in Re State Farm Lloyds
520 S.W.3d 595
| Tex. | 2017Background
- Homeowners sued State Farm Lloyds over underpayment of hail-damage claims; multiple consolidated mandamus proceedings contest a trial-court electronic-discovery protocol.
- Homeowners requested ESI in native or near-native format to preserve metadata and functionality (e.g., spreadsheet formulas, email threading, annotations).
- State Farm routinely stores claims in an Enterprise Claims System (ECS) that retains documents in searchable static formats (PDF/TIFF/JPEG) and contends producing native files would require extraordinary, burdensome engineering to locate upstream native sources.
- Trial court adopted the homeowners’ protocol requiring native (or near-native if native is infeasible) production; court of appeals denied mandamus relief to State Farm.
- Texas Supreme Court clarified that neither party may unilaterally dictate ESI form; Rule 196.4 requires case-by-case proportionality balancing under Rule 192.4 and may permit production in a reasonably usable form or shift costs if extraordinary steps are ordered.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether requesting party may unilaterally specify ESI production form | Homeowners: Yes—Rule 196.4 lets requester demand native format | State Farm: No—responding party may produce reasonably usable form maintained in ordinary course | Court: Neither side has unilateral control; court decides after proportionality analysis |
| Whether ESI must be produced in native form when responding party offers searchable static form | Homeowners: Native necessary for metadata, search/sort, formulas, and full utility | State Farm: ECS static files are reasonably usable, preserve integrity, reduce burden/cost | Court: Trial court must balance proportionality factors; native may be required only for particularized need or if benefits justify burden |
| When cost-shifting is appropriate for producing in requested form | Homeowners: Did not specifically press that requester must pay costs | State Farm: If native requires extraordinary steps, costs should be borne by requester | Court: If court orders extraordinary retrieval, it must order requester to pay reasonable expenses for those steps |
| Standard for evaluating objections that native production is unduly burdensome | Homeowners: State Farm’s burden claims are conclusory; native production is straightforward | State Farm: Must be able to show reasonable infeasibility or burdensomeness | Court: Responding party must show reasonable unavailability or burden; if a reasonably usable alternative exists, court balances Rule 192.4 factors and may require particularized need or cost-shifting |
Key Cases Cited
- In re Weekley Homes, L.P., 295 S.W.3d 309 (Tex. 2009) (discusses discovery limits and need to meet-and-confer on ESI disputes)
- Zubulake v. UBS Warburg LLC, 216 F.R.D. 280 (S.D.N.Y. 2003) (addresses metadata relevance and cost-shifting in e-discovery)
- Aguilar v. Immigration & Customs Enf’t Div. of U.S. Dep’t of Homeland Sec., 255 F.R.D. 350 (S.D.N.Y. 2008) (analyzes types of metadata and when metadata production is required)
- Williams v. Sprint/United Mgmt. Co., 230 F.R.D. 640 (D. Kan. 2005) (discusses presumption against metadata production absent particularized need)
- Wyeth v. Impax Labs., Inc., 248 F.R.D. 169 (D. Del. 2006) (observes emerging standards favor production as ordinarily maintained absent specific showing)