MEMORANDUM AND ORDER

BARBARA MOSES, Magistrate Judge.

Plaintiff Royal Park Investments SA/NV (RPI) is the holder of thirteen residential mortgage-backed securities (RMBS) certificates (Certificates) that derive their value from pools of mortgage loans held in ten RMBS trusts (Trusts) for which defendant Deutsche Bank National Trust Company (Deutsche Bank) serves as the trustee (Trustee). See Compl. (Dkt. No. 1) ¶ 2.1 In the aggregate, the Trusts hold approximately 50,000 loans. See Chippey Decl. dated July 17, 2017 (Dkt. No. 425), ¶ 16; Transcript of April 3, 2018 Oral Argument (Tr.) (Dkt. No. 617) at 24:15. Each Trust is governed by a multi-party contract, typically called a Pooling and Service Agreement (PSA), which outlines the Trustee's obligations with respect to that Trust and its constituent loans.2 In this action, RPI alleges that Deutsche Bank breached its contractual obligations under the PSAs — principally by failing to insist that other parties to the PSAs honor their own contractual obligations — thereby diminishing the value of RPI's Certificates. Certificates are "bond-like instruments," Compl. ¶ 35, entitling the holder to a portion of the cash flows generated by the mortgage loans underlying the issuing Trust. Id. ¶ 42.

Now before the Court is plaintiff's Motion Regarding Sampling-Related Expert Discovery, (Dkt. No. 453), in which RPI seeks an order "allowing the parties to conduct sampling-related expert discovery." Pl. Mot. at 1. In its accompanying memorandum of law (Pl. Mem.) (Dkt. No. 474), RPI explains that it wishes to engage one or more as-yet unidentified experts to use "reliable statistical sampling and extrapolation methods as part of its proof of liability and damages across the thousands of loans backing the . . . Trusts." Pl. Mem. at 1. For the reasons that follow, the motion is DENIED.

I. BACKGROUND

A. Procedural History

Plaintiff filed this action on June 18, 2014, asserting direct claims on behalf of itself and a putative class of "all RMBS investors" in the Trusts, as well as derivative claims on behalf of the Trusts themselves. Compl. ¶¶ 2-3, 189-99. On February 3, 2016, the Honorable Alison J. Nathan, United States District Judge, dismissed the derivative claims, and RPI withdrew its claims under the Trust Indenture Act. See Royal Park Investments SA/NV v. Deutsche Bank Nat'l Tr. Co., 2016 WL 439020 (S.D.N.Y. Feb. 3, 2016) (2/3/16 Mem. & Order) (Dkt. No. 100).3 Plaintiff's surviving claims allege that Deutsche Bank breached its contractual obligations under the PSAs and its common-law duty to avoid conflicts of interest. See Compl. ¶¶ 206-219.

On August 18, 2017 — shortly before the then-scheduled close of fact discovery — the parties advised me that they "may wish to litigate whether and/or to what extent sampling will be permitted in this case," and jointly requested a schedule under which they would brief that question, and the Court would decide it, prior to the preparation of expert reports and the completion of expert discovery. See Joint Ltr. dated Aug. 18, 2017 (Dkt. No. 440), at 1. By Order dated August 25, 2017 (Dkt. No. 443), I directed "the party seeking a ruling" on sampling to "file the appropriate motion" by September 8, 2017. Id. at 3.

As it turned out, the moving party was plaintiff RPI, which styled its motion as one seeking permission to conduct "sampling related expert discovery." RPI's moving brief, and the accompanying Declaration of Lucas Olts, dated September 8, 2017 (Olts Decl.) (Dkt. No. 475), were filed (in redacted form) on September 18, 2017. Deutsche Bank filed its opposition memorandum (Def. Opp. Mem.) (Dkt. No. 490), accompanied by the Biron Declaration, on October 16, 2017. Plaintiff filed its reply memorandum (Pl. Reply Mem.) (Dkt. 496) on October 30, 2017. Thereafter, from November 17, 2017 through March 12, 2018, the parties filed a series of follow-up letter-briefs concerning supplemental authority and related matters. (Dkt. Nos. 509, 516, 542, 559.) Throughout this period (and beyond) the parties also filed a variety of other discovery motions, most of which have now been resolved. (See Dkt. Nos. 462, 478, 524, 526, 544, 551, 621, 626, 630, 644, and 645.)

On March 29, 2018, the District Judge denied plaintiff's motion for class certification. See Royal Park Investments SA/NV v. Deutsche Bank Nat'l Tr. Co., 2018 WL 1750595 (S.D.N.Y. Apr. 11, 2018) (3/29/18 Op. & Order) (Dkt. No. 607).4 On April 3, 2018, I heard oral argument on the sampling motion. See Tr. at 8-61.

B. The PSAs

The Court assumes familiarity with the factual background in this matter,5 but briefly reviews the relevant terms of the governing PSAs.

1. R&W Breaches

All of the PSAs required the originators, sponsors, sellers, and/or other warrantors of the loans collateralizing the Certificates (collectively the Warrantors) to make detailed representations and warranties (R&Ws) regarding the credit quality and other characteristics of those loans and the accuracy of the information they provided concerning each loan. Compl. ¶¶ 7, 38, 47; see also, e.g., FFML 2006-FF9 PSA § 2.03 & Sched. IV.6 "[O]ver fifty different Warrantors" made such R&Ws concerning the 50,000 loans in the Trusts. Chippey Decl. ¶ 16.

Under the PSAs, the Trustee is ordinarily entitled to rely "conclusively" on the R&Ws, and is not required to investigate their accuracy or reliability. See FFML 2006-FF9 PSA §§ 8.01(a), 8.02(d). Nor is the Trustee required to undertake any duties other than those "specifically set forth" in the contract. Id. § 8.01; see also id. § 8.01(a) ("no implied covenants or obligations shall be read into this Agreement against the Trustee").

However, the Trustee must take certain measures upon "discovery" or receipt of written notice of an R&W breach that "materially and adversely affects the value" of the relevant mortgage loan or the interests of the Certificate-holders in that loan. See FFML 2006-FF9 PSA §§ 2.03(c)-(d). In some Trusts, breaches of certain specified R&Ws, as well as breaches that cause the loan not to constitute a "qualified mortgage" under § 860G(a)(3) of the Internal Revenue Code, will be "deemed automatically to materially and adversely affect the value of such Mortgage Loan and the interests of the Trustee and Certificate-holders in such Mortgage Loan, thus requiring the repurchase or substitution of such Mortgage Loan by the Mortgage Loan Seller." FFML 2006-FF9 PSA § 2.03(d).7 In the GSR 2007-AR2 Trust, it is "understood" that a breach "shall be deemed to have materially and adversely affected the value of the related Mortgage Loan . . . if the Trust incurs a loss as a result of such defect or breach." GSR 2007-AR2 PSA § 2.03(b), (c), (d). Otherwise, however, the PSAs do not appear to contain any guidelines for determining whether an R&W breach may be deemed to have "materially and adversely affect[ed]" the value of the relevant loan or the interests of the Trustee and Certificate-holders therein.

When the Trustee discovers or receives written notice of a breach meeting the "material and adverse" standard, it must "promptly provide notice of the breach to the offending Warrantor and the other parties" to the PSA. Compl. ¶ 8; see also FFML 2006-FF9 PSA § 2.03(c). Thereafter, if the breach is not timely cured, the Trustee must "enforce the breaching Warrantor's obligation to either substitute or repurchase" the defective loan, sometimes known as a "put-back" remedy. Compl. ¶ 8; see also FFML 2006-FF9 PSA § 2.03(d). The "Repurchase Price" for a put-back loan is calculated based on the unpaid principal balance of the defective loan, "as of the date of repurchase," together with other factors specific to that loan, including the Trustee's expenses incurred in enforcing the repurchase obligation as to that loan. FFML 2006-FF9 PSA at 44.

In addition, some of the PSAs require the Trustee to act upon "discovery" or receipt of written notice of a "materially defective" document in — or a document missing from — the mortgage file delivered to the Trustee as to each loan. See, e.g., HVMLT 2006-8 PSA §§ 2.03(a)-(b). As in the case of an R&W breach, if the defect (known as a Document Exception) "materially adversely affects the value of that Mortgage Loan or the interest therein of the Certificate-holders," the Trustee must "promptly notify" the responsible party of the defective or missing document and thereafter — if the deficiency is not timely cured — must "enforce such Originator's obligation . . . and cause such [originator or seller] to repurchase that Mortgage Loan from the Trust . . ." Id.8

The PSAs also contain "sole remedy" provisions, typically stating that the breaching Warrantor's obligation to "cure, repurchase, or substitute any Mortgage Loan as to which a breach of a representation and warranty has occurred and is continuing . . . shall constitute the sole remedies against such Person respecting such breach available to Certificate-holders . . . or the Trustee on their behalf." FFML 2006-FF9 PSA §§ 2.03(j), (k).

2. Events of Default

The PSAs further require the Trustee to take certain steps when it acquires actual knowledge of an event of default (EOD) by a Master Servicer or (in some Trusts) any Servicer; that is, misconduct by the entities responsible for "ensur[ing] the legal and proper servicing of the Mortgage Loans." Compl. ¶ 11; see also id. ¶¶ 52-58. Among other things, the Trustee must notify the offending Servicer or Master Servicer of the EOD, demand that it cure the default, and then — if the EOD remains uncured — "act as a quasi-fiduciary for [the Certificate-holders] and protect them as if Deutsche Bank is protecting its own interests." Id. ¶ 13; see FFML 2006-FF9 PSA § 8.01 ("In case a Master Servicer Event of Default has occurred and remains uncured, the Trustee shall exercise such of the rights and powers vested in it by this Agreement, and use the same degree of care and skill in their exercise as a prudent person would exercise or use under the circumstances in the conduct of such person's own affairs.").

C. Plaintiff's Claims

In this action, RPI alleges that Deutsche Bank breached its contractual obligations to the Certificate-holders in that it failed to "enforce the Warrantors' breaches of R&Ws . . . by seeking the cure, substitution, or repurchase of any and all defective Mortgage Loans," Compl. ¶ 207(a); failed to provide the required notifications of Servicer EODs; and failed thereafter to exercise its heightened "prudent person" obligations when it "knew of uncured and ongoing Events of Default," such as by "terminating the offending . . . Servicer" or taking over its duties. Id. ¶¶ 12, 207(b)-(e), 209.9 As a result, RPI alleges, thousands of mortgage loans that should have been replaced or repurchased were not, causing damages in the form of "billions of dollars in R&W claims that could have been asserted against the Warrantors but were not." Id. ¶ 181. In addition, plaintiff alleges, "numerous Mortgage Loan delinquencies [were] allowed to stretch on interminably without payments being remitted to the . . . Trusts," due to Servicer inattention, and foreclosure actions, when they were filed, were "denied, invalidated and/or improperly delayed," due to other misconduct by the Servicers, which in turn "substantially [drove] up the Covered Trusts' expenses and losses." Id. ¶¶ 15-16, 182-83.

D. Governing Principles

1. Loan-by-Loan, Trust-by-Trust

The District Judge has consistently held that in order to prevail against Deutsche Bank at trial for failing to enforce the Warrantors' cure, substitution and/or repurchase obligations with respect to R&W breaches, RPI must demonstrate those breaches "on a `loan-by-loan and trust-bytrust' basis." See, e.g., 2/3/16 Mem. & Order at 11 (quoting Ret. Bd. of the Policemen's Annuity & Benefit Fund of the City of Chi. v. Bank of NY. Mellon, 775 F.3d 154, 162 (2d Cir. 2014) (hereafter PABF)); 3/29/18 Op. & Order at 38.10

Loan-by-loan proof is required to establish the Trustee's liability to the Certificate-holders because, under § 2.03 of the PSAs, the Trustee has neither the obligation nor the ability to demand cure, substitution, or repurchase of a nonconforming loan unless — among other things — it can identify an R&W breach (or a Document Exception) that "materially and adversely" affects the value of that particular loan. See FFML 2006-FF9 PSA §§ 2.03(c)-(d).

Moreover, as recently reconfirmed by the New York Court of Appeals, the cure/substitute/repurchase mechanism set forth in each PSA is the enforcing party's "sole remedy" against a breaching Warrantor. See Ambac Ass. Corp. v. Countrywide Home Loans, Inc., 31 N.Y.3d 569, 584-85, ___ N.E.3d ___ (2018) ("the remedy for Ambac's contract claims is limited to the repurchase protocol provided for in the contract's sole remedy provision"); Nomura Home Equity Loan, Inc., Series 2006-FM2, by HSBC Bank USA, Nat'l Ass'n v. Nomura Credit & Capital, Inc., 30 N.Y.3d 572, 584, 69 N.Y.S.3d 520 (2017) ("the Sole Remedy Provision applies, precluding HSBC from seeking general contract damages" for a sponsor's breach of its R&Ws).11

Thus, "whether [a Warrantor] was obligated to repurchase a given loan requires examining which loans, in which trusts, were in breach of the representations and warranties." PABF, 775 F.3d at 162. Similarly, "whether a loan's documentation was deficient requires looking at individual loans and documents." Id. As Judge Schofield explained in Royal Park Investments SA/NV v. HSBC Bank USA Nat'l Ass'n, 2018 U.S. Dist. LEXIS 31157 (S.D.N.Y. Feb. 23, 2018) (hereafter RPI v. HSBC II):

2018 U.S. Dist. LEXIS 31157, at *35-36. Accord Royal Park Investments SA/NV v. U.S. Bank Nat'l Ass'n, 2018 WL 3350323, at *2 (S.D.N.Y. July 9, 2018) (Lehrburger, M.J.) (hereafter RPI v. US Bank) ("whether and to what extent a trustee can obtain repurchase of breaching loans must be determined separately for each specific loan"); BlackRock Allocation Target Shares v. Wells Fargo Bank, Nat'l Ass'n, 2017 WL 953550, at *5 (S.D.N.Y. Mar. 10, 2017) (Netburn, M.J.) (hereafter Blackrock v. Wells Fargo I) (liability must be proven "loan-by-loan"), order clarified sub nom. BlackRock Allocation Target Shares: Series S Portfolio v. Wells Fargo Bank, Nat'l Ass'n, 2017 WL 3610511 (S.D.N.Y. Aug. 21, 2017) (Failla, D.J.) (hereafter Blackrock v. Wells Fargo II).

Loan-by-loan proof is also required to establish damages. Even assuming the existence of a material and adverse R&W breach or Document Exception, calculating the quantum of damages flowing from the Trustee's failure to enforce its remedies against the breaching Warrantor with respect to a particular loan is a highly fact-specific undertaking requiring consideration of — among other things — when the Trustee had sufficient knowledge to made a demand; whether the relevant Warrantor would have been asked to cure, substitute,12 or repurchase the defective loan; whether the Warrantor was solvent13 and otherwise capable of meeting the Trustee's hypothetical demand when made; how long the process would have taken14; and when the statute of limitations expired on the Trustee's ability to enforce its demand through litigation.15 Additionally, any calculation of damages resulting from the failure to demand substitution would have to take into account the nonperformance risk associated with the hypothetical substituted loan.16

Thus, in suits by RMBS certificate-holders against RMBS trustees, it is the uniform view of judges in this District that "[p]laintiffs need to prove liability and damages on a trust-by-trust and loan-by-loan basis." Blackrock Balanced Capital Portfolio (FI) v. Deutsche Bank Nat'l Tr. Co., 2018 WL 3120971, at *2 (S.D.N.Y. May 17, 2018) (Furman, D.J.) (hereafter Blackrock v. Deutsche Bank) (emphasis added).

2. Actual Knowledge of R&W Breaches

As noted above, the Trustee's duty to remedy an R&W breach or Document Exception is triggered by its "discovery" or receipt of notice of the breach or exception. The PSAs do not further define the term "discovery." However, the District Judge has held that the Trustee's duty to enforce the R&Ws arises upon its "actual knowledge" of breaching loans, see 2/3/16 Mem. & Order at 13-14, and I have consistently applied that standard throughout the fact discovery period. See, e.g., 2/12/18 Mem. & Order at 4-11.17

RPI proposes a different standard. Citing cases that involve the duties of parties other than trustees, arising from contracts other than the PSAs at issue here, plaintiff argues that "[a] party `discovers' a breach when it knows or should know that the breach has occurred." Pl. Mem. at 3 (quoting Bank of N.Y. Mellon Trust Co. v. Morgan Stanley Mortg. Capital, Inc., 2013 WL 3146824, at *19 (S.D.N.Y. June 19, 2013), vacated and remanded sub nom. Bank of New York Mellon Tr. Co. v. Morgan Stanley Mortg. Capital, Inc., 821 F.3d 297 (2d Cir. 2016) (hereafter BNY Mellon). Therefore, RPI contends, the Trustee acquired an obligation to enforce the R&Ws as to "all breaching loans in the . . . Trusts," Reply Mem. at 1 (emphasis added), as soon as it obtained "constructive knowledge" (or was placed on "inquiry notice," see Tr. at 29:22) that such breaches likely existed (for example, because it knew of "pervasive" problems in the RMBS industry), even though it could not identify the specific loans as to which cure, substitution or repurchase was required. Pl. Mem. at 3-5.

I cannot adopt plaintiff's view. BNY Mellon does not bear the weight that RPI places upon it.18 Moreover, nothing in the PSAs requires the Trustee to "take action" on a wholesale basis to remedy potential R&W breaches that it cannot specifically identify. On the contrary: as noted above, the contractual repurchase mechanism "is targeted to a specific loan, and not to a group or category of loans." MASTR Adjustable Rate Mortgages Tr. 2006-OA2 v. UBS Real Estate Sec. Inc., 2015 WL 764665, at *11 (S.D.N.Y. Jan. 9, 2015) (Castel, D.J.) (hereafter UBS I), reconsideration denied, 2015 WL 797972 (S.D.N.Y. Feb. 25, 2015) (hereafter UBS II). See, e.g., HVMLT 2006-8 PSA § 2.03(b) (upon discovery of a materially adverse R&W breach or Document Exception, the Trustee must notify the relevant Warrantor of "such" defect or breach, request that the Warrantor cure "such" defect or breach within 90 days, and then — if a cure is not timely effected — cause the Warrantor to repurchase "that" loan). "The structure of these provisions — and the nature of the defined terms therein — leads to the conclusion that the parties agreed upon a remedial process that generally calls for proof of breach on a loan-by-loan basis." Homeward Residential, Inc. v. Sand Canyon Corp., 2017 WL 5256760, at *7 (S.D.N.Y. Nov. 13, 2017) (Keenan, D.J.) (hereafter Homeward v. Sand Canyon), reconsideration denied sub nom. Homeward Residential, Inc. for Option One Mortg. Loan Tr. 2006-2 v. Sand Canyon Corp., 2018 WL 2323227 (S.D.N.Y. May 22, 2018). Thus, as discussed above, a trustee cannot invoke the repurchase mechanism absent sufficient knowledge — actual knowledge — to identify the specific loans as to which it claims repurchase is required. See RPI v. HSBC II, 2018 U.S. Dist. LEXIS 31157 at *36 ("The trustee cannot provide notice to the seller without knowing the specific defective document or the specific R&W breach."); Blackrock v. Wells Fargo II, 2017 WL 3610511, at *9 ("a trustee cannot undertake the contractually required measures without knowing of a specific defect, in a specific loan, in a specific trust").

Moreover, the PSAs typically state that "no implied covenants or obligations shall be read into this Agreement against the Trustee," see, e.g., HVMLT 2006-8 PSA § 8.01(i); that "the right of the Trustee . . . to perform any discretionary act enumerated in this Agreement shall not be construed as a duty," id. § 8.02(viii); and that the Trustee is not required to "expend or risk its own funds . . . in the performance of any of its duties hereunder" unless it has been offered "reasonable security or indemnity satisfactory to it against the costs, expenses and liabilities which may be incurred therein or thereby." Id. §§ 8.01(iv), 8.02(iii). Thus, even if the "sole remedy provision" does not prohibit "pervasive breach" suits by trustees against warrantors (as some judges in this District have held, see Part II.B. of this Memorandum and Opinion, infra), I cannot find any support in the language or structure of the PSAs for RPI's theory that a trustee could be required to bring such a suit.

Several recent cases within this District have questioned whether the obligation of an RMBS trustee to enforce R&Ws can be triggered by something less than actual knowledge of specific R&W breaches.19 But no such case has interpreted the term "discovery," as used in the PSAs, to mean either "constructive knowledge" or "inquiry notice," as RPI urges here. To the contrary: it appears to be the uniform view of judges in this District that, in cases brought by RMBS investors against RMBS trustees, "discovery' requires more than inquiry notice." Blackrock v. Wells Fargo II, 2017 WL 3610511, at *9. I therefore have no reason to depart from the law of the case, and will continue to apply the District Judge's determination that the question for trial will be whether the Trustee had "actual knowledge" of the alleged R&W breaches. See 2/3/16 Mem. & Order at 13.

3. Actual Knowledge of EODs

There is no controversy concerning the degree of knowledge required to trigger the Trustee's obligations after an EOD. The PSAs themselves make clear — and RPI acknowledges — that the Trustee is required to act upon an EOD only when it has "actual knowledge" or "written notice thereof." See FFML 2006-FF9 PSA § 8.02(h) (the "Trustee shall not be deemed to have knowledge of a Master Servicer Event of Default or an Event of Default" unless the Trustee has "actual knowledge" of the occurrence of an EOD or "written notice thereof"); see also Compl. ¶¶15, 211; Pl. Mem. at 2, 24.

E. The Trustee Sampling Opinions

In PABF, the Second Circuit left open the question presented here, namely, whether an RMBS certificate-holder can use statistical sampling to establish liability, damages, or both in a case against an RMBS trustee. 775 F.3d at 162. However, that question is no longer novel in this District. Since PABF was decided, two Magistrate Judges and three District Judges have carefully analyzed it and uniformly answered in the negative — in each case reasoning principally that because statistical sampling "cannot provide loan-specific information as to any loan outside the sample," RPI v. HSBC II, 2018 U.S. Dist. LEXIS 31157 at *36, it is of "limited benefit," id., in a case where both liability and damages must be established "loan by loan," such that the effort "is not justified under the proportionality standard of Rule 26." Id. at *37.20

In reaching this conclusion, every judge has distinguished cases brought against trustees (for failing to enforce R&W breaches against originators, sponsors, and other warrantors), from cases brought directly against such warrantors; that is, against the entities that made the R&Ws, were responsible for their accuracy, and were required to cure, substitute or repurchase them in the event of a breach. In these cases, sampling has been permitted by some judges in this District21 and denied by others.22 However, as Judge Schofield explained:

RPI v. HSBC II, 2018 U.S. Dist. LEXIS 31157, at *37-38.

II. ANALYSIS

In this case, RPI seeks to use statistical sampling to show "(i) the existence of underlying R&W breaches in the loan pools; (ii) what Deutsche Bank would have found had it reasonably investigated upon `discovery' of such breaches; (iii) what a prudent person would have found had it investigated upon gaining `actual knowledge' of events of default in proceeding as a prudent person; and (iv) the amount of damages resulting from such misconduct." Pl. Mem. at 2, 23-24.23 At oral argument, counsel clarified that RPI does not propose to sample all of the loans, in all of the trusts, for all of these purposes.24 Rather, it proposes to use sampling in slightly different ways with respect to "three different buckets," or categories, of loans. See Tr. at 28:8-10. I address each category in turn.

A. The 5,000 Loans

Plaintiff asserts that it has evidence, obtained through fact discovery, that Deutsche Bank had "actual knowledge" of approximately 5,000 specific breaching loans in the ten Trusts, Pl. Mem. at 5, including 2,500 loans that the Trustee recorded in a "repurchase log" after receiving written breach notices from other parties, another 500 loans that the Trustee failed to record in any repurchase log even though it received written breach notices about them, and an unspecified number of "specific breaching loans" that the Trustee learned about through other means, such as borrower complaints and reports that coverage was rescinded and premiums repaid by primary mortgage insurers. Id. at 5-7; see also Tr. at 31:2-5 (there is a "bucket of 5,000 loans which does meet the actual knowledge standard").25

RPI stresses that it does not propose to use sampling to establish the Trustee's knowledge of these 5,000 allegedly breaching loans. See Tr. at 28:13-21 ("The sampling evidence would not be used to prove knowledge."). Rather, RPI wishes to avoid the expense and burden of "reunderwriting" all of the loans in this category to determine liability (that is, which of them actually had "material" and "adverse" R&W breaches or Document Exceptions, such that the Trustee was obligated to demand cure, substitution, or repurchase) and damages (that is, the impact on RPI resulting from the Trustee's failure to do so). As to this category, therefore, RPI proposes to sample some subset of the 5,000 loans. Tr. at 32:2-9; 37:14-22. As explained in RPI's moving brief, this would require the combined efforts of three experts, beginning with a "sampling expert," who draws a sample "capable of yielding statistically significant conclusions" regarding the larger pool (in this case, the 5,000-loan pool). Pl. Mem. at 20-21. Next:

Id. at 21.

For purposes of the pending discovery motion I assume, without deciding, that plaintiff can in fact show, using non-sampling evidence obtained in the ordinary course of discovery, that Deutsche Bank had actual knowledge of thousands of loans as to which there were R&W breaches or Document Exceptions (or as to which it received written notices claiming that there were such defects).26 I also accept, as a general proposition, that sampling, when done correctly, can "conserve[] resources by providing reliable and objective extrapolation to a population without having to examine every single transaction." Pl. Mem. at 20. See generally Deutsche Bank v. Morgan Stanley, 289 F. Supp. 3d at 496 ("Properly done, statistical sampling is not guesswork — it is a scientific method of making accurate inferences (to varying degrees of statistical certainty depending on the methodology employed) about a large population based on careful analysis of a representative subset of that population.") Thus, a well-constructed sampling protocol could provide a reliable estimate of the breach rate within the larger pool; that is, what proportion of loans in that pool that had R&W breaches (or Document Exceptions). In theory, sampling could also provide an estimate of the proportion of such breaches that were "material and adverse." See Pl. Reply Mem. at 9-10 (arguing that a "proper sampling protocol" could "accurately assess," among other things, "materiality of the breach").27

The problem is not what sampling can do; it is what sampling cannot do: it cannot tell the fact-finder which loans in the larger pool had material and adverse R&W breaches or Document Exceptions. Nor can it establish the damages, if any, flowing from the Trustee's failure to put back any specific loan outside of the sample set. See RPI v. HSBC II, 2018 U.S. Dist. LEXIS 31157, at *36 ("Sampling cannot provide loan-specific information as to any loan outside the sample[.]"). Where, as here, the sole remedy available to the Trustee under the express terms of the PSAs is inherently loan-specific, both liability and damages must be established "loan by loan," making sampling unhelpful. See Blackrock v. Deutsche Bank, 2018 WL 3120971, at *2 ("Because plaintiffs need to prove liability and damages on a trust-by-trust and loan-by-loan basis, there is no benefit to sampling beyond what it reveals about the loans within the sample."). As Judge Netburn explained in Blackrock v. Wells Fargo I, 2017 WL 953550, at *5:

Accord Blackrock v. Wells Fargo II, 2017 WL 3610511, at *10-11 (finding "no error in Judge Netburn's thorough reasoning" that "sampling could not help [plaintiffs] identify the loans in breach, demonstrate that any breaches materially affected particular loans, or ascertain the loanspecific cure and repurchase remedy"); RPI v. US Bank, 2018 WL 3350323, at *3 (the "contractual language dictates a `loan-by-loan' analysis, a standard that cannot be met with sampling"). Therefore, even though I have given RPI the benefit of multiple favorable assumptions as to what it may be able to show (both through non-sampling evidence and through its as-yet-unidentified sampling and re-underwriting experts), I cannot conclude that sampling will help it prove any aspect of its case outside of the sample set, even as to loans that meet the "actual knowledge" standard.

B. All "Bad" Loans In The Trusts

In RPI's view, the Trustee's duty to enforce the R&Ws was not limited to the specific loans as to which it received notice, or obtained actual knowledge, of R&W breaches. Rather, RPI seeks to pursue "globalized claims for pervasive breaches of R&W obligations." Pl. Ltr. dated Nov. 17, 2017, at 1. That is, RPI proposes to hold the Trustee liable for each and every materially breaching loan in the Trusts. It can do this, it says, because Deutsche Bank had enough information about "pervasive R&W breaches existent throughout the mortgage industry" generally, Pl. Mem. at 9 n.10, and the "high probability of breaches" within the Trusts in particular, id. at 10, to put it on "inquiry notice" of additional R&W breaches, which in turn "required" it to "take enforcement action for all breaching loans in the . . . Trusts." Pl. Reply Mem. at 1.

Moreover, RPI contends, Deutsche Bank could and should have taken such enforcement action (presumably against all of the "over fifty Warrantors," Chippey Decl. ¶ 16, who made R&Ws with respect to the Trusts) "without having to investigate or know the specific identity of each individual breaching loan." Pl. Reply Mem. at 2. Indeed, according to RPI, Deutsche Bank could and should have used sampling as part of its own "globalized" actions against the Warrantors. See id. (defendant "had the contractual right, ability, knowledge and power to do so").28 By the same token, RPI reasons, it may now use sampling (a) to retrace the steps that Deutsche Bank should have taken; (b) to determine what proportion of all of the loans in each Trust (or at least all of the loans that have "gone bad," Tr. at 24: 9-11) had material R&W breaches; and (c) to calculate its damages on that basis. See Pl. Reply Mem. at 2 ("RPI is entitled to utilize statistical sampling to prove liability and damages by showing what DB should have done to protect the . . . Trusts from losses arising from breaching loans."); Tr. at 38:17-39:3.

Even if sampling could properly be used to establish liability and damages as to loans in the "actual knowledge" pool, RPI could not rely on it to support a globalized claim, based on a "pervasive breach" theory, that substitutes "inquiry notice" for actual knowledge as the trigger for the Trustee's enforcement obligations. See 2/3/16 Mem. & Order at 13-14. As noted above, the inquiry notice standard is fundamentally inconsistent with the language and structure of the PSAs and for that reason not been accepted by any judge in this District for use against an RMBS trustee. See, e.g., RPI v. HSBC I, 2017 WL 945099, at *6 ("discovery," as used in § 2.03 of the PSAs, means "actual knowledge"); Blackrock v. Wells Fargo II, 2017 WL 3610511, at *9 ("`discovery' requires more than inquiry notice"). It therefore cannot furnish a sound basis for the ambitious and expensive expert sampling program that RPI wishes to commence.

RPI's bid to use sampling in support of its pervasive breach theory rests on two additional problematic assumptions. First, RPI presumes that Deutsche Bank could have pursued multiple globalized claims against the Warrantors, using sampling, "without having to investigate or know the specific identity of each individual breaching loan." Pl. Reply Mem. at 2. But two judges in this District have held pervasive breach suits impermissible even when brought directly against warrantors. Homeward v. Sand Canyon, 2017 WL 5256760, at *10; UBS I, 2015 WL 764665, at *11; USB II, 2015 WL 797972, at *2; UBS III, 205 F. Supp. 3d at 401, 424, 476. Two others have permitted "pervasive breach" suits against warrantors, based on sampling evidence, but under circumstances quite different from any that the Trustee could have presented with respect to the Trusts at issue here.

In Deutsche Bank v. Morgan Stanley, Judge Forrest permitted the trustee to proceed against the sponsor on a pervasive breach theory, using sampling, but only after the trustee first sent the sponsor a breach letter which "specifically identified 1,620 loans, which amounted to more than one-third of the underlying loan pool," and which was sufficient to "trigger[] the Repurchase Protocol as to all potentially breaching loans." 289 F. Supp. 3d at 506 (emphasis in the original). In addition, the trustee alleged that the sponsor "knowingly and intentionally transferred thousands of breaching loans into the Trust," id. at 502, which was a significant basis for Judge Forrest's holding that the sole remedy provision in the parties' contract "may be voidable." Id. at 501. Similarly, in Flagstar, 920 F. Supp. 2d at 486, 513, the plaintiff monoline insurer first sent formal letters to the sponsor, identifying specific breaching loans, and then — when the sponsor refused to cure — was permitted to use sampling to show that the loans underlying the two RMBS trusts at issue were "materially fraudulent." Id. at 477, 502-508. Here, in contrast, RPI apparently presumes that Deutsche Bank could have successfully sued all 50 Warrantors without first specifically identifying any breaching loans — or alleging the kind of intentional misconduct at issue in Deutsche Bank v. Morgan Stanley or Flagstar. I cannot share RPI's confidence, and for this reason as well I am reluctant to authorize it to pursue expert sampling evidence that would become relevant and probative only if, among other things, it can convince the trier of fact that Deutsche Bank would have succeeded, in a series of hypothetical lawsuits, in using similar evidence against the Warrantors.

Second, RPI assumes that what the Trustee could do and what the Trustee must do are one and the same. As explained above, however, some of the PSAs expressly say otherwise: "the right of the Trustee . . . to perform any discretionary act enumerated in this Agreement shall not be construed as a duty." HVMLT 2006-8 PSA §§ 8.02 (iii), (viii).29 Moreover, all of the PSAs assure the Trustee that prior to an EOD it is not required to "make any investigation" into the R&Ws unless it is formally requested to do so by one or more Certificate-holders. Id. § 8.02(v).30 They also state that the Trustee need not "expend or risk its own funds . . . in the performance of any of its duties hereunder" unless it has been offered "reasonable security or indemnity satisfactory to it against the costs, expenses and liabilities which may be incurred therein or thereby." HVMLT 2006-8 PSA §§ 8.01(iv), 8.02(iii).31 In Deutsche Bank v. Morgan Stanley, the trustee sued the sponsor after being directed to do so (and presumably indemnified) by Certificate-holders. 289 F. Supp. 3d at 491-93. Here, RPI makes no showing that it (or any other investor) offered either direction or assurances to Deutsche Bank. Nor is RPI entitled, with the benefit of 20-20 hindsight, to read these provisions out of the PSAs entirely. For this reason as well, RPI's pervasive breach theory is unlikely to succeed and cannot justify an order permitting the parties to engage in expert sampling discovery.

C. Post-EOD Loans

The third category of loans for which RPI proposes to use statistical sampling to prove liability and damages consists of loans serviced by Servicers or Master Servicers as to which there was an EOD. Plaintiff asserts that it has uncovered through ordinary discovery, and will present at trial, evidence showing that multiple Servicer or Master Servicer EODs occurred and remained uncured, and that the Trustee had actual knowledge of those EODs, thus stripping it of the contractual protections discussed above and triggering its heightened obligation to:

FFML 2006-FF9 PSA § 8.01.32 According to RPI, "this hefty `prudent person' standard compelled [the Trustee] to investigate the quality of the loans to determine whether or not [it] could make valid repurchase claims," Pl. Mem. at 17, even if the EOD arose out of an unrelated issue. RPI's theory is that if Deutsche Bank had properly investigated — for example, by sampling — it would have discovered many breaching loans, which it could and should have put back to the relevant Warrantors. Id. at 19. Further, RPI contends, "what Deutsche Bank would have found following those required investigations can be proven here through sampling." Id.; see also Pl. Reply Mem. at 10 (sampling will "show the breaches a reasonable trustee would have found upon properly executing its duties").

RPI's motion papers do not estimate the number of loans in the post-EOD "bucket," nor the number of EODs they believe they can prove at trial.33 Once again, however, for purposes of the pending motion I give plaintiff the benefit of the doubt, in this case assuming, without deciding, that RPI can in fact show that Deutsche Bank had actual knowledge of one or more EODs sufficient to trigger its prudent person obligation as to loans affected by that EOD. Where RPI's argument falls short is at the next step: its assertion that a prudent Trustee, faced with a Master Servicer that has defaulted (by, for example, failing to promptly deposit certain payments received from the Servicers it monitors, see FFML 2006-FF9 PSA § 9.06(a)), is obligated by this event to "investigate the quality of the loans" throughout the relevant Trust "to determine whether or not [it] could make valid repurchase claims." Pl. Mem. at 17.

Plaintiff cites no legal authority for this proposition. Nor does it point to any "industry standards or customs at the time, showing that performing some kind of sampling review, identifying and investigating loan breaches, and subsequently enforcing repurchase was what a prudent person would have done following an EOD." RPI v. HSBC I, 2017 WL 945099, at *9 (internal quotation marks omitted).34 Additionally, as Judge Netburn pointed out, the structure of the PSAs undercuts RPI's theory. "[E]ven in the post-EOD context, `[t]he trustee is not required to act beyond his contractually conferred rights and powers.'" Id. (quoting Royal Park Investments SA/NV v. HSBC Bank USA, 109 F. Supp. 3d at 597). Thus, for example, the Trustee is still entitled, after a Master Servicer EOD, to refrain from spending its own funds on an investigation without satisfactory indemnification. RPI v. HSBC I, 2017 WL 945099, at *9; see also FFML 2006-FF9 PSA § 8.02(f).

Absent a firmer foundation for RPI's claim that a prudent person was required to hunt for R&W breaches after a Master Servicer EOD, I am reluctant to authorize the use of sampling, years later, to approximate "what [that] prudent person would have found" had it done its own sampling at the time. Pl. Mem. at 23-24.

D. Proportionality

Fed. R. Civ. P. 26(b)(1) permits the parties to obtain discovery, including expert discovery, regarding any nonprivileged matter that is "relevant to a party's claim or defense and proportional to the needs of the case, considering," among other things, "whether the burden or expense of the proposed discovery outweighs its likely benefit." Proportionality "focuses on the marginal utility of the discovery sought." 2/12/18 Mem. & Order at 16 (quoting Vaigasi v. Solow Mgmt. Corp., 2016 WL 616386, at *13-14 (S.D.N.Y. Feb. 16, 2016)). Thus, "[p]roportionality and relevance are `conjoined' concepts; the greater the relevance of the information in issue, the less likely its discovery will be found to be disproportionate," and vice versa. Vaigasi, 2016 WL 616386, at *14.

By making a motion for permission to conduct sampling-related discovery, RPI has asked the Court to consider the marginal utility of that discovery before it commits itself (and, as a practical matter, commits its opponent as well) to the development, execution, and defense of an expensive expert sampling protocol.35 For the reasons discussed above, I have determined that "the relevance of sampling evidence to prove [RPI's] claims against the trustee is slim to none, while the burdens remain high," RPI v. US Bank, 2018 WL 3350323, at *4, and therefore I conclude — like every other judge in this District who has ruled on a similar motion — that "it is not proportionate to the needs of the case for Royal Park to pursue sampling-related discovery." Id. at *6. See also Blackrock v. Deutsche Bank, 2018 WL 3120971, at *2 ("there is nothing to be gained from allowing statistical sampling per se and much to be lost, in time if not money"); RPI v. HSBC, 2018 U.S. Dist. LEXIS 31157, at *37 ("sampling would provide slight benefit at great cost"); Blackrock v. Wells Fargo II, 2017 WL 3610511, at *11 ("the minimal benefits that sampling could provide to the [plaintiffs] are outweighed by the discovery's burden and expense").

In connection with the proportionality issue I have considered RPI's argument that sampling, while burdensome and costly, is less expensive than the alternative, which is to require it to prove liability and damages individually with respect to all actionable breaching loans in the Trusts. See, e.g., Pl. Reply Mem. at 10 ("the alternative would be re-underwriting thousands more loans across the ten Covered Trusts, and would cost far more and still likely result in evidentiary challenges"). The short answer to this point is that a shortcut is not a shortcut if it terminates in a dead end. Time and money spent on sampling is wasted if — as appears likely — the results will not assist the parties in resolving this action. The longer answer is the answer Judge Castel gave in UBS II:

2015 WL 797972, at *4. As Judge Castel pointed out, the parties have other "powerful tools available to them to streamline the presentation of large volumes of data to the fact finder." Id. (citing, e.g., Fed. R. Evid. 1006).

I have also considered RPI's contention, advanced at oral argument, that since it can develop the expert statistical analyses it envisions based on data it already possesses, see Tr. at 20:10-11 ("we're not seeking any more fact discovery from Deutsche Bank"), it should be permitted to do so on its own nickel and at its own risk, without judicial interference. See id. at 26:9-10 ("give us enough rope to hang ourselves"). As a practical matter, however, "[i]n a litigation with as much at stake as this one, no responsible defense attorney would move forward without at least analyzing plaintiff's sampling expert report, deposing the expert, preparing to cross-examine the expert at trial, and retaining an expert to potentially rebut the plaintiff's expert." RPI v. US Bank, 2018 WL 3350323, at *3. See also Tr. at 45:1-46:22 (Deutsche Bank's counsel, arguing that "the rope" is not "free for us," because "they're going to conduct sampling. And then the trustee is going to have to spend money and time and put in its own ex[pert] report showing why their ex[pert] report is incorrect."). Thus, if I permit plaintiff to conduct sampling-related discovery, I effectively require defendant to do so as well.

III. CONCLUSION

For the reasons stated above, plaintiff's motion to permit sampling-related expert discovery is DENIED. The parties shall submit a proposed revised expert discovery schedule within 10 days of this Order. See Dkt. No. 443, at 3.

SO ORDERED.