Rusoff v. The Happy Group, Inc.

Background

The plaintiffs brought a consumer class action alleging that The Happy Group, Inc. marketed “free range” eggs as “pasture-raised” eggs, causing consumers to pay premium prices. The complaint asserts claims under California and New York consumer laws and seeks damages, injunctive relief, and declaratory relief.

The parties disputed the contents of their protocol for producing electronically stored information, or ESI. They could not agree on three additional custodians—Ryan Parkinson, Pat Bryant, and Alexander Kent—or on search terms to apply to the custodians’ electronic records. The company had already collected and searched ESI from six agreed custodians while the dispute remained unresolved.

Legal standard

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. Proportionality requires considering factors such as the importance of the issues, the amount at stake, the parties’ access to information and resources, the value of the discovery, and its likely burden or expense. Rule 26(b)(2) requires limits on discovery that is cumulative, duplicative, or outside the permissible scope.

The court stated that the party resisting discovery bears the burden of explaining and supporting its objections.

Custodians

The court granted the plaintiffs’ request to obtain ESI from Ryan Parkinson, THG’s senior marketing manager. The court found that his communications with marketing employees and outside marketing firms could bear on the company’s alleged marketing strategy and on whether the alleged misrepresentations were material. The court concluded that narrow search terms and removal of duplicate files could reduce the burden on THG.

The court also granted the request for ESI from Pat Bryant, THG’s vice president of sales. The court found that his communications could concern retailers, distributors, pricing, premiums, standards, certifications, marketing, and damages. The court rejected THG’s argument that Bryant’s records would be cumulative of records from other custodians.

The court denied the request for ESI from Alexander Kent, THG’s vice president of operation and supply chain director. The court relied on deposition testimony indicating that Kent had limited knowledge of marketing and found that his supply-chain information would duplicate information from another custodian. The plaintiffs had not shown a significant need for Kent’s records.

Search terms

The court denied the plaintiffs’ original nine search strings, finding them too broad and disproportionate. For example, terms relating generally to deception could produce records about workplace matters or statements by unrelated people, while the proposed audit search could produce many audits unrelated to the egg-labeling claims. The proposed terms generated tens of thousands of hits for sample custodians, further showing the need for narrowing.

The court also denied THG’s proposal to require several searches to include the word “pasture.” The court found that relevant communications could discuss mislabeling free-range eggs without using that word. The court likewise rejected THG’s objections to certain pricing-related searches because internal pricing communications could bear on whether the alleged misrepresentations were material.

The court approved a modified search protocol designed to connect the searches more closely to the plaintiffs’ allegations. For Parkinson and Bryant, one approved search required “pasture raised” or “pasture-raised” to appear near terms involving cartons, labels, advertising, messaging, social media, or related decision-making. The remaining approved searches connected terms involving deception, surveys and research, premiums, pricing, consumer understanding, standards, or audits with egg products, labeling, advertising, animal-raising conditions, certifications, or related subjects.

Cost-shifting

THG asked the court to require the plaintiffs to pay the cost of collecting ESI from the six existing custodians. The court explained that the responding party ordinarily bears the cost of complying with discovery, although a court may shift costs to protect against undue burden or expense.

The court denied THG’s request without prejudice. It found that THG had not adequately briefed the request and that cost-shifting was not warranted on the record. The court reasoned that THG had assumed the risk of duplicative work by collecting and searching ESI from all six custodians before the search-term dispute was resolved. The court also noted that its narrowed custodian ruling and tailored search strings would help avoid unnecessary burden.

Disposition

The order granted the plaintiffs’ request for ESI discovery from Ryan Parkinson and Pat Bryant; denied the request for ESI discovery from Alexander Kent; granted the modified search-string protocol; denied the plaintiffs’ original search strings and THG’s counterproposal requiring the word “pasture”; and denied THG’s request to shift discovery costs without prejudice. The order resolved a discovery dispute and did not decide the merits of the consumer claims.