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#CaseoftheWeek Episode 78: When Sanctions are Available for Failure to Conduct a Responsiveness Review Prior to Production

Episode 78 is Part 1 of another two-part case law series. In this Case of the Week, Kelly Twigger discusses whether a party is subject to sanctions under FRCP 37(b) for producing 800,000 pages of documents without a responsiveness review following the court’s order for the parties to agree on search terms. 

The case we are analyzing is Raymond James & Assocs., Inc. v. 50 N. Front St. TN, LLC, 2020 WL 4572356 (W.D. Tenn. 2020). The decision made by United States Magistrate Judge Tu M.Pham is from August 7, 2020.

Keep reading or watch the video to understand the ediscovery issues.

Good morning and welcome to Episode 78 of our Case of the Week series published in Partnership with ACEDS. My name is Kelly Twigger, I am the CEO and founder of eDiscovery Assistant, as well as the principal at ESI Attorneys.

As you know, here on our Case of the Week series, each week we choose a decision in eDiscovery that highlights key issues for litigators and talk about the practical aspects of that decision, and what you need to be focused on for purposes of your practice and your clients.

This week’s decision comes to us from Raymond James and Associates vs. 50 North Front Street in Tennessee, LLC. This is a decision actually from August of 2020, and the reason I wanted to cover something that was a couple of years old is because we have a more recent decision that we’re going to cover next week and this one really sets the stage for it.

This is a decision from United States Magistrate Judge Pham. Judge Pham has 53 decisions in our eDiscovery Assistant database, so very prevalent in writing on discovery decisions. As we’ll find here, there are places where I wish the judge would have gotten into more analysis on situations that arose, because I feel like they are ones we need to have further clarity on with regard to the rules. You’ve heard it from me before if you listen to our Case of the Week series, that I’m a huge proponent of understanding the difference between form of production and manner of production under Rule 34, and that, of course, comes up in this case.

As always, we tag each of our discovery decisions in eDiscovery Assistant with our proprietary issue tags and this week’s issue tags include search terms, manner of production, sanctions, and cost recovery.

What’s going on in this case?

This is a contract and tort dispute about elevators in an office building in Memphis located at 50 North Front Street. The tower, or the office building, is known as Raymond James Tower. Raymond James has sued 50 North Street for failure to modernize the elevators in the building. The building itself is owned and managed by Colliers Commercial Real Estate company, but at least as the caption is listed on this decision, Colliers is not listed as a defendant. When I pull up the full caption of the case, from the Western District of Tennessee, Colliers is listed. That brings about some issues with regard to discovery and the scope of discovery.

We are before the Court here on a motion for sanctions. There are multiple issues and motions before the Court, but the Court specifically limits this decision to only the motion for sanctions regarding the production of documents by 50 North in response to requests for production from Raymond James. The Court’s ruling here grants Raymond James’ motion for sanctions based on the document dump by 50 North of 800,000 pages of information, and also awards costs to Raymond James that are to be determined on a separate motion by declaration.

Now that we know what we’re on, and what the Court’s ultimate decision is, let’s talk about what the facts are underlying the Court’s decision. Prior to this particular motion for sanctions, Raymond James moved to compel for responses from 50 North to requests for production on at least two separate occasions. On the initial occasion, the Court granted the motion to compel and issued an order that required that the parties to:

  1. Meet and confer and define search terms for 50 North’s production of documents within seven days of that court’s order, and
  2. That 50 North then conduct a search “with supervision of counsel”, review and produce all of the responsive documents and provide a privilege log for all withheld documents within 20 days.

That’s the first order. That language of that first order specifically requires that 50 North review and produce all responsive documents.

Subsequent to that initial order, the parties could not agree on search terms. Surprise, surprise, surprise. Raymond James then alerted the Court on multiple occasions that the parties could not agree to search terms, and at that point, the Court held another hearing and entered a second order. That order then specified custodians and search terms for 50 North to use in collecting and reviewing its production.

That second order also required production of documents using those custodians and search terms within 30 days. In response to the Court’s order, instead of conducting a responsiveness review, 50 North ran the required email searches, conducted a privilege review and then simply produced all of the remaining documents, whether or not they were responsive to the request for production. The resulting production included about 800,000 pages of documents. Remember, that’s pages, not documents.

Raymond James got this production, essentially a document dump of 800,000 documents, started to go through it, and realized that it was, in fact, just a complete mess of a lot of non-responsive information. Raymond James then moved for sanctions against 50 North for failure to comply with the Court’s two prior orders ordering it to conduct a responsiveness review, and in its briefing included both statistics and examples of the volumes of non-responsive documents in the 800,000-page production.

In its briefing, Raymond James also noted that 50 North provided categories of documents that had absolutely no bearing on the litigation about modernizing elevators — including emails regarding a tattoo parlor, newsletters in foreign languages, and a couple of other examples. In order to be able to cull those documents to find what was responsive and then be able to review them, Raymond James hired contract attorneys at a service provider to conduct a manual review of the documents at a cost of about $150,000. Those costs and fees are what we’re going to talk about in next week’s Case of the Week but just for context, that’s essentially what the cost was for that review.

50 North then makes an argument that is really important, I think we need to pay attention to here, and it’s one of the bigger takeaways from this case. 50 North argues that it was not required to conduct a responsiveness review under the Court’s prior orders. That’s pretty unbelievable, considering that both of the orders specifically state that 50 North is required to review documents for responsiveness.

More specifically, even, 50 North argued that when the Court ordered it to produce “all responsive, non-privileged documents from the above referenced email searches”, 50 North argued that meant that it was required to produce all non-privileged documents that were responsive to the search terms. So, 50 North is essentially saying, “Court, you told us to run these search terms. We ran them and we gave all of the hits of those search terms to opposing parties except for what was privileged.” And they argue that it didn’t have any other additional obligation to conduct a relevance review under the Court’s first order, but if it had, that would have been abrogated by the Court’s second order. Then 50 North even goes so far as to say that Raymond James should be sanctioned for bringing a sanctions motion because it wasn’t allowed under the Court’s existing orders.

Interestingly, it doesn’t appear in the facts in this decision that 50 North made any argument about the lack of responsiveness of the documents that it provided. In fact, 50 North owns up to the fact that it just said, “Hey, you told us to run these search terms. We ran these search terms, and we gave you everything that was responsive and not privileged, and that’s what the Court ordered.”

What’s the Court’s thinking on this set of facts? Well, the Court basically says, no 50 North. Our orders were very clear. It was very clear that you had an obligation to review the documents that you produced in response to the disputed request for production.

This is where I think there’s an interesting argument that’s made by 50 North. The Court does not take the time here to distinguish it because it doesn’t necessarily need to based on the orders that exist, but it’s really important. 50 North first made the argument, as I mentioned, that the Court’s second order abrogated its need to demur any responsiveness review under the first order. The Court said, “No, that’s not the case. We already said, our orders were very clear, you were supposed to do a responsive review.” 50 North then says, “Well, we have the right not to conduct a responsiveness review under FRCP Rule 34(2)(e) because we produced documents as they are “kept in the ordinary course of business.”

The Court here rejects that argument and says that even if Rule 34 permitted a party to forego a relevance review, that rule only applies if there is not a stipulation or order by the Court to conduct a review, which there was here. Because the Court ordered 50 North to review those documents, Rule 34’s language “in the ordinary course of business” does not apply, but the Court does not go into any analysis about whether or not 50 North’s argument about the language of Rule 34 is correct, and that’s a concern.

Essentially what we’ve got here is a violation of two orders, the Court is clear about that. So, what’s the next analysis on the motion for sanctions? Well, the Court then looks to what sanctions are available and essentially says that under Rule 37(b)(2), discovery sanctions may be appropriate when a party fails to obey an order to provide or permit discovery. This is a section of Rule 37 that we’ve covered multiple times on Case of the Week, and that I’ve advocated for parties to be moving to compel when they are not getting what they need in discovery, so they have an order that puts them under Rule 37(b), because the requirements are not as difficult to meet as the failure to preserve a standard under Rule 37(e).

The Court notes that under Rule 37(b)(2), sanctions can include an award for attorney’s fees.

Analysis wise, the Court says that its prior orders were clear about the need to produce responsive documents from a set of established email searches, and that it was not reasonable for 50 North to fail to review for responsiveness. As a result, the Court grants the motion for sanctions, for violation of rule 37(b)(2) against 50 North. The sanctions that Raymond James seeks are essentially the cost recovery for what it had to do to deal with this document dump — the full cost of hiring contract attorneys to conduct a manual review of the production, as well as other related attorney’s fees and costs. 50 North argued that because the documents were produced in a text searchable format, that Raymond James could have used targeted keyword searches to filter out the irrelevant documents and not have the expense of a manual document for document responsiveness review.

That’s a really interesting argument, because it essentially says, “Hey, we still don’t have the obligation to conduct a responsiveness review, but you could have done it better Raymond James, once we gave you that information.”

I think generally speaking, there are very few courts, if any, where that argument is ever going to fly — that we abrogated our complete responsibility to do a responsiveness review, but now we’re going to argue with the other side about how they should have done it more effectively than they did. Nevertheless, the Court looks at that argument and looks at the information as provided by Raymond James and says that it needs more information about the costs associated with manual review, and the processes that were used to incur those costs, in order to be able to evaluate that argument and determine whether all or some of the expenses should be paid by 50 North. The Court requires Raymond James to submit a declaration that sets forth in detail all the fees and expenses that it incurred as a result of this document dump by 50 North, as well as memorandum explaining why those expenses are necessary. That ruling, which is just from a few months ago, is going to be what we cover in next week’s Case of the Week.

All right, what are our takeaways here? We’ve discussed a couple of them. This case, although it’s commercial litigation and by two, what I would consider, sophisticated parties, is really a rather finite dispute about the modernization of elevators in a commercial building. Interestingly here, this particular building is set up as its own LLC and from a liability perspective, that has a huge impact as to the depth of pockets of the LLC, but it is owned and operated by a much larger commercial real estate company.

When we talk about this document dump of 800,000 pages of documents on Raymond James, what does that really mean and does Rule 34 really preclude that kind of conduct? I think the answer pretty clearly is yes, and the case law around the country backs it up. What we don’t have here from this court — and technically, it really was not necessary for this court to engage in it because of the facts of the case— is that the Court says, “You have violations of two court orders under 37(b)(2) and so we don’t need to talk about whether or not Rule 34 applies in this context or whether the language of “in the ordinary course of business” precludes a party from having to conduct a responsiveness review.

Let’s think a little bit about those 800,000 pages of documents. If we talk about an average of three pages per document, that’s about 267,000 documents. If we talk about an average of five pages per document, that’s about 160,000 documents. Given the costs that we’re going to talk about next week, my inclination is that the average cost was somewhere between five to seven pages of document, and that’s, numbers wise, not really a ridiculous number of documents for a commercial litigation. It seems like a lot for an elevator dispute, but of course, we’re not privy to many facts about the case, the number of custodians, or the search terms in this particular decision that help us define that. What is concerning to me is this argument by 50 North that suggests that the language in rule 34(b)(2)(e) really obfuscates its need to conduct a responsiveness review. That section states that, “A party must produce documents as they are kept in the usual course of business or must organize and label them to correspond to the categories in the request.”

I’ve mentioned this a couple of times. The Court does not dive into that argument to dispel it, but that leaves the issue open, and it’s not an issue that we’ve seen addressed in many cases at all in eDiscovery over the years. It is an issue that I think is very open to needing some revisions to the rules. What does the ordinary course of business mean when it comes to ESI? There really isn’t what we used to have when it came to paper, and everyone kept paper folders. Even then, things were largely managed by custodian, because that’s how they were maintained. Production by custodian may be a perfectly logical way to produce ESI. But if you don’t have a way that “ordinary course of business” is defined, then it’s up to the parties negotiating an ESI protocol to make sure that the organization of information is provided in a particular way. Since parties fight so hard against providing the sources of ESI that are going to be searched and produced, it’s going to be really difficult without some further guidance from the Rules Committee on what ordinary course of business means with regard to ESI. This particular decision here does not provide that analysis.

It wasn’t necessary here, so no criticism to the Court intended whatsoever, but it’s something that some courts on these eDiscovery cases will dive into— even though it’s not relevant to the decision — because it’s important to provide some clarification, and we need that clarification.

All right, that really sums up our Case of the Week for this week. Kudos to Raymond James here for doing the advocacy to get to the motion to compel, have the orders to be able to argue under 37(b)(2) for a basis for sanctions, because otherwise there may not be a basis for sanctions for this document dump. When you’re evaluating or when you get documents dumped on you by opposing counsel, you need to evaluate exactly what’s been happening in the dispute, have you moved to compel? Do you have a violation of an order that you can go to for purposes of sanctions?

That’s our Case of the Week for this week. Thanks so much for joining me. We’ll be back next week with another decision from our eDiscovery Assistant database. This one, a follow up to the costs and fees of this Raymond James decision.

If you are interested in doing a free trial of our case law and resource database, sign up for a free trial to get started. You can also join one of our weekly demos on Thursday mornings at 11:30 ET.

Thanks so much. Stay safe and healthy out there and I’ll see you next week.

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