Weinstein v. Katapult Group, Inc.

Background

The court considered two joint letter briefs about outstanding discovery disputes. Weinstein, a former finance consultant, alleges in this contract case that Katapult wrongfully denied him stock options owed as compensation. The remaining claims identified by the court are breach of contract based on failure to make quarterly $15,000 payments, declaratory relief, and quantum meruit, which is a claim seeking payment for the reasonable value of services. The parties were approaching the close of fact discovery.

Under Federal Rule of Civil Procedure 26(b)(1), discovery may cover nonprivileged information relevant to a claim or defense and proportional to the needs of the case. The party resisting discovery bears the burden of explaining and supporting its objections. The court stated that each side argued that the other’s electronic searches and document production were too limited.

Discovery Disputes and Rulings

1. Katapult’s request for documents about other people’s stock options. Katapult sought documents and communications about any other person’s receipt, exercise, or termination of Katapult options. The court found Weinstein’s objections persuasive and held that documents about other people’s stock-option awards were irrelevant to assessing Katapult’s defenses. The court also relied on its earlier determination that agreements with third parties were irrelevant to this dispute. Weinstein’s objections were sustained.

2. Expansion of Weinstein’s keyword searches. Katapult sought additional email communications from Weinstein’s private email account and argued that his keyword list should be expanded. The court held that Weinstein was best positioned to determine the appropriate scope of searches for his own electronically stored information. It found that requiring searches over seven years for broad terms such as “Options,” “Advisor,” “Shares,” and “Equity,” without a reference to Katapult or the Advisor Agreement, would be an improper fishing expedition and disproportionate to the case. Weinstein’s objections were sustained.

3. Imaging Weinstein’s devices and review by counsel. Katapult argued that Weinstein’s self-collection of emails, texts, and files was insufficient and sought further imaging of his devices and a search by counsel. The court found Katapult’s concerns about deficiencies in the original self-collection well-founded because Weinstein’s initial review missed some responsive documents. But the court concluded that Weinstein had remedied the issue by retaining a third-party vendor to image his emails and text messages. Because both sides acknowledged that corrective steps were underway, the court found no further action to compel.

4. Amended interrogatory responses. The parties had agreed that two requests for production would be revised as interrogatories, with amended responses to follow. Weinstein’s counsel committed to providing those responses by October 7, 2022. The court found no dispute requiring an order because Weinstein was taking steps to comply and the deadline was reasonable. The court did not compel additional action.

5. Additional documents responsive to Katapult’s requests for production. Katapult requested an order requiring Weinstein to complete supplemental production by a date certain, preferably October 7, 2022. The court found that Weinstein was already addressing the production deficiencies through the third-party vendor’s collection and counsel’s review. Although an October 7 deadline appeared timely and reasonable, the court declined to compel production because Weinstein had shown no reluctance to comply.

6. Katapult’s time limits on searches responding to Weinstein’s requests for production. Katapult initially searched only through September 1, 2017, based on its position that the Advisor Agreement ended on July 31, 2017. Katapult later agreed to expand the search period from November 1, 2014, to the present, but not for every custodian. The court held that Katapult was best positioned to determine the appropriate scope of searches for its own electronically stored information. It found that Katapult had already conducted a thorough search and that requiring searches based on Weinstein’s assertion that he had contact with the company about stock options from 2017 to 2020 would be an improper and disproportionate fishing expedition. Katapult’s objection was sustained.

7. Katapult’s targeted email list. Weinstein sought to add four people to the list used to identify potentially responsive communications concerning his quantum meruit claim. Katapult responded that relevant communications from those people had already been produced and that expanding the search would generate thousands of additional documents for review. The court found that expansion unreasonable and disproportionate to the needs of the case. Katapult’s objection was sustained.

8. Katapult’s custodians. Weinstein argued that Katapult should search the email accounts of additional current executives. Katapult stated that it had searched the files of six custodians and argued that Weinstein’s guesses about who might have discussed him or his options were not reasonable or proportional. The court agreed that expanding the search to additional custodians was not reasonable or proportional. Katapult’s objection was sustained.

Disposition

The court’s conclusion states that it “SUSTAINS both sides’ respective objections as stated above.” It did not compel further action on the discovery issues for which Weinstein was already taking corrective steps, and it stated that it trusted him to meet his remaining discovery obligations without court intervention. The order was signed by Judge Phyllis J. Hamilton on September 29, 2022.