In re Honza, Case No. 10-07-00378-CV (Tx. Ct. App. January 2, 2008)

In an opinion redolent of Catch 22, the Texas Court of Appeals has declined to issue a writ of mandamus to set aside a discovery order requiring the defendants – certified public accountants – to permit a forensic computer expert to create a mirror image of each computer hard drive in their office in an effort to locate two particular documents or iterations of those documents at the heart of the lawsuit. The court blew past the arguments raised by the defendants without ever really addressing the main issue in the case – what possible basis could there be for permitting the creation of mirror images of the hard drives, when there was no allegation of spoliation, no suggestion that the defendants had not produced the documents as requested by the plaintiff during discovery, and the request to make mirror images was made for the first time on the eve of the second trial, the first having ended in a mistrial. Rather than deal with the extraordinary nature of the request, the court found that the documents were relevant and relevant documents found on computers were discoverable – end of analysis.

At issue in the case was a partial assignment of a right to purchase a portion of property. The question was whether the assignment required additional consideration at the time of purchase. The plaintiff contended that the defendants had altered the partial assignment after the parties had reached agreement but before execution, by adding the additional payment clause. The defendants had produced relevant documents in electronic format, as requested, but had not produced the attendant metadata. The opinion does not mention whether metadata was requested, or why it was not sought after production was made without it.

The court acknowledged that mandamus should be granted if the trial court had exceeded the proper scope of discovery, and that no Texas State court had addressed a request for access to an opponent’s computer hard drives, the court was nonetheless comfortable with the “body of state and federal decisions [that] has established a fairly uniform approach for such requests.” The court was correct when it noted that:

Federal district courts have consistently held that electronic data stored on computer heard drives, including “deleted” files and related data, is subject to discovery.

Some state courts have reached the same conclusion.

(Citations omitted). That of course begs the question. Under what circumstances should a party be permitted to rummage around in an opponent’s hard drives? The fact that electronic evidence is subject to discovery does not mean that the court should order the creation of mirror images of a party’s hard drives as a matter of course. That is particularly true when the party is a professional service organization such as a CPA. Nonetheless, that is precisely the sense that this opinion creates.

The opinion cites to numerous cases for the proposition that data stored on a computer hard drive is discoverable. None of these cases, however, seems to support the court’s broad mandate that discoverability equals creation of mirror images. In Orrell v Motorcarparts of Am., Inc., Case No. 3:06-cv-00418 (W.D. N.C. December 5, 2007) (discussed here), the plaintiff had wiped a hard drive containing highly relevant information. Thus, the basic premise for ordering imaging – destruction of electronic evidence – was present. In Wiginton v. CB Richard Ellis, Inc., 229 FRD 568 (N.D. Ill. 2004), the defendant continued its normal electronic record destruction practices well after it had been notified to cease such practices and preserve certain identified relevant evidence. The opinion referenced by the court addressed who should pay for the searching of backup tapes, hardly a prescription for hard drive imaging. In Simon Prop. Group L.P. v. mySimon, Inc., 194 FRD 639 (S.D. Ind. 2000), the court was faced with the issue of recovering deleted files. Likewise, the decision in Playboy Enterprises, Inc. v. Welles, 60 F. Supp.2d 1050 (S.D. Cal. 1999) dealt with the recovery of deleted files.

In Rowe Entm’t, Inc. v. The William Morris Agency, Inc., 205 FRD 421 (S.D.N.Y. 2002), the court addressed the question of who should pay for the production of email, a completely different issue than the one before the court here.

The decision in Antioch Co. v. Scrapbook Borders, Inc., 210 FRD 645 (D. Minn. 2002), is more problematic, but understandable in view of the fact that the corporate defendant was not represented and the individual shareholder defendants were pro se. The plaintiff argued that their lack of sophistication might result in the destruction of electronic records and the court bought the argument and permitted imaging of the defendants’ hard drives. The court’s rationale was premised solely on the potential for recovering deleted records, despite the absence in the record of any evidence that any records had been deleted.

In sum, the only federal case that evenly remotely supported the court’s decision was a case in which the party whose hard drives were ordered imaged was essentially unrepresented. The state decisions cited by the court were no more supportive.

The court took note of the Ford Motor case, but ignored its holding. Nonetheless, that holding bears quoting:

But Rule 34(a) does not grant unrestricted, direct access to a respondent's database compilations. Instead, Rule 34(a) allows a requesting party to inspect and to copy the product -- whether it be a document, disk, or other device -- resulting from the respondent's translation of the data into a reasonably usable form.

The Advisory Committee Notes to Rule 34(a) support this interpretation. Commenting on data compilations, the Committee stated, "[W]hen the data can as a practical matter be made usable by the discovering party only through respondent's devices, respondent may be required to use his devices to translate the data into usable form. In many instances, this means that respondent will have to supply a print-out of computer data." Fed. R. Civ. P. 34(a) advisory committee's note (1970 amend.). Like the other discovery rules, Rule 34(a) allows the responding party to search his records to produce the required, relevant data. Rule 34(a) does not give the requesting party the right to conduct the actual search. While at times -- perhaps due to improper conduct on the part of the responding party -- the requesting party itself may need to check the data compilation, the district court must "protect respondent with respect to preservation of his records, confidentiality of nondiscoverable matters, and costs." Id 

In re Ford Motor, 345 F.3d at 1316-17 (Emphasis added).

There is no suggestion in the Honza court’s decision that the defendants had deleted any computer records. Indeed, the court completely ignored the defendant’s concerns based on non-party client confidentiality and nondiscoverable matters, relying entirely on the computer forensic expert’s confidentiality agreement. This is the office of several practicing CPA’s whose files no doubt include numerous nonparty tax records. It is simply unbelievable that the court would so unceremoniously allow access to and copying of these records. Simply put, this is a truly bad decision, which hopefully will not be repeated in the future.