig., No. MDL32

1446, 2002 WL 31845114, at *3 (S.D. Tex. Aug. 16, 2002)).
33

Defs.’ Br. in Opp’n to Lead Pl.’s Mot. for Limited Modification of the
PSLRA Discovery Stay, at 13-14.
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undoubtedly experience some burden in engaging in these planning activities
for the securities action, the Court finds that it is a slight burden when put into
the context of this entire complex litigation due to the overlap that these
preparations will have with those of the MDL. While it is true that an eventual
ruling on a motion to dismiss could moot some of the planning efforts that the
Lead Plaintiff seeks, the Court nonetheless concludes that such a burden on
Equifax would be slight compared to the prejudice the Lead Plaintiff would
experience without the modification.
The Defendants also argue that the burden on a defendant is irrelevant
when determining whether to lift a PSLRA stay.34 According to the Defendant,
the Court’s inquiry should be limited to whether the discovery sought is
particularized, and whether it is necessary to preserve evidence or avoid undue
prejudice to the plaintiff. However, the Court disagrees. When deciding whether
a plaintiff will suffer undue prejudice, courts frequently look to the burden that
such discovery will put on the defendants.35 Courts may take all facts into
34

Id. at 12-14.

35

See, e.g., N.Y. State Teachers’ Ret. Sys. v. Gen. Motors Co., No. 14-

11191, 2015 WL 1565462, at *4 (E.D. Mich. Apr. 8, 2015) (“Production of the
documents would not unduly burden the defendants, because they already had
reviewed and compiled the documents when they produced them to other
entities or parties.”); In re LaBranche Secs. Litig., 333 F. Supp. 2d at 183
(“When deciding whether or not to lift the PSLRA’s discovery stay, ‘it is
customary to consider whether a production request places an undue burden on
the party from which it is requested.’”); Singer v. Nicor, Inc., No. 02 C 5168,
2003 WL 22013905, at *2 (N.D. Ill. Apr. 23, 2003) (“[D]efendants would not be
unduly burdened by producing them to plaintiffs now.”).
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account to determine whether undue prejudice exists, and often “weigh the
burden to defendants against the potential prejudice to plaintiffs.”36 Here, the
potential undue prejudice to the Lead Plaintiff outweighs the burden to Equifax.
However, such a burden would be substantial as to the Individual
Defendants, who are individual persons without access to the same vast
resources that a corporate entity such as Equifax has. Furthermore, most of the
Individual Defendants, excluding Mr. Smith, are not named as defendants in the
MDL action. Thus, unlike Equifax, ordering them to participate in discovery
preparations would require them to engage in planning activities that they
would otherwise not be engaged in, which is a crucial distinction. Therefore,
since the burden would be substantial to the Individual Defendants, and since
the risk of undue prejudice to the Lead Plaintiff is low, the Court will not modify
the discovery stay as to the Individual Defendants.
Furthermore, modification of the discovery stay as to Equifax will be
necessary to allow the Court to effectively manage the progress of this case. As
other courts have recognized in modifying the PSLRA discovery stay, “keeping
all parties on an equal footing with respect to discovery serves important case
management interests in complex litigation.”37 Allowing discovery preparations

36

In re Bank of Am. Corp. Secs., Derivative, & ERISA Litig., No. 09

MDL 2058 (DC), 2009 WL 4796169, at *2 (S.D.N.Y. Nov. 16, 2009).
37

In re Tyco Int’l, Ltd. Multidistrict Litig., No. MDL NO. 02-1335-B,

2003 WL 23830479, at *4 (D.N.H. Jan. 29, 2003).
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to begin in this case will make sure that the case proceeds at a proper pace. The
requested modification will help keep the securities action on a similar timeline
as the MDL proceedings, which would be especially useful for case management
if depositions begin. Absent these preparations, the risk of discovery disputes
and other case management issues will increase, which would disrupt the
orderly development of the case. Discovery disputes would become especially
likely if this case falls far behind the progress of the related proceedings due to
the conflicting interests of the parties in the various related actions. Keeping
these cases on a moderately similar timeline would help the Court expeditiously
resolve any discovery issues that may arise from these varying interests. The
Court may take all facts, including this, into account when determining whether
to lift such a stay. Therefore, since this limited modification of the discovery stay
will support the Court’s ability to manage this case, the Court determines that
this factor weighs in favor of a modification.
Additionally, the requested modification does not contravene the purposes
behind the PSLRA’s automatic discovery stay. Congress enacted the PSLRA’s
discovery stay to prevent securities plaintiffs from using burdensome discovery
to leverage settlements from defendants, and to prevent plaintiffs from using
discovery as a fishing expedition to find sustainable claims.38 Neither of these
concerns are implicated here. First, the requested planning activities will not be
38

In re WorldCom, Inc. Secs. Litig., 234 F. Supp. 2d 301, 305

(S.D.N.Y. 2002).

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so burdensome as to force Equifax “to settle an otherwise frivolous class
action.”39 As discussed above, the burden on Equifax will be slight since it will
already inevitably be engaged in most of these efforts in the related data breach
cases. Second, the discovery planning will not allow the Lead Plaintiff to find
sustainable claims that bolster its case because it is not requesting the actual
production of documents. Without document production, the Lead Plaintiff
would not be able to discover new facts supporting new claims. Therefore, since
the requested modification is consistent with the intentions of the PSLRA, the
Court concludes that it is justified under these circumstances.
The Defendants argue that it is both “irrelevant and incorrect” for the
Court to consider whether a requested modification implicates the concerns
underlying the PSLRA.40 However, this is a relevant inquiry. “[C]ourts have
modified the discovery stay in securities class actions when doing so would not
frustrate Congress’s purposes in enacting the PSLRA.”41 The cases cited by the
Defendants state that the fact that the PSLRA’s goals are not frustrated is not
sufficient on its own to justify lifting the discovery stay. While it is true that this
is not sufficient on its own, it is still relevant when taking all factors into

39

Id.

40

Defs.’ Br. in Opp’n to Lead Pl.’s Mot. for Limited Modification of the
PSLRA Discovery Stay, at 15-16.
41

In re Bank of Am. Corp. Secs., Derivative, & ERISA Litig., No. 09

MDL 2058(DC), 2009 WL 4796169, at * 1 (S.D.N.Y. Nov. 16, 2009).
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account. As already noted, courts can take all facts, including this, into account
when determining whether to modify the PSLRA’s discovery stay.42 All of the
factors discussed above, taken together, support a limited modification of the
discovery stay. Such a modification will help prevent undue prejudice to the
Lead Plaintiff, will inflict a minimal burden on Equifax, will promote the case
management needs of the Court, and will not contravene the goals of the
PSLRA. For this reason, the Court finds the Defendants’ argument unpersuasive.
Finally, the discovery sought by the Lead Plaintiff is sufficiently
particularized. The PSLRA allows for “particularized discovery” if it is necessary
to preserve evidence or to prevent undue prejudice.43 “[T]he meaning of
‘particularized’ in any given case ‘must take into account the nature of the
underlying litigation.’”44 For instance, courts have modified the discovery stay
to grant plaintiffs in securities class actions access to information that has been
made available to regulators and plaintiffs in other actions.45 “These courts
reason that such discovery is ‘particularized’ because it is limited to the

42

Id. at *2.

43

15 U.S.C. § 78u-4(b)(3)(B).

N.Y. State Teachers’ Ret. Sys. v. Gen. Motors Co., No. 14-11191,
2015 WL 1565462, at *3 (E.D. Mich. Apr. 8, 2015) (quoting In re Royal Ahold
N.V. Secs. & ERISA Litig., 220 F.R.D. 246, 250 (D. Md. 2004)).
44

45

In re Tyco Int’l, Ltd. Multidistrict Litig., No. MDL NO. 02-1335-B,

2003 WL 23830479, at *4 (D.N.H. Jan. 29, 2003) (collecting these cases).
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discovery documents that have already been produced to others and it prevents
‘undue prejudice’ by placing all potential claimants on an equal footing with
respect to discovery.”46 The discovery sought by the Lead Plaintiff is limited to
case management and discovery planning activities that will already be
occurring in the MDL. This limited discovery preparation is particularized
within the meaning of the PSLRA.47 The Lead Plaintiff is only seeking
permission to begin the same discovery preparations that are already underway
in the MDL proceedings. This request is especially reasonable when taking the
context of the entire case into account – this is a large, complicated case
coinciding with several other complex cases arising out of the data breach.
Furthermore, the Lead Plaintiff is not seeking the production of documents.
Instead, it is merely seeking permission to begin discovery preparations, which
weighs in favor of finding the request to be particularized.48 This narrow request

46

Id.

47

See, e.g., N.Y. State Teachers’ Ret. Sys., 2015 WL 1565462, at *3

(“The discovery NYSTRS seeks is particularized. It is limited to materials that
have been produced already and which will be produced in the MDL
Litigation.”); In re Royal Ahold N.V., 220 F.R.D. at 250 (“[T]he motion at issue
here describes a ‘clearly defined universe of documents,’ and the burden of
producing the materials should be slight, considering that the defendants have
previously produced them to other entities.”).
48

See In re Grand Casinos, Inc. Secs. Litig., 988 F. Supp. 1270, 1273

(D. Minn. 1997) (“Here, the ‘discovery’ is distinctly ‘particularized’ for it does no
more than ‘preserve evidence’ in the care, custody or control of third-parties,
who will not be subjected to any intrusive investigation unless the Motion to
Dismiss is denied . . . .”).
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cannot be characterized as part of a fishing expedition or frivolous strike suit by
the Lead Plaintiff.49 Taking the entire context of the underlying litigation into
account, the Court finds this requested discovery to be particularized.
Therefore, after assessing all of these factors, the Court concludes that
the limited modification of the PSLRA stay is justified in this case as to Equifax.
This particularized modification would be in the best interests of the litigation
and would prevent undue prejudice to the Lead Plaintiff. As another court
explained in allowing for limited discovery:
This approach makes sense in a case like this where (1) the
Securities Action plaintiffs would be at a serious disadvantage if
they are denied access to documents that are produced to the other
plaintiffs and government investigators; (2) the defendants will not
incur any additional costs if the Securities Actions plaintiffs are
given access to the documents; (3) keeping all parties on an equal
footing with respect to discovery serves important case management interests in this complex litigation; and (4) none of the claims
at issue are frivolous.50
For similar reasons, the Court concludes that the Lead Plaintiff’s requested
modification is warranted in this case.

49

See In re Worldcom, Inc. Secs. Litig., 234 F. Supp. 2d 301, 306

(S.D.N.Y. 2002) (“Where, as here, plaintiffs are not in any sense engaged in a
fishing expedition or an abusive strike suit and do not thereby act in
contravention of the fundamental rationales underlying the PSLRA discovery
stay, and where plaintiffs would be substantially prejudiced by the maintenance
of the stay, defendants cannot call upon the ambiguous notion of ‘particularized’
discovery to bend Section 78u–4(b)(3)(B) to a purpose for which it was not
intended.”).
50

In re Tyco Int’l, Ltd. Multidistrict Litig., No. MDL NO. 02-1335-B,

2003 WL 23830479, at *4 (D.N.H. Jan. 29, 2003).
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Finally, the Lead Plaintiff agrees with the Defendants that modification
of the stay is not necessary to preserve evidence.51 The PSLRA already requires
the parties to this action to preserve any evidence in their custody or control
during the pendency of the stay of discovery.52 However, the Lead Plaintiff does
seek permission to serve document preservation subpoenas on third parties, who
are not subject to the document preservation mandate of the PSLRA.53 The
Defendants argue in response that this request for third-party subpoenas is both
duplicative and non-particularized. They argue that it is duplicative because the
MDL has already addressed the issue of third-party document preservation.
According to the Defendants, the Lead Plaintiff has not shown that those
already-served subpoenas are insufficient to preserve evidence, or that any other
third parties not served with preservation subpoenas still need to be served. The
Defendants also argue that this request is not particularized because the Lead
Plaintiff has not specified the number, recipients, or scope of subpoenas it
desires to serve.54

51

Pl.’s Reply Br., at 2 n.2.

52

15 U.S.C. § 78u-4(b)(3)(C)(I).

53

See In re Grand Casinos, Inc. Secs. Litig., 988 F. Supp. 1270, 1272

(D. Minn. 1997) (“Unlike the evidence in the parties care, custody or control, the
documentary evidence of third-parties is not expressly subject to any
preservation Order and, inadvertently, or otherwise, such evidence may be
destroyed before the Court rules on the pending dispositive Motion.”).
54

Defs.’ Br. in Opp’n to Lead Pl.’s Mot. for Limited Modification of the
PSLRA Discovery Stay, at 5.
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However, the Court concludes that the Lead Plaintiff should be permitted
to serve any necessary third-party preservation subpoenas. But, the Lead
Plaintiff will be limited to serving subpoenas only to those third parties that
have not already been served with preservation subpoenas in the MDL
proceedings. Thus, any concerns as to duplicativeness will be addressed because
the Lead Plaintiff will only be permitted to supplement the subpoenas that have
already been served. This discovery would also be particularized. As noted
above, the meaning of the term “particularized” depends upon the context of the
particular case, and must take into account the nature of the underlying
litigation.55 Under this limited modification, the Lead Plaintiff will only serve
necessary subpoenas to parties who have not previously been served preservation subpoenas in the MDL. This is sufficiently narrow to be particularized
when considering the entire context of the case. Consequently, the Court
concludes that the Lead Plaintiff should be able to serve these necessary
preservation subpoenas. In fact, such a decision is consistent with the PSLRA
because in it Congress expressed a desire to make sure that relevant evidence
is preserved without being subjected to production.56

N.Y. State Teachers’ Ret. Sys. v. Gen. Motors Co., No. 14-11191,
2015 WL 1565462, at *3 (E.D. Mich. Apr. 8, 2015) (quoting In re Royal Ahold
N.V. Secs. & ERISA Litig., 220 F.R.D. 246, 250 (D. Md. 2004)).
55

In re Grand Casinos, Inc. Secs. Litig., 988 F. Supp. 1270, 1272 (D.
Minn. 1997) (“[T]he Plaintiffs’ service of Subpoenas duces tecum would further
56

Congress’ intent by subjecting relevant evidence to a ‘stay put’ directive whether
in the hands of the parties, or in those of third-parties, but would not allow the
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Therefore, the Court orders that the Lead Plaintiff and Equifax:
(a) Meet and confer, and, within 30 days of this Order, seek entry of
orders governing the treatment of confidential material and the production of Electronically Stored Information (“ESI”);
(b) Meet and confer, and, within 30 days of this Order, seek entry of a
proposed discovery schedule and Case Management Order;
(c) May serve initial requests for the production of documents;57
(d) Meet and confer regarding the custodians whose ESI will be searched
and what search terms should be used to search for ESI in response to
any initial requests for the production of documents, and report to the
Court within 75 days of this Order on any disagreements or issues with
respect to that process; and

Plaintiff to engage in discovery until such time as the District Court should rule
on the Motion to Dismiss in a way that would warrant an enforcement of the
Subpoenas.”); see also N.Y. State Teachers’ Ret. Sys., 2015 WL 1565462, at *5-6
(same).
57

The Defendants argue that requiring the parties to serve responses
and objections to document requests would advance discovery in this case ahead
of the MDL because such responses and objections are not due in that case until
after adjudication of any motions to dismiss. See Defs.’ Br. in Opp’n to Lead Pl.’s
Mot. for Limited Modification of the PSLRA Discovery Stay, at 5. The Court
agrees. Responses and objections to document requests in the MDL are not due
until 30 days after a ruling on Equifax’s motions to dismiss. See [Doc. 255] at 17
under No. 17-md-2800-TWT. Requiring the service of objections and responses
in this case before a ruling on the motion to dismiss would put this case ahead
of the MDL in that respect, which is inconsistent with the intentions of the
PSLRA. Therefore, the Court will only permit the service of initial requests for
the production of documents.
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(e) May serve necessary document preservation subpoenas on Third
Parties that have not been served in the MDL.
III. Conclusion
For the reasons stated above, the Lead Plaintiff’s Motion for Limited
Modification of the PSLRA Discovery Stay [Doc. 52] is GRANTED in part and
DENIED in part.
SO ORDERED, this 15 day of June, 2018.

/s/Thomas W. Thrash
THOMAS W. THRASH, JR.
United States District Judge

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