Court Orders Co-owned Businesses Dissolved Because of Dispute of Over Paying for Imaging of Servers

Last month, Judge Andrea Masley issued a decision, Besen v. Doshi, Index No. 652691/2018, 2019 N.Y. Misc. LEXIS 6835 (N.Y. Sup. Ct. Dec. 27, 2019) ruling on the Plaintiff's motion to quash the Defendant's demand for the production of hard copy documents. The Plaintiff also sought to condition the production on Doshi covering 50% of the costs of production. The parties were co-owners of multiple business. Besen's complaint brought claims for conversion and breach of fiduciary duty and also sought the judicial dissolution of some of the businesses. Doshi also filed a petition seeking the dissolution of a different business the parties co-owned.

The Court granted Besen's motion to extent that he was not required to produce documents in hard copy. "The days of producing paper copies are over." Id. at *11. Collecting, processing, and storing the 5 TB of data on the business's servers is estimated to cost as much as $100,000 and take 12 months. Besen estimates that imaging the servers would cost $1500 and setting up a portal would cost $6000. Judge Masley rejected the portal option and ordered that the servers be imaged and produced to Doshi within 10 days, with Besen's business covering the cost. Besen cannot restrict Doshi's access to only ESI that Besen found to be discoverable.

The Court admonished the parties for their inability to cooperate on discovery and decided it proved they were harming their businesses. "Despite this court's clear order on the record, the parties did nothing to move this matter along since October 11, 2019 until the night before a conference on December 18, 2019. The bickering over who shall pay the $1,500 cost to image the server evidences the dissention, deadlock and division. Their inability to cooperate to the detriment of their co-owned companies yields one conclusion: dissolve all of the joint businesses, now." Id. at *12.

Opened Emails Not Protected by the SCA

Last month, Judge Roger Vinson issued a decision, Sartori v. Schrodt, 3:18cv204-RV/HTC, 2019 U.S. Dist. LEXIS 223533 (N.D. Fla. Nov. 25, 2019) ruling on the Defendant’s motion for summary judgment. The parties, a husband and wife, in this case had joint access to a laptop kept in their home. They shared a Skype account, on which the wife found sexually explicit photos of her husband with other women. She was also able to get access to his gmail account without using his password and found more evidence of his extramarital affairs. His emails had not been downloaded to the laptop. Sartori was subsequently court martialed, discharged from the army, and sentenced to 10 years in prison for domestic abuse. The husband alleges that his wife violated the Computer Fraud and Abuse Act and the Stored Communications Act by accessing his gmail, the laptop, and Skype accounts. Judge Vinson rejected his claim with respect to the laptop and Skype. “Again, she was the person who created the password and log-on credentials for that particular account, and she used the same password and log-on credentials that she had used for other family accounts.”. Id. at *12. He aldo ruled that her second access of the Plaintiff’s gmail account was not a violation because implied consent was established by Sartori’s acknowledging that his infidelity was already disclosed. The Court concluded that the statutes could be violated even if the passwords weren’t used to access the account. Under the CFAA the claimant must prove $5,000 in damages. However because the husband’s infidelity was already disclosed through the Skype account, Judge Vinson concluded the accessing of gmail account didn’t result in such damages. “. . . the only thing Sartori was worried about was Schrodt discovering his extramarital affairs, and once she did so he no longer cared about her accessing the computer and online accounts.”. Id. at *19. Under the SCA, the Court concluded there was no temporary storage; and that the emails were not in storage for backup protection. “It thus appears that most courts have held (and I agree) that the SCA doesn't reach and protect undeleted emails that have already been delivered and opened by the intended recipient. In that situation—which is what we have here—the emails are no longer ‘electronic storage.’“. Id. at * 29.

Special Master: Confidentiality Order Balances EU GDPR

In November, Special Master Dennis Cavanaugh issued a decision, In re Mercedes-Benz Emissions Litig., No.: 2:16-cv-881 (SDW) (JAD), 2019 U.S. Dist. LEXIS 223132 (D.N.J. Nov. 4, 2019), ruling on a dispute between the parties on the General Data Protection Regulation of the European Union. The parties could not agree on a Discovery Privacy Order to address the redaction and protection of the private data of EU citizens. The Defendants argued that the Plaintiffs' proposed order would not comply with the GDPR because it prohibited the redaction of professional contact information of EU citizens. The Plaintiffs' order only called for the redaction of objectively irrelevant information. The Plaintiffs also objected to the Defendants' call for meet and confers on redactions pursuant to the GDPR throughout discovery.

Special Master Cavanaugh reviewed the applicability of the GDPR under the five factor test provided by Restatement (Third) for Foreign Relations Law § 442 in order to evaluate whether or not foreign laws barring disclosure should be observed.

1. The names, positions, and contact information of Defendants' employees were directly relevant to claims and defenses and so showed the requested evidence was important to the litigation.

2. Because the Plaintiffs' order would require the redaction of personal information of an intimate nature, the special master found that the request was specific enough to favor disclosure.

3. The special master assumed that most of the documents to be produced by Daimier originated in Germany, and hence this would weigh against disclosure even though some documents with personal information were found to come from the United States.

4. The Defendants were not shown to have a means of obtaining information about the employees through alternate means.

5. Because the suit alleges violations of the RICO Act and fraudulent concealment by misleading customers about the environmental impact of diesel vehicles, it is shown that noncompliance with the discovery request would be against the important interests of the United States.

These factors led to this conclusion: "Special Master believes the Discovery Confidentiality Order provision allowing a producing party to designate and protect as 'Highly Confidential' information that the producing party claims to be Foreign Private Data—such as employee names, sufficiently balances the EU's interest in protecting its citizens private data and the U.S. legal system's interest in preserving and maintaining the integrity of the broad discovery provisions set forth in the Federal Rules of Civil Procedure." Id. at *15.

In reaching his decision, the special master also noted that there have been no EU GDPR enforcement actions relating to violations stemming from legal cases.

The order bars the parties from redacting the names, titles, and contact information of Defendant and third party employees.