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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF NEW YORK

MORTGAGE RESOLUTION SERVICING, LLC, : 15 Civ. 0293 (LTS) (JCF)

1ST FIDELITY LOAN SERVICING, LLC,
and S&A CAPITAL PARTNERS, INC.,
MEMORANDUM
Plaintiffs, AND ORDER

- against -
USDSSDNY
JPMORGAN CHASE BANK, N.A., CHASE DOCUMENT
HOME FINANCE LLC, and JPMORGAN ELECTRONICALLY FILED
CHASE & CO.,
DOC#:----+--
Defendants. DATE FILED: l'

JAMES C. FRANCIS IV
UNITED STATES MAGISTRATE JUDGE

This action arises from the sale by the defendants of

thousands of residential mortgages to the plaintiffs. As

established in a prior decision, Mo rt gag e Re s o lut ion Servicing , LLC

v. JPMo r gan Chase Ba nk , N. A., No. 15 Civ. 293, 2016 WL 3906712

(S.D.N.Y. July 14, 2016) (the "7/14/16 Order"), discovery is

currently limited to the plaintiffs' tort and breach of contract

claims, concerning "(1) the alleged misrepresentations and

omissions by the defendants about loans sold to the plaintiffs and

( 2) the defendants' practice of retaining payments made on the

loans, forgiving loans, or releasing liens on loans sold to the

plaintiffs." Id. at *2. The scope of discovery does not include

information relevant only to a related gui tam action pending in

the United States District Court for the District of Columbia, id.

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at *4, and discovery as to the plaintiffs’ claim under the

Racketeer Influenced Corrupt Organizations Act is stayed during the

pendency of a motion to dismiss, id. at *7. The plaintiffs have

moved to compel the defendants to respond to a variety of discovery

demands, each of which I will address in turn.

Loan Information

The plaintiffs contend that the defendants have failed to

provide complete information about the loans that the plaintiffs

purchased, as was required by the 7/14/16 Order. (Plaintiffs’

Memorandum of Law in Support of Motion to Compel Discovery (“Pl.

Memo.”) at 5-6). The defendants respond that they have provided

all responsive information located over the course of a

comprehensive search. (Defendants’ Memorandum of Law in Opposition

to Plaintiffs’ Motion to Compel Discovery and in Support of

Defendants’ Cross-Motion for Protective Order (“Def. Memo.”) at 10-

12). In particular, the defendants produced a spreadsheet

containing information gleaned by queries of their databases.

(Def. Memo. at 12).

The defendants acknowledged one shortcoming in their

responses, however. In briefing the prior discovery dispute, they

represented that in a database known as RCV1, loans “cannot

normally be queried using the identity of the entity to which a

loan has been sold.” (Declaration of Michael J. Zeeb dated June

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10, 2016, ¶ 4). Indeed, in the 7/14/16 Order, I relied on that

representation and rejected the plaintiffs’ application for a Rule

30(b)(6) deposition to explore the basis for that assertion.

Mortgage Resolution Servicing, 2016 WL 3906712, at *8. On the eve

of oral argument on the current motion, the defendants advised me

that their previous representation was wrong, and that they could

query the RCV1 database for information about charged off loans

sold to Mortgage Resolution Servicing, LLC. (Letter of Robert D.

Wick dated May 8, 2017 (“Wick 5/8/17 Letter”), at 1). The

defendants provided the results of that search to the plaintiffs

with the expectation that it would meet most of the plaintiffs’

demands. (Wick 5/8/17 Letter at 2; Tr. at 38).1 The plaintiffs

are less sanguine about whether the additional information will

meet their needs. (Tr. at 39-40).

The defendants maintain, with some justification, that they

are trying to hit a moving target. Many of the plaintiffs’

discovery demands are contained not in formal document requests but

in letters that enlarge or elaborate on prior requests. The time

has come to achieve closure. By May 31, 2017, the defendants shall

complete all document production, including the results of any

queries of RCV1 and any other relevant database. By June 15, 2017,

1
“Tr.” refers to the transcript of the oral argument held on
May 10, 2017.

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the plaintiffs shall provide the defendants with a list specifying

any information that they consider to be missing. If, after having

met and conferred, there are still residual disputes, the parties

shall present them to the Court in a joint letter by June 30, 2017.

Wick Analysis

In the course of the qui tam litigation, Robert D. Wick,

counsel for the defendant, JPMorgan Chase Bank, N.A. (“Chase”),

sent a letter to counsel for the relator stating in part:

The complaint that is now on file with the court may have
been intended to allege that Chase claimed credit under
the National Mortgage Settlement (“NMS”) for releasing
liens that it did not own or that were ineligible for
credit under the NMS. For each lien identified in the
complaint, Chase has investigated whether it claimed
credit for the lien and whether it was entitled to do so.
With two exceptions, Chase did not, in fact, claim credit
for the identified liens. The two exceptions relate to
liens that Chase repurchased before they were released.
As a result of the repurchases, Chase owned both of the
liens for which credit was claimed.

(Letter of Robert D. Wick dated Aug. 8, 2014, attached as part of

Exh. 6 to Declaration of Brent Tantillo dated Feb. 28, 2017). The

plaintiffs seek disclosure of the analysis to which Mr. Wick refers

in his letter. (Pl. Memo. at 12-14). The defendants have objected

on grounds of relevance and attorney work product.

The defendants are correct that information concerning whether

Chase claimed a credit for any particular lien under the NMS is

irrelevant, since it relates only to the qui tam action. Whether

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information pertinent to Chase’s entitlement to claim credit is

discoverable here is more nuanced, since one of the underlying

questions in both litigations is whether Chase owned the underlying

mortgages at the time that it released liens or issued forgiveness

letters. To that extent, the analysis referred to by Mr. Wick

would be relevant.

The analysis itself, however, would be protected from

disclosure under the work product doctrine. The doctrine applies

to work product generated in related cases as well as in the

litigation where the information is sought. See Federal Trade

Commission v. Grolier Inc., 462 U.S. 19, 30 (1983) (Brennan, J.,

concurring); U.S. Information Systems, Inc. v. International

Brotherhood of Electrical Workers Local Union Number 3, AFL-CIO,

No. 00 Civ. 4763, 2002 WL 31093619, at *1-2 (S.D.N.Y. Sept. 17,

2002). But, “neither the attorney-client privilege nor the work

product privilege protects underlying facts.” Gucci America, Inc.

v. Guess?, Inc., No. 09 Civ. 4373, 2010 WL 2720015, at *3 (S.D.N.Y.

June 29, 2010) (quoting SR International Business Insurance Co. v.

World Trade Center Properties LLC, No. 01 Civ. 9291, 2002 WL

1455346, at *4 (S.D.N.Y. July 3, 2002)). Therefore, to the extent

that they have not already done so, the defendants shall produce

within two weeks any documents upon which Mr. Wick’s analysis was

based insofar as those documents are relevant to the contract and

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tort claims at issue here.

Custodians

Next, the plaintiffs ask that the Court compel the defendants

to search the files of an additional five custodians: Joy Palazzo,

Nancy Rubino, Panikos Palettas, Jonathan B. Driver, and Steve

Hemperly. (Pl. Memo. at 14-18).2 Generally, “[r]esponding parties

are best situated to evaluate the procedures, methodologies, and

technologies appropriate for preserving and producing their own

electronically stored information.” The Sedona Conference, The

Sedona Principles: Second Edition, Best Practices Recommendations

& Principles for Addressing Electronic Document Production, at ii

princ. 6 (2007), http://www.thesedonaconference.org. Absent

agreement among the parties, then, the responding party is entitled

to select the custodians most likely to possess responsive

information and to search the files of those individuals. Unless

that choice is manifestly unreasonable or the requesting party

demonstrates that the resulting production is deficient, the court

2
The plaintiffs also demanded the production of documents
from the files of Mark Davis, who had been proposed as a custodian
by the defendants. (Pl. Memo. at 14). In preparing to respond to
the current motion, the defendants determined that they had
initially searched the files of a former employee named Mark Davis
who is not the person they intended to designate as a custodian.
(Def. Memo. at 14 n.7). They have committed to rectifying the
error and producing responsive documents from the files of the
correct individual.

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should play no role in dictating the design of the search, whether

in choosing search tools, selecting search terms, or, as here,

designating custodians. In any event, “a party seeking to compel

another party to search the files of additional custodians bears

the burden of establishing the relevance of the documents it seeks

from those custodians.” Lightsquared Inc. v. Deere & Co., No. 13

Civ. 8157, 2015 WL 8675377, at *5 (S.D.N.Y. Dec. 10, 2015); see

Fort Worth Employees’ Retirement Fund v. J.P. Morgan Chase & Co.,

297 F.R.D. 99, 107 (S.D.N.Y. 2013).

In this case, the plaintiffs have not met the threshold for

court intervention. To be sure, as discussed above, they contend

that the defendants’ production is incomplete. They do not,

however, adequately link any purported shortcomings with the

failure to search the files of the additional custodians. For

example, the plaintiffs allege that Ms. Palazzo was responsible for

“communications with the Monitor of the National Mortgage

Settlement.” (Pl. Memo. at 15). That might render information

within her possession relevant to the qui tam action, but it does

not make her an appropriate custodian here. Similarly, the

plaintiffs assert that Mr. Palettas “participated in the initial

removal of RCV1 loans for lien release.” (Pl. Memo. at 17).

Perhaps so, but in his role as an information technology employee,

he is unlikely to have had substantive responsibilities relevant to

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the claims in question. (Def. Memo. at 18). Ms. Rubino was in

charge of RCV1 administrative support (Pl. Memo. at 17), and the

defendants’ production already includes more than 5,300 email

communications involving her (Def. Memo. at 18). The plaintiffs

have not suggested a basis for believing that a search of her files

would unearth new information of any significance. The issue is

somewhat closer with respect to Mr. Driver. As Vice President of

Lien Management at Chase, he was in charge of the business unit

that processed lien releases. (Pl. Memo. at 17; Def. Memo. at 17).

However, the defendants have already produced over 5,600 emails

involving Mr. Driver, including any communications contained in

Chase’s shared drive. (Def. Memo. at 17 & n.9). The chances that

there are unique materials contained on his personal drive are

slim. Finally, Mr. Hemperly purportedly “exercised senior

responsibility as Managing Director -- Head of Mortgage

Originations at Chase.” (Pl. Memo. at 18). But speculation that

his position as a senior executive might increase the relevance of

his files is not a basis for designating him as a custodian. See

Assured Guaranty Municipal Corp. v. UBS Real Estate Securities

Inc., Nos. 12 Civ. 1579, 12 Civ. 7322, 2013 WL 1195545, at *3-4

(S.D.N.Y. March 25, 2013). To the contrary, it is equally

plausible to assume that because of his senior position, he would

have less information about specific transactions than employees

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lower in the hierarchy.

Even if the plaintiffs had cleared the hurdle of showing that

the proposed additional custodians had some unique relevant

information, discovery of their files would not be warranted

because the cost and burden would be disproportionate. As

discussed above, given the information already produced, the

marginal utility of that possessed by these custodians is low. Yet

the cost of producing it would be substantial. Phil Verdelho, the

Executive Director for Electronic Discovery Platform Services for

Chase, has presented a detailed (and uncontradicted) analysis,

showing that the cost of restoring the additional custodians’ email

mailboxes and deduplicating, culling, and reviewing the data would

likely exceed $400,000.00. (Declaration of Phil Verdelho dated

March 13, 2017, ¶¶ 2, 6-18). The game is simply not worth the

candle.

Privilege Log

At the time that they filed the current motion, the plaintiffs

sought an order requiring the defendants to produce a supplemental

privilege log with respect to documents withheld from the latest

wave of production or produced in redacted form. (Pl. Memo. at 18-

21). They also complained of certain deficiencies in the original

privilege log. (Pl. Memo. at 19-20). By the time the defendants

answered the motion, they had submitted a supplemental log and

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argued that the plaintiffs’ application was moot. (Def. Memo. at

18-19). The plaintiffs, however, contend that, because of the late

submission of the log, any privilege should be deemed waived, and

they argue that several of the deficiencies that they previously

identified have not been remedied. (Plaintiffs’ Reply Memorandum

of Law in Further Support of Motion to Compel Discovery and

Memorandum of Law in Opposition to Defendants’ Cross-Motion for

Protective Order at 8-9).

In appropriate circumstances, the failure to produce an

adequate and timely privilege log can result in forfeiture of

privilege. See JDS Therapeutics, LCC v. CVS Pharmacy, Inc., No. 15

Civ. 4365, 2015 WL 6459092, at *2 (S.D.N.Y. Oct. 21, 2015); S.E.C.

v. Yorkville Advisors, LLC, 300 F.R.D. 152, 157-58 (S.D.N.Y. 2014);

In re Chevron Corp., 749 F. Supp. 2d 170, 180-82 (S.D.N.Y. 2010).

However, “[o]nly flagrant violations of discovery rules should

result in a waiver of privilege.” Johnson v. Riverhead Central

School District, No. 14 CV 7130, 2016 WL 4507002, at *7 (E.D.N.Y.

Aug. 26, 2016) (quoting Chevron Corp. v. Donziger, No. 11 Civ. 691,

2013 WL 4045326, at *3 (S.D.N.Y. Aug. 9, 2013)). This is not such

a case. The defendants did not refuse to produce a privilege log,

nor did they engage in calculated foot-dragging. Rather, they

deferred production of a log so that they could focus on producing

the documents themselves more expeditiously (Def. Memo. at 18-19),

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an approach for which they should not be punished.

It is not clear which, if any, of the purported deficiencies

in the log are still at issue. Therefore, by June 15, 2017, the

plaintiffs shall provide the defendants with a list of any such

shortcomings, and, if the parties are unable to resolve their

differences, they shall identify any remaining disputes in the

joint letter they are to submit by June 30, 2017.

Plaintiffs’ Rule 30(b)(6) Notice

In their motion to compel, the plaintiffs sought an order

directing the defendants to produce a witness pursuant to a Rule

30(b)(6) notice. (Pl. Memo. at 21-23). The defendants cross-moved

to quash the notice as overbroad and disproportionate to the needs

of the case. (Def. Memo. at 20-24). Subsequent to oral argument,

the parties reached a tentative resolution of this issue. The

plaintiffs agreed to withdraw the original Rule 30(b)(6) notice and

to proceed with a deposition on a more limited range of topics

without prejudice to seeking a further deposition at a later date.

That issue is therefore moot for the time being.

Conclusion

As detailed above, the plaintiffs’ motion to compel (Docket

no. 146) is granted in part and denied in part, and the defendants’

motion for a protective order (Docket no. 152) is denied as moot.

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SO ORDERED.

C. FRANCIS IV
UNITED STATES MAGISTRATE JUDGE

Dated: New York, New York

May 18, 2017

Copies transmitted this date:

Brent S. Tantillo, Esq.

Tantillo Law PLLC
1629 K Street, NW, Suite 300
Washington, DC 20006

Gary F. Eisenberg, Esq.

Perkins Coie LLP
30 Rockefeller Plaza, 22nd Floor
New York, NY 10112

Robert D. Wick, Esq.

Michael M. Maya, Esq.
Christian J. Pistilli, Esq.
Covington & Burling LLP
One City Center
850 10th St., NW
Washington, DC 20001

Michael C. Nicholson, Esq.

Covington & Burling LLP
620 Eighth Ave.
New York, NY 10018-1405

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