Court Orders Inspection Of Hard Drive After Delays In ESI Disclosures

Posted by Gregg Mayer on Monday, April 14th, 2008   

In a March 26 opinion, a Florida federal magistrate ordered a plaintiff to open up the computer hard drives of various employees so that the defendant could search for responsive email and other electronically stored information (“ESI”).

The plaintiff was also ordered to pay the attorney fees for the various motions to compel that the defendant had to file before being granted access to the hard drives.

Since this is a case where the court had to intervene and order the defendant to open up certain computer hard drives, this case will likely be one of the more important e-Discovery decisions of early 2008.

In U&I Corporation v. Advanced Medical Design, Korean-based U&I filed a breach of contract case in October 2006 against American Medical for failing to pay a balance due for medical equipment. As part of the litigation, both sides sought various ESI, including email sent by U&I employees.

After some haggling over what ESI should be disclosed, U&I belatedly acknowledged that it could not retrieve email from 2004. U&I explained that a “failure of the hard drive caused the 2004 e-mail account to be ‘unloadable’ or unretrievable.” U&I agreed to produce email from 2003, 2005, 2006 and 2007.

However, American Medical discovered that not all of the 2005 and 2006 email was produced because when American Medical subpoenaed a third-party company, that company disclosed various email messages from U&I employees that U&I never disclosed.

In short, American Medical argued that U&I delayed in telling American Medical that its 2004 email was not recoverable, and it failed to disclose all of the email from 2005 and 2006. American Medical sought sanctions.

In response, U&I argued that – despite another company’s production of some email that U&I did not disclose – there was no evidence that U&I deliberately withheld ESI. U&I also noted it disclosed approximately 14,500 documents. In addition, U&I threw out a host of other excuses for failing to disclose all of its ESI, including “language barriers of its employees” and “confusion.”

In weighing the arguments, the court sided with American Medical.

U&I’s assertion that the delay in providing documents to American Medical was caused by the international travel requirements of its employees, server and software problems, confusion, language barriers of its employees and the lack of understanding of the American legal system does not excuse U&I’s tardy and incomplete responses. After all, U&I was the party which filed this lawsuit…At the outset of the litigation, U&I and its counsel had the responsibility to take affirmative steps to ensure that all sources of discoverable information were identified, searched, and reviewed so that complete and timely responses to discovery requests could be provided.

It is not the court’s role, nor that of opposing counsel, to drag a party kicking and screaming through the discovery process. U&I has failed to show substantial justification for its failure and unwillingness to abide by discovery rules and the court’s prior orders…

Consequently, the court ordered U&I to pay American Medical’s attorney fees for bringing the motion to compel. Moreover, the court ordered that American Medical be allowed to inspect the hard drives of certain U&I employees in search for responsive ESI. A forensic examiner would conduct the search.

U&I highlights the importance of maintaining a strong archiving system. When doubts are raised about whether a company has disclosed all of the relevant ESI, then courts are likely to step in and let the opposing side take a look for themselves.

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