Plaintiff awarded monetary sanctions for Safeway's unreasonable discovery efforts

A U.S. District Court Judge has recently ordered that Safeway, Inc. pay $516,484 as a discovery sanction under Rule 26(g). In Rodman v. Safeway, Inc., Case 3:11-cv-03003-JST (N.D. Cal.), U.S. District Judge Tigar ordered the grocery chain to pay this sanction based on three key factors: (1) Safeway’s counsel laissez faire handling of the document review process, (2) the blind reliance of counsel on a person with no training or prior experience in searching electronic records, and (3) the objective unreasonableness of the search in question. The Court held these documents were “highly relevant” and defense counsel’s attempt to spring these documents on the eve of trial was unreasonable.

A tale of an untimely production

In early 2015, Rodman’s lawyers requested documents showing the terms and registration process in effect from 2001 to 2005. Safeway initially responded by stating, “Safeway [did] not have access to the Special Terms that were in effect between 2001 and 2005.” And another month later, Safeway reported to Plaintiff that “[a]s for the pre-2006 Special Term and Registration documents, Safeway has not located any responsive documents.” Taking these responses at face value, the parties were set for trial to being in October 2015.

However, about a week prior to trial, Safeway had apparently located the documents, or as the Court referred to them, “ten highly relevant documents related to Safeway’s pre-2006 terms and conditions.” What a surprise they would be discovered on the eve of trial.

How did Safeway manage to find these documents at the 11th hour? Well, fortunately, they had the Director of Marketing review a “legacy” drive in anticipation of trial. One could easily wonder why such a drive was being reviewed by the Director of Marketing on the eve of trial, but we will put that speculation aside for a moment. After all, this wasn’t the first time Mr. Guthrie had been thrown into the deep end and ask to pull IT duty.

In fact, Mr. Guthrie actually testified previously - as a designated corporate representative for Safeway - concerning (naturally) “[a]ll steps taken by Safeway to locate documents and persons knowledgeable about the [pre-2006 registration issues].” At that deposition, prior to his 11th hour review of the legacy drive, he Mr. Guthrie testified he had searched this legacy drive using keyword searching. Actually, he used the built-in search function within Microsoft and, despite not testifying or otherwise establishing that he understood how this search worked, proceeded to run top level drive searches for such broad terms and phrases as “register” and “terms” and “terms and conditions.”

But here’s the problem with that first search….

When searching the drive to produce documents responsive to plaintiff’s discovery requests, Mr. Guthrie’s keyword search didn’t actually involve a search within the contents of the files. Instead, he only searched for file names that contained those keywords. But being the ever diligent employee, when it came time to prepare for trial, he went the extra mile and actually “found a way to search within the contents of files.” As luck would have it, Mr. Guthrie’s improved search located the ten “highly relevant” documents.

Given the clear cut relevance of these documents, the Court continued the trial and permitted (rightfully) the plaintiff to take additional discovery. The documents were so damaging that the parties were able to stipulate to several material facts, which lead to a stipulation on the previously filed motions for summary judgement, which lead to the need to cancel the trial date altogether! The Court issues judgment in favor of the Class in the amount of $41,884,767 (Safeway filed a Notice of Appeal; that appeal is now pending before the Court of Appeals for the Ninth Circuit). In April of this year, Plaintiff filed a motion for discovery sanctions.

Rule 26(g): stop and look in discovery

Federal Rule of Civil Procedure 26(g) “requires a signing attorney to certify that a reasonable inquiry has been made with respect to the factual and legal basis for any discovery request or response.” Plaintiff argued sanctions were appropriate for Safeway’s “false and inaccurate statements in response . . . concerning the non-existences of documents reflecting historic copies of” Safeway’s pre-2006 terms and conditions. Essentially, had Safeway properly searched the legacy drive in the first instance, Safeway would have been required to concede the issue in their initial discovery responses.

Reasonable searching: so easy, even a Director of Marketing can do it

Interestingly, the Court held, even though neither party had addressed the sufficiency or reasonableness of Mr. Guthrie not searching the actual contents of the electronic records, the initial search was unreasonable. The Court took exception with the lack of oversight and direction from counsel in guiding the search process. This seemed especially true in light of the fact that Mr. Guthrie - the Director of Marketing - didn’t actually have any experience in searching “large document repositories.” Despite being tasked with sifting through more than 300 GB on the legacy drive, outside counsel simply took Safeway’s word that there were no such documents.

Of course, the final factor the Court considered was the obvious relevance of some of the folders on the drive where the documents were discovered. The Court remarked that “[a]nyone conducting an adequate search would have looked in those folders.”

Takeaways and Best Practices

When it comes to search and information retrieval, you need to understand that it is a science as much as an art. Don’t let the other side proffer unqualified corporate representatives to talk about the identification, preservation, collection and review of documents in the case. Safeway should have been taken to task for allowing outside counsel to conduct discovery in such an informal manner, You’re entitled to the information - make them give it to you!

Also, the sanction award was less than the amount requested, and the Court specifically noted that the lack of follow up earlier in the process would have obviated the need for some of the expenses incurred. Once it was clear at the deposition that Mr. Guthrie might not have the understanding of search methods to be the person tasked with looking for the data, counsel should have brought this matter to the Court’s attention sooner.

Lastly, I am a big fan of Rule 26(g) and the way that a motion under the Rule (or even the threat of a motion) can act as a truth serum for defense counsel struggling for answers in discovery. It is clear from reading the order, that defense counsel was playing fast with their discovery responses. But time is often of the essence, and the plaintiff is fortunate that the data on the mysterious legacy drive was not inadvertently altered, destroyed, or otherwise lost. Bring the 26(g) issue up with the Court as soon as the facts make it appropriate, and ensure what you need isn’t lost by mistake.

#FRCP #discovery #sanctions