In re Convergent Technologies Securities Litigation
Not Reported in F.Supp., 1985 WL 1154 (1985)
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Rule of Law:
A party seeking to compel answers to contention interrogatories early in the discovery process, before substantial documentary or testimonial discovery is complete, bears the burden of justifying the request by demonstrating that early answers will materially advance the litigation's goals.
Facts:
- Plaintiffs, shareholders of Convergent Technologies, Inc., filed a securities lawsuit against the company, some of its directors and officers, and Burroughs Corporation.
- The complaint alleged that the defendants made material misrepresentations and omissions regarding Convergent's business and financial prospects.
- The complaint specifically alleged that inside director defendants William A. Harris (VP of Manufacturing) and Richard G. Meise (VP of Sales) were 'control persons' of the corporation.
- During the class period, both Harris and Meise sold tens of thousands of their personal shares of Convergent stock.
- The complaint also alleged that defendant Burroughs Corporation was a 'control person' of Convergent.
- Burroughs was Convergent's largest customer, accounting for nearly half its revenue, had a designee on Convergent's board of directors, and held warrants to purchase approximately 2.5% of Convergent's outstanding shares.
Procedural Posture:
- Plaintiffs filed a Consolidated Amended Complaint in federal district court against Convergent Technologies and other defendants.
- During the initial phase of discovery, defendants served plaintiffs with over 1,000 interrogatories, many of which were 'contention' interrogatories seeking the factual and legal basis for the complaint's allegations.
- Plaintiffs objected to answering the contention interrogatories, arguing they should be deferred until after defendants completed their document production.
- Defendants filed motions with the court to compel plaintiffs to provide immediate answers to the interrogatories.
- The discovery dispute was referred to a United States Magistrate Judge for resolution.
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Issue:
Must plaintiffs answer contention interrogatories served by defendants early in the discovery period, before having a meaningful opportunity to conduct their own discovery, such as reviewing defendants' documents?
Opinions:
Majority - Magistrate Wayne D. Brazil
No. A party is not required to answer contention interrogatories early in the discovery period, and a court may defer ordering responses until substantial discovery has been completed, unless the propounding party meets a burden of justification for compelling early answers. The court reasoned that Federal Rule of Civil Procedure 33(b) and its accompanying Advisory Committee Notes grant courts significant discretion to defer answers to contention interrogatories, which often create disputes that are best resolved after other discovery is finished. The court expressed skepticism about the utility and motivation behind comprehensive contention interrogatories served early in litigation, viewing them as a potential form of discovery abuse used to harass opponents or impose economic pressure. Early answers are often of poor quality, as the responding party has not yet developed its case through discovery of evidence primarily held by the opposing party. Therefore, the court established a framework placing the burden on the propounding party to show that early answers to specific, well-crafted questions will materially advance the litigation by clarifying issues, narrowing the dispute's scope, facilitating settlement, or exposing a basis for a dispositive motion under Rule 11 or 56. In this case, defendants failed to meet this burden, as plaintiffs could not reasonably be expected to have all the facts supporting their claims, particularly the 'control person' allegations, before reviewing Convergent's own documents.
Analysis:
This opinion established an influential framework for managing contention interrogatories, particularly in complex civil litigation. It represents a significant judicial effort to enforce the principles of proportionality and good faith introduced in the 1983 amendments to the Federal Rules of Civil Procedure. By shifting the burden of justification to the party propounding early contention interrogatories, the decision provides a mechanism for trial courts to prevent discovery from being used as a tool for harassment or economic warfare. The case serves as a key precedent for deferring responses to such interrogatories until a more appropriate, later stage of discovery, thereby promoting a more efficient and fair litigation process.
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