ANTI-MONOPOLY, INC., Plaintiff, -against- HASBRO, INC., et al., Defendants.
94 Civ. 2120 (LMM) (AJP)
UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK
1995 U.S. Dist. LEXIS 16355; 1995-2 Trade Cas. (CCH) P71,218
November 3, 1995, Decided
November 3, 1995, FILED
For ANTI-MONOPOLY, INC., plaintiff: Carl E. Person, New York, NY.
For HASBRO, INC., defendant: Dennis P. Orr, Shearman & Sterling, NY, NY. Gary L. Reback, Susan Abouchar Creighton, Wilson Sonsini Goodrich & Rosati, Palo Alto, CA. Steven A. Maddox.
For TOYS "R" US, INC., defendant: Brooks R. Burdette, Schulte, Roth & Zabel, NY, NY.
For K MART CORPORATION, defendant: Neal R. Stoll, Skadden Arps Slate Meagher & Flom, LLP, New York, NY. Gary L. Reback (See above). David J. Berger, John Mathias Horan, Wilson, Sonsini, Goodrich & Rosati, Palo Alto, CA.
Andrew J. Peck, United States Magistrate Judge
Andrew J. Peck
OPINION AND ORDER
ANDREW J. PECK, United States Magistrate Judge:
By letter motion dated October 13, 1995 (supplemented by letter dated October 31, 1995), plaintiff Anti-Monopoly, Inc. moves to compel production of certain data processing files (that is, computerized data) from defendants. The relevance of the material for discovery purposes is conceded. Defendants object largely on two grounds: (1) that they are producing the information in hard copy format, and (2) that they would have to "create" the information in electronic format.
The law is clear that data in computerized form is discoverable even if paper "hard copies" of the information have been produced, and that the producing party can be required to design a computer program to extract the data from its computerized business records, subject to the Court's discretion as to the allocation of the costs of designing such a computer program. The application of these principles to the facts of this case, however, require further negotiation by the parties.
Rule 34(a) of the Federal Rules of Civil Procedure clearly authorizes a party to request production of computerized data:
Any party may serve on any other party a request (1) to produce ... any designated documents (including writings, ... and other data compilations from which information can be obtained, translated, if necessary, by the respondent through detection devices into reasonably usable form) ....
The 1970 Advisory Committee Notes to Rule 34 emphasize that Rule 34 applies to computer technology:
The inclusive description of "documents" is revised to accord with changing technology. It makes clear that Rule 34 applies to electronic data compilations from which information can be obtained only with the use of detection devices, and that when the data can as a practical matter be made usable by the discovering party only through respondent's devices, respondent may be required to use his devices to translate the data into usable form. In many instances, this means that respondent will have to supply a printout of computer data. The burden thus placed on respondent will vary from case to case, and the courts have ample power under Rule 26(c) to protect respondent against undue burden or expense, either by restricting discovery or requiring that the discovering party pay costs. Similarly, if the discovering party needs to check the electronic source itself, the court may protect respondent with respect to preservation of his records, confidentiality of nondiscoverable matters, and costs.
See also Sanders v. Levy, 558 F.2d 636, 648-49 (2d Cir. 1976) (en banc) ("The 1970 amendments to the Federal Rules rendered Rule 34 specifically applicable to the discovery of computerized information."), rev'd on other grounds sub nom. Oppenheimer Fund, Inc. v. Sanders, 437 U.S. 340, 98 S. Ct. 2380, 57 L. Ed. 2d 253 (1978) (Rule 23 rather than Rule 34 governs identification of class members; production of computer tape proper but district court erred in imposing cost of doing so on defendants); Santiago v. Miles, 121 F.R.D. 636, 640 (W.D.N.Y. 1988) ("A request for raw information in computer banks is proper and the information is obtainable under the discovery rules."); Daewoo Electronics Co. v. United States, 10 C.I.T. 754, 650 F. Supp. 1003 (C.I.T. 1986) (Rule 34 "is intended to keep pace with changing technology"); 8A C. Wright, A. Miller & R. Marcus, Federal Practice and Procedure § 2218 at 450 (1994) (1970 amendment of Rule 34 "brought the federal rules ... into the computer age").
As Professors Wright and Miller have noted:
It has become evident that computers are central to modern life and consequently also to much civil litigation. As one district court put it in 1985, "computers have become so commonplace that most court battles now involve discovery of some computer-stored information."
Id. § 2218 at 449 (quoting Bills v. Kennecott Corp., 108 F.R.D. 459, 462 (D. Utah 1985)); see generally Manual for Complex Litigation (Third) § 21.446 (1995).
Thus, today it is black letter law that computerized data is discoverable if relevant.
Turning to defendants' objections, defendants first contend that "all of the information plaintiff requests is already being produced by [defendants] as part of [their] document response." (Defendants' 10/20/95 letter at p. 3.) That argument was rejected fifteen years ago by the court in National Union Electric Corp. v. Matsushita Electric Industrial Co., 494 F. Supp. 1257, 1261 (E.D. Pa. 1980) (citing, inter alia, United States v. Davey, 543 F.2d 996, 1000 (2d Cir. 1976)). See also 8A C. Wright, A. Miller & R. Marcus, Federal Practice and Procedure § 2218 at 452 & n.13 (citing cases). As in the present case, Matsushita involved the need for computerized sales and price information to allow analysis in an antitrust case. Thus, the rule is clear: production of information in "hard copy" documentary form does not preclude a party from receiving that same information in computerized/electronic form.
Second, defendants contend that "nothing in the Federal rules requires Defendants to create new documents that they do not maintain in the ordinary course of business" and "Plaintiff's motion would require [defendants] to create a new electronic format, solely to ease plaintiff's review of documents." (Defendants' 10/20/95 letter at p. 1, 3.) The court rejected this same argument in Matsushita, at least where the requesting party offered to pay the cost of creating the computer program. 494 F. Supp. at 1258-62; accord, In re Air Crash Disaster at Detroit Metropolitan Airport, 130 F.R.D. 634, 635 (E.D. Mich. 1989). The Matsushita court further noted:
We suspect that by the year 2000 virtually all data will be stored in some form of computer memory. To interpret the Federal Rules which, after all, are to be construed to "secure the just, speedy and inexpensive determination of every action," F.R. Civ. P. 1 (emphasis added), in a manner which would preclude the production of material such as is requested here, would eventually defeat their purpose.
Matsushita, 494 F. Supp. at 1262-63.
In its letter dated October 30, 1995, defendants claim that:
The documents that Hasbro has agreed to produce present the requested sales and discount data in various aggregate forms -- broken down by item, customer, year or month. These are the reports that Hasbro generated for use by its management in the normal course of business during the period in question. Hasbro is not seeking to withhold electronic versions of these reports. The fact of the matter is that these reports no longer exist in electronic form. Accordingly, Hasbro can produce nothing more than the hard copy versions that it has agreed to produce.
What is at issue here, then, is not sales and discount data, but electronic versions of each and every invoice and credit memo generated by Hasbro over a four year period. The burden to Hasbro of collecting all of these electronic invoices is substantial and certain: weeks of programming and computer time to collect the invoices followed by substantial attorney review time to ensure that they are responsive. It would be impossible to complete production by the Court's November 30 deadline. The benefit to plaintiff, however, is entirely speculative. Plaintiff has made no showing as to why it is necessary or even helpful to examine individual invoices to substantiate allegations of discriminatory pricing, especially when Hasbro has already agreed to produce documents sufficient to show the terms of sale with all its customers.
If the "aggregating" reports referred to in the first paragraph truly "no longer exist in electronic form," obviously that moots the issue. n1
n1 Defendants will need to represent not just that the reports are not available electronically but that it is not possible to electronically re-create the reports by running a specially-written computer program over existing computerized business data.
As to the second quoted paragraph, the Court does not have sufficient information as to plaintiff's need for "electronic" invoices in light of other available discovery data or of the real costs (in time and money) to defendants to create a program to "collect" that data. The Court leaves it to the parties to further discuss the issue in light of the Court's ruling.
The Court further notes that, as in Matsushita, further Court rulings may depend on plaintiff's willingness to pay defendants' costs in creating the required computer program. See also, e.g., In re Air Crash Disaster at Detroit Metropolitan Airport, 130 F.R.D. at 636 (ordering requesting party to pay costs of manufacturing computerized information); Williams v. E.I. du Pont de Nemours & Co., 119 F.R.D. 648, 651 (W.D. Ky. 1987) (same); Bills v. Kennecott Corp., 108 F.R.D. at 462-64 (same).
If the parties are not able to resolve the issue, plaintiff is to submit a follow-up letter motion by November 17, 1995 (with defendants' response due November 29, 1995 and plaintiff's reply due by December 4, 1995). As appropriate, affidavits from computer personnel or computer experts should be submitted.
DATED: New York, New York
November 3, 1995
Andrew J. Peck
United States Magistrate Judge