Parties and third parties alike should pay careful attention to the terms of a discovery stipulation. Courts are likely to strictly uphold the terms of a stipulation, even if doing so would result in a party or third party having to go to great expense in order to comply with a discovery request. Parties and third parties should also strive toward timely compliance with case management orders, as well as comprehensive identification of sources of potentially relevant ESI, keeping in mind that even a good faith failure to comply could result in sanctions.

In re Fannie Mae Sec. Litig., 552 F.3d 814 (D.C. Cir. 2009):

D.C. Cir. affirmed district court’s decision in this case, where defendants sought production of documents from a third party (“OFHEO”). After OFHEO produced what it represented were “all” of its responsive documents, defendants learned that OFHEO did not search its off-site backup tapes. OFHEO voluntarily agreed to search the backup tapes, and entered into a stipulation by which defendants would set the search terms. Upon finding that the search terms resulted in 660,000 documents, OFHEO objected, but the court ordered the production of all the documents finding that the stipulation clearly granted defendants sole discretion over the terms. OFHEO took steps to comply, and went to great expense (9% of its total budget), but repeatedly requested last minute extensions of time. Court noted OFHEO’s good faith, but late attempts to comply, and ordered immediate production of all documents withheld on the sole basis of pending privilege review, although such production would not constitute a waiver of privilege. Moreover, the D.C. Cir. upheld the district court’s holding OFHEO in contempt for its delay and conduct during discovery.

A detailed summary of this case is available here.

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One or both parties might have to bear the costs associated with ediscovery, depending on the court’s assessment of the parties’ agreements, the conduct of the parties, and the overall circumstances. Even though a party has failed to specify the format for production of ESI, or even if ESI has already been produced in a reasonably useful format, the requesting party might still be able to obtain production in its desired format, so long as it is willing to pay.

Proctor & Gamble Co. v. S.C. Johnson & Son, Inc., 2009 WL 440543 (E.D.Tex. 2009):

Parties agreed to produce ESI in TIFF format, and sought case management order determining which party should run OCR on the TIFFs, and who should bear the costs. Defendant argued that plaintiff should bear the costs associated with the OCR process, estimated to be $200,000, but the court determined that cost-shifting was not warranted. Court’s analysis focused on the arguments defendant failed to make, namely, that the information requested is not relevant; that the OCR process would not make documents easier to examine and thus significantly reduce time-related costs.

A detailed summary of this case is available here.

In re Classicstar Mare Lease Litig., 2009 WL 260954 (E.D. Ky. 2009):

Defendant responded to plaintiff’s request for production of financial documents “as they are kept in the usual course of business” by producing the information in .pdf and Excel format, and then again in searchable .tif format. Despite this production, plaintiffs obtained an order compelling a native format production, which defendant objected to on grounds that it had already produced information in a reasonably usable format that did not significantly degrade its searchability. Noting that the parties at one point had agreed the information would be in native format, and that plaintiff felt the information was degraded without the native format metadata, the court ordered defendant to produce in native format. However, the court ordered plaintiff to bear the costs associated with the native format production.

A detailed summary of this case is available here.

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