Parties and third parties alike should pay careful attention to the terms of a discovery stipulation. Courts are likely to strictly uphold the terms of a stipulation, even if doing so would result in a party or third party having to go to great expense in order to comply with a discovery request. Parties and third parties should also strive toward timely compliance with case management orders, as well as comprehensive identification of sources of potentially relevant ESI, keeping in mind that even a good faith failure to comply could result in sanctions.
In re Fannie Mae Sec. Litig., 552 F.3d 814 (D.C. Cir. 2009):
D.C. Cir. affirmed district court’s decision in this case, where defendants sought production of documents from a third party (“OFHEO”). After OFHEO produced what it represented were “all” of its responsive documents, defendants learned that OFHEO did not search its off-site backup tapes. OFHEO voluntarily agreed to search the backup tapes, and entered into a stipulation by which defendants would set the search terms. Upon finding that the search terms resulted in 660,000 documents, OFHEO objected, but the court ordered the production of all the documents finding that the stipulation clearly granted defendants sole discretion over the terms. OFHEO took steps to comply, and went to great expense (9% of its total budget), but repeatedly requested last minute extensions of time. Court noted OFHEO’s good faith, but late attempts to comply, and ordered immediate production of all documents withheld on the sole basis of pending privilege review, although such production would not constitute a waiver of privilege. Moreover, the D.C. Cir. upheld the district court’s holding OFHEO in contempt for its delay and conduct during discovery.
A detailed summary of this case is available here.