District Court Rejects the Concept of Unilateral “Relevance Redactions” but Stresses the Importance of Discovery Confidentiality Orders to Address Commercially-Sensitive Information
In a recent decision, a Washington District Court illustrated the challenges parties face when they are in possession of responsive documents also containing highly confidential irrelevant information. The court stressed that, as a general rule, a party is not permitted to unilaterally redact information solely on the basis of relevance, and parties should consider seeking to enter into comprehensive ESI discovery protocols and discovery confidentiality orders allowing for the redaction of irrelevant information included in otherwise responsive documents, particularly where the parties will be exchanging highly confidential information in discovery.
In Corker v. Costco Wholesale, plaintiffs initiated a class action suit against a number of coffee wholesalers, distributors and retailers under the Latham Act for false designation of origin. In discovery, plaintiffs sought the sale volume and pricing for the particular blend of coffee at issue sold by the defendants. Instead of producing the spreadsheet containing this information in the native excel format, one defendant first produced documents summarizing the contents of the spreadsheet and then, after plaintiffs objected to this disclosure, a 2,269-page static PDF of the spreadsheet redacting information related to coffee blends not at issue in the litigation that the defendant considered highly confidential. Plaintiffs moved to compel the production of the spreadsheet in the native form as kept in the ordinary course of business and without redaction.
Addressing the issue of redactions, the District Court first noted the general principle that a party may not redact documents based on their unilateral determination of relevance. The District Court, however, did not decide the motion on these grounds. The District Court instead addressed the redaction issue through the prism of confidentiality. The defendant had argued that the information was redacted as it was highly confidential and its disclosure would put the defendant at a completive disadvantage.
As discussed by the District Court, Rule 26(c)(1)(G) allows a Court to issue a protective order “requiring that a trade secret or other confidential research, development, or commercial information not be revealed or be revealed only in a specified way” where good cause is shown. The District Court noted that, while the defendant had shown good cause under Rule 26 for preventing the disclosure of its pricing and sales volumes of irrelevant coffee blends, the defendant had failed to show that the stipulated protective order submitted to and entered by the District Court was insufficient to protect the defendant’s commercially-sensitive information from disclosure to competitors outside the litigation. The stipulated protective order allowed for the defendant to designate documents for “Plaintiff’s Outside Counsel Only.”
The District Court’s opinion also provides a reminder that excel spreadsheets must be produced in native form in accordance with Rule 34. In finding the defendant’s production “plainly insufficient,” the District Court noted that Rule 34(b)(2)(E)(ii) required the production of ESI in the form “it is ordinarily maintained or in a reasonably usable form . . .” and that the summary documents and static PDF did not provide the information in the form it was ordinarily maintained nor with the same functionality as the native spreadsheet. For example, the static PDF could not be sorted or filtered like the spreadsheet in native form. Therefore, the Court determined that the defendant’s production did not produce the information in a “reasonably useable form” as required by Rule 34(b)(2)(E)(ii).
The decision of the District Court illustrates the importance of addressing discovery concerns, such as the production of confidential information and the format of these productions, at the onset of the discovery period by entering into a discovery confidentiality order, in which the parties may set forth sufficient protections for handling commercially-sensitive information, and an ESI discovery protocol, in which the parties set forth mutual obligations as to the production and format of different types of documents. By addressing these issues early in the discovery process, the parties may decrease the likelihood of discovery disputes leading to motion practice thereby lessening the burden on the Court and reducing litigation costs for their clients.