Facts
- Oxbow entities shipped coal and petroleum coke by rail and sued Union Pacific and BNSF, alleging a Sherman Act conspiracy involving fuel surcharges that caused overcharges and lost profits.
- In discovery, defendants sought an order requiring Oxbow to add William I. Koch (Oxbow’s founder, CEO, and principal owner) as an electronic-records custodian.
- Oxbow had already searched and produced documents from 19 custodians and argued Koch’s materials would be duplicative and disproportionate to obtain.
- The parties conducted a sample search of nearly half a million documents from Koch’s files using agreed terms; about 12% were responsive, and Oxbow produced roughly 1,300 documents.
- Oxbow estimated that completing collection, review, and production of the remaining Koch materials would cost about $85,000 more and requested cost-shifting if production were compelled.
Issues
- Whether Koch should be added as a document custodian because his files likely contain relevant, non-duplicative information responsive to defendants’ discovery requests.
- Whether searching and producing Koch’s ESI would be unduly burdensome or disproportionate under Federal Rule of Civil Procedure 26(b)(1) and 26(b)(2)(C).
- Whether cost-shifting was warranted under Rule 26(b)(2)(B) or Rule 26(c) based on undue burden or inaccessibility of the ESI.
Decision
- The court granted defendants’ motion to compel and ordered Oxbow to add William I. Koch as a document custodian whose records must be searched for responsive materials.
- The court held that defendants showed Koch likely possessed relevant, unique information bearing on liability and damages and that Oxbow did not establish undue burden outweighing likely benefit.
- The court denied Oxbow’s request for broad cost-shifting, finding the ESI was reasonably accessible and the costs were not exceptional for high-stakes antitrust litigation.
Legal Principles
- Under Rule 26(b)(1), discoverable matter must be relevant and proportional, considering the issues, amount in controversy, parties’ access to information, parties’ resources, importance of discovery to resolving key issues, and whether burden outweighs benefit.
- A producing party’s proportionality objection must be supported with concrete evidence of burden; conclusory claims of duplication or cost are insufficient where the requesting party shows likely relevance and need.
- High-level executive custodians may be compelled when the executive is closely involved in disputed business decisions and their communications and analyses are unlikely to be fully replicated in subordinate custodians’ files.
- Under Rule 26(b)(2)(B), cost-shifting is generally tied to ESI that is “not reasonably accessible because of undue burden or cost”; ordinary ESI on current systems, even if expensive to review, may remain reasonably accessible.
- Sampling results and responsiveness rates may inform proportionality by indicating whether a request is targeted rather than speculative.
Conclusion
The court required Oxbow to search and produce ESI from its CEO as a custodian because the likely relevance and case stakes justified the additional expense, and it declined to shift costs where the data was reasonably accessible and the burden did not outweigh the expected benefit.