Court Affirms Order Requiring a Non-Party to Spend $6 Mil. to Comply with e-Discovery Subpoena

Appellate courts do not often weigh in on e-discovery issues, but when they do, it is a big deal. The United States Court of Appeals for the District of Columbia did so on January 6, 2009, when it issued an opinion on e-discovery and sanctions. In re Fannie Mae Securities Litigation, _ F.3d _, 2009 WL 215282009, U.S. App. LEXIS 9 (D.C. App. Jan. 6, 2009). Typically, I would be glad to have a Circuit Court opinion on e-discovery. Not so here.

Unfortunately, In re: Fannie Mae Securities Litigation sets a troubling precedent in favor of enforcing exorbitant e-discovery costs. In this case, the Office of Federal Housing Enterprise Oversight (”OFHEO”), was required to spend six million dollars, representing nine percent of its total annual budget, just to comply with a subpoena for electronic documents. Although OFHEO clearly had relevant information to the multidistrict litigation against the Federal National Mortgage Assn. (”Fannie Mae”) and the Federal Home Loan Mortgage Corp. (”Freddie Mac”), they were not a party to the litigation. This fact, coupled with the high expense involved in an over-broad e-discovery request, did not seem to concern the court, which is why this decision is troubling.

Read more at e-Discovery Team.