*1 FINAL REPORT AND RECOMMENDATION OF SPECIAL DISCOVERY MASTER

I. Report

A. Summary of Disputes

B. Resolved Disputes

C. Unresolved Discovery Disputes

D. Recommendations

CASES

Autotech Techs. Ltd, P'ship v. Automation-direct. com, Inc., 248 F.R.D. 556 (N.D. Ill. 2008)

Berckeley Inv. Group v. Colkitt, 455 F.3d 195 (3d Cir. 2006)

Bolton v. Sprint/United Mgmt. Co., 2007 WL 756644 (D. Kan. Mar. 8, 2007)

Bull v. United Parcel Serv., 665 F.3d 68 (3d Cir. 2011)

D'Onofrio v. SFX Sports Grp., 247 F.R.D. 43 (D.D.C. 2008)

Drysdale v. Woerth, 153 F. Supp. 2d 678 (E.D. Pa. 2001)

Dunn v. Mercedes Benz of Ft. Washington, Inc., 2012 WL 424984 (E.D. Pa. Feb. 10, 2012)

Farran v. Johnston Equip., Inc., 1995 WL 549005 (E.D. Pa. Sept. 12, 1995)

Flickinger v. Toys R Us-Delaware, Inc., 2012 WL 2581015 (3d Cir. July 5, 2012)

Grider v. Keystone Health Plan Central, Inc., 580 F.3d 119 (3d Cir. 2009)

Harris v. Jacobs, 2012 WL 4109052 (E.D. Pa. Sept. 19, 2012)

Hassan v. Stafford, 472 F.2d 88 (3d Cir. 1973)

Hussey v. Chase Manhattan Bank, 2004 WL 220845 (E.D. Pa. Jan. 12, 2004)

In re Prudential Ins. Co. Am. Sales Practice Litig. Agent Actions, 278 F.3d 175 (3d Cir. 2002) (willful bad faith is a prerequisite for imposing § 1927 sanctions)

Joseph v. Hess Oil Virgin Islands Corp., 651 F.3d 348 (3d Cir. 2011)

Jurimex Kommerz Transit GMBH v. Case Corp., 2007 WL 2153278 (3d Cir. 2007)

Kelly v. Crown Equip. Corp., 1991 WL 208771 (E.D. Pa. Oct. 8, 1991), aff'd, 970 F.2d 1273 (3d Cir.)

LaSalle Nat'I Bank v. First Conn. Holding Group, L.L.C., 287 F.3d 279 (3d Cir. 2002)

Medeva Pharma Suisse A.G v. Roxane Lab., Inc., 2011 WL 310697 (D.N.J. Jan. 28, 2011)

Micron Tech, Inc v. Rambus, Inc., 645 F.3d 1311 (Fed. Cir. 2011)

Orbit One Comme'ns, Inc. v. Numerex Corp. 271 F.R.D. 429 – 44 (S.D.N.Y. 2010)

Plan Pros, Inc. v. Torczon, 2009 WL 3063017 (D. Neb. Sept. 18, 2009)

PSC Info Group v. Lason, Inc., 2009 WL 2232473 (E.D. Pa. July 21, 2009)

Richardson v. Philadelphia Housing Auth., 1991 WL 276065 (E.D. Pa. Dec. 20, 1991)

Riddle v. Liz Claiborne, Inc., 2003 WL 21976403 (S.D.N.Y. Aug. 19, 2003)

Rimkus Consulting Group, Inc. v. Cammarata, 688 F. Supp. 2d 598 (S.D. Tex. 2010)

Ryan v. Gifford, 2007 WL 4259557 (Del. Ch. Nov. 30, 2007)

Secure Energy Inc. v. Coal Synthetics, 2010 WL 597388 (E.D. Mo. Feb. 17, 2010)

St. Martine v. Keystone Freight Corp., 2012 WL 645931 (E.D. Pa. Feb. 28, 2012)

Swindell Dressier Int'l Co. v. Travelers Cas. & Sur. Co., 827 F. Supp. 2d (W.D. Pa. 2011)

Victor Stanley, Inc. v. Creative Pipe, Inc., 269 F.R.D. 497 (D. Md. 2010)

Victor v. Lawler, 2011 WL 2664741 (M.D. Pa. Aug. 19, 2011)

White v. Graceland Coll. Ctr. for Prof'l Dev. & Lifelong Learning, Inc., 2009 WL 722056 (D. Kan. Mar. 18, 2009)

Williams v. Sprint/United Mgmt. Co., 230 F.R.D. 604 (D. Kan. 2005)

Wooley v. Great Atl. & Pac. Tea Co., 281 F.2d 78 (3dCir. 1960)

Zubulake v. UBS Warburg LLC, 220 F.R.D. 212 (S.D.N.Y. 2003)

STATUTES

28 U.S.C. § 1927

OTHER AUTHORITIES

Fed. R. Civ. P. 26(c)

Fed. R. Evid. 401

Federal Rule of Civil Procedure 34

Interim Status Report, I refused

Local Rule 83.6.1

Local Rule 83.61

Request No. 1

Request No. 2

Request No. 3

Request Nos. 4 and 5

Rule 30(b)(6)

Rule 37 Rule 37(a)(5)(B)

The Sedona Principles-Second Edition: Best Practices Recommendations and Principles for Addressing Electronic Document Production at 3 (2007)

www.mrisoftware.com

*2 After a year of negotiation, the outstanding discovery disputes between Plaintiff and Defendants Fair Collections and Outsourcing, Inc. (hereinafter “FCO”) and Home Properties LP (hereinafter, “Home Properties” or “Home”) that were referred to the Special Discovery Master for resolution have been thoroughly examined. In addition, subsequent disputes between the parties that arose over the last year have likewise been addressed. The following report[1] summarizes these activities and recommends certain further actions to the Honorable Court.

The parties came before the Special Master to resolve outstanding discovery disputes then pending before the Court.[2] Specifically, the Honorable Court gave the Special Master the authority to “address all discovery motions currently pending [and] .... to deal with all future discovery issues that arise between the parties and any other pre-trial discovery matters the Court may refer to the Special Master.” See Ex. A at ¶ 2. The order also noted that the “Special Master shall take all reasonable steps necessary to attempt to resolve the parties' disputes by agreement and without motion practice.” Id.

At the time of the parties' first meeting with the Special Master, the following motions were pending:

Over the course of the year during which the Special Master worked with the parties to resolve these outstanding discovery disputes, additional disputes arose and motions were filed. These included the following disputes:

From this group of new disputes, only the final two remain unresolved and are addressed in Section C of this report.

*3 The parties largely succeeded in resolving their disputes informally. This section summarizes each of these disputes and reports on the process by which resolution was achieved.

Plaintiff's motion to compel sought certain financial information from Defendant FCO. At the parties' first meet and confer with the Special Master, the specific records Plaintiff sought pursuant to this request were discussed and clarified. Counsel for FCO agreed to produce the requested information and, following the meet and confer, produced Mr. Sabota's 2010 tax returns, FCO's 2010 Trial Balances and certain additional financial information the parties had discussed. Plaintiff's counsel quickly confirmed receipt of the requested information. This motion was therefore resolved. See Interim Status Report of Special Master dated October 7, 2011, attached as Exhibit B.

In addition to the financial information Plaintiff moved to compel from defendant FCO itself, Plaintiff also asserted during negotiation that it is entitled to receive financial information from certain additional FCO entities not party to this litigation. Plaintiff believes information sought from these entities is relevant to determining the value of FCO and is in the “possession, custody or control” of FCO.[4] Plaintiff asserted that it is entitled to receive this financial information from these FCO entities pursuant to its Request for Production to the defendant FCO, because this information is in FCO's “possession, custody or control.” Plaintiff's specific requests for documents from the other FCO entities are enumerated in the draft Order. After examining the requests, the Special Master requested briefing on the specific legal issue raised by the motion. Both parties subsequently submitted briefs addressing whether the information requested from the identified FCO Entities is in the possession, custody or control of defendant FCO for purposes of discovery.

In the meantime, the Special Master ordered FCO to produce the documents requested in the draft Order that were in the possession, custody or control of Defendant FCO (not the other FCO entities). Defendant FCO submitted the requested documents and, after conferring with its financial expert, Plaintiff advised the Special Master that it was satisfied with the documents provided by Defendant FCO and would no longer seek the requested information from the other FCO entities. As a result, the remainder of the motion to compel (Document 109) was resolved. See Interim Status Report dated January 10, 2012, attached as Exhibit C.

*4 Similarly, after the parties discussed Defendant FCO's motion to compel information from Plaintiff regarding Plaintiff's claim for damages, Plaintiff quickly produced the requested information. Initially, Plaintiff insisted that it had already produced all information related to its damages in prior productions. To clarify and resolve this issue, the Special Master ordered Plaintiff to identify, by bates number, all previously produced documents that support its claims for economic and non-economic damages. Plaintiff subsequently produced the requested information. FCO confirmed receipt of the requested information. This motion was therefore resolved. Id.

In this motion, Plaintiff sought information related to class discovery. Specifically, Plaintiff asked Home Properties to identify, inter alia, the number of leases it executed and terminated in the Commonwealth of Pennsylvania, along with certain other information about the policies and practices of Home Properties regarding tenant contact information and communications with tenants who may be represented by counsel. Home Properties objected to these interrogatories, primarily on the grounds that they were not relevant and were vague and overbroad.

The Special Master worked with the parties to clarify and narrow the requests, ultimately ordering Home Properties to provide responses to Interrogatories 1, 2 and 4, but clarifying that information requested in response to Interrogatories 1 and 4 to the number of leases and terminations was limited to the Commonwealth of Pennsylvania during the class period. In addition, the Special Master instructed Plaintiff to restate Interrogatories 3, 6 and 7 to clarify the information sought. Plaintiff served refined Interrogatories 3, 6 and 7 and withdrew Interrogatory 5. Home Properties subsequently provided the requested responses to Interrogatories 1-4 and 6-7.[5] This Motion to Compel was therefore resolved. See Interim Status Report dated October 28, 2011, attached as Exhibit D.

This Motion to Compel consumed most of the parties' efforts over the course of the last year and thus requires a detailed summary here. Plaintiff's Motion to Compel Discovery from Home Properties relates to documents it sought in its First Request for Production of Documents served in January 2011. The five requests at issue in this motion sought the following information:

*5 As recited in the original motion and subsequent submissions related to these requests, it was clear from the outset that Home Properties produced little information in response to these requests prior to the parties' first meet and confer before the Special Master. Instead, to a large extent, it appeared evident to the Special Master that Home Properties narrowly construed the requests, lodged broad objections and did little, if any, investigation in an effort to identify responsive information. Id. Thus, the undersigned concluded that Home Properties had an obligation to conduct a thorough investigation into the existence and location of the requested documents. As a result, the undersigned worked with the parties to clarify the requests and gave counsel for Home Properties very specific instructions regarding the investigation the Defendant should undertake and the information it should produce. See Interim Status Report dated September 23, 2011 at 3-6, attached as Exhibit E.

With respect to Request No. 1, which seeks service agreements between FCO and Home Properties, Plaintiff claimed at the first meet and confer to have in its possession a number of records evidencing such agreements that were obtained in other litigations. Plaintiff was therefore instructed to produce evidence of such service agreements it contends exist between the parties. Plaintiff quickly submitted five documents it claims evidence such an agreement. Following a detailed review of this submission, however, the undersigned concluded that none of the documents submitted constitute or evidence a service agreement between FCO and Home Properties. See Interim Status Report dated October 7, 2011 at 3-4 (Ex. B).

Counsel for Home Properties was also invited to examine the documents and to revisit its position on the existence of additional service agreements between Home and FCO. Home Properties submitted, via letter, a response to each of the items identified in Plaintiff's submission and advised the Special Master that it had already produced the sole agreement between Home Properties and FCO, the Collections Services Agreement.[6]

Following discussion with the parties, it became clear that Plaintiff did not have good reason to believe that other service agreements existed between FCO and Home. Home had made multiple representations throughout the litigation regarding its response to Plaintiff's request and had submitted verified responses under penalty of perjury clearly stating that the Collection Services Agreement is the only agreement between the parties. Satisfied that Home Properties had conducted a good-faith search for additional records, the undersigned advised the parties that this request was satisfied and the motion to compel with respect to this request was resolved.[7] See Interim Status Report dated December 8, 2011 at 2, attached as Exhibit F.

*6 As with Request No. 1, the parties discussed the issues related to Plaintiff's demand for “dunning letters” and the undersigned probed Home Properties' position on this request. As noted in the Motion to Compel and Response, Home Properties had very narrowly construed this request, objecting to its production by stating that “no such documents exist as originated from” Home. During the meet and confer, it also became evident that Home narrowly construed the term “dunning letter” and claimed to have found no documents captioned as such. In the interest of resolving this dispute, Home Properties was instructed to “conduct a thorough search for (1) any samples or templates of documents ‘seeking to collect a debt,’ otherwise known as ‘dunning letters,’ regardless of the author, originator or owner of such documents” and (2) “any documents or indicia of approval by Home Properties of the ‘dunning letter’ samples or templates used by” FCO. Home Properties was to conduct a thorough search and to produce any documents found, and in the event no documents were found, to submit a detailed recitation of the efforts undertaken to locate records, including a list of all individuals interviewed, physical locations and electronic record repositories searched. Id.

In response to these instructions, Home Properties produced four sample “dunning letters.” In addition, Home Properties produced information related to an internal electronic information technology system called MRI[8] and, specifically, a spreadsheet listing the fields of information available in the MRI system. Some of these fields appear to describe letters seeking to collect a debt. As a result, Plaintiff was instructed to propound an interrogatory identifying the MRI fields it contends evidence letters seeking to collect a debt and requesting that Home Properties respond by stating whether any of those fields are used by Home and, if so, to produce any letters indicated by those fields. Finally, Home was instructed to respond to the interrogatory and include in its response a detailed recitation of the steps taken, individuals interviewed and sources searched for the requested information.

Plaintiff subsequently served the request regarding the MRI system described above. Home Properties responded to the request and produced the requested letters. This Request was therefore resolved. See Interim Status Report dated December 8, 2011 at 2 (Ex. F).

It is Plaintiff's request for Home Properties' Standard Operating Procedures that spawned the lengthiest digression from the parties' efforts to resolve their discovery disputes over the last year. In response to Plaintiff's original request, Home Properties described an “online reference” that it contended might constitute a Standard Operating Procedure and further stated that a request had been made by counsel (presumably to Home Properties) “for evaluation.” When the parties convened for their first meet and confer, no further information had been provided since the original response was served in January 2011.

As an initial matter, then, the Special Master instructed Home Properties to investigate the purported “on-line reference” and to provide answers to a specified set of questions. These questions were: (a) the name of this application, file or database; (b) whether the system is “home grown” or “off the shelf” (c) how this system is accessed by Home Properties personnel in the ordinary course of business; (d) whether and how the content of this system can be exported and (e) the size of the content in the system in gigabytes. Home Properties was also asked to produce any index to the contents of the system and to state objections, if any, to production of information from this system.

*7 Home Properties later submitted, by letter, responses to the questions above. The responses, however, were nearly nonsensical, as Home stated that its Standard Operating Procedure, which it earlier had represented was an “on-line reference,” turned out to be a system owned and controlled by defendant FCO to which Home Properties purportedly had only limited access. In essence, Home asserted that FCO's website is its Standard Operating Procedure.

At the next meeting of the parties, during which the Special Master probed for information from Home Properties regarding its contention that it has no manuals other than the FCO website described in its earlier response, counsel for Home Properties finally disclosed that the Defendant has a “leasing manual.” Although Home noted that the leasing manual was neither requested nor relevant, I ordered its immediate production. See Interim Status Report dated October 28, 2011 at 3 (Ex. D). On November 11, 2011, Home Properties submitted the leasing manual, along with an MRI Guide, which is an instruction manual related to its internal MRI software package.

Following the production of these items, the parties still could not agree that Home Properties had produced all of the standard operating procedures it possesses and is obligated to produce. In support of this contention, Plaintiff pointed to references contained in the two documents directly produced, as well as a screenshot of Home Properties' intranet, which indicates that Home's intranet may serve as a repository for a body of Home Properties policies and procedures that Home may not have searched.

Based on these references, Home Properties was instructed to produce a complete list of all Home Properties policies and procedures, regardless of subject matter, for review. The Special Master advised the parties that I would review the list and would instruct Home to produce those policies and procedures, if any, that are potentially responsive to Plaintiff's discovery requests. As an alternative, Home was permitted to produce all existing policies and procedures to Plaintiff, subject to the parties' existing confidentiality agreement. Home elected the former option.[10]

Home subsequently produced a complete list of all Home Properties policies and procedures.[11] On January 10, 2012, the Special Master instructed Home to produce certain polices that, broadly construed, might be responsive to Plaintiff's request for standard operating procedures. See Interim Status Report dated January 10, 2012 at 3 (Ex. C). On January 26, 2012 and again on January 31, 2012,[12] Home produced paper and electronic versions of the requested policies, along with reproductions of the Leasing Manual, MRI User Guide, MRI Workshop for Property Managers, and MRI Handbook. Following Home's submission of these policies, the undersigned was satisfied that Home, however belated, had complied with Plaintiff's request for “standard operating procedures” by producing a large body of company policies, including some of marginal relevance. This request was resolved.

*8 When this request was initially raised by Plaintiff, the Special Master was concerned that this was a request for new discovery. As such, the parties were asked to identify previously served discovery requests and responses that could be read to include this category of information. See Interim Status Report dated October 28, 2011 at 3 (Ex. D) and Agenda dated December 6, 2011 at 3, attached as Exhibit G. Following submissions by both parties, Home Properties stood on its prior responses. At the December 7, 2011 meet and confer, the parties agreed that Home's production of information in response to Request No. 3 above would satisfy this request. This issue was therefore resolved.

As the Court is aware, Plaintiff filed a Motion for Sanctions against Home Properties on October 25, 2011 related to Home Properties' tardy submission of requested information to the Special Master. After receiving briefing from both Plaintiff and Home Properties, the Special Master submitted a Memorandum and Order on January 10, 2012, which was filed with the Court on January 12, 2012. The undersigned will not recite here the circumstances giving rise to the motion nor the resolution proposed in the Memorandum and Order, but will recommend that the Honorable Court affirm the Order.

This Motion to Compel sought from Home Properties L.P. information in the possession, custody or control of Home Properties, Inc. After the parties fully briefed it, this motion was discussed at a meet and confer of the parties on December 7, 2011. Following the meet and confer, this Motion was withdrawn without prejudice. See Interim Status Report dated December 8, 2011 at 4 (Ex. F).

At the Court's request, the parties attempted to reach agreement on proposed modifications to Plaintiff's Third Amended Complaint. On December 12, 2012, a report was submitted to the Court reflecting the modifications on which the parties were able to reach agreement and those they were not.

On November 17, 2011, plaintiff filed a Motion for Leave to Serve Additional Discovery on Defendant Home Properties. Specifically, Plaintiff sought discovery related to Home Properties' purported imposition of “30 day notice fees”[13] that Plaintiff asserts is related to class certification. Home Properties submitted a Reply objecting to this new discovery as a violation of the Court's Order[14] barring further discovery pending resolution of then-outstanding discovery disputes. Home further objected that this discovery attempts to support Plaintiff's proposed Third Amended Class Action Complaint,[15] which has not been approved by the Court and is therefore not relevant to litigation as then pled.

With those arguments in mind, the undersigned granted Plaintiff's motion in part and ordered Home to provide information that was similar in scope to previously propounded discovery. See, e.g., Plaintiff's Motion to Compel Responses to Plaintiff's Third Set of Interrogatories from Home Properties and discussion at § 1.B.4, above. In particular, Home was ordered to answer two interrogatories that sought information regarding the number of tenants and fees charged for failure to provide “30 day notice,” limited to the Commonwealth of Pennsylvania for the period January 1, 2008 to present. Home subsequently provided this information and the Motion was resolved. See Interim Status Report dated January 10, 2012 at 2 (Ex. C).

*9 The parties last met in person on January 26, 2012. Before that meeting, the Special Master issued an interim status report on January 10, 2012 that reflected that all but one issue had been resolved. See id. With Home's production of an array of policies and manuals at the January 26, 2012 conference, the Special Master was certain that the parties had resolved all of their discovery disputes and, with notice to the Court, could finally turn their time and attention to the merits of this litigation. Sadly, that was not to be.

Satisfied that the parties had resolved their last remaining discovery dispute following Home's submission of policies and manuals in late January, 2012, the Special Master scheduled a conference call for February 7, 2012. The purpose of this call was to allow the parties to discuss the policies and manuals Home had produced and to air any remaining questions before confirming that all outstanding disputes between the parties were indeed resolved. Instead, on February 6, 2012, the undersigned received the Declaration of Joseph O'Keefe (Plaintiff's counsel), attaching the Declaration of Christopher M. Erb, a forensic computer consultant.[16] See O'Keefe Declaration, attached as Exhibit H. No motion or other request accompanied the Declaration. Id.

The Declaration, however, raised serious allegations of spoliation relating to the policies and manuals produced by Home Properties. Counsel's declaration claims that, based on his own examination of the metadata associated with the produced policies and manuals, some of the documents had been modified in significant ways immediately prior to production.

Specifically, Plaintiff's counsel alleged that “modification dates are present in the metadata.” O'Keefe Declaration at ¶23 (Ex. H). As evidence of such modification, Plaintiff's counsel points to modification dates in the metadata of certain documents that he concludes show that the documents were edited by a witness just hours before they were produced. See O'Keefe Declaration at ¶13. In another example, Plaintiff's counsel alleges that counsel for Home, along with an individual no longer employed by Home, likewise engaged in modification just prior to production of these policies to Plaintiff. See O'Keefe Declaration at n.5 (“metadata obtained from Home's January 31, 2012 e-production which appears to indicate that Home's counsel similarly modified Home's Revenue Policy [a “policy” whose metadata also appears to indicate that it was created by Ms. Jodi Falk of Home Properties on January 30, 2012 despite representations that Ms. Falk “no longer works for Home”] prior to its production). Plaintiff's counsel also alleges that, just prior to production, a witness appears to have deleted information from one of the policies. Id. at ¶17. Counsel retained a computer forensic consultant to examine the files and prepare a declaration. Id. at ¶26. Plaintiff's consultant confirmed counsel's conclusion that “modification dates are present in the metadata.” See Erb Declaration at ¶5, attached as Exhibit J to the O'Keefe Declaration and attached hereto as Exhibit I. Mr. Erb recommended further investigation. Id. at ¶6.

Reviewing the O'Keefe Declaration and exhibits, the Special Master noted first that Plaintiff's counsel raised no issues or concerns that Home Properties' production was incomplete. Instead, Plaintiff's counsel focused solely on the so-called metadata that he had examined. Second, the undersigned noted that none of the alleged modifications were made to Plaintiff's leasing documents or to any documents directly related to Plaintiff's claims against Home. Rather, all of the alleged modifications were to company policies and instruction manuals produced in response to Request No. 3, many of which are of marginal relevance to this litigation. The undersigned also noted that the policies and manuals in question were produced in PDF[17] (portable digital format) format, which would not have been the original native application in which those documents were created.[18] Finally, it was also noted that Plaintiff made no attempt to meet and confer with Home Properties about his concerns or otherwise raise his concerns about the metadata with the Special Master before he submitted this Declaration. The O'Keefe Declaration was the first indication of any kind that Plaintiff contested the production of the policies and manuals and suspected spoliation.

*10 During the scheduled call the following day, Plaintiff's counsel reiterated the allegations contained in the Declarations. The Special Master probed Plaintiff's counsel about the investigation he had conducted and the basis for his conclusions when he did not know or inquire of Home Properties about the production or otherwise attempt to meet and confer with Home about his concerns. As was pointed out to counsel for Plaintiff, there might be a simple explanation that could resolve his concerns. If, for example, Home Properties personnel opened the files during the collection process, the act of opening the file would have changed the modified date and would therefore easily explain what Plaintiff's counsel saw when he examined the metadata. If, for example, the documents were converted to PDF for purposes of production, the metadata associated with the PDFs would likely indicate that the files were modified when they were converted to PDF at the time of production, which again would easily explain what Plaintiff's counsel saw in the metadata. Home Properties' counsel was likewise probed about the manner in which the policies and manuals had been collected, but counsel did not know how the documents had been collected or whether the files produced were native or converted to another format during collection and production.

Because Plaintiff's counsel had submitted a Declaration without an accompanying motion or request for relief, Plaintiff's counsel was asked what action was requested and/or what relief would be sought. Plaintiff's counsel indicated that he intended to conduct further investigation into the alleged spoliation and requested that Home Properties produce the subject policies and manuals in native format. Home's counsel was instructed to conduct an investigation and report back on whether the policies and manuals were available in native format. If the policies and manuals were available in native format, Home Properties was ordered to produce each of the subject policies and manuals in native format by February 13, 2012. A conference of the parties was scheduled for February 14, 2012. On February 13, 2012, Home Properties reported back and produced the policies and manuals in what it thought was native format.

On the very same day, Plaintiff filed a Motion for Hearing on Discovery Issues. See Motion for Hearing on Discovery Issues, attached as Exhibit J. In this motion, Plaintiff claims that Home Properties admitted to altering evidence,[19]and has lied and hidden relevant evidence. Id. at 6. Plaintiff cites as evidence of this misconduct his earlier allegation regarding the modification dates in the metadata of the examined documents. Id. at 6-7. Plaintiff does not provide new evidence of spoliation, but seeks “examination under oath” of two Home Properties witnesses, Robert Farnan and Cherie Buschel, both of whom had been deposed earlier in the litigation. Id. at 8-12.

The Motion states that the “hearing requested by Plaintiff here is the first step in determining (1) what occurred; (2) when it occurred (3) why it occurred and (4) what should be done about it.” Id. at 8. Plaintiff alleges that Mr. Farnan,[20] who appears to have been responsible for collecting the materials in Home's production, “is all over the metadata” associated with the production.[21] Id. at 10. Plaintiff gives no indication of the questions he would ask Mr. Farnan. Rather, Plaintiff concludes that Farnan is “Plaintiff's ‘best evidence’ for the essential inquiry as to ‘intent, recklessness, or gross negligence’ surrounding Home's bogus responses that it qualified by equally outrageous reliance upon general objections and outright misrepresentations that led to a delay of over a year in production of these (and other) materials, and, now, the admitted modifications surrounding Home's production as expressly acknowledged in Home's December 29, 2011 Special Master submission and as further evidenced by the modification dates contained within Home's January 30, 2012 Special Master submission.” Id. at 10-11 (emphasis in original omitted).

*11 Plaintiff requests the deposition of Cherie Buschel, also previously deposed, to “confirm Home's actual policies and procedures.” Id. at 11. In describing the testimony he would seek, however, Plaintiff seeks to question this witness on the content of the documents, not the circumstances surrounding the creation of them. Instead of seeking to identify, for example, the date the original materials were created or who authored them, Plaintiff recites a series of factual issues in the case that it plans to revisit with this witness, none of which relate to the alleged spoliation. See id. at 11-14.[22]

On February 27, 2012, Home Properties submitted a Response to Plaintiff's Motion for Hearing on Discovery Issues, attached as Exhibit K, in which it denies Plaintiff's assertions of spoliation. Home offered no explanation regarding the documents at issue or the alleged spoliation. Instead, Home requests that the Court or Special Master deny Plaintiff's motion because (a) the issue of spoliation is beyond the scope of the authority of the Special Master pursuant to the Court's Order Appointing Special Master[23] or (b) in the alternative, the depositions requested constitute an attempt to seek additional discovery in contravention of the Court's Order, which Home contends prohibits further discovery.[24]

On March 5, 2012, Plaintiff filed a Reply in Support of Motion For Hearing on Discovery Issues, attached as Exhibit L. The Reply itself does not raise new allegations and arguments. Included with its Reply, however, is a second, detailed Expert Report of Christopher M. Erb, Plaintiff's computer forensic consultant. See Reply in Support of Motion for Hearing on Discovery Issues, Exhibit A (attached hereto as Exhibit M).

In this Affidavit, Mr. Erb identifies the specific alterations to the Home Properties documents that Plaintiff contends constitutes spoliation. Mr. Erb limited his examination to the MRI Workbook, which is a training manual containing computer screen shots of the MRI software application in use at Home Properties, embedded in a set of step-by-step written instructions on how to use it. See Erb. Expert Report at ¶3(c) (Ex. M). The MRI Workbook was produced in PDF format. Id Mr. Erb identifies the following alterations:

Mr. Erb then examined metadata associated with the MRI Workbook. Id. at 18. The metadata indicates that the document was last printed on January 3, 2012 at 3:42 P.M. and was last saved at 6:16 P.M. that same day. The metadata also indicates “total editing time” as 2 hours and 15 minutes.[25] The metadata indicates the create time as 6:16 P.M. on January 3, 2012, over two hours after the document was printed.[26] Mr. Erb also offers testimony that Home failed to produce all of the native files requested for each of the policies and manuals,[27] Id. at ¶ 35.

The remainder of Mr. Erb's Report offers factual and legal conclusions about Home Properties and its conduct in this litigation that go well beyond the purview of a computer forensic expert. Id. at 28-38. By way of example, Erb concludes that Home Properties' conduct “evidences deceitful and evasive conduct consistent with the devious significant and substantive modifications, manipulations and deletions which I have identified in the documents themselves.” Id. at ¶137. He also states that Home “simply ignored” Plaintiff's document requests, engaged in “evasive tactics,” made “questionable statements” and acted with an “obvious intent to alter these documents so that their usefulness to Plaintiff and his counsel is substantially diminished if not entirely eliminated.” Id. at 29, 35.[28]

*13 On March 7, 2012, a conference of the parties was held to discuss the Motion and progress of Home Properties' efforts to investigate the collection of the policies. Counsel for Home Properties was rather candid in disclosing that he did not understand the importance or meaning of production in “native” format and had relied on his client to collect and forward the documents to him. Counsel further represented that, in an effort to resolve the dispute, the policies would be re-collected in native format and reproduced.

On March 21, 2012, counsel for Home Properties provided a brief update to the Special Master on its investigation into its collection effort. Home reported that it had retained a forensic expert to re-collect each of the nine policies and had conducted interviews of the current custodians of each policy. See Letter from Candidus Dougherty to Stephanie Blair (copied to all parties), dated March 21, 2012, (Ex. O). Home also disclosed that some of the policies are currently only available in PDF and not native format. Id.

On April 4, 2012, Home Properties submitted a Supplemental Brief in Opposition to Plaintiff's Motion for Hearing on Discovery Issues. In this Supplemental Brief, Home denies Plaintiff's allegations of misconduct by Home Properties and its lawyers and argues that sanctions are unwarranted. See generally Home Properties Supplemental Brief in Opposition to Plaintiff's Motion for Hearing on Discovery Issues, attached as Exhibit P. Importantly, Home submitted with its Supplemental Brief a set of the policies and manuals at issue in native format that were collected by a computer forensic expert in a forensically sound manner.[29] See id. at 26. The documents were accompanied by declarations from both the expert and counsel attesting to the method of collection. Id. at Exhibit JJ (letter reports of John G. Roman, attached hereto as Exhibit Q) and Exhibit KK (C. Dougherty Certification, Ex. N hereto). This would constitute the fourth time some of these documents have been produced to Plaintiff in one form or another. Notably, the content of the documents has never varied.

The Home Properties Supplemental Brief also seeks sanctions against Plaintiff, an apportionment of the Special Master's fees and a protective order. Id. at 49. Specifically, Home seeks relief in the form of sanctions under 28 U.S.C. § 1927 and Local Rule 83.61, apportionment to Plaintiff of the full amount of the Special Master's fees in addressing the motion and a protective order prohibiting further discovery by Plaintiff without leave of Court. Id. Home also requests sanctions under Rule 37 if Plaintiff's motion is denied because Plaintiff's motion was not substantially justified and could have been resolved with a meet and confer. Id.

On April 23, 2012, Plaintiff submitted a Sur-Reply in Support of the Motion for Hearing on Discovery Issues. The Sur-Reply restates arguments previously asserted in support of the Motion. See generally Plaintiff's Sur-Reply in Support of His February 13, 2012 Motion for a Hearing on Discovery Issues, attached as Exhibit R. The Sur-Reply did, however, remind the Special Master that Plaintiff does not seek a determination of spoliation or sanctions for spoliation. Rather, it clarifies that Plaintiff seeks as relief a hearing to inquire “who did what, when, and to what degree.” Id. at 33. Following that clarification, the Sur-Reply recites the history of “Home's Prior Bad Acts”. Id. at 38-47. Plaintiff does not, however, address the sanctions sought by Home in its Supplemental Brief, other than to state in the last paragraph of its Sur-Reply that Plaintiff “opposes the Request for Sanctions and Protective Order.” Id. at 47.[30]

*14 Counsel for Home Properties subsequently wrote to the Special Master on April 25, 2012 requesting that the Special Master refrain from considering any issue relating to spoliation and to confine any ruling to a determination of whether Home complied with Request No. 3. See Letter from Candidus Dougherty to Stephanie Blair (copying all parties), dated April 25, 2012, attached as Exhibit T. Plaintiff strenuously objected to Home's request. See email from Kenneth Jacobsen to Stephanie Blair (copying all parties), dated April 26, 2012, attached as Exhibit U. On June 22, 2012,[31] Home Properties submitted to the Court a letter seeking clarification regarding the scope of the Special Master's authority and a request that the pending Motion for Hearing on Discovery Issues be moved out of the Special Master's proceedings and referred to a magistrate judge for further consideration and resolution. See June 22, 2012 letter of Candidus K. Dougherty to the Honorable Eduardo C. Robreno, attached as Exhibit V. Plaintiff filed a response in Opposition on June 29, 2012. On July 3, 2012, the Court issued an order denying Defendant's Motion to Terminate, Review, or Clarify the Authority of the Special Master.[32]

In one last exchange between the parties, Plaintiff offered to withdraw the Motion for Hearing if Home Properties would agree to “produce one or more Rule 30(b)(6) witnesses competent to testify about its automated systems and standardized policies and procedures identified and produced during the past eight months in response to Plaintiff's Request No. 3.” See email from Kenneth Jacobsen to Candidus Dougherty (copying all parties), dated July 16, 2012, attached as Exhibit W. On July 23, 2012, Home Properties declined Plaintiff's offer. See email from Curtis Cheyney to Kenneth Jacobsen (copying all parties), dated July 23, 2012, attached as Exhibit X.

To summarize, currently pending before the Special Master is the Motion for Hearing on Discovery Issues, in which plaintiff asserts that Home Properties engaged in spoliation and seeks as relief the deposition of two Home Properties witnesses who were previously deposed in this litigation. Also before the Special Master is a request from Home Properties for sanctions, a protective order and reallocation of my fees. Prior to addressing these issues, the undersigned must address the question whether any decision is within the scope of the authority granted the Special Master by the Honorable Court.

Based on the Court's Order Appointing Special Master, as well as its July 3, 2012 Order denying Home Properties' Motion to Terminate, Review, or Clarify the Authority of the Special Master, the undersigned concludes that I have authority to recommend a decision on Plaintiff's Motion for Hearing and Home Properties' request for sanctions, a protective order and reallocation of my fees.

The Order Appointing Special Master provides, in relevant part:

See n.1 (emphasis added).

Plaintiff's Motion for Hearing on Discovery Issues does not seek sanctions for spoliation such as the exclusion of evidence or an adverse inference jury instruction. Such sanctions might properly be addressed pre-trial and certainly after the close of discovery and are clearly outside the scope of the Special Master's authority. See Swindell Dressier Int'l Co. v. Travelers Cas. & Sur. Co., 827 F. Supp. 2d, 498, 508 (W.D. Pa. 2011) (noting that in order to properly determine sanctions issue, court would wait for a complete record after discovery closed); Victor v. Lawler, 2011 WL 2664741, at *5 (M.D. Pa. Aug. 19, 2011) (“Many of the considerations which determine whether a spoliation sanction is appropriate, however, are factual matters which are best decided by a trial judge in the context of a trial”). Rather, the Motion alleges spoliation but seeks further discovery, not sanctions. The Special Master clearly has the authority to determine and recommend whether additional discovery should be granted pursuant to the Order Appointing Special Master.

*15 More importantly, the Court denied Home Properties' Motion to Terminate, Review, or Clarify the Authority of the Special Master, which put the question of the scope of the Special Master's authority squarely before the Court. Thus, I conclude that a recommendation on the Motion for Hearing is within my authority and provide a recommendation below.

Plaintiff seeks a hearing to examine under oath two Home Properties witnesses, Robert Farnan and Cherie Buschel, both of whom were deposed earlier in this litigation. Plaintiff asserts that it requires this discovery in order to gather additional evidence to support its spoliation claim. Plaintiff points to changes in the metadata of one document as evidence of intentional spoliation engaged in by Home that, in Plaintiff's view, was done in an effort to thwart Plaintiff's case.

Spoliation is the destruction or significant alteration of evidence, or the failure to preserve property for another's use as evidence, in pending or reasonably foreseeable litigation. Harris v. Jacobs, 2012 WL 4109052, at *14 (E.D. Pa. Sept. 19, 2012); see also Victor Stanley, Inc. v. Creative Pipe, Inc., 269 F.R.D. 497, 516 (D. Md. 2010) (spoliation is “the destruction or material alteration of evidence or ... the failure to preserve property ...”); Rimkus Consulting Group, Inc. v. Cammarata, 688 F. Supp. 2d 598, 612 (S.D. Tex. 2010) (noting that spoliation is the destruction or meaningful alteration of evidence). Mere destruction or alteration of evidence does not necessarily give rise to sanctions. See Ashton, 772 F. Supp. 2d at 799-800. A party claiming spoliation must prove:

See Zubulake v. UBS Warburg LLC, 220 F.R.D. 212, 220 (S.D.N.Y. 2003) (Zubulake IV); see also Victor Stanley, 269 F.R.D. at 521 (surveying elements in each circuit). Plaintiff's claim of spoliation fails each of these elements.

Plaintiff has not shown that any of the policies or manuals produced by Home were destroyed or significantly altered. To the contrary, the policies and manuals have been produced multiple times to Plaintiff in a variety of formats with no discernible change to the content of the documents. Moreover, the purported alterations found in the metadata are insignificant. Thus, there is no evidence of destruction or material alteration.

Plaintiff relies on the declaration of a computer forensic consultant to demonstrate that the documents were altered.[33] Having carefully reviewed the declaration of Mr. Erb, the Special Master rejects his conclusions.[34]Among other things, Mr. Erb never acknowledged the most obvious and simple explanation, that the purported “alterations” he discovered were made by the author during creation of the manual. The deleted or hidden text and carved images most likely happened when the author created screenshots and dropped them into a Word® document, which was then printed to PDF for distribution and storage.[35] Thus, the text Mr. Erb uncovered was never meant to be part of the manual.[36] This conclusion is entirely consistent with the content and format of the manual as Mr. Erb found it. No evidence other than unsupported conjecture and suspicion supports Mr. Erb's opinion that Home Properties and its counsel engaged in spoliation.

*16 The production format likewise provides a simple explanation for the alleged “alterations.” Plaintiff did not request production of these documents in native format, as permitted by Federal Rule of Civil Procedure 34. Generally, if a party wants information in native format or with metadata, the party should ask for that production format in its initial request. See Secure Energy Inc. v. Coal Synthetics, 2010 WL 597388 (E.D. Mo. Feb. 17, 2010) (motion to compel production of metadata denied when party failed to request metadata for engineer drawings); D'Onofrio v. SFXSports Grp., 247 F.R.D. 43 (D.D.C. 2008) (court denied request for metadata when party originally failed to specify format of production in request); Autotech Techs. Ltd. P'ship v. Automation-direct.com, Inc., 248 F.R.D. 556 (N.D. 111.2008) (court denied production of metadata after production of documents in PDF format). In the absence of a specific instruction, Home was left to select the form of production. See Fed. R. Civ. P. 34. Home produced the documents in PDF, a static image format, which was not the format in which the documents were created. See Plan Pros, Inc. v. Torczon, 2009 WL 3063017, at *5 (D. Neb. Sept. 18, 2009) (production of QuickBooks information in Excel format was not production in format in which data was ordinarily maintained); see also Bolton v. Sprint/UnitedMgmt. Co., 2007 WL 756644, at *3 (D. Kan. Mar. 8, 2007) (native format “simply means if a document was created in an Excel software program, then it should be produced in Excel format”). Information visible in the original Word® file (hidden data, for example) would not be visible in the static image format. SeeWilliams v. Sprint/United Mgmt. Co., 230 F.R.D. 604, 647 (D. Kan. 2005) (noting metadata is generally not visible when document is converted to an image file, including metadata for Word® documents such as “hidden text”). Therefore, the existence of “hidden text” within a Word® document not visible in the PDF version of the document does not mean that the evidence was destroyed or altered. Instead, it simply means Home produced the document in a static, non-native format. Mr. Erb never offers this obvious explanation.

Plaintiff also asserts that Home must have altered the manual because it has a “last saved date” in January 2012. Home's counsel, however, attested under oath that the company failed to use forensically sound methods to collect the data for production. See Dougherty Certification, attached to Supplemental Brief by Home Properties L.P. in Opposition to Plaintiff's Motion for Hearing on Discovery Issue at Exhibit KK, (attached hereto as Exhibit N). A party that fails to collect information in a forensically sound manner can alter the metadata. See The Sedona Principles-Second Edition: Best Practices Recommendations and Principles for Addressing Electronic Document Production at 3 (2007) (noting that moving electronic data “may change creation or modification dates found in the metadata”). The fact that the metadata includes a modification date just prior to production corroborates the conclusion that the collection method altered the modification date. Rather than offering the obvious explanation that the metadata was altered by unsound collection techniques, a well-known and common mistake, Mr. Erb offers a nefarious cause that is not supported by the proffered evidence.[37]

Even if the manual was modified, the alleged alterations are of so little consequence as to be irrelevant to Plaintiff's claims. Plaintiff has not demonstrated that the alterations (the deleted or hidden text and carved images) bear any relevance to the issues in this litigation. As recited above, the purported alterations involve meaningless changes to a marginally relevant document that do not affect the content of the manual or Plaintiff's ability to use it in its case. Additional discovery serves no purpose but to prolong discovery in this matter.

Before spoliation sanctions can be awarded, a party must show that the information was relevant. See Bull v. United Parcel Serv., 665 F.3d 68, 73 (3d Cir. 2011); see also Orbit One Commc'ns, Inc. v. Numerex Corp., 271 F.R.D. 429, 441 – 44 (S.D.N.Y. 2010). Relevant evidence is evidence that tends “to make a fact more or less probable than it would be without the evidence.” Fed. R. Evid. 401. Put another way, the alleged alteration to evidence is relevant if a reasonable trier of fact could find that the altered evidence would support a party's claims. See Medeva Pharma Suisse A.G. v. Roxane Lab., Inc., 2011 WL 310697, at *15 (D.N.J. Jan. 28, 2011); see also Orbit One Commc'ns, Inc. v. Numerex Corp., 271 F.R.D. 429, 439 (S.D.N.Y. 2010) (party seeking sanctions must demonstrate that a reasonable trier of fact could find that the missing evidence supports his claims); Riddle v. Liz Claiborne, Inc., 2003 WL 21976403, at *2 (S.D.N.Y. Aug. 19, 2003) (absent evidence that allegedly spoliated documents would have been helpful to case, court could not find spoliation).

*17 The alterations identified by Plaintiff do not make any disputed fact in this litigation more or less probable. Plaintiff seeks damages as a result of Home's alleged failure to provide an itemized, written accounting regarding a tenant's security deposit and purported violations of the Fair Debt Collection Practices Act. None of the alterations impact these allegations.

One alteration pointed out by Plaintiff is the removal of punctuation (a period). Clearly, this change is not “significant and substantive” as Mr. Erb insists. The inclusion or exclusion of this punctuation in the instruction manual would not alter the outcome of the case or even bear on Plaintiff's claim. Similarly, the overlapping and hidden text and visuals omitted from carved images in the instruction manual are likewise not “significant and substantive” because they bear no relation to whether or how Home Properties provided Plaintiff the requisite notice to which he claims he is entitled. The covered over text-the phrases “calculate on rent plus any recurring charges,” “do not include concessions,” “do not round,” “aren't charged for balances under $200;” “click the Print Letters button to view the Applicant letter” and “–150 06/1/2011” – in an instruction manual makes no fact related to Plaintiff's claim more or less probable than it would be in the absence of the covered over text. This is a software instruction manual, not a record of Plaintiff's rental file, not a record of Plaintiff's account or even of the calculations of Plaintiff's rent or fees.

The January dates in the metadata likewise bear no relation to Plaintiff's claim, as it is obvious that any change to the metadata dates resulted from the manner in which the documents were collected for production and do not reflect any change to the content of the manual. This is not a case where metadata is critical to Plaintiff's case, such as when metadata is needed to determine when events occurred. See Ryan v. Gifford, 2007 WL 4259557, at * 1 (Del. Ch. Nov. 30, 2007) (metadata necessary when it would show date and time related to issue of backdating of stock options); White v. Graceland Coll. Ctr. for Prof'l Dev. & Lifelong Learning, Inc., 2009 WL 722056, at *4–5 (D. Kan. Mar. 18, 2009) (discussing need for metadata when timing of decision to terminate was critical and discrepancies in certain dates of emails and attachments existed); Dunn v. Mercedes Benz of Ft. Washington, Inc., 2012 WL 424984, at *6 (E.D. Pa. Feb. 10, 2012) (finding prejudice “too insubstantial” when plaintiff had adduced no evidence that missing notes would have been favorable to her). The dates here are January 2012, the precise month when the manual was produced for the third time. The only relevance the date bears is to the meet and confer process, not Plaintiff's claim. Thus, the purported modifications to the manual do not make a disputed fact “more or less probable.”

While Plaintiff also complained about updates to the MRI Guide in May 2011, the updates did not result in evidence going missing. To the contrary, Home has produced several versions of the MRI Guide and policies, and has collected and made available the previous version of the MRI Guide that was updated in May 2011. The fact that there are different versions of the document, none of which vary in any meaningful way (other than the date in the metadata), does not make a fact relevant to this case any more or less probable.

*18 Plaintiff has not alleged, nor does the evidence support the contention that Home Properties failed to meet its obligation to preserve evidence. To the contrary, Home has produced the policies and manuals multiple times and has not been accused of failing to preserve them. Plaintiff does allege that Home Properties admits to modifying one document after the litigation was commenced. See Plaintiff's Motion for Hearing on Discovery Issues at 7 (Ex. J). Home has, however, indicated that prior versions have been preserved and are available. See Home Properties Supplemental Brief in Opposition to Motion for Hearing at 42, attached as Exhibit P.

Having personally overseen the parties' conduct over the course of a year, the Special Master concludes that Home's conduct has not been improper. The undersigned has observed no evidence of the intentional and unprofessional conduct by Home and its counsel that permeate Plaintiff's papers. While Plaintiff's counsel has routinely accused counsel for Home of misconduct, the Special Master has witnessed Home Properties' counsel's good-faith effort to engage in the meet-and-confer process and to comply with instructions and orders. Indeed, Home Properties' information has been the primary focus in this lengthy meet-and-confer process and Home has been ordered to produce the vast majority of information this process has yielded, and appropriately so. While his effort may have fallen short from time to time, Home's counsel readily conceded his shortcomings and made every effort to correct his errors. This is not the behavior of a party engaged in intentional misconduct. Home's behavior does not evidence an intent “to impair the ability” of the opposing party to assert a claim or defend itself, see Micron Tech, Inc. v. Rambus, Inc., 645 F.3d 1311, 1326 (Fed. Cir. 2011) quoting Schmid v. Milwaukee Elec. Tool Corp., 13 F.3d 76, 80 (3d Cir. 1994), or to purposefully deprive the adversary of evidence. See Victor Stanley, 269 F.R.D. at 530 quoting Powell v. Town of Sharpsburg, 591 F.Supp.2d 814, 820 (E.D.N.C. 2008). While imperfect, Home's conduct over the last year did not suggest bad faith or intentional misconduct.

Finally, Plaintiff seeks to redepose two witnesses it previously questioned, purportedly to question the witnesses about the alleged alteration of the MRI Manual. As noted above, however, Plaintiff seeks to question these witnesses on the contents of the Manual and other substantive issues in this case. Indeed, counsel for Plaintiff offered to withdraw the Motion in exchange for re-deposition of these witnesses on issues unrelated to this Motion. See Ex. W. This further supports the conclusion that Plaintiff's Motion for Hearing on Discovery Issues should be denied. Plaintiff had an opportunity to question these witnesses earlier in the litigation. Concluding that no spoliation occurred, I would deny Plaintiff's requested relief.

Home seeks sanctions in the form of attorneys' fees under 28 U.S.C. § 1927 or Local Rule 83.6.1 against Plaintiff for allegedly “unreasonably and vexatiously” multiplying the proceedings by filing the Motion for Hearing on Discovery Issues. Sanctions under § 1927 can only be imposed when counsel's conduct is a result of bad faith. See Grider v. Keystone Health Plan Central, Inc., 580 F.3d 119, 142 (3d Cir. 2009); see also In re Prudential Ins. Co. Am. Sales Practice Litig. Agent Actions, 278 F.3d 175, 181 (3d Cir. 2002) (willful bad faith is a prerequisite for imposing § 1927 sanctions). While these provisions provide a court with the ability to sanction vexatious conduct, “courts should exercise [this sanctioning power] only in instances of serious and studied disregard for the orderly process of justice. See LaSalle Nat'l Bank v. First Conn. Holding Group, L.L.C., 287 F.3d 279, 288 (3d Cir. 2002).

*19 Plaintiff's counsel has multiplied the proceedings in this matter by filing the Motion for Hearing and in failing to confer with Home prior to its filing. Still, Defendant has failed to offer evidence of bad faith on the part of Plaintiff's counsel and bad faith will not be found without such evidence. “Indications of bad faith are findings that the claims advanced are meritless, that counsel knew or should have known this, and that the motive for filing the suit was for an improper purpose such as harassment.” See In re Prudential Ins. Co. America Sales Practice Litig. Agent Actions, 278 F.3d 175, 188 (quoting Smith v. Detroit Fed'n of Teachers Local 231, 829 F.2d 1370, 1375 (6th Cir. 1987)).

The Special Master has concluded that Plaintiff's Motion for Hearing on Discovery Issues is meritless and that Plaintiff's counsel should have known this when he refused to withdraw the Motion in the face of serious questions regarding the merit of his contentions. The Special Master cannot conclude, however, that the motion was filed for an improper purpose. The party that suffers most from months and months of meritless motion practice is Plaintiff. Thus Home's request for sanctions under 28 U.S.C. § 1927 or Local Rule 83.6.1 is denied and Plaintiff will not be ordered to pay Home's attorneys' fees associated with the Motion for Hearing on Discovery Issues.

Home also seeks sanctions under Rule 37(a)(5)(B) because Plaintiff's motion “was not substantially justified and could have been resolved with a meet and confer.” Under Rule 37(a)(5)(B), if a motion to compel discovery is denied, a court “must, after giving an opportunity to be heard, require the movant ... to pay the party ... who opposed the motion its reasonable expenses incurred in opposing the motion, including attorney's fees” unless “the motion was substantially justified or other circumstances make the award of expenses unjust.[38]” While it should be denied, Plaintiff's Motion for a Hearing on Discovery Issues is not a motion to compel filed pursuant to Rule 37 that would require the imposition of sanctions. Thus, the request for sanctions will be denied as well.

The Order Appointing Special Master permits the undersigned to consider Home's request for fee apportionment and to adjust my fees accordingly. The Order specifically provides:

The majority of my outstanding fees relate to Plaintiff's Motion for Hearing on Discovery Issues. Therefore, the only question is whether these fees should be reapportioned and, if so, how?

Plaintiff filed its Motion for Hearing on Discovery Issues without attempting to resolve the issue informally. Without conferring with Home about the alleged spoliation issues or raising the issue with the Special Master, Plaintiff submitted the Declarations of Joseph O'Keefe and Christopher M. Erb. During a conference call with the parties on February 7, 2012,[39] the Special Master questioned Plaintiff's counsel about his failure to ask Home about the documents. The Special Master was forced to ask Home how the documents had been collected, and to order Home to conduct an investigation and report back on the issue. A week later, before any additional discussion between the parties, Plaintiff submitted the Motion for Hearing.

*20 The issues related to the alleged modification of the manual could have been resolved cooperatively and quickly. Indeed, as Home offered additional information about the method used to gather the documents, the explanation for the alleged modification became clear. There was no spoliation. Yet, when Plaintiff had the opportunity to reconsider its motion, he refused. This Motion consumed six months of the parties' and the Special Master's time. As such, the Special Master orders the Plaintiff to pay the bulk of outstanding fees spawned by the Motion for Hearing on Discovery Issues.[40]

Home seeks a protective order precluding further discovery from Plaintiff without leave of Court. A protective order can only be issued upon a showing of “good cause.” Fed. R. Civ. P. 26(c). “Good cause” means “a legally sufficient reason” and “reflects the burden on a litigant ... to show why a request should be granted or an action excused.” Joseph v. Hess Oil Virgin Islands Corp., 651 F.3d 348, 351 (3d Cir. 2011). Home asserts that allowing Plaintiff any further discovery without leave of Court will subject it to annoyance and harassment. The Special Master disagrees that all future discovery requested by Plaintiff would be sought solely for the purpose of harassing and annoying Home. Given the history between the parties recited above, however, there is a risk that Plaintiff will abuse the process and therefore I do find “good cause” to issue a protective order and will recommend that no further discovery be permitted without leave of court.

On June 15, 2012, Plaintiff submitted a letter to the Special Master requesting that the Special Master direct Home to produce additional information related to Plaintiff's class discovery. When this set of interrogatories was addressed earlier in the process, the Special Master had ordered Home to provide information concerning rentals in the Commonwealth of Pennsylvania. See § l.a.4, above. Plaintiff claims that my instruction limiting Home's response to the Commonwealth of Pennsylvania resulted in the denial of Plaintiff's Motion to Compel without prejudice. This is incorrect. See Interim Status Report dated December 8, 2011 at 4-5 (Ex. F). Plaintiff's original request sought only information related to Pennsylvania rentals. See Motion to Compel. Plaintiff now asks the Special Master to order Home to provide this information on a nationwide basis. In response to this request, Home Properties objects on a variety of grounds, including relevance and burden.

Plaintiff's request is denied. First, the original request was limited to the Commonwealth of Pennsylvania and therefore, information regarding rentals outside the Commonwealth seeks new discovery. Second, as noted above, the undersigned has recommended that the Court grant Home's request for a protective order and therefore will not order additional discovery for the reasons set forth above.

After working with the parties for over a year, the Special Master concludes that all parties have had ample opportunity to address discovery in this litigation and have exchanged a plethora of information as a result. Therefore, and respectfully, the overarching recommendation of the Special Master to the Court is to refuse to entertain renewed demands for discovery that have already been exhaustively litigated. In addition, and to summarize the Special Master's conclusions on both resolved and outstanding discovery disputes, the following actions are recommended:

The record in this litigation is quite large. I have not attached to this report all documents associated with each issue addressed herein, and ask counsel to provide to the Court any documents the Court may request in considering this Report and my Recommendations that 1 have not included here.

See Order Appointing Special Master, attached as Exhibit A.

An issue is considered resolved if the parties exchanged information and either affirmatively agreed that the issue was resolved or failed to raise further objection following the exchange.

Although the Court specifically stated in the Order Appointing Special Master that I should not rule on whether Michael Sobota shall be joined as a party, the Order did authorize me to assist the parties in resolving the Motion to Compel. See Exhibit A at ¶ 2 and n.3. The issue of whether discovery should be obtained from related FCO entities was therefore addressed and resolved.

In what became a common occurrence during this process, a dispute arose over the form of Home Properties' response, which had been submitted by letter instead of in the form of a pleading. Plaintiff objected to the informality of the response but, following Home's submission of the requested information, the motion to compel was resolved.

It was as a result of Home Properties' letter response related to Request No. 1 that a second digression from the parties' work towards resolution arose. Upon receiving Home Properties' letter response, Plaintiff raised an objection to the form of the response, demanding a response in the form of a pleading rather than a letter. I instructed Home Properties to resubmit its response in such a format. Plaintiff's letter also included a second objection which was actually a demand for discovery from Home Properties' parent, Home Properties Inc. As stated in my next Interim Status Report, I refused to address what was effectively a new discovery request against a non-party in this manner. See Interim Status Report dated October 7, 2011 at 5 (Ex. B). In an effort to reach a conclusion on Request No. 1, Home Properties also offered to arrange for an informal question and answer session with Home Properties, Inc. in the presence of the Special Master for the purpose of confirming that Home Properties, Inc. has no documents relevant to this litigation. Plaintiff declined the offer. The demand for information from non-party Home Properties Inc. later formed the basis for a Motion to Compel discussed at § 8, below.

Plaintiff failed to provide the Special Master with any reason to doubt the truthfulness of Home's statements that the Collection Services Agreement is the only agreement between the parties. See PSC Info Group v. Lason, Inc., 2009 WL 2232473, at *2 (E.D. Pa. July 21, 2009) (sanctions denied when defense counsel informed opposing side that defendant had produced all documents and plaintiff “offered this court no reason to doubt the veracity of defendant's statements that no other responsive documents exist”); Hussey v. Chase Manhattan Bank, 2004 WL 220845, *2-3 (E.D. Pa. Jan. 12, 2004) (when defendants stated all documents had been produced and explained their process for searching for additional information, court was satisfied that all information had been produced); Richardson v. Philadelphia Housing Auth., 1991 WL 276065, at *2 (E.D. Pa. Dec. 20, 1991) (when defendant claimed all documents had been produced, “defendant cannot be forced to do more than that”); see also Jurimex Kommerz Transit GMBH v. Case Corp., 2007 WL 2153278, at *5 (3d Cir. 2007) (accepting representation that party had produced all documents in its possession and control when there was no evidence to the contrary). Simply put, Home could not be ordered to produce documents that do not exist. See Hussey, 2004 WL 220845, at *3; see also Farran v. Johnston Equip., Inc., 1995 WL 549005, at *1 (E.D. Pa. Sept. 12, 1995) (“where the answer states that no record exists, the court cannot compel the impossible”).

MRI (“Management Records Inc.”) software is software commonly used in the property management industry. See www.mrisoftware.com.

Request Nos. 4 and 5, which sought Home Properties' policies and procedures for referring debt to FCO, along with disclosure of the electronic systems used by Home to refer debt for collection by FCO, were satisfied by Home's production of documents in response to Request No. 3. In addition, Plaintiff's later request for discovery of the “computerized or other electronic means by which” Defendants “share information” was likewise satisfied by this production. See Interim Status Reports dated December 8, 2011 (Ex. F) and January 10, 2012 (Ex. C).

Home Properties was also ordered to provide additional information about the MRI Guide it had already produced, along with another system referenced in the MRI Guide called the “LRO Moneymaker.” Those questions were answered and thereafter required no further action.

Home was also ordered to produce a complete list of all software in use at the company, which it did.

As was often the case, it took several tries before Home finally submitted all of the requested documents in the format requested.

The parties disagreed as to the name of this fee, but agreed that it relates to the demand for payment of rent where the tenant has not provided the requisite lease termination notice.

See n.1.

This nomenclature appears for the first time in Plaintiff's proposed Third Amended Class Action Complaint, submitted to the Court on October 24, 2011.

I have attached only those materials directly cited in this Report, but note that Plaintiff and Home submitted large numbers of attachments with the briefing summarized in this portion of the report.

A PDF essentially converts a document into an image or picture of a document so that the original content can not be modified.

Adobe Acrobat, the software that creates PDFs, is not a word processing application. Rather, Adobe converts documents, regardless of native application, into a standard flat (or image) file format accessible by virtually any computer.

The Special Master has been unable to identify any such admission in the materials Plaintiff claims contain them.

Plaintiff states that Mr. Farnan is the “Home deponent that attempted to ... manipulate deposition testimony through ‘purposeful rewrites tailored to manufacture an issue of material fact’ in a blatant move to hide the full extent to which the scheme that Plaintiff outlines in his Second Amended Complaint has defrauded tenant consumers out of more than $27 million nationwide.” Id. at 10.

Part of Home's February 13, 2012 production was a set of electronic files forwarded by Mr. Farnan via email to counsel for Home, which counsel for Home forwarded to Plaintiff's counsel and the Special Master. It is therefore not surprising that Mr. Farnan's name appears in the metadata.

Interspersed with allegations of spoliation are arguments related to substantive factual issues in this case that have no bearing on the question of whether Home altered evidence and are well beyond the scope of the Special Master's authority. For example, at several points, Plaintiff argues that Home engaged in an “illegal taking of 84% of its tenant's escrow monies” and cites to an earlier declaration from Plaintiff's accounting expert regarding the relationship between Home Properties LP and Home Properties Inc. Seeid. at 6, 11.

As discussed in ¶C.1.a(7), below, in a July 3, 2012 Order, the Court denied Home Properties' Motion to Terminate, Review, or Clarify the Authority of the Special Master, which Home filed to preclude the Special Master from considering Plaintiff's spoliation claim.

The Order Appointing Special Master specifically permits the Special Master to “deal with all future discovery issues that arise between the parties and any other pre-trial discovery matters the Court may refer to the Special Master.” See Order Appointing Special Master at ¶2 (Ex. A).

“Total editing time” reflects the time elapsed since the last time a document was saved. It does not indicate whether changes were made to the document.

This “create time” indicates that the file was saved to a new location or in a new format, which is how it was “created” after it was printed.

Home Properties produced native files that were available. See Certification by Candidus K. Dougherty ¶42, attached as Exhibit N. See also letter from Candidus Dougherty to Stephanie Blair (copied to all parties), dated March 21, 2012, attached as Exhibit O.

The Erb Report contained other allegations, including opinion on the relationship between Home Properties L.P. and Home Properties, Inc., but these are not salient to this Motion. See, e.g., id. at ¶3(c).

As noted in Ex. O and the Dougherty Certification (Ex. N), some of the policies were not available in native format.

Plaintiff includes a Supplemental Report from Mr. Erb, attached as Exhibit S, which offers more of the same “evidence” of alteration. For example, in Exhibit B, Mr. Erb identifies additional hidden text revealed when he examined Home's April native production. The hidden text consists of this phrase: “Click the Print Letters button to view the Applicant Letter” and this phrase: “–150 06/1/2011.” Mr. Erb concludes that these two covered over phrases are “significant and substantive” modifications to the manual. The report also includes pages of metadata reports without any explanation or reference.

A conference of the parties was held on June 14, 2012 during which Home reasserted its view that the Special Master did not have authority to rule on the Motion for Hearing and again requested that 1 abstain from ruling.

The Court also denied without prejudice Plaintiff's Motion to Remove the Matter from Suspense and Direct Filing of Plaintiff's Motion for Partial Summary Judgment.

Home Properties submitted an expert report addressing Home's collection efforts, but this report does not directly rebut Mr. Erb's opinions regarding the alleged spoliation. See Supplemental Brief in Opposition to Plaintiff's Motion for Hearing on Discovery Issues, Exhibit JJ (Roman reports, Ex. Q hereto). Even in the absence of direct rebuttal of Mr. Erb's opinion testimony, however, the Special Master has the obligation to assess the credibility of the expert. As the Third Circuit has noted, “a trier of fact is not bound to accept an expert's opinion merely because it is uncontradicted.” Hassan v. Stafford, All F.2d 88, 96 (3d Cir. 1973) (emphasis added); see also Wooley v. Great Atl. & Pac. Tea Co., 281 F.2d 78, 80 (3d Cir. 1960) (trier of fact is free to reject uncontradicted testimony of a witness, particularly “when the testimony is composed of opinions”). Instead, the Special Master “is free to accept or reject expert testimony as [she] deems proper, even if such testimony is uncontroverted.” Drysdale v. Woerth, 153 F. Supp. 2d 678, 689 (E.D. Pa. 2001); see also Kelly v. Crown Equip. Corp., 1991 WL 208771, at *3 (E.D. Pa. Oct. 8, 1991), aff'd, 970 F.2d 1273 (3d Cir.).

Plaintiff's expert report contains a number of legal conclusions. An “expert witness is prohibited from rendering a legal opinion.” See Berckeley Inv. Group v. Colkitt, 455 F.3d 195, 217 (3d Cir. 2006). The Third Circuit recently reaffirmed this notion when it found no abuse of discretion when a district court struck portions of an expert report that rendered legal conclusions. See Flickinger v. Toys R Us-Delaware, Inc., 2012 WL 2581015, at *5-6 (3d Cir. July 5, 2012). For this reason, the Special Master will not consider the portions of the Erb declaration that include legal conclusions.

There is also no evidence that the covered-over text in the manual explaining the software is not visible in the software application itself.

Here is an analogy: If a sentence is deleted while a person is writing a document, the act of deleting the sentence is not spoliation. It is editing.

Plaintiff notes that Home admitted that the manual was updated during the course of the litigation. Plaintiff does not, however, show how this update resulted in the loss of evidence. Indeed, to the extent Plaintiff complains about the update, Home collected the previous versions of the MRI Guide as well. See Doughery Certification at ¶50 (Ex. N).

One judge in this District has ruled that failure to meet and confer before filing a motion to compel makes the motion substantially unjustified. See St. Martine v. Keystone Freight Corp., 2012 WL 645931 (E.D. Pa. Feb. 28, 2012).

Plaintiff submitted the Declarations on February 6, 2012, the day before a previously scheduled conference of the parties. Plaintiff could, but did not, wait one day to raise his concerns during the conference. Instead, he set in motion a formal process that raised serious claims of misconduct without any attempt to resolve or even substantiate those claims.

The precise allocation is set forth in the invoice which will be sent to the parties on November 21, 2012.