Sinclair Wyo. Ref. Co. v. A&B Builders, Ltd.
Sinclair Wyo. Ref. Co. v. A&B Builders, Ltd.
2016 WL 11494744 (D. Wyo. 2016)
November 4, 2016
Rankin, Kelly H., United States Magistrate Judge
Summary
The Court ordered the production of approximately 200 folders of ESI identified by the Fisher Defendants as potentially relevant to the litigation. CB&I Defendants filed a Motion for a Protective Order instead of producing the identified folders, but the Court found that the Stipulated Discovery Order did not shield them from disclosing ESI not identified through the stipulated search protocol.
Additional Decisions
SINCLAIR WYOMING REFINING COMPANY, a Wyoming corporation, Plaintiff,
v.
A&B BUILDERS, LTD., a Texas limited partnership; MATRIX ENGINEERING, LTD., a Texas limited partnership; HOWE-BAKER ENGINEERS, LTD., a Texas limited partnership; APPLIED CONTROL EQUIPMENT, LLC, a dissolved Colorado limited liability company nka APPLIED CONTROL EQUIPMENT, LLLP, a Colorado limited liability limited partnership; INSTRUMENT & VALVE SERVICE COMPANY, a Delaware company; FISHER SERVICE CO. dba FISHER CONTROLS INTERNATIONAL, INC., a Delaware corporation nka FISHER CONTROLS INTERNATIONAL, LLC, a Delaware limited liability company, and EMERSON PROCESS MANAGEMENT LLLP, a Delaware limited liability limited partnership, Defendants
v.
A&B BUILDERS, LTD., a Texas limited partnership; MATRIX ENGINEERING, LTD., a Texas limited partnership; HOWE-BAKER ENGINEERS, LTD., a Texas limited partnership; APPLIED CONTROL EQUIPMENT, LLC, a dissolved Colorado limited liability company nka APPLIED CONTROL EQUIPMENT, LLLP, a Colorado limited liability limited partnership; INSTRUMENT & VALVE SERVICE COMPANY, a Delaware company; FISHER SERVICE CO. dba FISHER CONTROLS INTERNATIONAL, INC., a Delaware corporation nka FISHER CONTROLS INTERNATIONAL, LLC, a Delaware limited liability company, and EMERSON PROCESS MANAGEMENT LLLP, a Delaware limited liability limited partnership, Defendants
Civil No. 15-CV-91-ABJ
United States District Court, D. Wyoming
Filed November 04, 2016
Counsel
Brad W. Breslau, Cheri L. MacArthur, Pro Hac Vice, Richard R. Rardin, Cozen O'Connor, Denver, CO, Geoffrey D. Farnham, Pro Hac Vice, Charles R. Tuffley, Pro Hac Vice, Denenberg Tuffley PLLC, Southfield, MI, Kevin P. Caraher, Pro Hac Vice, Cozen O'Connor, Chicago, IL, Mark T. Mullen, Pro Hac Vice, David J. Walton, Pro Hac Vice, Cozen O'Connor, Philadelphia, PA, Thomas M. Regan, Cozen O'Connor, San Diego, CA, Defendant, Bennett J. Lee, Pro Hac Vice, Garrett E. Dillon, Pro Hac Vice, Nicholas A. Merrell, Pro Hac Vice, Steven M. Wheat, Pro Hac Vice, Vincent Sebastinelli, Pro Hac Vice, Varela Lee Metz & Guarino LLP, San Francisco, CA, Steven F. Freudenthal, Freudenthal & Bonds, Cheyenne, WY, for Plaintiff.Janet B. Martin, Pro Hac Vice, Jay Scott Lasater, Pro Hac Vice, Leif Andrew Olaf Distad, Lasater & Martin PC, Highlands Ranch, CO, David F. Evans, Hickey & Evans, Cheyenne, WY, Douglas H. Fleming, Pro Hac Vice, James E. Breitenbucher, Pro Hac Vice, Laura P. Hansen, Pro Hac Vice, Fox Rothschild LLP, Seattle, WA, James F. Bennett, Jennifer S. Kingston, John D. Comerford, Dowd Bennett LLP, St Louis, MO, Matthew E. Johnson, Pro Hac Vice, Dowd Bennett LLP, Denver, CO, Michelle D. Nasser, Pro Hac Vice, Dowd Bennett LLP, Saint Louis, MO, Patrick D. McVey, Pro Hac Vice, Fox Rothschild LLP, Seattle, WA, Paul J. Hickey, Robert John Walker, Hickey & Evans, Cheyenne, WY, for Defendants.
Rankin, Kelly H., United States Magistrate Judge
ORDER DENYING DEFENDANTS HOWE-BAKER ENGINEERS, A&B BUILDERS AND MATRIX ENGINEERING'S MOTION FOR A PROTECTIVE ORDER [DOC. 130] AND FINDING AS MOOT PLAINTIFF'S MOTION TO COMPEL DISCOVERY [DOC. 128]
*1 This matter is before the Court on Defendants Howe-Baker Engineers, A&B Builders and Matrix Engineering's (hereinafter “CB&I”) Motion for a Protective Order and Sinclair's Motion to Compel Discovery. The Court having carefully considered the Motions, Responses and Replies, and being fully advised in the premises, FINDS:
BACKGROUND
This case stems from a September 27, 2013, explosion and fire at the Sinclair Refinery in Sinclair, Wyoming. The explosion was caused by the failure of a Sinclair hydrotreater unit (“the #4 HDS Unit), which the CB&I Defendants originally installed at the Sinclair plant. The uncontroverted cause of the explosion was the failure of a valve on that unit (“FV-241”). CB&I's work installing the #4 HDS Unit lasted from January 2005 to June 2006. Since the work occurred over ten years ago, the CB&I Defendants claim that they have few current employees who worked directly on the #4 HDS Unit and that all their relevant information on the project is now electronically stored on backup tapes.
On August 16, 2016, the Court held an informal discovery conference with the parties. Plaintiff Sinclair and Defendants and Cross-Claimants Fisher Service, Co. and Instrument & Valve Service Company (Fisher Defendants) objected to the sufficiency of CB&I Defendants responses to requests for production. The Court noted that the problems appeared to stem from a dispute about production of electronic documents from the CB&I Defendants' backup tapes. The Court attempted to mediate between Sinclair's expansive discovery requests and the CB&I Defendants' limited production to that date by ordering the production of approximately 200 folders of electronically stored information (ESI) that the Fisher Defendants had identified as potentially relevant to the litigation. As the decision was an informal one, without the benefit of briefing on the issue, the Court's order also allowed the CB&I Defendants to file a protective order instead of producing the identified folders if they believed production was inappropriate. The CB&I Defendants choose to file this Motion for a Protective instead of producing the 217 folders the Court ordered them to produce at the August 16, 2016, conference. The Court will address this Motion before turning to Plaintiff's Motion to Compel.
MOTION FOR A PROTECTIVE ORDER
The CB&I Defendants argue that production of the approximately 200 files the Fischer Defendants identified as potentially relevant is inappropriate for two reasons. First, CB&I Defendants argue that backup tapes are, by definition, inaccessible. As a result, FRCP 26 would prevent the discovery of the folders at issue absent a showing of good cause. The CB&I Defendants do not use this line of reasoning to argue that there is not good cause in this individual case. Instead, they argue this Rule 26 limitation is the background which convinced the parties to consent to the terms of the Stipulated Discovery Order. The CB&I Defendants argue that since Plaintiff might not have been entitled to any discovery under this standard, the Stipulated Discovery Order reflects both parties' concessions in light of the uncertainty surrounding what materials were discoverable, and as a result, the Discovery Order should be enforced.
*2 Next, the CB&I Defendants argue that stipulated agreements cannot be set aside by the Court unless the agreement was improvident or would lead to a manifest injustice. CB&I Defendants argue first that the Stipulated Discovery Order was not improvident because using search terms is a common court ordered solution when discovery materials are only available through inaccessible backup tapes. Next, CB&I Defendants argue that it would not be manifestly unjust to enforce the Stipulated Discovery Order because Plaintiff and the Fischer Defendants' search terms have so far yielded few relevant documents. The CB&I Defendants reason that this reflects a lack of responsive documents, generally, in their backup tapes and a costly expansion of discovery would be inappropriate. Finally, the CB&I Defendants argue that since the Stipulated Discovery Order was neither improvident nor unjust, the Court should not asses the relative worth of the Parties' agreement, and enforce the agreement.
RESPONSE
In Response, Plaintiff puts forward a number of arguments in favor of disclosure of the 217 identified files. First, Plaintiff argues the CB&I Defendants have in independent obligation to respond to Plaintiff's Requests for Production of Documents, and that a failure to produce requested documents cannot be justified by the terms of the Stipulated Protective Order. Additionally, Plaintiff argues that because the Stipulated Protective Order allows parties to challenge the sufficiency of ESI search methodology, Plaintiff can contest the sufficiency of a party's production without violating the terms of the Stipulated Protective Order. Next, Plaintiff argues that it would be inappropriate to treat CB&I Defendant's ESI as inaccessible because they unilaterally decided to place their information on backup tapes, and to hold otherwise would encourage parties to render their information inaccessible. Finally, Plaintiff argues even if the Court were to find the CB&I Defendants' ESI is inaccessible, Plaintiff has shown the requisite good cause to order production.
The Fisher Defendants also opposed the CB&I Defendants' Motion for a Protective Order and filed a separate Response. The Fisher Defendants first argue that under the general rules of discovery, the material they are seeking is discoverable because it is relevant and proportional to the needs of the case. In particular, the Fisher Defendants argue the high value of the litigation and the inability of all parties to find a sufficient replacement for the CB&I Defendants' ESI necessitate the conclusion that the Rule 26proportionality factors weigh strongly in favor of disclosing the disputed files. The Fisher Defendants also assert that CB&I Defendants' failure to respond to basic interrogatories because they lack sufficient information or knowledge to respond highlights the inadequacy of the CB&I Defendants' search terms and suggests that the full files should be disclosed.
Next, Fisher Defendants argue that CB&I Defendants have the burden of showing good cause exists to issue a protective order, and that CB&I Defendants' attempts to avoid this burden by arguing the backup tapes are inaccessible and that the Stipulated Discovery Order protects them from disclosing these files both fail. In particular, Fisher Defendants argue there is no per se rule that backup tapes are inaccessible, and that the files they are requesting are accessible since the CB&I Defendants have already restored them. The Fisher Defendants also argue that the CB&I Defendants cannot rely on the terms of the Stipulated Discovery Order to avoid disclosure of the 217 folders at issue for two reasons. First, Fisher Defendants argue that CB&I Defendant's exclusion of certain requested search parameters means they failed to comply with the terms of Stipulated Discovery Order. Second, Fisher argues even if the terms of the Stipulated Discovery Order apply, there is ample precedent for setting aside such an order to expand the scope of discovery.
REPLY
*3 In Reply, the CB&I Defendants advance three primary arguments against the disclosure of the 217 files at issue. First, the CB&I Defendants argue they have complied with the Stipulated Discovery Order and should not be ordered to produce discovery beyond the Order's scope. Second, the CB&I Defendants argue that neither Plaintiff nor the Fischer Defendants have provided grounds to overcome the presumption that stipulated orders will not be set aside. Finally, the CB&I Defendants assert they have discovered additional physical documents that potentially moot the controversy over whether to produce the 217 folders at issue.
RULING OF THE COURT
The Court must potentially answer two separate questions to determine whether CB&I defendants are entitled to a protective preventing disclosure of the 217 files at issue. First, do the terms of the Stipulated Discovery Order shield the CB&I Defendants from disclosing ESI not identified through the stipulated search protocol. Second, if the stipulated Discovery Order does not prevent disclosure of these 217 files, is disclosure appropriate under Federal Rule of Civil Procedure 26.
Federal Courts apply the traditional rules of contract interpretation to determine the meaning of stipulated orders entered into by parties. Stafford v. Crane, 382 F.3d 1175, 1180 (10th Cir. 2004). The majority of courts that Federal Courts have held that state contract law governs stipulated agreements by the parties in diversity cases. See Edwards v. Born, Inc., 792 F.2d 387, 389 (3rd Cir.1986) (state law provides the scope of an attorney's authority to settle his client's action when action is not derived from federal law); Glazer v. J.C. Bradford & Co., 616 F.2d 167, 169 (5th Cir. 1980) (state law contract and agency law governs whether a settlement agreement was enforceable).
There is a colorable argument, however, that a dispute over a discovery order is purely procedural and not outcome determinative in the same the way a settlement agreement is. Cf. Trierweiler v. Croxton & Trench Holding Corp., 90 F.3d 1523, 1539 (10th Cir. 1996) (“[I]n the typical, relatively unguided Erie choice courts are to heed the outcome-determination approach while also relying on the policies underlying the Erie rule: discouragement of forum-shopping and avoidance of inequitable administration of the laws.”). Perhaps in response to the difficult and novel choice of law questions raised by how to interpret a stipulated discovery order in a diversity cases, the most relevant Tenth Circuit case chose not to address the issue.
In Stafford, the Tenth Circuit was required to construe a stipulation stating that a trust at issue in the case was null and void as of May 9, 2002. 382 F.3d at 1177. On appeal, the defendant contended this stipulation barred the plaintiff's contention that the trust was void ab initio. Id. at 1178. The court did not address the choice of law question and instead cited to both generalized Tenth Circuit precedent and Kansas state contract law in parallel. Id. at 1180. This Court, like the Tenth Circuit, sees no utility in delving into the complex choice of law issue, because both Wyoming contract law and Federal common law necessitate the same interpretation of the Stipulated Discovery Order.
The Stipulated Discovery Order provides that the CB&I Defendants “may employ search terms for non-email ESI as provided for in Paragraph IV.3.b.” Paragraph IV.3.b then references the more detailed discussion of ESI discovery procedures later in the Stipulated Discovery Order by providing that searches of non-email ESI “will be conducted in accordance with the procedures for searching email outlined in Paragraphs IV.4.a-c.” Paragraphs IV.4.a-c provide, in relevant part, that:
*4 b. The producing party shall disclose the search terms and methodology (e.g. custodians, date restrictions, etc.) that it proposes to use to locate email likely to contain discoverable information before conducting any such efforts. The parties shall meet and confer to attempt to reach an agreement on the producing party's search terms and/or other methodology. If the parties fail to reach an agreement, each party shall use a search methodology it deems sufficient to satisfy its discovery obligations. Nothing in this paragraph prevents a party from challenging in court the sufficiency of such search methodology.
c. Upon subsequent order based on a finding of specific need and good cause, a party may be required to conduct additional searches, using different search terms, queries or date ranges.
The CB&I Defendants essentially argue that, based on the language of these two paragraphs, the Court cannot go beyond modifying search parameters without setting aside the Stipulated Discovery Order. The problem with this line of reasoning, however, is that both Wyoming state law and Federal common law disfavor reading remedial provisions within a contract as exclusive. Walters v. Michel, 745 P.2d 913, 915 (Wyo. 1987); Marker v. United States, 646 F. Supp. 433, 439 (D. Del. 1986).
In Walters, the Wyoming Supreme Court dealt with whether a clause providing specific remedies necessarily foreclosed other remedies. 745 P.2d at 915. The relevant passage read:
In the event of the buyer's failure to reasonably complete the terms and conditions of this offer, the buyer agrees that the seller may elect to either retain the deposit made herewith as fixed and liquidated damages for the buyer's failure to complete the sale as herein provided, or to maintain an action to enforce specific performance of this agreement.
Id. (emphasis original). The court began its interpretation of this provision by stating that “[r]emedies mentioned in a contract generally are not exclusive remedies. Such remedies are held to be merely some of several remedies which might be pursued by an injured party.” Id. Within the context of this background rule, the court found that failing to label the relevant clause an “exclusive remedy” clause or to incorporate “exclusive remedy” language into the provision weighed against finding the enumerated remedies were exclusive. Id. The court also emphasized that providing an individual “may” pursue the enumerated remedies, instead of commanding that they “shall” pursue such remedies, weighed in favor of finding the remedies mentioned in the contract were not exclusive. Id.
Similarly, courts that have addressed the exclusiveness of remedies listed in a contract governed by Federal common law have also found that enumerated remedies should not be exclusive unless the contract explicitly identifies them as exclusive. Marker, 646 F. Supp. at 439. In Marker, the court applied federal common law to a breach of contract claim against the United States. 646 F. Supp. At 435. In applying Federal common law, the court held that the presence of a liquidated damages clause within the contract did not bar a specific performance remedy. Id. at 439.
The language of the contract at issue here provides any party to the Stipulated Discovery Order can challenge the sufficiency of another parties search methodology. The CB&I Defendants argue, however, that since a party “may be required to conduct additional searches” no other remedy, such as the wholesale disclosure of discrete, highly relevant folders, should be available to Plaintiff or the Fisher Defendants. Under both Wyoming and Federal common, however, the remedies in paragraph IV.4.c of the Stipulated Discovery Order are not exclusive.
*5 Under the Wyoming law, the Court must approach this clause with the understanding that enumerated remedies “in a contract generally are not exclusive remedies.” Walters, 745 P.2d at 915. Within the context of this background rule, the failure to identify Paragraph IV.4.c. as an “exclusive remedy” and the choice of “may” instead of “shall” both weigh in favor of finding that the enumerated remedies are not exclusive. Id. Similarly, courts applying Federal common law have found that, without more, the existence of an enumerated remedy in a contract does not imply that the enumerated remedy is exclusive. Marker, 646 F. Supp. at 439. As a result, the Court finds the remedies enumerated in paragraph IV.4.c are not exclusive and the Court has authority to order the production of the 217 files at issue in response to a challenge to the sufficiency of the CB&I Defendants' search methods, without setting aside the Stipulated Discovery Order.
Additionally, if the Stipulated Discovery Order does prevent the disclosure of the 217 files at issue, then the Stipulated Discovery Order should be set aside. Generally, courts cannot “disregard or set aside” stipulations that are absolute and unequivocal. L.P.S. v. Lamm, 708 F.2d 422, 431 (10th Cir. 1979). Courts can, however, “relieve a party from an improvident agreement or one that might work an injustice.” In re Westinghouse Elec. Corp., Ect., 570 F2d 899, 902 (10th Cir. 1978). Of particular importance in determining if a stipulated order is improvident or unjust is the “strong policy of the federal rules favoring full disclosure.” Id. In Westinghouse, for example, the court found preventing all future depositions of a crucial witness was inappropriate. Id. The court emphasized that the “law favors disposition of litigation on the merits,” and preventing the questioning of a critical witness would undermine that goal. Id.
In this case, the CB&I Defendants have used the Stipulated Discovery Order to avoid even the most basic discovery requests. The CB&I Defendants have, for example, said they lack sufficient information or knowledge to identify each person who has “inspected and accepted” the valve that caused the explosion at the Sinclair refinery. The CB&I Defendants have also answered Sinclair's request for them to admit they installed the valve at issue by simply stating they are unable to admit or deny they completed the installation. In fact, the CB&I Defendants have responded to Sinclair's request for “a complete copy of engineering, construction and inspection files pertaining to the #4 HDS Unit” by stating that CB&I Defendants will only produce these when they are identified by search terms initiated pursuant to the Stipulated Protective Order.
The CB&I Defendants also assert this lack of knowledge and documentation despite the fact that Sinclair alleges their contract required the CB&I Defendants to maintain auditable records, and the fact that the installation of the #4 HDS Unit was a one and a half year project for which the CB&I Defendants were paid approximately $25 million. While the Court is sympathetic to the fact that the events at issue in this case took place ten years ago, it strains credulity to believe that the CB&I Defendants have so little knowledge of a $25 million project that they cannot answer even the most remedial interrogatories and requests for admissions. Additionally, the CB&I Defendants maintain these denials of knowledge precisely because they have not been able to locate the relevant files by applying search terms to their backup tapes. Allowing the CB&I Defendants to use the Stipulated Discovery Order to avoid responding to discovery requests would cut against the Federal policy of disclosure and discourage resolution of the case on the merits. Accordingly the Court finds that, if the Stipulated Discovery Order did not allow for the production of documents, then it should be set aside under Westinghouse. See 570 F2d at 902. Finding that the Stipulated Discovery Order does not prevent the disclosure of the 217 files at issue does not end the Courts inquiry, however.
*6 Any order compelling the production of materials must comply with Rule 26. The scope of ESI discovery is governed by Federal Rule of Civil Procedure 26(b). Generally, all discoverable material must be relevant and not privileged. Fed. R. Civ. P. 26(b)(1). Discovery of ESI, however, is limited if the materials sought are “not reasonably accessible because of undue burden or cost.” Fed. R. Civ. P. 26(b)(2)(B). If the ESI is not reasonably accessible, then the requesting party must show good cause to discover the material. Id.
As a general rule, backup tapes are considered inaccessible under Rule 26(b)(2)(B) because of the costs and burdens of restoring them. W.E. Aubuchon Co. v. BeneFirst, LLC, 245 F.R.D. 38, 42 (D. Mass. 2007); Zubalake v. UBS Warburg LLC, 217 F.R.D. 309, 319-320 (S.D.N.Y. 2003). This case is no different. While Sinclair argues that the CB&I Defendants' decision to place their information on backup tapes should weigh against finding the material inaccessible, that would violate the plain language of Rule 26(b)(2)(B), which looks at the cost and burden of restoring the data. Similarly, the Fisher Defendants' argument that the data is now available because the CB&I Defendants restored it in order to search it is inapposite. Allowing parties to bootstrap limited data restoration to comply with discovery into a finding that previously inaccessible material was now accessible would eviscerate the protections of Rule 26(b)(2)(B). As a result, the Court finds that the 217 files at issue are inaccessible and that Plaintiff and the Fisher Defendants must show good cause for the Court to order production of those files.
While the text of Rule 26(b)(2)(B) links good cause to the three factors that can limit discovery outlined in Rule 26(b)(2)(C), both caselaw and the Advisory Committee notes have adopted a more detailed seven factor seven test to determine whether the discovery of inaccessible ESI is appropriate. See Fed. R. Civ. P. 26 Advisory Committee's note to 2006 Amendment; W.E. Aubuchon Co., 245 F.R.D. at 43. The factors a court should consider are:
(1) the specificity of the discovery request; (2) the quantity of information available from other and more easily accessed sources; (3) the failure to produce relevant information that seems likely to have existed but is no longer available on more easily accessed sources; (4) the likelihood of finding relevant, responsive information that cannot be obtained from other, more easily accessed sources; (5) predictions as to the importance and usefulness of the further information; (6) the importance of the issues at stake in the litigation; and (7) the parties' resources.
Fed.R.Civ.P. 26 Advisory Committee's note to 2006 Amendment. It is worth noting, however, that these factors are not exclusive. While these factors are generally more detailed than Rule 26(b)(2)(C), they omit the requirement that the Court consider the “expense of the proposed discovery.” Fed. R. Civ. P. 26(b)(1); see also Fed. R. Civ. P. 26(b)(2)(C)(iii)(requiring that the proposed discovery not be “outside the scope permitted by Rule 26(b)(1).”). Accordingly, an inquiry into the costs of production is required in addition to the seven factors.
The Fisher Defendants request to produce the 217 folders of information at issue is specific in light of how expansive the CB&I Defendants ESI is. The backup tapes contained over 5 terabytes of data, and over 10,000 folders. In other words, the Fisher Defendants have identified about two percent of the information stored on the backup tapes from a single closed CB&I office as potentially relevant to project CB&I defendants were paid $25 million to complete. This factor weighs in favor of producing the 217 files at issue.
*7 In their Reply Brief, the CB&I Defendants have asserted that they, apparently fortuitously, discovered a cache of physical documents that might be relevant. The CB&I Defendants have conceded, however, that, outside of this recent discovery, there are almost no sources of information on the #4 HDS Unit besides their backup tapes. Accordingly, most, if not all, of the information relevant to the work the CB&I Defendants did on the #4 HDS Unit is on their backup tapes. Additionally, Sinclair and the Fisher Defendants have identified these specific files, which are only two percent of the backup tapes as the most likely to contain relevant information. As a result, the Court finds that both the quantity of information available from more easily accessed sources and the likelihood of finding relevant information that cannot be obtained from more easily accessed sources weigh in favor of the disclosure of the contested 217 files.
As discussed earlier, the CB&I Defendants have been unable to respond to numerious discovery requests in this case. For example, the CB&I Defendants were not able to either admit or deny that they installed the FV-241 valve, despite the fact that they were contracted to install the #4 HDS Unit. These failures to respond to discovery requests also have to be viewed in light of the fact that Sinclair asserts that the CB&I Defendants were required to keep auditable records of their work on the project. As a result, this factor weighs highly in favor of disclosure.
The 217 folders that the Fisher Defendants have requested are the ones that they believe are most likely to contain relevant information after reviewing an index of the over 10,000 folders on Fisher's backup tapes. The CB&I Defendants have countered this argument by pointing out that their use of search terms on these 217 folders only returned 116 documents. In response, however, the Fisher Defendants have argued that the CB&I Defendants search terms were too narrow, and the results are not an accurate reflection of what was contained in the folders. For example, the CB&I Defendants refused to run the search term “Sinclair” on this small subset of folders, contending that it was too broad of a term. The Fisher Defendants argument that the CB&I Defendants' search terms are inadequate is bolster by the CB&I Defendants' failure to retrieve relevant information so far.
While the CB&I Defendants have argued that these 217 folders do not contain relevant information, the CB&I Defendants also appear to believe that there is not relevant information anywhere else on their backup tapes, and have failed to locate the information needed to answer basic Requests for Production of Documents. As a result, unless all the CB&I Defendants backup contain almost no information on a $25 million project, the CB&I Defendant's approach to searching these tapes must be flawed. The failure of the CB&I Defendants' search protocols, as applied to the 217 folders, to return relevant results carries little weight when the CB&I Defendants' search of all their ESI has also failed to return relevant results. The Court believes that the Fisher Defendants have made a good faith effort to identify the most probative folders, and that disclosing this information will provide the relevant information needed to resolve these claims on the merits. Accordingly, this factor also weighs in favor of production.
Plaintiff alleges that the explosion at the Sinclair Refinery caused them over $100 million in damages due to both equipment damage and the time the refinery was offline. The significance of this claim weighs in favor of disclosing the 217 files at issue.
*8 All parties to this action are corporations who either paid or received significant amounts of money for their work on this project. Additionally, the costs of production in this case are relatively low. While the CB&I Defendants claim that it could cost up to $40,000 to produce the requested folders, three quarters of that cost is an estimate of how much it will cost to review the documents for privileged material. Most courts, however, have held that including the costs of privilege review in reviewing the costs of production is inappropriate. See e.g. Rowe Entm't, Inc. v. William Morris Agency, Inc., 205 F.R.D. 421, 432 (S.D.N.Y. 2002); U.S. ex rel. Guardiola v. Renown Health, No. 3:12-CV-00295-LRH, 2015 WL 5056726, at *4 (D. Nev. Aug. 25, 2015). This is a sound policy decision as the scope and thoroughness of privilege review is within the control of producing party, and the producing party could employ a number of techniques for limiting costs.
For example, when dealing with a large document set, the producing party might establish a clawback provision that allows them to recover inadvertently produced privileged documents and limits waiver of the privileged subject matter. Rajala v. McGuire Woods, LLP, No. CIV.A. 08-2638-CM, 2013 WL 50200, at *3 (D. Kan. Jan. 3, 2013). The producing party could also take advantage of the materials' electronic format and use technology to limit the attorney hours spent on review. See e.g. Maura R. Grossman & Gordon V. Cormack, Technology-Assisted Review in E-Discovery Can Be More Effective and More Efficient Than Exhaustive Manual Review, 17 Rich. J.L. & Tech. 11 (2011) (providing empirical evidence for the effectiveness of technology assisted privilege review). Given the relatively small cost of producing these tapes, outside of attorney review, the Court finds that the resources of the parties and the relative costs of production weigh in favor of producing the 217 files at issue.
CONCLUSION
Production of the 217 files the Fisher Defendants have identified as potentially relevant is appropriate in this case. The Stipulated Discovery Order should not be construed to limit the remedies for inadequate production. Additionally, even if they Court were to construe the Stipulated Protective Order as limiting the CB&I Defendants' production requirements to searches of their backup tapes, the Court would have grounds to set aside that agreement as improvident and unjust. The inadequacy of search-term based production to date would undermine both the policy of disclosure under the rules and resolution of litigation on the merits. In re Westinghouse Elec. Corp., Ect., 570 F2d at 902. Since the Stipulated Discovery Order does not protect the CB&I Defendants from producing the 217 files the Fisher Defendants have requested, and Rule 26 allows their disclosure, the CB&I Defendant's Motion for a Protective Order is DENIED.
Additionally, the Court finds that denying the CB&I Defendants' Motion for a Protective Order moots the issues raised by Plaintiff's Motion to Compel. The Order to produce these 217 folders necessarily changes the posture of the Motion to Compel. Many of the documents requested by the plaintiff may be contained in these files, while the CB&I Defendants may have a duty to supplement their original answers as they review the material they now must disclose. As a result, the Plaintiff's complaints about the sufficiency of the CB&I Defendant's production will necessarily be addressed, at least in part, by the order to produce the 217 folders at issue. Since the issues raised in the motion will necessarily change or at least be narrowed, it would be inappropriate for the Court to wade in now. Accordingly, the Court finds that the issues raised by Plaintiff's Motion to Compel are MOOT.
*9 NOW, THEREFORE, IT IS ORDERED that the CB&I Defendants' Motion for a Protective Order be, and the same hereby is, DENIED and that Plaintiff's Motion to Compel be, and by the same hereby, is found MOOT.
IT IS FURTHER ORDERED that the CB&I Defendants shall produce these records by November 23, 2016.
Dated this 4th day of November, 2016.