July 02, 2018 Practice Points

Applying Relevance and Proportionality to Solve Discovery's "Goldilocks Problem"

A recent decision from the Southern District of New York in securities litigation against BNY Mellon gives guidance on this recurring issue.

By Andrew M. Toft

When the bench and bar address relevance and proportionality in discovery, they're confronting a "Goldilocks problem": When is discovery "too much," "too little," or "just the right amount"? A recent decision from the Southern District of New York in securities litigation against BNY Mellon gives guidance to both plaintiffs and defendants on this recurring issue. Blackrock Allocation Target Shares: Series S. Portfolio, et al. v Bank of New York Mellon, et al., 2018WL2215510, May 15, 2018.

Early in the litigation, BNY Mellon had agreed to search the files of 28 custodians using search terms chosen by the plaintiffs. It had also agreed to search a specific “shared drive” for responsive documents. When BNY Mellon subsequently produced something less than 85,000 documents, however and acknowledged it had more to produce, the plaintiffs sought to compel BNY Mellon to search the files of an additional 96 custodians. The plaintiffs and BNY Mellon were able to limit their dispute to only nine additional custodians after a court-ordered meet-and-confer.

The court then reviewed the legal standards for relevance and proportionality, pointing out that while the burden of establishing relevance is on the party seeking discovery, once relevance has been shown, it is up to the responding party to justify curtailing discovery. The court also stated that proportionality and relevance are “conjoined” concepts in that the greater the relevance of the information sought, the less likely its discovery will be found to be disproportionate.

Ultimately, the court ordered BNY Mellon to search the files of at least some of the additional custodians where the plaintiffs had identified deficiencies in BNY Mellon's earlier production and linked those deficiencies to its failure to search those individuals' files. The court also commented on BNY Mellon’s failure to provide any information regarding the incremental cost or burden of expanding discovery for those additional custodians, a clear practice point for lawyers whose clients find themselves in BNY Mellon’s position.

With respect to other additional custodians, the court concluded that the plaintiffs failed to demonstrate that their files contained documents not found in files of existing custodians or the shared drive. The court went on to state that, if the plaintiffs demonstrated a particularized need for discovery from those custodians after the parties had a better understanding of the universe of documents being collected and produced, the court might reconsider their request to search the files. The court noted, however, it would consider that request only after the meet-and-confer required under Rule 37.

The opinion provides an example of a court closely reading and applying Rule 26. It highlights proportionality considerations and provides guidance to attorneys on how to use discovery conducted early in the case to support arguments for expanding the scope of discovery later in the case to include searches of files controlled by custodians previously unknown or simply not included in the earlier discovery. The discussion of relevance subsequent to the 2015 amendments is also helpful. Finally, the opinion provides an example of how inadvertently produced documents can open the door to discovery that might not otherwise have been permitted.


Andrew M. Toft is an attorney in Denver, Colorado.


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