Zapproved Case Summary

Zapproved Case Summary

First Niagara Risk Mgmt., Inc. v. Folino, No. 16-1779 (E.D. Pa. Aug. 11, 2016).

The court concluded that the plaintiff’s requested scope of discovery from the defendant’s electronic devices, while “rather broad,” was “proportional to the needs of this case” under the amended federal rules of discovery. The court therefore granted the plaintiff’s motion to compel but denied an award of the associated costs because the defendant’s objection was “substantially justified.”

The plaintiff, First Niagara Risk Management, Inc., sued its former employee, John Folino, alleging breach of contract and breach of fiduciary duty, among other claims. From 2010 until early 2016, Folino was First Niagara’s First Vice President and Regional Director of Insurance for Western Pennsylvania. He took that position, signing an employment agreement with nonsolicitation and noncompete provisions, after selling two businesses to First Niagara for $5 million. Thereafter, First Niagara uncovered “mountainous” evidence “of Folino’s involvement in [a] competing venture” that he launched in 2015 with another First Niagara employee.

At the start of discovery, the parties “agreed in [a] Stipulated Preliminary Injunction that Folino would make available for imaging all of his personal and business electronic devices” to be imaged by a third-party vendor “using a list of key words and search terms.” But the parties “disagreed about the scope of discovery almost immediately.” First Niagara moved to compel “a broad search of [Folino’s] electronic devices—including e-mails and text messages.” Folino objected that the request was “overly broad and invasive” and proposed a much more limited search protocol.

The court initially noted that the recently amended Federal Rule of Civil Procedure 26(b)(1) “defines the scope of discovery as ‘any nonprivileged matter that is relevant to any party’s claim or defense and proportional to the needs of the case.’” The party seeking to compel discovery “bears the initial burden of proving the relevance” of that evidence; if that burden is met, the resisting party must establish that the evidence is excluded by six specific proportionality factors.

The court did not hesitate to find that the “material requested by First Niagara [was] relevant.” The court noted that after “limited discovery,” First Niagara already “revealed significant evidence that Folino was more than likely involved in the formation” of a competing company where he recruited First Niagara employees, which would breach his employment agreement.

However, the court did “agree with Folino that this request is rather broad.” The court therefore proceeded to analyze the case according to the Rule 26 proportionality factors: “(1) the importance of the issues at stake, (2) the amount in controversy, (3) the parties’ relative access to information, (4) the parties’ resources, (5) the importance of discovery in resolving the issues, and (6) whether the burden or expense of discovery outweighs its likely benefits.” Significantly, the court concluded that the “issues at stake are of grave importance to First Niagara,” which had “to conduct broad discovery to uncover the scope of Folino’s alleged misdeeds.” The court also discounted Folino’s “complaints about costs,” finding that they “ring hollow from someone who just sold two companies for over $5 million.” In sum, the court held that “the potential harm First Niagara’s discovery requests may impose on Folino does not outweigh the presumption for disclosure.”

Finally, the court considered First Niagara’s request for fees and costs related to the motion to compel discovery. Finding that Folino’s “nondisclosure and objections, while ultimately futile, were substantially justified given the breadth of First Niagara’s request,” the court denied this motion. The court further noted that it did “not begrudge First Niagara’s broad discovery request,” although it understood “how Folino could have interpreted [it] as overly broad, expensive, and burdensome.”

The court therefore granted First Niagara’s motion to compel but denied to award its fees and costs associated with the motion.

First Niagara Risk Mgmt., Inc. v. Folino, No. 16-1779 (E.D. Pa. Aug. 11, 2016).,47


In its opinion, the court rejected Folino’s argument that “the Sedona [Conference] principles state that the responding party is presumed to be in the best position to choose an appropriate” search method. The court noted that “these principles are not binding on us” and that the record “has already shown that Folino’s proposed protocol is inadequate.”

Instead, when addressing proportionality, carefully consider whether your requests and circumstances align with the Rule 26 factors. To argue for limited discovery, examine your resources, particularly in light of the issues involved in the case. Here, it was significant that Folino profited significantly from sales to an aggrieved plaintiff.