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Searching Only File Names is Not the “Safe Way” to Avoid Sanctions: eDiscovery Case Law

Court Denies Defendant’s Motion to Overrule Plaintiff’s Objections to Discovery Requests

See what I did there?… :o)

In Rodman v. Safeway, No. 11-cv-03003-JST (N.D. Cal., Oct. 6, 2016), California District Judge Jon S. Tigar ordered the defendant to pay plaintiff’s Class Counsel $688,646 as a discovery sanction under Rule 26(g), ruling that “failure to search within the contents of the legacy drive constituted an unreasonable inquiry”, but denied without prejudice the plaintiff’s request for a negative jury instruction.

Case Background

In this certified class action for breach of contract, the Court previously granted the plaintiff’s motion for partial summary judgment that the defendant breached its contract with class members who registered to shop online after 2006 “by charging higher prices for groceries on its online Safeway.com delivery service than it charged in the stores where the groceries were selected.” After the Court denied the plaintiff’s motion for partial summary judgment regarding pre-2006 liability, only one issue remained to be tried: whether class members who registered for the delivery service prior to 2006 had agreed to the same contract as class members who registered after 2006.

Trial was scheduled to begin on October 6, 2015. Approximately seven days before that date, the defendant produced ten highly relevant documents related to its pre-2006 terms and conditions. The documents were found on a “legacy” computer drive by the defendant’s Director of Marketing, Steve Guthrie, who was reviewing that drive in anticipation for trial. Apparently, Guthrie’s initial search of the legacy drive did not involve a search within the contents of the files, but rather merely searched for file names within the legacy drive. Guthrie did not find the ten documents-in-question until approximately ten days before trial – over five months after fact discovery closed on April 24, 2015. Ultimately, the parties stipulated that the Court’s prior summary judgment orders were equally applicable to Class members who registered before January 1, 2006 and in November 2015, the Court issued a Judgment in favor of the certified class in the amount of $30,979,262 in damages and $10,905,505 in prejudgment interest, for a total of $41,884,767. The defendant appealed.

On April 6, 2016, Plaintiff filed a motion for discovery sanctions under Rule 26(g) based primarily on the defendant’s “false and inaccurate statements” in response to interrogatories and document requests “concerning the non-existences of documents reflecting historic copies of” the defendant’s pre-2006 terms and conditions. The Court held a hearing on the motion on August 25, 2016.

Judge’s Ruling

Judge Tigar disagreed with the defendant that its inquiry was unreasonable, stating “Although there is no indication of bad faith in Safeway’s inability to find the ten responsive documents during fact discovery, the Court concludes that Safeway’s initial search of the legacy drive was unreasonable”, giving three reasons that the inquiry was unreasonable:

  1. There was “no indication that Safeway’s counsel guided or monitored Mr. Guthrie’s search of the legacy drive in any significant way”;
  2. There was no evidence that Guthrie had any experience searching large repositories; and
  3. The evidence indicated that the search was objectively unreasonable.

Ultimately, Judge Tigar concluded that the defendant’s failure to search within the contents of the legacy drive constituted an unreasonable inquiry and that the defendant offered no substantial justification for its violation of Rule 26(g). The plaintiff requested attorneys’ fees totaling over $1 million, but Judge Tigar reduced that request by one-third, resulting in a fee award of $688,646. Judge Tigar also denied without prejudice the plaintiff’s request for a negative jury instruction, but indicated that the plaintiff may renew the request for a negative jury instruction should the Ninth Circuit remand this case for trial.

So, what do you think? Should the lack of finding of bad faith have resulted in a different outcome? Please share any comments you might have or if you’d like to know more about a particular topic.

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