On Wednesday, Judge Fallon issued a memorandum order in Kurt Morales II v. Sunpath Ltd., C.A. No. 20-1376-JLH-SRF (D. Del.), a class action suit alleging that various defendants are telemarketers who made robocalls violating the Telephone Consumer Protection Act.
More than three years into the litigation, counsel for one of the defendants, Sunpath Ltd., withdrew, and the Court ordered Sunpath Ltd. to retain new counsel. D.I. 232. When it failed to do so, the clerk entered a default against it. Id.
Plaintiff argued that Sunpath defaulted specifically to avoid having to face discovery. D.I. 265 at 1. Plaintiff therefore served a subpoena on Sunpath's e-discovery vendor Everest Discovery, LLC who, unsurprisingly, pushed back. Plaintiff moved to compel discovery from both Sunpath and Everest.
Here' s a fun fact: it turns out that defaulted parties are not subject to discovery—at least, not without a subpoena:
Plaintiffs cite no authority suggesting that the court may compel a defaulted party to produce discovery. . . . Case law from within the Third Circuit suggests that a motion to compel discovery from a defaulted party cannot be granted, even if the discovery sought is relevant. See Balbo Corp. v. Enighed Condominiums, LLC, 2011 WL 4703024, at *3 (D.V.I. Feb. 7, 2011). Instead, "defaulted parties should be treated as non-parties for the purposes of discovery," and the party seeking discovery from the defaulted party should proceed to subpoena them. . . . Consequently, Plaintiffs' motion is denied . . .
D.I. 268 at 1-2.
But all hope is not lost for plaintiff. The Court held that Sunpath's e-discovery vendor must produce the hard drive of documents it received from Sunpath—unless Sunpath responds and asserts objections:
The court's consideration of this issue is narrowly based on the unique facts of the instant case, which involves discovery in the possession of an e-discovery vendor from a defendant who has not objected to the subpoena and has since defaulted. It does not extend to permit wholesale discovery from non-party e-discovery vendors. To mitigate Everest's concerns, IT IS ORDERED that Sunpath shall have until May 10, 2024 to assert any privilege, confidentiality, or other objections to the subpoena. If no objection is made by Sunpath within the designated time frame, Sunpath will be deemed to have waived any objections and Everest shall produce the hard drive to Plaintiffs' counsel without any obligation for Everest to review the contents of the hard drive. In the interim, counsel for Everest shall confer with counsel for Plaintiffs on the terms of a proposed form of protective order governing the contents of the hard drive for the court's signature upon expiration of Sunpath's objection period.
Id. at 5.
The document vendor argued that ordering an e-discovery vendor to give up its client's files would be "unprecedented," but the Court noted the lack of any citation to a rule against it:
Everest suggests it would be unprecedented to order an e-discovery vendor to produce a client's documents, noting that Plaintiffs failed to cite any authority where such an order was entered. . . . But Everest also fails to cite any case law analogous to these circumstances establishing a per se rule barring discovery from e-discovery vendors.
Id. at 4.
It will be interesting to see whether Sunpath objects, and whether Everest is ordered to produce the documents. Even if it is, I expect this decision will have little impact on parties' use of discovery vendors, given that most parties don't expect to default and fall silent on objections.
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