Limiting eDiscovery due to proportionality: Apple v. Samsung Case Summary

by Julia Romero Peter, Esq.

In Apple Inc. v. Samsung Elecs. Co. Ltd., No. 12-CV-0630-LHK (PSG), 2013 WL 4426512 (N.D. Cal. Aug. 14, 2013), the court denied Samsung’s motion to compel Apple to produce relevant financial reports; citing to the “all-too-often ignored discovery principle” of proportionality.  Under Federal Rule of Civil Procedure 26(b), parties are allowed discovery of nonprivileged relevant matters.  The court noted that although relevance under the rule is construed broadly, the rule limits discovery under certain circumstances.  For instance, under Rule 26(b)(2)(B), discovery is not required where a party shows that the ESI is “not reasonably accessible because of undue burden or cost.”  And under Subpart (C), the court must limit discovery if it is not proportional — if “the burden or expense of the proposed discovery outweighs its likely benefit.”

In this case, Samsung requested that Apple produce financial data regarding particular product models for the U.S. market.  Instead, Apple produced worldwide data according to product line.  In turn, Samsung objected demanding the more granular data.  But Apple would not comply with Samsung’s request, asserting that it does not keep such granular reports in the “ordinary course of business.”

Apple did not argue that such information was not relevant under Rule 26.  Indeed, the court noted that that the “U.S.-specific, model level data [requested by Samsung] is highly relevant to both Samsung’s own damages claims as well as Samsung’s defenses against Apple’s damages claim.”  The court further stated that had Apple kept such reports or could make them with “reasonable efforts,” it would be required to provide them.  Apple persisted that “only a herculean effort could produce even a subset of the reports demanded.”

After evaluating the parties’ arguments, the court concluded that Apple could query its databases to produce “at least some of the reports” Samsung wanted.  It further noted that, “Courts regularly require parties to produce reports from dynamic databases, holding that ‘the technical burden . . . of creating a new dataset for the instant litigation does not excuse production.’”  The court, however, declined to order production.

Instead, the court discussed the two aforementioned limitations on discovery.  For the court to limit discovery under Rule 26(b)(2)(B), Apple would have to “make a ‘particular and specific demonstration of fact [of undue burden or cost], as distinguished from stereotyped and conclusory statements.’”   In this case, however, Apple asserted “broadly” that it would be “immensely burdened” if it were ordered to gather Samsung’s requested reports, because they would necessitate engaging “‘multiple financial groups’” for “‘likely . . . several months of coordinated effort.’”  The court cautioned that it “is generally dubious of such generalized claims of burden in complying with discovery obligations.”

Ultimately, the court concluded that it had to limit discovery due to proportionality, where “the burden or expense of the proposed discovery outweighs its likely benefit.”  The court noted that because the parties had “already submitted their expert damages reports, the financial documents would be of limited value to Samsung at this point.”  Because Samsung was able to “estimate U.S. and product-specific damages” from the data provided by Apple, the court concluded that it appeared “senseless to require Apple to go to great lengths to produce data that Samsung is able to do without.”

In the interest of fairness, the court precluded the possibility of Apple later challenging Samsung for not utilizing “more granular financial data, either at pretrial hearings or at the trial itself.”  The court ordered that Apple was “estopped from challenging Samsung’s experts on any ground that would be rebutted by reference to documents that Samsung requested but did not receive.”


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