Fasteners For Retail, Inc. v. DeJohn , 2014 Ohio 1729 ( 2014 )

[Cite as Fasteners For Retail, Inc. v. DeJohn, 2014-Ohio-1729.]
Court of Appeals of Ohio
EIGHTH APPELLATE DISTRICT
COUNTY OF CUYAHOGA
JOURNAL ENTRY AND OPINION
No. 100333
FASTENERS FOR RETAIL, INC.
PLAINTIFF-APPELLEE
vs.
MICHAEL A. DEJOHN, ET AL.
DEFENDANTS-APPELLANTS
JUDGMENT:
REVERSED AND REMANDED
Civil Appeal from the
Cuyahoga County Court of Common Pleas
Case No. CV-12-786894
BEFORE: Kilbane, J., Keough, P.J., and McCormack, J.
RELEASED AND JOURNALIZED: April 24, 2014
ATTORNEY FOR APPELLANTS
John F. Burke
Burkes Law, L.L.C.
614 West Superior Ave.
Rockefeller Bldg., Suite 1500
Cleveland, Ohio 44113
ATTORNEYS FOR APPELLEE
Charna E. Sherman
Charna E. Sherman Law Offices
5310 Key Tower
127 Public Square
Cleveland, Ohio 44114
F. Benjamin Riek, III
Emershaw, Mushkat & Schneier
120 E. Mill Street, Suite 437
Akron, Ohio 44308
MARY EILEEN KILBANE, J.:
{¶1} In this appeal, defendants-appellants, Michael DeJohn (“DeJohn”) and
Daniel Kump (“Kump”),1 appeal from the trial court’s order compelling them to produce
their computer hard drives for forensic imaging2 in litigation filed by plaintiff-appellee,
Fasteners for Retail (“FFR”).
{¶2} Having reviewed the record and the controlling case law, we reverse and
remand the matter for further proceedings consistent with this opinion.
{¶3} This appeal arises from a lawsuit filed by FFR in an unrelated matter in the
United States District Court for the Northern District of Illinios. See Fasteners for Retail
v. Anderson, N.D.Ill. No. 11 C 2164, 2011 U.S. Dist. LEXIS 124937 (Oct. 28, 2011).
FFR, a company engaged in selling products used in retail shelving displays, brought suit
against K International (“KI”) and Gerald Andersen alleging patent infringement, false
advertising, misappropriation of trade secrets, and other claims. KI filed a counterclaim,
alleging false patent marking and other claims. During the course of the Illinois
litigation, FFR learned that DeJohn, who had worked as FFR’s vice president in charge of
sales until his termination on March 12, 2008, performed consulting work for KI. FFR
also learned that Kump, who had worked as FFR’s vice president for new market
1 Thisappeal was previously consolidated with 8th Dist. Cuyahoga No.
100336, an appeal from the same discovery order filed by defendant Bruce Hrvatin
(“Hrvatin”). On March 6, 2014, however, this court granted Hrvatin’s motion to
dismiss his appeal.
2On September 10, 2013, this court determined that the discovery order is
final and appealable under R.C. 2505.02(B)(4).
development until his termination on October 24, 2009, also performed consulting work
for KI.
{¶4} Subsequently, on July 12, 2012, FFR filed suit against DeJohn and Kump in
the Cuyahoga County Common Pleas Court. In relevant part, FFR alleged that DeJohn
and Kump had breached the confidentiality and nondisclosure provisions of their
employment agreements, misappropriated trade secrets, and engaged in unfair
competition; Kump breached his noncompete agreements; and DeJohn tortiously
interfered with Kump’s contract with FFR. DeJohn and Kump filed answers denying
liability and also filed counterclaims asserting breach of contract, abuse of process, and
unfair competition.
{¶5} In October 2012, FFR sought discovery from defendants; however,
defendants did not fully comply with FFR’s request. As a result, on December 7, 2012,
FFR filed a motion to compel in which it complained that DeJohn and Kump filed
incomplete responses to a number of interrogatories. In the motion, FFR stated that
DeJohn and Kump objected to the discovery request because it was overbroad, indicated
overall that they had no list of FFR customers, and argued that neither individual had
disclosed FFR’s confidential information.
{¶6} In response, DeJohn and Kump moved to strike the motion to compel
because it was not signed by counsel. Defendants also asserted that the response “may
exceed 20,000 names. Moreover, plaintiff is fully aware of its customers and this
defendant has no documentation containing any such customers’ names.” In addition, on
December 7, 2012, defendants filed their own motion to compel FFR to comply with
discovery, seeking the nature of the confidential information they had allegedly disclosed
to KI. In this motion, defendants complained that FFR had “failed to respond to nearly
all of [their] interrogatories and had failed to produce a single document in response to
the Request for Production of Documents.”
{¶7} On December 26, 2012, FFR moved for a protective order governing use of
confidential information and apprised the court that the parties “have failed to reach
agreement on terms of a stipulated protective order creating a standstill in discovery.”
{¶8} The same day, FFR also filed a motion for electronic discovery, asserting
that the parties “have been unable to agree upon the parameters of discovery.” FFR
proposed that defendants produce “any relevant computer hard drives and electronic
media” for FFR’s review, and from that review a list of search terms would be derived.
Upon completion of defendants’ discovery, FFR would “produce pursuant to a protective
order a subset of documents concerning the information FFR contends constitutes
Confidential Information.” In opposition, defendants asserted that it would be unfair to
order defendants to provide discovery to FFR before FFR provided any discovery to
defendants. Defendants complained that FFR had not provided them with discovery and
that FFR had already received extensive electronic discovery in the Illinois litigation.
{¶9} On March 26, 2013, the trial court granted defendants’ motion to compel
discovery responses and also granted FFR’s motion to compel discovery and for
sanctions.
{¶10} On March 27, 2013, FFR filed an amended complaint with leave of court.
In relevant part, this pleading added Hrvatin and KI as new party defendants and alleged
that DeJohn, Kump, and Hrvatin breached their employment agreements,
misappropriated trade secrets, and engaged in unfair competition; that DeJohn tortiously
interfered with Kump’s employment; and that Kump and DeJohn fraudulently induced
FFR to enter into severance agreements.
{¶11} On May 31, 2013, following a pretrial, the trial court ordered, in relevant
part, that FFR “produce 20 gigs of documents” “for attorney’s eyes only,” and identify
those documents that would notify the defendants of the basis of their alleged disclosure
of trade secrets. The trial court also ordered defendants to produce all outstanding
discovery “for attorney’s eyes only.”
{¶12} On July 9, 2013, FFR filed another motion to compel and for sanctions,
complaining that Hrvatin had indicated in response to a motion for production of
documents that “[t]here are no documents that satisfy this request,” and that documents
FFR obtained in the Illinois litigation and Hrvatin’s other discovery responses refuted that
contention.
{¶13} On July 12, 2013, FFR filed a motion to compel defendants to comply with
discovery and for production of their computer hard drives. FFR asserted that
defendants have “engaged in knowingly evasive and even perjured testimony, and
potentially even the spoliation of critical evidence.” In support of this motion, FFR
asserted that there are “mounting signs” that “[d]efendants purposely destroyed relevant
electronic information.” FFR asserted that DeJohn stated that he experienced computer
problems that prevented him from retrieving all of his emails, and that Kump had the hard
drive on one of his computers replaced one day before this matter was filed. FFR also
asserted that DeJohn wrote “Hello men” on a number of emails with two recipients who
are employees of FFR, but “FFR has received more of the chain,” thus suggesting that a
larger email chain existed. FFR also submitted evidence that its expert, Mark
Lanterman, had developed an electronic discovery protocol that has successfully been
used by attorneys for years.
{¶14} In opposition, defendants asserted that FFR should not be given unfettered
access to their computers since FFR already had access to all of the email sent to FFR
from its own servers, in addition to all of the information obtained in the Illinois
litigation. Moreover, defendants argued, FFR had not shown that the defendants
revealed any confidential information.
{¶15} On August 8, 2013, FFR filed a motion for an extension of time to respond
to defendants’ requests for discovery. The next day, on August 9, 2013, the trial court
issued the following order:
Defendants Kump, DeJohn, and Hrvatin are hereby ordered to produce
electronic discovery and the computer hard drives by 9/3/13.
All parties are to answer all interrogatories served on them by opposing
counsel.
{¶16} Defendants appealed from that order on August 30, 2013. On September
10, 2013, this court determined the order to be final and appealable under R.C.
2505.02(B)(4), and concluded in relevant part:
To the extent the order requires disclosure of such matter, it determines the
action with respect to a provisional remedy and prevents a judgment in
appellant’s favor with respect to the discovery. Bennett v. Martin, 186
Ohio App.3d 412, 2009-Ohio-294, [928 N.E.2d 763,] ¶ 35 [(10th Dist.)].
An appeal following a final judgment would not be an effective remedy for
the disclosure of privileged and/or confidential information.
{¶17} DeJohn and Kump assign the following errors for our review:
I. The trial court erred because its order compels production of irrelevant,
privileged and confidential information and imposes an undue burden on
Appellants.
II. The trial court erred in ordering forensic imaging of Appellants’
computer hard drives because Appellee failed to demonstrate what it must
[do] to warrant that degree of intrusion, disruption, and invasion.
III. The trial court erred in issuing the discovery order because it fails to
include any protocols and procedures and because it fails to adequately
protect Appellants’ privileged and confidential electronically-stored
information.
Standard of Review
{¶18} Pursuant to Civ.R. 26(B)(1), the scope of discovery is as follows:
[A]ny matter, not privileged, which is relevant to the subject matter
involved in the pending action, whether it relates to the claim or defense of
the party seeking discovery or to the claim or defense of any other party[.]
{¶19} An appellate court reviews a claimed error relating to a discovery matter
under an abuse of discretion standard. Lightbody v. Rust, 137 Ohio App.3d 658, 663,
739 N.E.2d 840 (8th Dist.2000); Trangle v. Rojas, 150 Ohio App.3d 549,
2002-Ohio-6510, 782 N.E.2d 617 (8th Dist.).
{¶20} Further, if forensic imaging is imposed as a sanction under Civ.R. 37(B), it
is likewise to be reviewed under an abuse of discretion standard. Bennett, 186 Ohio
App.3d 412, 2009-Ohio-6195, 928 N.E.2d 763, ¶ 40.
Order for Production of the Computer Hard Drives
{¶21} In this matter, the trial court ordered defendants to produce their computer
hard drives for discovery. Forensic imaging of a computer’s hard drive creates a mirror
image that replicates bit for bit, sector for sector, all information on the hard drive,
including embedded, residual, and deleted data. Id. The Bennett court noted that courts
are generally reluctant to compel such forensic imaging of a hard drive “largely due to the
risk that the imaging will improperly expose privileged and confidential material
contained on the hard drive.” Id. For that reason, and in order to guard against undue
intrusiveness to a party’s privacy and confidentiality, the Bennett court established a
two-part procedure to determine whether forensic imaging is warranted, as opposed to
other discovery procedures. Id. First, the trial court must weigh the parties’ interests in
obtaining the discovery against privacy concerns. Second, the trial court must set forth a
protective protocol to ensure forensic imaging is not unduly intrusive. Id.; Nithiananthan
v. Toirac, 12th Dist. Warren No. CA2011-09-098, 2012-Ohio-431, ¶ 9.
1. Weighing of Interests in Discovery Versus Privacy
{¶22} In their first and second assignments of error, DeJohn and Kump assert
that the trial court did not follow the first part of the procedure outlined in Bennett, 186
Ohio App.3d 412, 2009-Ohio-6195, 928 N.E.2d 763. Defendants argue that the trial
court did not weigh FFR’s interests in obtaining discovery versus the defendants’
competing interests in privacy and confidentiality, and that the record did not establish the
requisite background of noncompliance with discovery.
{¶23} With regard to the first part of the procedure, the Bennett court began by
cautioning against undue intrusiveness. Id. at ¶ 41. The court then observed that the
plaintiff was forced to file numerous motions to compel, the defendants did not comply
with the court’s orders to comply with discovery requests, the defendants were untruthful
regarding what had and had not been produced, and the defendants had adopted a
“lackadaisical and dilatory approach.” Id. at ¶ 42.
{¶24} The Bennett court stated:
Thus, before compelling forensic imaging, a court must weigh “the
significant privacy and confidentiality concerns” inherent in imaging
against the utility or necessity of the imaging. * * * In determining
whether the particular circumstances justify forensic imaging, a court must
consider whether the responding party has withheld requested information,
whether the responding party is unable or unwilling to search for the
requested information, and the extent to which the responding party has
complied with discovery requests. * * * When a requesting party
demonstrates either discrepancies in a response to a discovery request or the
responding party’s failure to produce requested information, the scales tip
in favor of compelling forensic imaging.
(Citations omitted.) Id. at ¶ 41. See also Nithiananthan, 12th Dist. Warren No.
CA2011-09-098, 2012-Ohio-431, at ¶ 9 (the party requesting forensic imaging must
demonstrate a “background of noncompliance” with discovery under part one of the
Bennett framework).
{¶25} We also observe that federal courts are likewise
“loathe to sanction intrusive examination of an opponent’s computer as a
matter of course, or on the mere suspicion that the opponent may be
withholding discoverable information. Such conduct is always a
possibility in any case, but the courts have not allowed the requesting party
to intrude upon the premises of the responding party just to address the bare
possibility of discovery misconduct.”
Scotts Co., L.L.C. v. Liberty Mut. Ins. Co., S.D.Ohio No. 3:06-CV-899, 2007 U.S. Dist.
LEXIS 43005, at *4-5 (June 12, 2007), quoting Diepenhorst v. Battle Creek, W.D. Mich.
No. 1:05-CV-734, 2006 U.S. Dist. LEXIS 48551, *10-11 (June 30, 2006).
{¶26} In Bennett, the court outlined the following examples of situations where
imaging was warranted:
Playboy Enters. [v. Welles], 60 F.Supp.2d 1050, 1054 [(S.D.Cal. 1999)]
(allowing access to party’s computer system on a finding of systematic
deletion of relevant e-mails after litigation had commenced). See, e.g.,
Williams v. Mass. Mut. Life Ins. Co., 226 F.R.D. 144, 146 (D.Mass. 2005)
(denying motion to appoint computer forensic expert because moving party
failed to present any “credible evidence that Defendants are unwilling to
produce computer-generated documents”); Bethea v. Comcast, 218 F.R.D.
328, 329-30 (D.D.C. 2003) (denying motion to compel because, “[i]n the
context of computer systems and computer records, inspection or seizure is
not permitted unless the moving party can demonstrate that the documents
they seek to compel do, in fact, exist and are being unlawfully withheld”);
Simon Prop. Group L.P. v. Simon, Inc., 194 F.R.D. 639, 641 (S.D.Ind.
2000) (allowing plaintiff to inspect defendant’s computer system because
plaintiff demonstrated “troubling discrepancies with respect to defendant’s
document production”); Ameriwood Indus., Inc. v. Liberman, Case No.
4:06CV524-DJS, 2006 U.S. Dist. LEXIS 93380, 2006 WL 3825291, *1
(E.D.Mo. Dec. 27, 2006) (unpublished) (granting motion to compel imaging
of defendant’s hard drive because the court had “cause to question whether
defendants have produced all responsive documents”); Balboa
Threadworks, Inc. v. Stucky, Case No. 05-1157-JTM-DWB, 2006 U.S. Dist.
LEXIS 29265, 2006 WL 763668, at *4 (D.Kan. Mar. 24, 2006)
(unpublished) (permitting imaging of defendants’ computer where
defendants’ representation that no responsive materials existed on computer
was contradicted by their production of e-mail created on that computer).
{¶27} Applying the first portion of the Bennett procedure, the court in Scott
Process Sys. v. Mitchell, 5th Dist. Stark No. 2012CA00021, 2012-Ohio-5971, concluded
that the trial court abused its discretion by permitting forensic imaging of electronic
devices without first requiring the requesting party to show that there had been a
background of noncompliance with discovery. Id. at ¶ 38. Accord Nithiananthan, 12th
Dist. Warren No. CA2011-09-098, 2012-Ohio-431, at ¶ 9. The Scott Process Sys. court
also concluded that the order for forensic imaging was erroneous where the requesting
party failed to demonstrate that paper production of the records was insufficient or that
the requesting party’s need for forensic imaging outweighed the party’s privacy interests.
Id. at ¶ 37-38; see also Nithiananthan at ¶ 18.
{¶28} In this matter, the record does not demonstrate the requisite showing of
defendants’ noncompliance with discovery as mandated under the first portion of the
Bennett procedure. The record demonstrates that FFR was noncompliant with
defendants’ request for production of documents during the course of litigation. FFR
also conceded that the parties “failed to reach agreement on terms of a stipulated
protective order creating a standstill in discovery.” In addition, FFR sought detailed
electronic discovery as early as October 2012, or prior to its filing of any motion to
compel discovery. Moreover, under FFR’s proposal, defendants would produce “any
relevant computer hard drives and electronic media” for FFR’s review, then upon
defendants’ compliance, FFR would “produce pursuant to a protective order a subset of
documents[.]” At this time, however, there is no evidence in the record that FFR has
fully complied with discovery, and FFR has already received extensive records from the
Illinois litigation.
{¶29} We acknowledge that FFR sought and obtained a motion to compel
discovery and for sanctions on March 26, 2013, but following that order, FFR filed an
amended complaint with new allegations and obtained additional discovery on May 30,
2013. The record does not demonstrate that the documents FFR sought were being
unlawfully withheld and not available from FFR’s own information or other sources.
Viewing the record as a whole, the showing required under the first portion of the Bennett
analysis has not been met.
{¶30} Therefore, DeJohn and Kump’s first and second assignments of error are
well taken.
2. Protective Protocol
{¶31} DeJohn and Kump’s third assignment of error asserts that the trial court
did not require the protocol for discovery required under the Bennett framework.
{¶32} With regard to the second part of the procedure, the Bennett court clearly
held that “the failure to produce discovery as requested or ordered will rarely warrant
unfettered access to a party’s computer system,” and that “a court must protect the
defendant’s confidential information, as well as preserve any private and privileged
information.” Id., 186 Ohio App.3d 412, 2009-Ohio-6195, 928 N.E.2d 763, at ¶ 47.
The Bennett court then outlined a protocol for discovery:
[A]n independent computer expert, subject to a confidentiality order,
creates a forensic image of the computer system. The expert then retrieves
any responsive files (including deleted files) from the forensic image,
normally using search terms submitted by the plaintiff. The defendant’s
counsel reviews the responsive files for privilege, creates a privilege log,
and turns over the nonprivileged files and privilege log to the plaintiff.
(Citations omitted.) Id. at ¶ 47. Similarly, in Nithiananthan, 12th Dist. Warren No.
CA2011-09-098, 2012-Ohio-431, the court held that at minimum, an appropriate protocol
requires that an independent computer expert, subject to a confidentiality order, creates a
forensic image of the computer system. Id. at ¶ 20. The expert then retrieves any
responsive files (including deleted files) from the forensic image, normally using search
terms submitted by the plaintiff. The defendant’s counsel reviews the responsive files
for privilege, creates a privilege log, and turns over the nonprivileged files and privilege
log to the plaintiff.
{¶33} Under the second portion of the Bennett procedure, a trial court abuses its
discretion when its judgment entry permits unfettered forensic imaging of a party’s
electronic devices, and contains none of the Bennett protections required to conduct such
forensic analysis. Scott Process Sys., 5th Dist. Stark No. 2012CA00021,
2012-Ohio-5971, at ¶ 36.
{¶34} In this matter, the record does not contain the protective protocol required
under Bennett. Therefore, DeJohn and Kump’s third assignment of error is well taken.
The trial court abused its discretion in ordering forensic imaging of appellants’ computer
hard drives.
{¶35} Accordingly, the judgment is reversed and remanded for further
proceedings consistent with this opinion.
It is ordered that appellants recover of said appellee costs herein taxed.
The court finds there were reasonable grounds for this appeal.
It is ordered that a special mandate issue out of this court directing the common
pleas court to carry this judgment into execution.
A certified copy of this entry shall constitute the mandate pursuant to Rule 27 of
the Rules of Appellate Procedure.
MARY EILEEN KILBANE, JUDGE
KATHLEEN ANN KEOUGH, P.J., and
TIM McCORMACK, J., CONCUR