The first four articles in this six-part series have focused on when a company can be ordered to preserve and/or produce documents of a third party. In the final two segments, we shift gears to discuss the timing of third party discovery. Rule 45, which governs subpoenas, has recently changed, but one thing remains the same: Courts are reluctant to impose unnecessary burdens on third parties when it comes to discovery unless it is shown that a party controls the third party’s documents. In practice, this often means that discovery from third parties must wait until the parties have exchanged all the information they have in their own files, virtual and otherwise.
While the case law confirms that this is the general rule, it may nonetheless be possible to obtain discovery from third parties before completing party discovery. This will take a bit of strategic planning. Likewise, some of the choices that the parties make in the early going of the case may have an effect on the timing of third party discovery. This article discusses the current status of the law, and the next will provide practical tips both for obtaining or resisting early third party discovery.
As practitioners are no doubt aware, there is a movement afoot to revise the Federal Rules of Civil Procedure to, among other things, encourage cooperation between parties in the interest of reducing the burdens of discovery. One possible measure to reduce these burdens includes openly discussing third party discovery early in the life of the lawsuit, because early third party discovery may facilitate the orderly exchange of information and, thus, reduce discovery disputes.
For the moment, however, third parties — or the party (usually the defendant) with which the third party is aligned — often resist production of documents or depositions until the bulk of discovery is completed under the guise of burdensomeness. Discovery responses prepared by third parties consistently recite the mantra that the information sought is duplicative and more likely to be in the possession, custody, and control of the parties. Third party discovery, this line of resistance goes, should be pursued only as a secondary source to fill in the gaps. If a party is likely to have a document, courts often require that such information be obtained from that party before compelling production from a non-party. For examples, see Haworth, Inc. v. Herman Miller, Inc. (concluding that it was proper for a district court to compel a party “to seek discovery from its party opponent before burdening the nonparty . . . with this ancillary proceeding”); Arista Records LLC v. Lime Grp. LLC; LG Electronics, Inc. v. Motorola, Inc. (“This court will not require Motorola to produce e-mail communications that Vizio and LG purposefully decided not to seek in the underlying lawsuit.”); and Nidec Corp. v. Victor Co. of Japan (“There is simply no reason to burden nonparties when the documents sought are in possession of the party defendant.”).
This principal also takes some support from Federal Rule of Civil Procedure 26(b), which requires that a court limit disclosure if “the discovery sought is unreasonably cumulative or duplicative, or can be obtained from some other source that is more convenient, less burdensome, or less expensive.” Proceeding serially in this manner, however, does not always lead to an efficient — and thus less costly — discovery process.
A handful of recent cases have recognized that simultaneous party and third party discovery may be appropriate in certain circumstances if the requesting party can show that the third party may have materials that the parties do not have, even if there may be, or even is likely to be, some overlap. One such case, Viacom Int’l, Inc. v. YouTube, Inc., in the Northern District of California allowed simultaneous discovery from defendant YouTube and the non-party venture capital firms that had invested in YouTube in light of YouTube’s “poor” record-keeping practices in its early years. Addressing the issue of timing, the court concluded that there was no reason to make plaintiff wait until YouTube produced its documents if the set of documents being requested is “not well-defined.” The court reasoned that, if the set is not “well-defined,” then even after party discovery is completed it will be impossible to know if all of the documents were produced. Put differently, regardless of when the third party discovery occurs, there will still be reason to believe that such discovery will be fruitful, so there is no reason to wait.
In short, the timing of potentially duplicative discovery from third parties may depend on the facts of the situation. For a lawyer seeking to obtain discovery from a third party, the key is to focus on what the third party has to offer that likely will not be replicated in party discovery. For example, in the YouTube case, the court noted that YouTube had switched offices many times in its early days and had initially suffered from what the court called “poor record keeping.” As a result, the third party venture capital funds, which certainly had materials relevant to the case and likely had better filing systems, were ordered to produce their documents immediately rather than requiring plaintiff to wait to see what YouTube actually had in its files.
This approach will not always overcome the judicial tendency to postpone burdening non-parties, especially if the ill-defined nature of the requested documents is not well alleged. For example, Judge Wood of the Southern District of New York concluded in Arista Records LLC v. Lime Group LLC that, although there was the potential for differences between retention policies, that “potential” was not enough to justify production from a third party absent any real evidence of actual differences in retention policies. “Defendants, however, do not provide any specific evidence that Plaintiffs’ policies are, in fact, different from those of the Licensees.”
As is always the case, the jurisdiction in which you find yourself will undoubtedly affect the ability to obtain or resist third party discovery. Often third party discovery is not given serious consideration when bringing an action as a plaintiff or in deciding whether, as a defendant, it may be advisable to change forums if possible. In the next and last segment of this series on third party discovery, we will discuss some practical considerations for achieving the company’s goals with regard to these issues and provide some additional take-away thoughts to tie this series together.