In this discovery dispute, the Texas Supreme Court “elucidate[d] the guiding principles” that govern discovery by concluding that its state rules align with the federal rules. Under both, “proportionality is the polestar” that should guide the courts.
The case began with homeowners “alleging underpayment of insured hail-damage claims” by their insurance company, State Farm Lloyds (“State Farm”). During discovery, the homeowners requested electronically stored information (ESI) in native format, such as Word documents and Excel spreadsheets. That native format would not only provide metadata about file creation dates but also comments, tracked changes and spreadsheet formulas.
State Farm refused, offering to produce only a “searchable static form,” such as PDF or picture files. State Farm argued that this was a “reasonably usable” form of ESI. Moreover, State Farm stated that with “more than 35,000 new claims each day,” it “routinely converted” data into a static format in its ordinary course of business. Providing native-format ESI would, State Farm argued, “be an extraordinary and burdensome undertaking.”
The trial court ruled in favor of the homeowners. It ordered State Farm to produce native-format ESI “regardless of whether a more convenient, less expensive, and ‘reasonably usable’ format” was available. State Farm sought a writ of mandamus, an order that would override the trial court’s order. The intermediate appellate court declined that relief. State Farm therefore requested mandamus relief from the Texas Supreme Court.
The court began its opinion by noting that neither party “has a unilateral right to specify the format of discovery.” The allowable scope of discovery includes “any matter that is not privileged and is relevant” to any claim or defense. Generally, though, the trial court “must make an effort to impose reasonable discovery limits.”
Specifically considering ediscovery, the court concluded that “while metadata may generally be discoverable … that does not mean production in a [native] format is necessarily required.” Instead, whether metadata is necessary depends on whether it is proportional to the case.
The court examined proportionality under the Texas state rules, the Sedona Conference’s principles, and the Federal Rules of Civil Procedure, specifically Rules 34 and 26, concluding that those rules align. Each requires that the trial court “balance any burden or expense” of the requested information against specific proportionality factors.
Those factors include the benefits of the specific discovery sought and “the needs of the case.” Specifically, “metadata may be necessary to the litigation when the who, what, where, when, and why ESI was generated is an actual issue in the case.” Additionally, the court should consider “the amount in controversy, the parties’ [financial and technological] resources, the importance of the issues at stake … and the importance of the requested format in resolving the issues.”
Finally, the court noted that discovery, and ediscovery in particular, “is necessarily a collaborative enterprise.” In that collaboration, “proportionality is the polestar” for the parties and the courts. The court denied State Farm’s request for relief without prejudice for reconsideration by the trial court.
Takeaways on proportional discovery requests
Address each proportionality factor that applies when requesting a specific form of discovery or objecting to a request for a different production format. Do not rely on conclusory statements or declare that a particular format would be “extraordinary and burdensome” to provide without explaining precisely why and how.