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Square D Co. v. Scott Electric Co.

July 15, 2008

SQUARE D COMPANY, PLAINTIFF,
v.
SCOTT ELECTRIC COMPANY, ET AL., DEFENDANTS.



The opinion of the court was delivered by: Judge Nora Barry Fischer

MEMORANDUM ORDER

The instant dispute arises out of the execution of a forensic inspection of Defendant Globe Electric Supply Co., Inc.'s computer systems, which the Court originally ordered on June 12, 2007, more than one year ago. The forensic inspection of Globe's facilities has been the subject of numerous motions filed with this Court and has consumed an inordinate amount of time and money of the parties and judicial resources of this Court. Currently pending before the Court are cross motions for sanctions related to said forensic inspection. Because the two motions stem from the same set of circumstances, the Court will consider them together. For the following reasons, the Court will grant in part and deny in part Square D Company's Motion to Compel Against Globe Electric Supply Co. And For Rule 37(B) Sanctions [187] and the Court will deny Defendant Globe's "Cross-Motion Seeking Order Directing Square 'D' to Complete Forensic Inspection in the Manner Previously Ordered by this Court which Limited Same to 'Systems' Involved in the 'Purchase, Sale, or Inventory' of Square 'D' Merchandise"*fn1 [189].

BACKGROUND*fn2

The Court first addressed the issue of forensic inspection more than one year ago on a Motion for Rule to Show Cause and for Sanctions (Docket No. 70), filed by Plaintiff Square D on June 1, 2007. On June 12, 2007, the Court ordered that, within fourteen days of producing all documents relating to or otherwise reflecting Globe's purchases and sales of Square D circuit breakers from January 1, 2003 through May 31, 2007, "Globe shall submit to an inspection by Square D (including its attorneys), at Globe's expense, of its inventory of Square D circuit breakers as well as Globe's officers, warehouses, storage containers or facilities where Square D circuit breakers are or may be located." (Docket No. 73 at ¶¶2-3). The Court further ordered Globe to "submit to a forensic inspection of its computer systems which record its purchases and sales of Square D products and its inventory of such products, with such inspection to be incurred at Globe's sole expense and cost." (Docket No. 73 at ¶4). However, the Court held in abeyance its ruling as to sanctions and contempt, which leads to the second instance in which the Court addressed the issue of the forensic inspection.

On November 14, 2007, after finding Globe in contempt of Court and considering that "the information at issue is important to the public health and safety in that the counterfeit circuit breakers represent a potential danger to unknowing consumers," the Court again addressed the issue of the forensic inspection, ordering Globe to: submit to an inspection by Square D (including its attorneys), at Globe's expense, of its inventory of Square D circuit breakers as well as Globe's offices, warehouses, storage containers or facilities where Square D circuit breakers are or may be located, and also submit to a forensic inspection of its computer systems which records its purchases and sales of Square D products and its inventory of such products, with such inspection to be incurred at Globe's sole expense and cost.

Square D Co. v. Scott Elec. Co., Civil Action No. 06-459, 2007 WL 3488809, at *11 (W.D. Pa. Nov. 14, 2007). The Court further ordered that said inspection occur within thirty days, or on or before December 14, 2007. Id.

The third instance in which the Court addressed the issue of the forensic inspection arose on a motion from Globe, specifically its Motion Seeking a Protective Order Clarifying the Previously Entered Order of the Court Dated November 14th, 2007 (Docket No. 171), filed on March 31, 2008. Relevant to the forensic inspection, Globe requested that the Court limit the forensic inspection "to a set time and cost to avoid a fishing expedition," (Docket No. 171 at ¶1). In support, Globe attached an Affidavit of Boris Rosenstein, who asserted that the lack of any limits on the inspection would result in "staggering" costs. (Docket No. 174 at ¶5). At the risk of repeating itself here (although it appears necessary), the Court considered and rejected Globe's request:

Globe's (and its technician's) assertion that the forensic inspection constitutes a fishing expedition ignores this Court's previous Orders. In its June 12, 2006 Order as well as its November 14, 2007 Memorandum Opinion and Order, the Court specifically and unequivocally ordered that the forensic inspection (of Globe's computer system) would be tailored and limited to Square D circuit breakers. (See Docket No. 73 at ¶ 4; Docket No. 110 at 15-21). Yet, Globe has filed another motion to limit the breadth of the forensic inspection in terms of time period and cost. As to the former, Globe's request is subsumed by the Court's limitation of the forensic inspection to Square D circuit breakers. For example, if Globe first sold Square D circuit breakers in 1995, then the forensic inspection may properly reach back that far. As to the latter, the Court refuses to set a dollar amount on the forensic inspection. As the Court has on at least two occasions already delineated the scope of the forensic inspection, i.e., limited to Defendant Globe's sale of Square D circuit breakers, the Court denies Globe's motion to the extent that it requests additional limitations on the forensic inspection.

Finally, Globe requests that "initial costs" should be borne by Plaintiff Square D. (Docket No. 171-5 at 3). Once again, as the Court has previously ordered that Globe shall bear all costs related to the forensic inspection, the Court denies the same. Globe shall submit to the forensic inspection within thirty days of this Order, or at another time convenient for both parties but no later than the close of discovery. Failure to do so may result in further sanctions.

Square D Co. v. Scott Elec. Co., Civil Action No. 06-00459, 2008 WL 1932307, at *1-2 (W.D. Pa. Apr. 30, 2008) (footnote omitted). Hence, except as to requested relief unrelated to the forensic inspection, the Court denied Globe's motion. Furthermore, the Court issued a not-so-subtle warning to the parties:

Finally, the Court expresses its frustration with the continual problems surrounding discovery in this matter. The Court ADVISES the parties as well as counsel that failure to comply with the instant Memorandum Order in all respects may result in harsh sanctions, including but not limited to, 'prohibiting the disobedient party from supporting or opposing designated claims or defenses, or from introducing designated matters into evidence' or 'rendering a default judgment against a disobedient party.' See generally Fed.R.Civ.P. 37(b)(2)(A)(i)-(vii).

Id. at *3 (emphases in original).

After its April 30, 2008 Order, the parties scheduled the inspection for June 15, 2008 (Sunday) and June 16, 2008 (Monday). As such, on May 15, 2008, Square D served a Notice of Inspection, particularly advising the parties that Plaintiff would "inspect, image, and copy any electronically stored information located on Defendant Globe Electric Supply Co.'s computers." (Docket No. 187-4). Upon arrival, according to Plaintiff, Globe objected to a portion of the inspection and Plaintiff returned on June 20-22, 2008 (Friday through Sunday), in order to complete the inspection. However, again according to Plaintiff, Globe asserted numerous objections.

As a result, on June 27, 2008, Plaintiff Square D filed the instant motion, (Docket No. 187), and, on July 2, 2008, Defendant Globe filed its cross-motion and response to Plaintiff's motion, (Docket No. 189 & 189-2). On July 11, 2008, Plaintiff filed Square D's Response to Globe's Cross-Motion for Sanctions. (Docket ...


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