United States District Court, D. Kansas
ORDER
James
P. O'Hara U.S. Magistrate Judge.
In this
negligence action involving the release of genetically
modified corn into the U.S. corn supply, a dispute has arisen
over whether plaintiff Agribase International, Inc., a corn
exporter, has named the appropriate persons as document
custodians whose records will be searched in response to
discovery requests. Although Agribase has named two document
custodians, defendants Syngenta AG, Syngenta Crop Protection
AG, Syngenta Corporation, Syngenta Crop Protection, LLC, and
Syngenta Seeds, LLC (collectively, “Syngenta”)
have filed a motion (ECF No. 40) for an order compelling
Agribase to designate two additional custodians, namely,
Zhenhua Qin, Agribase's former president and majority
owner, and Richard Yang, Qin's former assistant. Because
the court finds Qin and Yang are likely to have unique,
discoverable information, and because Agribase has not
demonstrated an undue burden in searching their records, the
motion is granted.
I.
Background
Agribase
was a relatively small export company owned by Qin and Gene
Liu. It operated from 2010 to approximately 2015, buying corn
and corn products in the U.S. and exporting them to China. In
November 2015, it filed this suit, alleging Syngenta's
negligence in introducing corn containing the genetic trait
MIR162 into the U.S. corn supply before MIR162 was approved
by China caused a significant drop in corn prices. Agribase
asserts it “was injured by the collapse of the export
market to China and suffered damages from reduced corn and
corn by-product prices, from costs associated with lost
contracts and rejected shipments of corn and corn
by-products, and/or from the disruption and contraction in
the export market for corn and corn by-products and the
services associated with that market.”[1] More
specifically, Agribase contends it lost four sales contracts
due to Syngenta's “premature release of MIR162 in
the United States.”[2]
During
the course of discovery, Syngenta served a request for
production of documents on Agribase in May
2019.[3] Agribase agreed to Syngenta's request
that it run 46 search terms in electronically stored
information (“ESI”). Agribase identified two
custodians whose records it agreed to search: Liu, who was
Agribase's co-owner, vice president, secretary, and
treasurer, and whose responsibilities included
“handling financials, pricing, and sales
contracts;”[4] and Terry English, who was Agribase's
only employee and whose responsibilities included
“trading and purchasing corn and corn by-products,
logistics, and coordinating drayage and
truckers.”[5]
Syngenta
then requested Agribase add Qin and Yang as two additional
document custodians. As mentioned above, Qin is the only
other owner of Agribase and served as the company's
president. Yang served as Qin's assistant and translator.
Although Yang was not an employee of Agribase, he used an
Agribase e-mail address and “perform[ed] certain tasks
on Agribase's behalf including assisting Mr. English with
logistics.”[6]Agribase refused Syngenta's request to
search the electronic files of Qin and Yang. The instant
motion followed.
II.
Legal Standards
Fed. R.
Civ. P. 26(b)(1) entitles parties to “obtain discovery
regarding any nonprivileged matter that is relevant to any
party's claim or defense and proportional to the needs of
the case.” Relevance is “construed broadly to
encompass any matter that bears on, or that reasonably could
lead to other matter that could bear on, any issue that is or
may be in the case.”[7] To determine whether discovery sought
is proportional to the needs of the case, the court considers
“the importance of the issues at stake in the action,
the amount in controversy, the parties' relative access
to relevant information, the parties' resources, the
importance of the discovery in resolving the issues, and
whether the burden or expense of the proposed discovery
outweighs its likely benefit.”[8] Fed.R.Civ.P. 34 permits a
party to seek the discovery of documents, including ESI.
Generally,
absent a different agreement between the parties, the party
responding to a discovery request may select the custodians
it deems most likely to have responsive
documents.[9] When the opposing party moves to compel
the designation of an additional ESI custodian, the movant
bears the burden of demonstrating the proposed
custodian's “ESI likely includes information
relevant to the claims or defenses in the
case.”[10]Considering the proportionality
requirement of Rule 26(b), the movant further must show the
proposed custodian “is likely to have unique
information and ESI, not available through other [designated]
custodians.”[11] In the lead case of this MDL involving a
suit by corn producers against Syngenta, the undersigned U.S.
Magistrate Judge found good cause for the appointment of 15
(rather than 5) proposed records custodians where the
proposed custodians appeared to be “fairly high level
managers with direct knowledge about important aspects of
this case, ” where the discovery sought was
“targeted, narrowly drawn, and proportionate, ”
and where the responding party had not “made an
adequate evidentiary showing that 15 custodians (as opposed
to 5) would involve undue expense.”[12]
III.
Analysis
Applying
these legal standards, the court finds Syngenta has
demonstrated Qin and Yang are likely to have unique, relevant
ESI that has not been captured by Agribase's search of
Liu and English's records. Syngenta has presented the
deposition transcript of English, who testified as
Agribase's Fed.R.Civ.P. 30(b)(6) representative. On
Agribase's behalf, English represented that Qin was
“in charge of” Agribase's sales in China and
“communicated with the buyers in
China.”[13] When asked about Yang's role for
Agribase, English testified that Yang conveyed purchase
offers from China[14] and communicated with English about
“procuring product here in the US.”[15] Yang further
managed logistics for Agribase by obtaining bookings and
coordinating drays and truckers.[16]
Qin and
Yang (who were based in China) had the responsibility of
communicating with Chinese purchasers of the corn and corn
products, and this role was unique to them- it was not a role
filled by Liu or English (who were based in the
U.S.).[17] Their ESI is clearly relevant to the
claims and defenses in this case. Such information could bear
on Agribase's actual or potential contract terms with
Chinese buyers, Agribase's purported lost profits, and
Agribase's independent knowledge of MIR162's approval
status by China and/or whether Agribase's shipments to
China would be rejected. In addition, Yang's role
managing logistics for the company may lead to documents in
his control that are not duplicative of the logistics handled
by English. Without ESI from Qin and Yang (who essentially
represented the Chinese branch of the company), relevant,
responsive information likely will not be captured in
Agribase's document production.
Agribase's
arguments against adding Qin and Yang as custodians are
respectfully rejected. First, Agribase asserts their addition
would “broaden discovery in a manner wildly
disproportionate to the needs of the
case.”[18] But Agribase provides no specific
information about the time or expense it would incur in
searching Qin and Yang's ESI. Without an affidavit or
other evidence of the burden that Agribase would incur, the
court is not left with information sufficient to make a
proportionality determination.[19] Agribase does state it already
has produced more than 118, 000 documents from the ESI of Liu
and English, [20] but this number is irrelevant if those
documents miss a significant portion of the issues in the
case.[21] Next, Agribase notes English and Liu
were “both intimately involved in the details
surrounding” the four sales contracts at issue in this
case.[22] But again, accepting the truth of this
statement does not diminish the fact that Qin and Yang were
also involved in the four contracts and likely have relevant
information that would not be captured by the ESI of English
and Liu. Agribase seeks more than $3 million in damages, and
ordering the collection of documents from the persons
responsible for communicating with Chinese buyers,
particularly when those persons are the company's
president and his assistant, is not disproportional.
Second,
Agribase asserts Qin did not use an
“@agribaseinc.com” e-mail address, but instead
conducted business on personal e-mail accounts. Perhaps if
Qin had used an Agribase e-mail account, the ESI sought would
be in the possession of Agribase and easier to access. But
Rule 34 permits Syngenta to obtain documents within
Agribase's “possession, custody, or control.”
Agribase has not suggested business-related e-mails in the
personal e-mail accounts of its president and majority owner
are not within its control. “[C]ontrol comprehends not
only possession but also the right, authority, or ability to
obtain the documents.”[23] Thus, “it is not unusual
for documents in the possession of a third party, closely
connected to the litigation, to be subject to a Rule 34
request.”[24] Agribase makes the conclusory statements
that ...