Kaiser Aluminum Warrick, LLC v. US Magnesium LLC

Background

The case involves US Magnesium’s alleged failure to fulfill a contract to supply magnesium to Kaiser. US Magnesium relies on a force majeure defense, meaning it claims that unexpected equipment failures made compliance with the contract impossible.

Kaiser objected to US Magnesium’s production of certain documents with redactions. Kaiser sought reproduction of the documents without those redactions, arguing that redactions based on relevance are disfavored when a protective order is in place. US Magnesium argued that the redacted material was irrelevant and competitively sensitive.

The court reviewed samples of the redacted documents. They included monthly reports with detailed financial information, competitor research, information about business segments unrelated to magnesium operations—including a lithium plant—and information about magnesium production.

Legal Standard and Analysis

Federal Rule of Civil Procedure 26(b)(1) permits discovery of nonprivileged information that is relevant to a party’s claim or defense and proportional to the needs of the case. The court explained that information outside the scope of discovery may sometimes be redacted for relevance, but that relevance redactions must be evaluated case by case.

The court reasoned that relevance redactions can be appropriate when they are made in good faith, are limited, do not deprive the other party of necessary context, and do not cause delay or unfair expense. A producing party should ordinarily request permission before making such redactions, because the practice can lead to disputes and additional litigation costs.

US Magnesium had not requested permission before making the redactions. However, the court had previously ruled that information about US Magnesium’s lithium plant and finances was irrelevant to the force majeure defense and not proportional to the case. The court therefore concluded that US Magnesium could continue to redact that information.

The court found other redactions improper. US Magnesium had redacted information about magnesium production, including reports on magnesium inventory and purchases, even though that information was relevant. It had also redacted column and row descriptions, such as “Tons Mg Sold,” “Net Profit/Loss,” and “Accounts Receivable,” as well as graph titles. The court held that these descriptions and titles should be disclosed because they allowed Kaiser to understand what information had been redacted. The substantive numbers could remain protected as confidential and proprietary.

Order

The court denied in part and granted in part Kaiser’s motion. US Magnesium was not required to reproduce the reports in fully unredacted form. It was required, by March 10, 2023, to reproduce the reports while removing redactions covering responsive information about magnesium inventory and purchases, column and row descriptions, and graph titles. Other redactions concerning irrelevant information, including some bullet points under tables and charts, could remain.

The court also ordered the parties to seek permission from the opposing party or the court before redacting future documents. The order stated that no extension of the March 10 deadline would be permitted.