Nachurs Alpine Solutions Corp v. Banks et al
ORDER granting in part and denying in part 102 Motion to Compel. Signed by Chief Magistrate Judge CJ Williams on 7/7/2017. (pac)
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF IOWA
NACHURS ALPINE SOLUTIONS,
BRIAN K. BANKS and NUTRA-FLO
This matter is before the Court pursuant to plaintiff’s resisted motion to compel
the production of electronically stored information (“ESI”). (Doc. 102). Plaintiff argues
that defendants’ ESI discovery responses were deficient in that plaintiff believes
defendants wrongfully withheld documents generated as a result of a search of ESI on the
ground that the documents were deemed beyond the scope of discovery. Neither party
requested oral argument on the motion and the Court finds argument unnecessary. For
the reasons that follow, the Court grants in part and denies in part plaintiff’s motion to
compel production of ESI documents.
On March 10, 2015, plaintiff filed suit against defendants in this Court. (Doc. 2).
Plaintiff and defendant Nutra-Flo Company (“Nutra-Flo”) are competitors engaged in the
business of manufacturing and selling fertilizer. Plaintiff’s complaint alleged, generally
speaking, that its former employee, defendant Brian Banks (“Banks”), took confidential,
proprietary, and trade secret information from plaintiff and provided that information to
his new employer, defendant Nutra-Flo.
After litigation regarding a preliminary
injunction, defendants filed an answer on April 15, 2015, generally denying all
allegations. (Doc. 27).
Discovery followed during which a dispute arose over the search and production
of ESI. The Court ultimately entered an order regarding ESI. (Doc. 68). Using search
terms approved in the Court’s order, defendants searched their ESI for documents
containing those search terms. Defendants then reviewed those documents for privilege,
duplication, and relevance.
On March 13, 2017, defendants produced a first batch of ESI, along with a
privilege log reflecting documents withheld on privilege grounds. Apparently defendants
withheld documents as being nonresponsive (e.g., outside the scope of discovery), but
did not so indicate.
On April 19, 2017, defendants produced a second batch of ESI, along with another
privilege log. This production included placer-sheets stating “Non-Responsive File”
marking documents defendants believed were nonresponsive. These nonresponsive file
sheets represented 235 documents.
Through discussions, plaintiff apparently discovered there were more than 44,000
other documents that defendants had withheld from the first batch on the ground that they
were nonresponsive. Between the two productions, defendants provided plaintiff with
11,687 documents, but withheld 44,337 documents as being nonresponsive.1
The actual number of documents produced and in dispute is unclear. The numbers used above
come from plaintiff’s pleadings. Defendants assert that 55,552 documents contained search
terms, which after de-duplication was reduced to 36,933 documents. (Doc. 118, at 2). Of these,
defendants withheld 532 as privileged and 24,479 as outside the scope of discovery. (Doc. 118,
at 4). Defendants state they produced 11,922 ESI documents to plaintiff. (Id.). The Court is
puzzled at how plaintiff believes defendants have withheld approximately 44,000 documents,
and defendants claim they have withheld approximately 24,000 documents.
Plaintiff took issue with the withholding of documents as nonresponsive and the
parties attempted to resolve their differences. At the parties’ request, the Court held an
informal conference call with the parties to discuss their dispute.
conference call, defendants produced a log to plaintiff regarding all documents withheld
as nonresponsive. The parties again attempted to work out their dispute regarding ESI
and reached a partial compromise. Defendants agreed to produce all of the documents
from the second batch that had been withheld as nonresponsive on the condition that:
(1) the documents would be designated as Attorneys Eyes Only; (2) the production of the
documents would not serve as an admission that the documents were responsive. The
parties were unable to reach an agreement as to all of the other documents defendants
have withheld on the ground that they were unresponsive.
The Parties’ Arguments
Based on a review of the privilege logs, plaintiff believes that defendants have
withheld a substantial number of documents that are relevant. Plaintiff has identified 28
categories of documents it believes were properly withheld as unresponsive, but has
identified four categories of documents it believes are relevant:
(1) Documents that reference potassium acetate or a product that contained
potassium acetate in the title;
(2) Documents sent to or from Brian Banks and/or regarding Banks’ role at NutraFlo;
(3) Documents regarding or referencing plaintiff; and
(4) Documents reflecting product sales.
(Doc. 102-8, at 3). In support of its motion, plaintiff provided a number of examples that
based on the privilege log description plaintiff believes the documents would contain
relevant information. (Doc. 102-8, at 3 nn. 3-6). Plaintiff seeks an order compelling
defendants to produce all documents other than those that fall within the 28 categories
plaintiff believes are unresponsive, with defendants to bear the costs of sifting through the
withheld documents to cull out those within the 28 categories. Alternatively, plaintiff
requests an order requiring defendants to produce all of the nonresponsive documents
under the same conditions as those produced in the second batch (i.e., (1) Attorneys Eyes
Only designation; and (2) no admission of relevance), with defendants paying attorneys’
fees for the cost of culling through the documents for responsive documents. (Doc. 108-2,
Defendants resist plaintiff’s motion, arguing that plaintiff’s motion amounts to a
request that defendants “perform a second, costly review of all of the 24,479 documents
withheld as non-responsive.” (Doc. 118, at 5). Defendants argue that this amounts to
“asking this Court to tear up its old ESI Order and establish a brand new one.” (Id.).
Defendants further argue that culling through the nonresponsive documents would involve
using search terms (i.e., Brian Banks’ role at Nutra-Flo, and Nutra-Flo’s product sales) that
were not part of the Court’s ESI Order. (Doc. 118, at 6). Ultimately, defendants argue that
this discovery request is disproportional and plaintiff has obtained the information through
other means, such as depositions, requests for production of documents, and
interrogatories. (Doc. 118, at 7-12). With respect to the specific examples plaintiff
identified of descriptions that appear to suggest relevant documents were withheld,
defendants demonstrated that the documents were either irrelevant or already produced in
some other form. (Doc. 118, at 11-12).
In its reply, plaintiff argues that it is not requiring defendants to conduct a new
search of ESI; rather, it is requesting that defendants cull through the documents identified
through search terms from the ESI, but which defendants withheld as being beyond the
scope of discovery. (Doc. 119, at 1). Plaintiff argues that it has, in the alternative, agreed
to do the work itself (albeit, with defendants paying the cost), and that the “only logical
reason why” defendants would not agree to this arrangement is because “there is something
relevant in those documents that [defendants] do not want [plaintiff] to find.” (Doc. 119,
at 2). Plaintiff also argues that to the extent that defendants can explain away some of the
documents it withheld on the ground that they were already produced, then defendants
violated the ESI order regarding duplicates and argues that “[a]t the very least, this Court
should compel Nutra-Flo to comply with the ESI Order and identify all documents that
were withheld as nonresponsive that had already been produced in the three batches of ESI
production.” (Doc. 119, at 3-4).
In analyzing the merits of plaintiff’s motion to compel, the Court begins with
looking at the Federal Rules of Civil Procedure regarding the scope of discovery and the
obligation of the parties. Rule 26(b)(1) of the Federal Rules of Civil Procedure provides:
Unless otherwise limited by court order, the scope of discovery is as
follows: Parties may obtain discovery regarding any nonprivileged matter
that is relevant to any party’s claim or defense and proportional to the needs
of the case, considering the importance of the issues at stake in the action,
the amount in controversy, the parties’ relative access to relevant
information, the parties’ resources, the importance of the discovery in
resolving the issues, and whether the burden or expense of the proposed
discovery outweighs its likely benefit. Information within this scope of
discovery need not be admissible in evidence to be discoverable.
FED. R. CIV. P. 26(b)(1). Rule 26(b) is widely acknowledged as “liberal in scope and
interpretation, extending to those matters which are relevant and reasonably calculated to
lead to the discovery of admissible evidence.” Hofer v. Mack Trucks, Inc., 981 F.2d
377, 380 (8th Cir. 1992) (internal citation omitted). Rule 401 of the Federal Rules of
Evidence reads: “[e]vidence is relevant if: (a) it has any tendency to make a fact more or
less probable than it would be without the evidence; and (b) the fact is of consequence in
determining the action.” FED. R. EVID. 401.
Under the rules, district courts possess considerable discretion in determining the
need for, and form of, discovery. See Admiral Theatre Corp. v. Douglas Theatre Co.,
585 F.2d 877, 898–99 (8th Cir.1978). Rule 26 “vests the district court with discretion
to limit discovery if it determines, inter alia, the burden or expense of the proposed
discovery outweighs its likely benefit.” Roberts v. Shawnee Mission Ford, Inc., 352
F.3d 358, 361 (8th Cir. 2003) (citing FED. R. CIV. P. 26(b)(1)). The scope of permissible
discovery is broader, however, than the scope of admissibility. Hofer v. Mack Trucks,
Inc., 981 F.2d 377, 380 (8th Cir.1992). The Court must also consider whether the
information sought is “proportional to the needs of the case,” considering a number of
factors, including “the parties’ relative access to relevant information, . . . the importance
of the discovery in resolving the issues, and whether the burden or expense of the
proposed discovery outweighs its likely benefit.” FED. R. CIV. P. 26(b)(1).
Plaintiff must make a threshold showing that the requested information falls within
the scope of discovery under Rule 26(b)(1). Hofer, 981 F.2d at 380. See also Seger v.
Ernest-Spencer Metals, Inc., No. 8:08CV75, 2010 WL 378113, at *2 (D. Neb. Jan. 26,
2010) (stating that the burden of making a threshold showing of relevance is on the party
requesting discovery). When a requesting party makes a threshold showing of relevance,
then the burden shifts to the party resisting the motion to compel. See Continental Illinois
Nat. Bank & Trust Co. of Chicago v. Caton, 136 F.R.D. 682, 684-85 (D. Kan. 1991)
(“All discovery requests are a burden on the party who must respond thereto. Unless the
task of producing or answering is unusual, undue or extraordinary, the general rule
requires the entity answering or producing the documents to bear that burden.”) (internal
citation omitted). The party objecting has the burden to “substantiate its objections.” St.
Paul Reinsurance Co. v. Commercial Fin. Corp., 198 F.R.D. 508, 511 (N.D. Iowa 2000)
(internal quotation marks and citation omitted). A mere statement by the objecting party
that the “request for production was overly broad, burdensome, oppressive and irrelevant
is not adequate to voice a successful objection.” Id. (internal quotation marks and citation
omitted). Instead, the objecting party must prove that the “requested documents either
do not come within the broad scope of relevance defined pursuant to FED. R. CIV. P
26(b)(1) or else are of such marginal relevance that the potential harm occasioned by
discovery would outweigh the ordinary presumption in favor of broad disclosure.” Id.
(quoting Burke v. New York City Police Dept., 115 F.R.D. 220, 224 (S.D. N.Y. 1987)).
The Eighth Circuit Court of Appeals has explained: “‘The purpose of our modern
discovery procedure is to narrow the issues, to eliminate surprise, and to achieve
substantial justice.’” Mawby v. United States, 999 F.2d 1252, 1254 (8th Cir. 1993)
(quoting Greyhound Lines, Inc. v. Miller, 402 F.2d 134, 143 (8th Cir. 1968)). “The
rules are meant to insure that . . . parties can obtain ‘[m]utual knowledge of all the
relevant facts gathered by both parties.’” Id. (citing Hickman v. Taylor, 329 U.S. 495,
Here, the Court finds there is at least a colorable prima facie showing that the
withheld documents fall within the broad scope of liberal discovery because they
contained one of the terms to search for potentially relevant documents in defendants’
ESI. Plaintiff has not made a strong showing, other than this, that the withheld documents
are relevant (but of course, without access to the documents, it is difficult for it to do so).
On the other hand, defense counsel have represented that they have reviewed the
documents and, although they contain one of the terms used for the ESI search, they do
not in fact fall within the scope of discovery. The Court accepts that defense counsel, as
officers of this Court, acted in good faith in making that determination. There is no way
for the Court or plaintiff to double-check that work, however, without reviewing the
Plaintiff believes that at least some of the nonresponsive
documents are relevant, though their belief is not well supported and the few examples it
identified in footnotes defendants have demonstrated are not relevant or have already
been produced. The Court’s confidence in defendants’ response is colored, however, by
the Court’s conclusion that defendants have previously not complied with discovery
obligations. (Doc. 115).
Balancing the countervailing factors, the Court finds it would be disproportional
to require defendants to go back through the documents to identify those that fall within
the four categories plaintiff believes are most likely to generate relevant documents. Nor,
even if it did, is it likely that plaintiff would not be any more satisfied or the Court more
confident with the result. The Court disagrees with plaintiff’s presumption that the only
reason defendants are unwilling to comply with its alternative request of producing the
documents for plaintiffs to review is that defendants have something to hide. Rather, the
Court presumes defendants are unwilling to comply with the alternative because plaintiff
wants defendants to pay the attorneys’ fees associated with culling through the documents.
The Court understands this reluctance, especially given that plaintiff has not been able to
make a strong showing that the documents are relevant and defense counsel asserts that
they have reviewed the documents and concluded they are not relevant.
The Court finds the appropriate resolution to this dispute is: (1) defendants produce
all of the ESI documents it identified as unresponsive under an Attorneys Eyes Only label;
(2) that the production is not to be deemed as an admission by defendants that the
documents are relevant; and (3) that plaintiff bear its own costs of reviewing the
documents for the categories it believes may hold relevant documents. Should plaintiff
discover relevant documents during this review which it believes were wrongfully
withheld by defendants, then plaintiff can bring a motion for sanctions at that time to
recover some or all of the attorneys’ fees associated with the search.
For the reasons above and as set forth herein, the Court grants in part and denies
in part plaintiff’s motion to compel ESI discovery. (Doc. 102). Defendants shall
produce all of the ESI documents it identified as unresponsive under an Attorneys Eyes
Only label. That production will not to be deemed as an admission by defendants that
the documents are relevant. Plaintiff is to bear its own costs in reviewing those ESI
documents; if plaintiff finds relevant documents it believes were wrongfully withheld, it
may file a motion for sanctions.
IT IS SO ORDERED this 7th day of July, 2017.
Chief United States Magistrate Judge
Northern District of Iowa
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