CALYON, Plaintiff, v. MIZUHO SECURITIES USA INC., et. al., Defendants No. 07CIV02241RODF United States District Court, S.D. New York May 18, 2007 Freeman, Debra C., United States Magistrate Judge MEMORANDUM AND ORDER *1 By letter dated April 9, 2007, Plaintiff Calyon has sought an order from the Court resolving a discovery dispute between Calyon and the individual defendants.[1] (See letter to the Court from Calyon's counsel, David Dunn, dated Apr. 9, 2007 (“4/9/07 Dunn Letter”).) Specifically, Calyon has requested that the Court order the Individual Defendants to produce to Calyon's forensic computer expert for inspection the “mirror images” that have been or will be made of the hard drives of the Individual Defendants' personal computers and other computer storage devices. Having considered all submissions on this matter, the Court denies Calyon's request without prejudice, for the reasons discussed below. BACKGROUND In its Complaint dated March 15, 2007, Calyon alleges that the Individual Defendants, while employed at Calyon, conspired to transmit Calyon's confidential and proprietary business information to their new employer, defendant Mizuho Securities, USA, Inc. (“Mizuho”), in order to interfere with Calyon's customer relationships and divert business to Mizuho.[2] (See Complaint dated Mar. 15, 2007, ¶¶ 46-50.) The Individual Defendants, according to Calyon, used e-mail and small, hand-held computer storage devices to remove, without Calyon's authorization, “vast quantities” of Calyon's business data and documents, much of which was “confidential and proprietary.” (See 4/9/07 Dunn Letter at 2.) In light of these allegations, both Calyon and the Individual Defendants have recently reached an agreement to preserve the hard drives of the Individual Defendants' personal computers and computer storage devices by creating “mirror images,” or exact copies, of the hard drives. (See 4/9/07 Dunn Letter at 3; letter to the Court from the Individual Defendants' counsel, Steven G. Kobre, Zaharah R. Markoe, and Steven W. Perlstein, dated April 11, 2007 (“4/11/07 Kobre Letter”) at 1.) The two parties, however, have been unsuccessful in agreeing on a protocol for reviewing the mirror images. Calyon contends that because the hard drives contain evidence of the Individual Defendants' removal of proprietary information, its forensic expert should be entitled to inspect the entirety of their mirror images. In a declaration submitted to the Court, Calyon's computer forensic expert, Elizabeth Hall, of Guidance Software (“Guidance”), states that Guidance needs complete access to the mirror images to “effectively investigate and determine the details of when and by what means” the Individual Defendants obtained documents from Calyon on their personal computers, and what they did with those documents afterwards, such as transmitting them to other computers or deleting them. (See Declaration of Elizabeth Hall dated April 23, 2007 (“4/23/07 Hall Decl.”), ¶ 5.) Hall adds that she is unable to accomplish this by “simply requesting certain files or data from an Individual Defendant's hard drive,” given that certain hidden areas of the hard drives, such as the “unused” portions and the “fragments” of data resulting from the deletion of documents, may contain relevant information that could not be examined without inspecting a copy of the entire hard drive. (See id. ¶¶ 3-5.) According to Hall, there is a “need to look at the whole to determine how the pieces fit together.”[3] (Id. ¶ 5.) At bottom, Calyon maintains that only its expert-as opposed to the Individual Defendants' expert or an independent third-party expert-would possess the requisite incentive to search exhaustively for evidence, and that only Calyon's expert would be able to confer with Calyon's counsel on an on-going basis to refine search methods. (See 4/9/07 Dunn Letter at 4-5.) *2 The Individual Defendants, for their part, object to Calyon's request that Calyon's expert conduct the search. They argue that granting Calyon's expert “unfettered access” to the Individual Defendants' home computers and computer storage devices would impermissibly invade the privacy rights of the Individual Defendants and their non-party family members who have also used the computers.[4] (See 4/11/07 Kobre Letter at 1.) In contrast to Calyon's proposal, the Individual Defendants have proposed that their own expert review the mirror images by using search terms provided by Calyon, or, alternatively, that a search be performed by an independent third-party expert, who would presumably be appointed by the Court (although at Calyon's expense), and who would be able to consult with Calyon on the information it seeks. (See id. at 2.) According to the Individual Defendants, either of these procedures would ensure that only responsive, non-privileged documents and data are produced to Calyon. In making its proposals, the Individual Defendants dispute Calyon's core contention that only Calyon's own expert would be able to obtain all responsive information from the imaged hard drives. (See letter to the Court from the Individual Defendants' counsel, Steven G. Kobre, Zaharah R. Markoe, and Steven W. Perlstein dated April 27, 2007 (“4/27/07 Kobre Letter”) at 2.) Indeed, in response to the declaration submitted by Calyon's expert, the Individual Defendants have submitted their own expert declaration, in which Brett D. Harrison, of FTI Consulting (“FTI”), states that FTI would be able to “accurately and thoroughly” identify all of the files or data of interest that Calyon maintains can only be located through its own expert's inspection. (See Declaration of Brett D. Harrison, dated April 27, 2007 (“4/27/07 Harrison Decl.”) ¶¶ 5-7.) In addition, according to Harrison, FTI has demonstrated in matters outside this case that it can work successfully “with other parties through counsel, to identify and agree upon forensic processes and procedures which FTI then implements so as to provide the desired results,” and that doing so has “obviated the need to provide a mirror image of the hard drive to the opposing parties.” (See id. ¶ 5.) Calyon responds to the Individual Defendants' objections, in part, by arguing that its application to the Court does sufficiently address any of the Individual Defendants' privilege or privacy concerns, in that its proposed search protocol “would require [Calyon's] expert to first submit all documents and data to counsel for the Individual Defendants before any disclosures are made to Calyon or its attorneys.” (See letter to the Court from Calyon's counsel, James Zucker, dated May 7, 2007 (“5/7/07 Zucker Letter”), at 1.) This, Calyon adds, would allow the Individual Defendants' counsel to designate documents or data as “irrelevant, private or privileged,” and to withhold disclosure to Calyon or its attorneys on such a basis. (See id.) DISCUSSION *3 In general, under Fed.R.Civ.P. 26(b)(1), parties may obtain discovery regarding any unprivileged matter relevant to the claim or defense of any party, as long as the discovery “appears reasonably calculated to lead to the discovery of admissible evidence.” The discovery of electronically stored information is specifically addressed by Fed.R.Civ.P. 34(a), as amended effective December 1, 2006, which allows a party to request that another party “produce and permit the party making the request ... to inspect, copy, test, or sample any ... electronically stored information.” As recognized by the Advisory Committee's notes on the 2006 amendment to Fed.R.Civ.P. 34(a), however, “[i]nspection or testing of certain types of electronically stored information or of a responding party's electronic information system may raise issues of confidentiality or privacy.” Notes of Advisory Committee on 2006 Amendments. Thus, Rule 34(a) does not entitle a party to “a routine right of direct access to a party's electronic information system, although such access might be justified in some circumstances.” Id. Since the 2006 amendment to Rule 34(a), only a few cases with facts similar to this case have addressed whether the imaging and inspection of hard drives is justified. See Ameriwood Industries, Inc. v. Liberman, No. 4:06 CV 524-DJS, 2006 WL 3825291, at *3, *6 (E.D.Mo. Dec. 27, 2006), amended by 2006 WL 685623 (E.D.Mo. Feb. 23, 2007); Cenveo Corp. v. Slater, No. 06-CV-2632, 2007 WL 442387, at *1-3 (E.D.Pa. Jan. 31, 2007); Frees, Inc. v. McMillian, No. 05-1979, 2007 WL 184889, at *3 (W.D.La. Jan. 22, 2007); Balfour Beatty Rail, Inc. v. Vaccarello, No. 3:06-CV-551-J-20MCR, 2007 WL 169628, at *2-3 (M.D.Fla. Jan. 18, 2007). As explained below, these cases appear to consider the relationship between the plaintiff's claims and the defendants' computers and, in some cases, whether the defendant has fully complied with discovery requests, in determining how the requested electronic discovery should proceed. Even in cases where courts have found computer imaging and inspection to be warranted, the courts have nonetheless adopted procedures to protect privilege and privacy concerns. In Ameriwood, the plaintiff sued several former employees and their newly formed company for unlawfully using the plaintiff's computers to remove proprietary information and trade secrets to “sabotage [the] plaintiff's business relationships and divert [the] plaintiff's business to themselves.”[5] 2006 WL 3825291, at *1, *3. Specifically, the plaintiff alleged that the defendants had forwarded trade secrets to their personal e-mail accounts while employed by the plaintiff. Id. Asserting that this information may have been further transmitted to others or deleted to hide the defendants' actions, the plaintiff requested that the court compel the defendants to, among other things, produce a mirror image of their personal home computers' hard drives. Id. at *3. The defendants objected to this request as “overbroad, vague, burdensome, and call[ing] for irrelevant information.” Id. at *2. The defendants also argued that they had already searched for and disclosed responsive information from their hard drives. Id. at *3. The court noted, however, that some electronically stored information “might not be obtained during a typical search” of the hard drives. Id. In fact, the court found specific evidence establishing the defendants had not produced all responsive documents from their computers. Id. *4 Based on a review of case law decided before the 2006 amendment to Rule 34(a), the court observed that “discrepancies or inconsistencies in the responding party's discovery responses may justify a party's request to allow an expert to create and examine a mirror image of a hard drive.” Id. at *4 (citation omitted). Moreover, the court explained that, “in cases where a defendant allegedly used the computer itself to commit the wrong that is the subject of the lawsuit, certain items on the hard drive may be discoverable,” and that “allegations that a defendant downloaded trade secrets onto a computer provide a sufficient nexus between plaintiff's claims and the need to obtain a mirror image of the computer's hard drive.” Id. at *4. In the case before it, the court held that, because the plaintiff alleged that the defendants had used their computers to distribute the plaintiff's confidential information, “[h]ow and whether [the] defendants handled those documents and what [the] defendants did with the documents is certainly at issue.” Id. at *5. Thus, the court allowed “an independent expert to obtain and search a mirror image” of the defendants' computers, given the “close relationship” between those computers and the plaintiff's claims, as well as the court's doubts that the defendants had produced all responsive documents. Id. at *1. Nonetheless, the Ameriwood court recognized the defendants' privacy concerns regarding the information on their computers. Id. at *5. The court found that a three-step imaging, recovery, and disclosure procedure would sufficiently address those concerns. Id. The procedure adopted by the court required that: (1) an independent expert, bound by a confidentiality agreement, make a mirror image of and recover all files from the defendants' hard drives; (2) the expert then provide all recovered files and information about those files (such as information as to when those files were created, accessed, copied, or deleted) to the defendants' counsel; and (3) within 20 days of the receipt of the recovered files, the defendants produce any non-privileged and responsive documents to the plaintiff. Id. at *5-6; see also Cenveo Corp., 2007 WL 442387, at *1-3 (citing Ameriwood and adopting similar procedure). In Frees, the court also allowed the imaging and examination of computer hard drives, but did not base its decision on any discrepancy or inconsistency in the defendant's discovery responses.[6] 2007 WL 184889, at *1-*3. As in Ameriwood, the plaintiff in Frees sued a former employee for using the plaintiff's computers to remove the plaintiff's proprietary information while still employed by the plaintiff. Id. at *1. In granting the plaintiff's motion to compel the imaging and examination of the defendant's work and home computers, the court agreed with the plaintiff that the computers would be “among the most likely places [the defendant] would have downloaded or stored the data allegedly missing.” Id. at *2. Although the defendant claimed he had acquired his computers two years after the misappropriation was alleged to have occurred, the Court found that even if that were true, the computer could still contain evidence related to the “pilfered” data. Id. To address privilege, privacy and confidentiality concerns, the court created the following protocol: (1) the plaintiff's expert would create a mirror image of the defendant's hard drive; (2) prior to the expert performing a keyword search of the image, the defendant would review that image to ensure that privileged or nonresponsive information would not be produced; (3) after the defendant's review, the plaintiff's expert would then be permitted to examine the image to identify relevant files for production; and (4) once the expert identified those files, the defendant would have a chance to object to the production of any file on grounds such as privilege. Id. at *3. *5 Finally, in contrast to Ameriwood, Cenveo and Frees, the court in Balfour simply denied the plaintiff's motion to compel the production of the defendants' hard drives. Balfour Beatty Rail, Inc., 2007 WL 169628, at *2-3. There, the plaintiff alleged that two former employees had damaged the plaintiff's computers, solicited several other employees to leave with them, and solicited business from the plaintiff's customers to start a competing business, all while still employed by the plaintiff. Id. at *1. In addition, the plaintiff contended that the defendants had destroyed information on the plaintiff's computers to hide their actions. Id. The court, however, found plaintiff's motion to compel inspection to be insufficient, holding that the “[p]laintiff's requests simply seek computer hard drives. Plaintiff does not provide any information regarding what it seeks to discover from the hard drives nor does it make any contention that [d]efendants have failed to provide requested information contained on these hard drives.” Id. at *3. Here, Calyon has not argued that the Individual Defendants have failed to produce all responsive documents that have otherwise been requested (including documents stored in electronic form), or that there are “discrepancies or inconsistencies” in these defendants' responses to prior discovery requests. See Ameriwood, 2006 WL 3825291, at *4. Nor has Calyon argued that the Individual Defendants have made any representation that relevant documents or data have been lost, such that there may now be a need for Calyon to conduct a more exhaustive electronic search in order to try to find that information. Nor has Calyon identified any specific information that it seeks to recover from the mirror images, and shown that the Individual Defendants would not be capable of, or willing to, produce that particular information. In sum, the Court is not yet faced with any failure by the defendants to conduct a thorough forensic search of their computers, or to produce any and all relevant documents, files, metadata, and even hidden data fragments that Calyon may request. On the contrary, the Individual Defendants have represented that their expert can and will conduct an exhaustive search of the hard drives for the information Calyon seeks, including information located in the hard drives' hidden areas (see 4/27/07 Kobre Letter at 2; 4/27/07 Harrison Decl. ¶¶ 5-7), and the Court, at present, has no basis to question this representation. In its submissions to the Court, Calyon does not appear to dispute that the Individual Defendants' expert has the technological capability to perform this search. Moreover, the Individual Defendants' counsel and expert have stated that they are willing to work cooperatively with Calyon's counsel and expert on an on-going basis to develop and refine search techniques to ensure that all responsive information is identified. In the end, other than arguing that only its expert has the proper incentives to conduct an exhaustive search, Calyon provides no specific basis for why it believes the Individual Defendants' expert would not thoroughly search the hard drive images. Calyon's argument about proper incentives is simply too generalized a basis for granting it carte blanche access to the Individual Defendants' personal hard drives, access that Calyon itself acknowledges as “extraordinary.” (See 4/9/07 Dunn Letter at 5.) Finally, although the courts in Ameriwood and Cenveo ordered that an “independent” expert conduct the search of the hard drive images, the Court finds no need, at this time, to appoint such an expert, which would introduce yet another layer of expertise to a case where each side has already retained experts of their choice, and which would make the prosecution of this action more costly.[7] CONCLUSION *6 For all of the foregoing reasons, it is hereby ORDERED that: 1. Calyon's request for an order requiring the Individual Defendants produce to Calyon's computer forensic expert the mirror images of the hard drives of their personal computers and other computer storage devices is denied, without prejudice. 2. The Individual Defendants are directed to make their computer forensics expert, FTI, accessible for consultation with Calyon's expert, so that FTI can search the mirror images based on a search protocol agreed to by both parties. 3. The Individual Defendants counsel and expert are directed to confer with Calyon's counsel and expert on an on-going basis to determine if the search protocol needs refinement. 4. The Individual Defendants are directed to preserve the mirror images of all the computer hard drives and other storage devices in question. If, after the Individual Defendants' production of documents and data from those mirror images, Calyon can demonstrate that relevant and responsive information has been withheld or is missing, or that the Individual Defendants' expert has failed to consult fully, in good faith, with Calyon's expert in order to develop an appropriate search protocol, then Calyon may renew its application for direct access to the mirror images. SO ORDERED Footnotes [1] The individual defendants are Alexander Rekeda, Douglas Munson, James Shepard, William Budd, Jr., Clifford Condon, Xavier Capdepon, Paolo Torti, Gwen Snorteland, Daniel Will, Rachel Yang, and Yuri Chumak (collectively, the “Individual Defendants”). [2] Specifically, Calyon has asserted the following causes of action against the Individual Defendants: (1) Violation of the Computer Fraud and Abuse Act, 18 U.S.C. § 1030; (2) Breach of Fiduciary Duty; Inducing/Aiding and Abetting Breach of Fiduciary Duty; (3) Unfair Competition; (4) Tortious Interference with Business Relationships; and (5) Civil Conspiracy. (See Complaint dated Mar. 15, 2007, ¶¶ 56-103.) [3] In a supplemental declaration, Hall summarizes the three principal reasons why Calyon's expert requires complete access to the images: (1) to forensically examine unused portions of hard drives or other media for evidence regarding Defendants having received, deleted or retransmitted Calyon documents or information, (2) to potentially recover fragments of deleted documents from unallocated portions of hard drives or other media, and (3) to possibly forensically undelete and recover certain documents. (See Supplemental Declaration of Elizabeth Hall dated May 3, 2007 (“5/3/07 Hall Decl.”), ¶ 2.) [4] Specifically, the Individual Defendants state that their home computers contain, among other things, personal information related to taxes, personal finances and investments, family members' social security numbers, and data related to the business or charity activities of their spouses. (See 4/11/07 Kobre Letter at 6; letter to the Court from the Individual Defendants' counsel, Steven G. Kobre, Zaharah R. Markoe, and Steven W. Perlstein, dated May 10, 2007, at 2.) [5] The plaintiff alleged a violation of, inter alia, the Computer Fraud and Abuse Act. Id. at *1. [6] Although the Frees court noted in its statement of facts that the plaintiff filed its motion to compel after the defendant had failed to respond to some discovery requests, including the request for the production of the defendant's hard drives (id. at *1), the Court did not mention that this failure was a factor in its decision to allow the imaging and inspection of the hard drives. [7] In Ameriwood, the plaintiff was ordered to select and pay for an independent expert on its own. See Ameriwood, 2006 WL 3825291, at *1-6; see also Simon Prop. Group L.P. v. mySimon, Inc., 194 F.R.D. 639, 641 (S.D.Ind.2000) (ordering plaintiff to select and pay for an expert to oversee mirror imaging of hard drives); Cenveo Corp., 2007 WL 442387, at *1-3 (ordering plaintiff to select a third party expert to oversee mirror imaging of hard drives).