Court Concludes Data Is within Defendant’s Possession, Custody or Control, Declines to Shift Costs

Williams v. Angie’s List, No. 1:16-00878-WTL-MJD, 2017 WL 1318419 (S.D. Ind. April 10, 2017)

Plaintiffs in this case—48 current and former employees of Defendant—alleged they were entitled to “substantial compensation” for hours worked without pay. Plaintiffs further alleged that Defendant’s computerized time records did not entirely reflect their hours worked because Defendant had instructed them to underreport their overtime hours and because many of those hours were worked from home.  Plaintiffs therefore sought production of “background data” automatically recorded while they were working on Defendant’s sales platform, Salesforce, in an effort to “close the gaps” in other records.  Defendant produced one year’s worth of the requested data, but refused to produce the additional two years sought by Plaintiffs arguing that the information was maintained by Salesforce, “a third-party provider of services,” and that Defendant had “no greater rights” to the data “than any other person.” Defendant also noted the $15,000 invoice it received from Salesforce related to the initial production, which it claimed supported its position that it did not have possession, custody or control of the information.  Ultimately, the court granted Plaintiffs’ motion to compel and denied Defendant’s motion to shift costs.

The court first addressed Defendant’s assertion that it did not have possession, custody, or control over the data and quickly rejected Defendant’s argument. Specifically, the court reasoned that the evidence established a “longstanding contractual relationship” between Defendant and Salesforce and that the background data in question was recorded “‘for’ Angie’s List as part of the ordinary course of their business relationship” and could be accessed upon request.  Indeed, most compelling was the fact that Defendant had actually acquired and produced a year’s worth of data already.  Thus, the court concluded that Defendant had “the legal right” to obtain the discovery sought—the relevant test in the Seventh Circuit.  In so concluding, the court also addressed Defendant’s argument that the cost to acquire the data from Salesforce bolstered its position that it had no legal right to the data and reasoned that “[t]he fact that Angie’s List must pay for the extracting of this data is of no moment; quite frequently, retrieving and compiling electronic discovery costs substantial sums. Indeed, all discovery costs money.”

The court then turned to Defendant’s request to shift the costs of production because of the alleged burden of production and marginal relevance of the data at-issue.  Summarizing broadly, the court acknowledged its authority to “proportion the costs of e-discovery in cases of undue cost or burden,” subject to consideration of eight factors bearing striking resemblance to the factors addressing proportionality under FRCP 26, as acknowledged by the court (“As both parties observe, district courts in the Seventh Circuit have transmuted the test for whether discovery is proportional under Rule 26(b)(1) to guide the court’s discretion in whether to shift discovery costs.”). Those factors are:

1) the likelihood of discovering critical information; 2) the availability of such information from other sources; 3) the amount in controversy as compared to the total cost of production; 4) the parties’ resources as compared to the total cost of production; 5) the relative ability of each party to control costs and its incentive to do so; 6) the importance of the issues at stake in the litigation; 7) the importance of the requested discovery in resolving the issues at stake in the litigation; and 8) the relative benefits to the parties of obtaining the information.

Considering each of the factors, the court ultimately concluded that “[t]he relevant factors, especially those addressed to the importance of the discovery at issue, all weigh against cost shifting.” In so concluding, the court reasoned, in part, that Plaintiffs were “not requesting the[ ] records on a blank slate as part of a fishing expedition,” but rather had already discovered evidence to undermine the accuracy of Defendant’s official time tracker, including the previously-produced Salesforce records that “strongly suggest[ed] employee activity outside of the time reflected” on Defendant’s usual timekeeping system.

A full copy of the court’s order is available here.