holding that blanket order would save "expense and time" that moving party "would incur if it was required to review each document line-by-line to identify and redact sensitive information."Summary of this case from Mathew Enterprise, Inc. v. Chrysler Group LLC
For FEDERAL DEPOSIT INSURANCE CORPORATION, AS RECEIVER FOR PEOPLES FIRST COMMUNITY BANK, Plaintiff: JOSEPH GEORGE GALARDI, BEASLEY HAUSER KRAMER ETC - WEST PALM BEACH FL, WEST PALM BEACH, FL; ANDREW STEVEN KWAN, BEASLEY HAUSER ETC PA - WEST PALM BEACH FL, WEST PALM BEACH, FL.
For GREG M BRUDNICKI, JOSEPH F CHAPMAN, III, HENRY CLAYTON FUTRELL, PHILLIP W GRIFFITTS, JOHN ROBERT MIDDLEMAS, JR, RODNEY C MORRIS, RAYMOND E POWELL, JOHN STEPHEN WILSON, II, Defendants: CHARLES WACHTER, FOWLER WHITE BOGGS ETC - TAMPA FL, TAMPA, FL.
GARY R. JONES, United States Magistrate Judge.
Pending before the Court are Plaintiff's Motion For Entry of Protective Order Relating to Confidentiality And Non-Disclosure (Doc. 13) and Defendants' Motion to Compel Production of Documents, Strike Or Overrule Objections, And For Sanctions. (Doc. 15.) On June 11, 2013 the Court conducted a telephonic hearing to address the motions. For the reasons discussed on the record, and as summarized below, Plaintiff's Motion for Entry of Protective Order Relating to Confidentiality and Non-Disclosure is due to be granted as detailed in this order, and as set forth in the modified confidentiality and non-disclosure order separately entered by the Court, and Defendant's Motion to Compel Production of Documents, Strike or Overrule Objections And For Sanctions is due to be granted in part and denied in part.
This action is brought by the Federal Deposit Insurance Corporation, as receiver (FDIC-R" ) for Peoples First Community Bank, against eight of People's former directors, one of whom was an officer, for negligence and gross negligence relating to the approval of eleven transactions. Procedurally, the FDIC-R has filed a first amended complaint after the Court granted in part and denied in part Defendant's motion to dismiss and ordered the FDIC-R to file an amended complaint. (Doc. 10.) The Defendants have not yet filed a response to the First Amended Complaint. Pursuant to the Court's Scheduling and Mediation Order (Doc. 9) the discovery deadline is October 31, 2013.
The two motions addressed in this order concern the production of documentary information by the FDIC-R. The motion for protective order requests the Court to enter an appropriate confidentiality order to facilitate production of the documents in this case, the majority of which are maintained in electronic format. The motion to compel concerns the form and procedures for production of the information and challenges the protocol for production of the electronically stored information (" ESI" ) proposed by the FDIC-R. The motions were addressed by the Court at the same time because resolution of the motion for protective order is a prerequisite to production of ESI by the FDIC-R.
I. Plaintiff's Motion for Entry of Protective Order
The lion's share of documentary information in this case has been converted to ESI. Defendants have served 94 document requests requesting a wealth of information. According to the FDIC-R, responsive documents will be voluminous and include information relating to the identity of bank customers, borrowers, guarantors, and their personal financial and other private information. Additionally, the materials to be produced will include regulatory materials prepared by the Office of Thrift Supervision (" OTS" ). As a consequence, the FDIC-R requests the Court to enter a confidentiality and non-disclosure order to safeguard the personal, financial and regulatory information. The FDIC-R urges the Court to enter an appropriate confidentiality and non-disclosure order to expedite the flow of discovery material because the confidentiality of the personal and financial information of bank customers will be preserved without the FDIC-R having to engage in a costly -- and time consuming process -- of reviewing each document line-by-line to identify sensitive customer information to be redacted. As to the regulatory materials, the FDIC-R represents that their proposed confidentiality order includes terms that satisfy state and federal regulators, which will facilitate the expeditious disclosure of the requested regulatory information.
At the hearing counsel for the FDIC-R represented that the database of ESI consists of all paper documents and all data records and electronic files of Peoples as of the date Peoples was taken over by the FDIC and closed. After Peoples was closed the FDIC-R collected and processed 2.053 terabytes of ESI from the bank's files, which included 52,000 paper documents converted to ESI and 45 million data records and 1.5 million electronic files. Documents after that date generated by the FDIC and documents generated by Hancock Bank, which purchased various assets of Peoples, are not included in the ESI database collected and prepared by the FDIC-R.
As an example of the volume of documents that will need to be produced, the FDIC-R represents that it is prepared to produce approximately 61,000 documents in the first phase of discovery
The FDIC-R has provided the Court with a proposed confidentiality and nondisclosure order, substantially similar to orders that have been used in other cases involving the FDIC-R and failed financial institutions.
While Defendants do not seriously challenge the need for some form of a confidentiality order, the Defendants challenge the confidentiality order proposed by the FDIC-R arguing that there is no need for a blanket confidentiality order because the sensitive customer information the FDIC-R seeks to protect relates to loans dating back six to eight years and the bank has not operated since 2009. Further because ten of the eleven loans in question in this case have been the subject of public foreclosure actions, Defendants suggest there are no longer confidentiality concerns about the loans, borrowers, collateral or real estate projects involved in those actions. Defendants also raise concerns that their ability to interview witnesses and gather information will be hampered because the proposed confidentiality order would require them to have a potential witness sign an agreement to maintain confidentiality. Moreover, Defendants raise concerns that the confidentiality order would impose liability if Defendants discussed information which already is widely available in the public domain. Defendants also understandably complain that the proposed confidentiality order may require their counsel to disclose to the FDIC-R the names of witnesses consulted during their investigation, which would invade the work product privilege by disclosing the strategies of counsel by virtue of identifying the individuals Defendants' counsel contacted.
As to the regulatory information, Defendants assert that disclosure of information relating to the examination and regulation of the bank is no longer a concern because the bank has not operated since December 2009 so there is no risk that disclosure would affect the operation of the Bank, its depositors or other individuals previously involved with the Bank.
Lastly, Defendants complain that the entry of the FDIC-R's proposed confidentiality order would result in the wholesale sealing of documents, thus burdening the Court and running afoul of the principle that court orders authorizing the filing of documents under seal should be narrowly tailored and should be the exception.
Defendants have proposed their own confidentiality order, which Defendants assert is much simpler and adequately addresses issues of confidentiality. One of the sections in Defendants' proposed confidentiality order entitled " Objections to Designation" would authorize a party to lodge an objection at any time to the confidential designation of a document. If the parties do not resolve the objection by agreement the party designating the material as confidential would be required to file a motion with the Court and obtain a ruling on the confidential nature of the document. If the designating party fails to do so within 30 days the confidential designation lapses and the document can then be publicly disclosed. For good reason, the FDIC-R urges the Court not to include this type of provision because it would unnecessarily complicate the process of document production, invite abuse and more likely than not would result in protracted motion practice.
The Court has considered the views of the parties and concludes that the entry of a protective order is necessary and appropriate in this case in order to facilitate the expeditious production of documents and to avoid unnecessary expense and time, which the FDIC-R would incur if it was required to review each document line-by-line to identify and redact sensitive information.
The discovery in this case is asymmetrical. The FDIC-R will be the party producing the vast majority of documents. The relevant documents in this case are not in the possession of Defendants -- who have not been involved with People's Bank since at the latest December 2009 when the Bank was taken over by federal regulators -- but rather will be contained in the Bank's files concerning the underwriting, investigation and approval of the loans in the eleven transactions Thus, the burden and expense of document production will fall upon the FDIC-R. Moreover, the concerns about a blanket confidentiality order raised by Defendants can be addressed adequately through appropriate modifications to the confidentiality and non-disclosure order the Court is entering separately in this case.
For example, the Court agrees that the Defendants should not be required to disclose to the FDIC-R upon request -- as currently included in section 7 of the FDIC-R's proposed confidentiality order -- the identities of any third parties Defendants chooses to consult with and share the documents. While Defendants will be required to have any third parties execute a modified agreement to maintain confidentiality counsel only will be required to maintain the agreements for later use if necessary and will not be required to provide copies to the FDIC-R upon request.
Further, the entry of the modified confidentiality order by the Court will not, as Defendants suggest, result in wholesale sealing of documents in this case nor does the order constitute a blanket finding by the Court of privilege or confidentiality. Rather, that determination, if necessary, will be reserved for the Court to address in the event a motion to seal is filed. The modified order entered by the Court addresses the procedures for filing documents under seal consistent with Eleventh Circuit precedent and consistent with the principle that wholesale sealing of documents is disfavored by the Courts.
See, e.g. Chicago Tribune Co. v. Bridgestone/Firestone, Inc., 263 F.3d 1304, 1310-15 (11th Cir. 2001).
Accordingly, for these reasons, Plaintiff's Motion For Entry of Protective Order Relating to Confidentiality and Non-Disclosure (Doc. 13) is granted to the extent specified in the Confidentiality and Non-Disclosure Order entered separately by the Court this date.
II. Defendants' Motion To Compel
A. The ESI Protocol
Defendants request the Court to enter an order requiring the FDIC-R to produce documents responsive to Defendants' First Request for Production, served on April 4, 2013. Defendants also request the Court to award sanctions against the FDIC-R for delaying discovery.
Defendants' requests for production include 94 separate requests. While the requests are far-reaching in their scope, in general, Defendants seek production of documents relating to the eleven loan transactions at issue and to the allegations in the Complaint. Although Defendants complain that the FDIC-R has not produced any documents at this point the reason no documents have been produced is because a confidentiality and non-disclosure order had not been entered and the parties did not reach agreement on the ESI protocol to be utilized for the production of the documents. Thus, resolution of the ESI protocol is critical to the production of documents.
The parties sharply disagree on the method of production and the ESI protocol. Putting aside the form boilerplate objections inserted in every response by the FDIC-R, the FDIC-R has agreed to produce responsive documents under a proposed protocol. Pursuant to the FDIC-R's proposed protocol (the " ESI Protocol" ), the FDIC-R has agreed to produce the documents in a two phase process. The first phase consists of approximately 61,000 pages of documents and includes the following categories of highly relevant documents: (1) credit, underwriting, appraisal and other loan-related files maintained by Peoples Bank; (2) Bank loan and appraisal policies; (3) Board and loan committee meeting minutes and packages; (4) pre-failure loan reviews relating to the eleven transactions or the Bank's loan portfolio performed by the Bank or outside auditors; (5) reports of examination performed by the Bank's primary regulator, the OTS from 2002 forward, and key regulatory correspondence relating the reports of examination. Notably, the phase I production constitutes the vast majority of the relevant documents in this case. The only impediment to the production of these documents was the entry of an appropriate confidentiality and non-disclosure order. Moreover, the FDIC-R has agreed to produce the phase I documents at its own expense. Thus, with the Court's entry of the confidentiality and non-disclosure order production of the vast majority of documents has been resolved.
For example, in many of its responses to the requests the FRIC-R has included an objection that the request is " vague, ambiguous, overly broad, unduly burdensome ... " or that the request is " overly broad, unduly burdensome, seeks irrelevant information, and it is not reasonably calculated to lead to the discovery of admissible evidence" and then proceeded to advise that subject to such objections it would produce responsive documents. While the Court recognizes that it may be a common practice to raise boilerplate objections and then produce documents subject to the objection the practice is prohibited by N.D.Fla.Loc.R. 26.2(C)(1), which requires that objections and grounds for objection shall be addressed to the specific request for production, and may not be made generally. Simply " [I]ntoning the 'overly broad and burdensome' litany, without more, does not express a valid objection." See Mead Corp. v. Riverwood Natural Resources Corp., 145 F.R.D. 512, 515 (D. Minn. 1992). Thus, the form boilerplate objections shall not be considered by the Court and are nullity.
In phase II of production the FDIC-R has proposed that these documents should be produced pursuant to their proposed ESI Protocol. The documents contained in phase II consist of largely marginal documents from a relevancy perspective and are contained in the voluminous ESI the FDIC-R has collected and copied to its DMS database. Under the FDIC-R's ESI protocol, the parties would collaborate in the process of culling relevant documents from the 2.053 terabytes of ESI on the DMS database by using agreed upon search terms and the names of key Bank employees. After relevant information has been identified the information will be uploaded to a database known as " Relativity." The Defendants will then be given private and secure access to Relativity through the internet and be able to search, review and annotate all ESI on Relativity. Defendants will then be able to identify and request any document they want produced. The FDIC-R will then produce the requested documents subject to a privilege review and clawback agreement. The FDIC-R proposes to charge $.06 per page for any document Defendants identify from the Relativity database and then request the FDIC-R to produce. Additionally, the FDIC-R proposes to charge the Defendants $225 per gigabyte of data that is uploaded to the Relativity database.
The FDIC-R suggests that using their proposed ESI protocol will expedite discovery, provide the Defendants with better access to the documents and will greatly reduce the enormous costs it would incur if it was required to utilize traditional methods of collection and review of ESI. Further, the ESI protocol proposed by the FDIC-R was not formulated just for this case but has been used successfully in at least a dozen similar lawsuits brought by the FDIC-R against former officers and directors of failed banks.
See, e.g. FDIC v Johnson, et al., No. 2:12-cv-00209-KJD-PAL, (D. Nev. Mar. 22, 2013 and FDIC v. Baker, No. 1:12-cv-04173-RWS (N.D.Ga. April 18, 2013). Copies of these orders are located at Doc. 19, Exs. C and D.
Defendants object to the ESI protocol primarily on the grounds that the ESI protocol is an inappropriate cost shifting and " responsibility shifting" scheme by the FDIC-R. According to the Defendants, the Federal Rules of Civil Procedure do not require Defendants to pay the FDIC-R to produce documents kept in the ordinary course of business, regardless of whether the documents are obtained from an ESI database or from the hard copy files. Specifically, the Defendants challenge the protocol because under the protocol they will be required to provide appropriate search terms in the first instance, and not the FDIC-R, thus placing on them the burden of locating and identifying relevant documents.
While there are some minor modifications that will be made in the ESI protocol, the Court concludes, for the most part, the ESI protocol proposed by the FDIC-R is appropriate, reasonable and consistent with principles of proportionality when dealing with ESI.
As to cost shifting, Defendants contend that because the ESI is not inaccessible the Zubulake factors for determining whether there should be cost shifting do not even come into play. The Court in Zubulake held that the usual rules of discovery generally apply when the ESI data are in accessible format but that cost shifting could be considered when data were relatively inaccessible, such as on backup tapes. While the Court in Zubulake was focusing upon the issue of cost shifting when dealing with inaccessible ESI, and other courts have required a showing of inaccessibility for cost shifting, other courts have held that Rule 26(c) permits cost shifting as part of enforcing proportionality limits.
Zubulake v. UBS Warburg LLC, 216 F.R.D. 280, 284 (S.D.N.Y. 2003).
Zubulake v. UBS Warburg LLC, 217 F.R.D. 309, 322 (S.D. N.Y. 2003).
See, e.g. Peskoff v Faber, 240 F.R.D. 26, 31 (D.D.C. 2007)(" [A]ccessible data must be produced at the cost of the producing party; cost shifting does not even become a possibility unless there is first a showing of inaccessibility." ); Pipefitters Local No. 636 Pension Fund v. Mercer Human Res. Consulting, Inc., 2007 WL 2080365, at *2 (E.D. Mich. July 19, 2007).
See, e.g. Thompson v U.S. Dep't of Housing and Urban Dev., 219 F.R.D. 93, 98 (D. Md. 2003)(The options available are limited only by the court's own imagination and the quality and quantity of the factual information provided by the parties to be used by the Court in evaluating the Rule 26(b) factors. The court can, for example, shift the cost, in whole or part, of burdensome and expensive Rule 34 discovery to the requesting party ... " ).
There are several reasons that requiring the Defendants to pay some of the cost of producing the ESI makes sense, even assuming the DMS database does not fall within the definition of inaccessible ESI. First, this case does not present a classic example of whether there should be cost shifting in producing ESI. In the typical case in which courts have dealt with the issue of cost shifting -- including Zubulake and Peskoff -- the lion's share of the expense in producing the ESI concerned the collection and retrieval of the ESI from, for example, backup tapes and other sources which by their very nature made the process extremely expensive and time consuming. That is not the situation in this case. The FDIC-R already has identified, collected and stored all of the information (including all ESI from People's Bank) on the FDIC-R DMS database, setup and established to make discovery less expensive, less burdensome and more expeditious. Indeed, the FDIC-R represents in the Declaration of Ray Rivard, an information technology specialist in the FDIC's Legal Information Technology Unit, that the FDIC has already incurred more than $624,000 in costs for collection, processing and uploading of the files and documents of People's Bank into the DMS database. Thus, this case does not involve a situation where there will be an enormous cost in collecting and retrieving ESI -- the FDIC-R has already saddled the cost of doing this and expended the time to do so. Consequently, the Defendants' suggestion that the ESI protocol advanced by the FDIC-R is a cost-shifting device is not accurate. Indeed, the costs the Defendants would be required to pay under the ESI protocol include only a $.06 per page charge for converting a document to a TIFF format and a nominal charge for uploading the data to the Relativity database, which the FDIC-R states should be no more than about $200 per month -- a charge that pales in comparison to the hundreds of thousands of dollars that are typically incurred in collecting and retrieving ESI. The $.06 per page charge applicable only to documents Defendants identify on the Relativity database and request the FDIC-R to produce in TIFF format is extremely modest and certainly consistent with the per page cost for photocopying a document, which Defendants would have to pay if the documents were traditional paper documents and not ESI.
Doc. 19, Ex. A, ¶ 13.
Secondly, even assuming the ESI protocol was interpreted to provide cost-shifting, Federal Rule of Civil Procedure 26(b)(2)(C) provides authority for shifting costs as part of the enforcement of proportionality limits. Among the factors the Court may consider in enforcing proportionality limits are: (1) the specificity of the discovery requests; (2) the likelihood of discovering critical information; (3) the purposes for which the responding party maintains the requested data; (4) the relative benefit to the parties of obtaining the information; (5) the total cost associated with the production; (6) the relative ability of each party to control costs and its incentive to do so; and (7) the resources available to each party.
Rowe Entertainment, Inc. V. William Morris Agency, Inc., 205 F.R.D. 421, 428-29 (S.D. N.Y. 2002), aff'd, 53 Fed. R .Serv. 3d 296 (S.D.N.Y. 2002).
The application of these factors strongly supports the ESI protocol proposed by the FDIC-R. The data contained on the DM database contain emails and other documents which probably fall on the outer boundaries of relevant information. The 61,000 documents -- which will be produced by the FDIC-R at no cost -- contain the key documents relating to the eleven transactions and the review and approval of these loans. Consequently, the ESI protocol concerns largely marginal documents. Further, the 94 discovery requests are far reaching, broad and do not call for the production of specific targeted documents. The collection, retrieval and uploading of the Bank's documents into the DM database -- a task that was time consuming and cost hundreds of thousands of dollars -- was, in the Court's view, an appropriate and reasonable method to attempt to control the costs of discovery in this case and significantly reduce the time and effort the parties would have spent if discovery of ESI had proceeded in the traditional way. Lastly, the costs Defendants will have to pay under the ESI protocol are relatively small -- an expense that these Defendants should be able to bear without impacting their ability to mount a vigorous defense to the claims in this case. Accordingly, the Court concludes that taking into account considerations of proportionality of the discovery requests in these circumstances, the ESI protocol proposed by the FDIC-R is reasonable, necessary and wholly appropriate in this case subject to minor modifications made by the Court. The Court will, therefore, append to this Order the modified ESI Protocol, which shall control the discovery of ESI in this case.
efendants' objection to the protocol on the grounds that it shifts the burden to the Defendants because they are required to initially propose the search terms is not very persuasive. First, Defendants -- former directors and an officer of the Bank -- stand in the best position to know the names, titles and other information as to the custodians, the names of files and how the Bank's documents are stored. It thus makes sense that the Bank would be involved in the first instance in formulating appropriate search terms. Secondly, the search process of the DMS database contemplates that the process should be a mutual collaboration and thus the Court expects the parties to work together, notwithstanding which side first proposes the search terms.
or example, paragraph 4 of the ESI protocol limits the search term process to no more than 3 iterations of custodian and search terms and hit reports. While this number is not necessarily nreasonable it does impose an arbitrary limit. The Court therefore has changed the limit on iterations to a " reasonable number." The Court expects the parties to act in good faith and reasonably in implementing the ESI protocol. In the event, however, a dispute develops as to the number of iterations of search terms the parties may present the issue to the Court for resolution.
B. Defendants' Specific Discovery Requests
There are several issues applicable in general to many of the 94 discovery requests. These issues include: (1) whether the FDIC-R must produce documents relating to post-receivership administration, disposition, or sale of the loans and collateral relevant to the eleven transactions, (2) the relevant time period for the discovery requests; (3) documents relating to the FDIC-R investigation; and (4) attorney-client and work privileges to some of the requests.
Turning first to whether the FDIC-R must produce post-receivership documents the FDIC-R contends that these documents are not subject to discovery because the FDIC's efforts in marshaling the assets of a failed institution are not subject to challenge under what the FDIC describes as the " no-duty" rule. See, e.g. FDIC v Bierman, 2 F.3d 1424, 1439-40 (7th Cir. 1993); FDIC v. Cherry, Bakaert & Holland, 129 F.R.D. 188, 195-96 (M.D. Fla. 1989). Under the no-duty rule the FDIC's decisions as receiver with respect to the sale of bank's assets are not material. FDIC v Greenwood, 719 F.Supp. 749, 750-51 (C.D. Ill. 1989). Thus, as a matter of public policy the decisions of the FDIC in liquidating the assets of a failed bank cannot be second guessed whether couched in terms of contributory negligence, proximate causation or mitigation of damages. Cherry at 195-96. While the non-duty jurisprudence may apply to challenges to the FDIC's post receivership actions, the Court is now concerned with discovery and not whether these types of defenses will be raised or whether evidence relating to these issues will be admitted at trial. Indeed, at this juncture the Defendants have not yet filed a response to the First Amended Complaint so the Court does not know whether defenses will be raised drawing into question the no-duty rule.
As the Court explained at the hearing, the standard to be applied as to the scope of discovery is whether the evidence is calculated to lead to the discovery of admissible evidence. Included within post-receivership documentation is information concerning the disposition of the loans and collateral of the eleven transactions. Although Defendants may be precluded from challenging the decisions made by the FDIC-R as to when and how these assets were foreclosed and disposed of, the Defendants are entitled to know the ultimate disposition of the loans and assets. There very well may be information included within those files which could bear upon the creditworthiness of the borrowers, the bona-fides of the transactions and the financial solvency of the guarantors, information which arguably could have a bearing upon whether the review and approval of the eleven transactions were prudent, sound and consistent with generally accepted banking practices. Accordingly, the FDIC-R's objection to production of post receivership documents on the grounds that such information is not discoverable because of the no-duty rule is overruled. The FDIC-R is required to produce post receivership documents relating to the sale and disposition of the loans and collateral in the eleven transactions involved in this case.
With regard to the relevant time period for the scope of discovery the Defendants have requested documentation from throughout the Bank's 26 year history. As a general matter while it seems highly unlikely that any documentation could be relevant that predates when the eleven loans were first brought to the Bank for approval, the FDIC-R has agreed to produce documents dating from 2002, which is three years before the first of the eleven transactions was approved. This period of time is more than reasonable and therefore to the extent the Defendants request production of documents predating 2002 the requests are denied. In the event there are specific and identifiable documents predating 2002 that are essential in this case the Defendants may then make a request for production and if necessary bring the matter to the attention of the Court.
With regard to the FDIC-R's investigation of the Bank the regulatory investigations of the Bank are confidential under 12 C.F.R. § 308.147 and thus documents relating to the investigation do not have to be produced. This applies only to documents that are not contained within the files of People's Bank. To the extent any reports of examination or regulatory reviews are contained within the files of People's Bank these documents must be produced. With regard to the Material Loss Review, the document is publicly available and therefore Defendants should be able to obtain a copy. However, as to closing reports and other communications prepared by investigators for the FDIC's counsel these documents are attorney-client privileged and thus protected from compelled disclosure. Cherry, 131 F.R.D. at 599. Additionally, any OIG work papers and other investigatory materials not within the possession, custody or control of People's Bank or the FDIC-R are confidential and not subject to production.
At the hearing, the Defendants identified the loss sharing agreement between the FDIC-R and Hancock Bank as part of the documentation Defendants were requesting. The purchase and sale agreement between the FDIC-R and Hancock Bank is a public document, although portions of it are redacted as it relates to specific assets. Because there is a confidentiality agreement in place the FDIC-R will be required to produce an unredacted copy of the purchase and sale agreement and/or loss sharing agreement with Hancock Bank.
Lastly, with regard to requests to produce 28 through 94, the requests are contention requests which recite allegations in the complaint and require the FDIC-R to produce documents referring to the specific allegation. The FDIC-R has agreed to produce all documents that support the factual allegations in the complaint but object to being required to categorize the documents to correspond to each of the 66 requests from number 28 through 94. The Court agrees that requiring the FDIC-R to group and categorize the documents to correspond with each request could implicate the thought processes of counsel and thus invade the work product privilege. See, Sporck v. Peil, 759 F.2d 312, 316 (3d Cir. 1985). The FDIC-R will, however, be required to produce documents responsive to these requests consistent with the limits and guidelines on discovery discussed in this order.
As to requests nos. 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27 and 28 through 94 the FDIC-R is required to produce documents responsive to these requests consistent with, as limited by this Order, and where applicable, pursuant to the ESI Protocol approved by the Court.
Accordingly, for these reasons, Defendants' Motion to Compel is granted in part and is denied in part to the extent that the Court has narrowed and limited the scope of production of documents in this order.
The Defendants' request for sanctions is denied. The FDIC-R's failure to produce documents until an appropriate confidentiality and non-disclosure order was entered and offer to produce ESI pursuant to the ESI protocol was reasonable and justified. Accordingly, there is no basis for the entry of sanctions.
In light of the foregoing and upon due consideration, it is ORDERED:
1. Plaintiff's Motion For Entry of Protective Order Relating to Confidentiality And Non-Disclosure (Doc. 13) is GRANTED. The Confidentiality and Non-Disclosure Order entered separately by the Court shall control the production of documents and confidential material in this case.
2. Defendants' Motion to Compel Production of Documents, Strike Or Overrule Objections, And For Sanctions (Doc. 15) is GRANTED in part and DENIED in part. The FDIC-R shall produce documents as required by this Order. The FDIC-R must produce the documents identified in Phase I of discovery as soon as possible and not later than ten (10) business days from the date of this Order. The terms of the ESI Protocol appended to this Order are incorporated into this Order and shall control discovery in this case. The parties must comply with the ESI Protocol appended to this Order including the requirement that the Defendants pay the charges identified in the ESI Protocol. The parties are directed to begin implementing the ESI Protocol as soon as possible and are further directed to cooperate with each other in the implementation of and compliance with the ESI Protocol. Although the Court has not included specific deadlines for implementing the ESI Protocol the parties are directed to make all reasonable efforts to do so as expeditiously as possible and in recognition of the fact the discovery deadline is October 31, 2013. The Defendants' request for sanctions is denied.
DONE AND ORDERED this 14th day of June 2013.
PROTOCOL REGARDING ELECTRONICALLY STORED INFORMATION
As used herein, " FDIC-R" or " Plaintiff" means FDIC in its capacity as Receiver of Peoples First Community Bank, Panama City, Florida (" Peoples First" or the " Bank" ). " Defendants" mean collectively Greg M. Brudnicki, Joseph F. Chapman, III, Henry Clayton Futrell, Philip W. Griffitts, John Robert Middlemas, Jr., Rodney C. Morris, Raymond E. Powell, and John Stephen Wilson, II. Plaintiff and Defendants have conferred regarding the production of electronically stored information (" ESI" ) and agree that such production shall be made in accordance with this Protocol Regarding Electronically Stored Information (" ESI Protocol" ).
1. This Protocol applies to the ESI provisions of Fed.R.Civ.P. 16, 26, 33, 34, and 37. As used herein, the words " Party" or " Parties" include Plaintiff and Defendants.
2. The provisions set forth in Exhibit A hereto shall govern the format of the production of ESI.
3. FDIC-R or its contractors are in possession of certain ESI related to Peoples First and obtained from Peoples First's legacy systems (" Peoples First ESI" ). The Peoples First ESI is maintained by FDIC-R in the Data Management Services (DMS) databases listed in attached Exhibit B. FDIC-R represents that the Peoples First ESI listed in Exhibit B is a complete and accurate listing of all the ESI processed by FDIC-R from Peoples First. FDIC-R shall cause searches to be conducted of the Peoples First ESI and shall process and produce any and all responsive documents to Defendants in accordance with the procedure set forth in this ESI Protocol in the format specified in Exhibit A.
4. Defendants shall collectively identify a set of search terms and designated custodians in collaboration with Plaintiff. Plaintiff will run the search terms across the Peoples First ESI. Thereafter, Plaintiff shall provide a search term hit report to Defendants which identifies for each database the number of unique documents which hit upon each identified search term requested by Defendants. Plaintiff shall also identify in the hit reports the number of documents included in the family of each document containing a search hit. Based on this initial search term hit report, Defendants may then collectively identify a refined or modified set of search terms and designated custodians that Plaintiff will run across Peoples First ESI and produce a second search term hit report to Defendants. This search term process shall not be unlimited and shall be limited to a reasonable number of iterations of custodians and search terms and hit reports., consistent with the facts of this case. If, however, a producing party is aware of a relevant document that is not triggered by the application of the search terms, the producing party shall produce that document from the Peoples First ESI. If the Parties are unable to agree upon a final set of search terms, any Party may raise the issue with the Court by motion.
5. After the Parties have agreed upon search terms or established search terms, FDIC-R shall export to a Relativity database the documents captured by the agreed upon search terms. Defendants shall be granted access to the Relativity database for inspection of the documents and may designate the documents they wish to have imaged, Bates-numbered and produced.
6. Pursuant to the terms of the Protective Order, FDIC-R reserves the right to claim privilege, work product, or other protection, for any documents exported to the Relativity database.
7. Defendants collectively shall pay $225 per gigabyte for all Peoples First ESI that is exported to Relativity OR a monthly cost of $10 per gigabyte hosted on the Relativity review platform, and shall pay $0.06 per page for all Peoples First ESI that is produced. Each Defendant shall be relieved of his or her duty to pay the monthly hosting fee upon advising FDIC-R that he or she no longer requires access to the Relativity database; provided, however, that if any disputes between the Parties exist that require continued use of the Relativity database, each Defendant involved in such dispute shall pay the monthly hosting fee until the dispute is resolved.
8. Under this ESI Protocol, the FDIC-R shall produce ESI in " Static Image(s)" format, which means a representation of ESI produced by converting a native file into a standard image format capable of being viewed and printed on standard computer systems. In the absence of agreement of the Parties or order of Court, a Static Image will be provided in Tagged Image File Format (TIFF, or .TIF files). If a TIFF or .TIF file cannot be created, then the Static Image will be provided in Portable Document Format (PDF).
9. In addition and supplemental to the ESI protocol set forth in paragraphs 5 through 8 above, the Plaintiff shall produce to the Defendants in response to discrete discovery requests responsive, non-objectionable documents that may have been kept by the Bank in paper format or files that are segregated, discrete in nature, and readily accessible. By way of example, such files may include records for the eleven (11) Transactions at issue, Bank loan policies, board and committee minutes related to the eleven (11) Transactions at issue, and third-party reviews of the eleven (11) Transactions at issue. Such documents shall be produced in electronic format, and most often in searchable PDF scans.
10. Regardless of the protocols set forth in this ESI Protocol, FDIC-R shall produce any and all non-privileged ESI it intends to rely upon in support of any claim or defense during the course of the litigation.
11. Defendants with relevant ESI shall identify and produce non-privileged ESI that is responsive to Plaintiff's discovery requests in the format specified in Exhibit A. Defendants shall log any document reasonably believed to be not discoverable because it is privileged, subject to the work product doctrine, or otherwise not discoverable on the basis of a recognized protection or privilege.
12. In accordance with Federal Rule of Evidence 502(b), no party shall be deemed to have waived its right to assert the attorney-client privilege, the attorney work-product privilege, or any other recognized privilege or protection (collectively " Privilege" ). Upon the discovery by any party of an inadvertent disclosure of materials protected by Privilege, including those exported to Relativity pursuant to this ESI Protocol, in accordance with Federal Rule of Civil Procedure 26(b)(5)(B) that party shall promptly notify the other counsel in writing of the disclosure, identify the document that contains such materials, and immediately take steps to preclude further disclosure. In such an event, the party receiving the materials protected by Privilege will return or destroy all copies of identified materials and treat those materials as if they had been initially excluded from production.
13. The return or destruction of a document or materials over which the producing party has asserted a claim of Privilege as set forth above shall be without prejudice to the receiving party's right to seek an order from the Court directing the production of the document on the ground that the claimed Privilege is invalid or inapplicable; provided, however, that mere production of the document or information in the course of this action shall not constitute grounds for asserting waiver of the Privilege.
14. Nothing in this Protocol requires Plaintiff or Defendants to produce again information that was produced to the other before this action was commenced nor does it preclude the assertion of any privilege or protection for such information.
Exhibit A to ESI Protocol
Form of Production for Email
All electronic email from Windows-Based ESI (" WESI" ) shall be produced as Static Images complete with full text extracts and the following fields of metadata, to the extent the metadata is available:
1. Custodian (Name of Custodian from which file is being produced);
2. Other Custodians (Name(s) of custodian(s) who had exact copy of message before de-duplication);
3. Author (FROM field);
6. Recipient (TO field);
8. MD5 Hash Value or Equivalent;
9. Date Sent (Date the email was sent);
10. Date Received (Date the file was received);
11. Time Sent (Time the email was received);
12. Time Received (Time the email was received);
13. File Type (Application used to create the file);
14. Page Count;
15. File Ext (Extension for the file);
16. PST Name (File name);
17. Body Text (Extracted text);
18. Bates Begin (Beginning Production Number);
19. Bates End (Ending Production Number);
20. Attach Begin (Beginning Attachment Range Number);
21. Attach End (Ending Attachment Range Number).
Electronic mail shall be produced along with attachments to the extent the message and/or any attachment is responsive, relevant and not privileged. As a general matter, subject to specific review, a message and its attachments(s) shall not be withheld from production based on the fact that one or more attachments are privileged, irrelevant or non-responsive. To the extent the message and/or one or more attachments is privileged or non-responsive, the responsive, non-privileged documents shall be produced along with placeholders indicating whether the individual record was withheld as non-responsive or privileged.
Form of Production for Other WESI
All other WESI (including attachments to electronic mail) shall be produced as Static Images complete with full text extracts and the following fields of metadata to the extent the metadata is available:
1. Custodian (Name of Custodian from which file is being produced);
2. Other Custodians (Name(s) of custodian(s) who had exact copy of file before de-duplication);
4. Doc Title (Title of file from properties);
5. Doc Subject (Subject of file from properties);
6. Created Date (Date the file was created);
7. Created Time (Time the file was created);
8. Last Modified Date (Date the file was last modified);
9. Last Modified Time (Time the file was last modified);
10. Last Saved By (Name of user who last saved the file);
11. File Type (Application used to create the file);
12. Doc Type;
13. Page Count;
14. File Ext (Extension for the file);
15. Path (Full path of the original location where the file was located);
16. MD5 Hash (MD5 hash value of the original native file);
17. Body Text (OCR for paper data or Extracted text for all ESI);
18. Bates Begin (Beginning Production Number);
19. Bates End (Ending Production Number);
20. Attach Begin (Beginning Attachment Range Number);
21. Attach End (Ending Attachment Range Number),
Form of Production for Spreadsheets
ESI in the form of spreadsheets (Excel) shall be produced in native format with the first page of the file converted to a Static Image and linked to the native file. These documents will be accompanied with the appropriate load files indicating a cross reference to the Bates numbered Static Image.
All WESI shall be produced along with an IPRO, Opticon, or Summation DII load file indicating Bates numbers and document breaks. Metadata shall be produced in Concordance DAT file format, DII format and summary text file for Summation, or XML format and extracted full text shall be provided in TXT file format at the document level. Non-Windows-Based Applications and Data shall be subject to the same production requirements to the extent technically and legally feasible.
The following file types shall be processed for production:
File Type Description
Windows cabinet (data will be extracted and containerfile
Comma Separated Values file
Outlook Express E-mail Folder
Microsoft Word Template
Microsoft Word 2007
Lotus Notes Message File
Electronic fax documents
Outlook Express E-mail Message
Outlook Express Saved Mail Messages files
Apple Mail email message
Web based Hypertext Markup Language.File
Web based Hypertext Markup Language File
Calendar items in Apple, Mozilla and Google
Apple Keynote presentation
MSN Mail file
Unix MAC file mailbox
Novell GroupWise saved email message file
Microsoft Access Database
Multipurpose Internet Mail Extension
Multipurpose Internet Mail Extension
Outlook Mail Message
Lotus Notes (data will be extracted and containerfile
Microsoft Outlook Offline folder file (data will beconverted,
extracted, and container file discarded)
Outlook Express message folder file
Portable Document Format File
PopMail messages file
Microsoft PowerPoint Show file
Microsoft PowerPoint file
Microsoft PowerPoint 2007
Microsoft Outlook personal folder file (data will beextracted
and container file discarded)
WinRAR compressed archive (data will be extracted and
container file discarded)
Rich Text Format
Tagged Image Format
Plain Text File
Microsoft Works Word Processor Document
Microsoft Excel 2007
Extensible Markup Language.file
XML Paper Specification
Zipped Compressed File (data will be extracted and
Extended Zipped Compressed File (data will beextracted
To avoid the production of more than one copy of a particular unique item, the Parties shall use industry standard MD5 or SHA-1 hash values within (1) all emails identified for production, and (2) all loose files identified for production. The Parties will not de-duplicate attachments to emails against loose files.
Other Methods to Streamline Discovery
The Parties agree to meet and confer in good faith about any other technology or process that a producing party proposes to use to streamline the culling, review and production of ESI (e.g., email threading, near de-duplication, technology assisted review). The Parties shall make reasonable good faith efforts to resolve any objections to the use of such technology or process before seeking relief from the court.
Documents shall be produced on external hard drives, readily accessible computer or electronic media, e.g., CDs or DVDs, or by FTP upload (" Production Media" ). All Production Media should have the following four directories: (1) IMAGES for the images; (2) DATA for the .dat and .opt files; (3) TEXT for the extracted text/OCR files; and (4) NATIVES for the native Excel files. The Production Media shall identify: (a) the producing party's name; (b) the production date; and (c) the Bates Number range of the materials contained on the Production Media.
Where the original of a produced document is in color, and color is material to the interpretation of the document, the receiving party may request that the document be produced in color (whether electronic or paper).
Documents that exist solely in physical hard-copy format shall be converted and produced following the same protocols outlined above. The metadata shall indicate document breaks and identify the custodian from whom the document was collected. The " .tiff' files shall be subject to an Optical Character Recognition (" OCR" ) process.
The Parties need not collect documents stored on disaster recovery backup tapes unless a showing of specific need is made.
Exhibit B to Joint ESI Protocol
[To be completed]