Undue burden argument prompts court to shift the cost of reviewing documents to the requesting party subject to a non-waiver order

April 17th, 2009 | By Steve Puiszis

In re Motor Fuel Temperature Sales Practices Litig., 2009 WL 959493 (D. Kan. April 3, 2009)

In this multi-district litigation, plaintiffs brought claims against the defendants asserting various state law theories because the defendants sold motor fuel at a specific price per gallon without adjusting for temperature expansion. In discovery, plaintiffs sought information concerning the defendants’ activities dating back to 1970. They noted that in 1974, the National Conference on Weights & Measures began considering the issue of temperature adjustments in the retail sale of motor fuel. During this time, the defendants allegedly contributed to industry studies on average fuel temperatures, and lobbied against temperature adjustments. Plaintiffs also claimed that during this time frame, the defendants created documents which acknowledged that when temperatures rise above 60 degrees Fahrenheit, selling motor fuel which has not been temperature adjusted unjustly enriches the seller. Additionally, in the 1990’s, the Canadian government passed legislation permitting the installation of automatic temperature compensation (“ATC”) equipment in retail gas stations.

Defendants initially objected to the plaintiff’s discovery requests about their activities prior to January 1, 2001 on the ground that it was unduly burdensome. The defendants subsequently agreed to provide plaintiffs with responsive, non-privileged pre-2001 documents found in their active files, but resisted searching for pre-2001 data or documents in their archived files.

While the defendants’ undue burden arguments did not convince the court that that the pre-2001 information did not have to be produced, it nonetheless fashioned a remedy attempting to balance the cost of that discovery, given the parties competing interests. While the court never mentioned Rule 26(b)(2)(b) or Fed. R. Evid. 502 in its decision, it essentially allowed the plaintiffs to have a “quick peek” of the requested information subject to a nonwaiver order. The decision provides a good example of the type of factual information that a party needs to provide when making an undue burden argument under Rule 26.

The court initially noted that the party objecting to discovery has “the burden to show facts justifying their objection by demonstrating that the time or expanse involved in responding to requested discovery is unduly burdensome.” Horizon Holdings, Inc. v. Genmar Holdings, Inc., 209 F.R.D. 208, 213 (D.Kan. 2002). It explained that this burden imposes an obligation “to provide sufficient detail and explanation about the nature of the burden in terms of time, money and procedure required to produce the requested documents.” Id.

Pre-2001 documents and data

In the Motor Fuel Temperature case, one group of defendants provided a declaration explaining that a search of the archived documents by category code identified 48,721 boxes of records potentially relevant to the plaintiff’s discovery requests. The cost to simply retrieve those boxes from storage was estimated at $197,000, and that did not include the expense of search for responsive documents within each box. Another defendant provided a declaration explaining that it had identified 6,750 boxes, likely to contain responsive documents which were located in three different offices. That defendant estimated that searching those boxes for responsive information would require 5,063 hours of time at a cost of $253,150. A third defendant’s declaration explained that its archived email systems included formerly independent entities that had merged with it, each of which had its own archived email systems that were difficult to access and search. This included thousands of backup tapes that were not electronically searchable, and would have to be individually reviewed. A third-party vendor would have to be hired at a substantial cost simply to facilitate the review of the data on those tapes.

The court apparently felt that there was good cause to order production of this information because it directed the defendants to make their pre-2001 records available to the plaintiffs as they are maintained in the ordinary course of business at each defendant’s expense. However, to the extent that plaintiffs wanted to search thousands of boxes of records, the court directed that they had to do so at their own expense. Moreover, the court directed that if the plaintiffs selected any records or documents for copying, the defendant in possession of the records would be entitled to then review them for responsiveness, privilege or any other objection. Notably, the court explained that the defendants’ production of these documents as directed by the court, did not waive any privilege objections. If, after reviewing any of the defendants’ pre-2001 documents, the plaintiffs identified a specific pre-2001 email or other electronically stored information that they believed relevant to the lawsuit, the court provided that the plaintiffs may then seek discovery of that specific ESI.

Canadian data

Plaintiffs also sought pre-2001 information concerning how the defendants implemented and used ATC equipment at gas stations in Canada. The defendants argued that obtaining station specific information in Canada would be overly burdensome. One defendant pointed out that the requested information would have to be obtained from 750 service stations throughout Canada which would require 35 weeks to obtain and review. Another defendant demonstrated that it had 246 service stations in Canada, and would take 300 hours to simply gather the information. The court was persuaded by those figures that the plaintiffs’ requests were unduly burdensome. It ordered that the defendants which provided declarations in support of their objection to gather a sample of information from ten representative service stations.

Each party should provide a factual predicate establishing undue burden

The court, however, overruled the undue burden arguments of the remaining defendants which failed to submit declarations concerning their Canadian operations. The court noted that two defendants submitted “factually divergent” declarations, and that the burden on one defendant was not likely representative of the burden on the other defendants. So a word of caution, each party in any multi-party case should provide the necessary factual predicate for its undue burden argument or run the risk that the court will find one or more of the parties failed to meet its burden of proof. It is common in litigation involving multiple parties on one side of the ledger to divide up tasks among themselves so that each party is not reinventing the wheel and incurring unnecessary legal costs. However, each party should supplement lead counsel’s undue burden objection with their own supporting declaration, or run the risk of the same outcome.

Lady Justice photo courtesy Flickr user vaXzine under this Creative Commons license.

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