First Financial Bank, N.A. v. Bauknecht et al

Filing 45

OPINION by U.S. Magistrate Judge Byron Cudmore: Plaintiff First Financial Bank, N.A.'s Motion to Compel Document Production 41 is ALLOWED in part and DENIED in part. See written order. The Court sua sponte extends fact discovery to 10/4/2013 and the dispositive motion deadline to 11/4/2013. All other deadlines remain in full force and effect. (LB, ilcd)

E-FILED

Tuesday, 23 July, 2013 04:31:38 PM
Clerk, U.S. District Court, ILCD

IN THE UNITED STATES DISTRICT COURT
FOR THE CENTRAL DISTRICT OF ILLINOIS, PEORIA DIVISION
FIRST FINANCIAL BANK, N.A.,

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Plaintiff,
v.
SCOTT BAUKNECHT, and
STATE BANK OF GRAYMONT,
Defendants.

No. 12-cv-1509

OPINION
BYRON G. CUDMORE, U.S. MAGISTRATE JUDGE:
This matter comes before the Court on Plaintiff First Financial Bank,
N.A.’s (First Financial) Motion to Compel Document Production (d/e 41)
(Motion). For the reasons set forth below, the Motion is ALLOWED in part
and DENIED in part.
BACKGROUND
Defendant Scott Bauknecht quit First Financial in January 2012 and
went to work for Defendant State Bank of Graymont (Graymont). First
Financial alleges claims against Bauknecht and Graymont based on
alleged wrongful conduct related to this event. Complaint (d/e 1); see
Report and Recommendation entered February 21, 2013 (d/e 24), for a
summary of the allegations and claims.
Page 1 of 13

On February 13, 2013, First Financial served on Graymont a request
for production of documents. Defendant’s Response to Motion to Compel
(d/e 44) (Graymont Response), Exhibit 1, Plaintiff First Financial Bank’s
First Set of Document Requests to Defendant State Bank of Graymont
(Document Request). Defendants objected to producing certain
documents. The parties have met and conferred in an effort to resolve the
objections. The parties have further met and conferred to attempt to
resolve objections regarding the procedures for producing electronically
stored information (ESI) responsive to First Financial document requests.
The parties have been unable to resolve all of the objections. Hence, First
Financial brings this Motion.
PRINCIPLES OF DISCOVERY
Federal Rule of Civil Procedure 26(b)(1) allows parties to obtain
discovery regarding any matter, not privileged, which is relevant to the
claim or defense of any party. The federal discovery rules are to be
construed broadly and liberally. Herbert v. Lando, 441 U.S. 153, 177
(1979); Jefferys v. LRP Publications, Inc., 184 F.R.D. 262, 263 (E.D .Pa.
1999). Federal Rule of Civil Procedure 26(b)(1) provides that the “[p]arties
may obtain discovery regarding any matter, not privileged, that is relevant
to the claim or defense of any party . . .,” but “[f]or good cause, the court
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may order discovery of any matter relevant to the subject matter involved in
the action.” Id.
Relevant information need not be admissible at trial if the discovery
appears to be reasonably calculated to lead to the discovery of admissible
evidence. The rule gives the district courts broad discretion in matters
relating to discovery. See Brown-Bey v. United States, 720 F.2d 467, 470471 (7th Cir.1983); Eggleston v. Chicago Journeymen Plumbers' Local
Union No. 130, U. A., 657 F.2d 890, 902 (7th Cir.1981); see also,
Indianapolis Colts v. Mayor and City Council of Baltimore, 775 F.2d 177,
183 (7th Cir.1985) (on review, courts of appeal will only reverse a decision
of a district court relating to discovery upon a clear showing of an abuse of
discretion). The discovery relevance standard is flexible,
If there is an objection the discovery goes beyond material
relevant to the parties’ claims or defenses, the Court would
become involved to determine whether the discovery is relevant
to the claims or defenses and, if not, whether good cause exists
for authorizing it so long as it is relevant to the subject matter of
the action. The good-cause standard warranting broader
discovery is meant to be flexible.
Federal Rule of Civil Procedure 26(b)(1) Advisory Committee Notes, 2000
Amendment. Remember, we are talking discovery, not admissibility at trial.
The party opposing discovery has the burden of proving that the
requested discovery should be disallowed. Etienne v. Wolverine Tube,
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Inc., 185 F.R.D. 653, 656 (D. Kan. 1999); Golden Valley Microwave Foods,
Inc. v. Weaver Popcorn Co., 132 F.R.D. 204, 207 (N.D. Ind. 1990); Flag
Fables, Inc. v. Jean Ann’s Country Flags and Crafts, Inc., 730 F. Supp.
1165, 1186 (D. Mass. 1989).
Normally, the responding party pays the cost of producing
documents. See Zubulake v. UBS Warburg LLC, 216 F.R.D. 280, 284
(S.D.N.Y. 2003). The Court has discretion to allocate the costs of ESI
discovery between the parties.1 In determining whether to reallocate costs,
the Court will consider several factors:
1) the likelihood of discovering critical information; 2) the
availability of such information from other sources; 3) the
amount in controversy as compared to the total cost of
production; 4) the parties' resources as compared to the total
cost of production; 5) the relative ability of each party to control
costs and its incentive to do so; 6) the importance of the issues
at stake in the litigation; 7) the importance of the requested
discovery in resolving the issues at stake in the litigation; and 8)
the relative benefits to the parties of obtaining the information.
Wiginton v. CB Richard Ellis, Inc., 229 F.R.D. 568, 573 (N.D. Ill. 2004).
With these principles in mind, the Court addresses the Motion.

1

The Court has used the allocation of costs approach in a number of cases involving ESI discovery
issues. See also the 2006 Amendment Committee Note to Rule 26(b)(2) concerning cost allocation.

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ANALYSIS
First Financial asks the Court to compel Defendants to produce
documents, including ESI, responsive to Request Nos. 1 and 13. The
Court addresses each request separately.
Request Number 1
Request No. 1 asks for:
All documents and things relating to Scott Bauknecht’s
application for employment, recruitment, or hiring by Graymont,
including, but not limited to the Confidentiality
Acknowledgement signed by Bauknecht (see Complaint Ex. 1).
Document Request, at 3. First Financial states that during the parties’
discussions over this request, First Financial has further defined the
documents it seeks with this request as follows:
A. Any email between Bauknecht and any employee at
Graymont concerning his prospective employment by
Graymont, including the confidential information he
intends to bring with him from First Financial: and
B. Any email from Employee 1 at Graymont to Employee
2 at Graymont concerning Bauknecht’s application,
hire, or recruitment, or the confidential information he
intends to bring with him from First Financial.
Plaintiff First Financial Bank, N.A.’s Memorandum of Law in Support of
Motion to Compel (d/e 42) (First Financial Memorandum), at 3-4.
First Financial further requested that Defendant Graymont conduct
the search for these emails in ESI through two separate searches. First
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Financial requested a search “by recipient/sender for documents to
Bauknecht, from Bauknecht, or shared with Bauknecht.” First
Financial Memorandum, Exhibit 2, email dated April 30, 2013 (emphasis in
the original) (hereinafter referred to as the “Recipient/Sender Search”).
First Financial then requested a, “second, separate search by subject
matter for documents containing the words or terms Bauknecht, Bauk,
Buak, Scott, SB, S.B., First Financial, First Financial Bank, FF, FFB,
Freestar, Pontiac National Bank, or Pontiac.” Id. (emphasis in the
original) (hereinafter referred to as the “Key Word Search”).
Graymont objected to performing two searches as overly
burdensome. Graymont stated that it would “agree to run Bauknecht’s
name against various address fields as part of a search term broad search,
but will not agree to run separate searches and reviews as you suggest.”
First Financial Memorandum, Exhibit 3, Letter dated May 8, 2013.
Graymont, however, would not agree to two separate searches.
Graymont also objected to searching all of its email accounts.
Graymont proposed only searching the email accounts of the four
employees listed in its Rule 26 disclosures: Ronald Minnaert, Paul
Russow, Robert Tronc, and Scott Bauknecht. First Financial would not

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agree to these terms. The Court believes the Key Word Search would be a
broader more comprehensive search than the Recipient/Sender Search.
1. Two Separate Searches
Defendants’ objection to conducting two separate searches is
sustained unless First Financial agrees to pay the cost for the proposed
separate Recipient/Sender Search. Defendants’ computer consulting
expert Scott Worbel states that such a search is unorthodox, expensive,
and will interfere with Defendant Graymont’s operations. Defendants’
Response to Motion to Compel (d/e 44), Exhibit 4, Declaration of Scott
Worbel (Worbel Declaration), ¶¶ 10-11. The search also seems duplicative
since Graymont agreed to search the email address fields as part of the
Key Word Search.
The Court will not require Graymont to conduct the duplicative
Recipient/Sender Search unless First Financial agrees to pay for it. The
relevant factors weigh heavily in favor of shifting the cost of a separate
Recipient/Sender Search to First Financial. The likelihood of uncovering
additional relevant information is small and the cost of conducting a
separate duplicative search is high.

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Therefore, the Court directs Defendant Graymont to conduct the Key
Word Search with all of First Financial’s search terms quoted above.2 The
Key Word Search shall search all relevant data fields, including all address
fields, such as sender, recipient, cc, and bcc; the subject field; and the
body of the email. The temporal limitations of the search shall be emails
sent or received from August 1, 2011, to February 1, 2012, inclusive of both
dates. Graymont shall then produce all responsive, unprivileged emails
with all attachments, and a privilege log of any withheld documents in
accordance with Federal Rule of Civil Procedure 26(b)(5).
The Court directs Graymont to conduct a separate Recipient/Sender
Search only if First Financial elects and agrees to pay the entire cost of the
separate search. First Financial must notify Graymont in writing within
fourteen days after the date of this Opinion if it will pay for the
Recipient/Sender Search.
2. The Email Accounts to be Searched
Defendants’ objection to searching all of Graymont’s email accounts
is overruled. Bauknecht’s communications with Graymont personnel is
relevant, at a minimum, to First Financial’s claims against Bauknecht for
breach of contract and breach of fiduciary duty. Graymont seeks to limit
2

Graymont may exclude the search term “First Financial Bank” as duplicative of the search term “First
Financial.” See First Financial Memorandum, Exhibit 3, Letter dated May 8, 2012.

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the search to the email accounts of the four named individuals. Graymont
argues that the search should be limited to these four individuals because
they are listed on Defendants’ Rule 26 initial disclosures. The Rule 26
disclosure only means that these four individuals are the persons that
Defendants, “may use to support its claims or defenses.” Fed. R. Civ. P.
26(a)(1)(A)(i). The designation does not indicate that the four individuals
are the only employees at Graymont who have responsive documents in
their email files. The Key Word Search (and the Recipient/Sender Search
if First Financial elects to pay for it), therefore, shall include all of
Graymont’s email accounts.
However, the Court is concerned with the cost of searching all email
accounts at Graymont. First Financial indicates that Graymont has fewer
than forty employees, so the number of accounts may not be huge. First
Financial Memorandum, at 5, n.2. Some of those employees, however,
would have no reason to have relevant information. Maintenance
employees or other similar employees are not likely to have relevant
emails. The additional cost of including the email accounts of these types
of employees in the search may be significant. Still, the information First
Financial seeks is discoverable and important to the Plaintiff in this
litigation. Graymont would have greater ability to control costs since it will
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be conducting the search. The parties have provided no evidence to
indicate any material difference in the ability of either party to bear the cost
of production. See Wiginton, 229 F.R.D. at 573.
Therefore, considering all the relevant factors cited on page four
herein, the Court allocates the cost of conducting the Key Word Search as
follows: Graymont will pay seventy-five percent of the costs and First
Financial will pay twenty-five percent of the costs. First Financial will
reimburse Graymont for its share of the costs within thirty days after receipt
of the responsive documents. This allocation of the costs recognizes that
Graymont has the primary obligation to bear the cost of producing
responsive documents, but provides some relief to Graymont for the cost of
including all Graymont employees’ email accounts in the search when
some of the employees are less likely to have relevant documents.
Request No. 13
Request No. 13 asks for:
All documents and things reflecting or relating to any of the
“Confidential Information” that First Financial defined in its
Complaint. See Complaint ¶ 9 (“customer and prospect lists,
referral sources, business plans and strategic plans, internal
financial documents, quarterly reports, contact information for
customers, customer financial histories, and personal customer
information”).

Page 10 of 13

Document Request, at 5. First Financial states that the Bauknecht has
identified a list of seventy-three First Financial customers who were
contacted after Bauknecht became a Graymont employee (Disputed
Customer List). First Financial Memorandum, at 6. First Financial wants
responsive documents with respect to all of those customers.
Graymont objects on the grounds that customer lists are not
confidential, evidence regarding contacts with First Financial customers
who did not become Graymont customers is irrelevant, and Graymont
cannot release customer information without a court order. The Court
overrules the third objection as moot since the Court is now ordering
production of the documents.
The Court also overrules the other two objections. First Financial
alleges that Defendants made false disparaging representations about First
Financial to customers. Complaint (d/e 1), ¶ 21. Graymont’s
communications with all seventy-three customers on the Disputed
Customer List is relevant to those allegations regardless of whether the
customer list is confidential and regardless of whether the customers
moved accounts to Graymont. Graymont is hereby ordered to produce all
of the unprivileged documents responsive to Request 13, and specifically
all responsive documents that relate to the seventy-three customers on the
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Disputed Customer List, and a privilege log for any documents withheld
under a claim of privilege in accordance with Federal Rule of Civil
Procedure 26(b)(5). The time limitation for the search will be documents
sent, received, or produced from January 1, 2012, to the date of this
Opinion. Graymont will produce all attachments to any responsive
unprivileged emails or other documents.
Graymont presents no evidence that complying with Request No. 13
will be unduly burdensome. See Wiginton, 229 F.R.D. at 573. The Worbel
Declaration only discusses the cost of First Financial’s proposed duplicate
email searches. Therefore, the cost of any ESI search necessary to
respond to Request No. 13 will be borne by Graymont.
Many of the responsive documents to be produced by Graymont may
contain private information that should be kept confidential, especially
those responsive to Request No. 13. The Court has already entered an
agreed Confidentiality Order (d/e 35) to protect such information. The
parties will comply with the Confidentiality Order with respect to documents
produced pursuant to the Opinion.
WHEREFORE Plaintiff First Financial Bank, N.A.’s (First Financial)
Motion to Compel Document Production (d/e 41) is ALLOWED in part and
DENIED in part. Defendant State Bank of Graymont is hereby ordered to
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produce the unprivileged responsive documents and privilege logs as set
forth in this Opinion. All documents and privilege logs are to be produced
by September 10, 2013. The costs for the searches for electronically
stored information shall be borne in the manner set forth in this Opinion.
First Financial’s request for fees and expenses for bringing this Motion is
denied. The Court sua sponte extends fact discovery to October 4, 2013
and the dispositive motion deadline to November 4, 2013. All other
deadlines remain in full force and effect.
ENTER: July 23, 2013
s/ Byron G. Cudmore
UNITED STATES MAGISTRATE JUDGE

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