Court Deems Broad E-Discovery Requests Proportional If Important Issues Are at Stake
First Niagara Risk Management v. Folino, (E.D.P.A. April 14, 2016) is a dispute between an employer and a former employee. First Niagara (“Plaintiff”) brings this suit against John Folino (“Defendant”), who until recently served as plaintiff’s First Vice-President and Regional Director of Insurance for Western Pennsylvania. Defendant Folino assumed this role in 2010 after Plaintiff purchased most of the assets of two businesses he owned for an initial $5,000,000 payment. Defendant owned a third company, RTI Insurance Services of Florida (“RTI”), that Plaintiff did not purchase. The Employment Agreement Defendant signed in conjunction with the sale of his businesses contained non-solicitation and non-compete provisions that barred Defendant from either soliciting the services of, or employing, Plaintiff employees for any other businesses, competing with Plaintiff for clients, or diverting existing or potential customers from Plaintiff to a competing business.
In 2015, while still working for Plaintiff, the evidence shows that Defendant worked with another of Plaintiff’s employees, to start a company called Trident Risk Advisors (“Trident”) which would compete directly with Plaintiff. Plaintiff only learned of Defendant’s involvement after bringing a separate case against Kolongowski, which is also before this court. It then brought this action against Defendant on April 14, 2016, asserting claims for breach of contract, breach of fiduciary duty, breach of implied duty of good faith and fair dealing, tortious interference with contract, civil conspiracy to obstruct justice, and misappropriation of trade secrets. The same day it filed its complaint, Plaintiff also filed motions for a preliminary injunction and a temporary restraining order. The Court denied the initial motion for a temporary restraining order, and, after a hearing on April 21, 2016, the parties agreed to a Stipulated Preliminary Injunction which the Court approved. The parties agreed that Defendant would make available all of his personal and business electronic devices, and that an independent third party forensic discovery company could conduct forensic imaging of Defendant’s devices using a list of key words and search terms.
Plaintiff and Defendant disagreed about the scope of discovery almost immediately. Plaintiff now moves to compel Defendant to allow for a broad search of his electronic devices — including emails and text messages. Plaintiff moves to compel Defendant to allow Eqip, a third-party vendor to search his personal electronic devices and personal email accounts using more than 110 keywords. Defendant objects to Plaintiff’s proposed terms and date range for its electronic discovery search request as being overly broad and invasive.
The Court agreed with Defendant that this request is rather broad. But, after analyzing the factors set out in Rule 26(b)(1), it found that Plaintiff’s request is proportional to the needs of this case. The recent amendment to Fed. R. Civ. P. 26 requires courts to consider the following factors when defining the scope of discovery: the importance of the issues at stake, the amount in controversy, the parties’ relative access to information, the parties’ resources, the importance of discovery in resolving the issues, and whether the burden or expense of discovery outweighs its likely benefits. This amendment restores the proportionality factors to their original place in defining the scope of discovery and reinforces the obligation of the parties to consider these factors in making discovery requests, responses or objections.
The material requested by the Plaintiff is relevant. Limited discovery in this matter has so far revealed significant evidence that Defendant was likely involved in the formation of Trident and the recruitment of Plaintiff’s employees to join this new company, actions that would be a breach of his Employment Agreement with Plaintiff. Moreover, there is also evidence that at least one employee from RTI helped in the formation of Trident. The Court therefore found that the material requested by Plaintiff is relevant to their breach of contract, breach of fiduciary duty, tortious interference, and other claims in this matter.
Plaintiff has shown that the material it requests is relevant under Rule 26, and Defendant’s defenses under both the Rule 26 proportionality factors and the non-binding Sedona principles fail. The Court therefore grants Plaintiff’s motion to compel.