In Re: RFC and RESCAP Liquidating Trust Litigation
ORDER granting in part and denying in part #2441 Defendants' Motion to Compel Discovery of Iron Mountain Servicing Records (Written Opinion). Signed by Judge Susan Richard Nelson on 06/14/17. (MJC)
UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
In Re: RFC and RESCAP Liquidating
Civil File No. 13-3451 (SRN/HB)
Order Regarding Defendants’ Motion to Compel Discovery of Iron Mountain
SUSAN RICHARD NELSON
Before the Court is Defendants’ Motion to Compel Discovery of Iron Mountain
Servicing Records [Doc. No. 2441]. For the reasons set forth below, Defendants’ motion
is granted in part and denied in part.
In November 2016, Plaintiffs Residential Funding Company, LLC and the
RESCAP Liquidating Trust (collectively, “RFC”) located approximately 14,500 boxes of
hard copy documents stored at Iron Mountain records management locations, possibly
containing loan servicing-related documents. Plaintiffs had previously agreed to produce
loan servicing files for the at-issue loans in their possession, custody, or control. (RFC’s
Responses to Defs.’ First Set of Interrogs. and Requests for Prod. (Request No. 2).) After
the parties met and conferred regarding the 14,500 additional boxes, RFC reviewed a
sample of them, disclosing the results of the sampling process to Defendants in December
2016. (Ex. C to Supalla Decl. [Doc. No. 2445] (A. Alden Letter of 12/19/16).) Based on
the sampling process, Plaintiffs found responsive documents in Los Angeles (814 boxes)
and Connecticut (195 boxes). (Id. at 1.)
In response to Defendants’ request to review the sampled documents, RFC
produced the 108 files identified through the sampling process. (Ex. D to Supalla Decl.
(A. Alden Letter of 1/27/17).) Following their review, Defendants determined that
Plaintiffs or third parties had not previously produced some of the documents. (Supalla
Decl. ¶ 6.) Defendants then requested that Plaintiffs review the remaining boxes in the
Los Angeles and Connecticut Iron Mountain sites that they had not previously reviewed–a
total of 907 boxes–and produce any non-privileged documents concerning the at-issue
loans. (Id. ¶ 7.) RFC refused, noting that the sampled documents had yielded only a 2%
rate of responsiveness. (Ex. E to Suppalla Decl. (4/5/17-4/6/17 Email Chain).) However,
Plaintiffs offered to facilitate Defendants’ access to the documents, should Defendants
wish to manually pull and review them at their own expense. (Id.) Defendants refused
and filed the instant motion to compel.
Under Rule 26, the Federal Rules authorize 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.
Fed. R. Civ. P. 26(b)(1).
Rule 34 describes the general procedures and requirements for discovery requests
within the scope of Rule 26(b), requiring the responding party “to produce and permit the
requesting party . . . to inspect, copy, test, or sample” items “in the responding party’s
possession, custody, or control.” Fed. R. Civ. P. 34(a)(1). The responding party “must
produce documents as they are kept in the usual course of business or must organize and
label them to correspond to the categories in the request[.]” Fed. R. Civ. P. 34(b)(E)(i).
Defendants argue that Plaintiffs’ offer of access to the Iron Mountain documents for
Defendants’ inspection and review fails to meet the requirements of Rule 34. (Defs.’
Mem. Supp. Mot. to Compel at 6 [Doc. No. 2444].) They cite authority for the general
proposition that simply because the producing party regularly stores documents, it does not
necessarily follow that the producing party can merely make them available for
inspection–an option otherwise available under Rule 34(b) for documents kept in the
“usual course of business.” (Id.) (citing Mizner Grand Condominium Ass’n v. Traveler’s
Prop. Cas. Co. of Am., 270 F.R.D. 698, 700 (S.D. Fla. 2010); In re Sulfuric Acid Antitrust
Litig., 231 F.R.D. 351, 353 (N.D. Ill. 2005); Fifth Third Bank v. KC II Insure Servs., No.
11-cv-2101 CM/DJW, 2011 WL 5920949, at *5 (D. Kan. Nov. 28, 2011); American Int’l
Specialty Lines Ins. Co. v. NWI-I, Inc., 240 F.R.D. 401, 410-11 (N.D. Ill. 2007); Alford v.
Aaron Rents, Inc., No. 3:08-cv-683, 2010 WL 2765260, at *24 (S.D. Ill. May 17, 2010);
Tussing v. Sprinkle, No. 8:13-CV-153-T-35MAP, 2013 WL 12164691, at *2 (M.D. Fla.
Oct. 22, 2013); In re G-I Holdings Inc., 218 F.R.D. 428, 439 (D. N.J. 2003); Cardenas v.
Dorel Juvenile Grp., Inc., 230 F.R.D. 611, 618 (D. Kan. 2005)).
From the Court’s review of this authority, these cases are highly fact-specific.
Moreover, Plaintiffs point to authority in which courts have applied the ordinary-courseof-business standard differently to bankrupt entities, permitting the inspection of stored
documents in satisfaction of that standard. (Pls.’ Opp’n Mem. at 8-9) (citing Hagemeyer
N. Am., Inc. v. Gateway Data Sciences Corp., 222 F.R.D. 594, 598 (E.D. Wisc. 2004)
(finding that documents stored by the then-bankrupt defendant were kept in the usual
course of business such that the defendant discharged its duty under the rules by giving
plaintiff continuing access to the materials); Devon Mobile Comm. Liquidating Trust v.
Adelphia Comm. Corp., 338 B.R. 546, 551 (Bankr. S.D.N.Y. 2005) (permitting access to a
bankruptcy debtor’s stored documents as being kept in the “usual course of business”).
As in the cases cited by Plaintiffs, RFC has not engaged in an effort to conceal
discovery, nor has it deliberately presented Defendants with something akin to a
“document dump.” Rather, the 907 Iron Mountain boxes were placed in storage between
1997-2009, several years prior to this litigation and prior to RFC’s bankruptcy. (Decl. of
Colette Wahl ¶ 15 [Doc. No. 2548].) RFC has not accessed the overwhelming majority of
these files for a number of years. (Id.) None of the files stored in Connecticut have been
accessed since 2009, and only 12 of the 814 boxes of files in Los Angeles have been
accessed since 2009, with the last boxes most recently accessed in March 2012. (Id.)
Particularly given RFC’s status in bankruptcy, the Court finds that it has demonstrated that
these stored documents have been kept in the usual course of business, consistent with
Hagemeyer and Devon Mobile.
Both parties, however, raise valid points concerning the need for the requested
discovery, on one the hand, and the burden of producing it, on the other hand. Plaintiffs
did agree to produce loan servicing files for the at-issue loans and Plaintiffs’ sample
yielded responsive documents. As this Court has repeatedly noted, Defendants are entitled
to loan servicing documents for the at-issue loans. However, the responsive documents
represented a very low percentage of the overall volume of discovery and required
considerable time and expense for Plaintiffs to review and produce. In light of the
foregoing discussion regarding the usual course of business, and balancing Defendants’
need for the requested information against Plaintiffs’ burden, the parties shall split the
review and cost of this discovery equally. Accordingly, Defendants’ motion is granted in
part and denied in part.
THEREFORE, IT IS HEREBY ORDERED THAT:
Defendants’ Motion to Compel Discovery of Iron Mountain Servicing
Records [Doc. No. 2441] is GRANTED in part and DENIED in part.
Dated: June 14, 2017
s/Susan Richard Nelson
SUSAN RICHARD NELSON
United States District Judge
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