Antitrust Law Daily Wrap Up, ANTITRUST—TexCtApp: In Discovery Dispute, Waste Management Must Produce Documents in Native Format that It Previously Produced in PDF Format, (Jan 21, 2013)

By Tobias J. Gillett, J.D., LLM.

In long-running antitrust litigation between Waste Management of Texas, Inc. and a competitor, Waste Management must produce discovery material in native format, with its original metadata, that it had previously produced in PDF format, a Texas appellate has ruled (In re: Waste Management of Texas, Inc., January 18, 2013, Morriss, J.). The court denied Waste Management’s request for a writ of mandamus that argued that the trial court’s discovery order would result in the production of Waste Management’s trade secrets and would prove overbroad and unduly burdensome.

The competitor, Josh Bray, doing business as Sanitation Solutions, had filed an antitrust lawsuit against Waste Management in 2007 alleging that Waste Management had engaged in predatory pricing and improper bundling of services. In 2009, the trial court issued an order compelling discovery, and recognizing an agreement between the parties “that metadata shall be preserved but need not be produced at this time.” Waste Management spent $110,000 complying with this order, including reviewing, redacting, converting, and producing documents, and delivered the documents to Bray in PDF format without metadata.

In 2012, Bray requested production of the documents in their native format with metadata, arguing that the PDF format did not permit comprehensive review of the material. The court issued an order compelling that production. Waste Management appealed, seeking a writ of mandamus requiring the court to withdraw its order.

Trade Secrets

Waste Management first contended that production of the documents would result in disclosure of “trade secrets and proprietary, confidential information, to a direct competitor.” Bray argued in response that Waste Management had not filed a withholding statement or raised the trade secret objection before the trial court, and thus no evidence supported the trade secret claim.

In a prior order, the Court of Appeals had concluded that the document production did involve trade secret concerns, had addressed whether Bray could personally review documents designated “Attorney’s Eyes Only,” and had concluded that, because “both parties seem to have agreed that trade secrets were at issue, Bray had the burden” to demonstrate that the material was “necessary to a fair adjudication of his claims.”

Nonetheless, the court determined that its previous decision did not control this dispute, because it had “concerned a different, albeit related, subject,” had assumed that Bray had conceded that the documents were subject to trade secret protection, and had related to an “Attorney’s Eyes Only” procedure that the Texas Supreme Court may have considered inadequate in an intervening opinion.

Here, the court observed that a party asserting trade secret protection must introduce evidence demonstrating that the discovery order would disclose trade secrets. “Merely claiming trade secrets are at issue is not sufficient.” As Waste Management had not introduced that evidence, Bray did not have the burden to show that the material was “necessary to a fair adjudication of his claims,” and the trial court did not abuse its discretion in ordering Waste Management to produce the material.

Overbreadth

The court also rejected Waste Management’s claim that the order was overbroad and required production of data outside the relevant geographic area. The court noted that “[a]ny geographic market determination before discovery has been completed is preliminary at best.” Moreover, data from outside the region could still prove relevant to Bray’s claims. The court found Bray’s requests, which specified a particular time period, place, and subject matter, to be reasonably specific, and not an overbroad “fishing expedition.” The fact that the requests involved a large volume of data did not in itself “amount to an overly broad discovery order.”

Undue Burden

Waste Management also contended that the discovery order imposed an undue burden on it because it required Waste Management to review for a second time documents that it had already produced, because it required Waste Management to produce documents with metadata when Bray had previously agreed to production of documents without metadata, that Bray’s request did not sufficiently specify the form in which Waste Management should produce the documents, that the native format would render redaction impossible, and that producing the documents in their native format would cost more.

The court rejected all of these arguments. The 2009 discovery order had not affirmed an agreement between the parties that metadata was not required; rather, it “merely postponed” a decision regarding the need for metadata.

The court found Bray’s request that the documents be produced “in a reasonable manner” had sufficiently specified a form for the discovery, concluding that the request was “the functional equivalent” of the Federal Rules of Civil Procedure’s “reasonably useable” default form for discovery. The court observed that this form granted the recipient of the request some flexibility in producing the material, and noted that Bray had never agreed to production in PDF format. If Waste Management had found his request too ambiguous, it should have contacted him.

Moreover, the cost of production and the inability to redact the documents would not be unduly burdensome. Although Waste Management had previously spent $110,000 reviewing the documents, the present order only involved costs of $5,500, and no evidence indicated that the document review process would have to be repeated. Furthermore, Waste Management had abandoned all of its privilege claims except a claim of trade secret protection, and had failed to support that claim with any evidence. Without any evidence “supporting a right to redact,” an inability to do so was not relevant.

In addition, in the court’s view, Waste Management had caused its own discovery difficulties through its decision to produce the documents in PDF format. Although the cost of supplementing its previous discovery with metadata in PDF format would cost $2,500, the $3,000 difference between that and the cost of production in native format was not sufficient to constitute an abuse of discretion.

Costs

Waste Management contended that the production of documents for a second time was an “extraordinary step,” and hence that Bray should bear the costs of production. The court concluded that Waste Management had “an adequate remedy by appeal,” and that the “dispute merely concerns a de minimis amount of money given the scale of this litigation.”

The court also rejected an argument that the request required Waste Management to produce documents through the present when the original scheduling order only covered a period through 2010, noting that Waste Management had not raised the issue before the trial court and had thus not preserved the issue for appeal. Therefore, the court denied Waste Management’s request for a writ of mandamus.

The case is No. 06-12-00097.

Attorneys: Roger D. Sanders (Sanders, O'Hannon & Motley, PLLC) for Waste Management of Texas, Inc. Catherine C. Jobe (Boyd & Associates) for Josh Bray, doing business as Sanitation Solutions.

Companies: Waste Management of Texas, Inc.; Sanitation Solutions.

Cases: Antitrust TexasNews