Filed: Jan. 30, 2019
Latest Update: Jan. 30, 2019
Summary: REPORT AND RECOMMENDATION OF SPECIAL MASTER TIMOTHY M. CAIN , District Judge . BACKGROUND On March 8, 2018, Industrial Packaging Supplies, Inc. (Plaintiff or IPS) brought suit against Geordy Davidson, John England, Stephen Schroeder, Cory Perry, Quinn Davidson, Michael Schmitt, Jason Nettles, DBE Solutions, LLC and Axis Packaging, LLC. 1 Plaintiff is a South Carolina corporation which claims that the individual defendants, all of whom were formerly employed by plaintiff, have violated ce
Summary: REPORT AND RECOMMENDATION OF SPECIAL MASTER TIMOTHY M. CAIN , District Judge . BACKGROUND On March 8, 2018, Industrial Packaging Supplies, Inc. (Plaintiff or IPS) brought suit against Geordy Davidson, John England, Stephen Schroeder, Cory Perry, Quinn Davidson, Michael Schmitt, Jason Nettles, DBE Solutions, LLC and Axis Packaging, LLC. 1 Plaintiff is a South Carolina corporation which claims that the individual defendants, all of whom were formerly employed by plaintiff, have violated cer..
More
REPORT AND RECOMMENDATION OF SPECIAL MASTER
TIMOTHY M. CAIN, District Judge.
BACKGROUND
On March 8, 2018, Industrial Packaging Supplies, Inc. (Plaintiff or IPS) brought suit against Geordy Davidson, John England, Stephen Schroeder, Cory Perry, Quinn Davidson, Michael Schmitt, Jason Nettles, DBE Solutions, LLC and Axis Packaging, LLC.1 Plaintiff is a South Carolina corporation which claims that the individual defendants, all of whom were formerly employed by plaintiff, have violated certain employment-related agreements with plaintiff. Plaintiff alleges these violations include solicitation of plaintiff's present and prospective customers, sharing of trade secret and confidential information, unauthorized use of customer lists, and unauthorized solicitation of plaintiff's employees, along with use of confidential corporate information. Plaintiff's complaint contains the following causes of action against some or all of the defendants: Violation of the Defend Trade Secrets Act (18 U.S.C. § 1836, et. seq.), violation of the South Carolina Trade Secrets Act) (39-8-10, South Carolina Code, et. seq.,) breach of contract, tortious interference with contract, breach of the duty of loyalty, misappropriation of corporate opportunity, breach of fiduciary duty, conversion, unjust enrichment, and for an accounting. Plaintiff also requests preliminary and permanent injunctive relief.
STATUS
Pursuant to the order of the Honorable Timothy M. Cain (Dkt 87), the undersigned was appointed "to oversee discovery and discovery disputes" in this matter. Plaintiff previously filed a Motion to Compel and Motion for Entry of Forensic Protocol (Dkt 72) ("Motion to Compel"). Defendants filed responses to plaintiff's motion (Dkt 80, Dkt 81). Plaintiff's motion was referred to the undersigned.
In compliance with the Court's initial deadline for submission of a Report & Recommendation, the undersigned reviewed and analyzed the submissions of the parties. The parties then requested the undersigned to delay submitting his Report & Recommendation, as they were hopeful other ongoing discovery would lead to agreement on the pending issues. Recently, plaintiff and defendants Geordy Davison, John England, DBE Solutions, LLC, Axis Packaging, LLC, Davidson Brothers Equity, LLC and Viking Packaging, LLC agreed on a consent protocol to conduct discovery of certain electronically stored information (Ex. A). The undersigned has been informed that entry of this protocol resolves the pending motions as to those defendants.
The undersigned conducted a conference with counsel for plaintiff and counsel for the listed defendants on January 25, 2019. The only matter remaining for decision is whether Stephen Schroeder, Cory Perry, Quinn Davidson, and Michael Schmitt ("defendants") should be subject to the same protocol.2 On January 28, 2019, counsel submitted brief position papers as to this remaining issue. The matter is now ripe for decision.
DISCUSSION
Plaintiff submitted an affidavit of forensic examiner James Scarazzo of FTI Consulting regarding his examination of certain electronic files and devices in the possession of IPS and previously used by defendants Schmitt, Davidson, Schroeder, and Perry while employed by IPS. Defendants also submitted affidavits. All affidavits were previously filed with the Court.
It is plaintiff's position that Mr. Scarazzo's examination discloses that certain documents, presentations, files, and drawings were transferred by defendants to various external devices in defendants' control. Defendants' affidavits claim that each left his work computer and external storage devices on plaintiff's premises as of the date of resignation. Defendants also aver that each has searched his iCloud storage services and/or e-mail accounts for plaintiff's "confidential information," "trade secrets," or tangible property, but none has been found. Some of the defendants do not possess the same cell phone as when they were employed by plaintiff. Plaintiff contends that Mr. Scarazzo's findings are sufficient to require defendants to enter into the consent protocol. Defendants contend Mr. Scarazzo's findings, when compared with their declarations, do not provide sufficient basis for a search of their private electronic devices.
The Consent Protocol requires defendants to identify any and all electronic storage devices, computers, smart phones, etc. which could potentially contain or reflect any of plaintiff's confidential information: (1) which is the subject of this litigation, and (2) to which defendants have had access from January 1, 2016 to the present. The protocol requires that any such devices to be made available to an approved consultant for preservation. Defendants are allowed to have a representative present during the process of preserving the data from the devices.
The protocol requires the approved consultant to insure that all original data sources are preserved, and the consultant must use generally accepted forensic tools and techniques in doing so. The protocol also sets forth requirements for the collection of data from computers, mobile devices and cloud-based repositories.
Plaintiff is required to submit a proposed list of search terms for use in searching the preserved data. Defendants have the right to object and counter-propose search terms. Once search terms are agreed upon or settled by the Court, the approved consultant will produce a search report to counsel. Defendants have the right to object prior to the production of material to plaintiff's counsel.
RECOMMENDATION
The undersigned agrees that an examination of individual personal devices, accounts, etc. can be a significant intrusion into privacy. Such an intrusion should not be undertaken absent a showing of the need for such measures. Plaintiff has presented the affidavit of a forensic examiner, who opines that actions were undertaken by defendants which amounted to a "sophisticated plan . . . to take files and documents belonging to IPS and provide them to AXIS or it's agent." Defendants dispute Mr. Scarazzo's conclusions. Each defendant claims he has searched for the information and found none.3
The protocol does not allow an unlimited search of defendants' personal devices and accounts. Only devices identified by defendants as actually or potentially containing the information at issue are subject to search. The protocol further provides that the search terms utilized must be either agreed to by the parties or approved by the Court. Defendants have an opportunity to object to the production of identified documents and any documents produced will be presumed confidential pursuant to a previously-agreed upon protective order.
The provisions of the protocol considerably lesson the intrusiveness of any search conducted. Defendants will have considerable input into search terms, as well as the ability to object to the production of material to the plaintiff. Coupled with the affidavit of a forensic examiner, as well as plaintiff's representation that the costs of the protocol and the search will not be borne by the defendants, leads to the conclusion that the defendants should participate in the protocol as set forth below.
Accordingly, it is recommended as follows:
1. The defendants submit to the consent protocol;
2. The search terms utilized be narrowly tailored so as to exclude unrelated material;
3. Any dispute as to search terms be resolved in favor of exclusion rather than inclusion; and
4. The search related to defendants Perry and Schmitt end as of the date each ended any employment with the defendants.
Respectfully submitted,
EXHIBIT A
* * * * * * * * *
CONSENT PROTOCOL FOR CONDUCTING DISCOVERY AS TO CERTAIN ELECTRONICALLY STORED INFORMATION
* * * * * * * * * * * * * * * *
REPORT AND RECOMMENDATION OF SPECIAL MASTER
* * * * * * * * * * * * * * * *
INDUSTRIAL PACKAGING SUPPLIES, INC. v. GEORDY DAVISON, JOHN ENGLAND, STEPHEN SCHROEDER, CORY PERRY, QUINN DAVIDSON, MICHAEL SCHMITT, DBE SOLUTIONS, LLC, AXIS PACKAGING, LLC, DAVIDSON BROTHERS EQUITY, LLC, AND VIKING PACKAGING, LLC
Case No. 6:18-cv-00651-TMC
IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF SOUTH CAROLINA GREENVILLE DIVISION
Industrial Packaging Supplies, Inc., Civil Action No. 6:18-cv-00651-TMC
Plaintiff,
CONSENT PROTOCOL FOR
CONDUCTING DISCOVERY AS TO
CERTAIN ELECTRONICALLY
vs. STORED INFORMATION
Geordy Davison, John England, Stephen
Schroeder, Cory Perry, Quinn Davidson,
Michael Schmitt, DBE Solutions, LLC,
Axis Packaging, LLC, Davidson Brothers
Equity, LLC, and Viking Packaging, LLC,
Defendants.
Plaintiff Industrial Packaging Supplies, Inc. ("IPS") initiated this action on March 8, 2018, seeking, among other things, preliminary and permanent injunctive relief against Defendants pursuant to the Defend Trade Secrets Act (the "DTSA"), 18 U.S.C. § 1836 and the South Carolina Uniform Trade Secrets Act (the "Trade Secrets Act"), 765 I.L.C.S. 1065/1, et seq. [ECF No. 1.] In so doing, Plaintiff seeks to secure its proprietary, confidential and trade secret information by requiring Geordy Davidson ("Geordy"), John England ("England"), DBE Solutions, LLC ("DBE Solutions"), Axis Packaging, LLC ("Axis"), Davidson Brothers Equity, LLC ("Davidson Bros.") and Viking Packaging, LLC ("Viking") (collectively, the "Defendants") to identify, secure, segregate, and return any such information within their possession, custody or control.
Defendants, for their part, deny having used or possessed any of Plaintiff's trade secret information. Defendants, however, have agreed to Plaintiff's request to conduct discovery of certain laptops, computers and related electronic storage devices; both to confirm Defendants' assertions regarding trade secret or proprietary information and to also assist the parties in the collection of other potentially relevant documents and information sought by Plaintiff in its pending discovery. Plaintiff and Defendants agree that the entry of an Order pursuant to which IPS may conduct this electronic forensic discovery in a manner that safeguards Defendants' proprietary and privacy interests, will be to the benefit of all parties and, specifically, will fully and fmally resolve Plaintiff's pending Motion to Compel and Motion for Entry of a Forensic Protocol as to these Defendants.1 [ECF 72.]
Accordingly, this Court, having reviewed Plaintiff's Motion and related submissions, for good cause shown and with the consent of Defendants, hereby finds Plaintiff's requested relief to both reasonable and appropriate. As such, Plaintiff's Motion shall be and is hereby GRANTED. This ESI Protocol, and any properly executed modifications hereof, shall hereinafter be used by the parties for that purpose and shall exclusively govern the parties' review and examination of Defendants' electronic data storage devices and services.
NOW THEREFORE, it is hereby ORDERED:
1. Plaintiff is authorized to use Forensic Technology, Inc. ("FTI"), or any other consultant approved by both parties in writing (each an "Approved Consultant"), to conduct any data forensic and electronic discovery services contemplated by this ESI Protocol. Defendants merely acknowledge and consent to Plaintiff's anticipated use of FTI for the data collection on behalf of the Plaintiff. In doing so, Defendants do not (a) place any credence in FTI or any agent or employee thereof, or (b) accept, adopt, or approve of any results FTI (or any agent or employee thereof) may reach in this matter, or (c) agree with any conclusions FTI (or any agent or employee thereof) may reach in this matter.
2. Any Approved Consultant and/or representative of an Approved Consultant who is involved in this litigation in any way, including but not limited to the collection, examination, compilation, use or disclosure of data from the Evidence (as such term is defined hereinbelow), will be subject to the jurisdiction of this Court and shall, upon the entry of any confidentiality and/or protective order filed in this case, execute the requisite acknowledgment of same.
3. Any data acquired and/or preserved by an Approved Consultant will be stored on encrypted media when in transit to further safeguard the information stored thereon. At all times, the Evidence shall not be moved by mail or common carrier.
4. No data from the Evidence may be removed, copied, transferred, or disclosed by any person, party or entity except an Approved Consultant and only as specifically provide for herein.
I. IDENTIFICATION
5. Identification of Devices. Within three (3) business days of the entry of this ESI Protocol, Defendants shall identify to counsel for Plaintiff each and every computer, smart phone, external hard drive, server, cloud storage facility, or other electronic data storage device to or of which Defendants, including their principals, employees, agents, and representatives, have respectively had access, possession, custody or control presently or since January 1, 2016, to the present, which, to the best of Defendants' knowledge, could potentially or does in fact contain or reflect any of Plaintiff's confidential, proprietary or trade secret information, or upon which Defendants reasonably anticipate may be stored documents, correspondence or information relevant and responsive to Plaintiff's now pending discovery requests.
6. Identification of Accounts. Within three (3) business days of the entry of this ESI Protocol, Defendants shall identify to counsel for Plaintiffs each and every electronic mail account and/or service (including, without limitation, any Gmail or similar cloud email service) to which Defendants, including their principals, employees, agents, and representatives, have respectively had access, possession, custody or control presently or since January 1, 2016, to the present, which, to the best of Defendants' knowledge, could potentially or does in fact contain or reflect any of Plaintiff's confidential, proprietary or trade secret information, or upon which Defendants reasonably anticipate may be stored documents, correspondence or information relevant and responsive to Plaintiff's now pending discovery requests.
7. Certification. Defendants shall submit a certification, under oath, that they have fully complied with the above two sections requiring the identification of all potential sources of Evidence.
II. PRESERVATION OF DATA SOURCES
8. Within five (5) business days of (a) the entry of this ESI Protocol or (b) being provided in writing with the name and contact information of the Approved Consultant engaged by Plaintiff in this matter, whichever is later, Defendants and their counsel will make all devices and accounts (including any and all necessary credentials and/or encryption keys) identified in Section I available to an Approved Consultant for preservation. At all times, the Devices shall not be moved by mail or common carrier.
9. The preservation of data from Devices may occur at the offices of Defendants' counsel, at a lab or office at which such work is regularly performed by an Approved Consultant, or at another location agreed to by the parties.
10. An Approved Consultant will preserve all available data including allocated and unallocated space on a device in a forensic manner from any Devices using commercially available hardware and/or software, which is designed for such purpose. The resulting data will hereinafter be the "Preserved Evidence" or "Evidence". Each Defendant may have a representative present at any time during the entire process of preserving the Preserved Evidence. The preservation of the Preserved Evidence will be scheduled and carried out in a manner which will pose the least possible disruption to Defendants' business functions and personal lives including, but not limited to, occurring on weekends or between the hours of 7:00 p.m. and 6:00 a.m.
11. Before inspecting any physical devices, the Approved Consultant shall record in writing the specifications, characteristics, any unique identifiers (e.g., Serial Number, MELD, etc.) for the device and document current physical condition and operability.
12. For any physical storage devices (e.g., laptops, desktops, flash drives), the Approved Consultant will make full bit-by-bit forensic images of the Device. The Approved Consultant shall validate (or test the results to ensure repeatability) the forensic image of any imaged Device and provide to all parties, in writing, a general description of the process and tools utilized to conduct the imaging. The Approved Consultant shall take all necessary steps to ensure that the original data sources are neither permanently destroyed nor altered. Nothing in this Order shall be construed to absolve the Approved Consultant, or any employee, agent, or contractor thereof, of civil liability for damages arising out of the destruction or alteration of Defendants' or any other party's original data sources.
13. For any mobile devices (e.g., smart phones, tablets, etc.) the Approved Consultant will use forensic tools, methods, and techniques recognized throughout the industry as safe to the original data sources and effective. As available, the Approved Consultant will cross-verify the results with a different tool and document in writing a general description of the tools, methods, and techniques utilized to conduct the acquisition.
14. For virtual or cloud-based repositories (such as iCloud, iTunes, Gmail, Google Apps, and other similar cloud-services providers that allow for the storage and/or syncing or archiving of data), the Approved Consultant will use forensic tools, methods, and techniques recognized throughout the industry as safe to the original data sources and effective, in order to forensically acquire all available data from the source. The Approved Consultant will document in writing all information necessary to identify the original source of the virtual repositories.
15. The inspection and collection of data from any mobile device shall be conducted on site where the mobile device is regularly maintained, except by agreement with the Parties wherein the mobile device may be inspected and collection of data at another location. The inspection and collection of data from any mobile device shall be made and the device returned to the owner within three (3) hours of the data being preserved. For any Device from which it is contended that Plaintiff's confidential or proprietary information should be removed, the parties will confer regarding a procedure to remove from such device any information which Plaintiff believes to be Plaintiff's confidential or proprietary information. Any dispute regarding the removal of information or the return of a device will be resolved by the Court or Special Referee if agreed to by the parties.
16. The Approved Consultant shall be allowed to maintain possession and control of the Preserved Evidence to the extent necessary to perform searches and related forensic examination pursuant to this Protocol. The Preserved Evidence shall not be accessed or transmitted, except as set forth in this Protocol. At all times when the Preserved Evidence is in the possession and control of the Approved Consultant, the Preserved Evidence shall be maintained in the possession and control of the Approved Consultant using the degree of care which the Approved Consultant would use to maintain possession and control of its own most highly valued business information. Nothing in this Order shall be construed to absolve the Approved Consultant, or any employee, agent, or contractor thereof, of civil liability for damages arising from the loss, destruction, or alteration of the Preserved Evidence.
III. SEARCHING, REPORTING & REVIEW
17. Plaintiff shall submit to the counsel for Defendants a list of search terms to be used in searching the evidence files within three (3) days of the data preservation. Counsel for Defendants shall have three (3) business days from receipt of this list to raise any objections to the term search list. Counsel, either collectively or independently, can request the assistance of Approved Consultant to develop the search terms. If there are any objections raised that the parties cannot resolve, the Court will resolve them. The Approved Consultant may proceed with searches of all data using the terms to which Defendant has not objected. Any such search shall not waive attorney-client privilege or work product/trial-preparation privilege as to any documents searched, whether searched directly or searched as part of a larger file or collection of documents.
18. At Plaintiff's request and expense, the Approved Consultant may process the Evidence files using forensic tools, methods, and techniques recognized throughout the industry as safe to the original data sources and effective, and may conduct a search of all evidence files to locate documents and/or files containing the approved search terms. The results of this search will be the "Search Results." The Approved Consultant will produce a search report to all Counsel.
19. Counsel for Defendants will review the Search Results. Within five (5) business days of receiving access to the Search Results, Defendants' Counsel shall identify to Plaintiff's Counsel any files/documents for which they raise any objection as to the production of such information to Plaintiff. In the event Defendants' Counsel needs additional time to conduct this review, they may request a reasonable extension of this time period to complete this review, which shall not be unreasonably denied. Any files among the Search Results to which Defendants do not assert an objection within the review period will then be provided to Plaintiff's Counsel by the Approved Consultant.
20. Plaintiff may respond to any objection within seven (7) business days, but shall not be provided copies of the data/file itself until a ruling by the Court or Special Referee if agreed to by the parties or unless otherwise agreed by the parties.
21. Within three (3) business days of receiving Plaintiff's responses, if Defendants maintain the objection, Plaintiff may submit the matter to the Special Referee. The Special Referee may review any contested documents/files en camera to determine whether they should be disclosed.
IV. PRODUCTION
22. All Search Results that are not withheld by Order of the Special Referee or by unchallenged objection by one or more Defendants will be produced to each of the parties in their format of choice (e.g., PDF and/or with load files for a review tool), utilizing the same DocID's and/or Beg Bates number, at no charge to Defendants.
23. These documents will be presumed highly Confidential under the terms of the Confidentiality and Protective Order and this presumption remains unless the parties otherwise agree or the Court or Special Referee if agreed to by the parties so orders.
V. ADDITIONAL FORENSIC ANALYSIS
24. At Plaintiffs request and expense, an Approved Consultant may also conduct an examination of the Evidence to determine data relative to Defendants' Devices, including, but not limited to, reporting on alteration/deletion of files or determining when, for example, a particular peripheral (e.g. flash drive, external hard drive) was plugged in to the particular Device or an account (e.g., Google Drive) was accessed or installed on a particular Device.
25. If Counsel identify additional data sources (e.g., devices, accounts and/or custodians), Sections I through IV will be repeated unless otherwise agreed to in writing by both Counsel.
26. The results of this examination pursuant to Paragraphs 24 and 25 will be the "Forensic Analysis" and will be Plaintiff's work product and shall be subject to discovery only as set forth in the Federal Rules of Civil Procedure and the Local Rules of this Court. However, any report generated by the Forensic Analysis that Plaintiff intend to use as an exhibit at any hearing, deposition or trial of this matter must be timely disclosed to Defendants prior to such use.
27. If Plaintiff's Approved Consultant is subsequently designated as an expert for purposes of offering any testimony in this case, then the Approved Consultant's report(s) shall be timely disclosed as required by the Federal Rules of Civil Procedure and the Local Rules of this Court.
28. If the Forensic Analysis shows that a particular file is related to the subject matter of this action and that file is not included in the Search Results, the Approved Consultant will not disclose the contents of any documents without first obtaining the Defendant's written consent.
29. Plaintiff may request additional searches of the Forensic Images. Any additional searches of the Forensic Images shall be conducted as set forth above, and any objection to additional searches shall be determined by the Court or Special Referee if agreed to by the parties.
30. The activities covered by this ESI Protocol shall be governed by the Federal Rules of Civil Procedure and the Local Rules of this Court. Any modifications to this ESI Protocol must be made in writing signed, by hand or electronically, by the parties or their representatives.
31. In the event Defendants subsequently have need to conduct forensic discovery of Plaintiff's systems or devices as discovery in this case develops, Defendants may move to amend this ESI Protocol to allow for such discovery, and such amendment shall be granted absent good cause shown by Plaintiff.
It is SO ORDERED this __ day of January, 2019.
Judge, United States District Court
District of South Carolina
