In FTC v. Match Grp., Inc., No. 3:19-CV-2281-K (N.D. Tex. Jan. 7, 2025), Texas Magistrate Judge Brian McKay granted the FTC’s motion for sanctions related to the late production of emails by Match Group that was caused by a technological glitch in its archival system, but imposed different sanctions than those requested by the FTC.
Case Discussion and Judge’s Ruling
In this case involving claims that Match Group’s online dating service, Match.com, employed unfair practices to induce subscriptions and constructed confusing or cumbersome processes to hinder cancelations, the discovery period ended on July 28, 2023.
Three months after the discovery period closed, Match Group provided additional materials to the FTC consisting of emails that had not been previously disclosed, acknowledging that the discovery was responsive to the FTC’s requests and stating that its failure to produce the material during the discovery period was the result of a technological glitch in its archival system that it discovered in the final days of the discovery period.
Match Group explained in defending against the FTC’s motion that the company used Microsoft Office 365 for operations and preserved files using a third-party archiving vendor that advertised its interoperability with the Microsoft platform. Match Group used this archival system to collect documents for this litigation and other matters. When there were only a couple of weeks remaining in the discovery period, a Match Group employee discovered while working on a different matter that a collection of documents from the archival system returned an unexpectedly low volume, which led to the discovery that the archival system had left pockets of custodians and time periods uncaptured.
Match Group then accessed a different backup system to identify any responsive documents that had been missed due to the technological glitch in its archival system. Doing so, it found and produced 37 additional documents to the FTC on August 7, 2023, and 450 additional documents on October 25, 2023. The larger and more belated production occurred after the FTC had filed its motion for summary judgment. Match Group did not oppose the FTC’s request for extension of its page limits on the reply brief and agreed that the FTC could use the late-produced documents in an appendix to the reply. Nonetheless, the FTC moved for sanctions, stating that some of the documents contained in those productions were “central” to its claims, so it proposed that the Court prohibit Match Group from using the late-produced documents at trial, either affirmatively or in response to the FTC’s use of them.
Judge McKay found that “Rule 37(d)(1)(A)(ii) does not apply to the circumstances present here”, stating: “That provision does not concern a tardy production such as the one at issue; it is instead used to address a complete failure to provide any response to discovery at all.”
Regarding sanctions under Rule 37(c)(1), Judge McKay stated: “Even though Match Group did not make a considered decision not to produce the documents during the discovery period, the Court concludes that Rule 37(c)(1) allows the company to avoid exclusion by showing that its failure to produce was substantially justified. Here, Match Group asserts that it reasonably relied on the archival system to collect documents for production, and the Court agrees. Match Group represents that it produced more than 300,000 documents in this case during the discovery period,…and it relied on an archival system marketed as interoperable with the company’s Microsoft system… Having found that Match Group’s failure was substantially justified by its reasonable reliance on the archival system, the Court concludes that Match Group is not subject to sanctions under Rule 37(c)(1), and the Court need not address under that rule whether the failure to timely produce was also harmless.”
However, Judge McKay ruled: “Sanctions are appropriate under Rule 16(f)(1)”, stating: “Match Group acknowledges that it failed to produce documents until after its deadline to do so. That is sufficient to find a violation.” Considering the four harmlessness factors engaged in connection with sanction under Rule 37(c)(1) “holistically”, Judge McKay said: “the Court finds that Match Group has not shown that its late production was harmless in all respects. Its failure to produce the documents did not materially impact the merits of the FTC’s summary judgment motion, but it did prevent the FTC from questioning certain witnesses about documents that are probative of the FTC’s claims. Considering the degree and the type of harm incurred as a result of Match Group’s late production, the Court concludes that sanctions are appropriate.”
However, Judge McKay rejected the one-sided exclusion the FTC requested whereby it may use the late-produced documents at trial but Match Group would be precluded from explaining or otherwise responding to them. Instead, he stated: “The Court concludes that an appropriate sanction here is to allow the FTC to conduct additional limited discovery on the late-produced documents. No later than March 19, 2025, the FTC may depose up to three individuals, each for no more than 2.5 hours…the scope of these depositions is limited to matters directly implicated by the late-produced documents and does not broadly reach to the limits of Fed. R. Civ. P. 26(b)(1). Match Group shall bear reasonable costs associated with the depositions”.
So, what do you think? Were any sanctions for Match Group warranted due to the technological glitch in its archival system? Please share any comments you might have or if you’d like to know more about a particular topic.
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