Granting Motion to Compel, Court Orders Appointment of Independent Expert “to Retrieve any Deleted Responsive Files from Defendants’ Computers”

Bank of Mongolia v. M & P Global Fin. Servs., Inc., 2009 WL 1117312 (S.D. Fla. Apr. 24, 2009)

In this case arising from allegations that defendants conspired to defraud plaintiff of $23 million, defendants failed to properly and timely respond to plaintiff’s requests for production of documents and failed to offer adequate justifications or explanations for such behavior.  Additionally, despite initial representations that certain documents had been produced or were not in their possession, at hearing it became clear that such representations were not true.  For example, despite claiming that all responsive documents had been produced, defense counsel admitted at hearing that defendants had not performed a search of all deleted and unsaved electronic documents.  For defendants’ discovery failures, the court granted plaintiff’s motion to compel and ordered an independent forensic expert be allowed access to defendants’ computer systems to search for “deleted responsive files.”  The court also granted plaintiff’s motion for attorney’s fees.

During the course of discovery, plaintiff filed its initial requests for production but received no response.  Defendants also repeatedly failed to respond to inquiries regarding their estimated date of production.  Plaintiff filed a motion to compel based on the lack of response and requested access to defendants’ electronic records and computer hardware as a sanction for suspected spoliation based on plaintiff’s receipt of documents from a third-party that should also have been produced by defendants, but were not.  Defendants initially failed to respond to plaintiff’s motion to compel resulting in the court’s Order to Show Cause directing a response.  Thereafter, defendants produced their response to plaintiff’s request for production consisting of a one page document representing that the requested materials had already been produced or were not in defendants’ possession, among other things.  When defendants finally responded to the motion to compel, they offered no substantial explanation for their tardy responses to either the request for production or the subsequent motion to compel beyond a claim that they mistakenly believed their initial disclosures were a response to plaintiff’s request for production. 

At hearing, counsel conceded that defendants failed to perform a search of all deleted and unsaved electronic documents.  Also, counsel was unable to provide an explanation of defendants’ search methodology upon the court’s inquiry or to answer other questions related to discovery and production.

The court made several findings in favor of plaintiff, including that defendants failed to provide an adequate explanation for their delay and failed to produce all responsive documents or provide a reasonable explanation for that failure.  Accordingly, plaintiff’s motion to compel was granted and defendants were ordered to produce an affidavit from their custodian of records detailing the steps take to identify responsive documents.

Also, because of the discrepancies in defendants’ response to plaintiff’s requests, their concession that not all documents had been produced, “and particularly in light of the recovery of apparently responsive documents by the Plaintiffs from third-party sources,” the court determined that an independent expert should be appointed “to retrieve any deleted responsive files from Defendants’ computers.”  The court denied defendants’ request to undertake such an inspection on their own.  The court then provided a 10-point procedure to be followed in carrying out the inspection.  Included were instructions that the expert’s access would not result in defendants’ waiver of privilege, that the court would have final approval of search terms following plaintiff’s submission of such terms and defendants’ opportunity to object, and that plaintiffs would bear the cost of such inspection.  The court acknowledged that its prescribed protocol did not provide plaintiffs with the access requested, but reasoned that, “the [defendants’] failure to adequately respond to Plaintiff’s request for documents is not sufficient grounds to give Plaintiff unfettered access to Defendants’ computer system.”

Regarding the court’s order that plaintiff bear the cost, the court reasoned that absent a showing that defendants improperly deleted or otherwise omitted documents from the production of their computer files, cost shifting was not appropriate.  The court indicated its willingness, however, to revisit the issue should evidence of spoliation be uncovered.

Finally, noting that “the M & P Defendants’ counsel frankly conceded that there was no substantial justification for Defendants’ failure to comply with Plaintiff’s documents requests, nor did other circumstances make an award of expenses unjust,” the court granted plaintiff’s request for attorney’s fees and costs.