Discovery

• Pages: 117-148

117

CHAPTER V

DISCOVERY

Perhaps no greater facet of indirect purchaser antitrust litigation

has changed more since the passage of the Class Action Fairness Act

of 20051 (CAFA) than that of discovery. Prior to CAFA, a significant

portion of indirect purchaser litigation occurred in state court while

the direct purchaser litigation occurred in federal court. Frequently

the direct purchaser litigation would be allowed to proceed ahead of

the indirect purchaser litigation, and the indirect purchaser litigation

could benefit from the advanced nature of the direct purchaser

litigation. Today things are different, as CAFA has placed a

significant portion of indirect purchaser litigation in federal court and

discovery occurs in tandem with the direct purchaser litigation.

Technological changes also have transformed indirect purchaser

antitrust litigation drastically. With the digitization of business, the

amount of electronically stored information (ESI) has increased the

amount of information that needs to be sorted through in discovery,

with associated increases in costs.2 These changes affect not only the

manner of producing and reviewing the information, but also who

can have access to the information under stipulated protective orders.

In acknowledgment of these and other changes, this chapter

initially addresses the timing of discovery and the current trends in

bifurcation. It then discusses the coordination of indirect purchaser

discovery proceedings with that of the direct purchaser discovery

proceedings. The last three sections discuss selected issues germane

to seeking discovery from parties, members of a class action, and

nonparties.

A. Timing of Discovery and Bifurcation

The first question regarding discovery is when it will commence.

Since many indirect purchaser cases are brought as putative class

actions, the decision on whether a class will be certified will

fundamentally shape the remainder of the case. Parties consequently

consider both the commencement of discovery and whether it will be

1. Class Action Fairness Act of 2005, Pub. L. No. 109 -2, 119 Stat. 4

(2005) (codified in sections of 28 U.S.C.).

2. See, e.g., In re Intel Corp. Microprocessor Antitrust Litig., 258

F.R.D. 280, 283 (D. Del. 2008) (describing the production at issue in

2008 as possibly “the largest electronic production in history” with

Intel’s production being “somewhere i n the neighborhood of a pile

137 miles high”).

118 Indirect P urchaser Litigation Ha ndbook

appropriate to bifurcate discovery between “class certification” issues

and “merits” issues.

1. Timing

The timing of discovery in indirect purchaser cases is generally

controlled by the relevant rules of civil procedure governing

discovery. In federal court, Rule 26(d) dictates that:

A party may not seek discovery from an y source before the parties

have conferred as required by Rule 26(f), except in a proceeding

exempted fro m ini tial disclosure u nder Rule 26(a)(1)(B), or when

authorized by these rules, by stipulation, or by court order.3

Once one of the Rule 26(d) criteria is satisfied, discovery

theoretically can commence at any point thereafter.4 The United

States Supreme Court ruling in Bell Atlantic Corp. v. Twombly5 does

not “erect an automatic, blanket prohibition on any and all discovery

before an antitrust plaintiff's complaint survives a motion to

dismiss.”6 Whether or not discovery should occur before the

sustaining of a complaint hinges on whether or not the discovery

would be burdensome, “a question calling for the exercise of

discretion and the balancing of competing factors.”7

3. See also In re Flash Memory Antitrust Litig., 2008 WL 62278, at *5

(N.D. Cal. 2008) (applying Rule 26(d) and denying plaintiff’s request

for discovery prior to the Rule 26(f) conference).

4. See Gideon Mark, Feder al Discovery Stays, 45 U. MICH. J.L.

REFORM 405, 406 (2012) (footnote omitted) (“Nothing in Rule 12 of

the Federal Rules of Civil Procedure . . . which governs motions to

dismiss, triggers an automatic stay of discovery before the disposition

of such motions. Likewise, no other federal rule triggers an automatic

stay.”).

5. 550 U.S. 544 (2007).

6. In r e Graphics Processing Units Antitrust Litig., 2007 WL 2127577,

at *4 (N.D. Cal. 2007); see also In re Lipitor Antitrust Litig., 2013

U.S. Dist. LEXIS 118387, at *18 (D.N.J. 2013) (discussing the

court’s order lifting the discovery stay pending the motion to dismiss,

which sruck “an appropriate balance between the court’s duty to

“secure the just, speedy, and inexpensive determination,” FED. R. CIV.

P. of this action against Defe ndants’ concerns regarding hardship and

burden.”); In re Flash Memory Antitrust Litig., 2008 WL 62278, at

*3 (quoting In re Graphics Pr ocessing Units Antitrust Litig., 2007

WL 2127577, at *4).

7. In re Graphics Processing Units Antitrust Litig., 2007 WL 2127577,

at *5 (denying discovery prior to adjudication of the motion to

dismiss but stating prompt discovery co uld be appropriate where

“testimony needed to be preserved due to ill health of a witness,” or

Discovery 119

Indirect purchaser litigation frequently is brought after the entry

of a consent order with the Federal Trade Commission (FTC) or the

announcement of a criminal investigation commenced by the

Department of Justice (DOJ).8 During the course of FTC and DOJ

investigations, civil investigative demands (CIDs) and grand jury

subpoenas will be served on and responded to by the investigated

party. The responses to the CIDs and grand jury subpoenas may be

made available to plaintiffs before the sufficiency of a complaint has

been established, either through stipulation of the parties and/or order

of the court.9

2. Bifurcation

The question whether or not to bifurcate discovery in indirect

purchaser litigation generally involves the question of bifurcating

discovery between class certification issues and merits issues.10

where a complaint is certainly “viable, such as is often true where

guilty pleas have already been entered in a parallel criminal case.”).

8. See 15 U.S.C. § 45 (prohibiting “unfair methods of co mpetition in or

affecting commerce, and unfair or deceptive acts or practices in or

affecting commerce.”).

9. See In re Lithium Ion Batteries Antitrust Litig., 2013 WL 2237887, at

*1 (N.D. Cal. 2013) (ordering the production of materials already

produced to the DOJ or any grand jury); In re Pool Prods. Distrib.

Mkt. Antitrust Litig., No. 2:12 -md-02328, at 1 (E.D. La. July 12,

2012), ECF No. 121, Pretrial Order #10, (ordering the ma nufacturer

defendants to “produce any FTC civil investigative demands (CID),

subpoenas, and correspondence regarding the CIDs and subpoenas,

including any narrative responses to the subpoenas or CIDs,” and to

meet and confer with plaintiffs “to develop a protocol for producing

FTC documents on a rolling basis” with complete production by a

date certain); see Plaintiff Vision-Ease’s Amended Motion to Compel

Transitions to Produce Documents Created After Apr. 1, 2009 and

from Three Particular Employees at 5, In re Photochromic Lens

Antitrust Litig., No. 8:10 -md-2173-JDW-EAJ (M.D. Fla. Jul. 18,

2011), ECF No. 140 (“In October 2009, Transitions vo luntarily

produced in this litigation all of the documents it had produced to the

FTC during the FTC’s investigation, plus all of its correspondence

and communications with the FTC during the investigation. This

production included organizational charts describing the positions

and reporting structure of many of Transitions’ employees.”).

10. See, e.g., Melnick v. Microsoft Corp., 2001 WL 1012261, at *7 n.8,

at *16 n.26 (Me. Super. Ct. 2001) (order denying motion for class

certification and noting that “the parties took discovery on class

certification issues from 6/15/00 through 9/30/00” and that “[a]fter

months of discover y on the certification iss ue, the plai ntiffs have not

shown that they have the means to prove impact or damages on a