Court Denies Plaintiff Direct Access to Mirror Images of Defendants’ Hard Drives; Defense Expert to Conduct Forensic Search with Ongoing Input from Plaintiff and Plaintiff’s Expert

Calyon v. Mizuho Secs. USA Inc., 2007 WL 1468889 (S.D.N.Y. May 18, 2007)

This case involved claims against former employees (the “Individual Defendants”) and their new employer for the misappropriation of confidential business information.  According to Calyon, the Individual Defendants used email and small, hand-held computer storage devices to remove vast quantities of Calyon’s business data and documents.  Plaintiff and the Individual Defendants reached an agreement to preserve the hard drives of the Individual Defendants’ personal computers and computer storage devices by creating “mirror images” of them.  However, the parties were unable to reach agreement on the protocol for reviewing the mirror images, and sought the court’s assistance.
Calyon contended that because the hard drives contained evidence of the Individual Defendants’ removal of proprietary information, its forensic expert should be entitled to inspect the entirety of their mirror images.  Calyon maintained that only its expert – as opposed to the Individual Defendants’ expert or an independent third-party expert – would possess the requisite incentive to search exhaustively for evidence, and that only Calyon’s expert would be able to confer with Calyon’s counsel on an on-going basis to refine search methods.

The Individual Defendants argued that granting Calyon’s expert “unfettered access” to the home computers and computer storage devices would impermissibly invade the privacy rights of the Individual Defendants and their non-party family members who also used the computers.  The Individual Defendants proposed that their own expert review the mirror images by using search terms provided by Calyon, or, alternatively, that a search be performed by an independent third-party expert, who would presumably be appointed by the Court (although at Calyon’s expense), and who would be able to consult with Calyon on the information it seeks.

The court noted that the discovery of electronically stored information was specifically addressed by Fed.R.Civ.P. 34(a), as amended effective December 1, 2006, which allows a party to request that another party “produce and permit the party making the request … to inspect, copy, test, or sample any … electronically stored information.”  The court cited the Advisory Committee’s notes and observed:  “[i]nspection or testing of certain types of electronically stored information or of a responding party’s electronic information system may raise issues of confidentiality or privacy.”  It further noted that Rule 34(a) does not entitle a party to “a routine right of direct access to a party’s electronic information system, although such access might be justified in some circumstances.” (Citations omitted.)

The court found that, in the time since the 2006 amendment to Rule 34(a), only a few cases with similar facts had addressed whether the imaging and inspection of hard drives was justified.  These cases included Ameriwood Industries, Inc. v. Liberman, 2006 WL 3825291 (E.D. Mo. Dec. 27, 2006), amended by 2007 WL 685623 (E.D. Mo. Feb. 23, 2007); Cenveo Corp. v. Slater, 2007 WL 442387 (E.D. Pa. Jan. 31, 2007); Frees, Inc. v. McMillian, 2007 WL 184889 (W.D. La. Jan. 22, 2007); Balfour Beatty Rail, Inc. v. Vaccarello, 2007 WL 169628 (M.D. Fla. Jan. 18, 2007).  The court went on to discuss each case, and concluded that Calyon had failed to make the requisite showing for the “extraordinary” relief requested.  Calyon did not argue that the Individual Defendants failed to produce all responsive documents, or that there were “discrepancies or inconsistencies” in their discovery responses, or that there had been any representation that relevant documents or data had been lost, such that there was a need for Calyon to conduct a more exhaustive electronic search in order to try to find that information.  Further, Calyon did not identify any specific information that it sought to recover from the mirror images, or show that the Individual Defendants would not be capable of, or willing to, produce that particular information.  “In sum, the Court is not yet faced with any failure by the defendants to conduct a thorough forensic search of their computers, or to produce any and all relevant documents, files, metadata, and even hidden data fragments that Calyon may request.”

In addition, the court did not find a need for an independent computer expert, since it would “introduce yet another layer of expertise to a case where each side has already retained experts of their choice, and which would make the prosecution of this action more costly.”

Accordingly, the court denied Calyon’s motion without prejudice, and ordered:  (1) that the Individual Defendants make their computer forensics expert (“FTI”) accessible for consultation with Calyon’s expert, so that FTI could search the mirror images based on a search protocol agreed to by both parties; (2) that the Individual Defendants’ counsel and expert confer with Calyon’s counsel and expert on an on-going basis to determine if the search protocol needs refinement; and (3) that the Individual Defendants preserve the mirror images of all the computer hard drives and other storage devices in question in the event Calyon later demonstrates that relevant and responsive information has been withheld or is missing, or that the Individual Defendants’ expert has failed to consult fully, in good faith, with Calyon’s expert in order to develop an appropriate search protocol.  In such event, Calyon would be permitted to renew its application for direct access to the mirror images.