U.S. Magistrate Judge Paul S. Grewal of the Northern District of California recently issued an order in Venture Corp., Ltd. v. Barrett shedding light on the meaning of two Federal Rules of Civil Procedure governing document production. One rule requires that parties produce documents in the form in which they are “ordinarily maintained,” and the other requires the production of documents “as they are kept in the usual course of business.” Magistrate Judge Grewal’s order drew an important distinction between the two rules that is important for parties to keep in mind during eDiscovery.

The facts of the case should be familiar to many litigators. After the initial case management conference and the filing of a scheduling order, defendant James P. Barrett began serving document requests together with other discovery on plaintiffs Venture Corporation, Ltd. and Venture Design Services, Inc. Disputes arose, and the parties agreed to meet by telephone to resolve them. What the parties subsequently agreed to is hotly contested. The Venture plaintiffs claimed that Mr. Barrett agreed to accept documents in PDF or native format without organization or labeling. Mr. Barrett denied this, claiming that he reserved the right to demand identification by document request. Neither party documented what was said during the meeting.

What occurred next is not contested. The Venture plaintiffs proceeded to produce approximately 41,000 pages of documents. The production was not organized as it was kept in the usual course of business, nor was it organized and labeled to respond to the categories of Mr. Barrett’s document requests. Mr. Barrett eventually moved to compel answers to the interrogatories seeking identification of which documents corresponded to which document requests.

The Venture plaintiffs did not dispute that their documents and electronically stored information (ESI) were organized differently from how they were produced. Instead, they argued that Mr. Barrett had agreed to accept production in PDF and native form. After noting that the Venture plaintiffs’ proof of this contention was “thin at best,” Magistrate Judge Grewal went on to describe why, even if Mr. Barrett had agreed to accept production in PDF and native form, the Venture plaintiffs’ production would still have been deficient under the Federal Rules of Civil Procedure. Magistrate Judge Grewal’s conclusion rested on the Venture plaintiffs’ failure to satisfy both obligations imposed by Rule 34(b)(2)(E)—in this case, their production of documents and ESI in a reasonable form still would not excuse their failure to produce those items organized as they were kept in the ordinary course of business. 

Magistrate Judge Grewal elaborated on this distinction in his opinion. Under Rule 34(b)(2)(E)(ii), a producing party must either produce documents in the form in which they are ordinarily maintained or in a reasonably usable format. The court found that producing documents in PDF and native file format was consistent with Rule 34(b)(2)(E)(ii), but that a producing party’s obligation does not end there. Under Rule 34(b)(2)(E)(i), the producing party must either organize the production to reflect the organization of the documents as kept in the usual course of business, or organize the production to reflect the information’s organization and structure in terms of its responsiveness to the opposition’s document requests.

In finding that the “grab-bag of PDF and native files” produced by the Venture plaintiffs failed to satisfy Rule 34(b)(2)(E)(i), Magistrate Judge Grewal’s order clarifies a common misunderstanding among litigants. The Federal Rules of Civil Procedure governing the form of production are separate from the rules governing the organization of the production. Parties need to be aware of both obligations.

Attorneys in Ballard Spahr’s E-Discovery and Data Management Group work with clients to identify, analyze, and deliver information in civil, regulatory, and criminal matters. For more information, please contact Philip N. Yannella at 215.864.8180 or yannellap@ballardspahr.com, or Thomas J. Gallagher IV at 215.864.8383 or gallaghert@ballardspahr.com.

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