Defendant Must Produce ESI Not In Its Physical Custody But Under Its Control, Computer Imaging Denied Because Need Not Proportional

14 Jun 2017

Imaging of computersIn First American Bankcard, Inc. v. Smart Business Technology, Inc., et. al., Case No. 15-638 (E.D. La., May 24, 2017), Plaintiff sued Defendants for damages it allegedly incurred as a result of “deficient and defective” software designed, manufactured and hosted by Defendants. Plaintiff used the software to process cash advances and check cashing at casinos.

Plaintiff served discovery requests, including document requests upon Defendant Smart Business Technology, Inc. (Smart).  Later, upon deeming Defendant Smart’s responses and objections insufficient, Plaintiff filed a Motion to Compel and for Reasonable Expenses to obtain additional responses to certain interrogatories and certain document requests.

The court overruled and ordered responses be made to some of Defendant Smart’s objections to interrogatories, finding utterly unsupported Smart’s objections of undue burden, undue expense, or lack of proportionality. In Plaintiff’s Motion to Compel regarding the document requests, the basis of Smart’s objection to producing the electronically stored information (ESI) sought by Plaintiff was that Defendant Smart no longer possessed the requested data.  Smart argued that because it was no longer operating, the ESI was now in the possession of its former owners, Defendants Fuente and Romero, and therefore could no longer be produced by Defendant Smart. The court found this argument to be without merit on multiple grounds.   Since Smart did not include this objection in its discovery responses, but rather only raised it in response to the Motion to Compel, the objection had been waived.  Additionally, the court held that a party’s obligation to produce extends beyond mere possession, but rather the obligation under FRCP 34(a)(1) is to provide documents or ESI that is within a party’s possession, custody or control. Whether a party has control over a document or thing is a fact-specific inquiry.  Control can be found to exist when the producing party has the legal right to obtain a document even if it does not have current physical possession. The court held that documents in possession of Smart’s former owners were discoverable, since the former owners have an obligation to Smart to provide the requested documents. The court ordered production of the requested ESI.

The court also considered the request in Plaintiff’s motion to take forensic imaging of Smart’s computer system or server. While the court found that forensic imaging of computers is within the scope of discovery of ESI, it denied the request, finding that Plaintiff did not sufficiently establish why this request was proportional to the needs of the case.

ILS – Plaintiff Electronic Discovery Experts