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Oxbow Carbon & Minerals LLC v. Union Pacific Railroad Co.

United States District Court, District of Columbia

September 11, 2017

OXBOW CARBON & MINERALS LLC, et al. Plaintiffs,



         This matter was referred to the undersigned for the resolution of all discovery disputes. Presently ripe for resolution is Defendants' motion to compel, [Dkts. 105, 108], requesting that the Court order Plaintiffs to produce all documents belonging to their CEO, the production of which Plaintiffs, in turn, argue would be unduly burdensome and disproportionate to any value the documents might possess to Defendants in this litigation. Following two hearings on this matter, and upon consideration of the parties' filings and the entire record herein, [1] the Court finds that Defendants' motion to compel should be granted.


         Plaintiffs are five related companies (collectively, “Oxbow”) that mine and sell coal and petroleum coke (“petcoke”). See Am. Compl. at ¶¶ 9-13. They allege in the Amended Complaint that Union Pacific (“UP”) and BNSF Railway Company (“BNSF”)-both railroad companies with which Oxbow contracts to ship coal and petcoke-conspired to engage in anticompetitive conduct from 2004 to 2012 in violation of the Sherman Antitrust Act, codified at 15 U.S.C. §§ 1 and 2, that forced Oxbow to pay higher prices to ship coal and petcoke. See Id. at ¶¶ 1-8, 14-15. Specifically, Oxbow believes that UP and BNSF conspired to (1) fix fuel rates applied to commercial rail freight service above competitive levels through a uniform fuel surcharge and (2) allocate certain markets for coal shipment to each other, granting UP a monopoly in at least one region of the country. Id. at ¶¶ 1-8. Oxbow claims it paid Defendants more than $50, 000, 000 in illegal fuel surcharges as a result of the conspiracy. Id. at ¶ 137. Oxbow seeks to recover treble damages under 15 U.S.C. § 15, as well as its “lost business and profits” that proximately resulted from the conspiracy. Id. at ¶ 134 & p. 54.

         In their motion, Defendants request that the Court compel Oxbow to add William I. Koch (“Koch”), Oxbow's founder, CEO, and principle owner as a document custodian whose records will be searched for material responsive to Plaintiffs' discovery requests. See Mot. at 1-2, 12-14. Defendants maintain that Koch indisputably possesses relevant, unique information responsive to their requests, and argue that Oxbow has improperly refused to produce this information based on the unsupported theory that production of his documents would be disproportionately burdensome and duplicative of the documents produced from the search of the nineteen other Oxbow document custodians' files. Id. Based upon its review of the documents already produced from the other Oxbow custodians, Defendants believe that Koch's records contain information that would, among other things, reveal that market forces-as opposed to Defendants' alleged collusion-contributed to the increasing rail freight costs and any of Oxbow's lost profits. Id. at 5-9. Relatedly, Defendants assert that their discovery request is proportionate and reasonable in light of the facts of this case, including the tens of millions of dollars that Oxbow seeks in damages. Id. at 9-14.

         In their opposition, Oxbow argues that Defendants have failed to satisfy their burden of demonstrating that the discovery they seek is responsive and not unduly burdensome. See Resp. at 1. Based on their calculations, Oxbow estimated that adding Koch as a document custodian would result in roughly 130 gigabytes of additional documents to be filtered through the parties' previously-agreed-upon search terms, a process that Oxbow initially estimated would cost $250, 000. Id. at 4. Oxbow further contends that many of Koch's documents would likely be duplicative of the other custodians' documents or only marginally responsive given Koch's senior position over a conglomerate of Oxbow companies, only some of which are involved in the coal and petcoke businesses. Id. at 7-15. Despite these arguments, Oxbow represented at the first hearing on Defendants' motion that it was open to analyzing a random sample of Koch's records using the agreed-upon search terms to provide the parties with concrete numbers regarding the responsiveness of Koch's documents to the terms and with a basis to negotiate new search terms if necessary. See 6/14/17 TR. at 53:22-56:9. Accordingly, the undersigned held Defendants' motion in abeyance pending the analysis of a sample of Koch's documents and the parties' attempt to negotiate a resolution of the dispute themselves. See Order at 1.

         Following the hearing, Oxbow collected a total of 467, 614 documents from Koch's electronic and physical files and provided them to a vendor for processing. Report at 1-2. After removing any duplicative records, the vendor searched Koch's documents using the previously-agreed-upon search terms, which yielded 45, 639 document hits-82, 600 documents in total when including “families” of documents. See Id. at 2.[2] The vendor collected a random sample of ten percent of these hits and any associated families-12, 074 documents in total-and provided them to Oxbow for review for privilege and responsiveness. Of these 12, 074 documents, Oxbow determined that approximately 1, 300 documents-11.67 percent of them-were actually responsive to the search terms and produced them to Defendants. Id. at 3. In total, the initial processing of Koch's records and review of the sample documents cost Oxbow $57, 197.95. Id. at 3-4. Based on its experience reviewing the sample documents, Oxbow now estimates that it will cost approximately $85, 000 to process, review, and produce the remainder of Koch's documents to the Defendants, bringing the total cost of the effort, including the review of the sample documents, to approximately $142, 000-significantly less than Oxbow's original estimate of $250, 000. Id. at 3-4; see also Resp. at 4. Oxbow's initial estimate was based on its prediction that, after processing, searching, and filtering Koch's documents through the agreed-upon search terms, it would have to review approximately 214, 000 documents for false positives and privileged information before producing the responsive documents to Defendants. See Resp. at 18. In reality, applying the agreed-upon search terms yielded only 45, 639 hits on Koch's documents-82, 600 documents when including document families. Report at 2.

         Unfortunately, the sampling effort did not result in the parties resolving the dispute without further intervention of the Court. In their August 2, 2017 Joint Status Report, the parties advance dramatically different interpretations of the significance of the sampling's results. Despite the lower-than-expected cost of the analysis, Oxbow believes that the results confirm that a complete production of Koch's documents would be an unnecessary burden and expense, particularly in light of the documents' low responsiveness rate to the search terms. Id. at 5-6. Further, following its sampling of Koch's documents, Oxbow refused to negotiate with Defendants over the agreed-upon search terms, or to provide Defendants with the data from the sampling necessary to evaluate the effectiveness of the terms. Id. at 11. According to Oxbow, the only purpose for doing so would be to negotiate narrower search terms, an effort that Oxbow deemed not worth the attorney time it would take to accomplish because it was unlikely “to dramatically reduce the number of hits Oxbow will ultimately need to review.” Pl. Supp. Letter Brief at 1. Accordingly, Plaintiffs asked again for the Court to deny the motion to compel or, in the alternative, order Defendants to bear the cost of the production of the documents it seeks. Report at 7.

         Defendants, in turn, view the results of the sampling as proof of the existence of relevant and unique documents in Koch's records. Id. at 9-10. While acknowledging that Koch's records are less responsive to the search terms than the other Oxbow custodians' files, Defendants note that such a result is to be expected because the other custodians deal more exclusively with Oxbow's coal and petcoke business than Koch, Oxbow's CEO. Id. at 10. Moreover, the lower-than-expected number of hits in Koch's records confirms to Defendants that the search terms effectively narrowed the universe of documents that Oxbow must review for production. Id. Further, Defendants contend that the total number of responsive documents likely in Koch's possession- approximately 10, 000, based on Defendants' extrapolation from the results of the sampling effort-is significant and roughly equivalent to the total number of documents produced by each of Oxbow's other custodians. Id. And while Defendants represent that they were willing to renegotiate the agreed-upon search terms to tailor future searches following the sampling, Oxbow's refusal to do so, or to even share the data from the sampling necessary to have an informed discussion of the effectiveness of the search terms, has dampened its enthusiasm for the task. Id. at 11. Given Oxbow's refusal and the large amount of money at stake in the litigation, Defendants oppose Oxbow's request for cost-sharing and seek a ruling on their motion to compel now. Id. The Court's ruling follows below.


         Rule 37 of the Federal Rules of Civil Procedure provides that, “[o]n notice to other parties and all affected persons, a party may move for an order compelling disclosure of discovery” from a party who fails to comply with its discovery obligations. Fed.R.Civ.P. 37(a). The party that brings the motion to compel bears the initial burden of “proving that the opposing party's answers were incomplete, ” Equal Rights Ctr. v. Post Prop, Inc., 246 F.R.D. 29, 32 (D.D.C. 2007) (internal citations omitted), and “explaining how the requested information is relevant.” Jewish War Veterans of the United States of America, Inc. v. Gates, 506 F.Supp.2d 30, 42 (D.D.C. 2007). If the movant satisfies this burden, the burden then shifts to the non-movant “to explain why discovery should not be permitted.” Id.

         As for the scope of discovery, it has long been recognized that “[u]nder the broad sweep of Rule 26(b)(1) of the Federal Rules of Civil Procedure, a party ‘may obtain discovery regarding any matter, not privileged, which is relevant to the subject matter involved.'” Friedman v. Bache Halsey Stuart Shields, Inc., 738 F.2d 1336, 1348-49 (D.C. Cir. 1984) (quoting Fed.R.Civ.P. 26(b)(1)). The broad presumption in favor of discovery of relevant information embodied in Rule 26 is not without limits, however. Instead, under the amended Rule 26, [3] discovery must be relevant and “proportional to the needs of the case.” Fed.R.Civ.P. 26(b)(1). To determine whether a discovery request is proportional, courts weigh the following six factors: “(1) the importance of the issues at stake in this action; (2) the amount in controversy; (3) the parties' relative access to relevant information; (4) the parties' resources; (5) the importance of the discovery in resolving the issues; and (6) whether the burden or expense of the proposed discovery outweighs its likely benefit.” Williams v. BASF Catalysts, LLC, Civ. Action No. 11-1754, 2017 WL 3317295, at *4 (D.N.J. Aug. 3, 2017) (citing Fed.R.Civ.P. 26(b)(1)); Arrow Enter. Computing Solutions, Inc. v. BlueAlly, LLC, No. 5:15-CV-37-FL, 2017 WL 876266, at *4 (E.D. N.C. Mar. 3, 2017); FTC v. Staples, Inc., Civ. Action No. 15-2115 (EGS), 2016 WL 4194045, at *2 (D.D.C. Feb. 26, 2016).

         “[N]o single factor is designed to outweigh the other factors in determining whether the discovery sought is proportional, ” and all proportionality determinations must be made on a case-by-case basis. Williams, 2017 WL 3317295, at *4 (internal citations omitted); see also Bell v. Reading Hosp., Civ. Action No. 13-5927, 2016 WL 162991, at *2 (E.D. Pa. Jan. 14, 2016). To be sure, however, “the amendments to Rule 26(b) do not alter the basic allocation of the burden on the party resisting discovery to-in order to successfully resist a motion to compel-specifically object and show that . . . a discovery ...

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