Commercial Law Corporation, P.C. v. Federal Deposit Insurance Corporation

Filing 97

OPINION and ORDER granting in part and denying in part 72 Second MOTION to Compel Production of Documents and Things And For Sanctions filed by Federal Deposit Insurance Corporation, and Staying this Order for 14 days. Signed by Magistrate Judge R. Steven Whalen. (Refer to image for details). (JCur)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
COMMERCIAL LAW CORPORATION,
P.C.,

Case No. 10-13275

Plaintiff,

District Judge Sean F. Cox

v.

Magistrate Judge R. Steven Whalen

FEDERAL DEPOSIT INSURANCE
CORPORATION,
Defendant.
/
OPINION AND ORDER
For the reasons and under the terms stated on the record on January 12, 2012,
Defendant’s Second Motion to Compel and for Sanctions [Doc. #72] is GRANTED IN
PART AND DENIED IN PART.
I.

BACKGROUND

This involves Defendant’s request for Plaintiff’s electronically stored information,
specifically data and metadata1 related to attorney’s lien documents prepared by Plaintiff
or Plaintiff’s counsel, and purportedly signed by the Director of Home Federal Savings
Bank (“HFSB”) on or about November 1, 2009. However, as placed on the record at the
hearing on this motion, the Defendant has discovered and proffered information
suggesting that these documents were in fact prepared in January of 2010, after Defendant
FDIC became the receiver for HFSB, and back-dated. If true, this would show fraud, and
1

Metadata has been defined as “information about a particular data set which
describes how, when, and by whom it was collected, created, accessed, or modified and
how it was formatted.” Williams v. Sprint/United Management Co., 230 F.R.D. 640, 646
(D. Kan. 2005) (quoting Appendix F to The Sedona Guidelines: Best Practice Guidelines
and Commentary for Managing Information & Records in the Electronic Age).
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defeat the Plaintiff’s attorney’s lien claim. Thus, the requested information is clearly
relevant within the meaning of Fed.R.Civ.P. 26(b)(1) (“Parties may obtain discovery
regarding any matter, not privileged, that is relevant to the claim or defense of any
party.”).
The Defendant’s specific discovery requests in its Second Request to Plaintiff for
the Production of Documents and Things (Exhibit 4, Defendant’s Motion) are for “exact
copies (i.e., bit-by-bit mirror images) of the hard drives of each and every computer that
was utilized to create, modify, amend or otherwise relates to” the two attorney’s lien
documents purportedly signed on November 1, 20092, as well as mirror images of the
computer hard drives relative to documents produced by Karl Haiser and attached emails
sent by L. Fallasha Erwin to various members of HFSB’s board of directors on January
18, 2010. Finally, Defendant requests exact copies of the hard drives of computers used to
send or receive any emails relating to the attorney’s lien documents.
The computers in question are the property of Mr. Erwin, an attorney and the sole
owner and director of his law firm, Commercial Law Corporation, P.C., the Plaintiff in
this case.
In this motion, the Defendant seeks dismissal of Plaintiff’s complaint as a
discovery sanction under Fed.R.Civ.P. 37, or in the alternative, an order compelling
Plaintiff to produce the requested discovery.
II.

DISCUSSION
A.

Dismissal

Fed.R.Civ.P. 37(c)(1) provides for sanctions for a party’s failure to provide

2

The two attorney’s liens relate to two separate parcels of real estate located in
Detroit, Michigan.
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discovery as required by Rule 26(a). Among the available sanction are “any of the orders
listed in Rule 37(b)(2)(A)(i)-(vi).” Rule 37(b)(2)(A)(v) provides for “dismissing the
action or proceeding in whole or in part.” Rule 37(c)(1)(C) sanctions are, by the terms of
the Rule, addressed to the Court’s discretion. Rule 37(c)(1) also instructs that sanctions
will not be imposed if “the failure [to produce] was substantially justified or is harmless.”
In the past, I have had occasion to remark on the obstructionist conduct of
Plaintiff’s counsel. In this instance, however, given that as framed, the requests to
produce involved the mirror imaging of an attorney’s computer–a computer that would
almost certainly contain privileged material–Mr. Erwin was justified in lodging an
objection.3 Therefore, I will DENY the Draconian sanction of dismissal. I also DENY
Defendant’s request for costs and attorney fees associated with this motion.
B.

Request to Compel

As stated above, data and metadata related to the purported attorney’s liens is
relevant and discoverable. Further, under Fed.R.Civ.P. 34 and 26(b), a forensic search, or
imaging of the hard drives of the computers used to generate the documents is an
appropriate method to locate and extract that information. See Capitol Records, Inc. v.
Alaujan, 2009 WL 1292977, *2 (D.Mass. 2009). The request for imaging is therefore
GRANTED. The question is how to do so without also disclosing privileged and
irrelevant information. I approach this problem with particular care, because these are an
attorney’s computers.

3

At oral argument, counsel for Defendant acknowledged that some protocol was
necessary to protect against disclosure of confidential material, and stated that he
attempted unsuccessfully to work out a mutually agreeable procedure with Mr. Erwin.
There was disagreement about the relative level of cooperation, but it is not necessary for
this Court to resolve that kind of he-said-she-said dispute, given the protocol set forth in
this Order.
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In fashioning a procedure, this Court does not write on a blank slate. The
protocols set forth in Playboy Enterprises, Inc. v. Welles, 60 F.Supp.2d 1050, 1054 -1055
(S.D.Cal. 1999), and Simon Property Group L.P. v. mySimon, Inc., 194 F.R.D. 639, 641 642 (S.D.Ind. 2000), provide a workable template for ferreting out the relevant
information while protecting against disclosure of privileged or irrelevant information. In
Playboy Enterprises, the court directed the parties to agree on a computer expert who
would then be appointed by the court to image the defendant’s computer. The expert
would sign a protective order/confidentiality agreement prior to imaging the computer.
The image (presumably on a disk) would be given to defendant, who would extract and
produce relevant information, and provide a privilege log for any otherwise relevant
information to which privilege was claimed.
A similar procedure was used in Simon Property Group. There, the plaintiff was
directed to select an expert, subject to defendant’s objection, to image the defendant’s
computer. The expert, who would be appointed by the court, would provide to
defendant’s counsel all extracted word processing, spreadsheet, emails and similar
documents likely to contain relevant material. Defendant’s counsel would then produce
documents responsive to the plaintiff’s discovery requests, subject to claims of privilege.
In the present case, Defendant has made a colorable showing that critical
documents may have been backdated by Plaintiff’s counsel. If true (and at this point I
make no determination of whether it is or not), this fact would cast doubt on the
trustworthiness of any assertion of compliance by Plaintiff’s counsel. Therefore, for the
protection of both parties, I will adjust to above protocols as follows in order to assure the
appearance as well as the actuality of integrity. As Ronald Reagan famously said, “Trust
but verify.”
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The parties shall therefore comply with the following procedure:
1. Within 14 days of the date of this Order, or, if timely objections to this Order
are filed, within 5 days of the denial of those objections, Defendant’s counsel will submit
to Plaintiff’s counsel and to this Court the name of a computer expert capable of imaging
the hard drives of Plaintiff’s computer and extracting specific data from the images, along
with the curriculum vitae of that expert.
2. Within 3 days thereafter, Plaintiff’s counsel may file with this Court an
objection to Defendant’s expert, along with the name and curriculum vitae of his own
expert. If Plaintiff’s counsel fails to timely object to Defendant’s expert, any objections
will be deemed waived. If Plaintiff’s counsel does timely object, the Court will select
either Plaintiff’s or Defendant’s expert to undertake the imaging.
3. The expert shall be appointed by the Court, shall be considered an Officer of
this Court, and shall be bound by strict rules of confidentiality. The expert shall not
disclose the contents of any documents, files, data or metadata found on Plaintiff’s
computers to any person or entity other than Plaintiff’s counsel and this Court unless
specifically ordered to do so, and shall, prior to undertaking the imaging, sign a stipulated
protective order and confidentiality agreement. The parties shall agree to the form of such
order, and shall submit the proposed order to the Court for approval and entry. To the
extent the expert has direct or indirect access to information protected by the attorneyclient privilege, disclosure will not result in a waiver of the attorney-client privilege.
4. Plaintiff shall make the relevant computers (as described in Defendant’s Second
Request to Plaintiff for the Production of Documents and Things) available to the expert
at Plaintiff’s place of business at mutually agreeable time(s). The expert shall use his best
efforts to avoid unnecessary disruption to the normal activities or business operations of
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Plaintiff. The expert may not remove the computers from Plaintiff’s premises. Only the
expert and the expert’s employees assigned to this task are authorized to inspect of
otherwise handle Plaintiff’s computer(s). Plaintiff’s counsel may of course be present
during the imaging, but shall not interfere with the expert’s work. The expert shall
maintain all information in the strictest confidence and maintain a copy of the mirror
images and all recovered data and documents until 60 days after the conclusion of this
litigation or otherwise by order of this Court.
5. Within 14 days of the imaging of Plaintiff’s computer(s), and without
disclosure of the images, the expert shall provide the parties and the Court with a report
describing the computer(s) that Plaintiff produced as well as the expert’s actions with
respect to each computer. The report shall include a detailed description of the
computer(s) imaged by the expert.
6. Once the expert has images of Plaintiff’s computer(s), he/she shall recover from
the mirror images all available word processing documents, incoming and outgoing email
messages, and other files, including metadata, and including but not limited to files that
were “deleted” (hereinafter, in its entirety, referred to as “the documents and data”)
related to the “attorney lien” documents that are the subject of this Motion. The expert
shall provide the recorded documents and data in a reasonably convenient and searchable
form to Plaintiff’s counsel, and to the Court for in camera review, along with, to the
extent possible, the information showing when any files were created, accessed, copied of
deleted, and the information about the deletion and the contents of deleted files that could
not be recovered.
The expert shall also provided Defendant’s counsel a notice of service of the
documents and data upon Plaintiff’s counsel and the Court.
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7. Plaintiff shall have ten days from the date of service of the recovered
documents and data to object to the production of any portion of the documents and data
on grounds of privilege. Plaintiff shall serve any such objections on Defendant’s counsel,
and file the objections with the Court. I will then rule on Plaintiff’s objections.
8. The parties will have 14 days to file objections to my ruling with the District
Judge assigned to this case. If no timely objections are filed, or if the District Judge
overrules the objections, then I will enter an order directing the expert to produce the
documents and data for which the Court has found that no privilege applies, to counsel for
Defendant in the same form and content that the expert provided to the Plaintiff and to
this Court.
9. Defendant shall pay the cost of expert.
Any party may file objections to this Opinion and Order within 14 days, for review
pursuant to 28 U.S.C. § 636(b)(1)(a) and Fed.R.Civ.P. 72(a). This Order is STAYED for
14 days, or until the District Judge rules on any timely objections.
IT IS SO ORDERED.

s/ R. Steven Whalen
R. STEVEN WHALEN
UNITED STATES MAGISTRATE JUDGE
Date: January 18, 2012
The undersigned certifies that the foregoing document was served upon counsel of record via the Court's
ECF System to their respective email addresses or First Class U.S. mail disclosed on the Notice of
Electronic Filing on January 18, 2012.
s/Johnetta M. Curry-Williams
Case Manager

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