Summons and Complaint ✅
Service of Process ✅
You now have to collect, review and produce documents pursuant to the preliminary conference order. And so, in collecting documents from the various custodians, it appears some of the documents contain truly “irrelevant” material. However, parts of the document are indeed responsive. Can you legitimately redact that portion of the document you deem “irrelevant”?
In Hansen Realty Development Corp. v Sapphire Realty Group LLC, a case involving a real estate development project, Triple Star Realty LLC (“Triple Star”) purchased the property for $91 million but, because it was unable to move past pre-construction activity, among other things, the parties abandoned the property and sold it in 2017. Pursuant to Triple Star’s Operating Agreement, Hansen Realty Development Corp (“Hansen”) held a 75% interest in Triple Star and Sapphire Realty Group LLC (“Sapphire”), whose sole member and Chief Executive Officer is Yan Po Zhu (“Zhu”) (collectively with Sapphire, the “Zhu Defendants”), held the remaining 25% interest.
In November, 2017, Hansen commenced this derivate action on behalf of Triple Star alleging that the Zhu Defendants mismanaged the property’s development and misappropriated Triple Star’s account for personal use. In December, 2017, Sapphire commenced a third-party derivate action on behalf of Triple Star against Hansen, Triple Star’s Chief Operating Officer, Weiming Yin, and the sole shareholder of Hansen’s parent company, Shu Sen Jia for, inter alia, grossly mismanaging Triple Star, and causing Triple Star to pay for their personal expenses.
On September 15, 2018, Sapphire filed a motion to compel Hansen to respond to its discovery demands and to produce (i) Hansen’s financial documents, (ii) documents pertaining to Yin’s employment, (iii) documents and communication between Yin and Hansen, and (iv) email messages and WeChat messages from Hansen’s agents and representatives concerning the property. By order dated January 25, 2019, Hansen was directed to produce communications with Mr. Yin regarding the development and management of the property. Although Hansen produced the WeChat messages, they contained significant redactions.
The Court noted that the WeChat messages were never downloaded into a database for preservation or searched pursuant to any search terms. However, Hansen’s counsel explained that its office in Shanghai used a “mobile forensic application to extract WeChat messages.” Upon review of the messages for privilege, Hansen’s counsel in China redacted certain messages and the spreadsheet containing the WeChat messages was returned to Hansen’s counsel in the USA for production.
As with most productions, Hansen’s counsel produced a privilege log. Unfortunately, here, the log stated that the WeChat messages were redacted on the basis that they were “either not relevant, subject to attorney-client privilege, or redacted according to the laws of the People’s Republic of China.” The deficient privilege log resulted in Sapphire’s instant motion to compel the production of the redacted WeChat messages.
In its motion to compel, the Zhu Defendants contest Hansen’s production in light of the fact that the production contains documents redacted solely for lack of relevance. Hansen, argues that the redacted WeChat messages “should be treated no differently than other documents that are not produced for lack of relevance.” In support of its position that it can redact irrelevant information, Hansen relied on Ohnmacht v. State. However, the Ohnmacht Court conducted an in camera review of the unredacted version of the document and held that the redactions protect sensitive information that are also not relevant to the claim. Although the Court permitted the party to redact irrelevant information, the Ohnmacht Court did not conclude, as Hansen wrongly alleges, that a party can redact documents on the basis of relevance alone. In other words, the Court did not set a blanket rule that redactions for relevance are valid.
Interestingly, the Court noted that the WeChat messages in question are not separate documents that can be withheld as “non-responsive” because they comprise of an entire conversation, some of which Hansen’s counsel seeks to redact on the basis of relevance.
Pursuant to CPLR § 3101 (a) “[t]here shall be full disclosure of all matter material and necessary in the prosecution or defense of an action.” To that end, the First Department has previously held that this provision should be interpreted liberally “to require disclosure of any facts which will assist the good faith preparation for trial,” but noting that documents that are either privileged, constitute attorney-work product, and/or contain materials in preparation of trial are not subject to disclosure ( Johnson v. Nat’l R.R. Passenger Corp., CPLR 2101[b]-[d]). Confidential personal information is also not subject to disclosure and should be redacted (22 NYCRR §202.5[e]).
The Court acknowledged that notwithstanding these rules, there ” is no guidance as to whether parties are permitted to redact materials on the basis of relevance alone.”
The Court noted that Hansen failed to “provide a compelling reason why its unilateral relevance redactions should be accepted, given the existence of substantial authority to the contrary and given its repeated failure to set forth the basis for its blanket assertion for lack of relevance, particularly as there is a compelling reason to believe that the redactions may be relevant based on their time period.” Justice Borrok ultimately directed the parties to agree to an ESI protocol with respect to the WeChat messages, including search terms. In that regard, the Court required Hansen to have all the WeChat messages translated in English and uploaded to a searchable database, which shall be preserved in the event of a dispute, and to produce all responsive messages together with a detailed privilege log. The Court held that in the event of a dispute, the parties can contact the Court, which will conduct an in camera review of the WeChat messages.
Although there is apparently a paucity of case law in state court on the issue of redactions, the question of the legitimacy of redacting on the grounds of relevancy alone is not new to the federal courts (see, e.g., New Falls Corp. v Soni; Durling v. Papa John’s Int’l, Inc.; Howell v. City of New York [“It is not the practice of this court to permit parties to selectively excise from otherwise discoverable documents those portions that they deem not to be relevant”]). There does appear, however, to be authority both supporting and opposing the approach of redacting for relevance (compare for example, Brussels Lambert v. Chase Manhattan Bank [allowing redactions for “nonresponsive” information] with, John Wiley and Sons Inc. v. Book Dog Books LLC, [noting that redactions are generally impermissible, unless “based on a legal privilege”]).
Do not be misled — relevance alone is not a basis for redacting documents. However, courts may be amenable to offer in camera review to avoid the discovery of irrelevant information. In that regard, be sure to provide the court with an explanation regarding the reason why the relevance redactions should be accepted. Also, perhaps this is a good topic for discussion among counsel and the court in the initial or preliminary conference.