Hock Food, Inc. v. William Blair & Co., is a dispute over the calculation of the “success” fees paid to the Defendant in assisting the Plaintiff with the sale of their business interests. Hock Foods, Inc. v. William Blair & Co., L.L.C., 2011 U.S. Dist. LEXIS 24874 (D. Kan. Mar. 11, 2011).
The bulk of the discovery disputes centered on an interrogatory to identity client disputes over a 10-year period and a corresponding discovery request to produce engagement letters identified in the interrogatory. Hock Foods, Inc. at *6.
The Plaintiff also sought an order to compel the Defendant to modify its search parameters related to how fees were calculated. Hock Foods, Inc. at *6.
Calculating Undue Burden
The Defendant claimed they had between 1,000 to 1,500 clients they would need to investigate to determine whether there had been any disputes with any of them. Hock Foods, Inc. at *23. Interviews were estimated in the hundreds of hours with the key players. Id.
The Defendant’s ESI was also 12 terabytes of data. As the Court explained:
This District has conceptualized one gigabyte as the equivalent of a “truck load” of documents. [citations omitted]
It is impossible to even begin to calculate the time and expense associated with searching 12,000 truck loads of electronic documents alone. The search Plaintiff demands would be the discovery equivalent of searching for a needle in a haystack—an irrelevant needle.
Hock Foods, Inc. at *23.
Reasonableness and Undue Burden
The Court found the discovery requests to be unduly burdensome, but that was not the end of the analysis. Hock Foods, Inc. at *25-29.
The Court admitted it could not explain how a less burdensome search could be conducted, due to not knowing the Defendant’s records information system, but noted that the Defendant could ask its general counsel if it had a list of clients with disputes. Hock Foods, Inc. at *29. This was an area the Court encouraged the parties to meet and confer over. Hock Foods, Inc. at *30.
The Court further examined the proposed cost to review the 12 Terabytes of data. The Defendant claimed it would cost between $100 to $300 a gigabyte to run search terms over the data. Hock Foods, Inc. at *32. Searching all 12 Terabytes would cost $1.2 million to $3.6 million, not including document review. Id. As such, the Court found searching all 12 Terabytes to be unduly burdensome. Id.
However, that did not let the Defendant off the hook to conduct a reasonable search for responsive ESI. Hock Foods, Inc. at *32.
The Court conceded that it did not have enough information to give the parties specific guidance, but suggested the following:
Part of any such reasonable search might include a more limited search of Defendant’s ESI. For example, it might be appropriate to search Mr. Simon’s emails or other key executives who were likely to have been involved in any disputes or disagreements. Additionally, if Defendant’s search of its hard copy documents reveals only a handful of clients with whom it had a disagreement, it might be reasonable to search the emails of the individuals who were involved in those disputes.
Hock Foods, Inc. at *32-33.
Bow Tie Thoughts
There is a fine line between undue burden and not conducting any inquiry to respond to a discovery request. Case law has its share of examples of parties claiming e-Discovery is expensive, thus “unduly burdensome” and therefore the responding party need go no further in searching and reviewing ESI.
Hock Foods, Inc. follows a different path: the Defendant demonstrated searching 12 Terabytes would be unduly burdensome and the Court agreed, but that did not allow them to not conduct any reasonable search for responsive electronically stored information.