LKQ Corp. v. Kia Motors Am.

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LKQ CORPORATION, and KEYSTONE AUTOMOTIVE INDUSTRIES, INC., Plaintiffs, v. KIA MOTORS AMERICA, INC. and KIA MOTORS CORPORATION, Defendants.

No. 21 C 3166

United States District Court, N.D. Illinois, Eastern Division

July 6, 2023

MEMORANDUM OPINION AND ORDER

Sunil R. Harjani, United States Magistrate Judge.

Before the Court is Plaintiff LKQ's Motion to Compel Compliance with the Court's January 12, 2023 Order and to Provide Discovery Relating to a Potential Spoliation Claim [196]. The question the Court explores in this opinion is: “What is the authority and the standard for permitting discovery on discovery?” Discovery production is akin to an honor system. We trust that attorneys uphold their professional obligations and responsibilities by following the Federal Rules of Civil Procedure to produce relevant, nonprivileged information, after a reasonable inquiry, that is within their client's possession, custody, and control. As a general rule, attorneys do not second-guess each other's processes for producing responsive information. They may request more information after an initial disclosure or argue about objections, but generally they do not need a deep dive into the collection, review, and processing methodology of their opponent. If second-guessing was the norm, the whole discovery system would break down into an endless barrage of motions based on mistrust about the opponent's production. Counsel's status as an officer of the court combined with the possibility of serious sanctions embedded in Rules 11 and 37 and other professional disciplinary measures, serve as a deterrent to lawyers from either intentionally or negligently failing to produce information. Trust in an adversarial process appears contradictory at first, but it is the bedrock of modern discovery practice and has worked well for decades. Occasionally, however, a court is faced with requests by parties to look behind the curtain and allow exploration of an opponent's discovery production processes, and in particular, its collection review, and production of electronically stored information more colloquially known as “discovery on discovery.” Courts across the country have reached different conclusions about when and how they permit a party to explore the propriety of the opponents' ESI search. All, however, agree that enabling this type of discovery should be rare and certainly the exception, not the norm. In this case, the Court concludes that Rule 26(g) of the Federal Rules of Civil Procedure can permit discovery on discovery, but LKQ has not provided specific and tangible evidence of a material discovery failure for this Court to veer discovery off-track and allow an investigation into Kia's document production processes. As a result, LKQ's motion is denied.

BACKGROUND

In this patent infringement litigation over automotive parts, this motion to compel concerns the parties' ongoing dispute over their ESI obligations. On August 12, 2022, the parties submitted their Joint Initial Status Report. See Doc. 97. There, the parties stated they “anticipate that discovery may encompass electronically stored information but do not anticipate any electronic discovery disputes at this time.” Id. at 5. Famous last words. Unfortunately, and before this Court's involvement, between August and November 2022, document production proceeded and the parties did not agree on an ESI protocol, nor did they ask for the Court's assistance in establishing an ESI protocol at the start of discovery.

On November 14, 2022, LKQ filed a Motion to Compel Kia to Comply with its ESI Obligations. See Doc. 122. At that time, LKQ requested that Kia be compelled to enter into or follow an ESI agreement. Doc. 123 at 9-10. LKQ's motion also addressed Kia's inability to locate documents from eight inventors of the patents at issue in this litigation.^[1]Id. at 5-6.

On January 12, 2023, the Court held a motion hearing and declined to order the parties to enter into an ESI protocol. See Doc. 157 at 13-14 (transcript of proceedings held on 1/12/23). The Court explained that the parties should have entered into an ESI protocol before beginning discovery, not in the middle of it when much of the document collection, review, and production had already occurred. Id. Instead, the Court required the parties to file separate ESI disclosures describing their search process concerning custodians, timeframe, methodology of searches, and items produced. Id. at 14-15. The Court stated that the purpose of the ESI disclosure was to provide confidence as to how the opposing parties' searches were conducted in the absence of an ESI protocol, not to “poke holes” in the other side's disclosure. Id. at 15-16. The Court also ordered Kia to conduct another search of the eight inventors' records and file a Rule 11 certification affirming that a reasonable inquiry had been conducted and all documents as to the eight inventors at issue in this dispute have been turned over that are in Kia's possession, custody, or control. See Doc. 153.

On January 31, 2023, both parties filed their ESI disclosures, and Kia filed its Rule 11 certification. See Docs. 165-67. Kia described its efforts to locate responsive documents by contacting each of the inventors to produce relevant information and having Kia's in-house counsel search various databases and collaborate with other employees and teams. See Doc. 165. After reviewing the disclosure, however, LKQ served a Rule 30(b)(6) Notice of Deposition of Defendants. See Doc. 198-2. Of the thirteen topics within the notice, eleven appear to be directed at Kia's ESI disclosure and Kia's document collection efforts. Id. at 4-6.^[2] The Court subsequently made clear that in order to proceed down this path of discovery on discovery, LKQ needed this Court's authorization to do so.

DISCUSSION

Generally in ruling on a motion to compel, the discovery standard set forth in Rule 26(b) of the Federal Rules of Civil Procedure governs. Under Rule 26(b)(1), parties are entitled 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.” Fed.R.Civ.P. 26(b)(1) (emphasis added). But this is not a motion where discovery about a party's claims or defenses is at issue. Rather, LKQ's motion concerns discovery directed toward the information gathering and production process, what this and many other courts refer to as discovery on discovery. The Seventh Circuit Court of Appeals has not had occasion to address the authority to allow such discovery, nor have they determined the showing required by a party before a court should permit this detour from a focus on the claims and defenses. The Court herein establishes its framework for analyzing this issue.

I. The Court's Authority to Permit Discovery on Discovery

Discovery on discovery concerns the process by which a party engaged in its discovery obligations. To be clear, the Federal Rules of Civil Procedure do not explicitly permit this type of discovery. Nothing in the Federal Rules directly enables a party to serve interrogatories, document requests, or conduct depositions about a party's procedures to comply with its discovery obligations. The Court appreciates that courts have broad authority to manage discovery, and courts may surmise that this inherent authority allows them to authorize exploration of the process by which a party conducts its discovery obligations. In this Court's view, however, the text of the Federal Rules of Civil Procedure governs, and without an applicable rule, discovery on discovery should not be permitted. The Rules are detailed, specific, and cover all aspects of discovery practice-from the principles that govern what can be discovered (e.g., relevant and proportional information) to the tools that may be used (e.g., interrogatories, document requests, depositions) to the penalties for failure to comply (e.g., sanctions). The federal rules on discovery leave nothing to the imagination. Courts need not, and indeed should not, veer outside the federal rules when the text is so specific as to what is and is not permitted.

Here, this Court's analysis is guided by the text of two of the most important rules that govern discovery in federal cases-Rule 1 and Rule 26 of the Federal Rules of Civil Procedure. First, Rule 1 outlines the scope and purpose of the Federal Rules of Civil Procedure. See Fed.R.Civ.P. 1. It requires the court and parties “to secure the just, speedy, and inexpensive determination of every action and proceeding.” Id.; see also AOT Holding AG v. Archer Daniels Midland Co., 2021 WL 6118175, at *3 (C.D. Ill. Sept. 3, 2021) (“All discovery disputes are considered through Rule 1's lens, which requires the Court to construe and employ the Rules in a way that promotes the just, speedy, and inexpensive determination of every action.”). This guiding principle ensures that courts move cases through discovery with a focus on efficiency and cost. Such a focus, however, would undoubtedly caution against veering off into an exploration of a party's discovery practices.

Second Rule 26 provides the general provisions governing discovery. See Fed.R.Civ.P. 26. Rule 26(b)(1) authorizes discovery on “any nonprivileged matter that is relevant to any party's claim or defense and proportional to the needs of the case.” Fed.R.Civ.P. 26(b)(1) (emphasis added). The language of Rule 26(b)(1) is limited to claims and defenses. Id. To be clear, discovery about the process by which a party searches for, reviews, and collects documents is not discovery relevant to a claim or defense. Put another way, it is not evidence that a party will use to prove the elements of its case or defend against a complaint. Taking it further, it is...