2014: Winter Issue

Home – Federal Judge Orders Defendant to Hire a Vendor

Federal Judge Orders Defendant to Hire a Vendor

Having "Difficulty" Complying with Discovery Orders? Then Get-And Pay-For an E-Discovery Vendor, Court Says

In case anyone didn't get the memo, please be aware that just because you don't have the data, it doesn't mean you don't control it and can't produce it.  


In yet another example of magistrate judges taking the lead in the use of e-discovery vendors and search protocols, U.S. Magistrate Judge David T. Bristow of the U.S. District Court for the Central District of California-frustrated by a defendant's "discovery failures" and "wholly inadequate" production-directed it to pay for an e-discovery vendor and to work out the search methodology with the plaintiffs (Carrillo v. Schneider Logistics Inc., No. CV 11-8557-CAS [DTBx], 2012 U.S. Dist. LEXIS 146903 [C.D. Cal. Oct. 5, 2012]).


In this wage-and-hour case brought by workers against warehouse operator Schneider Logistics Inc.- a provider of services to retail giant Wal-Mart and others-a dispute broke out over the production of thousands of documents and multimedia.


The workers claim that Schneider failed to produce documents relating to its business with Wal-Mart and even failed to conduct a proper search. The parties resolved their dispute during a meet and confer and proposed an order. The court directed Schneider to produce documents relating to Wal-Mart, among others, and to produce a custodian of records most knowledgeable about Schneider's document retention policies.  


Schneider produced 23,000 more documents, many of which, the court notes, Schneider had claimed did not exist. The two custodians Schneider provided could not answer basic questions about the company's retention policies. To make matters worse, one of Schneider's employees testified that she continued to delete emails and reports right up to the time of her deposition, and was not directed to do otherwise. The plaintiffs objected to gaps in Schneider's production, noting missing emails and surveillance video.


The court agreed with the workers' argument that Schneider's production had been "wholly inadequate," saying the company's "continued discovery failures" fall into three categories: 1) it did not conduct a "reasonably diligent search" for responsive documents; 2) it improperly withheld responsive documents; 3) it did not take adequate steps to preserve documents.


Noting the time and cost incurred by the workers due to Schneider's discovery failures, Magistrate Judge Bristow directed that an outside vendor be contracted to collect emails and other ESI. The court said it "does not have any confidence that ordering Schneider to conduct a good faith search for electronically stored information will be productive." He said Schneider "has repeatedly certified that it produced all responsive documents, only for plaintiffs to spend substantial time and resources demonstrating that those representations were false."


Schneider objected, saying it did not possess the Wal-Mart network servers where the responsive ESI was stored, therefore the ESI was not in Schneider's "care custody and control." The court rejected this argument. The phrase "possession, custody, or control" is "disjunctive" and is only one of the requirements that needs to be met-"actual possession is not required." As long as Schneider had the legal right to produce documents from another source upon demand, that qualified as "control," the court held.


"[T]he fact that Schneider does not physically possess the server that stores the Wal-Mart emails is immaterial. The electronically stored information is within Schneider's control by virtue of the fact that the Schneider employees use the Wal-Mart email accounts as their primary work email." The court found it "inconceivable" that Schneider could not request the relevant ESI, and gave Schneider seven days to retain an outside vendor that would collect all the ESI from Schneider's and Wal-Mart's or other third-party with servers relevant to the case. The vendor also would, the court directed, prepare a log of all documents and Schneider would create a privilege log. "[N]o documents identified by the vendor may be withheld on relevance grounds," the court added.  


If the parties could not agree on a vendor, the search protocol or the computers to be searched, the court would resolve their disagreements. Schneider, however, would pay for the vendor. Just as with the emails, the court said Schneider must produce surveillance video because it has the right to request it from the warehouse's security company.


With that, the court said sanctions were warranted against Schneider as well as payment of the plaintiffs' attorney fees.

Key Takeaways

  • Know that "control" over documents does not mean you have to have the documents in your possession.
  • Know that if you are challenged by massive discovery, courts are increasingly taking the initiative to require the use of outside vendors, and in some cases dictating the protocol to be used.
  • Ensure that you and your client have "reasonably diligent" document search methods in place.
  • Ensure that you and your client have adequate document preservation methods in place.

Of course, don't even think about holding back potentially responsive documents.