Case Law Summaries by Zapproved

With Williams v. Angie’s List, Inc, No. 1:16-cv-00878-WTL-MJD (S.D. Ind. Apr. 10, 2017), the court finds that information ‘possessed’ by a party is subject to e-discovery.

In this class-action employment case, the court found that data was “in [a party’s] possession, custody, or control” and thus subject to discovery if that party had “a legal right to obtain” the information.

The plaintiffs (collectively “Williams”) are a group of 48 current and former employees of the defendant, Angie’s List. Williams alleged that these employees were not properly compensated for overtime under the Fair Labor Standards Act because they were instructed to underreport their hours. To prove their true hours, Williams sought to obtain records including “background data automatically recorded” through the sales platform Salesforce.

Williams sought three years of Salesforce data. Angie’s List provided one year of data but refused to provide the remainder. Under Federal Rule of Civil Procedure 34(a)(1), production requests “are subject to the common-sense limitation that the items be within ‘the responding party’s possession, custody, or control.’” Angie’s List argued that the records were not in its possession because they belonged to Salesforce. Thus, the records were not subject to discovery. Williams objected that this argument inappropriately fused “the requirement of ‘control’ with undue cost or burden under the proportionality prong of Rule 26(b).”

The court noted that in the Seventh Circuit, “control” of information under Rule 34 exists when a party has “a legal right to obtain” it. Salesforce maintained the data in question for Angie’s List “in the regular course of business” under their “longstanding contractual relationship.” The company’s ability to obtain and produce some of the Salesforce data clearly proved it had possession of it.

The court also rejected Angie’s List’s request to shift the cost of production to Williams. The court reasoned that “all discovery costs money” and said that Angie’s List had to pay Salesforce to extract the data. Indeed, there would be “perverse incentives” if outsourcing “critical components” of work allowed companies to shield that information from discovery.

The court noted that it could “order cost shifting where producing electronically stored information is unduly burdensome or costly.” In the Seventh Circuit, “the test for whether discovery is proportional under Rule 26(b)(1) [should] guide the court’s discretion in whether to shift discovery costs.” These test factors include the “likelihood of discovering critical information,” whether that information is available from other sources, the amount in controversy compared to the cost of production, each party’s resources and each party’s ability to control the costs of discovery. The “responding party must bear the expense” of compliance unless it rebuts that presumption.

The information sought here was central to Williams’s claim of unpaid overtime. Angie’s List insisted that its own tracking system “provide[d] the most accurate picture” of actual hours worked. However, Williams had offered “ample evidence” otherwise. The employees’ declarations and the year of Salesforce records already produced demonstrated that there were “events logged outside of the time covered” by the internal time-tracking system. These records were “consistent with [employees] working several hours outside of the ordinary working day.”

“The clock has ticked long enough,” the court concluded. Finding that this was not a “fishing expedition,” the court granted Williams’s motion to compel production of three full years of Salesforce data.

The court also refused to shift the company’s costs. It observed that Angie’s List “has ample resources.” The $30,000 cost of obtaining the remaining two years of information was “easily outstripped by the amount in controversy.” Angie’s List also indicated that it paid $15,000 for one year of data, although Salesforce initially quoted $90,000 for that information, proving that it could control its discovery costs through negotiation. Further, the company’s “position appear[ed] to be primarily tactical” given what it spent to oppose the motion to compel over the preceding ten months.

Finally, the court also awarded Williams the costs and fees associated with the motion to compel.

Takeaways for meeting data compliance standards

If you intend to argue that information is not in your custody or is otherwise unavailable, you cannot first obtain and turn over some of that information. Work with third-party vendors to determine what is feasible before denying — or partially responding to — production requests.

Questions about case law and e-discovery?

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