Juggling Apples: Proportionality & Estoppel

AppleBalanceHead…[T]here is an additional, more persuasive reason to limit Apple’s production — the court is required to limit discovery if “the burden or expense of the proposed discovery outweighs its likely benefit.” This is the essence of proportionality — an all-to-often ignored discovery principle.

Magistrate Judge Paul Grewal

Apple Inc. v. Samsung Elecs. Co., 2013 U.S. Dist. LEXIS 116493 (N.D. Cal. Aug. 14, 2013).

Federal Rule of Civil Procedure Rule 26(b)(2)(C) is often ignored by attorneys.

Most case law focuses on arguing undue burden because ESI is not reasonably accessible, when a party should in truth be arguing proportionality.

Judge Paul Grewal addressed proportionality in one of the latest Apple v Samsung opinions. The core of the issue was Samsung seeking additional financial information from Apple; Apple produced some information, but Samsung argued the production was deficient. Apple countered that producing the information would require generating reports that would take a “herculean effort.”  Apple Inc., at *29-30.

AppleScalesThe Court did not take a bite at Apple’s undue burden argument on the effort to generate the reports. However, the Court did limit the discovery based on proportionality. Judge Grewal explained:

But there is an additional, more persuasive reason to limit Apple’s production — the court is required to limit discovery if “the burden or expense of the proposed discovery outweighs its likely benefit.” This is the essence of proportionality — an all-to-often ignored discovery principle. Because the parties have already submitted their expert damages reports, the financial documents would be of limited value to Samsung at this point. Although counsel was not able to shed light on exactly what was done, Samsung’s experts were clearly somehow able to apportion the worldwide, product line inclusive data to estimate U.S. and product-specific damages. It seems, well, senseless to require Apple to go to great lengths to produce data that Samsung is able to do without. This the court will not do.

Apple Inc., at *35-36.

The Court did not simply limit discovery, but estopped Apple from challenging Samsung’s damages experts for failing to include the information Apple was not required to produce. Apple Inc., at *36-37.

Bow Tie Thoughts

I have read many opinions where parties argue ESI is not reasonably accessible when they should instead have argued proportionality. This is a case where the judge truly understood proportionality and avoided undue prejudice for the requesting party.

The proposed amendments to the Federal Rules of Civil Procedure included proportionality at the start of the analysis under proposed Rule 26(b)(1). I think this is a bad idea.

The proposed Rule 26(b)(1) states:

Unless otherwise limited by court order, the scope of discovery is as follows: Parties may obtain discovery regarding any nonprivileged matter that is relevant to any party’s claim or defense and proportional to the needs of the case, considering the amount in controversy, the importance of the issues at stake in the action, the parties’ resources, the importance of the discovery in resolving the issues, and whether the burden or expense of the proposed discovery outweighs its likely benefit. Information within this scope of discovery need not be admissible in evidence to be discoverable.

The concept of proportionality is solid. More parties should argue it, but including it at the beginning of Rule 26 will only open the flood gates of parties fighting on every discovery request. I believe aggressive defense counsel will argue every request is not proportional to the amount in controversy, nor important to the action. Instead of helping bring costs under control, it will only cause excessive motion practice.

There are parts of the proposed amendments that I like. However, I have serious concerns about including proportionality first, instead of accessibility, that will backfire and drive up the cost of litigation.

Josh Gilliland is a California attorney who focuses his practice on eDiscovery. Josh is the co-creator of The Legal Geeks, which has made the ABA Journal Top Blawg 100 Blawg from 2013 to 2016 and was nominated for Best Podcast for the 2015 Geekie Awards. Josh has presented at legal conferences and comic book conventions across the United States. He also ties a mean bow tie.