Possession, Custody and Control in a Digital World: The “Legal Right Test” is Par for the Course

New technologies and organizational initiatives have further blurred the legal and operational lines of who actually “controls” data for purposes of preservation and production. See The Sedona Conference, Commentary on Rule 34 and Rule 45 “Possession, Custody, or Control,” 17 Sedona Conf. J. 467 (2016).

Under the Federal Rules of Civil Procedure, parties are only obligated to preserve and produce those records that are in their possession, custody or control. Parties are not obligated to recreate records that were destroyed in the ordinary course of business or that are in the possession of third parties. See Phillips v. Netblue, 2007 No. C-05-4401 SC. (N.D. Cal. Jan. 22, 2007) (“The fundamental factor is that the document, or other potential objects of evidence, must be in the party’s possession, custody, or control for any duty to preserve to attach … One cannot keep what one does not have.”) Former PGA Tour players recently brought this issue before the US District Court for the Northern District of California in the highly publicized Mickelson et al v. PGA Tour, Inc. case.

The LIV-PGA Feud in the context of the Mickelson et al v. PGA Tour Federal Antitrust Litigation.

For those not following the strife between LIV Golf and the PGA Tour, here is a quick primer:

• A group of golfers, including Phil Mickelson, brought a federal antitrust suit against the PGA Tour, alleging that the Tour unlawfully suspended them after they joined the competing LIV Golf Invitational Series.
• A few of the golfers, referred to as the nonparty players, voluntarily dismissed their claims and withdrew from the suit; nevertheless, the PGA Tour served subpoenas on the nonparty players.
• The PGA’s subpoenas requested the production of documents and included within the definition of the responding party the nonparty players’ “attorneys, agents …, member[s], or employee[s], or any other person acting on [their] behalf.” Mickelson et al v. PGA Tour, Inc., No. 5:22-cv-04486-BLF (N.D. Cal. Nov. 17, 2022).
• The nonparty players objected to this definition and argued that they were not obligated to search for and produce relevant, nonprivileged materials in the possession or custody of their agents.
• As such, the US District Court for the Northern District of California was presented with the issue of whetherESI held by the sports agents of certain nonparty players was within the nonparty players’ possession, custody or control such that they could be required to collect and search the ESI. 

When is something within a party’s possession, custody, or control?

Courts use two tests to determine possession, custody or control: the “Legal Right Test” and the “Practical-Ability Test”.

The “Legal Right Test”

Federal courts, including Pennsylvania’s District Courts and the Third Circuit Court of Appeals, have consistently held that documents are deemed to be within possession, custody or control for purposes of Federal Rule of Civil Procedure 34 if the party has actual possession, custody or control, or has the legal right to obtain the documents on demand.

The Third Circuit ruled on this issue in Gerling Intern. Ins. Co. v. C.I.R., 829 F.2d 131 (3d Cir. 1988), stating that “control is the test with regard to the production of documents [and] is defined not only as possession, but as the legal right to obtain the documents requested on demand.” Gerling, at 140.

The “Practical-Ability” Test

The second, and less employed, test is the Practical-Ability test. The Practical-Ability Test finds ESI and documents are within a party’s possession, custody and control when the party has the practical ability to produce the documents to the opposing party.

Under this test, the courts have “interpreted Rule 34 to require production if the party has the practical ability to obtain the documents from another, irrespective of his legal entitlement to the documents”. Golden Trade, S.rL. v. Lee Apparel Co., 143 F.R.D. 513, 525 (S.D.N.Y. 1992). Note, Pennsylvania State and Federal Courts do not employ this test and have described the definition of “practical ability” as broad. Further, the Seventh Circuit has stated that “the fact that a party could obtain a document if it tried hard enough does not mean the document is in its possession, custody or control; in fact, it means the opposite.” Chaveriat v. Williams Pipe Line Co., 11 F.3d 1420, 1427 (December 21, 1993).

US District Court for the Northern District of California applied the Legal Right Test and ordered the Non-Party Players to Collect and Produce their Sports Agents’ ESI.

Turning back to Mickelson et al. v. PGA Tour, Inc., Magistrate Judge Susan Van Keulen ordered that custodial ESI in the actual possession of the nonparty players’ agents was within the nonparty players “control” under Rules 34 and 45. She ordered the nonparty players to run the previously agreed-on search terms over their agents’ ESI, and even went a step further by adding limiter terms designed to narrow the scope of the results to materials related to their agents’ representation of the nonparty players and not other potential principals.

Specifically, Judge Van Keulen reasoned that the Federal Rules of Civil Procedure “require production of documents that are within the ‘possession, custody, or control’ of the responding person or entity” and that this standard applies “no matter whether the responding person is a party to the litigation or a third-party subject to Rule 45.” Nov. 17, 2022 Order at 1 (quoting Fed. R. Civ. P. 34(a)(1)). Further, in applying the “Legal Right Test,” Judge Van Keulen explained that “control” is generally defined as “the legal right to obtain documents upon demand” and that “under established Ninth Circuit law, materials in the possession of an agent are within the ‘control’ of the responding person and must be produced.” Id. at 2.

If you have any questions or would like to discuss preservation, collection or production obligations in litigation, please do not hesitate to contact Chris Orrin or another member of the litigation team at Klehr Harrison.

Author Chris Orrin is E-Discovery Counsel in the Litigation Department at Klehr Harrison.