Deluxe Financial Services, LLC, Plaintiff, v. Brian S. Shaw, and Harland Clarke Corp., Defendants Civil No. 16-cv-3065 (JRT/HB) United States District Court, D. Minnesota Signed February 09, 2017 Counsel Charles F. Knapp, Erik A. Mosvick, Katherine K. Bruce, Faegre Baker Daniels LLP, Minneapolis, MN, Thomas W. Carroll, Pro Hac Vice, Littler Mendelson, P.C., Denver, CO, for Plaintiff. David K. Montgomery, Pro Hac Vice, Jackson Lewis P.C., Cincinnati, OH, Jillian M. Flower, Lee A. Lastovich, Jackson Lewis PC, Minneapolis, MN, for Defendants. Bowbeer, Hildy, United States Magistrate Judge ORDER *1 This matter is before the Court on Plaintiff’s Motion to Compel Rule 34 Request for Inspection [Doc. No. 72]. The Court held a hearing on this motion on January 27, 2017. (Minutes [Doc. No. 85].)[1] I. Background On September 14, 2016, Plaintiff Deluxe Financial Services, LLC (“Deluxe”) brought claims against former employee Brian S. Shaw (“Shaw”) and Deluxe’s competitor Harland Clarke Corp. (“Harland Clarke”) for misappropriating trade secrets and tortiously interfering with Deluxe’s business. (Compl. [Doc. No. 1].) According to the Amended Complaint dated November 7, 2016, the allegations stem from Shaw’s alleged improper retention of Deluxe documents after he was terminated by Deluxe as part of a workforce reduction and later joined Harland Clarke. (Am. Compl. ¶¶ 10, 39, 48 [Doc. No. 14].) Specifically, Deluxe alleges Shaw brought multiple USB devices containing over 7,000 Deluxe business files to his employment at Harland Clarke. (Id. ¶¶ 41, 64.) Shaw then used this confidential information to respond to a request for proposal for a new multiyear contract, and stole one of Deluxe’s former clients, costing Deluxe millions of dollars of lost revenue in the coming years. (Id. ¶¶ 53-54.) Deluxe sought information from Harland Clarke after it discovered Shaw’s alleged misconduct. Harland Clarke informed Deluxe that its investigation revealed Shaw had inserted at least two USB devices containing Deluxe files into his Harland Clarke work computer. (Sottile Decl. ¶ 6 [Doc. No. 80].) Harland Clarke eventually provided these USBs to Deluxe’s forensic expert, Stroz Friedberg. (Id. ¶ 9.) Harland Clarke also reported to Deluxe that it had performed a search of Shaw’s Harland Clarke work laptop computer and had found no Deluxe files from the two USB devices on the laptop. (Id. ¶ 12.) On November 23, 2016, Deluxe served a request pursuant to Fed. R. Civ. P. 34 on Harland Clarke, asking to inspect Shaw’s work computer to obtain a forensic image from which it could determine whether any Deluxe or Deluxe-originated document resides, or once resided, on such device.[2] (Mosvick Decl. Ex. A [Doc. No. 76].) Harland Clarke objected on the grounds that it suffered from “technical or procedural deficiencies,” was overly broad, intrusive, and disproportionate, and that Harland Clarke would conduct a search and produce responsive documents in lieu of allowing the requested inspection. (Mosvick Decl. Ex. B [Doc. No. 76].) Deluxe now asks the Court for an order permitting Deluxe’s forensic computer expert to conduct the requested inspection. II. Discussion Federal Rule of Civil Procedure 34(a)(1)(A) allows a party to serve on another party a request “within the scope of Rule 26(b)” to permit inspection of “any designated documents or electronically stored information–including writings, drawings, graphs, charts, photographs, sound recordings, images, and other data or data compilations–stored in any medium from which information can be obtained ....” *2 Rule 26(b)(1) provides: Parties may obtain discovery regarding any nonprivileged matter that is relevant to any party’s claim or defense and proportional to the needs of the case, considering the importance of the issues at stake in the action, the amount in controversy, the parties’ relative access to relevant information, the parties’ resources, the importance of the discovery in resolving the issues, and whether the burden or expense of the proposed discovery outweighs its likely benefit. Information within this scope of discovery need not be admissible in evidence to be discoverable. The 2015 amendments to Rule 26 “restore[d] the proportionality factors to their original place in defining the scope of discovery.” Fed. R. Civ. P. 26 advisory committee’s note to 2015 amendment. The phrase “reasonably calculated to lead to the discovery of admissible evidence” was deleted because the phrase had been used incorrectly to expand the scope of discovery. Id. As amended, the rule still allows for “[d]iscovery of nonprivileged information not admissible in evidence ... so long as it is otherwise within the scope of discovery.” Id. Deluxe argues a forensic inspection of the laptop computer used by Shaw at Harland Clarke is necessary so that it can determine what Deluxe files Shaw accessed on that computer, including any that may subsequently have been deleted. Courts start from the position that granting a forensic inspection of an opponent’s electronic storage device “is highly intrusive.” A.M. Castle & Co. v. Byrne, 123 F. Supp. 3d 895, 900 (S.D. Tex. 2015). However, such inspections are sometimes justified, especially in cases where the device itself and the electronic data about its use that may be revealed by the electronic inspection is relevant to the claims and defenses in the suit. Id. A case involving the alleged misappropriation of trade secrets is such a cause of action. Id. at 901. Additionally, where “there are discrepancies or inconsistencies in the responding party’s discovery responses, a court may allow an expert to examine a mirror image of the party’s hard drives.” Id. During the hearing, Defendants argued that to prevail on its motion for a forensic inspection, Deluxe must show both factors, both that the device itself and the information sought to be gained through the inspection is relevant to the claims at issue and that there has been discovery misconduct. Although many of the cited cases do involve the presence of both factors, the Court has not found a case that explicitly requires both. Indeed, the Court has found several cases where courts have granted forensic inspections in the absence of any evidence of discovery misconduct or shortcomings. See, e.g., Weatherford U.S., LP v. Innis, No. 4:09-CV-061, 2011 WL 2174045 (D.N.D. June 2, 2011); Calyon v. Mizuho Sec. USA Inc., No. 07CIV02241RODF, 2007 WL 1468889, at *3 (S.D.N.Y. May 18, 2007) (courts analyzing whether forensic inspection is appropriate “appear to consider the relationship between the plaintiff’s claims and the defendants’ computers and, in some cases, whether the defendant has fully complied with discovery requests, in determining how the requested electronic discovery should proceed (emphasis added)); Frees, Inc. v. McMillian, No. CIV.A.05 1979, 2007 WL 184889, at *2 (W.D. La. Jan. 22, 2007), aff’d, 2007 WL 1308388 (W.D. La. May 1, 2007); Physicians Interactive v. Lathian Sys., Inc., No. CA 03-1193-A, 2003 WL 23018270, at *10 (E.D. Va. Dec. 5, 2003). *3 Here, there is no question that the device itself – the laptop computer used by Shaw in his employment at Harland Clarke – is relevant to the claims and defenses in this case. Deluxe claims Shaw used that laptop to access confidential Deluxe files, and that it may contain evidence of the extent to which those files were used or referred to in the course of his work at Harland Clarke. Harland Clarke acknowledges that two USB drives that contained Deluxe files were attached to the laptop, but denies that there is any evidence that any confidential Deluxe files were accessed from the laptop. Thus, an inspection of the laptop is likely to yield information that would tend either to prove or disprove the parties’ respective positions as to Shaw’s alleged use of Deluxe confidential information in the course and scope of his work at Harland Clarke. Harland Clarke contends, however, that even if Deluxe has made the necessary showing, the Court should not grant a forensic inspection because Harland Clarke has already searched Shaw’s computer. This argument has two sub-parts. First, Harland Clarke argues that its internal IT personnel have already searched Shaw’s computer, and that search showed that none of the Deluxe files from the two USB devices could be found on the laptop. (Sottile Decl. ¶ 12.) Next, Harland Clarke appears to argue that Deluxe is not entitled to use its own forensic expert but should accept the results of the investigation made by Harland Clarke’s internal expert. Addressing Harland Clarke’s second point first, other courts have ruled the party seeking the forensic inspection is entitled to its own forensic expert. See, e.g., Multifeeder Tech., Inc. v. British Confectionery Co., No. 09-cv-1090 (JRT/TNL), 2012 WL 4135848, at *7 n.6 (D. Minn. Sept. 18, 2012) (recounting magistrate judge’s opinion that appointed the plaintiff’s proffered forensic expert where defendant argued only that it be allowed to conduct its own search); Antioch Co. v. Scrapbook Borders, Inc., 210 F.R.D. 645, 653 (D. Minn. 2002) (allowing plaintiff to choose its own expert in the field of computer forensics to conduct an inspection of the defendants’ computer equipment). While the Court does not adopt a general rule that a party in Deluxe’s position is automatically entitled to have its own forensic consultant conduct the inspection, it concludes that Deluxe has demonstrated good cause to do so here. First, while Harland Clarke states that it performed a search of Shaw’s computer and found that only two of the USB drives containing Deluxe files had been attached at some point, and further found none of the Deluxe files from the two USB devices on the laptop, it has provided no affidavit, declaration, or other evidence showing, for example, by whom, how thoroughly, and pursuant to what protocol the search was conducted. Second, the results of that inspection, as reported by Harland Clarke’s counsel, do not cover all of the information sought to be discovered by Deluxe, including, for example, whether there is evidence that the laptop had been used to open Deluxe files from one of the USB drives even if those files had not been saved or copied to the laptop. Harland Clarke raises two additional concerns that should be addressed here. First, it argues the results of Deluxe’s forensic examination should be shared with counsel for all parties. The Court agrees. Other courts have required forensic experts to provide their reports to counsel for both sides. See, e.g., Weatherford U.S., LP, No. 4:09-CV-061, 2011 WL 2174045, at *5 (“the expert shall provide the parties with a report describing the computers that defendants produced as well as his actions with respect to each computer”); Ameriwood Indus., Inc. v. Liberman, No. 4:06CV524-DJS, 2007 WL 685623, at *1 (E.D. Mo. Feb. 23, 2007) (“As agreed to by the parties, the Court will also order the Expert to provide the parties with information concerning defendants’ usage of their computer equipment.”). And last but not least, Deluxe agrees the results should be distributed to counsel for both sides. (Pl.’s Mem. Supp. at 10 [Doc. No. 74] (“[T]he Court may order that Deluxe’s expert create the forensic image, examine the forensic image for only evidence regarding files related to Deluxe or information originating with Deluxe and evidence of spoliation, and distribute the examination results to counsel for both sides.”). *4 Second, Harland Clarke expresses concern about whether the proposed forensic protocol adequately protects the confidentiality of its own business information by clearly confining distribution of the results of the examination to counsel. This issue was not sufficiently briefed for the Court to make a ruling on specific language for the forensic protocol. The Court therefore directs the parties to meet and confer on an adequate forensic protocol based on this Order. III. Conclusion Accordingly, IT IS HEREBY ORDERED that: 1. Plaintiff’s Motion to Compel Rule 34 Request for Inspection [Doc. No. 72] is GRANTED. The parties are directed to meet and confer on language for a forensic protocol that adequately addresses confidentiality concerns. Footnotes [1] The Court also heard Non-Party Mark Johnson’s Motion to Quash Subpoena and for a Protective Order [Doc. No. 52] at that hearing. That motion will be addressed in a separate order. [2] Deluxe also asked for an inspection of other electronic devices, including a computer used by another Harland Clarke employee, Mark Johnson, but Deluxe subsequently narrowed its requests during the meet and confer process.