Genworth Financial Wealth Management, Inc. v. McMullan

267 F.R.D. 443, 2010 U.S. Dist. LEXIS 53145, 2010 WL 2195274
CourtDistrict Court, D. Connecticut
DecidedJune 1, 2010
DocketCivil Action No. 3:09-cv-1521 (VLB)
StatusPublished
Cited by11 cases

This text of 267 F.R.D. 443 (Genworth Financial Wealth Management, Inc. v. McMullan) is published on Counsel Stack Legal Research, covering District Court, D. Connecticut primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Genworth Financial Wealth Management, Inc. v. McMullan, 267 F.R.D. 443, 2010 U.S. Dist. LEXIS 53145, 2010 WL 2195274 (D. Conn. 2010).

Opinion

[445]*445MEMORANDUM OF DECISION AND ORDER GRANTING THE PLAINTIFF’S MOTION TO COMPEL DATA PRESERVATION AND FORENSIC IMAGING BY A NEUTRAL COURT-APPOINTED EXPERT, AND FOR SANCTIONS [Doc. # 34].

VANESSA L. BRYANT, District Judge.

Before the Court is Plaintiff Genworth Financial Wealth Management, Inc. (“Gen-worth”) and Third-Party Defendant Gurin-der Ahluwalia’s (hereinafter referred to collectively as the “Plaintiff’) [Doc. #34] Motion for a court order to compel the Defendants Timothy McMullan, James Cook, Timothy McFadden, Karen Bazon, Tamara Rivera, and TJT Capital Group LLC. (“TJT Capital”) to submit their computers and electronic media devices to forensic mirror imaging and examination by a neutral court-appointed forensic expert. The Plaintiff also seeks a court order for the preservation and production of evidence pursuant to Federal Rule of Civil Procedure 37(a)(5)(A) and Local Rule of Civil Procedure 37(c), and sanctions in the form of reasonable attorneys fees and costs associated with the Plaintiffs motion. [Doc. #34]. For the reasons stated herein the Plaintiffs motion is granted.

I. Background

Genworth initiated this action against the Defendants, former employees who left Gen-worth between June 29, 2009 and August 4, 2009 to establish TJT Capital, a competing business entity. The Plaintiff alleges that the Defendants requested and received DVD copies of Genworth’s Automated Contract Tracking (ACT) database, which contains client names, phone numbers, contact information, portfolio management history, and client notes prior to their staggered departures for the benefit of their company’s formation. Genworth alleges that the Defendants used trade secret client information, including information from the ACT database, to solicit hundreds of Genworth’s current and former clients in violation of the Computer Fraud and Abuse Act, the Connecticut Uniform Trade Secrets Act, the Stored Communications Act, and Connecticut common law’s prohibition of tortious interference with business relationships. [Doc. # 1].

The Defendants in turn assert that they identified client information for solicitation through permissible means including internet searches and memory. In August 2009, counsel for Genworth, submitted a letter instructing the Defendants to preserve all electronically stored information (ESI) and other potentially relevant information in anticipation of litigation. [Doc. #35, Exh. A-C]. Genworth subsequently filed suit [Doc. # 1 ] on September 25, 2009, and propounded document requests on November 10, 2009 seeking the production of electronic data and accompanying meta data. The Plaintiff notes that the Defendants failed to produce any e-mail, TJT’s Junxure client management database, or Portfolio Center client invoicing database. [Doc. # 35, Exh. D], The Plaintiff sought the Defendants’ assurance that forensic imaging had been undertaken, noting concerns that relevant data was at risk of being erased through automatic deletion of temporary and inactive files. [Doc. # 35, Exh. F]. The Plaintiff notes that Defendants’ counsel conceded that the Defendants had no intention of imaging any of their computer devices. [Doc. # 35]. The Plaintiff therefore filed the instant motion on February 5, 2010 [Doc. # 34]. In response, the Defendants noted that on February 12, 2010, after the Plaintiff filed its motion, Onsite IT Consulting performed imaging of TJT Financial’s computer devices and business laptops used by Defendants McMullan, Cook, and McFadden. [Doc. # 42],

On April 8, 2010, and April 12, 2010, the parties participated in a motion and eviden-tiary hearing during which the Plaintiff presented documentary evidence in support of its request and Defendant McMullan testified regarding his handling of Genworth client data. [Docs. # # 85, 87]. The hearing reflected that the Charles Schwab Corporation (“Schwab”), a custodian of assets for TJT Financial, produced pursuant to subpoena, email correspondence from Defendant McMullan and Cook’s personal email account and computer that was not produced as part of the Defendants’ response to Genworth’s discovery requests. The correspondence re-[446]*446fleets the Defendants’ submission of Gen-worth client data and information to Schwab, while still employed by Genworth, as part of efforts to establish TJT Capital and secure Genworth clients for the new entity. [Plaintiffs Demonstrative Exhs. 4-6, 9-10, 12-16], During the proceeding, Defendant McMullan testified that, prior to the start of the instant litigation, he discarded the personal computer onto which he downloaded ACT client information and from which he conducted correspondence with Schwab in anticipation of his departure from Genworth and the formation of TJT Financial. Testimony further reflected however, that the disposal of the personal computer may have occurred after Genworth submitted letters to the Defendants to preserve all relevant documents in anticipation of litigation.

II. Analysis

In responding to the Plaintiffs motion, the Defendants’ acknowledge that

Rule 34 and the Comments thereto, together with Rule 26(b)(2)(B), strongly suggest that a court’s ruling on such requests is discretionary and should take into account substantive considerations of the burden and expense of the request .... [and that] such relief is entirely within the discretion of the Court to grant or deny.

[Doc. # 42, page 8-9].

The Defendants assert that the Plaintiffs have “not proffered a sufficient basis with which to justify its demands.” Id. at Page 9. A party is entitled however, to discover any unprivileged matter that is relevant to a party’s claim or defense, where the discovery “appears reasonably calculated to lead to the discovery of admissible evidence.” Fed. R.Civ.P. 26(b)(1). With regard to the discovery of electronically stored information, the Federal Rules of Civil Procedure require a party to “produce and permit the party making the request ... to inspect, copy, test, or sample any ... electronically stored information.” Fed.R.Civ.P. 34(a). This right to information however, is counterbalanced by a responding party’s confidentiality or privacy interests. Notes of Advisory Committee on 2006 Amendments. A party is therefore not entitled to “a routine right of direct access to a party’s electronic information system, although such access might be justified in some circumstances.” Id.

In defining the extent of discovery to afford to a party, a court should:

consider the relationship between the plaintiffs 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. Even in cases where courts have nonetheless adopted procedures to protect privilege and privacy concerns.

Calyon v. Mizuho Securities USA Inc., No. 07 CIV0224IRODF, 2007 WL 1468889, at *3 (S.D.N.Y., May 18, 2007).

Particularly instructive, is the analysis provided in Ameriwood Industries, Inc. v. Li-berman, No. 4:06 CV 524-DJS, 2006 WL 3825291, at *3, *6 (E.D.Mo.

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Bluebook (online)
267 F.R.D. 443, 2010 U.S. Dist. LEXIS 53145, 2010 WL 2195274, Counsel Stack Legal Research, https://law.counselstack.com/opinion/genworth-financial-wealth-management-inc-v-mcmullan-ctd-2010.