Hullinger v. Anand
Hullinger v. Anand
2016 WL 7444620 (C.D. Cal. 2016)
August 19, 2016
Mumm, Frederick F., United States Magistrate Judge
Summary
The court found that the defendants had failed to comply with the court's orders to produce documents and metadata in a usable form, including custodian and date information, and had redacted documents inconsistently. The court ordered the defendants to provide the required metadata and formatting information for any ESI, and to work with the plaintiffs' e-discovery vendor to ensure that the information is provided in a workable form.
Additional Decisions
Jason HULLINGER, an individual, et al., Plaintiffs,
v.
Kunal ANAND, an individual, et al., Defendants
v.
Kunal ANAND, an individual, et al., Defendants
No. CV 15-7185 SJO (FFMx)
United States District Court, C.D. California
Signed August 19, 2016
Counsel
Bassil George Madanat, Guy Ruttenberg, Dennis Hiunam, Ruttenberg IP Law, a Professional Corporation, Los Angeles, CA, for Plaintiffs.Jerrold E. Abeles, Allan E. Anderson, Douglas Eugene Hewlett, Jr., Franjo M. Dolenac, Jeffrey Robert Makin, Arent Fox LLP, Matthew Alan Rips, Jean Y. Rhee, Marc A. Fenster, Brian D. Ledahl, Paul A. Kroeger, Russ August and Kabat LLP, Talya Goldfinger, Susan Allison, Jeffer Mangels Butler and Mitchell LLP, Los Angeles, CA, Charles E. Tillage, Stephen A. Scott, Hayes Scott Bonino Ellingson and McLay LLP, Redwood Shores, CA, Dara M. Tang, Hayes Scott Bonino Ellingson and McLay LLP, Redwood City, CA, for Defendants.
Mumm, Frederick F., United States Magistrate Judge
ORDER ON PLAINTIFFS' SANCTIONS MOTION
*1 On June 1, 2016, the Court held an evidentiary hearing on plaintiffs' request for sanctions for defendants' alleged disobedience of three Court orders. At the conclusion of the testimony, the Court directed the parties to provide written summations for the Court's consideration. The briefing now has been completed and the matter is ready for disposition.
BRIEF SUMMARY OF ACTION
Plaintiffs allege that they were co-owners of Agora Systems, LLC, (“Agora”) a start-up business they created with defendant Kunal Anand. Plaintiffs further allege that Anand brought defendant Bellanger into the business. Acting together, Anand and Bellanger allegedly took all the assets and business property of Agora, shut down Agora, and re-opened it under a new name, Prevoty, Inc., (“Prevoty”) to the exclusion of plaintiffs.[1]
Defendants deny that plaintiffs were ever co-owners of Agora and contend that Prevoty is an entirely different business from Agora.
PROCEDURAL BACKGROUND
The word contentious barely describes the manner in which discovery has proceeded in this action. As early as the inception of discovery, the stage was set for the numerous discovery motions that have loomed over these proceedings with an emergency ex parte application filed by plaintiffs. On November 17, 2015, plaintiffs asked the Court to intervene with defendants' attempts to force plaintiffs to appear for depositions (“Motion #1”). According to plaintiffs, defendants had purloined all of plaintiffs' and Agora's business documents when they shut down Agora. Plaintiffs further contended that defendants were attempting to depose the individual plaintiffs before plaintiffs were able to obtain and review any of their own business documents. Plaintiffs argued that they had sought production of these documents from defendants, but defendants had objected to all of plaintiffs' discovery requests. Apparently, defendants had initiated the steps for filing a motion to compel and had refused plaintiffs an extension of time to submit their portion of the joint stipulation required by the Local Rules. With their application, plaintiffs sought an extension of time within which to oppose defendants' contemplated motion to compel. After conducting a hearing on the application, the Court stayed the depositions until defendants produced the documents that had been taken from Agora.
Within a month, plaintiffs filed a motion to compel production of documents pursuant to a subpoena served on a former consultant to Agora who now worked for Prevoty (“Motion #2”). Defendants participated in the preparation of the joint stipulation and opposed the motion. On January 5, 2016, the Court largely granted the motion. (Dkt. 89.)
In the meantime, plaintiffs filed a motion to compel defendants to provide an answer to Interrogatory No. 2 (“Motion #3”). Interrogatory No. 2 sought, among other things, contact information for the investors of Prevoty. The Court granted the motion on January 25, 2016. (Dkt. 90.)
*2 While the motion to compel was pending, defendants filed a motion asking the Court to issue a protective order (“Motion #4”). The parties could not agree on three provisions of a proposed order: (1) whether a party should be allowed to unilaterally designate documents as “Attorneys' Eyes Only”; (2) whether deposition transcripts should automatically be considered Attorneys' Eyes Only for 30 days after the deposition; and (3) whether an elaborate clearance procedure for experts should be imposed. Plaintiffs opposed all three of the disputed provisions. After reviewing defendants' showing of the need to prevent the individual plaintiffs from having access to defendants' source code and plaintiffs' showing of why the individual plaintiffs should not be prevented from having such access, the Court found that defendants had not demonstrated a basis for having an “Attorneys' Eyes Only” designation. However, the Court issued a protective order that expressly provided that the order was “without prejudice to the ability of any Party to seek heightened protection (such as an ‘Attorney's Eyes Only’ designation) upon a proper showing on an individualized basis.” The Court also found the elaborate expert witness procedures requested by defendants were not necessary, but that some protections were in order. (Dkt. 99.)
Before the order on the parties' request for entry of a protective order issued, plaintiffs filed another motion to compel, this time for production of documents by defendants in response to plaintiffs' First Set of Requests for Production (“Motion #5”). Plaintiffs complained that defendants were trying to delay and disrupt plaintiffs' discovery, in this instance by (1) objecting to all of plaintiffs' document requests; (2) ignoring plaintiffs' repeated requests to meet and confer; (3) eventually agreeing to a conference, after which agreeing to supplement the responses; (4) thereafter maintaining their objections and still failing to produce the requested documents. Among other things, plaintiffs requested the Court to order defendants to produce their source code.
On March 14, 2016, the Court granted Motion #5 in full and specifically found that defendants' failure to produce many of the documents required by the order was without substantial justification. (Dkt. 110.) Significantly, the Court ordered defendants, among other things, to produce to plaintiffs their source code within 20 days.
Before the Court had ruled on plaintiffs' Motion #5, plaintiffs filed another motion to compel, this time asking the Court to order defendants to produce documents defendants had agreed to produce, but still had not produced (“Motion #6”). The requests at issue were part of the same First Set of Requests for Production as the previously filed, then pending motion. Discovery Motion #6 addressed requests for which, after several conferences, defendants had agreed to produce responsive documents, but had not complied with their agreement. Of particular significance to the pending motion for sanctions, plaintiffs' motion sought an order requiring defendants to provide certain information with respect to documents previously produced, including metadata.[2]
The Court granted Motion #6 on March 16, 2016 and reserved ruling on plaintiffs' request for attorneys' fees. (Dkt. 111.)
On March 29, 2016, plaintiffs filed a request that the Court enforce its order requiring defendants to provide a full and complete answer to Interrogatory No. 2 (The “First Sanctions Motion”). Plaintiffs asserted that despite this Court's order, defendants still had not provided contact information sufficient to enable plaintiffs to serve process on Prevoty's investors. The Court issued an Order to Show Cause requiring defendants to demonstrate why their answer should not be stricken for failure to comply with the Court's order. In response, defendants filed a declaration with the Court attesting that “Prevoty has provided the best and most current address information available to it regarding the contact information of these shareholders.” (Dkt 123-3 at 5 of 5.)
*3 In the meantime, defendants filed a motion asking the Court to clarify its order granting plaintiffs' Motion #5 (“Motion #7”). Defendants requested that the Court specifically state that it had not found that defendants had waived their attorney client privilege with respect to otherwise responsive documents.
On April 11, 2016, plaintiff filed a request that the Court enforce it orders granting plaintiffs' Motion #5 and Motion #6 (The “Second Sanctions Motion”). Plaintiffs asserted that defendants had failed and refused to produce their source code as required by the order granting Motion #5, had failed to provide the metadata as required by the order granting Motion #6, had recently asserted privilege objections to the production of documents ordered by the Court, and still had not provided the answer to Interrogatory No. 2 required by the order granting Motion #3.
Perhaps in response to the Second Sanctions Motion, on April 19, 2016, defendants filed a motion seeking a protective order granting “Attorneys' Eyes Only” status to the production of their source code (“Motion #8”).
On May 10, 2016, the Court held a hearing on Motion #7 and Motion #8. The Court clarified its prior order as to which document requests defendants would be permitted to withhold documents protected by the attorney client privilege. The Court denied defendants' request for Attorneys' Eyes Only treatment of its source code, but ordered the parties to agree on the precise contours of a protective protocol described by the Court. The Court also set a date for an evidentiary hearing on the First and Second Sanctions Motions. (Dkt. 142.) The Court ordered the parties to attempt to agree on the factual issues to be presented at the evidentiary hearing. After receiving the parties competing proposals, the Court entered its own order on May 24, 2016,[3] setting forth the following issues:
1. Whether defendant Prevoty, Inc. fully responded to Interrogatory No. 2;
2. Whether defendants complied with the Court's order regarding the provision of metadata and other formatting information;
3. Whether defendants withheld the production of any documents responsive to Request Nos. 41, 44–49, 51, 52, 54, 55, 57–60, 67, 69, 72–74, 76 and 77 on the grounds that any such documents were protected by the attorney-client privilege;
4. Whether any failure of defendant to fully respond to Interrogatory No. 2 or defendants to provide the documents and information described in subparagraphs 2 and 3 above was willful; and
5. What sanctions, if any, are appropriate.
(Dkt. 161.)
THE HEARING
On June 1, 2016, the Court held the evidentiary hearing on plaintiffs' two motions for sanctions. Guy Ruttenberg and Dennis H. Ma appeared on behalf of plaintiffs; Brian D. Ledhal, Marc A. Fenster, and Jerrold Abeles appeared for defendants. The parties called witnesses with respect to Issue No. 2 and referenced evidence with respect to Issue No. 1. The Court found that Issue No. 3 was not ripe and that Issue 5 could be handled by post-hearing briefing.[4]
A. Metadata—Issue Two
*4 Plaintiffs called one witness, their e-discovery vendor Hilary Quatinetz. Ms. Quatinetz explained that a load file is a file that includes metadata and links to text files, native files, and image files. Ms. Quatinetz had reviewed and was familiar with the ESI protocol proposed by plaintiffs and defendants' response to the proposal. (Plaintiff's Exhibits (“PX”) 35 and 38.) Ms. Quantinetz had examined each load file produced by defendants and noted whether the file raised any issues with respect to its content or formatting.
Ms. Quantinetz testified that the initial productions by defendants did not have any metadata, while other productions had metadata with inconsistencies in how some of the production fields were populated. In all, defendants produced over 20 load files, a number of them being replacements for earlier productions.
Ms. Quantinetz created an Excel spreadsheet and imported the latest load files received from defendants to that spreadsheet. (PX 63.) Based on the Excel spreadsheet, Ms. Quatinetz testified that out of 2,785 documents produced by defendants: 2,322 contained no custodian information; and 681 had no intelligible date information across the Date Created, Date Sent, or Date Received fields. Ms. Quatinetz reviewed various examples of fields missing values (or unintelligibly filled in) with respect to documents for which she would have expected to have had one or more of such fields populated. Ms. Quatinetz testified that any electronically created document should have a “created date” associated with the document, except emails. An email would have a “date sent” or “date received” associated with it, but not necessarily a “date created” reference.[5]
*5 With respect to the custodian field, Ms. Quatinetz testified that native electronic documents do not contain custodian information. When preparing a load file, the producing party must add a custodian for each document identifying who maintained the document.
Ms. Quatinetz also identified examples where the load files did not indicate that certain documents had been redacted by plaintiffs. Ms. Quatinetz also testified as to non-conformities in some of the load files which required the files to be replaced by defendants or fixed manually by plaintiffs.
In addition, Ms. Quatinetz testified that she offered to work with defendants' e-discovery vendor to resolve the problems with the production, but that defendants never agreed to such an effort.
Defendants called two witnesses: their e-discovery vendor, Marcelo Marciano, and defendant Julien Bellanger. Mr. Marciano did not dispute any of Ms. Quatinetz's testimony. He stated that defense counsel had told him which fields to populate, but he had not seen what protocol the parties had agreed upon and could not remember specifically which fields he was to carry over into the load file. Although he stated that he had not “stripped” any data fields, he also testified that he would not automatically include all the fields that were in the native document, only those he was expressly requested to include.
Mr. Bellanger testified that for the most part, he provided access to all of his files to defense counsel[6] and that defense counsel took what was wanted. Mr. Bellanger also testified that he had no knowledge of any material being provided to defense counsel other than “in its native and existing form.”[7] Finally, Mr. Bellanger testified that he had no interaction with defendants' e-discovery vendor.
B. Interrogatory No. 2
Plaintiffs served Plaintiffs' First Set of Interrogatories to Defendant Prevoty, Inc. on October 21, 2015. (PX 1.) Interrogatory No. 2 asked Prevoty to “[p]rovide the name, contact information and precise ownership interest (including the number of shares and percentage of total) for each individual or entity holding any type of shares or other equity stake in Prevoty, Inc.” The “Instructions” in the interrogatories provided that “[a]ll requests contained in the interrogatories to identify a person, whether a natural person or organization, are to be answered by providing sufficient information to enable the undersigned to contact the person by telephone, by mail and to serve legal documents on the person including that person's full name, title (if any), address and telephone number.”
On October 23, 2015, plaintiffs sent a letter to defendants expressing disappointment with defendants' position on early disclosures. Among other things, the letter stated that “We are in the process of subpoenaing all investors in Prevoty. These individuals may also need to be added as parties. We need their names and contact information. Please let me know if you can provide that.” (Dkt. 85-1 at 3 of 4.)
Plaintiffs received Prevoty's response to the interrogatories on November 23, 2015. (PX 2.) The response comprised only objections. The next day plaintiffs commenced the meet and confer procedure required by the Local Rules by sending defendants a letter requesting a meeting on December 1, 2015. Over the next six days, plaintiffs sent two additional letters and/or emails to defense counsel. Plaintiffs received no response to any of their letters and defendants' counsel did not appear for the conference on December 1. After additional letters and a telephone message threatening to file the motion to compel, defendants agreed to confer by telephone on December 4, 2016. During the telephone conference, defendants maintained that the information sought was irrelevant because plaintiff Agora did not have capacity to sue and the information solely related to Agora's claims. Apparently, neither party discussed the use of the word “contact” in the context of the interrogatory or the intended definition of the word.[8]
*6 On December 21, 2015, plaintiffs filed their Motion #3 to compel defendants to provide a complete answer to Interrogatory No. 2. The Court granted the motion on January 25, 2016.
Plaintiffs filed the First Sanctions Motion on March 29, 2016. Plaintiffs stated that defendants had failed to provide contact information sufficient to enable service of process on Prevoty's investors. Defendants contended in their response to the Court's order to show cause that they had provided the best address information available to them.
Plaintiffs submitted evidence at the June 1, 2016 hearing that demonstrated that, contrary to what defendants had been contending, defendants in fact had investor address information that they had not provided to plaintiffs. Specifically, plaintiffs demonstrated that:
1. Prevoty keeps an up-to-date list of its investors and their physical address to make sure the corporate records are up to date and for securities laws purposes (PX 103);
2. Prevoty redacted contact information for the following investors from documents it produced to plaintiffs on February 24, 2016 (which was after the Court granted plaintiffs' motion to compel a full and complete answer to Interrogatory No. 2): Paige Craig, Double M Partners, L.P., Launchpad LA Fund II, L.P., Michael, Stern, Plus Capital, L.P., and Eric Hahn (PX 87-89);[9]
3. Prevoty's CEO routinely communicated with the investors and was not averse to asking for address information from investors when he wanted to (PX 93, 98, 103, and 109);
4. One investor asked Prevoty's CEO to provide “legal” with its address to give to plaintiffs, to no avail (PX 93).
Plaintiffs also proffered that defendant Bellanger would testify that many of the investors were Prevoty's board members and could have been located easily by Prevoty. (HT at 139:1-21.) Evidence supporting the proffer ultimately became unnecessary when defendants' counsel acknowledged that defendants had address information for at least some of the investors that it did not provide to plaintiffs because, based on their interpretation of the word “contact,” counsel decided that it would be appropriate to provide contact information for an attorney ostensibly representing the investor instead. (HT at 153:24-155:25.)
SCOPE OF REVIEW
*7 Federal Rule of Civil Procedure 37(b)(2) provides, in part:
(A) For Not Obeying a Discovery Order. If a party or a party's officer, director, or managing agent ... fails to obey an order to provide or permit discovery, including an order under Rule 26(f), 35, or 37(a), the court where the action is pending may issue further just orders. They may include the following:
(i) directing that the matters embraced in the order or other designated facts be taken as established for purposes of the action, as the prevailing party claims;
(ii) prohibiting the disobedient party from supporting or opposing designated claims or defenses, or from introducing designated matters in evidence;
(iii) striking pleadings in whole or in part;
(iv) staying further proceedings until the order is obeyed;
(v) dismissing the action or proceeding in whole or in part;
(vi) rendering a default judgment against the disobedient party; or
(vii) treating as contempt of court the failure to obey any order except an order to submit to a physical or mental examination.
....
(C) Payment of Expenses. Instead of or in addition to the orders above, the court must order the disobedient party, the attorney advising that party, or both to pay the reasonable expenses, including attorney's fees, caused by the failure, unless the failure was substantially justified or other circumstances make an award of expenses unjust.
Fed. R. Civ. P. 37.
Only two conditions are required to put into consideration the array of sanctions specified in Rule 37(b): (1) a prior order and (2) a violation of the order. A failure by a party to comply with a court order is sanctionable under this rule, regardless of the reasons. See Societe Internationale Pour Participations Industrielles Et Commerciales, S. A. v. Rogers, 357 U.S. 197, 208, 78 S. Ct. 1087, 1094, 2 L.Ed. 2d 1255 (1958) (“Whatever its reasons, petitioner did not comply with the production order. Such reasons, and the willfulness or good faith of petitioner, can hardly affect the fact of noncompliance and are relevant only to the path which the District Court might follow in dealing with petitioner's failure to comply.”); see also David v. Hooker, Ltd., 560 F.2d 412, 420 (9th Cir. 1977) (“[I]n view of the possibility of light sanctions, even a negligent failure [to obey an order] should come within [Rule 37].”).[10]
*8 Given that the Court already has indicated that it is not considering civil contempt at this time, it will not address the requirements for such a finding.[11] With respect to the sanctions under consideration, except for the sanction of dismissal, an imposition of sanctions under Rule 37(b)(2) does not require willfulness, fault, or bad faith. Yeti by Molly, Ltd. v. Deckers Outdoor Corp., 259 F.3d 1101, 1106 (9th Cir. 2001). The Court has wide discretion to select an appropriate sanction, but the sanction should be targeted to address the misconduct or prejudice resulting from the misconduct. With respect to monetary sanctions, once a violation is demonstrated, the disobedient party bears the burden of showing that the failure was justified or that special circumstances make an award of expenses unjust. Apple Inc. v. Samsung Elecs. Co., Ltd., 2012 WL 2862613, at *1-2 (N.D. Cal. July 11, 2012).
The Ninth Circuit has set forth five factors to be considered by the court in selecting the appropriate sanction: “(1) the public's interest in expeditious resolution of litigation; (2) the court's need to manage its dockets; (3) the risk of prejudice to the party seeking sanctions; (4) the public policy favoring disposition of cases on their merits; and (5) the availability of less drastic sanctions.” Valley Engineers Inc. v. Electric Engineering Co., 158 F.3d 1051, 1057 (9th Cir. 1998).
As explained in Apple:
The Ninth Circuit has held that a party's failure to produce documents as ordered is considered sufficient prejudice to establish sanctionable conduct. Moreover, in the Ninth Circuit prejudice from unreasonable delay is presumed.
Apple, 2012 WL 2862613, at *6.
Factors 3 and 5 become particularly important in considering whether to impose issue, evidence, or case terminating sanctions.
ANALYSIS
A. Issue Two: Metadata and Formatting Information for ESI
(i) The Order
On March 16, 2016, the Court granted Motion #6 compelling defendant Prevoty to produce, in pertinent part, “the metadata and formatting information that plaintiffs seek.” (Dkt. 111 at 2 of 3.) Specifically, the Order provided, in pertinent part:
IT IS THEREFORE ORDERED THAT:
....
(2) Responding Parties provide the metadata and other formatting information that plaintiffs seek. The parties are ordered to meet, in person or by telephone, within 10 days of the date of this order to discuss and agree on the protocol for the production of metadata and formatting information. Both sides thereafter will be expected to comply with the agreed protocol in producing documents.
(Dkt. 111 at 2 of 3.)
(ii) Violation of the Order
Plaintiffs demonstrated that out of 2,785 documents produced by defendants: 2,322 contained no custodian information; and 681 had no intelligible date information across the Date Created, Date Sent, or Date Received fields. Plaintiffs further demonstrated that every electronically created document should have a “created date” associated with the document, except emails. An email would have a “date sent” or “date received” associated with it, but not necessarily a “date created” reference. Plaintiffs also demonstrated that a number of date fields contained unintelligible information.[12]
*9 Defendants did not directly contradict plaintiffs' showing. Rather, defendants contended that their production did not violate the order because: (1) the order did not require them to provide custodian information; (2) the order did not require them to provide any metadata for documents produced before the date of the order; and (3) they had not deleted any metadata from the documents produced.
1. Whether the Order Required Custodian Information
To fully understand defendants' contention, a review of the documents submitted in connection with the motion to compel is in order. On February 16, 2016, plaintiffs filed the Joint Stipulation re Plaintiffs' Motion to Compel Production of Documents for which there Are No Objections. (Dkt. 101.) The motion addressed three groups of documents, the third of which is relevant to the instant proceedings. Plaintiffs summarized their position with respect to this third group of documents as follows:
In short, Plaintiffs seek an order requir[ing] [Defendants] to re-produce their documents in usable form and in accordance with Fed. R. Civ. P. 34(b)(2)(E)(ii). The production should be in searchable format with document breaks separating discrete documents, as well as including a load file or table that contains basic document metadata (including confidentiality designation, custodian, file path, file name, date, document family relationships, sender and recipient data for emails, and extracted or OCR text), or other information about the individual documents. The image quality of the documents should not be degraded from the original form.
(Dkt. 101 at 160-61 of 165.)
Defendants' portion of the Joint Statement did not quibble with plaintiffs' request except to state that only a few documents were affected and that they should not be required to produce again all 8,200 pages of documents. (Dkt. 101 at 161 of 165.) Defendants also stated that the motion would be moot by the time it was heard because they intended to fix the production problems pointed out by plaintiffs. (Dkt. 101 at 163 of 165.)
The Court ordered the parties to meet and confer and file a status report prior to the hearing. On March 1, 1016, the parties filed their status report. With respect to the metadata issue, plaintiffs argued the following in the status report:
Defendants' production of metadata and ESI also remains incomplete. Other than document page break information, Defendants' productions still do not include any of the metadata requested by Plaintiffs and discussed in the pending motion to compel. Initial review also shows that a number of emails were produced without attachments. Defendants' load files do not consistently identify whether documents are produced under confidential legends, particularly in the latest production received on February 25, 2016 which contains a mix of confidential and non-confidential documents. Once again, the productions consist of unsearchable graphics files. There is no metadata information to identify basic information such as the date of the document, the custodian or the directory it was collected from, and basic header information for emails. This information is particularly important in this case, where the date of particular documents and what the documents were prepared for (which would come from file path and file name) is critical.
(Dkt. 107 at 5 of 13.)
Defendants argued that the motion was moot because defendants had provided everything plaintiffs were asking for. (Dkt. 107 at 9-11 of 13.)
*10 The Court granted the motion on February 16, 2016. The Order required defendants to provide the “metadata and other formatting information that plaintiffs seek.” Presumably, the metadata and formatting information sought by plaintiffs was that which was identified in the Joint Stipulation and the status report. However, to ensure that both parties understood exactly what would be required, the Court ordered the parties to meet, discuss, and agree on a protocol for the production. To encourage both sides to be reasonable in their negotiations for a protocol, the Court also made clear that whatever protocol was adopted would be applicable to both sides in any future productions.
Plaintiffs' Exhibits PX 35 and PX 38 comprise plaintiffs' proposal for the ESI protocol and defendants' response. PX 35 includes a detailed description of what should be included in a load file and in what format, including a list of fields to be populated. Among the fields listed are Designation (i.e., whether the document is marked “Confidential”), Custodian, Filepath, Filename, Title, Author, a number of date fields, etc. PX 38 is an e-mail from defendants' counsel to plaintiffs' counsel which states, in its entirety:
Following up on our call, it appears that we are in general agreement, subject to the caveats discussed, such as metadata fields being gathered where available through the use of standard extraction procedures at normal costs. In particular, we note that we do not necessarily have file path information, and are not committing to provide it. With respect to redactions, I believe that issue will be addressed by way of a field indicating whether a document contains redactions.
(PX 38.)
There was no testimony as to any particular “caveats discussed,” other than the fact that the e-mail used the term.
Testimony at the hearing was uncontroverted that “custodian information” related to who maintained the document and was not native to the document itself. Thus, custodian information always has to be added to the load file and is not automatically extracted from the native file. Defendants contended at the hearing that they did not need to include custodian information in the load file because of their statement in the confirming e-mail that the agreement was “subject to the caveats discussed, such as metadata fields being gathered where available through the use of standard extraction procedures at normal costs.” The Court does not agree.
First, defendants seemingly are taking the position that by “standard extraction procedures,” they meant all load fields would be limited to what metadata is contained within the native file. Under this interpretation, numerous fields such as bates numbers, whether the document contains redactions, whether the document is marked confidential, etc., would be excluded. Surely, had the parties intended this result, the limitation would have been more clearly set forth. The phrase chosen by defendants more naturally suggests that defendants would not review documents to obtain information (whether relating to author, date, or whatever) from the document that was not contained in the metadata with the native file or was otherwise unavailable. The suggestion that the phrase applied to every field in the load file (as opposed to fields regarding intrinsic document information or unavailable information) is not reasonable.
Secondly, to the extent defendants intended all along to exclude custodian information, the phrase used in the confirming e-mail was misleading. Custodian information should always be available, because presumably the party producing the document knows from where it was obtained. The example defendants provided to explain what the phrase meant, “[i]n particular, we note that we do not necessarily have file path information, and are not committing to provide it,” describes a field that has no relation to custodian information. If defendants wanted to exclude custodian information they could have and should have been more express about their desire, particularly since the motion that the Court granted had specifically requested custodian information.
*11 Thirdly, despite a number of “meet and confer” sessions attended by the parties and numerous filings with the Court, defendants never raised with the Court their position that “custodian information” was not required by the order until the evidentiary hearing.
Therefore, the Court rejects defendants' contention that they did not violate the order because the order did not require the production of custodian information.
2. Whether the Order Required Defendants To Provide Metadata for Documents Produced Before the Date of the Order
Defendants contend that the Order only required them to produce the required metadata and formatting information for ESI that was produced after the date of the order. According to defendants, plaintiffs did not segregate any of the productions according to when they were made and, thus, have failed to demonstrate that the missing metadata related to any document produced after the date of the order. The Court finds this argument to be utterly frivolous.
The structure of the order is as follows: first, the Court orders defendants to provide the metadata and formatting information plaintiffs requested; second, the Court orders the parties to agree on a protocol for the production; and third the Court orders that in the future both parties have to comply with the protocol. Nothing in the order suggests that the first command of the order is somehow nullified by the directive that both parties comply with the protocol in the future. Moreover, such an interpretation makes no sense given that plaintiffs' motion was based on defendants' failure to provide metadata for the ESI defendants had produced. Defendants make no attempt to explain why they should be given a pass on their obligation to provide metadata precisely for the ESI comprising the subject matter of the motion even though the motion was granted. In addition, defendants had not yet failed to provide metadata for a future production; they had failed to provide it for their past productions and the Court found that they should provide it.
Accordingly, the Court rejects defendants' contention that plaintiffs failed to demonstrate a violation of the Order because they did not establish which documents had been produced after the order. To the extent defendants withheld metadata for past productions, they violated the Order.
3. Defendants' Testimony that They Did Not Delete Metadata
Defendant Bellanger testified that he turned over to his counsel all of defendants' documents for counsel to determine which documents needed to be produced. Moreover, he turned the documents over in native format and did not delete any metadata from the documents. Defendants' e-discovery vendor testified that he did not delete any metadata from the documents and that he populated the fields in the load files he produced which defendants' counsel told him to populate, to the extent he could extract the data from the documents. The e-discovery vendor did not recall which fields defense counsel told him to populate. He also testified that he does not automatically populate all fields for which a document contains metadata; he only populates those fields he is directed to by his contractor, in this case, defense counsel. This testimony does not assist defendants.
*12 First, plaintiffs did not contend that defendants stripped metadata. Plaintiffs contended that defendants had failed to populate a number of fields that, in the absence of some explanation, one would expect to be populated (e.g., date created for ESI other than e-mail and date sent or received for electronically stored e-mail). Defendants made no attempt to explain why such information was missing from the load files.
In addition, plaintiffs contended that defendants had not specified custodian information in the load files, not that defendants had destroyed custodian information.
Finally, plaintiffs demonstrated that defendants had produced load files with garbled date information. Despite plaintiffs' requests that their e-discovery vendor meet with defendants' e-discovery vendor to resolve incompatibilities, defendants neither agreed to such a meeting nor took any action to make their production compliant with the protocol.
Thus, the Court rejects defendants' contention that they did not violate the Order because they did not strip metadata.
4. Plaintiffs Have Sufficiently Established a Violation
It is undisputed that defendants did not provide custodian information. It is undisputed that date information is missing from a large number of documents for which it should, in the ordinary course, be maintained with the native files. It is undisputed that many of the date fields produced to plaintiffs are garbled and that defendants neither accepted plaintiffs' offer to have the e-discovery vendors work out any incompatibilities nor took any action to come into compliance with the Order. In this regard, defendants have demonstrated that at least some of the garbled dates are not garbled in their files. Had defendants bothered to try, it appears that, by exercising a modicum of cooperation, they could have resolved the problem with plaintiffs.
Therefore, the Court concludes that plaintiffs have sufficiently established a violation of the Court's Order.
B. Issue One: Interrogatory No. 2
(i) The Order
On January 1, 2016, the Court issued its Order Granting Motion to Compel Answer to Interrogatory No. 2. (Dkt. 90.) The Order states, in pertinent part:
Defendant Prevoty is ordered to provide the information responsive to this interrogatory within 10 days of the date of this order.
(Id. at 2.)
The interrogatory requested, among other things, that defendants provide contact information for all of Prevoty's investors.
(ii) Violation of the Order
Plaintiffs contend that defendants violated the order by failing to provide address information for the investors and, in some cases, redacting investor address information from documents produced to plaintiffs after the Court's order. Defendants admit that they did not provide address information, but contend that the order did not require it to provide the address of the investors. Defendants contend that by asking for “contact information,” the interrogatory only requested that contact information for a lawyer or other representative or agent of the investory be provided.
In order to put the competing contentions in the proper context, a review of the filings and argument of the parties from the filing of plaintiffs' motion to compel up to the evidentiary hearing is required.
In the Joint Stipulation accompanying the motion to compel, defendants stated that they had now agreed to answer the interrogatory because plaintiffs were claiming that investors were potential witnesses. (Joint Stipulation (Dkt. No. 70) (“JS re Motion #3”) at 5-6 of 19.) In the Joint Stipulation, plaintiffs argued that they needed the information requested because some of the “shareholders [of Prevoty] may need to be added as defendants.” (JS re Motion #3 at 7.) In their Supplemental Memorandum in support of the motion to compel, plaintiffs argued that a supplemental response served by defendants was still deficient because, among other things, “Prevoty [ ] fails to provide the contact information for any stakeholder (i.e., where they [sic] can be served); instead, Prevoty only provides contact information for their lawyer.” (Plaintiffs' Supplemental Memorandum (Dkt. 84) at 3 of 8.)
*13 Defendants made no contention with respect to the meaning of “contact information,” did not address plaintiffs' complaint that defendants only identified lawyers for the investors, and specifically did not reveal their hidden interpretation that the term did not mean information to enable plaintiffs to contact the investors, but rather information regarding someone who could relay a message to the investors.
The Court unequivocally granted the motion in a written order dated January 25, 2016. Although the Court was not aware that defendants had their own interpretation of “contact,” the order impliedly rejected the viability of such an interpretation by specifically referencing plaintiffs' intent to use the contact information in adding some of the investors as defendants: “[Notwithstanding defendants' designation of the information as ‘Confidential,’] [t]o the extent plaintiffs seek to pursue claims against anyone identified in the answer [to Interrogatory No. 2], plaintiffs are not precluded from identifying the individual(s) (or entities) in an amended pleading along with such allegations as are necessary to state a claim, which may or may not require the disclosure of further facts included in the interrogatory answer.” (Order Granting Motion #3 (Dkt. 90) at 2 of 2.)
Defendants served a Second Supplemental Response to the interrogatory on February 4, 2016, ostensibly in response to the Court's order. However, this response provided an attorney's name as the contact information for every investor other than the individual defendants. After plaintiffs complained, defendants served a Third Supplemental Response on February 12, 2016. The Third Supplemental Response provided what appears to be addresses for a number of the investors, but still listed the attorney instead of an address for at least one individual investor and a number of limited partnerships and other entities. (PX 5.)
Plaintiffs filed the First Sanctions Motion on March 29, 2016. Plaintiffs stated that defendants had failed to provide contact information sufficient to enable service of process on Prevoty's investors. The Court issued an Order to Show Cause on the following day providing defendants ten days within which to demonstrate why their answer should not stricken for failure to comply with Court orders.
Defendants responded to the Order to Show Cause by submitting a written response (“OSC Response”) along with the declarations of Brian D. Ledahl and Julien Bellanger. In the OSC Response, defendants stated that “[i]n fact, Prevoty provided the best and most current address information it could.” (Dkt. 123 at 2 of 19.) The Court assumed (as it later turned out, incorrectly) that this statement related to address information for the investors. The OSC Response also contained the statement, “Prevoty's responses contained the best and most current address information Prevoty had for contacting the shareholders.” (Id. at 4 of 19.) The Court also assumed (again, as it later turned out, incorrectly) that the statement referred to address information for the investors. The OSC Response continued with statements of how difficult it was to obtain addresses for investors because Prevoty does not communicate with its investors by traditional mail to a physical address. (Id.) The Court interpreted these statements (again, as it later turned out, incorrectly) as suggesting that defendants had attempted to find physical address information for the investors and met with only limited success.
*14 The OSC Response also stated that defendants had identified counsel as a point of contact because of ethical concerns. (Id. at 5-6 of 19.) It is not particularly clear what was causing defendants to have ethical concerns. Nonetheless, it appeared to the Court at the time that defendants were attempting to explain why they originally had provided the address of a person who could be contacted to relay a message to the investors as opposed to providing addresses for actually contacting the investors, but that after plaintiffs had complained about defendants' response, they had attempted to obtain actual addresses for the investors and had encountered the difficulties described above. The OSC Response even went so far as to state that defendants should not be required to seek out address information if they do not possess it. The Court interpreted this statement (also incorrectly) as implying that defendants had provided the address information that they did have. It later turned out that defendants had not only better, but actual address information for the investors. Significantly, defendants did not state in their OSC Response that they did not provide address information for the investors because they did not think it was required by the Court's order.
Based on the Court's understanding of the OSC Response, the Court discharged the OSC.
The Court held a hearing on various discovery matters on May 10, 2016. During that hearing the Court scheduled the evidentiary hearing on plaintiffs' motions for sanctions for June 1, 2016. In discussing whether there were any factual issues that needed to be decided, the Court stated its understanding that in their response to the Order to Show Cause, “defendants said they gave [plaintiffs] all the information they had—that they didn't have any further information.” (Dkt. 147 at 14:12-15.) Defendants' counsel said nothing to disabuse the Court of its misunderstanding. On the contrary, defendants' counsel reaffirmed the Court's understanding: “we also provided a factual declaration from Mr. Bellanger who is the chief executive officer of Prevoty, the defendant to whom those interrogatories were directed, indicating that these are the—this is the information we have.” (Id. at 18:5-8.)[13]
It was not until plaintiffs had shown that defendants had redacted the investors' addresses from documents produced after the Court Order and defendants' witnesses were about to be cross-examined that defendants finally revealed that they thought the Order did not require them to provide actual addresses for the investors. This timing smacks of gamesmanship on defendants' part. Given the number of meetings engaged in by the parties ostensibly to resolve the issue both before and after the Court's Order and the several Court hearings at which time the issue was broached, it is inconceivable that defendants, had they been acting in good faith, would not have made known that the dispute did not revolve around difficulty in obtaining addresses, but in defendants' unilateral interpretation of a word in the interrogatory. The Court finds that in the context of the interrogatory, the words “contact information” for an investor mean sufficient information to actually contact the investor, not the investor's attorney. Therefore, plaintiffs have sufficiently demonstrated that defendants violated the Order.
C. Issues Four and Five: the Appropriate Sanction
*15 Having found a violation of the Court's orders, the Court must decide the appropriate sanction. The risk of prejudice suffered by plaintiffs and the availability of lesser sanctions are critical to the imposition of evidence, issue or terminating sanctions. Here, plaintiffs surely suffered delay and expense in trying to obtain the discovery they are entitled to under the Federal Rules. However, in that the discovery cut-off date has been extended to late December, the Court cannot conclude that any sanction other than monetary sanctions is appropriate at this point.
That conclusion is not to suggest that defendants' conduct is not troubling to the Court. At the hearing it became apparent that defendants had wasted not only plaintiffs', but the Court's time by taking incorrect and unreasonable interpretations of the Court's orders. Defendants' interpretations such as they were could and should have been revealed and dispelled at the commencement of motion proceedings, not only after numerous meetings, hearings, and finally an evidentiary hearing.
Defendants have shown absolutely no interest in cooperating with plaintiffs in discovery. On the contrary, it seems that defendants have tried every tactic at their disposal to delay and impede plaintiffs' discovery efforts. A prime example is defendants' failure to allow the e-discovery vendors to meet to figure out why the load file date fields were garbled when plaintiffs imported them into plaintiffs' application. Instead of insisting the problem was not on their side and engaging in numerous meetings with counsel, followed by motion practice, and ultimately an evidentiary hearing, defendants could have easily resolved the problem with the slightest amount of cooperation.
In order to impose monetary sanctions the Court need not take the step of finding defendants' conduct to be willful. Even though, given the state of the record, it is difficult to believe that defendants' have been acting in good faith, the Court will not make a finding at this time that defendants' conduct was willful. To be sure, given the revelation by defendants that they are narrowly (albeit unreasonably) interpreting the orders, they appear still not to be in compliance. With respect to any continued failure to comply with the Court's orders after all the process that has been afforded to defendants, a compulsory component of any order on plaintiffs' motions for sanctions is appropriate. The Court may not stand by while a litigant continues to flout a court order. Therefore, the Court will issue a Report and Recommendation recommending that defendants' answer be stricken and their default entered if they do not come into compliance with the Court's orders within 20 days hereof. If necessary, defendants must work with plaintiffs' e-discovery vendor in order to ensure the metadata and formatting information is provided to plaintiffs in a workable form. The Court is not changing the protocol, except as the Court rejected defendants' interpretation of it above. To the extent the native files do not contain the required information as metadata (except for such fields that by their nature are not kept as metadata in the native file), defendants do not need to examine the contents of the file to manually input such information into the load file.
With respect to monetary sanctions, the Court finds that defendants' failure to comply with the Court's orders was without substantial justification. Therefore, plaintiffs should be reimbursed for all the fees and expenses they incurred in trying to enforce the Court's orders dated January 25, 2016 and March 16, 2016.[14] In addition, plaintiffs should be reimbursed for any fees and expenses they incurred after the entry of the order that resulted from defendants' inadequate responses (e.g., vendor fees incurred in trying to fix the load files produced by defendants, etc.). Because plaintiffs' fee computations are distributed throughout the record and defendants have not had the opportunity to respond to plaintiffs' summation of such fees in the July 29, 2016 Declaration of Dennis Ma, the Court directs plaintiffs to file an itemization of their recoverable fees and expenses. In addition, plaintiffs should explain the basis for any expenses. Plaintiffs' filing is due within ten days of the date of this order. Defendants shall have ten days thereafter within which to object to any fees and expenses they contend either are unreasonable or do not fall within the Court's order herein for plaintiffs' recovery of fees and expenses.
*16 IT IS SO ORDERED.
Footnotes
In their Second Amended and Supplemental Complaint, filed June 9, 2016, Plaintiffs have added other defendants, including a former consultant for Agora, certain investors in Prevoty, and advisors to Anand and Bellanger.
In their portion of the Joint Stipulation on Motion #6, plaintiffs stated: “Plaintiffs also move to compel re-production of Defendants' previously produced documents—as well as any future production—in a usable form that complies with Fed. R. Civ. P. 34(b)(2)(E)(ii). Thus far, Defendants have produced roughly 8000 pages, but that production is largely unusable. The deficiencies include ... omission of critical metadata. Again, Defendants acknowledge that their production is non-compliant, and they agreed to re-produce the documents in usable form, as requested by Plaintiffs. Despite that promise, Defendants have not re-produced the documents—and refuse to provide a timetable for doing so.” (Dkt. 101 at 6 of 165.)
Although the order issued on May 24, 2016, it was not placed on PACER and made available to counsel until May 31, 2016, because of a processing error.
Although Issue No. 4 was largely left to post hearing argument, the evidence submitted with respect to Issue Nos. 1 and 2 informs much of the argument on Issue No. 4. With respect to the production of source code, the Court found that there was no evidentiary issue involved. Therefore, the Court will consider the adequacy of defendants' conduct with respect to complying with the order to produce source code at a later time.
Post-hearing, defendants filed the Declaration of Jean Y. Rhee in Support of Defendants' Objections and Responses to Evidence Admitted by Plaintiffs During June 1, 2016 Evidentiary Hearing (“Rhee Dec.”). (Dkt. 175.) The Rhee Dec. provides responses to seven of the approximately 19 documents whose load file information was individually reviewed by Ms. Quatinetz at the hearing. Plaintiffs object that Ms. Rhee did not testify at the hearing and therefore was not subject to cross-examination. However, the Court expressly permitted defendants to submit post-hearing evidence to the extent it responded to “new evidence” presented at the hearing. Although the Court does not agree that specific examples of the conduct forming the basis for plaintiffs' motion constitutes “new evidence,” the Court will accept defendants' responding evidence.
Nonetheless, the Rhee Dec. neither refutes plaintiffs' evidence of inadequacies in defendants' production nor provides an explanation for such inadequacies. In sum, Ms. Rhee testifies that she reviewed a Concordance database maintained by defendants' attorneys and, with respect to the seven documents she identifies, she (1) generated a metadata report from the database; (2) searched for the entry of the document in Plaintiffs' Exhibit 63, and, in some cases, (3) opened the native file of the document from the Concordance database and reviewed the properties page of the file.
Attached as exhibits to the declaration are screen shots of some of the results of Ms. Rhee's search results. Because defendants never produced the Concordance database, Ms. Rhee's statements with respect to that database are irrelevant. The screen shots of the entries in plaintiffs' Exhibit 63 revealed the following:
Ex. 74 (DEF000671): Custodian field blank, Date Created field “10/19/1998”;
Ex. 80 (DEF006380-90): Custodian field blank, Date Created field “6/20/02/1”;
Ex. 86 (DEF008376-86): Custodian field blank, Date Created field “9/25/2015”;
Ex. 91 (DEF009100-01): Custodian field blank, Date Created field “1/20/10/0”;
Ex. 95 (DEF011093): [no screen shot of Ex. 63];
Ex. 96 (DEF011367): [no screen shot of Ex. 63];
Ex. 97 (DEF011387): [no screen shot of Ex. 63].
These screen shots are consistent with the testimony at the hearing.
Finally, in connection with four of the exhibits, Ms. Rhee attached screen shots of the properties page of the native file of the referenced document. The properties pages reveal more metadata than was included in the produced load files. Apparently, defendants are implying that plaintiffs should have gone to each native file and configured their own load file therefrom. In a responding declaration, Ms. Quatinetz testified that such an undertaking is not easily performed. In any event, neither the Court's order nor the protocol required such an undertaking.
Mr. Bellanger testified that he provided defense counsel with “access to all our e-mails and hard drives and repositories.” Hearing Transcript (“HT”) at 162:12-13.
HT at 162:22-24.
As shown below, at the evidentiary hearing defendants took the position that they interpreted the words “contact information” for an investor not to mean address information, but rather a representative or agent who could be contacted to relay a message to the investor. Therefore, according to defendants, they complied with the order by providing the name and address of an attorney who they thought represented the investors (although it turned out that defendants were mistaken and the attorney did not actually represent the investors).
In Defendants' Responses to New Evidence Offered by Plaintiffs During June 1, 2016 Evidentiary Hearing, defendants identify two exhibits comprising documents produced to plaintiffs containing some investor address information that was not redacted. (See Def. Ex. 15 and 16.) Of the 37 investors listed in the answer to Interrogatory No. 2, Def. Ex. 15 contains address information for 20 of them and for one investor not listed in the answer to Interrogatory No. 2. Def. Ex. 16 contains address information for an additional seven of the 37 investors listed in the answer to Interrogatory No. 2. However, plaintiffs point out that a copy of the document marked as Def. Ex. 15 was not produced to plaintiffs until April 5, 2016 (after the Court's March 20, 2016 Order to Show Cause) and a copy of the document marked as Def. Ex. 16 was not produced to plaintiffs until May 10, 2016. (Dkt. 210 at 6 of 9.) Therefore, these documents do not refute plaintiffs' assertions that defendants purposely hid the investor address information from plaintiffs even after the Court's January 25, 2016 order compelling defendants to provide such information.
Procedurally, defendants are entitled to notice and an opportunity to be heard before sanctions may be imposed against them. Defendants have made several assertions that they did not receive proper notice because plaintiffs introduced or relied on evidence different from that contained in their motions for sanctions. However, defendants not only had the benefit of plaintiffs' motions, but also the Court's order listing the issues to be considered at the hearing and, after hearing all the testimony and seeing the exhibits, the opportunity to submit any additional evidence and argument they wished after the hearing. Thus, defendants were afforded both ample notice and ample opportunity to be heard.
Therefore, defendants' citation to Dual-Deck Video Cassette Recorder Antitrust Litig., 10 F.3d 693, 695 (9th Cir. 1993) for the requirements for a finding of civil contempt is inapposite. The Court relies on authority relating to Rule 37 discovery sanctions.
Plaintiffs also demonstrated that fields for redacted documents were not consistently filled in. Defendants objected that plaintiffs' original motion for sanctions had only complained about the custodian and date fields. If nothing else, this testimony was consistent with defendants' cavalier attitude regarding their obligations imposed by the Order. In any event, plaintiffs' motion for sanctions stated that defendants had failed to provide the metadata they were required to provide and set forth as examples the failure to provide custodian information and failure to provide date information. The inconsistent redaction entries were not mentioned. Although the motion certainly was broad enough to include any of defendants' failures to provide all the required metadata, the hearing focused primarily on custodian and date information. Moreover, the violations of the order with respect to custodian and date information are so extensive that the Court finds it unnecessary to analyze further failures on defendants' part. Therefore, although the Court finds the objection to be without merit, it nonetheless confines the analysis herein to defendants' failures with respect to custodian and date information.
Defense counsel followed this statement with the following comment: “There is I think a—I'll call it an interpretative disagreement about the nature of the request, the nature of what was requested in the motion with respect to contact information, and the fact that many of the individuals we're talking about are represented by counsel.” (Id. at 18:9-13.) In retrospect, this statement is consistent with defendants' eventual explanation that they understood “contact information” for the investors not to mean information on how to contact the investors but information on whom to contact to relay a message to the investors. At the time of the hearing, however, the statement did nothing to elucidate for the Court what defendants' contention was. The Court still labored under the misapprehension that defendants were taking the position that they had provided to plaintiffs the information that was available to them.
Because the Court will make a determination regarding the Court's March 14, 2016 order at a later time, the Court is not at this time awarding any fees with respect to such order. The Court will determine what sanctions, including but not necessarily limited to fees, if any, are appropriate at the time the Court makes a determination as to the March 14, 2016 order. In addition, the Court is not awarding any fees at this time incurred by plaintiffs' in obtaining the orders that comprise the subject matter of this action. Plaintiffs have requested, and the Court is considering, what, if any, fees should be awarded in connection with plaintiffs' various motions to compel pursuant to plaintiffs' pending request for ruling re sanctions.