Starr's Motion seeks to compel Plaintiff and Counterclaim-Defendant H.J. Heinz Company (“Heinz”) to produce non-privileged instant messages, text messages and voicemail within Heinz's custody or control related to the claims, counterclaims, and defenses at issue in the litigation. As discussed below, the scope of discovery has been limited to Starr's Counterclaim for Rescission.

On May 14, 2015, Heinz brought this action for alleged breach of contract, declaratory judgment, and bad faith against Starr's for its failure to provide insurance coverage under its “Product Contamination Policy” (“the Policy”) purchased by Heinz in 2014 for losses, among others, relating to “Accidental Contamination.” The alleged events that gave rise to the claim involve contaminated defatted soy powder from Qingdao Longhi Food Company Limited (“Qingdao”), which is a component or ingredient used by Heinz in its high protein dry baby cereal. Heinz alleges that it did not learn of the Qingdao contamination until mid-August 2014, when it was notified by the Zhejian Provincial Food and Drug Administration that its high protein dry baby cereal contained “high levels of lead.” The lead contamination allegedly occurred in April and May of 2014 at Qingdao, before the inception of the Policy on July 1, 2014. Heinz seeks damages from Starr for its alleged losses relating to the Qingdao contamination in excess of $30,000,000, which according to Heinz are “ongoing.”

On June 16, 2015, Starr filed an Answer and Counterclaim for rescission of the Policy, alleging that Heinz intentionally omitted material information from its May 28, 2014 application for insurance relating to its loss history, including information related to nitrate contamination of baby food manufactured in China, recalls of baby food in Canada and pesto dip in New Zealand, which occurred in 2014, and mercury contamination of baby food in China in 2013.

On or about June 23, 2015, counsel for the parties met and conferred about the scope of discovery, including electronically stored information (ESI) and thereafter submitted a Rule 26(f) report to the Court and agreed to a Stipulation for ESI Order, signed by the Court on July 6, 2015. The parties were unable to reach agreement on what constitutes “reasonably accessible” ESI with regard to instant messages, text messages and voicemail. (Dkt. No. 32)

On July 21, 2015, the Court ordered the parties to proceed on “Phase One (Rescission Counterclaim)” and further ordered the parties to produce all relevant documents by July 28, 2015, “subject to one exception,” which permitted Heinz to produce additional relevant documents or information “described in” Starr's Motion to Compel by August 13, 2015. (Dkt. No. 57)

*2 In the instant motion (Dkt. No. 46), Starr seeks to compel Heinz “to produce non-privileged instant messages, text messages, voicemail and other electronically stored information (“ESI”) that is within Heinz's custody or control and is otherwise subject to discovery....” In its supporting brief, Starr stated that it understood that Heinz personnel “frequently use[d]” instant messaging, text messaging and voicemail for “routine, business communications.”

In its opposition (Dkt. No. 52), Heinz argued that the ESI sought by Starr, including instant messages, text messages and voicemails, is not “reasonably accessible” or “proportionate” to the needs of the case. In support of its opposition, Heinz offered the declaration of David Bradt, Global Security and Compliance Sr. Manager for Heinz, (Dkt. No. 54), regarding Heinz's instant messaging and voicemail systems, company email and the absence of Heinz's ability to control or monitor the use of personal email accounts, text messaging or voicemails on Heinz employees' personal mobile devices. Heinz also offered the declaration of Ian Ascher, Associate Director—Global Insurance for Heinz, (Dkt. No. 53), who stated that he does not conduct “substantive” Heinz business by instant message, text message or personal email. With regard to Heinz matters, Mr. Ascher stated that he used his personal mobile device solely to access his Heinz email remotely, which is “synced” to Heinz's email platform.

Heinz did not provide specific information regarding (1) the number of employee-custodians who may have used Heinz's instant messaging system, its voicemail or personal text messages, and which may have relevant information related to Starr's rescission Counterclaim or (2) an estimate of the costs associated with searching these potential ESI repositories, two points which bear on Heinz's proportionality and inaccessibility arguments. Starr did not specifically address Heinz's inaccessibility argument, but noted that Heinz had not offered any facts or support for its position that the production of potentially relevant instant messages, text messages and voicemail would constitute an “undue burden” on Heinz and “an unnecessary waste of time and resources.” On the issue of “undue burden” Starr pointed out that any burden is “quite limited” at this stage in the proceedings because of the Court's ruling limiting the first phase to Starr's rescission claim, which in large part relates to Heinz's disclosure and/or non-disclosure of prior losses.

On July 22, 2015, counsel for the parties and Heinz's technical representative, Mr. David Bradt, participated in a telephone conference at my request (email dated July 21, 2015) to discuss the storage capabilities of Heinz's instant messaging system, the voicemail retention capabilities and litigation hold features of Heinz's telephone system, Heinz's policies regarding the use of personal mobile devices, text messaging, and the approximate number of Heinz employees who are custodians of potentially responsive ESI and have been determined to be “primary” or “key” employee custodians related to the rescission Counterclaim. During the call, counsel for Heinz advised that Mr. Ascher and Mr. Keatings are the two “key” Heinz employees with information potentially related to the rescission Counterclaim, and that another 10-12 Heinz employees may have potentially responsive ESI, though possibly duplicative of Mr. Ascher's and Mr. Keatings' ESI. Following the conference call, I requested via email that counsel for Heinz: (a) provide me a copy of Heinz's policies governing employees' use of personal mobile devices, including BYOD and company issued devices; (b) confirm whether Mr. Ascher's and Mr. Keatings' personal mobile devices are company owned or are their own personal devices; (c) determine whether Mr. Ascher or Mr. Keatings saved or retained any voicemail messages on Heinz's Cisco VOIP system or were subject to a litigation hold unrelated to the instant litigation; and (d) determine whether Mr. Ascher or Mr. Keatings had the capability to save company instant messages through the Lync instant messaging application. Additionally, I invited counsel for Starr to provide supplemental briefing on the issue of whether personal mobile devices, which are owned by Heinz employees and subject to Heinz's BYOD policy, are under the care, custody or control of Heinz. Heinz submitted four additional declarations on July 27, 2015 from David Bradt, Ian Ascher, Andy Keatings and Sabrina Hudson, copies of which are attached as Exhibits A-D. The exhibits to Mr. Bradt's declaration are omitted based on the Protective Order in this case. (Dkt. No. 39)

*3 Based on my review of the declarations of David Bradt, Ian Ascher, Andy Keatings and Sabrina Hudson, as well as the moving and responding briefs, and the additional information provided by counsel for the parties and Mr. Bradt on June 22, 2015, I make following recommended findings of fact.

*4 1. Rule 26(b)(2)(C) of the Federal Rules of Civil Procedure requires that discovery, including electronic discovery, should be proportional to the needs of the lawsuit, and not place an undue burden on the responding party. Proportionality requires a consideration of whether “the burden or expense of the proposed discovery outweighs the likely benefit, considering the needs of the case, the amount in controversy, the parties' resources, the importance of the issues at stake in the action, and the importance of the discovery in resolving the issues.”

1. Heinz maintains custody and control over employee personal mobile devices which are company owned. Some employees (such as Mr. Ascher) do use their own personal mobile devices for the purpose of sending and receiving Heinz company email subject to Heinz's BYOD program. Pursuant to Heinz's BYOD program, all Heinz information and emails on these devices remain the sole property of Heinz and Heinz, through the use Tangoe software, can “in its sole discretion” delete any Heinz data that it believes “may be in jeopardy.” Accordingly, with regard to Heinz data present on employee-owned personal mobile devices under its BYOD program, Heinz has custody and control of Heinz's data.

1. Heinz instant messages: Starr's motion to compel the production of Heinz's instant messages should be denied. The Lync instant messaging system does not retain or store company instant messages. The sworn declarations by Mr. Keatings and Mr. Ascher establish that they did not use the Lync instant messaging system to conduct substantive Heinz business. The evidence also established that Mr. Keatings and Mr. Ascher did not configure Lync to save their company instant messages.

*5 A form of Order is attached for the Court's consideration.

On the issue of a custodian's review of ESI, including text messages potentially in the custodian's possession, the case cited by Starr, In re Pradaxa 2013 WL 6486921 (Dec. 9, 2013) is distinguishable in that Pradaxa involved a second motion for sanctions based on a number of discovery violations, including providing the Court with inaccurate information and failing to comply with previous discovery orders. There is no evidence in the instant case that the sworn statements by Mr. Keatings and Mr. Ascher are inaccurate regarding their use (or absence of use) of Heinz's instant messaging system (Lync), the voicemail system (Cisco) and text messages via their personal mobile devices relating to Starr's rescission Counterclaim.

It is noteworthy that the parties have not yet served document requests. To the extent any of the 10-12 Heinz employees indicates that they sent or received text messages relevant to Starr's rescission Counterclaim, I recommend that counsel for the parties meet and confer regarding the form of their production. Although the parties did not introduce evidence of the estimated cost for extraction and production of potentially relevant text messages (and segregating from production personal or private text messages), in my experience the costs associated with such work (likely two to three hours of forensic analyst time per device) would not be prohibitive, impose an undue burden on Heinz, or be disproportional to this case, in which the amount in controversy is allegedly in excess of $30,000,000. Additionally, an appropriate search protocol can be implemented (as to time and content) that segregates only those text messages that potentially relate to Starr's rescission Counterclaim and protects the privacy interests of Heinz's employees.