The parties' competing protocols depart on two points. First, the FDIC's protocol does not require the FDIC to conduct a manual responsiveness review prior to production. Defendants maintain that the FDIC must conduct a responsiveness review and that a production based solely on search terms would be an abdication of plaintiff's obligations under the Federal Rules. Second, the FDIC's protocol seeks to impose a $0.03 per page conversion cost for any documents that defendants want converted from the document's native format to defendants' requested format (TIFF). Defendants claim that this provision is another attempt by plaintiff to shift a “routine cost of discovery” from the producing party to the requesting party. (Defs.' Resp. 14, ECF No. 71).

After review, the court will adopt the defendants' protocol with one modification. Plaintiff is not required to conduct a responsiveness review because the parties have agreed to produce the documents as they were kept in the usual course of business. The production, therefore, is presumed to have some underlying logic to the organization and structure of the production; a further responsiveness review is unnecessary under these circumstances. Additionally, plaintiff must bear the cost of conversion. This expense is a “cost,” and if plaintiff prevails, plaintiff may argue that this cost should be taxed to defendants.

The court recently faced the same issue in FDIC v. Stovall, No. 2:14-cv-00029-WCO (N.D. Ga. Oct. 23, 2014), ECF No. 42 (Stovall Order). In Stovall, the FDIC proposed an identical protocol to the one proposed in this case. Stovall Order 2-3.

The FDIC proposed a two–phase ESI production. In the first phase, the FDIC would produce ESI identified by the FDIC in its initial disclosures. In the second phase, the FDIC and bank directors would agree to a list of search terms, apply those search terms to the remaining ESI, the FDIC would upload the documents by search term hit, and the bank directors would review the ESI and select documents for production.

The court found that the FDIC's protocol did not comply with Rule 34(b)(2)(e). The Rule requires a producing party to produce documents “as they are kept in the usual course of business or [the producing party] must organize and label them to correspond to the categories in the request” and “produce [ESI] in a form or forms in which it is ordinarily maintained or in a reasonably useable form or forms.” FED. R. CIV. P. 34(b)(2)(E)(i-ii). In that case, the court found that the FDIC's proposal did not satisfy Rule 34 because the proposal did not call for discovery to be kept as produced in the usual course of business and the FDIC failed to demonstrate why requiring the FDIC to organize and label the production amounted to an undue burden. See Stovall Order at 4-6.

*2 Here, the same problem is not present. The FDIC has agreed to produce discoverable material as it was kept in the usual course of business. (See Pls.' Reply 12, ECF No. 75). A further responsiveness review, therefore, is not necessary to match relevant discovery with the corresponding request. Stovall, like other cases where this court and others required a responsiveness review, held that Rule 34 requires the producing party to either produce the documents as kept in the usual course of business or organize and label them to the corresponding discovery request. See FDIC v. Briscoe, 1:11-cv-2303-SCJ (N.D. Ga. June 6, 2013), ECF No. 98 (requiring the FDIC to conduct a responsiveness review because the FDIC did not contend that the documents would be produced as kept in the usual course of business or organized according to the categories in defendants' queries). The court did not–and does not–require a manual responsiveness review as a prerequisite to production. Rather, this is one area of discovery where the near infinite number of variables and factual differences counsel against any hard and fast rules.

The court appreciates defendants' concern that the FDIC's production will result in an unstructured “document dump,” but these concerns can be ameliorated by requiring the FDIC to produce all responsive documents in TIFF formatting. In that way, the documents will be fully searchable, and if defendants are concerned that the FDIC and they cast too wide a net during initial production, the defendants may use further search queries to filter out irrelevant documents without a great deal of cost to either party.

The FDIC objects and contends that the cost of converting the file format would exceed $31,000 to convert 150,000 documents from their native format to TIFF. The court does not ascribe much weight to this reasoning. The FDIC claims that it uncovered 150,000 documents by applying the “FDIC-R's preliminary search terms” to the ESI database, but plaintiff does not disclose (1) what those terms are, (2) whether the results from the search include defendants' search terms, and (3) how many documents comprise the initial “universe” of ESI.

The court believes the FDIC overstates the scope and number of relevant documents. For example, in FDIC v. Giannoulias, a case heavily relied upon by plaintiff, the FDIC sought to recover $114 million in losses that the bank suffered on 20 commercial loans. FDIC v. Giannoulias, 2013 WL 5762397, at *1 (N.D. Ill. Oct. 23, 2013). In that case, the bank directors and officers served 242 separate requests for production, and the parties' search term list included 250 unique search terms to identify relevant materials in the ESI. Id. at *1-2. The search terms yielded approximately 150,000 hits–roughly the same number the FDIC argues is relevant in this case. Id. at *1.

This action has four fewer defendants and fourteen fewer loans; the alleged damages are 10% of the losses alleged in Giannoulias; and–presumably–the FDIC's search term list contains fewer than 250 terms. The court finds it hard to fathom that the FDIC will end up producing anything close to 150,000 documents.

In short, the court finds that the circumstances in this case suggest that a manual review following the application of mutually agreed–upon search terms to the ESI database is not necessary. Plaintiff must pay whatever conversion cost is incurred as part of the process of transforming the files from their native format into TIFF format. If plaintiff is victorious, then plaintiff may attempt to recoup this expense. This solution strikes a balance between the parties' proposed protocols and encourages efficient discovery. Production without a subsequent manual review encourages defendants to not be too gluttonous in their initial requests, and requiring defendants' preferred production format similarly incentivizes plaintiff to make an efficient and generally relevant production. Therefore, the court hereby DENIES plaintiff's motion to adopt the FDIC-R's ESI Protocol [67] and ADOPTS the defendants' proposed ESI protocol [71-1], subject to the deletion of any language that requires the FDIC-R to conduct a manual responsiveness review prior to production.

*3 IT IS SO ORDERED, this 13th day of May, 2015.