Case 3:14-cv-03264-JD Document 1004 Filed 01/04/16 Page 1 of 6
`
`
`
`
`
`
`
`
`
`
`
`January 4, 2016
`
`Via ECF and Hand Delivery
`Hon. Judge James Donato
`United States District Court
`450 Golden Gate Avenue
`Courtroom 11, 19th Floor
`San Francisco, CA 94102
`
`Re:
`
`In re Capacitors Antitrust Litigation, No. 14-cv-3264-JD
`
`
`
`
`Dear Judge Donato,
`
`
`
`Pursuant to the Court’s November 9, 2015 Order (Dkt. 946) (“Court’s Order”), the Direct
`Purchaser Plaintiffs, Indirect Purchaser Plaintiffs (collectively, “Plaintiffs’) and Defendant Nippon
`Chemi-Con Corporation (“NCC”) (collectively, “the parties”) jointly submit this discovery letter
`brief requesting that the Court resolve a discovery dispute. The parties have met and conferred on
`several occasions but have been unable to agree and are now at impasse.
`
`
`PLAINTIFFS’ STATEMENT
`
`
`I.
`
`INTRODUCTION
`
`
`
`NCC originally agreed to produce ESI from nine custodians only to subsequently disclose
`that five of those custodians had no ESI to review. Now NCC objects to the inclusion of four
`substitute custodians on costs grounds. See Dkt. 941. Despite being under government
`investigation for price-fixing conduct as far back as March 2014 or earlier and despite Plaintiffs’
`efforts to engage NCC in custodial negotiations as far back as May 2015, it was not until August
`21, 2015 that NCC told Plaintiffs for the first time that it had no custodial data for five of the
`agreed-upon custodians. To this day, NCC has not explained why it took this extraordinary amount
`of time to determine a simple fact that was exclusively within its control. During a November 6th
`hearing, this Court ordered production of the four custodians’ documents and further ordered the
`parties to meet and confer to reach an agreement on a cost allocation for production of the
`additional ESI. Dkt. 946. Given NCC’s concern about additional discovery costs, Plaintiffs set
`forth a proposal that eliminated virtually all discovery costs to NCC and placed all of the discovery
`burden on Plaintiffs. Plaintiffs proposed entering into a “quick peek” agreement, whereby NCC
`would simply produce all of the documents to Plaintiffs, who would then shoulder the burden of
`reviewing the documents instead of NCC. Privileged material, if any, would be returned to NCC
`without waiver. NCC has rejected Plaintiffs’ proposal and instead proposed an expensive, multi-
`level privilege and relevancy review that unnecessarily increases the costs on all parties.
`
`II.
`
`FACTUAL BACKGROUND
`
`
`
`
`
`Five of the Nine Originally-Agreed Upon Custodians Have No ESI
`
`A.
`
`Although NCC now claims an undue burden, it has obtained an unfair advantage as a result
`of its own conduct. Despite agreeing to review and produce ESI associated with nine custodians,
`it only had to review and produce ESI from four custodians. Even if NCC were required to
`
`
`
`1
`
`

`
`Case 3:14-cv-03264-JD Document 1004 Filed 01/04/16 Page 2 of 6
`
`shoulder the burden of reviewing the four additional custodians’ ESI that is the subject of this
`motion—something that Plaintiffs’ proposal alleviates entirely—NCC would be reviewing one
`less custodian than it originally agreed to review. In response to these arguments, NCC stated that
`it made a unilateral business decision to “disassemble the teams of reviewing attorneys” in late
`September and that reassembling the team would impose undue costs. See Dkt. 941. Yet even
`during August, NCC was aware that it had a potential custodial dispute with Plaintiffs. See Dkt.
`932. NCC did not discuss this business decision with Plaintiffs even while meet and confer
`sessions were going forward, but now seeks to use this decision to justify its refusal.
`
`
`B.
`
`NCC’s Lack of Discovery Transparency Continues Through the Meet and
`Confer Process
`
`NCC’s Proposal is Costly and Unwarranted in Light of Plaintiffs’ Proposal
`
`
`Throughout this dispute, NCC has failed to provide the needed transparency in order to
`conduct proper meet and confers for ESI production. See Dkt. 932 at 1-4. In response to NCC’s
`conclusory assertions of undue burden, Plaintiffs repeatedly requested the expected volume of
`documents that would have to be reviewed for the four additional custodians. NCC refused to
`provide it. On November 6th during the hearing, for the first time NCC informed Plaintiffs (and
`the Court) that the additional ESI would be 60,000 documents. Thereafter, NCC based its initial
`cost sharing proposal on this assumption. It turns out that this estimate was wildly incorrect. At a
`later date, NCC revised its estimate and determined that the four custodians would only require
`review of an additional 30,000 documents. NCC had never actually run Plaintiffs’ search
`terms over the four custodians’ documents and so it did not know until December 3rd–nearly
`four months after the dispute arose and a month after the hearing—how many documents
`were actually implicated. At the time that NCC made these representations to the Court, it did
`not know how many documents were implicated by the request and therefore did not know whether
`it would cause an undue burden, despite its claims.
`
`C.
`
`On the same day of this Court’s hearing on the dispute, Plaintiffs informed NCC that they
`would shoulder the burden of review and eliminate all costs to NCC by having it produce the
`documents subject to a claw-back and quick peek agreement. On November 13th, when the parties
`met and conferred, it was clear Plaintiffs’ proposal still had not been communicated to the client
`because counsel for NCC stated that it would have to confer to determine if the proposal was
`acceptable. The proposal remained outstanding until November 30th, when Plaintiffs’ counsel
`again emailed NCC’s counsel to determine whether it was acceptable. NCC’s response—on
`December 3rd—was equivocal and stated that while NCC had “significant concerns”, it would
`continue to consider it “if there are additional factors.” It finally outright rejected the proposal on
`December 11th.
`
`On November 13, 2015, NCC proposed evenly splitting the cost to review its initial
`estimate of 65,000 documents. NCC’s proposal included a costly and unnecessary three levels of
`review: (1) Level 1 review for responsiveness and privilege of 65,000 documents, (2) Level 2
`review to confirm privilege and responsiveness designations, (3) Level 3 to once again confirm
`privilege and construct a privilege log. NCC estimated that it would cost 34.3 million yen, or,
`roughly $285,000. On December 3rd, after finally running the search terms over the documents,
`
`
`
`2
`
`

`
`Case 3:14-cv-03264-JD Document 1004 Filed 01/04/16 Page 3 of 6
`
`NCC revised its proposal to account for the greatly reduced number of documents, but still
`estimated that it would cost 22.6 million yen, or, roughly $188,000 to review 30,000 documents.
`NCC’s renewed proposal continued to include three levels of review.
`
`III. ARGUMENT
`
`A.
`
`Plaintiffs’ Proposal is Superior
`
`
`
`
`
`Plaintiffs’ proposal that NCC simply produce the approximately 30,000 documents without
`the need for a responsiveness and privilege review, but subject to a claw back and quick peek
`agreement, is far superior and should be adopted by the Court. Plaintiffs’ proposal imposes
`essentially no burden on NCC, alleviating the only rationale it has offered in support of its position.
`A “quick-peek” agreement is contemplated by the Federal Rules of Civil Procedure and Federal
`Rule of Evidence 502(d). The Advisory Committee Notes for Federal Rule of Evidence 502(d)
`states that “the court order may provide for return of documents without waiver irrespective of the
`care take by the disclosing party; the rule contemplates enforcement of ‘claw-back’ and ‘quick
`peek’ arrangements as a way to avoid the excessive costs of pre-production review for privilege
`and work-product.” Fed. R. Civ. P. 502(d), advisory comm. nn. Subdivision D; see also John B.
`v. Goetz, 879 F.Supp.2d 787, 891 (M.D. Tenn. 2010) (“Under this agreement, the parties can
`dramatically reduce the scope and cost of privilege review, and the scope and cost of discovery
`itself.”). A court’s authority to order such relief also arises under its power to fashion appropriate
`protective orders in litigation. See Fed. R. Civ. P. 26(c)(1). In doing so, Plaintiffs stipulate that
`NCC has not waived any right to assert privilege over a produced document.1
`
`B.
`
`NCC’s proposal to spend upwards of $190,000 to review a mere 30,000 documents is
`unnecessary given where the parties are in this litigation. First, three levels of any type of review
`for 30,000 documents at this juncture in the litigation is overkill. There is no need to have three
`levels of reviewers doing essentially the same work over and over again. Second, three levels of
`review on top of the search terms is excessive and renders the search term process superfluous.
`All parties in this litigation have expended significant time and resources negotiating search terms
`in an effort to target those documents that are likely to be relevant for purposes of this litigation.2
`Fourth, NCC’s “disassembling” of its document review team, despite being on notice of a
`custodian dispute in August, was a problem of its own making. Finally, NCC’s conduct throughout
`these negotiations casts serious doubt on its claims of undue burden. The fact that NCC did not
`disclose, until December 3rd, that the volume of requested documents was 30,000—despite their
`representations to the Court to the contrary—demonstrates that its position was never about undue
`burden. Instead, this conduct demonstrates that since the time Plaintiffs raised these issues in
`August, NCC never had any intention of producing a single additional document, regardless of the
`volume or burden. For all of these reasons, this Court should adopt Plaintiffs’ proposal and order
`NCC to produce the four custodians’ documents, subject to a quick peek and claw back stipulation.
`
`NCC’s Proposal Should be Rejected
`
`
`1 It is highly unlikely that pre-raid custodial documents for the four custodians would include substantial
`numbers of privileged documents and NCC has not conducted any sampling to substantiate such a concern.
`2 If this Court is inclined to accept NCC’s proposal, Plaintiffs should not be ordered pay for a responsiveness
`review, which was the point of the search term negotiations.
`
`
`
`3
`
`

`
`Case 3:14-cv-03264-JD Document 1004 Filed 01/04/16 Page 4 of 6
`
`
`
`NCC’S STATEMENT:
`
`The tone of Plaintiffs’ letter (and many of its accusations) is unfortunate. NCC believes
`the Court’s Order plainly stated that the parties should “split the cost” of the review of the ESI for
`the four substitute custodians. Accordingly, NCC believes the Court may readily resolve the
`present impasse without most of the commentary in Plaintiffs’ letter, which is no longer relevant
`in light of the prior conference call with the Court and the resulting order from November 6th.
`Accordingly, NCC does not take the Court’s time in this letter to rebut Plaintiffs’ accusations line-
`by-line (although NCC stands willing and able to do so should the Court so request).
`
`
`As the Court is aware, the parties’ prior conference call with the Court addressed whether
`discovery for newly-requested custodians would proceed. During the course of that discussion,
`the Court permitted ESI discovery for four custodians subject to cost-splitting between the parties.
`Following this conference call, the Court issued an order to the same effect:
`
`
`[T]he Court is therefore inclined to permit plaintiffs to obtain the ESI for the four
`substitute custodians identified in plaintiffs’ letter (Dkt. 932), so long as plaintiffs
`split the cost of that additional discovery with NCC.
`
`
`
`Contrary to Plaintiffs’ letter, NCC does not object to the inclusion of these four custodians
`– indeed, the Court already ordered it.3 Rather, NCC understood this order to mean the parties
`should split the cost of the review and, in keeping with the Court’s Order, has provided reasonable
`estimates of the same to Plaintiffs. As discussed below, Plaintiffs rejected NCC’s cost-splitting
`proposal and have not engaged in any further discussions of the cost shares (even though NCC
`offered to do so).
`
`
`Plaintiffs instead propose that NCC “simply produce the … documents at issue to
`Plaintiffs, subject to a clawback agreement,” without regard to a review for responsiveness or
`privilege prior to such production – that is, the only type of review discussed by the parties during
`the conference call with the Court in November.4 NCC does not believe the Court’s Order
`contemplated Plaintiffs’ new approach and Plaintiffs never raised it with the Court during the
`conference call on November 6th. NCC’s position is that a review supported by reasonable and
`well-documented cost estimates is precisely what the Court previously ordered, and NCC does not
`understand Plaintiffs’ different proposed course. Unfortunately, this impasse requires the Court’s
`further direction as to the meaning of its order.
`
`
`Notwithstanding the foregoing, NCC has gathered the relevant ESI and awaits the Court’s
`instruction. Although that ESI has not yet been reviewed, the parties can proceed apace upon the
`Court’s further guidance.
`
`
`
`
`3 See Plaintiffs’ Statement, Introduction, at 1 (stating “NCC [now] objects to the inclusion of four
`substitute custodians on costs grounds”). It is not clear to NCC why Plaintiffs are making this statement,
`which is not accurate. Also, Plaintiffs cite a docket entry (DKt. 941) that is plainly no longer relevant in
`light of the Court’s Order.
`4 See Correspondence of M. Weiler to E. Sega, November 30, 2015.
`
`
`
`4
`
`

`
`Case 3:14-cv-03264-JD Document 1004 Filed 01/04/16 Page 5 of 6
`
`JOSEPH SAVERI LAW FIRM, INC.
`
`
`
`/s/ Joseph R. Saveri
`Joseph R. Saveri (State Bar No. 130064)
`Andrew M. Purdy (State Bar No. 261912)
`Matthew S. Weiler (State Bar No. 236052)
`James G. Dallal (State Bar No. 277826)
`555 Montgomery Street, Suite 1210
`San Francisco, California 94111
`Telephone:
`(415) 500-6800
`Facsimile:
`(415) 395-9940
`E-mails:
`jsaveri@saverilawfirm.com
`apurdy@saverilawfirm.com
`mweiler@saverilawfirm.com
`jdallal@saverilawfirm.com
`
`
`
`Interim Lead Counsel for Direct Purchaser
`Plaintiffs
`
`COTCHETT, PITRE & McCARTHY, LLP
`
`/s/ Steven N. Williams
`Joseph W. Cotchett (State Bar No. 36324)
`Steven N. Williams (State Bar No. 175489)
`Adam J. Zapala (State Bar No. 245748)
`Elizabeth Tran (State Bar No. 280502)
`840 Malcolm Road, Suite 200
`Burlingame, CA 94010
`Telephone:
`(650) 697-6000
`Facsimile:
`(650) 697-0577
`E-mails:
`jcotchett@cpmlegal.com
`
`swilliams@cpmlegal.com
`
`azapala@cpmlegal.com
`
`etran@cpmlegal.com
`
`Interim Lead Counsel for Indirect Purchaser
`Plaintiffs
`
`CADWALADER, WICKERSHAM &
`TAFT
`
`/s/ Joseph J. Bial
`
`
`
`Charles F. Rule (admitted pro hac vice)
`Joseph J. Bial (admitted pro hac vice)
`Daniel J. Howley (admitted pro hac vice)
`700 6th St, NW
`Washington, DC 20001
`Telephone: (202) 862-2200
`Facsimile: (202) 862-2400
`rick.rule@cwt.com
`
`5
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`

`
`Case 3:14-cv-03264-JD Document 1004 Filed 01/04/16 Page 6 of 6
`
`joseph.bial@cwt.com
`daniel.howley@cwt.com
`
`Counsel for Defendant Nippon Chemi-Con
`Corporation
`
`
`
`cc:
`
`All Counsel
`
`
`
`6