Addressing the Disorganized Production
John A. Schena, Esq.
Schwartz Semerdjian Ballard & Cauley LLP
Almost every attorney understands that the Code of Civil Procedure section 2031.280 requires a production “be organized and labeled to correspond with the categories of the demand.” But, I can count on one hand the number of times I actually received documents produced in such a convenient fashion over the last few years. The reason is not (often) opposing counsel’s malicious intention to make me work weekends, but that the Code also provides for a mechanism to avoid the hassle of organizing and labeling a production by producing documents “as they are kept in the usual course of business.” Accordingly, no matter what the production request, type of case, or party, this very phrase magically appears on every response for request for production. The practice of producing documents as kept, in and of itself, is not particularly surprising given that avoiding organizing also prevents disclosure of what precise documents a party may feel is relevant to any particular request, while at the same time passes the cost of organization from client to the opposition.
But, the line between statutory compliance and a disastrous production, or perhaps better stated as obligation fulfillment versus mere strategy, is blurry at best. The statutory language is basic, leaving a lot to the imagination; the case law is minimal, again, not surprising as discovery disputes rarely are subject of appeal. Further complicating the issue is the fact that any local rules that would address a threshold for compliance in organizing productions are preempted by the Judicial Council. See California Rules of Court Rule 3.20. However, as Judge Eric Younger (Ret.) aptly states: “do you want to be the one who makes the argument that ‘disorganized and unintelligible’ compliance is no longer forbidden”? Younger on California Motions § 29.62 (2011 ed.) (emphasis in original).
A recent case confirms that you do not. In Kayne v. The Grande Holdings, Ltd. (2011) 198 Cal.App.4th 1470, the Second District Court of Appeal affirmed a finding that the producing party bears the costs of organizing documents produced in a disorganized fashion. The holding accompanied a sanctions order that totaled $74,809. The factual progression of Kayne is not unfamiliar to most litigators: plaintiffs requested documentation and defendant delayed production until faced with a motion for compliance. When the defendant finally did provide the roughly 60,000 pages of responsive documentation, it was “in complete disorder.” Id. at 1473. Upon receipt plaintiffs’ requested for compliance with Code of Civil Procedure section 2031.280: organization and corresponding categorical labeling of the production. After defendant refused, citing compliance by producing documents “as they are kept in the usual course of business,” plaintiffs assumed the burden of organizing the production and hired three new attorneys to organize the documents by category and date.
Kayne is fascinating given that the producing party employed the magic phrase – documents are produced “as they are kept in the usual course of business” – and yet was still subject to sanctions. The trial court did not necessarily find that the documents were not produced as maintained in the usual course of business, but instead wanted an explanation of how 60,000 pages of documents could have been in such disarray. In doing so, the court invited the producing party to provide evidence of the condition in which the documents were found. In opposition to the sanctions motion, the defendant provided two declarations, one from its controller and the other from in-house counsel. The provided declarations, however, did not adequately describe how the documents were found or the condition they were maintained while in that party’s custody and control. Id. at 1473-1474. While it was described that the documents were in storage, in plastic bags, the court wanted more. Simply put, the judge wanted an explanation for the disorganized condition in which the documents were produced and never received a compelling response.
On appeal, defendant attempted to shift the burden on the party seeking sanctions to come forward with evidence that the production had not complied with Code of Civil Procedure section 2031.280. The Appellate Court rightfully rejected this argument as illogical finding that the producing party “was the only party who could provide any evidence at all concerning the state of the documents in its possession, custody and control.” Id. at 1477. The Appellate Court further confirmed that trial courts have the discretion to order producing parties to either organize the documents themselves or bear the costs of organizing the documents. The cost here was the fees associated with three new attorneys reviewing and organizing documents; a cost that, undoubtedly, the producing party could have more efficiently handled in-house.
While the Kayne case may not be a novel application of law, it does serve as a reminder of the steps a party can take upon receipt of a disorganized production. If documents are not organized and labeled to correspond with requests, determine if they are in fact produced “as they are kept in the usual course of business.” As this determination is obviously easier said than done, creating a correspondence trail with opposing counsel is essential. In making the attempt to meet and confer, address the following questions to opposing counsel: How are documents maintained in the client’s usual course of business? How were these precise documents located? Which individual located these precise documents? In what condition were the documents discovered? And, is the production in substantially the same condition? The answers to these questions will provide a glimpse into any evidence that will be introduced in opposition to a discovery compliance or sanctions motion. There is also the possibility that opposing counsel will refuse to respond to the questions, creating a nice background record for the judge to consider.
If after conferring, you still suspect that production strategy has ranged towards production manipulation, ask opposing counsel to organize and label corresponding documents with requests regardless of whether the production is indicated to have been produced in the condition “kept in the usual course of business.” At this point, assuming the answer is do-it-yourself, you are left with the choice of immediately going before the judge for resolution or taking the organizational responsibility upon yourself and seeking to recoup upon your efforts by an award of sanctions. The latter, the method followed the Kayne plaintiffs, while riskier is perhaps more compelling, as the judge will have tangible evidence (attorney hours) to exemplify the state of disorganization.
Remember, unfortunately, not every client keeps their documents in a neat, organized fashion, especially in the absence of litigation. At some point, you will find yourself with a client that has maintained documents in a less than desirable method for production. The same discovery procedures and guidelines discussed above are apropos. While you do not have to double back and completely re-organize your client’s documents, the rule of reason will apply. Be aware that on motion the judge will look to see that you and your client made a sincere effort to comply with the Code. A refusal to organize and categorize a smaller volume of documents may look more like gamesmanship than a refusal in the case of hundreds of thousands, unless of course those hundreds of thousands are largely irrelevant.
If you are unable or unwilling to shoulder the costs of organizing the production, make sure to create a record that provides the answers to the above-questions in the event opposing counsel takes issue with the production. In summation, ensure that the documents are in fact being produced as “kept in the usual course of business.” The other option is to allow opposing counsel to inspect and copy records at your client’s place of business. While this tactic may alleviate any concern that the production was merely produced in a disorganized fashion, it comes with its own lists of concerns, which may include revealing your client’s actual disorganization.