Court Rules that Employment of De-Duplication Technology and Use of Search Terms are Reasonable Means of Narrowing Production

In re CV Therapeutics, Inc. Sec. Litig., 2006 WL 2458720 (N.D. Cal. Aug. 22, 2006)

In this securities class action, the parties had previously agreed on the entry of a stipulated order governing the discovery of material restored from backup tapes maintained by the defendant. (A copy of the Backup Tape Stipulation is available here.) Subsequently, plaintiffs learned from an undisclosed source that additional backup tapes existed which had not been produced, and moved to compel. The court issued an order dated April 3, 2006, which resolved that dispute, along with several other discovery disputes. (A copy of the court’s April 3, 2006 order is available here.) With respect to the newly discovered backup tapes, the court concluded that defendants had not intentionally hid the existence of the tapes, but that they should have been subject to the terms of the parties’ Backup Tape Stipulation. It continued:

In light of the peculiar circumstances surrounding the discovery of the backup tapes, the Court orders as follows: no later than April 24, 2006, defendants shall review and prepare full catalogs for all Exabyte and DLT tapes from the time period covered in the Backup Tape Stipulation. Plaintiffs shall review these catalogs, and inform defendants by April 28, 2006, which documents plaintiffs wish to have produced. Defendants shall produce all requested documents, except those protected by a privilege, by May 19, 2006. Defendants shall prepare and produce a privilege log for any documents withheld on account of privilege by May 26, 2006. The parties may modify any of these dates through the meet and confer process. Defendants shall bear the full cost associated with all of this discovery.

In this most recent decision, the magistrate considered plaintiff’s letter brief which claimed that defendants had violated the April 3, 2006 order, as well as defendants’ letter brief seeking entry of a protective order. Both discovery disputes concerned defendants’ production of documents from the belatedly identified “DLT” and “Exabyte” backup tapes.

As to the DLT tapes, the magistrate noted that 5,000 documents were at issue. Apparently, defendants had not produced these documents because plaintiff did not designate these documents by April 28, 2006, as required by the April 3, 2006 order. The magistrate noted that plaintiff’s late designation was due to technical problems which defendants’ technicians and plaintiff’s technicians worked together to resolve. Accordingly, the court denied defendants’ motion for a protective order with respect to the 5,000 documents from the DLT Tapes.

The problem presented by the Exabyte tapes was more complex. Plaintiff had designated some 423,835 documents for production, representing documents from the hard drives of 26 employees. Plaintiff acknowledged the number of documents was high, but explained that this was out of his control because defendants never made a list of the actual documents available for selection and instead only gave plaintiff the employee names and the dates of their hard drives. Defendants claimed that it was not possible to provide a more specific catalog.

With respect to the 423,835 documents, defendants applied their de-duplication process, which reduced the number of documents to 129,000. Defendants produced 4,000 out of the 129,000 documents, which came from the hard drives of the Individual Defendants. Defendants argued that it would be unduly burdensome and expensive to produce the remaining 125,000 documents.

The magistrate refused to require plaintiff to select only 60,000 of the 125,000 documents because defendants had provided “scant information” on which plaintiff could base his selection. Instead, the magistrate ruled that, as to the remaining 125,000 documents chosen by plaintiff, defendants would be permitted to apply search terms to narrow the production. The magistrate dismissed any objection that may be raised by plaintiff to the application of search terms:

To the extent Plaintiff contests the adequacy of the search terms, it has not set forth an alternative search methodology; moreover, no specific challenge to the search terms has been brought and briefed before the Court. Employment of search terms is a reasonable means of narrowing the production in this instance. Although Defendants complain that the resulting production and need for review of privileged matters is too burdensome, the permitted employment of de-duplication and search terms strikes a reasonable balance between Plaintiff’s needs and Defendants’ burden.