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Small v. University Medical Center

United States District Court, D. Nevada

July 31, 2018

DANIEL SMALL, et al., Plaintiffs,
v.
UNIVERSITY MEDICAL CENTER, et al., Defendants.

          ORDER (REPORT AND RECOMMENDATION AND FINAL FINDINGS OF FACT AND CONCLUSIONS OF LAW - ECF NO. 189)

          PEGGY A. LEEN UNITED STATES MAGISTRATE JUDGE.

         This order resolves the parties' disputes concerning the Report and Recommendation and Findings of Fact and Conclusions of Law of Special Master Daniel B. Garrie (ECF No. 189.) Defendants filed an Objection to the Report of Findings and Recommendation (ECF No. 207), Plaintiffs filed a Response to Defendants' Objections (ECF No. 216), and Defendants file a Reply (ECF No. 222). The court heard oral argument on the parties' positions and took the matter under submission.

         TABLE OF CONTENTS

         I. Introduction ........................................................................................................................ 3

         II. Procedural History and Discovery Proceedings ...................................................... 5

         A. The Pleadings ................................................................................................................. 5

         1. The Initial Complaint .................................................................................................... 5

         2. Subsequent Amended Complaints ................................................................................ 6

         3. The Operative Pleading - Fourth Amended Complaint (ECF No. 268) ....................... 7

         B. The Initial Case Management Conference ..................................................................... 8

         C. Conditional Certification ............................................................................................... 8

         D. Plaintiffs' May 2013 Motion to Compel ........................................................................ 9

         1. The June 25, 2013 Hearing ........................................................................................... 9

         2. The July 12, 2013 Hearing .......................................................................................... 11

         3. The August 15, 2013 Hearing: Agreement on Search Terms and Custodians ........... 14

         4. The September 24, 2013 Hearing: Agreement on Production Timeline .................... 17

         5. The November 12, 2013 Hearing: Requests Concerning Kronos and Mobile Phone Text Message Data .............................................................................................................. 21

         6. The November 26, 2013 Hearing: Further Discussion Regarding Kronos and Mobile Phone Data .................................................................................................................. 22

         7. The January 21, 2014 Hearing: UMC Ordered to Preserve Text Message Data, Discussion of Sanctions .............................................................................................. 24

         8. The February 11, 2014 Hearing .................................................................................. 27

         9. The March 10, 2014 Meeting in Chambers ................................................................ 30

         III. The Special Master's Activities and Report and Recommendation ................... 31

         IV. The Parties' Responses to the Special Master's R & R .......................................... 35

         A. UMC's Objection ......................................................................................................... 35

         B. Plaintiffs' Response to Defendants' Objection ............................................................ 36

         C. UMC's Reply ............................................................................................................... 37

         V. De Novo Review of Special Master Proceedings ..................................................... 38

         A. Declaration of Nicholas M. Wieczorek ....................................................................... 39

         B. Declaration of Craig Renard ........................................................................................ 40

         C. Declaration of Brian Brannman ................................................................................... 41

         D. Testimony of Lawrence Barnard ................................................................................. 42

         E. Declaration of John Espinoza re: Preservation Notices ............................................... 43

         F. Revised Declaration of Espinoza re: Preservation Notices ......................................... 44

         G. Declaration of John Espinoza Regarding the DOL Investigation ................................ 45

         H. Testimony of John Espinoza ........................................................................................ 46

         I. Declaration of Doug Spring ......................................................................................... 47

         J. Testimony of Doug Spring .......................................................................................... 48

         K. Testimony of Ernie McKinley ..................................................................................... 50

         L. Testimony of Jackie Panzeri ........................................................................................ 50

         M. Testimony of Glen McIntire ........................................................................................ 52

         N. Amended Declaration of Dean Schaibley .................................................................... 55

         O. Amended Declaration of Joseph Edmondson .............................................................. 57

         P. Declaration of Marilyn Sue Kisner .............................................................................. 59

         Q. Declaration of David J. Williams ................................................................................ 60

         R. Declaration of Ruben Gurrola ...................................................................................... 61

         S. Cayla Witty's June 25, 2014 Letter ............................................................................. 62

         T. Cayla Witty's June 30, 2014 Letter ............................................................................. 63

         VI. The Court's Findings and Conclusions ....................................................................... 64

         A. Special Master Garrie was Professional, Neutral, Possessed Specialized Knowledge and Expertise, and Remedied Much of UMC's ESI Deficiencies ...................................... 64

         B. UMC Failed to Comply with the Court's Orders to Preserve and Produce ESI .......... 66

         C. UMC Had No. Preservation Policy or Litigation Hold Policy and Failed to Timely Implement One ............................................................................................................ 68

         D. UMC Executives Failed to Accept Responsibility for Ensuring that ESI was Preserved and Failed to Notify Key Custodians and IT Staff to Preserve, and Prevent Loss, or Destruction of Relevant, Responsive ESI .................................................................... 75

         E. UMC Failed to Disclose the Existence of Relevant ESI Repositories, Including Multiple Timekeeping Systems and the Q-Drive Until Late in the Special Master Proceedings ..................................................................................................................................... 79

         1. UMC's Burden Shifting Argument in Defense of Non-Disclosure ............................ 80

         2. The Sixth Circuit's White Decision ............................................................................ 82

         3. The Sixth Circuit's Craig Decision ............................................................................ 84

         4. The Ninth Circuit's Forrester Decision ...................................................................... 85

         5. The Lillehagen Decision ............................................................................................. 87

         F. UMC Modified, Lost, Deleted and/or Destroyed ESI Responsive to Plaintiffs' Discovery Requests ...................................................................................................... 89

         G. UMC's Failure to Comply with its Legal Duty to Preserve, Failure to Put in Place a Timely Litigation Hold, Failure to Comply with Multiple Court Orders to Preserve and Produce Responsive ESI, and Loss and Destruction of Responsive ESI (1) Necessitated the Appointment of a Special Master, (2) Caused Substantial Delay of these Proceedings, and (3) Caused Plaintiffs to Incur Needless Monetary Expenses .......... 95

         H. The Special Master Correctly Concluded UMC Repeatedly Misrepresented the Completeness of its Production of Documents Produced to DOL; However, UMC Was Not Ordered to Produce Kronos Payroll Data in Spreadsheet Format ........................ 96

         VII. Analysis and Decision ...................................................................................................... 99

         A. Spoliation of Evidence ............................................................................................... 100

         B. The Duty to Preserve ................................................................................................. 101

         C. Scope of the Duty to Preserve .................................................................................... 102

         D. Sanctions Under Rule 37(b) ....................................................................................... 110

         E. Rule 37(e) .................................................................................................................. 112

         I. Introduction

         This case involves a dispute over unpaid wages and overtime compensation. Three named plaintiffs filed the case on July 27, 2012 individually and on behalf of all other similarly situated employees of defendant University Medical Center (“UMC”).[1] The case was filed as a collective action pursuant to the Fair Labor Standards Act, 29 U.S.C. § 201 et. seq. (“FLSA”), and initially as a class action pursuant to Rule 23 of the Federal Rules of Civil Procedure.[2]

         This lawsuit followed a Department of Labor (“DOL”) investigation that addressed substantially similar issues about uncompensated time for hourly employees related to uncompensated meal breaks. The DOL investigated a two-year period between April 1, 2010, and March 30, 2012. Prior to filing the lawsuit, plaintiffs' counsel made a Freedom of Information (“FOIA”) request to DOL for information related to the investigation. The DOL concluded that the employer violated the record-keeping provisions of the FLSA “by not keeping accurate records of hours worked for all employees due to the fact that employees were not taking lunch breaks, but it was automatically deducted in the pay records.”[3]

         The court reluctantly appointed a special master only after a series of hearings over many months made it painfully apparent that UMC, its counsel, and consultants were failing in their efforts to produce electronically stored information (“ESI”) responsive to plaintiffs' discovery requests. At the hearing before the appointment of the special master, the court warned UMC that if it did not resolve its ongoing problems with preserving, collecting, and producing responsive ESI, a special master would be appointed at UMC's expense. Not only did UMC fail to correct the problems outlined in the parties' joint status reports and addressed at length at eight case management and dispute resolution conferences the court conducted over nine months, but UMC's latest ESI production was largely unusable. ESI was produced to the plaintiffs that did not contain extracted text in pages of undecipherable codes complete with Japanese and Korean characters. The bulk of the production was unintelligible.

         The court has now conducted a de novo review of the entire record preceding the appointment of the special master as well as the entire record of the special master's proceedings. The court has also considered the parties' responses to the special master's report. The special master's report and supporting exhibits consisted of nearly 1500 pages, which the court has personally reviewed in its entirety. For the reasons explained below, the court finds that UMC has repeatedly violated its discovery obligations and its duty to preserve. Its multiple failures to implement timely preservation procedures, and to identify and collect information from relevant responsive repositories, resulted in the destruction of ESI responsive to plaintiffs' discovery requests. It also resulted in considerable delay of discovery, consumed an extraordinary amount of judicial resources, and cost the parties enormous, unnecessary time and expense. Sanctions are warranted. However, the court will not adopt the special master's recommendation to impose case-dispositive sanctions. Instead, the court will sanction UMC by ordering a jury instruction that allows the jury to consider UMC's discovery failures and destruction of evidence as an alternative to the more severe sanctions recommended by the special master. The court will also impose monetary sanctions in the form of reasonable costs and attorneys' fees unnecessarily incurred by plaintiffs, including ESI consultant fees incurred in connection with filing plaintiffs' May 2013 motion to compel, attempts to identify and remedy UMC's deficient ESI productions, and the cost of participating in special master proceedings.

         II. Procedural History and Discovery Proceedings

         A. The Pleadings

         1. The Initial Complaint

         The original Complaint (ECF No. 1) alleged that plaintiffs worked for UMC as hourly-paid, non-exempt employees during the statutory period. (Id. ¶ 14.) UMC violated federal and state wage laws by automatically deducting 30 minutes each day for meal break times regardless of whether a bona fide 30-minute meal break was actually taken. (Id. ¶ 17.) This uniform policy applied to the named plaintiffs and members of the collective classes (the “On-duty Meal Policy”.) (Id.) UMC did not maintain proper time records reflecting whether plaintiffs took meal breaks or worked through meal breaks during the statutory period. (Id.) UMC was aware of the On-duty Meal Policy at all times, but allowed the practice to continue as it reduced UMC's labor and payroll costs. (Id. ¶¶ 19-20.) The proposed opt-in collective class and Rule 23 class were defined to include respiratory therapists as other similarly titled positions. (Id. ¶¶ 23, 33.) The complaint alleged claims of action for (1) violation of the FLSA, and (2) violation of NRS 608.016 and NRS 608.018.

         2. Subsequent Amended Complaints

         An Amended Complaint (ECF No. 37) was filed in December 2012, adding three additional named plaintiffs. The amended complaint repeated the allegations of FLSA and Nevada wage and hour law violations regarding the On-duty Meal Policy. The proposed definition of the opt-in collective class and Rule 23 class was expanded to include respiratory therapists, registered nurses, admitting representatives, unit clerks, unit secretaries, environmental waste handlers, and any other similarly situated hourly employees. (Id. ¶¶ 30, 40, 52.) UMC filed an Answer (ECF No. 42) on January 2, 2013.

         Plaintiffs filed a Second Amended Complaint (ECF No. 237) in February 2015, repeating allegations of the On-duty Meal Policy, but omitting any claim under NRS 608.016 and NRS 608.018. This amendment alleged two claims for (1) FLSA violations, and (2) unjust enrichment and/or quantum meruit.

         In July 2015, plaintiffs filed a Motion to Amend Complaint (ECF No. 249), seeking to name UMC's Chief Human Resources Officer, John Espinoza, as a defendant. Plaintiffs asserted that Espinoza's addition was proper because the DOL determined that he fit the definition of an employer under the FLSA. The court granted the motion. (Min. Order, ECF No. 255.)

         The Third Amended Complaint (ECF No. 256) was filed in February 2016. Plaintiffs alleged that Mr. Espinoza is involved in the day to day business operations of UMC, exercises direct control over the hours and wages of the named plaintiffs and all similarly situated hourly employees employed, and is an employer within the meaning of the FLSA. (Id. ¶ 21.) The third amended complaint maintained allegations regarding the On-duty Meal Policy and asserted two claims for (1) FLSA violations, and (2) unjust enrichment and/or quantum meruit.

         Defendants filed a Motion to Dismiss (ECF No. 259) the third amended complaint for failure to state a claim. District Judge Andrew P. Gordon dismissed the FLSA claim with leave to amend because plaintiffs' allegations regarding overtime pay were threadbare recitals of the elements of a cause of action. (Order, ECF No. 267.) He also dismissed plaintiffs' minimum-wage claim with leave to amend because plaintiffs asserted an equitable theory of recovery that is not available to them because they have an adequate remedy at law. Id.

         3. The Operative Pleading - Fourth Amended Complaint (ECF No. 268)

         Plaintiffs filed a Fourth Amended Complaint (ECF No. 268) on August 25, 2016, alleging one FLSA claim against defendants UMC and Espinoza. Plaintiffs allege the defendants regularly interrupted employees' meal breaks or caused employees to miss meal breaks. (Id. at 8-11.) However, UMC's timekeeping software automatically deducted 30 minutes from employees' time for meal breaks. (Id. ¶ 51.) As a result, hourly employees went uncompensated for missed or interrupted meal breaks. (Id. ¶ 53.) Each named plaintiff alleges that he or she often had meal breaks interrupted, and missed breaks all together, but was not compensated. (Id. at 8-10.) Each named plaintiff also identifies at least one week in which he or she worked over 40 hours, including time worked through at least one meal break, for which he or she was not compensated. (Id.)

         Plaintiffs further allege defendants violated the FLSA by failing to track employees' meal breaks to determine whether employees took their breaks, were interrupted, or missed them. (Id. at 10-11.) Defendants' policy and practice required employees to clock in at the beginning of their shift and clock out at the end of the work day. (Id. ¶ 48.) They were not permitted to clock in and out for lunch. Id. Instead, defendants simply assumed that each employee actually received a bona fide, uninterrupted 30-minute meal break and deducted 30 minutes each day from their time cards automatically-i.e., the On-duty Meal Policy. (Id. ¶¶ 48, 51.)

         In addition, plaintiffs allege defendants knowingly and willingly violated the FLSA. For example, defendants contracted with a consultant specializing in strategic planning and process improvement in 2011 to analyze and recommend ways to improve teamwork and morale in UMC's emergency department. (Id. ¶ 57.) One of findings the consultant presented to defendants involved substantial staff complaints of missed meal breaks. (Id.) A 2012 investigation by the DOL also determined that employees were frequently not taking their lunch breaks and were automatically deducted 30 minutes for lunch per shift. (Id. ¶¶ 58-60.) Plaintiffs further allege that, in the two years prior to the filing of the complaint, UMC's labor relations committee discussed and noted at least eight times that hourly employees missed meal breaks. (Id. ¶ 62.) However, defendants continued the On-duty Meal Policy and failed to record and compensate employees for missed meal breaks. (Id.)

         The fourth amended complaint alleges that Espinoza qualifies as an employer under the FLSA because he exercises direct control over UMC employees' hours and wages, is involved in UMC's day-to-day operations, has the authority to hire and fire employees, has the authority to direct and supervise employees' work, and has the authority to make decisions regarding employee compensation and capital expenditures. (Id. ¶ 32.) Espinoza purportedly devised, implemented, and supervised UMC's wage and hour practices and policies. (Id.) He was also an active participant on the UMC project leadership team that worked with the consultant. (Id. ¶ 57.)

         Defendants filed a Motion to Dismiss (ECF No. 273) the fourth amended complaint in October 2016. Judge Gordon found that plaintiffs plausibly alleged the defendants knew or should have known that UMC employees were regularly missing meal breaks or having meal breaks interrupted but were still having 30 minutes deducted from their time automatically, without compensation. (Order at 5-6, ECF No. 276.) Additionally, Judge Gordon found the plaintiffs adequately alleged that Espinoza is an employer within the meaning of the FLSA. (Id. at 9.) Viewing the allegations and inferences in the light most favorable to plaintiffs, and considering that the definition of an employer is to be given an expansive interpretation, he found the fourth amended complaint states a plausible FLSA claim against Mr. Espinoza. (Id.) Judge Gordon, therefore, denied the motion to dismiss. (Id.)

         B. The Initial Case Management Conference

         Judge Cooke conducted an initial case management conference on February 6, 2013, and approved the parties' proposed discovery plan and scheduling order as outlined in the parties' joint case management report. (Mins., ECF No. 53.) The initial discovery plan and scheduling order established a July 1, 2013 discovery cutoff. (Scheduling Order, ECF No. 55.)

         C. Conditional Certification

         On June 7, 2013, Judge Gordon held a hearing on plaintiffs' Motion to Certify Class (ECF No. 46) and took the matter under submission. (Mins., ECF No. 103.) Judge Gordon granted plaintiffs' motion for conditional certification of an FLSA class. (Order, ECF No. 106.) His written order directed notice to “[a]ll individuals who were employed or are currently employed by [UMC] as hourly employees at any time during the relevant statute of limitations period.” (Id.) The order also directed UMC to provide counsel for plaintiffs with the name, last known mailing address, and last known email address of every non-exempt, hourly employee who has worked for UMC at any time during the three years preceding the date of the filing of the complaint; and to post the notification form in a conspicuous location at UMC's place of business where employment-related notices are routinely posted. (Id.)

         D. Plaintiffs' May 2013 Motion to Compel

         On May 15, 2013, plaintiffs filed a Motion to Compel Production of Documents and Information in Response to Plaintiffs' First Set of Request for Production of Documents and First Set of Interrogatories, and to Compel Further Inspection of Defendants' Premises (ECF No. 92).[4]The motion to compel sought an order compelling the defendants to respond to plaintiffs' first set of written discovery including interrogatories and requests for production of documents and electronically stored information served on January 23, 2013. The motion raised serious concerns from plaintiffs that spoliation was occurring. Plaintiffs requested, inter alia, documents and data relating to timekeeping and payroll records, and job descriptions and other employment records.

         1. The June 25, 2013 Hearing

         After the case was reassigned, the court set plaintiffs' motion to compel for a hearing on June 25, 2013. (Notice of Hr'g, ECF No. 107.) Plaintiffs' counsel appeared at the hearing. (Mins., ECF No. 112.) Defense counsel did not, but were ultimately reached by telephone 23 minutes after the scheduled start time. (Hr'g Tr. 3:24, ECF No. 113.) The court intentionally set the hearing after Judge Gordon's hearing on the motion to conditionally certify an FLSA class because the outcome of that motion impacted the scope of discovery in this case and the disputes involved in plaintiffs' motion to compel. (Tr. 4:1-4.) This was because UMC had resisted responding to discovery prior to conditional certification.

         At the hearing, UMC's counsel represented that it was now working on obtaining class contact information and working on producing employee files, timekeeping records, and payroll records for the opt-in plaintiffs “to the tune of 5600 documents already.” (Tr. 8:2-8.) The court addressed UMC's counsel concerning its response to the motion to compel which indicated that UMC had retained an IT specialist to help collect responsive data and documents, and asked what scope issues it now had in light of Judge Gordon's order. (Tr. 8:13-18.) Counsel for UMC requested an opportunity to meet and confer to see if the parties could work out their scope of discovery disputes. The court indicated it was prepared to rule on the motion to compel, and again inquired what if any scope of discovery issues UMC had in addition to its objection to producing DOL investigation materials. (Tr. 8:18-24.)

         Counsel for UMC indicated that, with respect to the opt-in plaintiffs, UMC would make rolling productions of documents and expected to have the first round ready within a couple of weeks “and on a continued basis thereafter.” (Tr. 12:24-13:9.) Counsel for plaintiffs agreed it made sense to proceed first with opt-in plaintiff discovery. With respect to the other categories of discovery addressed in the motion to compel, which included ESI and payroll records spreadsheets, plaintiffs suggested an August 1st deadline, five weeks after the hearing, for producing information responsive to discovery requests served five months earlier. (Tr. 14:6-19.) Plaintiffs' counsel specifically addressed discovery requests for DOL documents indicating that UMC had produced 19 pages of DOL documents and plaintiffs therefore believed it had waived any privilege claims. (Tr. 14:20-15:3.) Additionally, plaintiffs' counsel pointed out that John Espinoza, UMC's Chief Human Resources Officer, had already been deposed and testified at length about the DOL investigation and UMC's new timekeeping procedures. (Tr. 15:4-11.)

         Counsel for UMC objected to plaintiffs' proposed timeline for producing discovery suggesting 21 days to produce what counsel expected would be 25, 000 pages was not reasonable. (Tr. 17:2-9.) She referred to Mr. Espinoza's testimony that the documents could be produced in that time frame but pointed out that he was not an attorney and did not appreciate the need for privilege and relevance review. (Tr. 17:10-15.)

         The court continued the motion hearing to July 12, 2013, directing counsel for UMC to provide an updated estimate of when UMC would be producing documents with respect to the opt-ins. (Tr. 19:1-7.) The court also advised the parties that it would set a definitive timeline for rolling productions “based on your ability to get some definitive information from your IT people.” (Tr. 19:7-10.) Although the court was prepared to decide the disputes in the motion to compel at the June 25, 2013, hearing, because UMC's counsel was not prepared for the hearing, the court indicated it would resolve any remaining disputes concerning plaintiffs' motion to compel at the next hearing. The court also gave counsel relief from the existing discovery plan and scheduling order deadlines indicating new deadlines would be established at the July 12, 2103 hearing once the court received UMC's updated report on its document production timeline.

         2. The July 12, 2013 Hearing

         The court conducted a lengthy hearing on plaintiffs' motion to compel on July 12, 2013. (Mins., ECF No. 115.) Counsel for plaintiffs advised the court that no progress had been made since the last hearing, plaintiffs had not received any documents, either hard copy or ESI, and no privilege log had been produced. (Hr'g Tr. 4:14-21, ECF No. 119.) Additionally, UMC had not attempted to meet and confer between the two hearings with respect to issues raised in the motion to compel. (Tr. 4:22-24.) UMC had not yet provided the class list for notification although UMC had promised it the day of the hearing. (Tr. 5:7-21.)

         UMC's counsel indicated that he believed the class list and contact information for approximately 400 persons would be produced by July 29, 2013, in accordance with Judge Gordon's order. (Tr. 6:6-13.) Defense counsel indicated UMC had been working “tirelessly” since the last hearing and expected to have discovery for the 77 opt-in plaintiffs produced by August 9th. (Tr. 6:25-7:2.) With respect to the DOL investigation documents, counsel represented that he understood “from my clients that everything that we have that relates to the Department of Labor investigation has already been produced as part of the initial document production. I think they were Bates stamped 1 through 19.” (Tr. 7:3-8.) He represented there were no transcripts of DOL interviews with UMC employees. (Tr. 7:9-24.) He further represented that there was one document that he was aware of that had not been produced. (Tr. 7:25-8:1.) Counsel did not have the document but described it as a letter written by the district attorney who represented UMC in the investigation to the DOL in response to its inquiry. (Tr. 8:1-7.)

         The court then addressed UMC's failure to produce any ESI to date when it had committed to a rolling production. The court pointed out that these discovery responses were long overdue. (Tr. 8:12-14.) UMC's counsel argued that it was incredibly time intensive to produce and copy the hard copy documents from the opt-in plaintiffs' records. The court noted that UMC had represented in its response to plaintiffs' motion to compel that the client had retained a data collection company to coordinate completion of processing responsive ESI. (Tr. 9:2-5.) Counsel for UMC responded that prior counsel had retained a data collection agency and that his firm had tried to “recreate what they were doing.” (Tr. 9:7-8.) Counsel for UMC represented the following:

The client didn't have any real understanding of what that law firm was doing or the data collection service was doing. When we looked at what they collected, not only was it not usable, we didn't even know where it had come from. There was a lot of data collected. We don't know where it came from. It was-it turned out to be 3, 3 ½ million pages of documents. . . . that were not only responsive to anybody's discovery requests, but probably almost certainly included things that we could not produce, confidential patient information, confidential information about employees that are not part of the lawsuit, all kinds of the things so, we went back and started over and, when we started over and we ran a search of-just to see what we would get and how long it would take, we ran an email-a search on an email for the plaintiff Daniel Small. Daniel Small's e-mail account and search took 6 hours for the IT person to do and it-and it produced 45 pages of documents, none of which are relevant to the lawsuit. So I-in talking with the person at University Medical Center, I have a solution or a proposal for accommodating the searches for the electronic-at least for emails.

         (Tr. 9:9-10:6.)

         UMC's counsel acknowledged that there was a stipulated ESI protocol in place. However, he argued that UMC could not spend 6 hours per plaintiff conducting ESI searches with more than 70 opt-ins involved. The court pointed out that this was the reason counsel were supposed to discuss ESI problems at the beginning of the case. Counsel for UMC responded, “Well, I learned that this week.” (Tr. 11:3.) In a nutshell, counsel for UMC advised the court that he thought ESI was being collected, but learned it had not been done, and so “I started over” on the Monday before the hearing. (Tr. 11:15-20.) He suggested that, because it was so burdensome for UMC to search each of the plaintiffs' emails for documents that might relate to their lawsuit, UMC could give the plaintiffs access to their archived email and require them to search UMC records for their own emails. (Tr. 12:1-25.)

         Plaintiffs' counsel responded that much of what UMC had just reported was news to them. (Tr. 15:3-4.) Plaintiffs' counsel disputed UMC's representations about what had happened to date with respect to discovery, stating the “record is replete with what's happened here with prior counsel.” (Tr. 15:9-11.) Plaintiffs' counsel stated that another UMC lawyer submitted a declaration indicating she had met with IT people three times in the first week of June. (Tr. 15:23- 25.) Plaintiffs' counsel had a letter dated mid-April from prior counsel indicating he was meeting with people at the hospital and with the IT people. (Tr. 16:1-3.) Plaintiffs' counsel argued, “I don't think it's difficult and time consuming to figure out what happened here, your Honor, I just think someone from the defense side needs to sit down and do it.” (Tr. 16:3-6.) Counsel for plaintiffs also reported to the court that what UMC's counsel, Mr. Freeman, had just stated on the record was “wildly inconsistent” with the deposition testimony of Mr. Espinoza with respect to the DOL investigation, notes, calendars, and other documents exchanged with the DOL and about interviews that had been conducted. (Tr. 16:7-20.) Counsel for plaintiffs pointed out that the ESI protocol was put in place five months earlier. (Tr. 16:21-23.)

         Plaintiffs' counsel clarified that plaintiffs did not expect that defendants would review every individual plaintiffs' electronic mail. Rather, plaintiffs wanted “the executives' e-mails to be searched. That's what we want.” (Tr. 16:23-17:2.) Plaintiffs had not yet provided a list of custodians for an email search, but stated that ESI from at least some of the human resources (“HR”) people, specifically Messrs. Espinoza, Spring, and Brannman, were needed immediately. (Tr. 17:3-11.)

         The court urged the parties to communicate directly with each other and recessed the hearing to allow the parties to talk. The court granted plaintiffs' motion to compel indicating the question would be the timing of the disclosures. (Tr. 17:24-18:1.) The parties met and conferred for about an hour and the court resumed the hearing. Counsel for plaintiffs indicated that progress had been made. With respect to opt-in plaintiff information, the plaintiffs were willing to agree to an August 9th production date for information relating to the opt-ins. (Tr. 19:22-24.) The details of the agreement to produce opt-in plaintiff information on a rolling basis was described on the record. (Tr. 20:1-8.)

         With respect to ESI, plaintiffs' counsel indicated that essentially the parties were “really back at stage I.” (Tr. 20:9-12.) The parties had agreed that within a week of the hearing, UMC would engage an ESI vendor and counsel and their IT persons would:

get our hands around the structure of UMCs IT department, we'll have a list of individuals' servers, mainframes, hardware, all that kind of stuff, personal digital assistant devices that need to be searched and will have search terms; that one week from that point-so that three weeks out from now, . . . we'll be in a position where . . . ESI searches have begun.

(Tr. 20:13-23.) Plaintiffs' counsel indicated that this was a cooperative effort where the plaintiffs would be involved in every step so that months later plaintiffs did not find out that the right ESI searches had not been conducted. (Tr. 20:24-21:3.) The parties indicated they were meeting and anticipated filing a stipulated scheduling order within a week if not sooner, and requested an August status conference. Counsel for UMC asked for 60 days to go back and “re-answer” discovery responses served by prior counsel indicating he did not “see any other way to do it.” (Tr. 22:23-23:6.) He reiterated that he would have to start over with ESI searches and stated “it's going to take me 60 days to get it done so I'm going to ask for 60 days to provide those supplements.” (Tr. 23:7:14.) With respect to the ESI plan that counsel for plaintiffs described on the record, counsel for UMC stated he did not have “any trouble” with it. (Tr. 23:15-16.)

         The court indicated that it would set monthly status hearings to address issues as they arose to avoid formal motion practice on routine matters. (Tr. 25:13-17.) The court also indicated it was essential for both sides and their IT people to be involved in the ESI planning and production because “the vast majority of disputes that I have in ESI discovery matters are because of a lack of communication.” (Tr. 25:18-22.) The court acknowledged that plaintiffs were frustrated because they had been engaged in litigation for a year, very little information had been produced, and what information had been produced seemed inconsistent with much of Mr. Espinoza's deposition testimony. (Tr. 26:14-18.) The court urged counsel to “start on a fresh page and see if we can keep things civil and moving forward.” (Tr. 26:19-20.) The court gave UMC 45 days to serve supplemental discovery responses. (Tr. 27:23-28:2.)

         The parties submitted a Stipulation (ECF No. 114) facilitating Judge Gordon's Order (ECF No. 106) to give notice to the collective class, which the court approved following the hearing. (July 23, 2013 Order, ECF No. 116.)

         3. The August 15, 2013 Hearing: Agreement on Search Terms and Custodians

         The court conducted a follow up status and dispute resolution conference on August 15, 2013. (Mins., ECF No. 121.) The court heard counsel's representations concerning their progress on ESI protocols and the current status of the opt-in notices. UMC's counsel indicated that UMC was having difficulty responding to plaintiffs' discovery requests given the amount of information involved. Counsel for plaintiffs advised the court that UMC had not met its own August 2nd deadline to initiate ESI searches[5] and that plaintiffs received an email from UCM approximately two days before the hearing indicating that UMC wanted to negotiate the list of custodians who would be searched for ESI, the list of search terms for ESI, and that the letter made a “vague reference” to needing more time. (Hr'g Tr. 5:13-23, ECF No. 131.)

         Among the issues that plaintiffs' counsel raised at the hearing was that timekeeping and payroll information was not produced in Excel spreadsheet format. (Tr. 6:17-18.) Plaintiffs received a disk they contended was “not usable.” (Tr. 6:19-23.) Counsel for plaintiffs also asked the court to order that the defendants initiate ESI searches immediately with the list of custodians and list of “narrowly tailored and very reasonable” search terms plaintiffs provided. (Tr. 8:12- 19.) Plaintiffs had provided a list of 22 custodians including the named plaintiffs, and most of the executives at UMC. (Tr. 8:22-23.) The plaintiffs had also provided a list of approximately 55 search terms. (Tr. 9:4-6.) The list of custodians and search terms were provided on July 24, 2013. (Tr. 9:22-25.) Pursuant to the deadline established at the July 12, 2013 hearing, the deadline for initiating those searches was August 2nd. (Tr. 9:25-10:2.) On August 13th, two days prior to the hearing, UMC indicated it was “disputing those terms.” (Tr. 10:2-5.)

         Plaintiffs had conducted a meet and confer with UMC's counsel, UMC's internal IT people, and UMC's outside ESI vendor to identify the sources of relevant ESI. (Tr. 10:8-12.) The parties had identified servers, PCs in individual offices, PDAs/cell phones which were “the three categories of IT that we want searched” instead of just some mainframe server. (Tr. 10:12-18.) The court inquired of counsel for UMC what he had done in the last 30 days to attempt to comply with the deadline to initiate ESI productions by August 2, 2013. (Tr. 11:22-24.) Counsel for UMC acknowledged that he received the list of custodians and search terms on July 24, 2013, and had not gotten back to the plaintiffs about ESI productions until August 13th. (Tr. 12:4-8.) UMC “cut out those terms that we felt were duplicative of other terms.” (Tr. 12:8-11.) The court inquired why it took until August 13th to respond to the plaintiffs' search terms. (Tr. 12:12-13.) Counsel for UMC responded “that was a function of the fact that our IT person only recently told us it would take two whole weeks of nothing but searches to comply with what the plaintiffs' request was. So as soon as we knew that, we made a counter-proposal.” (Tr. 12:14-18.) Counsel for UMC addressed the cost and time estimates for it to comply with plaintiffs' ESI search for 22 custodians and for the plaintiffs' search terms. The court pointed out that UMC had yet to turn over “a single bit of ESI” in the entire case. (Tr. 14:1-3.) Counsel for UMC still had no idea what UMC's IT personnel were going to produce in terms of ESI. (Tr. 15:3-6.)

         After an extended discussion on the record about UMC's difficulties in producing discovery, the court proposed an iterative process to prioritize the search of ESI by an agreement to identify the five top custodians and critical search terms and “tweak the process as we go.” (Tr. 23:2-5.) Plaintiffs' counsel agreed to the proposal if the searches could be conducted immediately because the plaintiffs had waited so long. (Tr. 23:6-9.) The court required the parties to stay and identify the top five custodians and top ten search terms and a time parameter for the search “so that UMC can initiate the search for ESI for those five and those ten now.” (Tr. 24:14-19.)

         The court also inquired of plaintiffs' counsel what discovery it was most interested in seeing sooner rather than later. (Tr. 28:2-4.) Counsel for plaintiffs responded that the need to begin ESI searches was a priority to the plaintiffs. (Tr. 28:10-11.)

         UMC's counsel indicated that because of the number of plaintiffs who had opted in, 113 at the time of the hearing, it was going to take UMC months and months to produce individual files for the opt-in plaintiffs. (Tr. 27:14-24.) Counsel for plaintiffs argued that plaintiffs needed the payroll information in an Excel spreadsheet format to begin their work. (Tr. 29:1-2.) Plaintiffs' counsel stated the data was received in TIFF format, but the ESI protocol called for documents to be produced in spreadsheet fashion if available. (Tr. 29:7-14.) The plaintiffs had been told by three different representatives of UMC, including Mr. Espinoza at his deposition, that the timekeeping and payroll data was available in spreadsheet format. (Tr. 29:19-24.) Counsel for plaintiffs indicated that the ESI protocol required the documents to be produced in TIFF image, but there was an exception for spreadsheets. (Tr. 31:1-3.) Prior counsel indicated the data could be produced in spreadsheet format. (Tr. 31:3-7.) Mr. Espinoza also said UMC could do it. (Tr. 31:7-8.) According to plaintiffs, Espinoza testified that he reviewed payroll data all the time in spreadsheet format. (Tr. 31:12-14.) Plaintiffs' number one priority at that point was to obtain payroll and timekeeping information in Excel spreadsheet format. (Tr. 31:20-21.)

         Counsel for UMC insisted that it produced the payroll and timekeeping data in compliance with the ESI protocol. (Tr. 32:6-8.) UMC's counsel represented that “none of [UMC's] documents are kept in Excel spreadsheets;” rather, “it's kept in Kronos” and exported. (Tr. 32:13- 17.) Plaintiffs wanted TIFF so UMC produced the data in TIFF format. (Tr. 32:18-19.) The court then inquired about what Espinoza had testified to at his deposition. (Tr. 32:23-25.) UMC's counsel responded that it was her understanding that “Mr. Espinoza said there is a report that can be run that he can review in Excel.” (Tr. 33:2-4.) Espinoza said he could review the data that way, but it was not kept that way. UMC's counsel argued that its obligation under the Rules was to provide information “the way that it's kept, rather than to run special reports.” (Tr. 33:7-11.)

         The court directed UMC to initiate ESI search terms for five custodians of plaintiffs' choice and ten search terms the parties mutually agreed upon in the next day or two. (Tr. 34:3-18.) A follow-up status and dispute resolution conference was set for September 24, 2013, with a joint status report articulating the parties' respective positions with respect to any outstanding discovery disputes the Thursday before the hearing, August 19, 2013.

         4. The September 24, 2013 Hearing: Agreement on Production Timeline

         At the September 24, 2013 status and dispute resolution conference, the court addressed each side's contested issues in the order in which they appeared in the joint status report. (Mins., ECF No. 128; Hr'g Tr., ECF No. 130.)

         Plaintiffs' counsel again requested that timekeeping and payroll information be produced in Excel spreadsheet format. Plaintiffs' counsel indicated that a Kronos guide attached to the parties' joint status report showed how simply conversion into spreadsheet format could be accomplished. Counsel for UMC again insisted that UMC did not keep this information in Excel spreadsheet format and that it was not required to produce documents in spreadsheet format because it did not keep the data this way in the ordinary course of its business. Based on the representation of UMC's counsel, the court ordered UMC to produce its timekeeping and payroll information in the format kept in the ordinary course of its business.

         By the September 24th hearing, nearly 500 plaintiffs had opted in to the conditionally certified class. Counsel for the parties addressed the time it was taking to prepare hard copy documents or “packets” for the opt-in plaintiffs. UMC's counsel reiterated what it had represented in prior hearings that it took UMC personnel about four hours per opt-in plaintiff to gather the data from their personnel files and timekeeping records. As UMC had only produced 60 packets to date, plaintiffs projected that it would take another two years for UMC to produce the documents for the additional opt-in plaintiffs. Plaintiffs had not received any additional individual opt-in plaintiff document packets since the last hearing.

         The court then raised the issue of the proportionality of the discovery asking plaintiffs the amount they reasonably believed was in dispute for the damages involved for the entire opt-in class. Although plaintiffs' counsel had not finished their damages analysis, counsel represented that based on a very conservative estimate, each of the conditionally certified class members missed two meal breaks per week during the statutory period and damages would be “somewhere in the neighborhood of $10 million.” (Hr'g Tr. 9:6-10, ECF No. 130.) The court advised counsel that it made this inquiry to determine “how hard to push” the parties and how much resources were reasonable for UMC to devote. (Tr. 11:17-19.) The court noted that although inconvenience or expense in and of itself is not generally a defense to having to produce legitimate discovery, the court must assess whether the inconvenience or expense was out of proportion to plaintiffs' damages. (Tr. 11:19-23.)

         Counsel for UMC explained that UMC was working diligently, but also working on the ESI discovery issues. The court pointed out that UMC was preparing the individual opt-in plaintiff discovery packets through its in-house personnel, but had an ESI vendor assisting with the ESI production.

         The court then turned to the unfortunate ESI debacle. UMC's counsel indicated that UMC had not discussed the custodians or limited search terms with its ESI contractor before agreeing to them. (Tr. 13:23-14:9.) UMC had produced a lot of ESI and had information from its contractor that about 70 gigabytes of raw data, or in the neighborhood of 2, 100 boxes of additional ESI had been printed out. (Tr. 14:21-24.) The court questioned why UMC would even consider making hard copies of an ESI collection. Counsel for UMC responded, “It makes perfect sense the way you say that.” (Tr. 15:15-16.) The court questioned why the volume was a big issue for the five custodians and 10 search terms the court ordered at the last hearing. UMC's counsel responded that the size of the production was not the concern, but counsel's ability to go through it. (Tr. 15:20-21.) UMC acknowledged that a claw back agreement was in place. UMC's counsel also stated that UMC had recently received a report from its contractor giving subject headings of emails that would make it easier to weed out the irrelevant search terms. (Tr. 15:21-16:1.)

         The court inquired what UMC's independent contractor indicated would be more reasonable search terms. (Tr. 16:14-16.) UMC's counsel responded that there were some ideas that would “take a bit more conversation with our contractor and opposing counsel … but … we think it's close to ready to go.” (Tr. 16:17-25.)

         The court inquired of plaintiffs' counsel whether they were willing to review a potential “document dump” of potentially irrelevant documents from key word searches for terms such as “lunch.” (Tr. 17:18-24.) Counsel for plaintiffs responded that by de-duplicating documents “you're probably going to cut this in half anyway.” (Tr. 18:1-6.) Plaintiffs' counsel offered to consider search terms and Boolean searches to further limit the production. (Tr. 18:6-8.) However, plaintiffs were willing to review 15 or 20 gigabytes of information if necessary. (Tr. 18:8-10.) Counsel for UMC estimated the cost of putting the ESI production of approximately 75 gigabytes on a flash drive was approximately $100. (Tr. 18:22-23.) UMC's counsel stated that its ESI vendor indicated he could not simply de-duplicate documents without changing metadata and without changing the content. (Tr. 19:2-7.)

         Counsel for plaintiffs expressed concern that UMC was insisting it would not produce ESI for more than five custodians. The court indicated that it ordered the first five custodians with ten search terms in order to initiate ESI production, but that ESI production would continue in waves. (Tr. 20:13-21:14.) The court's intention was to allow plaintiffs to review the ESI production for the first five custodians involving the first ten search terms to further evaluate what further ESI search and production was reasonable taking it a step at a time. (Tr. 21:9-22:11.) The court then inquired whether there was any reason UMC could not produce ESI in electronic format to plaintiffs' counsel to allow them to de-duplicate the documents for the five custodians and 10 search terms in two weeks. (Tr. 22:12-14.) UMC's counsel replied “I see no reason why not. We will do that.” (Tr. 22:15-16.)

         The court addressed the parties' disputes concerning UMC's supplemental discovery responses ordered as a result of granting plaintiffs' motion to compel. (Tr. 22:18-20.) UMC's counsel maintained that notwithstanding the court's order overruling UMC's objections to the discovery requests at issue in the motion to compel, its objections remained viable. (Tr. 22:20- 25.) The court indicated that if UMC had withheld any documents on the basis of privilege, a privilege log fully compliant with Rule 26 would be required to be produced. (Tr. 23:8-10.) The court inquired whether UMC believed any objection other than privilege survived the court's order granting plaintiffs' motion to compel. (Tr. 23:14-20.) Counsel for UMC responded that the discovery requests were over-burdensome and irrelevant. (Tr. 23:21-25.) The court indicated that it would continue to oversee the scope of ESI custodian searches, but that as UMC had lost the motion to compel all of its objections were overruled except for privilege. (Tr. 24:2-9.) UMC's counsel responded that it had not withheld anything “except exceeding the scope of discovery, ” which would be revisited in a letter to opposing counsel clarifying the matter. (Tr. 24:14-17.)

         The court reiterated that it did not have all of the parties' prior disputes in the motion to compel memorized, but that boilerplate objections had been overruled. (Tr. 25:16-22.) The court ordered UMC to review their supplemental responses to make sure that no documents had been withheld except on the basis of privilege. (Tr. 25:24-26:10.) However, the court specifically advised UMC that its other objections were overruled when the motion to compel was granted. (Tr. 26:12-13.) After additional discussion, the court pointed out that it had gone over each of the disputed discovery requests and ruled on an interrogatory-by-interrogatory and an individual response to request for production basis, and again reiterated “so with respect to all of the objections I compelled you to produce, all of your objections, save privilege, have been overruled.” (Tr. 27:1-3.) The court resolved a number of other disputes and set the matter for a further status conference on November 12, 2013.

         5. The November 12, 2013 Hearing: Requests Concerning Kronos and Mobile Phone Text Message Data

         At the November 12, 2013 status conference, counsel for plaintiffs again indicated that plaintiffs had not received ESI promised by UMC, or in compliance with the ESI protocol. (Mins., ECF No. 138; Hr'g Tr. 5:3-8, ECF No. 139.) UMC's counsel had discussed the need to use a different ESI vendor. (Hr'g Tr. 5:18-20, ECF No. 139.) Plaintiffs' counsel proposed that both sides use plaintiffs' ESI vendor, International Litigation Services, Inc., which had a great deal of experience in e-discovery. (Tr. 5:21-6:1.)

         Plaintiffs' counsel also indicated that searches from executive “PDAs” (i.e., personal digital assistants) issued to UMC custodians, such as cell phones, had still not been produced. (Tr. 6:1-7:4.) Because of all of UMC's difficulties, plaintiffs had still not been able to begin review of ESI. (Tr. 7:15-16.) Plaintiffs' counsel again repeated their request for Kronos data in spreadsheet form, including Kronos spreadsheets related to the DOL investigation. (Tr. 9:1-18.) Plaintiffs' counsel represented that its own ESI vendor could not produce the payroll data in spreadsheet format because plaintiffs did not have native documents. (Tr. 9:19-10:2.) The court inquired whether, if plaintiffs received raw data that contained the metadata and in the format that both sides agreed to, plaintiffs could generate spreadsheet reports with the Kronos software. (Tr. 10:17- 21.) Counsel for plaintiffs responded that if UMC produced the Kronos data in its native format, plaintiffs could generate the report. (Tr. 10:22-23.)

         Counsel for UMC indicated UMC was amenable to plaintiffs' suggestion to jointly retain plaintiffs' ESI vendor which had been intimately involved in the process and prepared to comply with the ESI protocol. (Tr. 14:14-20.) However, counsel had to confer with the client. (Tr. 14:20- 21.) The court expressed its frustration with hearing more problems with UMC's ESI production at every status conference. (Tr. 16:5-6.) Additionally, ESI problems were discussed with counsel for UMC who kept assuring the court that “next time, there won't be an issue with what is loaded and what is produced.” (Tr. 17:21-22.) The court required UMC's IT vendor to speak directly with plaintiffs' IT vendor to ensure both sides were on the same page about compliance with the ESI protocol. (Tr. 17:23-18:6.) UMC requested two weeks to consider plaintiffs' proposal that the parties jointly use the same ESI vendor. (Tr. 18:7-15.)

         Counsel for UMC then addressed the electronic searches of the “personal digital systems” or PDAs and cellphones for UMC officials. (Tr. 19:21-24.) Counsel indicated that there were two issues-one regarding email or documents that would have been transmitted through those phones that would have gone through the exchange server with UMC. (Tr. 19:24-20:6.) UMC's counsel indicated that if there was other ESI such as text messages or metadata regarding calls that plaintiffs were seeking, it was not covered by the ESI protocol. (Tr. 20:7-10.) Counsel for UMC suggested that a stipulation would be needed to obtain information directly from the cell phone provider. (Tr. 20:10-15.)

         The court pointed out that this was an issue that had been discussed many months ago in a status conference, and that UMC had agreed to provide this information. (Tr. 20:16-19.) Counsel for UMC expressly represented to the court that “what information UMC has control over was searched, and I just wanted to clarify that for the court.” (Tr. 21:9-11.)

         Counsel for UMC also represented that she did not believe that providing plaintiffs with the raw data from Kronos would enable the plaintiffs to create timekeeping spreadsheets because a manual entry from a separate program was required. (Tr. 22:6-19.) The court directed that this issue be discussed among the parties' respective IT experts. (Tr. 22:25-23:14.)

         The court expressly addressed counsel for UMC about his comment that he was not technologically savvy about ESI issues stating:

If you're going to practice law in this era, like it or not, you're going to have to have an understanding of that. If that means having your ESI tech talk to you like a sixth grader, . . . that means they talk to you like a sixth grader. I mean, you have to understand.

(Tr. 25:18-25.) The court continued the hearing for two weeks until Tuesday, November 26, 2013.

         6. The November 26, 2013 Hearing: Further Discussion Regarding Kronos and Mobile Phone Data

         At the November 26, 2013 status conference, the parties announced that they had resolved some issues. (Mins., ECF No. 140; Hr'g Tr. 4:2-3, ECF No. 141.) The parties and their ESI vendors held a telephone conference on November 20, 2013. (Hr'g Tr. 4:23-5:6, ECF No. 141.) Defense counsel was on the phone with their new ESI expert, Joe Edmondson. (Tr. 5:2-6.) The primary discussion was how to produce prior discovery in conformance with the ESI order and make it compatible for review. (Tr. 5:7-9.) Plaintiffs' counsel believed that the discussion was fruitful and everything seemed to be on track on that issue. (Tr. 5:10-14.) The defense did not have a Kronos person on the phone to talk about the specifics of the Kronos database. (Tr. 5:15- 18.) The parties discussed getting information from hospital-issued PDAs. (Tr. 5:19-20.)

         The parties conducted another telephone call on November 25, 2013, and plaintiffs believed everything was on track with respect to the document production. (Tr. 5:23-25.) Defense counsel told plaintiffs that the search and subsequent processing of results would be completed by November 29th. (Tr. 6:1-3.) That process would include getting the documents properly formatted and de-duplicated. (Tr. 6:3-4.) Defense counsel also represented that ESI would be produced along with the privileged log on December 6th. (Tr. 6:5-6.)

         Plaintiffs' counsel advised the court that with respect to the PDAs, two of the five custodians had hospital-issued Blackberries and emails that would have been generated from those would be part of the ESI production on December 6th. (Tr. 6:14-18.) With respect to the texts, there was some ambiguity about when they would be produced. (Tr. 6:19-21.) However, plaintiffs' counsel believed defendants represented that the texts would be produced sometime in December. (Tr. 6:21-23.) Defense counsel indicated that their Kronos expert would be available for discussions the following day. (Tr. 6:25-7:5.) Based on these discussions, plaintiffs' counsel hoped to begin reviewing ESI document production in the beginning of the new year. (Tr. 8:7-9.) However, with respect to additional ESI production for additional custodians, the parties had not yet come to an agreement. (Tr. 8:10-12.)

         Counsel for UMC responded that, with respect to the progress that has been made, she was in agreement with plaintiffs' counsel. (Tr. 9:21-23.) The additional processing for the initial results was started the day after the last hearing. (Tr. 9:24-25.) UMC intended to have everything produced by December 6th. (Tr. 10:1-2.) With respect to the text messages for the smart phones or the five custodians' PDAs, counsel represented “we did actually contact them directly. Only two of them have UMC issued phones.” (Tr. 11:9-13.) These were upper-level management custodians. (Tr. 11:18.) Counsel represented that:

To collect any text messages that might relate to the search terms, we have to go to the individual phones. And that requires a little bit of additional scheduling. And we also have to deal with a little bit of preparation, to make sure we know what data can actually be taken from the phone because unfortunately, it varies widely depending on the device and the carrier.

(Tr. 11:18-25.) The carriers varied because some people used Blackberries, “which are not used on all services, and it's conflicting.” (Tr. 12:2-6.) The court specifically inquired whether the parties had discussions between their experts about making sure how to retrieve the data so that there was not a spoliation claim involving the manner in which data was retrieved. (Tr. 12:7-10.) Counsel for UMC responded that she did not think that had been discussed between the experts, but did not believe it would be a problem. (Tr. 12:11-13.) Counsel further represented to the court that because of the interaction between the ESI vendors and the experts, she did not believe there would be “anywhere near the delay in production from this point on, and it's just more a matter of making sure that we know what the scope is and the additional search terms that we can agree on.” (Tr. 12:18-23.) The court directed the parties to submit a stipulation and proposed order extending the deadlines to memorialize all of the dates that had been discussed and agreed upon. (Tr. 14:13- 16.) A further status conference was set for January 21, 2014.

         7. The January 21, 2014 Hearing: UMC Ordered to Preserve Text Message Data, Discussion of Sanctions

         The parties filed a Joint Status Report (ECF No. 142) before the January 21, 2014 hearing. In the report, UMC represented that it would produce text message data of the five identified UMC executive custodians by the end of January 2014. UMC represented that it has ascertained that three of the five custodians-Brian Brannman, current Chief Executive Officer (“CEO”) of UMC, John Espinoza, Chief Human Resources Officer of UMC, and James Mumford, Human Resources Director of Labor Relations-had mobile phones issued by UMC. (Id. 4:15-18.) Defense counsel represented that three of these individuals had UMC-issued Blackberry devices that required lengthy data-pulls taking four hours each. (Id. 4:18-19.) “As these individuals with high-levels of institutional responsibility are required to have access to these devices continually, UMC is very carefully scheduling time in January to pull what data can be obtained from these devices.” (Id. 4:19-22.)

         The hearing addressed ongoing issues with UMC's failure to produce ESI in accordance with the parties' ESI protocol. (Mins., ECF No. 143.) Among other things, counsel for plaintiffs indicated that UMC produced ESI in December that was given to plaintiffs' ESI expert. (Hr'g Tr. 6:5-6, ECF No. 144.) Plaintiffs' ESI expert tried to load the data, but there were complications, which he attempted to diagnose. (Tr. 6:6-8.) Plaintiffs subsequently advised the defendants that the data was useless and needed to be reproduced. (Tr. 6:8-11.) Plaintiffs disputed UMC's representation in the joint status report that plaintiffs' concerns had been addressed. (Tr. 6:12- 14.) Rather, UMC's counsel indicated that counsel had reviewed the production and believed it was fine. (Id.) Plaintiffs' counsel therefore suggested that the ESI people get together to figure out who was right. (Tr. 6:15-17.)

         A meeting was arranged with the respective ESI people. (Tr. 6:18-19.) On the morning of the conference call, defense counsel suddenly acknowledged that plaintiffs were correct that there were problems with the second production, which UMC agreed to fix. (Tr. 6:19-23.) UMC provided plaintiffs with samples of what it believed was a “corrected production.” (Tr. 7:5-7.) Plaintiffs' ESI vendor reviewed the information and found it still had a problem. (Tr. 7:7-8.) Plaintiffs' counsel described the technical aspects of the problem. (Tr. 7:9-19.) Plaintiffs spent $15, 000 trying to work with what UMC had produced, which UMC now admitted was unworkable, and plaintiffs' counsel questioned why plaintiffs should bear the cost of UMC's inability to produce discovery. (Tr. 8:7-12.) Plaintiffs asked the court to order reimbursement to plaintiffs for the additional costs incurred for their ESI vendor. (Tr. 8:13-16.) Plaintiffs' counsel also advised the court that the mobile text data that had still not been produced. (Tr. 10:22.)

         The court addressed counsel for UMC about the representation in the Joint Status Report (ECF No. 142) that UMC had spent $100, 000 over a year's period of time with two different vendors who gave UMC something described as worthless and did not comply with an ESI protocol that UMC itself proposed. (Tr. 16:4-17.) Counsel represented that UMC's production was ready, but that part of the problem with the latest ESI production “was purely a miscommunication.” (Tr. 16:18-20.) There was a coding issue with the second production. (Tr. 16:21-22.) Closer evaluation discovered the coding issues and UMC's ESI vendor began reprocessing it. (Tr. 17:1-3.) The January 14th conference call that was held “was another miscommunication.” (Tr. 17:25-18:1.) However, counsel for UMC represented in open court that she had an ESI production ready to produce to plaintiffs and would continue meeting and conferring with regard to any additional metadata issues. (Tr. 19:10-14.)

         The court directed UMC to turn the data over indicating it would give plaintiffs' expert two weeks to review the data and that:

If there's a problem again, I'm going to appoint a special master who is going to be paid for at UMC's expense, and this will be a special master who is a lawyer, who will be entitled to hire an ESI specialist who will report to the court what the problem is, and recommend to the court how to resolve the problem, because I am not going through this every two weeks.

(Tr. 19:20-20:3.) The court directed UMC's counsel to produce the Kronos payroll data for all of its employees during the time period relevant to the litigation, not just the opt-in plaintiffs, because the court had confidence in the plaintiffs' representations. (Tr. 20:18-23.)

         The court gave UMC until January 31st to produce the text data for the UMC executives to opposing counsel and told UMC's counsel that the court did not want to hear one more time about how the executives could not be without their Blackberries for the four hours it would take to dump the data. (Tr. 20:24-21:3.) The court warned UMC that it would permit plaintiffs to file whatever motions they intended to file if ESI production continued to be a problem including “the full panoply of Rule 37 sanctions that I have at my disposal up to and including case dispositive sanctions against UMC if we can't get this case ready for trial and discovery of routine information and ESI produced to plaintiffs' counsel.” (Tr. 21:4-11.) The court pointed out to UMC's counsel that the date was then January 21, 2014, and UMC had yet to produce ESI according to a protocol its own counsel drafted. (Tr. 23:5-6.)

         By the January 21, 2014 hearing and after seeing the latest round of UMC's problems with its production, the court had lost all confidence in UMC's ability to comply with its discovery obligations. By contrast, the court had a great deal of confidence in what plaintiffs and their ESI consultants were reporting.

         8. The February 11, 2014 Hearing

         At the next status and dispute resolution conference on February 11, 2014, plaintiffs' ESI experts, Doug Forrest and Bruce Pixley, were available and participated telephonically. Defendants' ESI expert, Joseph Edmondson, was not present or available telephonically although he was expected to participate, given contact information to call in, and attempts were made to contact him during the hearing. (Mins., ECF No. 146; Hr'g Tr. 1:1-5:25, ECF No. 147.) The only explanation counsel for UMC could provide for why Edmondson was not available as anticipated was that he had recently taken a position with the Las Vegas Sands, which was having problems with its phone lines. (Hr'g Tr. 6:1-7, ECF No. 147.) The hearing therefore proceeded without him.[6]

         Plaintiff's counsel indicated that plaintiffs had received the Kronos database, but it had not yet been loaded because plaintiffs were preoccupied with ESI and some text message issues. (Tr. 6:17-19.) Plaintiffs were in the process of loading the Kronos database. (Tr. 6:20.) UMC had also produced the final opt-in packets to plaintiffs for all 600 opt-in plaintiffs. (Tr. 6:24-7:5.) UMC had served these packets, but plaintiffs had not yet received it. (Id.) A privileged document log had also been produced. (Tr. 7:6-10.)

         However, there were still significant problems with defendants' ESI production and issues about whether it complied with the parties' ESI protocol. (Tr. 7:15-21.) The parties outlined the problems with UMC's most recent ESI production in a Joint Status Report (ECF No. 145) filed before the hearing. Counsel for plaintiffs advised the court that there were technical issues with UMC's most recent ESI production. The manner in which it was delivered to the plaintiffs made the information not searchable or sortable. (Tr. 9:7-12.) The joint status report attached the declaration of plaintiffs' ESI expert, Mr. Pixley, explaining how the documents were not searchable, sortable, or readable. (Tr. 9:13-17.) The documents could not be loaded to a viewing platform like Summation or Concordance so they could be viewed in the same manner that UMC saw them. (Tr. 9:18-20.) Plaintiffs' experts spent a good deal of time loading the data and attempting to diagnose the problem. (Tr. 10:3-8.) Plaintiffs were not surprised by what they found because of the problems with the sample data set UMC sent in mid-January, which was discussed at the last hearing. (Tr. 10:10-20.) Plaintiffs' counsel requested that the court appoint a special master at UMC's expense consistent with the court's suggestion at the last status conference. (Tr. 10:24-11:1.) Plaintiffs' ESI vendor had advised plaintiffs' counsel that 52, 000 of the 76, 000 documents in UMC's ESI production contained no subject line in the metadata. (Tr. 11:2-5.)

         Plaintiffs' counsel also addressed the text messages that the court ordered produced at the last hearing. (Tr. 11:16-19.) Although the court had given UMC a “drop-dead deadline” for the custodians, plaintiffs only received text messages from December 2013, through the date that the text messages were searched. (Tr. 11:23-12:2.) Defense counsel represented to plaintiffs' counsel the week before the hearing that it was highly unlikely that plaintiffs would receive any additional text messages. (Tr. 12:10-13.) These were the text messages of the UMC executives' Blackberries of Messrs. Brannman, Espinoza, and Mumford. (Tr. 12:17-23.)

         Counsel for plaintiffs pointed out that the lawsuit was filed in July 2012 and a preservation letter was sent to UMC on August 6, 2012, that covered ESI and text messages. (Tr. 12:24-13:5.) A second preservation letter was sent in the fall of 2012 when the complaint was amended to cover a broader group of employees. (Tr. 13:5-7.) At the July 2013 status conference, there was a detailed discussion about Blackberries and text messages. (Tr. 13:10-13.) Plaintiffs' counsel reminded the court that the parties went off the record for 45 minutes and reached a resolution of a number of discovery problems including preserving these text messages, and the spoliation issue was specifically raised. (Tr. 13:13-24.) However, when the text messages were produced in January, plaintiffs were told that the text messages produced included everything that was on them and the devices did not gather anything else. (Tr. 13:24-14:2.) Plaintiffs' expert, Mr. Pixley, prepared a declaration that Blackberry has a free software application that would preserve all of this data. (Tr. 14:5-8.) Plaintiffs therefore requested that if a special master was appointed, that he have authority over not just ESI, but also text messages that were not preserved and produced. (Tr. 14:8-12.)

         Counsel for UMC acknowledged “that this has been a very difficult process.” (Tr. 14:16- 18.) UMC's counsel represented they had been engaged in discussion of ESI compliance with UMC for the past year and believed UMC's production was in compliance with the ESI protocol order. (Tr. 14:18-21.) She characterized the issue raised by plaintiffs at the status conference as “matters of form that were not addressed by the ESI protocol order that go back to the idea of preservation…which is not briefed at this point.” (Tr. 14:21-25.) UMC attempted to address the most recent technical issues with its expert, Mr. Edmondson. (Tr. 15:4-6.) A lot of the documents were collected from a period before plaintiffs sent the preservation letter in August 2012. (Tr. 15:6-9.) As a result, the most recent document production involved documents that had to be recovered “that involves technical specifics that will lead to issues such as formatting information being included within the texts we're searching.” (Tr. 15:9-12.) Counsel believed the information was searchable, but stated “it is not as clean as plaintiffs might like….” (Tr. 15:13-15.)

         The court pointed out that the data was produced with Japanese and Korean characters and imbedded data that makes nonsense of simple emails. (Tr. 15:16-18.) The court characterized the examples of UMC's ESI production attached to Mr. Pixley's declaration as “outrageous.” (Tr. 15:18-19.) UMC's counsel stated UMC was trying to “problem solve, how this data can be best used.” (Tr. 16:2-4.) However, UMC believed it was compliant with an oral agreement reached with plaintiffs and their ESI vendor to amend paragraph four of the stipulated ESI protocol entered in this case. (Tr. 16:4-17:.25)

         UMC's counsel noted that its first ESI vendor created a production that was “useless in terms of the ESI protocol.” (Tr. 16:22-17:1.) UMC sent 78, 000 emails to its first vendor who was not compliant with the ESI protocol order. (Tr. 17:14-17.) This is why UMC went to its current ESI vendor, Mr. Edmondson, so he could comply. (Tr. 17:17-18.) UMC's counsel reiterated that she believed UMC was fully compliant with the ESI order and the parties should focus on whether there was additional information UMC needed to provide to move forward. (Tr. 18:1-8.)

         The court indicated it would appoint a special master at UMC's expense to solve the ongoing ESI problems to get the ESI in usable format to move the litigation forward. (Tr. 20:14- 20.) The court stated for the record that having reviewed the declarations of the respective experts in connection with the joint status report, it was not satisfied that plaintiffs had received what they were entitled to receive pursuant to the ESI protocol and the court's orders. (Tr. 20:21-25.) The court directed the parties to meet and confer to select a mutually agreeable special master so that each side would have confidence in a person with sufficient technical expertise to advise the court on how to solve the problem. (Tr. 21:2-6.) The court gave the parties two weeks to select a special master if they were able to agree, and if not, to submit their respective proposals, indicating the court would select one. (Tr. 21:6-12.) The court also indicated that it would hold a meeting in chambers with the special master, defense counsel, plaintiffs' counsel, and their respective IT folks to have a “calm, collected, problem-solving session to resolve this problem as efficiently and inexpensively as is humanly possible.” (Tr. 21:12-17.) The court ordered the appointment of a special master. (Tr. 21:20-22.) The court found that UMC was responsible for the problem and therefore would be responsible for the cost of the special master. (Tr. 21:22-23.) The meeting in chambers was set for March 10, 2014.

         9. The March 10, 2014 Meeting in Chambers

         The meeting in chambers occurred as scheduled on March 10, 2014. (Mins., ECF No. 151.) Both sides agreed to appoint Daniel Garrie as Special Master. Counsel for plaintiffs, counsel for UMC, and Special Master Garrie appeared along with plaintiffs' ESI experts Douglas Forrest and Bruce Pixley. Ernie McKinley, and Doug Spring were present on behalf of UMC, along with UMC's ESI expert, Joe Edmonson. The court and special master had extensive discussions with counsel, the parties' representative and consultants regarding UMC's ESI collection and production issues, as well as UMC's efforts to preserve discoverable materials requested in plaintiffs' litigation hold/preservation letters. (Id.) The court advised the parties that it had serious concerns about UMC's compliance with its preservation duties, the manner in which it collected and produced discoverable ESI, and its compliance with the court-approved ESI protocol. (Id.) The conference lasted approximately 3½ hours. At the conclusion of the conference, the court ordered UMC to “take all steps necessary to preserve ESI potentially relevant to the parties' claims and defenses in this matter in full compliance with the litigation hold/preservation letters sent by plaintiffs' counsel shortly after this lawsuit was filed. Failure to comply will result in sanctions, up to and including a recommendation to the district judge of case dispositive sanctions.” (Id.)

         The court entered a written Order (ECF No. 152) on March 14, 2014, formally appointing Special Master Garrie and outlining his ...


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