In Dale v. Deutsche Telekom AG, Magistrate Judge Jeffrey Cole addressed a recurring issue in complex litigation—whether in-house counsel are appropriate custodians in discovery. The October 4, 2024 decision also highlights critical factors impacting the scope of custodianship under Rule 26, with proportionality playing a key role in curbing excessive discovery requests. This antitrust case offers important lessons for litigators managing large-scale discovery.
Case Background
The dispute originated from the 2018 merger between T-Mobile and Sprint. Plaintiffs—customers of AT&T and Verizon—filed an antitrust action, claiming the merger diminished competition and caused them to overpay for wireless services. After six months of negotiation over discovery parameters, the parties reached an impasse.
The plaintiffs sought to compel T-Mobile to adopt their custodian list, which included 50 individuals—among them, three in-house counsel. The Court had to decide whether the inclusion of the three attorneys was appropriate and whether the custodian list met the proportionality standards set by Rule 26.
Key Issues in the Court’s Analysis
Magistrate Judge Cole framed the dispute with a pointed quote:
“The discovery rules are not a ticket to an unlimited, never-ending exploration of every conceivable matter that captures an attorney’s interest. Parties are entitled to a reasonable opportunity to investigate the facts—and no more.”
This sentiment set the tone for the Court’s analysis, which focused on proportionality and the practical burdens of discovery. Judge Cole emphasized the importance of judicial discretion, noting that discovery rulings often yield different outcomes based on the same facts.
The Court identified two key deficiencies in the plaintiffs’ motion:
- Failure to Justify Proportionality: The plaintiffs did not explain how 50 custodians were proportional to the needs of the case.
- Government Scrutiny as a Safeguard: The merger had already undergone significant review by the Department of Justice, reducing the plaintiffs’ argument that additional custodians were necessary.
Why the Court Excluded In-House Counsel
The Court denied the request to include the three in-house counsel as custodians, concluding that the attorneys were involved with merger-related decisions—not the post-merger pricing at issue in the case. Judge Cole further highlighted the logistical challenges of including in-house counsel, which would generate extensive privilege logs. The attorneys’ files totaled 442 gigabytes, a volume that would have required staggering amounts of time and resources to review.
Additionally, the Court stressed that the public interest demands efficient use of judicial resources. An in-camera review of thousands of privileged documents would delay other cases and impose unnecessary costs on taxpayers.
Ultimately, Judge Cole allowed the 50 custodians but denied the motion to add the three in-house counsel, finding that 50 custodians provided a reasonable opportunity for the plaintiffs to investigate their claims.
Practical Takeaways for Litigators
This decision underscores several essential considerations for litigators navigating discovery disputes:
- Proportionality Controls Discovery Scope: Rule 26 remains the key safeguard against overly burdensome discovery. Litigators should provide detailed justifications for custodian lists to align with the needs of the case.
- Iterative Negotiation Is More Efficient: An incremental approach—agreeing to an initial set of custodians and adding more as necessary—can prevent protracted disputes and reduce costs.
- In-House Counsel Are Unlikely Custodians: Courts are generally reluctant to treat in-house counsel as custodians unless there is clear evidence that their involvement is critical to the case. Litigators must be prepared to use documents from other custodians to build a case for including internal legal teams.
- A Shift Away from Custodian-Based Discovery: As more companies adopt collaboration tools, discovery is evolving. Counsel should focus on negotiating access to data sources, as future discovery requests will rely less on individual custodians and more on integrated data platforms.
Conclusion: Managing Discovery with Proportionality in Mind
The Dale v. Deutsche Telekom AG decision illustrates the importance of proportionality and strategic negotiation in discovery. Rather than fighting over expansive custodian lists, litigators should embrace iterative processes that allow for meaningful review of relevant data without overwhelming the courts or the parties involved.
This case also highlights the ongoing shift in discovery practices. As courts increasingly move away from custodian-based discovery, attorneys must adapt to new data realities and refine their strategies accordingly.
Understanding how to strike the right balance in discovery—particularly in high-stakes cases—can make all the difference. The lessons from this case provide valuable guidance for litigators aiming to manage discovery efficiently while maintaining focus on the key issues in their matters.
She is a co-author of Electronic Discovery and Records and Information Management, and host of Case of the Week at eDiscovery Assistant. As Principal at ESI Attorneys, Kelly manages the boutique eDiscovery and information law firm that acts as operational business partners with its clients to advise law firms, corporations, and municipalities on all areas of electronic information including eDiscovery, privacy, cybersecurity, and information governance.
Kelly is also the CEO of eDiscovery Assistant — a SaaS-based practical resource for litigators handling eDiscovery — that curates discovery decisions, rules, and additional content. She is developing an online academy to provide on-demand education for lawyers and legal support professionals to stay abreast of changes in the law and technology that affect litigation and clients’ obligations to respond.
You can reach Kelly at [email protected], join her Facebook community group at Let’s Talk eDiscovery, or connect with her on Twitter @kellytwigger.