Mortgage Resolution Servicing, LLC et al v. JPMorgan Chase Bank, N.A. et al

Filing 111

MEMORANDUM AND ORDER granting in part and denying in part 93 Motion to Compel; granting 98 Motion for Protective Order. For the foregoing reasons, the plaintiffs' motion to compel (Docket no. 93) is granted in part as set out above. The defendants' cross-motion for a protective order (Docket no. 98) is granted. (As further set forth in this Order.) (Signed by Magistrate Judge James C. Francis on 7/14/2016) Copies sent by Chambers (cf)

staying discovery on the RICO claims until their pending motion to
dismiss is decided.

The plaintiffs’ motion is granted in part and

denied in part; the defendants’ motion is granted.
Background
The plaintiffs purchase residential mortgages “which are not
performing according to their original terms.”
Complaint (“Complaint”), ¶ 11).

(Third Amended

This case relates to a pool of

thousands of such loans that the plaintiffs purchased from the
defendants in 2009. (Complaint, ¶ 1; Plaintiffs’ Memorandum of Law
in Support of Motion to Compel and Define Scope of Discovery (“Pl.
Memo.”)

at

7-8).

The

plaintiffs

assert

that

certain

representations and warranties that the defendants made about the
loans -- that the information provided about each loan was “true
and correct in all material respects,” that each loan complied with
applicable laws, and that the defendants actually owned all of the
loans that were sold -- were false at the time the parties’
agreement was executed and that the defendants further breached the
agreement after its execution by, for example, representing to
borrowers that the defendants still owned certain loans and then
collecting and retaining payments on those loans.

(Complaint, ¶¶

43, 56, 59-60, 68, 85-86; Pl. Memo. at 8-9).
In addition, the Complaint alleges the defendants improperly
forgave loans or released liens connected with the purchased loans.
The so-called National Mortgage Settlement, approved in April 2012,
required the defendants to provide billions of dollars in consumer
relief, including loan modifications, to borrowers whose loans it
2

owned or serviced.

(Complaint, ¶¶ 97, 100).

According to the

plaintiffs, in order to comply with that settlement, the defendants
forgave thousands of mortgage loans on three separate occasions:
September 13, 2012, December 13, 2012, and January 13, 2013.
(Complaint, ¶¶ 103-104).

However, some of the forgiven loans were

owned by the plaintiffs.

(Complaint, ¶ 105; Pl. Memo. at 9-10).

Further, a November 2013 settlement resolving claims by various
federal agencies and states arising out of the residential market
backed securities market, characterized in the papers as the RMBS
Settlement, again required the defendants to provide billions of
dollars in consumer relief.

(Complaint, ¶ 146; Pl. Memo. at 10).

The defendants allegedly claimed credit under the RMBS Settlement
for indebtedness owed by borrowers whose loans were sold to the
plaintiffs.

(Complaint, ¶ 147; Pl. Memo. at 10).

The plaintiffs

also allege that in order to avoid “anti-blight” responsibilities,
the defendants “releas[ed] liens on properties that served as
collateral

for

plaintiffs.

loans”

that

the

defendants

had

sold

(Complaint, ¶¶ 132-140; Pl. Memo. at 10).

to

the

Some of

these were released in connection with the “Pre-DOJ Lien Release
Project,” which the defendants allegedly established in October
2013 in order to excise from their books loans that would otherwise
require compliance with anti-blight programs.

(Complaint, ¶¶ 134,

140).
The
concern,

contract

and

primarily,

commercial

(1)

the

tort

alleged

claims

in

this

action

misrepresentations

and

omissions by the defendants about loans sold to the plaintiffs and
3

(2) the defendants’ practice of retaining payments made on loans,
forgiving

loans,

plaintiffs.

or

releasing

liens

on

loans

sold

to

the

(Complaint, ¶¶ 151-152, 157, 162, 168-169, 172-173,

177-181, 186, 194).

The RICO claim relates to these or similar

misrepresentations and misdeeds insofar as they were allegedly
intended to induce governmental entities to believe, falsely, that
the defendants had fulfilled their consumer relief obligations
under the National Mortgage Settlement and the RMBS Settlement.
(Complaint, ¶¶ 206, 210, 212).
Meanwhile, in Schneider, plaintiff-relator Laurence Schneider,
the principal of the three plaintiff companies here, filed a second
amended complaint alleging violations of the federal False Claims
Act, 31 U.S.C. § 3729, and various state equivalents.

(Second

Amended Complaint, U.S.A. ex rel. Schneider v. J.P. Morgan Chase
Bank (“Schneider Complaint”), attached as Exh. E to Declaration of
Christian J. Pistilli dated June 13, 2016 (“Pistilli Decl.”), ¶¶ 12,

305-419).

The

plaintiff-relator

alleges

that,

after

the

National Mortgage Settlement was executed and a Consent Judgment
entered, the defendants sent numerous loan-forgiveness letters to
borrowers and released numerous liens, purportedly pursuant to that
settlement.

(Schneider Complaint, ¶¶ 11-12, 14).

A number of

these letters forgave loans or released liens on mortgage loans
sold

to

Mr.

Schenider’s

companies

(the

plaintiffs

here).

(Schneider Complaint, ¶¶ 11, 14-15). These and other practices did
not meet the servicing standards required by the National Mortgage
Settlement,

and

allowed

the

defendants
4

“to

take

credit

for

valueless charged-off and third-party owned loans” rather than
applying

the

standards

required

under

the

National

Mortgage

Settlement to offer relief “to properly vetted borrowers who could
have applied for and benefitted from the relief and modification
programs.”

(Schneider Complaint, ¶¶ 17-19).

In addition, the

complaint alleges that the defendants failed to comply with the
Department of the Treasury’s Home Affordable Mortgage Program
(“HAMP”)

--

a

program

that

provided

certain

borrowers

the

opportunity to modify certain mortgage loans -- by failing to
solicit borrowers to apply for the program and failing to abide by
its servicing requirements. (Schneider Complaint, ¶¶ 39, 118, 181,
190-191, 198-199).

The HAMP allegations relate particularly to

loans known as Recovery One or RCV1 loans, which are “a collection
of various federally related mortgage loans that have been charged
off by [the defendants] and whose documentation has been corrupted,
ignored[,]

or

Complaint,

¶

allowed
172).

to

fall

According

into
to

disarray.”

the

(Schneider

plaintiff-relator,

the

defendants violated the False Claims Act when they certified to
federal and state governments that they were in compliance with the
standards required by the National Mortgage Settlement and HAMP.
(Schneider Complaint, ¶¶ 1-2).
The defendants have filed motions to dismiss in both this
action and in Schneider.

While the motion in Schneider seeks

dismissal

complaint

of

the

entire

on

both

procedural

and

substantive grounds (Defendants’ Memorandum in Support of Their
Motion to Dismiss Relator’s Second Amended Complaint, attached as
5

Exh. F to Pistilli Decl.), the motion in this case argues only that
the tort and RICO claims should be dismissed: the tort causes of
action because they are both duplicative of the breach of contract
claims and insufficiently pled, and the RICO claim because it fails
to allege both the existence of a valid RICO enterprise and a
pattern of continued criminal activity (Defendants’ Memorandum of
Law in Support of Their Motion to Dismiss Counts Four through Nine
of Plaintiffs’ Third Amended Complaint (“Motion to Dismiss RICO
Claims”)).
The plaintiffs now move to compel the defendants to produce
documents responsive to certain requests for production.
plaintiffs

divide

these

requests

into

two

categories:

The
“(1)

[d]ocuments that relate to the qui tam [c]ase or that [the]
[d]efendants claim are beyond the scope of the breach of contract
claims . . . ; [and] (2) [d]ocuments [the] [d]efendants claim they
cannot produce unless [the] [p]laintiffs provide them with a list
of loans that [the] [d]efendants sold.”2

(Pl. Memo. at 11).

The

defendants seek a protective order staying discovery as to the RICO
claim

until

their

motion

to

dismiss

is

decided

(Defendants’

Memorandum of Law in Opposition to Plaintiffs’ Motion to Compel and
Define Scope of Discovery and in Support of Defendants’ CrossMotion for Protective Order (“Def. Memo.”) at 12-17), and oppose
the motion to compel on various grounds (Def. Memo. at 9-11, 1719).

2

For convenience, I will refer to these two groups of
documents as “Category One” and “Category Two” documents.
6

Discussion
A.

Legal Standard

The amendments to Rule 26(b)(1) allow discovery of
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).

Relevance is still to be “construed

broadly to encompass any matter that bears on, or that reasonably
could lead to other matter that could bear on” any party’s claim or
defense.
(1978).

Oppenheimer Fund, Inc. v. Sanders, 437 U.S. 340, 351
However,

as

the

advisory

committee

notes,

the

proportionality factors have been restored to their former position
in the subsection “defining the scope of discovery,” where they had
been located prior to the 1993 amendments to the rules.

Fed. R.

Civ. P. 26(b)(1) advisory committee’s note to 2015 amendment.
Thus, the amended rule is intended to “encourage judges to be more
aggressive in identifying and discouraging discovery overuse” by
emphasizing the need to analyze proportionality before ordering
production of relevant information, as was the practice prior to
1993.

Fed. R. Civ. P. 26(b)(1) advisory committee’s note to 2015

amendment.

The burden of demonstrating relevance remains on the

party seeking discovery, but the newly-revised rule “does not place
on the party seeking discovery the burden of addressing all
proportionality considerations.”

Id.

In general, when disputes

are brought before the court, the parties’ responsibilities remain
7

the same as they were under the previous iteration of the rules, so
that the party resisting discovery has the burden of showing undue
burden or expense.

Fed. R. Civ. P. 26(b)(1) advisory committee’s

note to 2015 amendment; see also Fireman’s Fund Insurance Co. v.
Great American Insurance Co. of New York, 284 F.R.D. 132, 135
(S.D.N.Y. 2012) (“Once relevance has been shown, it is up to the
responding

party

to

justify

curtailing

discovery.”

(quoting

Trilegiant Corp. v. Sitel Corp., 275 F.R.D. 428, 431 (S.D.N.Y.
2011))).

Moreover, information still “need not be admissible in

evidence to be discoverable.”

Fed. R. Civ. P. 26(b)(1).

“If the evidence sought is relevant, ‘the burden is upon the
party seeking non-disclosure or a protective order to show good
cause’” by “demonstrating a particular need for protection.” Rosas
v. Alice’s Tea Cup, LLC, 127 F. Supp. 3d 4, 8 (S.D.N.Y. 2015)
(first

quoting

Penthouse

International,

Ltd.

v.

Playboy

Enterprises, 663 F.2d 371, 391 (2d Cir. 1981), and then quoting
Cipollone v. Liggett Group, Inc., 785 F.2d 1108, 1121 (3d Cir.
1986)).

“Although the burden is on the movant to establish good

cause for the entry of a protective order, the court ultimately
weighs the interests of both sides in fashioning an order.” Duling
v. Gristede’s Operating Corp., 266 F.R.D. 66, 71 (S.D.N.Y. 2010).
B.

Category One Documents

Category One documents would be responsive to fifteen of the
plaintiffs’ RFPs.3

The defendants object to producing documents

3

Plaintiffs’ RFP Nos. 5, 7, 26-27, 29, 31, 33-41. (Pl. Memo.
at 22; Appendix (“App.”) 1, attached as Exh. to Pl. Memo.; Def.
Memo. at 17 n.20; Plaintiffs’ Reply Memorandum of Law in Further
8

that are relevant only to the qui tam action, only to the RICO
claim, or only to both of those claims.

(Def. Memo. at 9, 12).

That is, they object to producing documents that are not relevant
to the breach of contract and tort claims.4

The defendants advance

two arguments: first, that requests for production of documents
relevant only to the qui tam action are inappropriate in this
separate action; and second, that discovery relevant only to the
RICO claim should be stayed in light of the pending motion to
dismiss.
1.

Documents Relevant to Qui Tam Action

The plaintiffs contend that “this Court has ordered the
parties to coordinate discovery in this case with discovery in the
qui tam case” in order “to avoid duplication.”

(Pl. Memo. at 14-

15). Therefore, according to the plaintiffs, the defendants should
produce discovery even if it relates only to claims not included in
this action. This argument overreaches. To be sure, the Honorable
Laura Taylor Swain, U.S.D.J., in denying the plaintiffs’ motion to
transfer this action to the District of Columbia, “encouraged” the
Support of Motion to Compel and Define Scope of Discovery and in
Opposition to Defendants’ Cross Motion for a Protective Order (“Pl.
Reply”) at 10).
4

The plaintiffs state that the defendants refuse to produce
discovery “that [the] [d]efendants claim [is] beyond the scope of
the breach of contract claims.” (Pl. Memo. at 11). As I read the
defendants’ submission, they have not objected to producing
discovery that might be relevant only to the plaintiffs’ common law
tort claims. (Defendants’ Reply Memorandum of Law in Support of
Their Cross-Motion for Protective Order (“Def. Reply”) at 2). As
they have argued in their motion to dismiss that each of the tort
claims is duplicative of the breach of contract claims, however
(Motion to Dismiss RICO Claims at 14-16, 18, 20-21), they
presumably find this to be a distinction without a difference.
9

parties “in the interests of efficient pre-trial management . . .
to undertake efforts to coordinate informally discovery of common
issues of fact, insofar as feasible, that may arise in the [False
Claims Act] action pending in D.C.”

Mortgage Resolution Servicing

LLC v. JPMorgan Chase Bank, N.A., No. 15 Civ. 293, 2015 WL 9413881,
at *2 (S.D.N.Y. Dec. 22, 2015).

However, that is not the same as

ordering the defendants to produce documents in this action that
are relevant only to the qui tam action, especially as Judge Swain
found that the two cases were not sufficiently intertwined to
counsel in favor of transfer.

See id. at *1-2.

Nor is it accurate that the defendants “opened the door” to
this discovery.

(Pl. Memo. at 19-20).

As a general matter, I am

unaware of any rule (and the plaintiffs have cited none) indicating
that when a party asks for production of certain categories of
information (or even produces such information), it is prohibited
from arguing that similar discovery sought by the other party is
not relevant.

Cf. State Farm Mutual Automobile Insurance Co. v.

Fayda, No. 14 Civ. 9792, 2015 WL 7871037, at *6 (S.D.N.Y. Dec. 3,
2015) (co-operating in discovery to produce documents in response
to

request

is

not

concession

that

documents

are

relevant).

Moreover, a number of the defendants’ requests for production that
the plaintiffs cite as pertaining to the qui tam case are also
relevant to the RICO claim in this case (which I discuss below),
such

as

requests

seeking

communications

with

governmental

authorities related to the allegation that the defendants’ conduct
caused the plaintiffs “to face the ire of governmental entities,”
10

or documents related to the defendants’ alleged violations of the
National Mortgage Settlement and the RMBS Settlement.

(Complaint,

¶¶ 145-147; Defendants’ First Request for Production of Documents
to Plaintiffs S&A Capital Partners, Inc., Mortgage Resolution
Servicing, LLC, and 1st Fidelity Loan Servicing, LLC, attached as
Exh. Q to Pistilli Decl., at 8).

That is, these requests do not

appear to indicate that the defendants seek discovery in this case
relevant only to the Schneider action.
This does not mean, however, that the defendants’ position on
the plaintiffs’ requests for production succeeds.

Because many of

the fifteen requests for production at issue are broadly written,
apparently to encompass documents relevant to all claims at issue
in this case as well as in the Schneider litigation, they often
encompass documents that are relevant mainly to the plaintiffs
contract and tort claims.

As I noted in a prior opinion:

The allegation that ties the plaintiffs’ breach of
contract, tort, and civil RICO causes of action together
is that the defendants, after selling mortgage loans to
the plaintiffs, released liens securing those loans,
purported to forgive debt on mortgages they sold, and
accepted and retained payments on loans they no longer
owned.
Mortgage Resolution Servicing, LLC v. JPMorgan Chase Bank, N.A.,
No. 15 Civ. 293, 2015 WL 6516787, at *1 (S.D.N.Y. Oct. 28, 2015)
(footnote omitted).5

Documents focused on the loans that the

defendants sold to the plaintiffs are relevant to “the private,

5

That opinion denied the defendants’ motion to transfer this
action to the District of Columbia.
Judge Swain subsequently
issued a decision likewise denying the same motion.
Mortgage
Resolution Servicing, 2015 WL 9413881, at *2.
11

commercial dispute between the parties” and the defendants have
purportedly agreed to produce these. (Def. Reply at 2). Documents
relating to communications, investigations, research, policies, or
selection criteria connected to loan forgiveness letters sent on
September 13, 2012, December 13, 2012, and January 13, 2012, are
also relevant, as are similar documents relating to the Pre-DOJ
Lien Release Program, even though these documents relate also to
loans not sold to the plaintiffs.6

(Pl. Memo. at 17-19).

The

defendants shall therefore produce documents responsive to any of
the relevant requests for production that fall into one of these
two sub-categories.
There is one request that merits a short, separate discussion.
Plaintiffs’ RFP No. 7 seeks documents relating to the criteria and
processes defendants employed in deciding to place loans in the
RCV1 database.

(App. 1 at 27).

The complaint alleges that by

placing loans in this database, which contained loans “charged-off
for

accounting

purposes”

(Def.

Memo.

at

18),

the

defendants

“den[ied] the borrowers their rights concerning federally-related
mortgages yet allowed [the defendants] to retain the lien and the
benefit of the security interest.”

(Complaint, ¶ 60(g)).

It is

clear that the RCV1 database included some of the loans sold to the
plaintiffs that form the basis of the breach of contract and
commercial tort claims in this case.
Memo. at 18).

(Complaint, ¶ 60(g); Def.

Therefore, this request is relevant (in the broad

6

The defendants have not argued that this discovery would be
unduly burdensome. (Def. Memo. at 9-11).
12

sense contemplated by Rule 26) to those claims and these documents
shall be produced.
2.

Documents Relevant to RICO Claim

In light of their assertedly meritorious motion to dismiss the
plaintiffs’ RICO claim, the defendants seek a protective order in
the form of a partial stay of discovery shielding them from
producing a subset of documents responsive to the same fifteen RFPs
that are relevant only to that claim.
Although
automatically
discretion,”

in

most

stay

cases

a

discovery,

Integrated

Systems

(Def. Memo. at 12-17).

motion
a
and

to

dismiss

does

not

court

has

“considerable

Power,

Inc.

v.

Honeywell

International, Inc., No. 09 Civ. 5874, 2009 WL 2777076, at *1
(S.D.N.Y. Sept. 1, 2009), to determine that “a pending motion to
dismiss [] constitute[s] ‘good cause’ for a protective order
staying discovery,” Hong Leong Finance Ltd. (Singapore) v. Pinnacle
Performance Ltd., 297 F.R.D. 69, 72 (S.D.N.Y. 2013). Courts should
“look to the particular circumstances and posture of each case” and
consider “(1) [the] breadth of discovery sought, (2) any prejudice
that would result, and (3) the strength of the motion.”

Id.

(alteration in original) (first quoting Alford v. City of New York,
No 11 CV 622, 2012 WL 947498, at *1 (E.D.N.Y. March 20, 2012), and
then quoting Brooks v. Macy’s Inc., No. 10 Civ. 5304, 2010 WL
5297756, at *2 (S.D.N.Y. Dec. 21, 2010)).
Here, the plaintiffs do not argue that the motion to dismiss
is insufficiently substantial for that factor to weigh in favor of
a stay.

(Pl. Reply at 5-8; Def. Reply at 4; Surreply Declaration
13

of Helen David Chaitman dated June 27, 2016 (“Pl. Surreply”)).
That concession by omission is well-taken.

They do, however,

contend that the discovery is not “disproportionately burdensome”
for the defendants and that a stay will “severely prejudice” the
plaintiffs.

(Pl. Reply at 6-8).
a.

Burden

The defendants specifically object to requests for production
seeking documents relating to the selection of the recipients of
all loan forgiveness letters sent by the defendants, if those
letters

are

not

connected

to

three

dates

mentioned

in

the

complaint; all written communications with borrowers for whose
loans the defendants claimed consumer relief not only pursuant to
the National Mortgage Settlement and the RMBS Settlement, but also
pursuant to the Emergency Economic Stabilization Act of 2008 (a
statute not mentioned in the complaint in this action, but cited in
the Schneider Complaint (Schneider Complaint, ¶ 52)); documents
identifying all loan modifications for which the defendants claimed
consumer relief under the National Mortgage Settlement consent
decree; and written communications with the monitor of the National
Mortgage Settlement consent decree discussing RCV1. (Def. Memo. at
13-14; App. 1 at 28, 30-31).

They characterize these RFPs -- Nos.

27, 29, 36, and 38 -- as “extremely broad and burdensome” and
“lack[ing] any arguable relevance to [the] [p]laintiffs’ commercial
tort or breach of contract claims.”7
7

(Def. Memo. at 14).

The defendants “do[] not concede” that the remainder of the
fifteen relevant requests for production “are relevant or
proportional to the needs of the case, even assuming [] that the
14

The defendants assert that using the plaintiffs’ proposed
search terms “designed to capture documents related to their RICO
allegations and qui tam case” for just one of the twenty-six
requested custodians yields over 650,000 documents. (Def. Memo. at
15; Declaration of Phil Verdelho dated June 10, 2016 (“Verdelho
Decl.”), attached as Exh. 4 to Def. Memo., ¶ 17).

They have

submitted

a

Executive

Director

for

declaration
Electronic

from

JPMorgan

Platform

Chase

Discovery

Bank’s

Services

--

a

professional who manages the firm’s e-Discovery technologies and
responsibilities -- who attests that the total cost of reviewing
that

single

$1,000,000.

custodian’s

responsive

(Verdelho Decl., ¶ 20).

documents

would

be

nearly

The plaintiffs state that

this estimate “strains, if not shatters, all credibility,” and is
a “ludicrous” “sham.”

(Pl. Reply at 6-7).

I have been presented with a sworn statement from a person
knowledgeable about the defendants’ documents storage systems and
e-discovery technologies estimating the cost of the defendants’
search

for

plaintiffs’

and
RFPs.

production
The

of

documents

plaintiffs

have

speculation (and some overblown rhetoric).

responsive
countered

to

with

the
mere

They request that if I

do not choose simply to disbelieve the evidence the defendants
present, then I order the defendants to produce a witness pursuant
to Rule 30(b)(6) of the Federal Rule of Civil Procedure, so that
the plaintiffs can “assess [this claim] by deposition.” (Pl. Reply
Court denies [the] motion to dismiss.” (Def. Memo. at 17 n.20).
However, they do not address those other requests in their motion
for a protective order.
15

at 6-7).
“There are circumstances where [] collateral discovery” -also known as discovery on discovery -- “is warranted.”

Freedman

v. Weatherford International Ltd., No. 12 Civ. 2121, 2014 WL
3767034, at *3 (S.D.N.Y. July 25, 2014).

“However, requests for

such ‘meta-discovery’ should be closely scrutinized in light of the
danger of extending the already costly and time-consuming discovery
process ad infinitum.” Freedman v. Weatherford International Ltd.,
No 12 Civ. 2121, 2014 WL 4547039, at *2 (S.D.N.Y. Sept. 12, 2014).
A party must provide “an adequate factual basis” for its belief
that discovery on discovery is warranted.
3767034, at *3.

Freedman, 2014 WL

The plaintiffs have failed to do so here.

Moreover, the motion before me seeks merely a stay of discovery
related to the RICO claim in the plaintiffs’ complaint; here I find
only that, in the context of that interim request, the discovery
imposes a significant burden on the defendants in light of the fact
that it may be obviated by Judge Swain’s decision on the pending
motion to dismiss.8
b.

Prejudice

The plaintiffs claim they will be “severely prejudiced” if a
stay is granted because having to wait for this discovery will
hamstring their ability to formulate litigation and settlement
strategy.

(Pl. Reply at 7).

But they offer no further discussion

8

If the motion to dismiss is denied, I expect that the
defendants will continue to explore techniques to lower the cost of
production and, if appropriate, the possibility of sharing the cost
with the plaintiffs.
16

of what particular strategic decisions will need to be made prior
to the decision on the motion to dismiss.

Moreover, the motion to

dismiss is fully briefed, so any consequent stay is likely to be
short-lived.

See, e.g., Integrated Systems and Power, 2009 WL

2777076, at *1 (imposing stay during pendency of motion to dismiss
where briefing on motion would be completed within one month of
application

and

stay

would

therefore

delay

commencement

of

discovery “for only a few months”).
I therefore grant the defendants motion for a protective order
staying discovery that is relevant only to the plaintiffs’ RICO
claim until the motion to dismiss is decided.

I note, however,

that if the motion is denied, and the stay has the effect of
increasing the cost of discovery in this case, either because it
results in duplication of work or for any other reason, the
defendants will not be heard to complain of that incremental burden
(and any added costs the plaintiffs incur may be shifted).
C.

Category Two Documents

These are documents related to data on loans the defendants
sold or offered for sale to the plaintiffs.
1.
This
various

Request No. 3

requests

details

asks

(number,

for

documents

type,

amount,

sufficient
security,

to

identify

status,

and

borrower) of loans the defendants “sold, transferred, put into the
name of, designated as belonging to, or offered to sell to” the
plaintiffs.

(App. 2, attached as Exh. to Pl. Memo., at 34).

The

defendants have agreed to produce documents related to loans
17

included on the so-called “Corrupted List,” a list provided by the
defendants to the plaintiffs in connection with the 2009 sale of
loans, which the plaintiffs allege was “grossly deficient” because
it did not include certain basic information (Complaint, ¶ 46), as
well as any loan “that has a bona fide nexus to the parties’
commercial relationship, including other loans purchased by [the]
[p]laintiffs.”

(Def. Memo. at 18 & n.21).

They object, however,

to identifying and producing loan data for “additional loans sold
to [the] plaintiffs.” (Def. Memo. at 18-19).
As

expressed,

unintelligible.

the

defendants’

objection

is

nearly

Having agreed to produce information related to

“any loan” with a nexus to the commercial relationship between the
parties “including other loans purchased by [the] [p]laintiffs,” it
is unclear how they can then refuse to produce information about
“additional

loans

sold

to

the

plaintiffs.”

Is

there

some

unexplained difference between loans the plaintiffs purchased from
the defendants and loans the defendants sold to the plaintiffs?
It appears from the context, however, that the defendants
object to producing information identifying loans included in the
RCV1 database, which have been charged-off for accounting purposes.
(Def. Memo. at 18).

According to a declaration from Michael J.

Zeeb, a Vice President of Mortgage Banking Recovery at JPMorgan
Chase Bank, the RCV1 loans “cannot normally be queried using the
identity

of

the

entity

to

which

a

loan

has

been

sold.”

(Declaration of Michael J. Zeeb dated June 10, 2016, attached as
Exh. 5 to Def. Memo., ¶ 4; Def. Memo. at 18-19).
18

The plaintiffs therefore ask for a Rule 30(b)(6) deposition to
challenge that assertion.

(Pl. Reply at 9).

But they have

provided no factual basis to support their skepticism about the
defendants’ explanation of the workings of the RCV1 database. Such
a deposition is therefore an unsuitable remedy at this time.
However, if the defendants maintain other databases containing the
requested information about loans sold to the plaintiffs that can
be searched by reference to the identity of the buyer of the loan,
the defendants shall produce such information.9
2.
These

Request Nos. 16-18 and 21

requests

seek

documents

related

to

the

servicing,

foreclosure, charge-off amount, and payment of any loan included on
the Corrupted List.

(App’x 2 at 34-37).

The defendants have

agreed to “query the appropriate database(s) and retrieve any
reasonably accessible data regarding the loans,” and argue that
therefore the motion to compel is moot as to these requests. (Def.
Memo. at 17-18).

The plaintiffs object that the use of the terms

“‘appropriate database(s)’ and ‘reasonably accessible data’ gives
[the] [d]efendants far too much license to withhold responsive
documents.”10

(Pl. Reply at 10).

9

The
defendants’
suggestion
that
this
request
is
objectionable because it is the plaintiffs’ responsibility to
“identify the specific loans that form the basis of their claims”
(Def. Memo. at 19) is unavailing. The request seeks information
that is within the bounds of Rule 26’s broad definition of
relevance.
10

The plaintiffs also object to the custodians and search
terms that the defendants propose, but the parties have agreed to
meet and confer to resolve that disagreement. (Pl. Reply at 10
n.5).
19

Rule 26 requires that a party produce electronically stored
information insofar as it is “reasonably accessible,” and even
where it is not reasonably accessible “if the requesting party
shows

good

cause.”

Fed.

R.

Civ.

P.

26(b)(2)(B)

&

advisory

committee’s note to 2006 amendments; see also Star Direct Telecom,
Inc. v. Global Crossing Bandwidth, Inc., 272 F.R.D. 350, 358
(W.D.N.Y. 2011).

The rule also requires the responding party to

identify, by category or type, the sources containing
potentially responsive information that it is neither
searching nor producing. The identification should, to
the extent possible, provide enough detail to enable the
requesting party to evaluate the burdens and costs of
providing the discovery and the likelihood of finding
responsive information on the identified sources.
Fed. R. Civ. P. 26 advisory committee’s note to 2006 amendments.
Here, the defendants have offered a Rule 30(b)(6) witness to
testify on some subjects relevant to the plaintiffs’ concerns: (1)
the

general

retention

policies

applicable

to

the

defendants’

mortgage lending and debt sale business; (2) the document retrieval
procedures used in this case; and (3) the location, storage, and
maintenance of (a) communications with or regarding the plaintiffs
and (b) communications and documents or data relating to loans sold
or offered to the plaintiffs.11

(Email of Christian Pistilli dated

June 8, 2016, attached as part of Exh. A to Pl. Surreply).

When

this additional information is produced along with the defendants’

11

The defendants have not agreed to produce a witness to
testify as to electronic database retrieval systems generally, so
the offered witness will presumably not testify as to the
assertions made in Mr. Zeeb’s declaration mentioned above. (Pl.
Surreply, ¶ 4; Email of Suzan Arden dated June 9, 2016, attached as
part of Exh. A to Pl. Surreply).
20

responsive documents, the plaintiffs should be able to better
assess the likelihood that other databases would include relevant
data.
3.

Request Nos. 28 and 3212

These requests seek data about loans that were the subject of
debt forgiveness letters sent out on September 13, 2012, December
13, 2012, and January 12, 2013, and about liens that were released
pursuant to the Pre-DOJ Lien Release Project.
defendants

argue

that

these

(App. 2 at 37).

requests

are

The

overbroad,

disproportionate, and irrelevant because they do not relate only to
loans purchased by the plaintiffs.

(Def. Memo. at 19).

The

plaintiffs respond that, as the defendants have indicated that they
are incapable of determining the entire universe of loans were sold
to the plaintiffs and because the operative complaint alleges that
some

loan

numbers

were

altered,

post-sale,

this

data

will

“provide[] a failsafe mechanism for [the] [p]laintiffs to check
their loans against the full list . . . without allowing [the]
[d]efendants the option of concealing [] information if it resides
in

an

inappropriate

database

or

somehow

proves

not

to

be

‘reasonably accessible.’” (Pl. Reply at 10).
According to the plaintiffs, more than 50,000 loan forgiveness
letters

were

sent

out

on

the

12

relevant

dates,

and

“tens

of

Some of the parties’ papers misidentify the second request
for production at issue as No. 31. (Def. Memo. at 19; Pl. Reply at
10). However, it is actually No. 32. (Pl. Memo. at 25; App. 2 at
37; Defendants’ Objections and Responses to Plaintiffs’ First
Request for the Production of Documents to All Defendants, attached
as Exh. A to Declaration of Helen Davis Chaitman dated May 27,
2016, at 24-25).
21