One of the defendants, David A. Stockman (former CEO of Collins & Aikman) challenged the SEC’s response to his request of production. “These disputes present important questions concerning the Government’s discovery obligations in civil litigation”.
The opinion “addresses four distinct but related discovery disputes”:
“First, the SEC failed to identify documents responsive to requests for documents supporting particular factual allegations in the Complaint, preferring instead to ‘dump’ 1.7 million potentially responsive documents on Stockman and then suggesting that he is capable of searching them to locate those that are relevant. Second, the SEC failed to perform a reasonable search for documents relating to accounting principles governing supplier rebates — both in general and with respect to the automobile industry. Instead, the SEC unilaterally limited its search to three of its divisions — and only if those divisions possessed ‘centralized compilations of non-privileged documents dealing specifically with rebates or accounting for rebates in the automobile industry.’ Third, the SEC improperly asserted the deliberative process privilege with regard to certain documents. Fourth, the SEC failed to search its own e-mails, attachments thereto, and other records created and maintained solely in an electronic format that related to either ‘(i) the investigation and litigation of this matter or (ii) the handling of several large cases unrelated to C&A and the Commission’s regulatory role in matters relating to rebates and rebate accounting.'”
“I also draw the parties’ attention to the recently issued Sedona Conference Cooperation Proclamation, which urges parties to work in a cooperative rather than an adversarial manner to resolve discovery issues in order to stem the ‘rising monetary costs’ of discovery disputes. The Proclamation notes that courts see the discovery rules ‘as a mandate for counsel to act cooperatively.’ Accordingly, counsel are directly to meet and confer forthwith and develop a workable search protocol that would reveal at least some of the information defendant seeks. If the parties cannot craft an agreement, the Court will consider the appointment of a Special Master to assist in this effort.”
Related Documents: Sedona Conference® Cooperation Proclamation
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