SEEKING THE PRODUCTION OF ELECTRONIC STORAGE DEVICES UNDER RULE 196.4? YOU’RE GOING TO NEED EVIDENCE

In re VERP Investment, LLC
Fifth Court of Appeals, No. 05-15-00023 (February 17, 2015)
Lang, Fillmore, and Brown (Opinion)
The Dallas Court of Appeals recently clarified the circumstances under which a trial court may compel the production of electronic storage devices in discovery. The Court made clear that the production of electronic storage devices is inherently burdensome because it is intrusive. For this reason, a party seeking direct access to an opponent’s electronic storage devices must present evidence showing (1) the responding party has defaulted on its discovery obligations (a “threshold” requirement); (2) it is impossible to obtain the requested information through a less intrusive means; (3) the proffered expert is qualified to conduct the search of the particular storage device sought; and (4) the proposed search methodology is likely to yield the requested information. Unless a party satisfies these evidentiary requirements, a trial court abuses its discretion in ordering the production of an electronic storage device.

Nguyen filed suit against his landlord, VERP, after VERP changed the locks on his rental properties for alleged non-payment of rent. Thereafter, a dispute arose regarding the authenticity of certain invoices produced by VERP during discovery. Nguyen served requests for production seeking, among other things, “the accounting software/program utilized to generate the invoices,” “all electronic data files related to such invoices,” and “a forensic copy of the computer hard drive from the computer(s) used to generate the invoices.” After VERP objected that the requests were burdensome and the information could be obtained “through more appropriate means,” Nguyen moved to compel.

Following two non-evidentiary hearings, the trial court ordered VERP to permit an agreed-upon forensic examiner “to make a ‘mirror image’ of the accounting software . . . and its supporting data on the Defendant’s computer hard drive, the computer hard drive, and all electronic data (including the accounting) on invoices prepared for [the leased properties] between June 1, 2013 and January 31, 2014 . . . .” The trial court’s order required the parties to reach an agreement regarding search terms, and directed the forensic examiner to produce a report containing a log of the files reviewed and his or her findings and conclusions following the examination. The forensic examiner was instructed not to disclose the substance of any files or documents identified by the review, but to limit the log to file name, date of creation, date of last access, author, and recipient. VERP sought mandamus relief, and the Dallas Court of Appeals conditionally granted the writ.

A trial court’s failure to follow Rule 196.4 and the Texas Supreme Court’s decision in In re Weekley Homes in compelling discovery is an abuse of discretion. VERP preserved its objections to the requested discovery by objecting that the requests were overbroad and the information sought could be obtained through “more appropriate means,” and in its opposition to Nguyen’s motion to compel. Notwithstanding the trial court’s order limiting access to the hard drive to an agreed-upon forensic examiner and its imposition of certain procedures and safeguards, the Court held the trial court abused its discretion by ordering the production of the hard drive. First, Nguyen failed to present evidence showing VERP had defaulted on its discovery obligations—a “threshold matter.” Although Nguyen asserted he believed the invoices produced in discovery had been backdated or falsified, there was no record evidence supporting this belief. Further, Nguyen failed to adduce evidence the information sought could not be obtained through narrower search terms or simply by the production of the metadata associated with the disputed invoices. Finally, Nguyen did not present evidence the proposed expert was qualified to perform searches of (or was even familiar with) the storage devices to be searched, or that the proposed methodology for searching was reasonably likely to yield the specific information sought. Indeed, there was no evidence of any kind before the trial court—only the pleadings and the arguments of counsel during two non-evidentiary hearings. In the absence of evidence on each of these essential requirements, the Court concluded the trial court abused its discretion by compelling production of the hard drive.

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