*1 On March 8, 2018, Industrial Packaging Supplies, Inc. (Plaintiff or IPS) brought suit against Geordy Davidson, John England, Stephen Schroeder, Cory Perry, Quinn Davidson, Michael Schmitt, Jason Nettles, DBE Solutions, LLC and Axis Packaging, LLC.[1] Plaintiff is a South Carolina corporation which claims that the individual defendants, all of whom were formerly employed by plaintiff, have violated certain employment-related agreements with plaintiff. Plaintiff alleges these violations include solicitation of plaintiff's present and prospective customers, sharing of trade secret and confidential information, unauthorized use of customer lists, and unauthorized solicitation of plaintiff's employees, along with use of confidential corporate information. Plaintiff's complaint contains the following causes of action against some or all of the defendants: Violation of the Defend Trade Secrets Act (18 U.S.C. § 1836, et. seq.), violation of the South Carolina Trade Secrets Act) (39-8-10, South Carolina Code, et. seq.,) breach of contract, tortious interference with contract, breach of the duty of loyalty, misappropriation of corporate opportunity, breach of fiduciary duty, conversion, unjust enrichment, and for an accounting. Plaintiff also requests preliminary and permanent injunctive relief.

Pursuant to the order of the Honorable Timothy M. Cain (Dkt 87), the undersigned was appointed “to oversee discovery and discovery disputes” in this matter. Plaintiff previously filed a Motion to Compel and Motion for Entry of Forensic Protocol (Dkt 72) (“Motion to Compel”). Defendants filed responses to plaintiff's motion (Dkt 80, Dkt 81). Plaintiff's motion was referred to the undersigned.

In compliance with the Court's initial deadline for submission of a Report & Recommendation, the undersigned reviewed and analyzed the submissions of the parties. The parties then requested the undersigned to delay submitting his Report & Recommendation, as they were hopeful other ongoing discovery would lead to agreement on the pending issues. Recently, plaintiff and defendants Geordy Davison, John England, DBE Solutions, LLC, Axis Packaging, LLC, Davidson Brothers Equity, LLC and Viking Packaging, LLC agreed on a consent protocol to conduct discovery of certain electronically stored information (Ex. A). The undersigned has been informed that entry of this protocol resolves the pending motions as to those defendants.

The undersigned conducted a conference with counsel for plaintiff and counsel for the listed defendants on January 25, 2019. The only matter remaining for decision is whether Stephen Schroeder, Cory Perry, Quinn Davidson, and Michael Schmitt (“defendants”) should be subject to the same protocol.[2] On January 28, 2019, counsel submitted brief position papers as to this remaining issue. The matter is now ripe for decision.

*2 Plaintiff submitted an affidavit of forensic examiner James Scarazzo of FTI Consulting regarding his examination of certain electronic files and devices in the possession of IPS and previously used by defendants Schmitt, Davidson, Schroeder, and Perry while employed by IPS. Defendants also submitted affidavits. All affidavits were previously filed with the Court.

It is plaintiff's position that Mr. Scarazzo's examination discloses that certain documents, presentations, files, and drawings were transferred by defendants to various external devices in defendants' control. Defendants' affidavits claim that each left his work computer and external storage devices on plaintiff's premises as of the date of resignation. Defendants also aver that each has searched his iCloud storage services and/or e-mail accounts for plaintiff's “confidential information,” “trade secrets,” or tangible property, but none has been found. Some of the defendants do not possess the same cell phone as when they were employed by plaintiff. Plaintiff contends that Mr. Scarazzo's findings are sufficient to require defendants to enter into the consent protocol. Defendants contend Mr. Scarazzo's findings, when compared with their declarations, do not provide sufficient basis for a search of their private electronic devices.

The Consent Protocol requires defendants to identify any and all electronic storage devices, computers, smart phones, etc. which could potentially contain or reflect any of plaintiff's confidential information: (1) which is the subject of this litigation, and (2) to which defendants have had access from January 1, 2016 to the present. The protocol requires that any such devices to be made available to an approved consultant for preservation. Defendants are allowed to have a representative present during the process of preserving the data from the devices.

The protocol requires the approved consultant to insure that all original data sources are preserved, and the consultant must use generally accepted forensic tools and techniques in doing so. The protocol also sets forth requirements for the collection of data from computers, mobile devices and cloud-based repositories.

Plaintiff is required to submit a proposed list of search terms for use in searching the preserved data. Defendants have the right to object and counter-propose search terms. Once search terms are agreed upon or settled by the Court, the approved consultant will produce a search report to counsel. Defendants have the right to object prior to the production of material to plaintiff's counsel.

The undersigned agrees that an examination of individual personal devices, accounts, etc. can be a significant intrusion into privacy. Such an intrusion should not be undertaken absent a showing of the need for such measures. Plaintiff has presented the affidavit of a forensic examiner, who opines that actions were undertaken by defendants which amounted to a “sophisticated plan ... to take files and documents belonging to IPS and provide them to AXIS or it's agent.” Defendants dispute Mr. Scarazzo's conclusions. Each defendant claims he has searched for the information and found none.[3]

The protocol does not allow an unlimited search of defendants' personal devices and accounts. Only devices identified by defendants as actually or potentially containing the information at issue are subject to search. The protocol further provides that the search terms utilized must be either agreed to by the parties or approved by the Court. Defendants have an opportunity to object to the production of identified documents and any documents produced will be presumed confidential pursuant to a previously-agreed upon protective order.

*3 The provisions of the protocol considerably lesson the intrusiveness of any search conducted. Defendants will have considerable input into search terms, as well as the ability to object to the production of material to the plaintiff. Coupled with the affidavit of a forensic examiner, as well as plaintiff's representation that the costs of the protocol and the search will not be borne by the defendants, leads to the conclusion that the defendants should participate in the protocol as set forth below.

Accordingly, it is recommended as follows:

Respectfully submitted,

ROE CASSIDY COATES & PRICE, P.A.

William A. Coates (Fed. ID No. 183)

ROE CASSIDY COATES & PRICE, P.A.

1052 North Church Street (29601)

P.O. Box 10529

Greenville, South Carolina 29603

(864) 349-2600 (phone) / (864) 349-0303 (fax)

wac@roecassidy.com