May 16

Early Fact Disclosure Facilitated by Electronic Discovery in E.D. Pa. Antitrust Class Action

Recognizing the speed and low cost of searching for relevant facts in electronically stored information (ESI), the United States District Court for the Eastern District of Pennsylvania has ordered plaintiffs’ counsel to disclose – in advance of depositions and class certification or summary judgment proceedings – the key facts, persons, and products underlying their allegation of an industry-wide price-fixing conspiracy involving drywall products. In re: Domestic Drywall Antitrust Litig., MDL No. 2437, 2014 WL 1909260 (E.D. Pa. May 12, 2014) (Baylson, J.).  Departing from established practice, in which such disclosures typically occur after discovery has closed, the court emphasized that early disclosure will advance the litigation, promote settlement discussions, and reduce attorneys’ fees.  “Ignoring the capabilities which ESI allows the parties to search for and produce factual information in a case of this nature is like pretending businesses still communicate by smoke signals.” Id. at *1, slip op. at 1.

In the drywall litigation, defendants’ document productions to plaintiffs consisted almost entirely of ESI. Defendants later moved to compel plaintiffs to respond to two interrogatories seeking identification of the price-fixed products, the persons who allegedly conspired, and the acts and omissions taken in furtherance of the conspiracy.  Plaintiffs objected that the defendants’ interrogatories were premature “contention interrogatories” that, based on past practice, they should not have to answer with detailed factual evidence.

Judge Baylson disagreed. First, he noted that while not dispositive, the interrogatories were “not ‘truly’ contention interrogatories;” rather, “the interrogatories seek facts on which Plaintiffs base their claims . . . .”  The interrogatories, moreover, were not premature, given that the defendants’ document production was largely completed and “[d]efendants have a reasonable need to know the identities of the products, individuals who discussed prices with competitors, and the dates and substance of the communications . . . .” Id. at *3, slip op. at 5.  Accordingly, the court ordered plaintiffs’ counsel to provide this information within 45 days in signed pretrial statements, followed by defendants’ responses “before depositions are complete,” and supplementation by plaintiffs after depositions but before exchange of expert reports. Id. at *7, slip op. at 12.

The court gave three policy reasons for the early disclosure: fair discovery will benefit from frequent exchange of information; information exchange facilitates evaluation of the strengths and weaknesses of the case and may promote settlement and save on attorneys’ fees; and avoidance of undue prejudice.  But what ultimately seemed to drive the decision was that in large cases, “ESI tools enable parties to use search terms and other methods to quickly identify relevant information and documents produced.  The benefits of these ESI tools substantially reduce the burden on Plaintiffs to provide the facts that the Defendants have requested.” Id. at *4, slip op. at 8.  Because of the ease, and relatively low cost, with which the required searches could be performed, there was no reason to postpone responses to the interrogatories.

The Domestic Drywall order is a pragmatic recognition that ESI can efficiently advance the ball in complex litigation, and may provide a basis to shorten the often-years-long pretrial period in class action litigation.

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