*1 THIS CAUSE is before the Court on Lead Plaintiffs’ Motion to Compel Defendants to Provide Their Search Protocols (ECF No. 195) and Lead Plaintiffs’ Motion to Compel the Production of Documents Concerning the SEC and NY DFS Investigations (ECF No. 197)[1] which were referred to Lurana S. Snow, United States Magistrate Judge. The motions are each ripe for consideration and a hearing was held before the undersigned on December 6, 2016. This Order memorializes the Court's rulings from the bench.

Lead Plaintiffs, a pension fund and an annuity fund for the International Union of Painters and Allied Trades District Counsel 35, brought this action on behalf of themselves and all persons or entities who purchased or otherwise acquired common stock of Altisource Portfolio Solutions, S.A. (“Altisource”) during the class period. Plaintiffs sued Altisource, a provider of support and technology services for mortgage servicing; Ocwen Financial Corporation (“Ocwen”), a mortgage servicer from which Altisource was spun off[2]; William C. Erbey, the founder, majority shareholder, and former Chairman of both Altisource and Ocwen; William Shepro, the CEO of Altisource; and Michelle Esterman, Altisource's CFO.

The Third Amended Consolidated Class Action Complaint (“TAC”) is the operative pleading. The following causes of action survived motions to dismiss: 1) violations of Section 10(b) of the Exchange Act and Rule 10b-5(b) against Altisource; 2) violations of Section 10(b) of the Exchange Act and Rule 10b-5(a) and (c) against Altisource; and 3) violations of Section 20(a) of the Exchange Act against Erbey, Shepro and Esterman as a control persons of Altisource.

A. The Motion to Compel Search Protocols

The instant motion concerns what the Lead Plaintiff's (hereinafter “Plaintiffs”) characterize as deficiencies in the Defendants’ production in response to the Plaintiffs’ First Set of Requests for Production of Documents which were served on March 2, 2016. On July 27, 2016, the Court entered an order granting, in part, the Plaintiffs’ motion to compel with respect to the document requests, and on September 12, 2016, the Court overruled Defendants’ sole objection concerning the July 27 Order. (ECF Nos. 151, 177) It is the production which followed that Plaintiffs contend is incomplete.

Prior to the Defendants’ October 4, 2016 production, Plaintiffs requested that Defendants provide a list of the custodians whose files Defendants planned to search, the search terms Defendants planned to use, and the parameters of any technology assisted review (TAR) they intended to use so that Plaintiffs could evaluate the adequacy of the search and review. According to the Plaintiffs’, Defendants did not respond to the request until November 7, 2016, after the production was completed, at which time Defendants asserted that they did not believe they were obligated to provide the search protocols. Instead, Defendants invited the Plaintiffs to propose search terms or TAR protocols and Defendants would evaluate and confer further with the Plaintiffs. Thereafter, Plaintiffs provided proposed search terms and additional custodians, requesting that the Defendants identify which, if any, of the proposed terms had been used. According to the Plaintiff, Defendants continue to refuse to provide their search protocols and also refuse to substantively respond to the Plaintiffs’ proposed terms.

*2 Defendants assert that they have worked with Plaintiffs and addressed many of the deficiencies Plaintiffs alleged to have existed in Defendants’ 130,000-plus page production to date. According to the Defendants, this shows that the parties are capable of resolving the issue without court intervention. Defendants argue that discovery into their past search efforts would be inappropriate discovery on discovery and as such is unnecessary and inappropriate. According to Defendants, the appropriate solution to any alleged deficiencies in production would be for the parties to cooperate to develop additional search terms targeted to identify any documents Plaintiffs believe are missing. Defendants have identified the custodians whose documents were searched, and have expressed a willingness to confer regarding additional searches for which Plaintiffs can demonstrate a need.

In support of the motion, Plaintiffs cite the case of Apple, Inc. v. Samsung Electronics Co., Ltd. 2013 WL 1942163 (N.D. Cal., May 9, 2013) in which the court found that production of the search terms and custodians used by third-party, Google would aid in uncovering the sufficiency of Google's production and would serve the greater purposes of transparency in discovery.

Defendants point to cases suggesting that a party's speculation that documents are missing from production is insufficient to warrant intervention by the Court. Klayman v. City Pages, 2014 WL 5426515 (M.D. Fla., Oct. 22, 2014) (mere speculation that more documents must exist insufficient basis for court to order forensic examination of a defendant's computers and telephone records); Procaps, S.A. v. Patheon, Inc., 2014 WL 11498060 (S.D. Fla., Dec. 1, 2014) (possible flaws in search process does not justify forensic examination); Ford Motor Company v. Edgewood Properties, Inc., 257 F.R.D. 418 (D. N.J., May 19, 2009) (in the absence of any indicia of bad faith, the mere “noticeable absence of documents” in a party's production does not justify employing a vendor to perform a separate search of ESI, in essence beginning document collection efforts anew). Defendants also cite the case of Romero v. Allstate Ins. Co. 271 F.R.D. 96 (E.D. Pa., Oct. 21, 2010) in which the court found that a retrospective view of the searches that Defendants had already conducted during the course of eight and one half years of discovery would constitute an undue burden on defendants unjustified by any potential benefit to the plaintiffs.

The undersigned notes that the cases cited by the parties draw upon the principles guiding best practices on the use of search and information retrieval methods in e-discovery. These principles include the notion that the best practice is for the parties to agree at the outset as to the mode of collection. See Ford 257 F.R.D. at 427. Absent agreement, the presumption is that the responding party is in the best position to choose an appropriate method for searching for and culling data. Id.

At the hearing the Plaintiffs cited particular items they believed are missing from Defendants’ production, including board and committee meeting minutes, e-mail attachments, lender placed insurance-related documents and documents from Defendant Erbey's custodial files. Plaintiffs also noted that the Defendants’ production of approximately 8,000 documents is considerably smaller than non-party, Ocwen's which included approximately 32,000 documents.

According to the Defendants, Ocwen's production was greater because its case, which is being separately litigated, is premised on a broader set of facts. Defendants represented to the Court that they have produced any board and committee meeting minutes which contained discussion of relevant, non-privileged matters. Similarly, draft SEC filings have been produced, to the extent that they are not privileged. With respect to the purportedly missing e-mail attachments, Defendants assert that the e-mails were produced in the manner that they were produced to the SEC, and to the extent that Plaintiffs have identified issues, Defendants have been willing to address them. Finally, according to the Defendants, the methodology they used to identify relevant responsive documents did not always employ search terms.

*3 After hearing and considering the arguments of the parties, the undersigned concludes that Plaintiffs have not made a sufficient showing that there are deficiencies in the Defendants’ production to warrant the relief that the Plaintiffs seek. However, the parties are directed to confer and agree upon search terms with respect to any future production.

B. The Motion to Compel Documents Concerning the SEC and NY DFS Investigations

Earlier during the course of this litigation, Plaintiffs sought documents in discovery concerning “the relationship and transactions between Altisource and any related company.” Plaintiffs limited the scope of the requests to investigations conducted by the Securities and Exchange Commission (SEC) or the New York Department of Financial Services (NY DFS). Defendants resisted producing responsive documents arguing that they were improper “cloned” requests and also pointed out that the NY DFS never requested documents from Altisource. On July 27, 2016, the undersigned entered an Order which, among other things required the Defendants to produce to the Plaintiffs documents Altisource produced to the SEC during the course of the SEC's investigation into Erbey's purported practice of non-recusal despite assurances that safeguards were in place to guard against conflicts of interest. (ECF No. 151) The instant motion concerns the parties’ disparate interpretations of the Court's July 27 Order, as well as the Court's Order permitting the Defendants to file the SEC subpoena under seal for in camera review. See ECF No. 150.

According to the Plaintiffs, because the Court determined that the subject matter of the SEC and NY DFS investigations was directly relevant to the subject matter of this litigation, Defendants’ refusal to produce the following categories of documents, which they categorize as the “Regulatory Documents” is improper:

According to the Plaintiffs, these documents are responsive to Requests 1[3] and 2[4] from the First Set of Requests for the Production of Documents to Defendants and should be produced. Although Defendants objected to their production arguing that the documents produced to the SEC involved a broader set of issues unrelated to the claims of Erbey's recusal from related party transactions, the Court determined in its July 27 Order that the scope of the SEC subpoena overlapped with the relevant issues in this case and sought documents directly relevant to the subject matter of this litigation and, according to the Plaintiffs, in no way limited Defendants’ obligation to produce otherwise relevant documents. Defendants’ objection that neither Altisource or Erbey produced any documents to the NY DFS has proved to be inaccurate, based upon information since discovered which has been designated confidential by Defendants pursuant to the parties’ Stipulated Protective Order.

*4 According to the Defendants, the July 27 Order directed Defendants to produce only the documents Altisource provided the SEC and it has done so. As for the SEC subpoena, it is Defendants’ position that the Court's Order permitting the subpoena to be filed under seal for in camera review and relieving them of the obligation to serve it on the Plaintiffs similarly relieves them of the obligation to produce it now, despite the Court's finding that the documents sought by the subpoena are relevant to this litigation. Defendants assert that the internal communications that Plaintiffs seek are protected communications subject to the attorney-client, work product and/or common interest privileges. According to the Defendants, requiring them to search for these documents would result in an unnecessary burden not resulting in additional production beyond what the Defendants have already produced.

After hearing the argument of counsel, the Court agrees with the Defendants that the SEC subpoena itself and the communications between Defendants and the SEC are not relevant to the issues in this case. As for the internal communications about the SEC subpoena, the vast majority of which the Defendants assert are protected by the attorney-client and/or work product privilege, the Court concludes that the burden of producing a privilege log identifying each document and the basis for the assertion of privilege outweighs the likelihood that the Plaintiffs will discovery anything of use.[5] However, the Court will direct the Defendants to identify by Bates Number which documents produced to the Plaintiffs were also produced to the SEC. Being fully advised, it is hereby

ORDERED AND ADJUDGED as follows:

1. Lead Plaintiffs’ Motion to Compel Defendants to Provide Their Search Protocols (ECF No. 195) is DENIED. However, the parties are directed to confer and agree upon search terms with respect to any future productions.

2. Lead Plaintiffs’ Motion to Compel the Production of Documents Concerning the SEC and NY DFS Investigations (ECF No. 197) is DENIED. However, Defendants are directed to, on or before December 19, 2016, identify by Bates Number which documents produced to the Lead Plaintiffs were also produced to the SEC.

DONE AND ORDERED at Fort Lauderdale, Florida, this 7th day of December, 2016.

Portions of ECF No. 197 are redacted pursuant to the parties’ Stipulated Protective Order. An unredacted version of the motion, affidavit in support thereof, and Exhibits G and H were filed under seal at ECF No. 198.

Ocwen's motion to dismiss was granted on December 22, 2015 and it is no longer a defendant in this case. (ECF No. 105)

Request 1 sought the following: All Documents and Communications concerning any investigation (formal or informal) concerning the relationships and transactions between Altisource and any Related Company by any Governmental Entity (including the SEC HLSS Action), including (a) any and all Wells Notices, subpoenas, civil investigative demands, or any other requests for the production of documents by a Governmental Entity issued to You; (b) any and all Documents or Communications provided by You to a Governmental Entity; (c) any and all Documents or Communications You received from a Governmental Entity; and (d) any and all transcripts, electronic recordings, or notes of any testimony or interviews. This request is for Documents and Communications through the present.

Request 2 sought the following: All Documents and Communications concerning: (a) the NY DFS investigation of You or Ocwen; (b) the NY DFS Agreement; (c) the NY DFS 2012 Consent Order; (d) the NY DFS Letters; (e) the NY DFS 2014 Consent Order (including drafts thereof); (f) negotiations concerning the issuance of the NY DFS 2014 Consent Order; or (g) compliance or non-compliance with the NY DFS Consent Order.

The 2015 amendments to Federal Rule of Civil Procedure 26(b)(1) make clear that parties may obtain discovery regarding any non-privileged matter that is relevant to a party's claim and proportional to the needs of the case considering, among other things, whether the burden or expense of the proposed discovery outweighs its likely benefit.