Finding Defendants’ Summaries an Insufficient Discovery Response, Court Grants Motion to Compel and Authorizes Plaintiff to Submit Proposed Hard Drive Inspection Protocol for Court’s Consideration

Anthropologie, Inc. v. Forever 21, Inc., 2009 WL 690239 (S.D.N.Y. Mar. 13, 2009)

In this copyright infringement case, defendants refused to properly respond to discovery and instead provided summaries of the requested information designated “for settlement purposes only.”  Finding these responses inadequate, and noting defendants numerous misrepresentations to the court, the court granted plaintiff’s motion to compel the production of the data underlying the proffered summaries and for all information responsive to plaintiff’s requests.  However, despite finding inspection of defendants’ hard drives justified, the court declined to order such access where plaintiff had failed to provide any specifics of its proposal and where the court sought to avoid additional delay and expense.  Accordingly, upon receipt of defendants’ ordered production, if it still wished, plaintiff was authorized to submit a proposed inspection process and further explanation of its need for access for consideration by the court.

In response to plaintiff’s request for information related to marketing and sales of allegedly infringing designs, defendants produced a very small number of documents, including a summary document purported to reflect the relevant requested data and several spreadsheets, prepared for counsel, containing some relevant information.  The underlying documentation upon which the summary and spreadsheets were based was not produced.  Moreover, the summary and spreadsheets were produced “for settlement purposes only.”  When pressed to provide a more complete production in response to discovery, defendants claimed, among other things, “that it did not maintain sales documents or that it would be unduly burdensome to locate them.”

Unable to persuade defendants to comply with its requests, plaintiff moved to compel production.  Plaintiff also sought permission to appoint an expert to copy and review the hard drives of defendants’ computer system to search for the categories of documents requested.

Addressing the arguments of the parties, the court immediately noted the contradiction of defendants’ position where defendants offered to provide or provided data for settlement purposes that “it plainly could only have derived from underlying documentation that defendant claiming either did not exist or was not accessible.”  The court went on to state that it was “virtually inconceivable that [defendant] does not keep records” related to the information requested by plaintiff and that its efforts to shield even the summaries from the discovery process by marking them for “settlement only” reflected “a refusal to comply with even the minimal requirements of the governing discovery rules.”  Continuing its analysis, the court rejected defendants’ “string of frivolous arguments” raised in its defense and highlighted a myriad of inconsistencies and “manifestly false statements,” including inconsistencies between the summaries produced.

Accordingly, the court concluded that defendants were to produce all “data and documentation on the basis of which they prepared each of the summaries that they have proffered to plaintiff…” including both hard copy and electronically stored information (“ESI”).  To that end, plaintiffs were ordered to provide specifications for the formatting of any such ESI for production.

Regarding authorization to access defendants’ hard drives, the court acknowledged that such orders were “not routinely granted” but that “they may well be justified where there is considerable doubt about the completeness of a litigant’s production and the information in question goes to the heart of the claims in the case.”  Thus, the court concluded, “In this case defendants’ performance to date appears to justify the use of such a procedure if it can be performed without undue delay and burden.” (Emphasis added.)

However, the court noted that “plaintiff has not proffered the specifics of what it proposes to do and how, nor has it documented its best estimate of how complicated and extended a process would be involved.”  Likewise, defendants offered no evidence to support the contention that such a process would “gravely harm its business.”  Thus, the court ordered that upon completion of defendants’ production, as outlined above, plaintiff was free to “submit the declaration of a forensic specialist proffering a specific proposal for conducting such a search, with a further explanation …of the need for it in light of the document productions made to date” with defendants to reply in three days.  “In light of the delay and expense occasioned by defendants’ course of conduct in discovery,” plaintiffs were also authorized to request an award of expenses for its motion, including attorney’s fees, pursuant to Rule 37(e)(4).