Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_04-cv-02676/USCOURTS-cand-3_04-cv-02676-16/pdf.json

Nature of Suit Code: 410
Nature of Suit: Antitrust
Cause of Action: 15:1 Antitrust Litigation

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United States District Court

For the Northern District of California

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United States District Court

For the Northern District of California

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

IN RE ATM FEE ANTITRUST

LITIGATION,

 /

This Document Relates To:

ALL ACTIONS

___________________________________/

No. C 04-02676 CRB

ORDER RE: PLAINTIFFS’ FOURTH

SET OF REQUESTS FOR

PRODUCTION OF DOCUMENTS

Now pending before the Court is Plaintiff’s motion to compel. For the reasons set

forth below, the motion is hereby GRANTED in part and DENIED in part.

BACKGROUND

In this action, Plaintiffs claim that the “interchange fee” charged by members of the

Start ATM network is the product an illegal price-fixing scheme. On a motion to dismiss,

Judge Walker sustained Plaintiffs’ claim because, at that stage of the litigation, he was bound

to accept the Plaintiff’s allegation that the interchange fee was not necessary to, or

reasonably ancillary to, “the achievement of the joint venture’s procompetitive benefits.” 

Brennan v. Concord EFS, Inc., 369 F.Supp.2d 1127, 1135 (N.D. Cal. 2005). In response to

Defendants’ subsequent argument that they had not engaged in “concerted action” to fix

prices in the context of their joint venture, this Court terminated their motion for partial

summary judgment motion and directed the parties “to proceed forthwith with any discovery

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necessary to elucidate the plausible procompetitive justifications that might be advanced in

support of the fixed interchange fee.” In re ATM Fee Antitrust Litig., No. 04-2676, at 1

(N.D. Cal. Nov. 30, 2006). The Court suggested that “[s]uch discovery need not be

extensive, for many of the plausible arguments are found in the very nature and structure of

the agreement itself, as to which all the parties by now have a thorough understanding.” Id.

at 6. In a further attempt to focus discovery on relevant issues, the Court directed Defendants

to set forth their procompetitive justifications in a preliminary proffer, which they did, albeit

not to Plaintiffs’ satisfaction. See Docket No. 374, at 13-19 (Mar. 13, 2007).

The Court’s aim in ordering further discovery was to provide the parties with a limited

opportunity to gather materials related to the economic consequences and justifications of the

interchange fee, which could then be tested on a motion for summary judgment. In

retrospect, this effort appears somewhat quixotic. In an antitrust case, nearly every aspect of

a defendant’s conduct or business can plausibly be viewed as relevant. See Bd. of Trade of

Chicago v. United States, 246 U.S. 231 (1918) (“To determine [the reasonableness of a

restraint or agreement] the court must ordinarily consider the facts peculiar to the business to

which the restraint is applied; its condition before and after the restraint was imposed; the

nature of the restraint and its effect, actual or probable. The history of the restraint, the evil

believed to exist, the reason for adopting the particular remedy, the purpose or end sought to

be attained, are all relevant facts.”).

Not unreasonably, Plaintiffs sought far-reaching discovery to test the merits of

Defendants’ putative procompetitive explanations for the interchange fee. Plaintiffs argue

that they are entitled to any and all information that might shed light on the reason for, the

history of, the theory underlying, the operation of, and the effects stemming from both the

interchange fee charged by Defendants specifically, and the operation of ATM and other

financial transactional networks generally. 

The parties now find themselves at loggerheads, in numerous ways, about the proper

scope of discovery. That impasse generated the instant motion to compel. Plaintiffs argue

that they are entitled to “material regarding networks other than Star,” “material provided to

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1 Defendants contend that Plaintiffs have failed to set forth their motion to compel in

requisite detail. Cf. Nugget Hydroelectric, L.P. v. Pac. Gas & Elec. Co., 981 F.2d 429, 438-39

(9th Cir. 1992) (upholding a magistrate judge’s finding that a demand for “millions of pages of

documents concerning every aspect of [the defendant’s business] relationships” was

“unnecessarily burdensome and overly broad” where the plaintiff had “fail[ed] to make a

‘specific showing that the burdens of production would be minimal and that the requested

documents would lead to relevant evidence’” (quoting Sorosky v. Burroughs Corp., 826 F.2d

794, 805 (9th Cir.1987))).

Here, the Court agrees that Plaintiffs have painted their discovery demands with a broad

brush. For this reason, the Court is constrained to consider many of the disputes presented in

the motion in categorical terms, rather than with detailed reference to disputed materials. Yet

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the government or in connection with [other] relevant private litigation,” “material regarding

ATM networks in foreign countries,” “material from the inception of the Star network to

date,” “materials regarding entities [that] Defendants acquired,” among other materials. 

Motion at 3-4. Defendants seek relief from what they perceive as the limitless scope of

Plaintiffs’ demands.

The Court does not deny that the materials identified by Plaintiffs might assist them in

their effort to debunk the proffered explanations for the interchange fee. Nonetheless, the

Court agrees with Defendants that the tremendous scope of these discovery demands are

unduly burdensome. Although the discovery rules entitle Plaintiffs to seek all material

“reasonably calculated to lead to the discovery of admissible evidence,” their theoretical

entitlement yields to practical considerations when “the burden or expense of the proposed

discovery outweighs its likely benefit.” Fed. R. Civ. P. 26(b)(2)(C)(iii). See also Franchise

Realty Interstate Corp. v. San Francisco Local Joint Executive Bd. of Culinary Workers, 542

F.2d 1076, 1082 (9th Cir. 1976) (“Particularly in antitrust litigation, the long drawn out

process of discovery can be both harassing and expensive.”). But see In re Folding Carton

Antitrust Litig., 83 F.R.D. 251, 253 (N.D. Ill. 1978) (approving antitrust plaintiffs’ “first

wave interrogatories relating to industry information,” including “identification of studies,

reports, statistical bulletins, analyses, memoranda, and data compilations of folding carton

operations for enumerated economic measures”).

This order sets forth general guidance regarding what the Court considers the

appropriate scope of discovery.1

 The parties’ discovery disputes fall into three general

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this does not mean that Plaintiffs’ motion is premature. Given the chasm between the parties’

expectations about the appropriate scope of discovery, at least some guidance is necessary at this

point, regardless of the abstract and general nature of some of Plaintiffs’ demands. Here, the

parties should view the Court’s order as setting forth general guidance, rather than concrete

commands. If the Court’s order proves inadequate to resolve disputes about specific documents,

the parties may seek an additional ruling from the Court--subject, of course, to the Northern

District’s meet-and-confer requirements. N.D. Cal. Civ. L.R. 37. The Court is cognizant of the

real discovery dilemmas posed by the theoretical nature of an antitrust case and appreciates the

extensive efforts that the parties have made to settle disputes on their own. 

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categories: (1) the type of information that is discoverable, (2) the time periods as to which

Plaintiffs may obtain discovery, and (3) the format in which discoverable information must

be furnished by Defendants. The Court addresses each of these three issues in turn.

I. Types of Discoverable Information

This lawsuit is about a specific legal violation (i.e., a violation of the per se

prohibition against price-fixing, due to a specific course of conduct (i.e., the imposition of a

fixed interchange fee). The interchange fee is the anchor of Plaintiffs’ case. The discovery

process must not become unmoored from this issue, lest the case drift into a dispute about the

most economically desirable structure of ATM networks generally. Although Plaintiffs

rightly observe that discovery is not limited to Defendants’ theory of the case, it is equally

true that discovery is limited to the specific subject matter presented by Plaintiffs’ complaint. 

It is from this perspective that the Court approaches Plaintiffs’ various requests for

documents.

1. Other ATM Networks and ATM Transactions Abroad. The Court finds that the

production of information about ATM networks other than Star is unnecessarily burdensome. 

The Court reaches the same conclusion regarding ATM transactions occurring in foreign

countries. It is true that such information may provide a basis for Plaintiffs to draw useful

comparisons to the domestic Star network. But it is useful in any antitrust suit to understand

how other market participants behave or how other markets operate. The usefulness of this

information, however, pales in comparison to the burden of requiring an antitrust defendant

to provide any and all information about its global industry and its competitors, as opposed to

the anticompetitive practice alleged. Thus, to the extent that Plaintiffs demands the

production information pertaining exclusively to other ATM networks, the Court finds that

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such demands are unreasonably broad. The Court draws the came conclusion with respect to

ATM transactions occurring exclusively outside the United States. To the extent that

Plaintiffs request the production of materials that themselves contain information about other

or foreign ATM networks and the domestic Star ATM network as well, the Court finds that

the production of such information is not unduly burdensome in light of its greater relevance. 

The Court notes, however, that Defendants appear to have agreed to produce such

information. Cf. Motion at 15 (noting that Defendants agree to produce documents regarding

Star that are otherwise discoverable and happen to mention other ATM networks); Concord

EFS Opp. at 10 (noting an agreement wherein Defendants agreed that they “would not

exclude an otherwise responsive document simply because it mentioned one of these other

networks”).

2. Acquired or Merged Entities. Plaintiffs have apparently set aside their demand for

documents related to NYCE and Cash Station, see Motion at 13 n.16, but continue to request

documents related to other ATM networks, specifically MAC and Honor, which have been

acquired by and incorporated into the Star ATM network. Plaintiffs claim that these

“predecessor networks” are relevant because they may reveal Defendants’ approach to

(re)configuring an ATM network. Defendants do not dispute the relevance of these

materials, but they claim that these requests are “the most overbroad and unduly burdensome

aspect of [Plaintiffs’ demands].” Further, Defendants note that Plaintiffs previously agreed

to forego such materials. See Wallach Decl., Ex. B, at 2 (“The parties have agreed that

Concord would not have to search for or produce Honor, MAC, or Cash Station documents

prior to the time that these entities became part of Star.”). The only response that Plaintiffs

provide for repudiating their prior agreement is that the agreement was executed before

Defendants proffered their procompetitive justifications. Yet the proffer, contrary to

Plaintiffs’ suggestion, nowhere explicitly mentions these other predecessor networks.

Although the predecessor networks are of obvious relevance to the lawsuit, the Court

concludes that Plaintiffs must abide by their prior commitment to constrain their discovery

requests to the Star ATM network, and not to the predecessor networks generally. The issues

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presented in the case are not substantially different now than when the case began. Indeed,

the Court’s directive “to proceed forthwith with any discovery necessary to elucidate the

plausible procompetitive justifications that might be advanced in support of the fixed

interchange fee” is directly related to Chief Judge Walker’s initial ruling that Plaintiff’s had

adequately pled that the interchange fee was not necessary to, or reasonably ancillary to, “the

achievement of the joint venture’s procompetitive benefits.” Brennan v. Concord EFS, Inc.,

369 F.Supp.2d at 1135. In short, despite the twists and turns of this litigation, the playing

field has not changed dramatically since Plaintiffs agreed in January of 2006 to forego the

materials they now demand.

A caveat is in order, however. The agreement apparently reached by the parties does

not indicate exactly what is meant by the phrase “prior to the time that these entities became

part of Star.” Wallach Decl., Ex. B, at 2. The Court construes this limitation to encompass

information and documents pertaining to these predecessor networks as they existed before

Concord incorporated them under their corporate umbrella. The Court does not view the

agreement as placing a restriction on Plaintiffs ability to obtain information relating to

changes made to MAC subsequent to its acquisition by Star in 1998, or to Honor subsequent

to its merger with Star in 1999. Id.; Concord EFS Opp. at 10. Thus, Plaintiffs are free to

explore any changes made to these two networks to achieve their integration with Star or to

bring these networks into the Concord fold. This avenue for discovery, which is likely to

produce the information most relevant to Plaintiffs’ lawsuit (because it will identify aspects

of the predecessor networks that needed to be altered in order to become part of the Star

network), remains open. 

3. Other Card Transactions. The Court finds that “point-of-sale” transactions and

“on-us” transactions are appropriate areas for additional discovery, provided that such

transactions pertain to the Star network (or its members) and occur within the United States. 

The fact that Star network gives customers access to their accounts via other types of

transactions that do not involve an interchange fee (if, in fact, these transactions do not

involve such a fee) is certainly relevant to Plaintiffs’ claim that the interchange fee is

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unnecessary and anti-competitive. (Of course, the Court does not intend to suggest any

conclusion here about the probative value of such evidence, which may pertain to an entirely

distinguishable economic arrangement). The Court does not hold that every document

pertaining to a POS or on-us transaction is fair game, but rather that a blanket objection to

these areas of inquiry is without merit. In the Court’s view, more extensive exploration

would be warranted as to POS transactions, which ostensibly employ the “machinery” of the

Star ATM network, than would be warranted as to “on-us” transactions, which generally do

not. The Court notes that many of the defendants appear to have produced information

regarding such card transactions already. See Opp. of Wells Fargo, Bank One, Bank of

America, and Wachovia at 10-14. Any further effort to compel production of such materials

should be based not merely on the relevant nature of the transactions themselves, but rather

on the need for specific subsets of POS or “on-us” information, as Plaintiff’s demands were

originally framed.

4. Government Investigations and Other Litigation. Plaintiffs seek materials

“submitted pursuant to the Hart-Scott-Rodino Act” as well as “materials from private

litigation” or arbitration proceedings on the basis that Defendants’ “statements in pleadings

or under oath . . . may contradict or estop Defendants’ claims here.” Motion at 4. Plaintiffs

state that they “have attempted to limit the burden of searching for this requested information

through the identification of a custodian with knowledge as to these issues and a list of

litigation and arbitration proceedings.” Id. at 21. 

The Court concludes that the potential for turning up a needle does not require

Defendants to sift through this haystack. Plaintiffs have identified no reason to think that

Defendants have ever taken any prior inconsistent position in prior litigation or in their HSR

filings. Instead, their justification for seeking such is purely speculative. Reply at 18 (noting

that such materials would be relevant “if their own testimony in non-antitrust settings

conflicts with their current litigation position”). Furthermore, Defendants have already

agreed to produce such information if it “relates specifically to antitrust violations.” Id. at

21-22. Under these circumstances, the Court concludes that the potential and speculative

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benefit of such materials outweighs the burden of producing them. See Earley v. Champion

Int’l Corp., 907 F.2d 1077, 1085 (11th Cir. 1990) (“A vague possibility that loose and

sweeping discovery might turn up something suggesting that [Defendants have changed their

view of the market or applicable antitrust principles] does not show particularized need and

likely relevance that would require moving discovery beyond the natural focus of the

inquiry.”).

5. Costs and Revenues. The Court finds that Plaintiffs’ requests for production of

documents related to the costs and revenues associated with the Star ATM network is proper. 

Undoubtedly, the procompetitive justifications for a fee, which ostensibly supports the ATM

network, must be assessed in light of the way a network operates, including the costs its

members must bear and the revenues they receive from it. 2 Donald I. Baker et al., The Law

of Electronic Fund Transfer Systems ¶ 24.07[5][c] (2006). The Court rejects Concord’s

contention that the costs and revenues of the network itself are irrelevant, notwithstanding

the fact that the interchange fee itself passes only from a card issuer to an ATM owner.

II. Information During Different Time Periods

Plaintiff’s motion to compel raises two controversies about the time periods as to

which Plaintiffs may propound discovery requests. The first dispute pertains to historical

information regarding the Star ATM network, and specifically to the time period between

1985 and 1995. The second dispute pertains to Defendants’ obligations to supplement their

initial disclosures, which occurred in 2004 and 2005, with more contemporary information.

1. Historical Information. It appears that only Defendant Concord EFS poses an

obstacle to Plaintiffs’ effort to obtain historical information for the time period from 1985 to

1995. See Reply at 5-7 (describing outstanding disputes with regard to each defendant). 

Further, both Plaintiffs and Concord EFS appear amenable to some sort of compromise on

this issue. Indeed, the moving papers indicate that they may not be far apart at all. Concord

EFS Opp. at 8 (discussing “an effort to reach compromise”); Reply at 15-16 (same). 

The Court recognizes that historical information is important to Plaintiffs’ case,

particularly insofar as it reflects changes to or discussion about the structure of the ATM

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network. At the same time, the Court appreciates the burden of sifting through 700 boxes

and the many millions of documents contained therein. The Court therefore directs the

parties to proceed initially with their tentative compromise--that is, for Concord to provide an

index of its historical documents (however imperfect that summary document may be) and

then to provide Plaintiffs with a copy of their favorite thirty (30) boxes. If that production

proves insufficient, and if the parties are unable to agree upon an appropriate supplemental

disclosure, Plaintiffs will be free to renew their request to compel additional documents. 

Until then, their motion to compel these historical materials is premature, and as to those

materials, the motion is therefore denied without prejudice. The Court encourages Concord

to furnish specific information, if possible, regarding the particular historical periods that

have attracted Plaintiffs’ attention. See, e.g., Motion at 24 (stating interest in “historical

prices, including any changes over time, and evidence reflecting how Defendants made those

pricing decisions”); Reply at 16 (discussing the “advent of surcharges” and “the 1988

arbitration decision concerning Pulse interchange fees”).

2. Current Information. Plaintiffs want supplemental disclosures covering all

contemporary materials up to the end of the year 2006. Defendant Concord EFS refuses to

provide materials subsequent to the initial searches and disclosures they made in 2004, while

certain of the Bank Defendants refuse to search for and produce discovery for materials

subsequent to the summer of 2005.

On the one hand, the Court appreciates Plaintiffs’ contention that a great deal of time

has passed since the complaint was first filed. Motion at 25. The court is also mindful that

the present posture of the case raises specific discovery concerns, especially in light of the

proffered procompetitive justifications. Id. Yet given that there has been “no change to

ATM interchange fees since the amended complaint was filed,” Concord EFS Opp. at 8, it is

difficult to see the value in requiring another round of supplemental disclosures simply in

order to gain a better understanding about “why Star maintained the same fixed interchange

fees.” Opp. at 16. The purpose of supplemental disclosures is not to affirm what is already

known. It is to generate new and better information. See Fed. R. Civ. P. 27(e) (requiring a

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party to supplement or to amend a prior response if “the information is disclosed is

incomplete or incorrect”). The civil discovery rules do not anticipate perpetual production.

Given that the parties have previously agreed to permit “specific, targeted” requests

for additional documents, and given the duration and unusual posture of this case, the Court

agrees that some additional production of contemporary materials is permissible. To that

end, the Court directs Plaintiffs to assemble a list of twenty (20) custodians from whom it

wishes to obtain additional records, and for the parties then to meet and confer regarding

additional production. Plaintiffs may of course seek additional contemporary information,

but if such requests merely seek a supplement about information already provided, Plaintiffs

will bear the burden either of demonstrating that such requests are based upon changed

circumstances or of showing cause why the information already disclosed is otherwise

inadequate. 

III. Format of Information

The Supreme Court recently amended Rule 34, which now states that “a party who

produces documents for inspection shall produce them as they are kept in the usual course of

business,” and that unless a request specifies otherwise, the production of “electronically

stored information” shall be produced “in a form or forms in which it is ordinarily

maintained or in a form or forms that are reasonably usable.” Fed. R. Civ. P. 34(b)(i)-(ii). 

The rule further provides that the form of electronic production required under the new rule

may be altered by agreement of the parties or by order of the Court. Id. A month after this

new rule went into effect, Plaintiffs propounded their Fourth Set of Requests for Production

of Documents. In their request, Plaintiffs state that Defendants must comply with the

amended rule as to any additional productions they make. 

The Court declines to compel Defendants to comply with Rule 34 for future document

productions. When this litigation began, the parties agreed to the production of electronic

information in a particular format. Specifically, Defendants agreed to produce, and Plaintiffs

agreed to accept, electronic documents stored in the form of a “TIFF file” that is subject to a

scanning process known as “OCR.” In plain English, Defendants agreed to give Plaintiffs a

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G:\CRBALL\2004\2676\order re motion to compel.wpd 11

digital image of all electronic documents that they could search, albeit imperfectly, for

certain words and terms. An amendment to the civil rules--nearly two year after the filing of

the lawsuit, and long after the parties established a system for propounding electronic

discovery--does not justify the abdication of the parties’ agreement, especially given the

security concerns raised by Defendants about maintaining the confidentiality of electronic

documents. Of course, if the parties can stipulate to the production of some materials in

native electronic format, they are free to do so. Otherwise, the Court orders that production

of additional materials shall proceed in accordance with the parties’ prior agreement. 

CONCLUSION

According to the findings and conclusions set forth above, Plaintiffs’ motion to

compel is GRANTED in part and DENIED in part.

IT IS SO ORDERED.

Dated: June 25, 2007 

CHARLES R. BREYER

UNITED STATES DISTRICT JUDGE

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