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First Senior Financial Group LLC v. Watchdog

United States District Court, E.D. Pennsylvania

April 3, 2014

FIRST SENIOR FINANCIAL GROUP LLC, PHILLIP J. CANNELLA, III AND JOANN SMALL, Plaintiffs,
v.

MEMORANDUM AND ORDER

J. CURTIS JOYNER, District Judge.

Before the Court are Plaintiff's Motion for Sanctions Based on Defendant Watchdog's Spoliation of Evidence (Doc. No. 134) and Defendant Watchdog's Response in Opposition thereto (Doc. No. 138); Plaintiffs' (Doc. No. 153) and Defendant Watchdog's (Doc. No. 154) Supplemental Briefs; as well as Defendant's Response to Plaintiffs' Supplemental Brief (Doc. No. 158). For the following reasons, it is hereby ORDERED that the Motion for Sanctions is GRANTED in part and DENIED in part. An Order follows.

II. BACKGROUND

Defendant Krista Brennan ("Brennan") is the creator of websites, including truthaboutcannella.com and truthaboutcannella.net, which contain information portraying the business and ethical practices of Plaintiffs First Senior Financial Group LLC, Phillip J. Cannella III, and Joann Small in a severely negative light. Brennan, or "Watchdog" as she refers to herself on these websites, insists that the information on her sites is true. Plaintiffs, however, argue that it is disparaging and defamatory.

Brennan's educational background consists of bachelor's degrees in communication studies and business, a master's degree in organizational and industrial psychology, and significant credits toward a master of science in information science focusing on the management of information technology. (Tr. 155-6). She has held jobs for which she acquired domain names for clients and designed websites for them. (Tr. 157). Among other positions she has held, Brennan worked for 4 years as the Director of Technology for the Vanguard Charitable Endowment Program, and worked as a Senior Executive at Stellar Financial, Inc., where she was responsible for management of the company's financial software product, software development, and technology operations, among other things. (Pl. Ex. L, Resume of Krista Cantrell Brennan). Although she knows how to install most kinds of software, Brennan asserts that she does not know how to install an operating system on a computer. (Tr. 156). Brennan once applied for a position as Chief Operating Officer with Plaintiff First Senior Financial Group prior to the commencement of litigation, but was not given an offer of employment. (Tr. 157-8, 160.) At present, Brennan has a diagnosis of an advanced form of secondary progressive multiple sclerosis ("MS") with associated loss of sensory ability and mobility, which impedes her ability to walk, read, or type; she also suffers from nystagmus, which makes it difficult for her to read or use a computer. (Tr. 166-67).

In March 2012, Plaintiffs commenced suit in this Court alleging defamation, tortious interference with business relationships, civil conspiracy, and violations of the Lanham Act. See (First Amended Complaint, Doc. No. 9). In August 2012, the Court granted Plaintiff's Motion for Alternative Service, allowing service by e-mail upon Defendant Watchdog. (Order of August 29, 2012, Doc. No. 17). Default Judgment for failure to appear, plead, or otherwise defend the action was entered against Watchdog in November 2012. (Doc. No. 56). Brennan maintains that she did not learn of the lawsuit until December 2012. (Def. Resp. Ex. A ¶ 3).

In February 2013, Brennan first appeared in the present action by filing a Motion to Vacate the Default Judgment that had been entered against her. (Doc. No. 82). The Court scheduled an evidentiary hearing to determine whether Brennan had received notice of the action and whether service had been effectuated by e-mail. (Doc. No. 89). On June 13, 2013, the Court ordered the Defendant to:

[I]dentify any and all electronic devices from which she accessed her email accounts truthaboutcannella@yahoo.com and watchdog@truthaboutcannella.net and any documents or records related to the website truthaboutcannella.net. Defendant Watchdog shall then submit these devices and computers for a forensic examination. Defendant Watchdog may select the expert used for the forensic examination, and the Plaintiffs shall pay for the forensic examination. (Doc. No. 97 ¶ 1).

On June 25, Brennan identified the computer of her mother Rose Ann Cantrell (the "target computer") to be the only readily-identifiable and accessible computer from which she accessed these email accounts.[1] (Defendant Watchdog's Identification of Computers, Pl. Ex. D). Plaintiffs' counsel did not respond to Brennan's identification of computers at that time. (Doc. No. 112-1 at ¶¶ 13-15).

The target computer at Ms. Cantrell's residence, 160 Whispering Oaks Drive in West Chester, PA, was always located in the kitchen area. (Tr. 31, 70, 153). Ms. Cantrell used the target computer on a daily basis to check her bank statements. (Tr. 35, 70, 154). While living with her mother, Brennan had frequent and easy access to the target computer as well. (Tr. 154). At the time, she lived on the ground floor of the house, the same floor where the computer was located. Id . On two occasions with unknown dates, Ms. Cantrell asked individual contractors to make repairs to her computer; she also asked her son-in-law, David Borda, to help her access her email at times. (Tr. 41-44). Brennan was not always at Ms. Cantrell's house while she was living there; she took three trips away of approximately 4-6 weeks, including in the summer of 2012 and the winter of 2012-2013. (Tr. 185).

On June 28, 2013, Brennan moved out of her mother's house in West Chester and flew to Texas. (Tr. 188; Def. Ex. A-2). She did not alert her counsel to the fact that she was leaving Pennsylvania. (Tr. 176). Two Facebook posts on June 28 and 29 indicated her location as Houston, Texas. (Pl. Ex. 3, 4).

On July 1, Plaintiff's newly-appointed counsel contacted Brennan's counsel to discuss the status of the forensic examination, and Brennan's counsel reminded him of the previous identification of computers. (Doc. No. 112-1 at ¶ 15-16).

On July 3, 2013, counsel for the parties conducted a telephone conference outside of the Court's presence. Counsel for Brennan, Mr. Cohen, suggested the retention of IT Acceleration ("ITA"), a local IT firm, to complete the forensic examination. (Affidavit of Sidney S. Liebesman, Pl. Ex. F at ¶ 5). Brennan's counsel also suggested that a device called "EZ Imager" be used. Id . ¶ 6; Tr. 175. This device could be used by sending a USB drive with imaging software to the house of Ms. Cantrell, where it could be connected to the target computer, directed to run the imaging software, and then returned to ITA. (Tr. 83-86, 112-113, 186-7). While counsel for Plaintiffs affirms that Brennan's counsel suggested that EZ Imager be used by Brennan without Ms. Cantrell's knowledge, (Liebesman Aff. ¶ 6), Brennan testified that she had understood that an ITA employee would use the device (Tr. 175-76). Brennan preferred the EZ Imager method of submitting to forensic examination because Ms. Cantrell vehemently opposed the release of her computer to the custody of forensic examiners. (Tr. 187). Counsel for Plaintiffs strongly opposed the use of EZ Imager, citing concerns for Ms. Cantrell's privacy interests if the exam were completed without her knowledge and a desire to observe strict compliance with the Court order requiring that the target computer itself be produced to a forensic examiner. (Liebesman Aff. ¶ 7). In the expert opinion of Gary Hunt, a Forensic Analyst at ITA, the use of EZ Imager is a typical, authenticated practice which is forensically equivalent to having a technician examine a hard drive in person. (Tr. 86, 113).

On July 7, 2013, Ms. Cantrell "checked in" on Facebook at a Starbucks; her location was posted as Katy, Texas. (Def. Ex. A-5).

In early August 2013, Ms. Cantrell was hospitalized after suffering a heart attack. (Def. Ex. E). When Plaintiffs sought to subpoena Ms. Cantrell to produce the target computer (Doc. No. 107), Brennan objected and requested that the Court vacate its June 13, 2013 Order. See (Doc. No. 112). On August 6, the Court ordered that Rose Ann Cantrell's computer be produced for forensic examination. (Doc. No. 115). When the computer was still not delivered, the Court verbally reiterated its order in an August 20 conference call with the parties. (Doc. No. 119). The computer was produced to ITA the next day by David Borda, Ms. Cantrell's son-in-law. (Tr. 69-70). It was the results of this forensic examination which led Plaintiffs to file the present Motion for Sanctions Based Upon Spoliation of Evidence.

Gary Hunt, the ITA Forensic Analyst, obtained a mirror image of the target computer, returned the target computer to Ms. Cantrell, and then performed a forensic examination of the mirror image. (Declaration of Gary Hunt, Pl. Ex. K at ¶ 2-3). He found no user-created documents on the computer. Id . ¶ 8. He also discovered that on July 7, 2013, Windows 7 had been reinstalled on the computer. Id . ¶ 9. The only current user profile on the target computer, "roseanncantrell, " was created at the same time. Id . ¶ 10. It was not possible to determine who had completed the reinstallation, nor who was logged on to the computer prior to the reinstallation. Id . ¶ 11; (Tr. 97-98, 120). Mr. Hunt also concluded that two different types of data-wiping software, Tracks Eraser Pro and CCleaner, had been installed and used on the target computer. (Hunt Decl. ¶ 12). Though it is not possible to determine when exactly these two types of software were used, they were used prior to July 7, 2013 by the user profile "Rose" which no longer resides on the computer. Id . ¶ 12-13, 16. It was also not possible for Mr. Hunt to determine who had employed these two types of software, and what, if any, data was deleted. In addition to their data-wiping capabilities, Tracks Eraser Pro and CCleaner have functions related to system optimization. Id . ¶ 14. While CCleaner is sometimes pre-installed on computers, Tracks Eraser Pro must typically be installed on a computer after it is purchased. (Tr. 93). Mr. Hunt testified that the use of both programs on one computer is "fairly rare" in his experience. (Tr. 131-32).

Lastly, Mr. Hunt conducted searches for certain keywords provided to him by counsel for the parties. Nearly all of the Plaintiffs' search terms hit on words in the target computer. (Pl. Ex. I). The search term hits were either system-related files or fragments from the unallocated space, which is disk space not being used by active files which can be over-written by the computer. (Hunt Decl. ¶ 8). Files or fragments are moved to a computer's unallocated space when files are deleted. (Tr. 126). Additionally, fragments may end up in the unallocated space as a result of clearing one's browser history or having temporary files running on the computer. Id . Mr. Hunt advised counsel that, at times, some keyword searches may result in "false positive" hits. (Tr. 117-118). For example, a positive hit for the word "complaint" may not refer to a complaint in a legal action. (Tr. 118). However, uncommon words such as "metaphysicalgrrl" and "Watchdog" are less likely to produce false positives. (Tr. 137).

On January 27, 2014, Plaintiffs withdrew their opposition to Brennan's Motion to Vacate Default Judgment. See (Doc. No. 146). The Court subsequently vacated the default. (Doc. No 147).

The Court held an evidentiary hearing on Plaintiff's Motion for Sanctions Based on Defendant Watchdog's Spoliation of Evidence on February 18, 2014. The Court heard testimony from Rose Ann ...


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