Northern District of Ohio Orders FDIC to Search for Responsive ESI

13 Jul 2016

In FDIC as Receiver for AmTrust Bank v. Ark-La-Tex Financial Services, LLC d/b/a Benchmark Mortgage, Case No. 15-2470 (N.D. Ohio, June 24, 2016), Plaintiff FDIC sued Defendant mortgage broker for alleged breaches of contractual warranties and representations contained in a master broker agreement.  The breaches arose during the Defendant’s brokering of six specific mortgage loans that were controlled by the master agreement. Plaintiff alleged that Defendant submitted false information to lender AmTrust Bank prior to AmTrust’s closure and subsequent FDIC receivership. Plaintiff also alleged that Defendant failed to indemnify Plaintiff for the losses.

Defendant asserted that the Plaintiff’s responses to discovery requests for ESI was deficient. Plaintiff then supplemented its responses. However, Defendant continued to assert deficiencies, and counsel for the parties held a meet and confer. Plaintiff further supplemented its responses, but Defendant was still not satisfied, and filed a Motion to Compel.

As part of the Motion, Defendant sought production of documents relating to certain of AmTrust Bank’s policies and procedures as related to approval, funding, and underwriting of mortgage loans.  It also sought documents relative to the decision-making process and quality control review of the loans at issue. Plaintiff objected, stating that the requests were not relevant and were “disproportionate to the needs of the case.”

The court found the documents were relevant to Defendant’s affirmative defenses. With respect to proportionality, the court noted that in the Northern District of Ohio, a party claiming undue burden must explain why the request is burdensome and propose alternatives. The court found Plaintiff’s arguments as to burden unpersuasive, including the assertions in a declaration by Plaintiff’s eDiscovery Specialist.  The declaration stated that attempting to identify the documents sought would require Plaintiff to “employ an expansive set of ESI search terms” that would yield “tens of thousands” of documents from a vast library of over 1.5 billion pages.  It also stated that a preliminary search for organizational charts alone yielded a return of over 5,800 documents.

The court found the declaration to be conclusory and  insufficient to show that the burden of production outweighed the benefit.  The court further held that Plaintiff did not make a good faith effort to search for the requested documents before determining that it would be burdensome to do so. The court ordered Plaintiff to comply with the requests and ordered attorneys’ fees in favor of Defendant.

ILS – Plaintiff eDiscovery Experts