Electrolux Home Products, Inc. v. Whitesell Corp., 2006 WL 355453 (S.D. Ohio Feb. 15, 2006)
In this case, third parties that had been subpoenaed by the defendant ('respondents") moved to stay enforcement of the magistrate judge's Decision and Order Enforcing Subpoenas (referred to as the "Confirmation Decision"), and petitioned for a Certificate of Interlocutory Appeal. The Chief Magistrate Judge wrote the opinion.
The Chief Magistrate Judge observed that the respondents did not indicate an intent to appeal the Confirmation Decision to the district court judge. Instead, they sought a stay until the district court judge could decide whether to certify for interlocutory appeal two questions relating to the underlying subpoenas:
1. Whether the District Court erred when it compelled Respondents to produce documents (including electronic information) responsive to Whitesell's subpoenas in conflict with the decision of the [United States District Court for the] Western District of Tennessee, which quashed nearly identical subpoenas that Whitesell had issued to non-party Martin Industrial Supply Company; and
2. If the District Court did not err in compelling production, did it err when it permitted Whitesell to send its IT vendor, Interhack, to Respondent Bamal's place of business to conduct a forensic review of Bamal's computer systems absent a holding of bad faith on Respondents' Part?
The Chief Magistrate Judge found that the first question did not merit interlocutory appeal because the decisions were not in conflict, and even if they were, it was not a controlling issue of law. He also found that the second question was not ripe for appeal. In addition, he concluded that the respondents should be held to have waived any appeal on the second question by their failure to raise it in their first appeal from enforcement of the subpoenas. He noted that, in the first decision enforcing compliance with the subpoenas, the Magistrate Judge wrote:
With respect to electronic information, Respondents shall make their computer systems available for inspection by Whitesell's counsel (including information technology consultants retained by Whitesell to assist) not later than December 27, 2005. Whitesell's counsel shall conduct this inspection and any copying/downloading from the Respondents' computer systems in such a manner as to minimize interference with Respondents' business operations. All electronic information shall be submitted for inspection in its native electronic form.
(Citation omitted.) Although respondents made fourteen specific objections to that order, they did not include any objection that the initial inspection of their computers would be done by forensic computer examiners employed by Whitesell's counsel. The Chief Magistrate Judge further observed:
Indeed, during the hearing on October 17, 2005, Whitesell's counsel had suggested that the examination be performed that way to avoid imposing a cost burden on Respondents, who have no in-house IT capacity; Respondents offered no objection to that suggestion when it was made. Nor did they even begin to suggest the Court could order examination in this manner only upon a finding that Respondents had acted in bad faith.
The Chief Magistrate Judge also noted that, given the case load of the Sixth Circuit, it is extremely unlikely that it would take the case or, if it did, decide it in time to allow discovery here before the discovery cut-off in the underlying litigation.
Finally, the Chief Magistrate Judge opined that, even if the court should certify one or both of the these questions for interlocutory appeal, it should not stay enforcement of the subpoenas pending appeal. He observed that the two enforcement orders entered by the Magistrate Judge had taken every measure to protect Respondents:
1. Respondents will have no expense; all the expense of discovery will be borne by Whitesell.
2. None of Respondents' trade secrets will be compromised because all discovery is to be on an attorneys-eyes-only basis.
3. There is no compromise of attorney-client privilege because Respondents' counsel will see the master data disk and have an opportunity to create a privilege log before the data is released to Whitesell's counsel.
Respondents have complained throughout this proceeding of the burden being imposed on them. Instead of lessening that burden by cooperating in discovery, they have fought a Stalingrad defense costing untold thousands of dollars in attorney fees and providing increased evidence that they have something to hide.
(Footnote omitted.) The Chief Magistrate Judge denied respondents' Motion to Stay Enforcement pending appeal, and recommended that the Motion to Certify under 28 U.S.C. ¬ß 1292(b) be likewise denied.