4:22-cv-10847
E.D. Mich.Jul 7, 2023Background
- Plaintiffs DTE Electric and Consumers Energy sued Toshiba American Energy Systems Corp. and Toshiba Corp. for breach of contract and defective overhaul/upgrade work at the Ludington power plant; defendants counterclaimed for unpaid work and obstruction.
- Plaintiffs sought discovery of documents and ESI held by Toshiba Corp.’s subsidiaries/affiliates (notably Toshiba ESS and Toshiba IC) about personnel (e.g., engineer Takeshi Hyuga) who worked on the project.
- Toshiba AES agreed to produce about a year of Hyuga-related documents but refused to produce older materials held by non-party subsidiaries, arguing those entities are not defendants and that it lacks obligation/control.
- Defendants offered to search for documents from certain custodians at non-party subsidiaries but disavowed a blanket obligation to search all subsidiary records; plaintiffs argued that Rule 34 requires production where the producing party has possession, custody, or control.
- The magistrate judge found Toshiba ESS is a wholly owned subsidiary and Toshiba IC is effectively wholly owned via a holding company, concluded Toshiba Corp. likely has legal right to obtain their documents, and ordered searches limited to Toshiba ESS and Toshiba IC with parties to confer on search parameters.
- The court denied a broader, enterprise-wide search of all affiliates/unnamed subsidiaries absent fact-specific showing of control and found the parties sufficiently met-and-conferred before filing the motion.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Toshiba Corp. must search subsidiaries' records (possession/custody/control under Rule 34) | Parent has control over wholly owned subsidiaries and must produce subsidiary documents | Parent need not search subsidiaries unless it has legal right to obtain their documents; control requires factual analysis | Toshiba Corp. must search/produce from Toshiba ESS and Toshiba IC (wholly/essentially wholly owned); parties must confer on search parameters |
| Whether production obligation extends to non-wholly-owned affiliates/"any other relevant subsidiaries" | Request covers affiliates who worked on project; defendants know which entities were involved | Broad, burdensome; plaintiffs must show legal right to obtain documents from unnamed affiliates | Court refused to compel search of all affiliates/unnamed subsidiaries; plaintiffs must make fact-specific showing to expand scope |
| Whether defendants' offer to search specific custodians moots the motion | Plaintiffs say unilateral, unspecified custodian searches insufficient absent legal obligation | Defendants contend their agreement to search some custodians renders motion moot | Offer to search certain custodians did not moot motion; court required searches of ESS and IC and conferral on scope |
| Whether plaintiffs met Rule 37(a)(1) meet-and-confer requirement before filing motion | Plaintiffs notified defendants by email that motion might be filed and disputed positions were exchanged | Defendants did not show lack of adequate pre-filing discussion | Court found plaintiffs satisfied meet-and-confer requirement (emails showed dispute and notice) |
Key Cases Cited
- Superior Prod. P’ship v. Gordon Auto Body Parts Co., 784 F.3d 311 (6th Cir. 2015) (trial court has discretion to limit overbroad discovery and prevent fishing)
- Surles ex rel. Johnson v. Greyhound Lines, Inc., 474 F.3d 288 (6th Cir. 2007) (discussing limits on fishing expeditions in discovery)
- In re Bankers Trust Co., 61 F.3d 465 (6th Cir. 1995) (possession/custody/control includes legal right to obtain documents)
- United States v. Int’l Union of Petroleum & Indus. Workers, AFL-CIO, 870 F.2d 1450 (9th Cir. 1989) (parent must produce documents of wholly owned or controlled subsidiary)
- Gerling Int’l Ins. Co. v. Comm’r of Internal Revenue, 839 F.2d 131 (3d Cir. 1988) (factors for determining when subsidiary is instrumentality of parent)
- Resol. Trust Corp. v. Deloitte & Touche, 145 F.R.D. 108 (D. Colo. 1992) (discussing possession, custody, or control for discovery)
- Pennwalt Corp. v. Plough, Inc., 85 F.R.D. 257 (D. Del. 1979) (parent frequently compelled to produce subsidiary documents when wholly owned)