MERRIMACK, SS SUPERIOR COURT Vention Medical Advanced Components, Inc. d/b/a Advanced Polymers, a Vention Medical Company v. Nikolaos D. Pappas and Ascend Medical, Inc. No. 2014-CV-00604 ORDER Plaintiff, Vention Medical Advanced Components, Inc., d/b/a Advanced Polymers, a Vention Medical Company ( Vention ), has filed a Motion to Compel Forensic Examination, to which the Defendants, Nickolaos D. Pappas and Ascend Medical, Inc. ( Ascend ), object. The Court held an evidentiary hearing on the matter beginning April 20, 2016. Based on the following, the Motion is GRANTED as to the requested forensic examination, under the protocols set forth in this Order, of the portion of the hard drive of Defendants computer containing Inventor Computer-Aided Design ( CAD ) program files and DENIED as to the remaining requests. I Broadly, Vention contends that Pappas failed to diligently search for electronically stored information ( ESI ) responsive to discovery requests by personally selecting documents he deemed responsive rather than relying on counsel to make the
determination, only searching for documents he believed were responsive, and conducting a manual search for documents rather than searching by key words. It is apparent from the testimony at the hearing that Pappas, rather than utilizing word searches to obtain relevant documents, relied on personal memory to try to obtain information and that in doing so, he failed to produce a number of documents responsive to production requests. Vention reasonably complains that since Pappas used only one computer in his startup operation and the only business in which the Defendants were engaged is the business at issue in this case, it would have been far more reasonable to cull personal information out of the computer and then provide it to counsel to determine what was required to be produced. Moreover, the record is clear that a number of documents were only produced after Vention s additional prodding. Vention points to several instances where it received vendor documents from thirdparties that Pappas should have produced. Vention also asserts that Pappas deliberately avoided providing certain documents he believed were too confidential and would not provide certain documents or information unless requested specifically. Vention maintains that certain material documents remain undisclosed, including CAD files with general tab and dimensional information, vendor communications, and research and manufacturing documents, including specifications and quality control data for the products advertised on Ascend s website that should exist, given industry standards. A With respect to vendor communications and research and manufacturing documents, Vention presented credible evidence that some documents were not disclosed when requested and that additional documents of the sort may exist that have not have - 2 -
not been disclosed at all. However, in response, Pappas credibly testified that he reasonably attempted to comply with his discovery obligations as to these documents, even though he admitted to inadvertently missing certain documents. Further, Pappas was compliant with further requests as to these documents. Specifically, as to vendor information, Pappas voluntarily produced material records from Redacted, the vendor with whom he worked to build his machine, early in discovery. Pappas admitted to missing an e-mail string with vendor Redacted, which Vention later received through subpoena of Redacted, but he maintained that he produced all other communications. With respect to testing and manufacturing records, Pappas testified that he inadvertently missed one document, which he produced upon further request. However, Pappas credibly testified that there were no undisclosed documents in his custody or control and asserted that his recordkeeping was not sophisticated as he was a one-person startup. Further, he stated that other research documents do not exist because he did not keep thorough records of research and development activities. Thus, the Court finds that, Pappas s production of these documents was not so deficient and less than forthcoming as to require a forensic examination. Vention also complains that the documentation regarding specifications and quality control data or the products advertised on Ascend s website is inadequate. Mark Saab testified credibly regarding medical device industry standards and that it is essential to contain equipment specification sheets both to provide a recipe to produce a reliable product and to ensure that specific product items can be identified in the event of a recall. Pappas testified that he simply did not create many of the documents that Saab testified - 3 -
would be expected to exist based on industry standards. Pappas also testified that he did not maintain any strength testing or dimensional data for the products listed on the website. Pappas cited to the phrase spot check samples throughout the lab notebook as evidence of quality control. The court credits Saab s testimony that the lack of documentation is inconsistent with documentation required of a medical device manufacturer. But on the other hand, Pappas was running a startup operation with no real employees. It appears that he had made less than $4,000 in sales before he was enjoined from conducting further business, and he apparently was able to determine relevant information by using his own lab notes. The Court therefore cannot find that the failure to use this information was willful, or that the information Vention claims should exist, ever existed. Finally, Vention complains that Defendants have not produced specifications for products Defendants were advertising on Ascend s website as commercially available products. Plainly this website information existed at one point, and one would expect that it should be maintained when litigation was threatened or instituted. In this case, Pappas s position is apparently that these specifications existed only on the website and were lost when he took down the website after litigation began and Ascend s business operation was enjoined. While the Court makes no finding of willfulness with respect to the specifications, this conduct failing to preserve obviously relevant information is inconsistent with generally accepted litigation practice and informs the Court s analysis of Defendants failure to produce all CAD files. B - 4 -
Pappas s use of CAD software and production of CAD files warrants a different conclusion. There is no doubt Pappas used this software to design a machine to manufacture a product that competes with Vention s product and allegedly infringes Vention s trade secret. Vention filed comprehensive production requests calling for the production of information regarding the design of Ascend s machine. Whether Pappas is using a different manufacturing process than Vention s process goes to the heart of this case whether the Defendants product infringed upon Vention s trade secrets. The parties engaged in extensive litigation over the scope of protective orders, which the Court ultimately resolved. There is no dispute that Vention s production requests called for the production of all of the Defendants CAD files. When they were not produced, Vention filed a Motion to Compel, which the Court granted over the Defendants objection. The Court s February 11, 2016 order required the Defendants to produce all CAD drawings of any kind and all documents related to the Defendants use of CAD in connection with the subject products of this case. The Order specifically required the production to include the dates the documents were created. As a result of the order, Pappas produced approximately 200 screenshots of CAD files. (Pl. s Ex. 1.) He did not produce native CAD files. Vention s witness, Victor Porto, credibly testified that the produced screenshots did not include the required information. Specifically, the produced screenshots neither included available dimensional information nor the reliable date of creation available in the general tab. Instead, the screenshots included the date of creation in the projects tab, which can be manually altered, unlike the date in the general tab. This information is particularly relevant, because Vention s - 5 -
trade secret misappropriation claim is partly based on the theory that Pappas could not have had adequate time after leaving Vention s employment to produce a competing product without utilizing Vention s trade secrets. Prior to the Court s order requiring production of all CAD documents, Pappas represented that he had produced all CAD documents. (Pl. s Ex. 38, 7.) Yet after the Court s order, Pappas produced approximately 200 CAD screenshots. (Pl. s Ex. 1.) During cross-examination, Pappas testified that prior to the Court s order, he believed Vention s request was limited to the document he had previously produced containing a drawing of his initial machine. (Pl. s Ex. 51.) But he understood the Court s order to broaden the scope to producing all CAD drawings, so he produced everything he had and presented the information in a manner that identified the model or the drawing or the assembly and the creation date and the file name so everything is there and there is no question on when it was created. When asked whether, prior to the Court s order, he understood that Vention was requesting all CAD documents, Pappas stated, I understood it, but I also took it in context, and the context of the deposition that led to the request was limited to this... Exhibit 51, and it was focused around timeline. He testified that he therefore believed he had provided everything at this point. But Pappas admitted he did not produce any information from the general tab, which Vention cited as another example of not producing when not specifically requested. Pappas characterized Porto s testimony as stating that the date in the general tab is unreliable, thus suggesting his decision to produce only the date in the projects tab was - 6 -
reasonable. 1 Pappas testified, however, that he would have produced the general tab date if Vention had specifically requested that information. Pappas further stated that he produced all the CAD drawings that went into my machine and some that did not. But when asked if there is other information available from CAD, including dimensional information, Pappas responded, The only reason that you would be asking or anyone would be asking for specific dimensions of my models is so you can design it yourself. When examining counsel stated, And that s why you don t want to provide it, Pappas responded that he will do whatever the judge orders. (Apr. 22, 2016 Hr g R. at 3:05:21 to 3:12:51.) II ESI is a critical aspect of discovery in most commercial disputes. Recognition of this fact has led to specific rules regarding its production. See, e.g., Super. Ct. R. 25. As with other aspects of discovery, disputes over production of ESI are grist for the judicial mill. Courts have begun to grapple with the issue of whether a party should be forced to allow an opponent to forensically examine a computer hard drive to determine whether all responsive materials have been produced. The New Hampshire Supreme Court has recognized that forensic imaging of hard drive, as requested in this case, is within the scope of discovery. N.H. Ball Bearings, Inc. v. Jackson, 158 N.H. 421, 430 (2009). Observing that electronic discovery has been more predominant Federal courts, the Supreme Court stated that it would look to those courts for guidance. Id. It further noted that because electronic discovery can easily become unduly intrusive, courts have been 1 However, this was not Porto s testimony. As articulated above, Porto credibly testified that the general tab date is the only reliable creation date because it cannot be manually altered. - 7 -
cautious in requiring the forensic examination of computers where the request is extremely broad, and the connection between the computers and the claims in the lawsuit is unduly vague or unsubstantiated. Id. Citing federal cases, the Supreme Court stated that courts tend to be more receptive to circumscribed requests limited to specified individuals or computers expected to produce relevant information. Id. (citing Rowe Entm t, Inc. v. William Morris Agency, Inc., 205 F.R.D. 421, 427 28, 432 33 (S.D.N.Y. 2002)). A The mere failure to produce documents is not necessarily sufficient to believe that a forensic examination is appropriate. As one court has noted, [i]t is the rare case that a litigant does not allege some deficiency in production of electronically stored information, and allegations of deficiencies alone do not automatically require a forensic search where a party claims that there are, for example, fewer e-mails from a person for about a subject or transmitted in a given time than the party expected to find. Covad Commc ns Co. v. Revonet, Inc., 258 F.R.D. 5, 13 14 (D.D.C. 2009); accord Balboa Threadworks, Inc. v. Stuky, No. 05-1157-JTM-DWB, 2006 WL 763668, at *3 (D. Kan. Mar. 24, 2006) ( Courts have been cautious in requiring the mirror imaging of computers where the request is extremely broad in nature and the connection between the computers and the claims in the lawsuit are unduly vague or unsubstantiated in nature. ). Skepticism concerning whether a party has produced all responsive, nonprivileged documents from certain hard drive, standing alone, is an insufficient reason to warrant forensic examination of hard drives. Ameriwood Indus., Inc. v. Liberman, No. 4:06CV524-DJS, 2006 WL 3825291, at *4 (E.D. Mo. Dec. 27, 2006). - 8 -
A court asked to authorize a search or reproduction of an opposing party s computer system must focus on whether there is reason to believe that the opposing party has been less than forthcoming in prior production of the case. Wright & Miller, 8B Federal Practice and Procedure 2218 (3d ed. 2016). Courts ordering forensic examination have found reason to believe that parties have been less than forthcoming based on evidence such as past production failures, lack of responsiveness, and existing undisclosed documents that should have been produced. See Bank of Mongolia v. M & P Glob. Fin. Servs., Inc., 258 F.R.D. 514, 519 (S.D. Fla. 2009) (holding that defendant s admitted failure to provide requested documents warranted appointment of an independent expert to retrieve any deleted responsive files from defendant s computers in light of defendant s past lack of responsiveness to discovery and plaintiff s presentation of documents obtained from third parties that the defendant should have produced); Bennett v. Martin, 186 Ohio App. 3d 412, 2009-Ohio-6195, 928 N.E.2d 763, at 25 ( Finally, the magistrate found that defendants habitually limited their responses... even if the actual document requests sought a much broader universe of documents. Based upon defendants pattern of interpreting the document request too narrowly, the magistrate concluded that defendants had wrongfully withheld documents responsive to the document requests and court orders. ); Koosharem Corp. v. Spec Personnel, LLC, No. 6:08-583-HFF-WMC, 2008 WL 4458864, at *1 *2 (D.S.C. Sept. 29, 2008) (ordering forensic examination of defendants computer where plaintiff established that not a single email produced by the defendants is an accurate copy of the original email, as the date and time stamp on every email ha[d] been modified to reflect the dates the emails were compiled rather than the dates they were sent ); White v. Graceland Coll. Ctr. for Prof l - 9 -
Dev. & Lifelong Learning, Inc., No. 07-2319-CM, 2009 WL 722056, at *2 *3, *8 (D. Kan. Mar. 18, 2009) (ordering access to defendant s computer where the plaintiff s computer expert noted discrepancies in the creation and sent dates of certain e-mails that the defendants could not adequately explain). Illustrative is U & I Corp. v. Advanced Med. Design, Inc., 251 F.R.D. 667 (M.D. Fla. 2008). In that case, the plaintiff engaged in wholesale discovery abuse. For example, after asserting that it fully responded to defendant s production requests, the plaintiff provided approximately 10,000 documents on 13 occasions over a 15-month period. Id. at 675. The plaintiff failed to produce e-mail communications with a third-party, and, as in this case, the third-party produced numerous emails between it and plaintiff s employees. Id. The court noted that [i]t is not the court s role, nor that of opposing counsel to drag a party kicking and screaming through the discovery process, and ordered an independent examination of the hard drives of plaintiff s computers. Id. at 676 In this case, the Court is willing to accept the Defendants representations that their failure to produce information, including the responsive communications with third-party vendors that Vention obtained through subpoena of those vendors, if not inadvertent, was at least not willful. 2 The Court is also willing to accept the representation that documents one would expect to exist at a medical supply company, such as lot information and specifications, do not exist because the business was a startup essentially run by one person, Pappas with an occasional assistant, and it was simply not feasible to create the type of internal organization like that of larger firms such as Vention. - 10 -
But it is troubling that Plaintiff has failed to produce the CAD files in their entirety. The initial production requests called for these files, and the Defendants should have produced them, but did not. Vention necessarily moved the Court to compel their production, and the Court ordered the Defendants to produce all of the CAD files. Despite producing some CAD screenshots, the Defendants again failed to produce the required information. Even after that, Pappas s response to Plaintiff s Motion to Compel Forensic Examination stated that he had fully complied with the Court s Order of February 11, 2016. (Pappas Aff. 16, Mar. 21, 2016.) At the evidentiary hearing, under cross-examination, Pappas admitted he had not produced all responsive documents; he took it upon himself to not produce responsive information because he thought was either too confidential to be produced or not responsive based on his own personal interpretation of why Vention was seeking the information. When a requesting party demonstrates either discrepancies in a response to a discovery request and the responding party s intentional failure to produce requested information, the scales tip in favor of compelling forensic examination. As in Wynmoor Cmty. Council v. QBE Ins. Corp., 260 F.R.D. 681, 687 (S.D. Fla. 2012), [i]t would appear that [Defendants] are either unwilling or unable to conduct a search of their computer systems or documents responsive to [Plaintiff s] discovery requests. Under these circumstances, the Court finds that the Defendants have been less than forthcoming in prior production of CAD files and orders a forensic examination of the Defendants computer for responsive CAD files. 2 To be precise, the Court concludes that the failure to produce responsive documents was the result of an unreasonable method of conducting a search for documents. This case involves one computer, used for less than a year, to create one product. After culling personal information from the computer, it would have been easy and sensible to simply have counsel take responsibility for determining what should be produced. - 11 -
B Nonetheless, imaging of a computer is intrusive, and it implicates significant privacy concerns. The Court is cognizant that such a procedure could result in discovery of personal information or confidential or privileged information. Under these circumstances, protective measures must be taken. At the outset, the Court notes that many of these concerns will be avoided by limiting any forensic examination to the CAD files on the computer. Limiting a search to those documents will ensure that no personal or irrelevant information is examined. Cf. Am. Family Mut. Ins. Co. v. Gustafson, No. 08-cv-02772-MSK-MJW, 2009 WL 641297, at *3 (D. Colo Mar. 10, 2009) (adopting a protocol using specific search terms in order to avoid irrelevant and privileged ESI). To extent a claim of confidentiality for privilege is made, that claim can be preserved through the protocol set forth as follows: 1. The Court shall appoint an independent computer expert to image and examine Defendant s computer system. The parties shall meet and confer and agree upon an expert by May 13, 2016, and inform the Court of the identity of the expert they have chosen. If the parties cannot agree on an expert, each party shall submit the curriculum vitae or supporting documents regarding the expert it chooses, on May 13 2016, and the Court will select the expert. 2. The appointed expert shall serve as an Officer of the Court. Thus, to the extent that this computer expert has direct or indirect access to information - 12 -
protected by attorney-client privilege, such disclosure will not result in waiver of Defendants privilege. 3. The independent expert shall sign and agree to be bound by the protective order in place in this case. 4. The expert shall examine the Defendant s computer and obtain a so-called mirror image of the hard drive. The expert shall then extract all information relating to the CAD program. 5. Prior to producing any information to Vention, the expert shall provide information he extracts to counsel for the Defendants. Counsel shall review the information and shall have 5 business days from receipt of the information to review the documents and advise the expert that the documents must be excluded from production to Vention on the basis of privilege. The documents shall then be produced by the expert to counsel for Vention. Defendants shall provide a privilege log for any documents withheld on privileged grounds. 6. Vention shall pay all costs and fees of hiring the independent expert. If, however, it is determined that Defendants improperly failed to produce significant documents, the Court will revisit this issue and consider imposing on Defendants the costs and fees of the independent expert or imposing the fees and costs on a shared basis by appropriate apportionment. 7. Within 5 days of providing the Defendants with the results of the search, the expert shall provide both parties a signed affidavit detailing the steps he or - 13 -
she took in mirror imaging the Defendants' computer system and searching the system. For the foregoing reasons, the Motion is GRANTED as to the requested forensic examination, under the protocols set forth in this Order, of the portion of the hard drive of Defendants computer containing CAD program files and DENIED as to the remaining requests. SO ORDERED. 5/6/16 s/richard B. McNamara DATE Richard B. McNamara, Presiding Justice - 14 -