*1 This matter is before the Court on Eduardo Gonzalez's (“Gonzalez”) Motion to Compel Forensic Examination and Impose Sanctions against Verfruco Foods, Inc. (“Verfruco U.S.”) (“Motion to Compel”). [ECF No. 63]. This case has been referred to the Undersigned for a ruling on all pre-trial, non-dispositive matters and for a report and recommendation on all dispositive matters. [ECF No. 69].

In the Motion, Gonzalez requests that the Court: (1) appoint a neutral third-party expert to access and independently review the two email servers that Verfruco U.S.’s directors, officers, and employees use (the “@freshcourt.com” and the “bestproduce1.com” email servers) and all devices of Jamie and Victor Sebastian-Mauricio (the “Sebastian-Mauricio Brothers”) for any documents responsive to Gonzalez's subpoena, and to determine whether any documents or communications have been deleted; and (2) impose both monetary and contempt sanctions pursuant to Federal Rule of Civil Procedure 37(b). [ECF No. 63 at 1].

On November 9, 2021, the Undersigned held a hearing on this matter. [ECF No. 63]. Having heard from the parties, in accordance with the Undersigned's ruling at the hearing, and for the reasons stated on the record, the Motion to Compel [ECF No. 63] is GRANTED IN PART.

On November 11, 2020, Gonzalez filed an ex parte Application for Judicial Assistance under 28 U.S.C. § 1782, requesting the issuance of subpoenas directed to Verfruco U.S., to obtain documentary and testimonial evidence for use in contemplated proceedings in Mexico. [ECF No. 1]. Gonzalez and the Sebastian-Mauricio Brothers were partners in Verfruco Mexico, S. de R.L. de C.V. (“Verfruco Mexico”), and his Application arose from the Sebastian-Mauricio Brothers purported decade-long effort to deprive him of his 8% equity interest in the company. [Id.].

He claimed that the Sebastian-Mauricio Brothers, as partial owners of Verfruco Mexico, transferred its assets to other companies owned and/or controlled by them, including Verfruco U.S., and Mexican companies, Freshcourt, S. de R.L. de C.V. (“Freshcourt”), Novafoods, S. de R.L. de C.V. (“Novafoods”), and FI Avocados, S. de R.L. de C.V. (“FI Avocados”). [ECF Nos. 1; 1-1]. According to Gonzalez, these companies and Verfruco Mexico form the Verfruco business group. See [ECF No. 63]. Verfruco U.S. admits that it is a $50-million-a-year operation. [ECF No. 63-1 at 112:20-113:6].

Ultimately, the Court entered an ex parte Order granting Gonzalez's Application (“Order Granting Gonzalez's § 1782 Application”), and the Clerk of Court was ordered to issue the requested subpoenas. [ECF No. 8]. In one subpoena, Gonzalez sought the following documents from Verfruco U.S.:

[ECF Nos. 1 at 20; 1-3 at 25, 39].

In the other subpoena, Gonzalez sought deposition testimony from Verfruco U.S. regarding the following:

[ECF No. 1-3 at 40, 47].

Verfruco U.S. moved to vacate the ex parte Order [ECF No. 13], and quash the subpoenas issued pursuant to the Order [ECF No. 15] (collectively, “motions”), arguing that the discovery sought by Gonzalez regarding the Mexican companies was not within Verfruco U.S.’ possession, custody, or control because the Mexican companies were located outside the United States. The motions included a declaration by Juan Molano, Verfruco U.S.’s Director of Sales and Product Management, claiming that Verfruco U.S. had “examined all of the electronic and paper records in its possession, custody, or control and determined that it does not have documents responsive to [Gonzalez's subpoenas].” ECF No. [13-2 ¶ 5].

On April 14, 2021, the Undersigned denied the motions and ordered Verfruco U.S. to produce all documents within its possession, custody, or control and provide information in its possession, custody, or control responsive to the subpoenas (“April 14, 2021 Order”). [ECF No. 25].

Verfruco U.S. filed objections to the Undersigned's April 14, 2021 Order. [ECF No. 34]. Verfruco U.S. also moved to stay compliance with the subpoenas until after the District Court Judge ruled on its objections. [ECF Nos. 34; 35]. Verfruco U.S.’s Objections included a second declaration by Juan Molano (“Mr. Molano”), stating that “Verfruco U.S. [did] not have any responsive documents to the subpoenas served by Mr. Gonzalez.” [35-2 ¶¶ 8-10].

On May 19, 2021, Verfruco U.S. submitted a third declaration by Mr. Molano stating that he “confirmed on three separate occasions that Verfruco U.S. does not possess any responsive documents about the four Mexican entities.” [ECF No. 40-1 ¶ 8]. The District Court Judge denied Verfruco U.S.’s motion to stay. [ECF No. 41].

On May 24, 2021, Gonzalez filed a notice of hearing, requesting that the Court compel Verfruco U.S. to produce, in accordance with the April 14, 2021 Order, all documents within its possession, custody, or control and provide testimony about information in its possession, custody, or control responsive to the subpoenas. [ECF No. 42 at 1]. The matter was set for a hearing, and a couple of days prior, without any notice or conferral, Verfruco U.S. filed an Advisory Notice to the Court. [ECF No. 44]. Verfruco U.S. once again informed the Court that “after searching three times, [it] did not find in its files any documents relating to the assets, revenues and profits of the four Mexican companies, to any transfers of assets or cash from those companies to Victor Sebastian Mauricio and Jamie Sebastian Mauricio or their companies, to Mr. Gonzalez's ownership interest in those companies, or to any efforts to deprive him of his ownership interest.” [Id. at 3].

*3 After a June 1, 2021 hearing, the Undersigned entered an order granting Gonzalez's request, ordering that Verfruco U.S. produce all documents responsive to the subpoenas, regardless of their physical location. [ECF No. 52 at 1] (emphasis in original). The order cautioned Verfruco U.S. that failure to comply with the Court's orders will likely result in sanctions pursuant to Fed. R. Civ. P. 37. [Id. at 3].

On June 22, 2021, Gonzalez deposed Verfruco U.S.’s corporate representative, Mr. Molano. See [63-1]. The day before Mr. Molano's deposition, Verfruco U.S. filed its Response to Subpoena to Produce Documents, stating that “Verfruco U.S. has not identified any documents responsive to the Subpoena.” [ECF No. 59 at 2]. Verfruco U.S. also explained that, on an unknown date in June 2021, it engaged an e-discovery vendor to “search all of Verfruco U.S.’s electronic records on the companies’ three computers and three mobile devices for documents responsive to Gonzalez's subpoena” and found only two financial statements. [Id. at 4-5]. Other than these two financial statements, Verfruco U.S. did not produce any documents responsive to Gonzalez's subpoena. [Id. at 29-30, 33-34].

As evidenced by the deposition transcript, Mr. Molano was entirely unprepared because he did not have any knowledge about Verfruco U.S.’s electronic document storage policies and practices, let alone the process used to collect, search for, and produce responsive documents in this matter. [ECF No. 63-1 at 29:23-30:16]. Specifically, Mr. Molano did not know what the Sebastian-Mauricio Brothers do with Verfruco U.S.’s documents, and he did not have knowledge about Verfruco U.S.’s payment of invoices, bank accounts, or whether Verfruco U.S. had accountants. [Id. at 42:20-45:23, 54:10-58:7, 71:10-72:17, 73:12-21; 74:21-75:2]. Mr. Molano also revealed that there were several emails to or from the Sebastian-Mauricio Brothers, which were responsive to the subpoena, but had not been produced by Verfruco U.S. [Id. at 93-152, Ex.’s 1-16].

Moreover, Mr. Molano was not even sure when a litigation hold was issued or if there was a formal document indicating a litigation hold, and he admitted that Verfruco U.S. did not activate a litigation hold function in its email server. [Id. at 64:21-24, 65:6-14, 68:4-14]. Finally, Mr. Molano testified that Verfruco U.S.’s directors, officers, and employees, including the Sebastian-Mauricio Brothers, use either the @freshcourt.com or @bestproduce1.com email accounts. [Id. at 16:25-17:4, 171:6-172:9].

Despite Verfruco U.S.’s repeated claims that it possessed no documents responsive to Gonzalez's request, on June 30, 2021, following Mr. Molano's deposition, Verfruco U.S. filed a Supplement to its Response to Subpoena to Produce Documents, identifying three documents responsive to Gonzalez's subpoena: a letter, an email thread, and a spreadsheet. [ECF No. 61]. Gonzalez then filed this Motion to Compel Forensic Examination and Impose Sanctions against Verfruco U.S. [ECF No. 63]. Meanwhile, the District Court Judge entered an order overruling Verfruco U.S.’s objections to the April 14, 2021 order requiring Verfruco U.S. to comply with the subpoenas [ECF No. 67], and on August 24, 2021, Verfruco U.S. appealed to the Eleventh Circuit Court of Appeals. [ECF No. 78].

On September 16, 2021, Verfruco U.S. filed a Notice/Stipulation of Substitution of Counsel. [ECF No. 85]. On November 8, 2021, at 4:51 p.m., nearly a year after this litigation commenced and the evening before the evidentiary hearing on Gonzalez's Motion to Compel, Verfruco U.S. filed a “Supplementary Declaration of Juan P. Molano.” [ECF No. 97]. In the Declaration, Mr. Molano admitted that both Victor and Jaime Sebastian-Mauricio conducted a “good faith search” of their personal mobile phones for any documents or communications responsive to Gonzalez's Subpoena, and the searches identified 3,032 “hits.” [Id. at 1].

A) Third-Party Forensic Expert

*4 “[C]ourts compel a party to turn over its computers for a forensic [electronically stored information] analysis only where there is a strong showing that the party (1) intentionally destroyed evidence, or (2) intentionally thwarted discovery.” In re Furstenberg Fin. SAS, No. 16-CV-60266, 2018 WL 11256048, at *3 (S.D. Fla. Oct. 22, 2018) (quoting Procaps S.A. v. Patheon Inc., No. 12-24356-CIV, 2014 WL 11498061, at *3 (S.D. Fla. Dec. 30, 2014)).

Verfruco U.S. is a company that brokers the sale of avocado products and generates $50 million dollars in revenue annually. Despite these facts, Verfruco U.S. has claimed on at least four separate occasions, from December 15, 2020 until June 30, 2021, that it had no documents responsive to Gonzalez's subpoena, other than two financial statements. Additionally, from June 30, 2021, up until the day before the hearing on the Motion to Compel, Verfruco U.S. continued to claim that it only had three documents responsive to the subpoena. In fact, it was not until the evening before the hearing on this matter, after denying on multiple occasions that there were no documents responsive to the subpoena, that Verfruco U.S. discovered 3,032 “hits.”

Further, as indicated by the prolonged nature of this litigation, the deposition of Mr. Molano and his failure to confirm that Verfruco U.S. had initiated an appropriate litigation hold, Verfruco U.S.’s representations, and Verfruco U.S.’s discovery of over three-thousand “hits” on the eve of the hearing, there is a strong showing that Verfruco U.S.: (a) has continued to violate this Court's Orders to produce responsive documents regardless of their physical location; and (b) has not appropriately preserved all responsive documents.

The Court finds that it is apparent that Verfruco U.S. is unwilling to conduct a complete search of its computer system and devices for documents responsive to Gonzalez's discovery requests. Accordingly, the Court finds that the requirements have been met to grant Gonzalez's request to appoint a neutral third-party expert to access and independently review the two email servers that Verfruco U.S.’s directors, officers, employees, independent contractors, and/or consultants use (the “@freshcourt.com” email server and the “@bestproduce1.com” email server) for any documents responsive to Gonzalez's subpoena and to determine whether any documents or communications have been deleted.

In accordance with the Undersigned's rulings, the neutral third-party expert requested by Gonzalez, FTI Consulting, Inc., is appointed with the following parameters:

B) Request for Sanctions

Gonzalez also seeks contempt sanctions pursuant to Federal Rule Civil Procedure 37(b). [ECF No. 63 at 1]. At this juncture, the Court defers ruling on Gonzalez's request for sanctions. Gonzalez may file a separate motion for sanctions along with a certification of attorneys’ fees and costs expended. The motion shall not exceed ten pages. Verfruco U.S. may file a response within fourteen days of Gonzalez's motion, which shall not exceed ten pages.

In accordance with the foregoing, it is ORDERED and ADJUDGED that the Motion to Compel [ECF No. 63] is GRANTED IN PART. The Court shall defer ruling on Gonzalez's request for sanctions.

DONE AND ORDERED at Miami, Florida on this 17th day of November, 2021.