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Industrial Packaging Supplies, Inc. v. Davison

United States District Court, D. South Carolina, Greenville Division

January 24, 2019

Industrial Packaging Supplies, Inc., Plaintiff,
v.
Geordy Davison, John England, Stephen Schroeder, Cory Perry, Quinn Davidson, Michael Schmitt, DBE Solutions, LLC, Axis Packaging, LLC, Davidson Brothers Equity, LLC, and Viking Packaging, LLC, Defendants.

          ROE CASSIDY COATES & PRICE, P.A. William A. Coates (Fed. ID No. 183) Roe Cassidy Coates & Price, P.A. Special Master

          REPORT AND RECOMMENDATION OF SPECIAL MASTER

         BACKGROUND

         On March 8, 2018, Industrial Packaging Supplies, Inc. (Plaintiff or IPS) brought suit against Geordy Davidson, John England, Stephen Schroeder, Cory Perry, Quinn Davidson, Michael Schmitt, Jason Nettles, DBE Solutions, LLC and Axis Packaging, LLC.[1] Plaintiff is a South Carolina corporation which claims that the individual defendants, all of whom were formerly employed by plaintiff, have violated certain employment-related agreements with plaintiff. Plaintiff alleges these violations include solicitation of plaintiff's present and prospective customers, sharing of trade secret and confidential information, unauthorized use of customer lists, and unauthorized solicitation of plaintiff's employees, along with use of confidential corporate information. Plaintiff's complaint contains the following causes of action against some or all of the defendants: Violation of the Defend Trade Secrets Act (18 U.S.C. § 1836, et. seq.), violation of the South Carolina Trade Secrets Act) (39-8-10, South Carolina Code, et. seq., ) breach of contract, tortious interference with contract, breach of the duty of loyalty, misappropriation of corporate opportunity, breach of fiduciary duty, conversion, unjust enrichment, and for an accounting. Plaintiff also requests preliminary and permanent injunctive relief.

         STATUS

         Pursuant to the order of the Honorable Timothy M. Cain (Dkt 87), the undersigned was appointed “to oversee discovery and discovery disputes” in this matter. Plaintiff previously filed a Motion to Compel and Motion for Entry of Forensic Protocol (Dkt 72) (“Motion to Compel”). Defendants filed responses to plaintiff's motion (Dkt 80, Dkt 81). Plaintiff's motion was referred to the undersigned.

         In compliance with the Court's initial deadline for submission of a Report & Recommendation, the undersigned reviewed and analyzed the submissions of the parties. The parties then requested the undersigned to delay submitting his Report & Recommendation, as they were hopeful other ongoing discovery would lead to agreement on the pending issues. Recently, plaintiff and defendants Geordy Davison, John England, DBE Solutions, LLC, Axis Packaging, LLC, Davidson Brothers Equity, LLC and Viking Packaging, LLC agreed on a consent protocol to conduct discovery of certain electronically stored information (Ex. A). The undersigned has been informed that entry of this protocol resolves the pending motions as to those defendants.

         The undersigned conducted a conference with counsel for plaintiff and counsel for the listed defendants on January 25, 2019. The only matter remaining for decision is whether Stephen Schroeder, Cory Perry, Quinn Davidson, and Michael Schmitt (“defendants”) should be subject to the same protocol.[2] On January 28, 2019, counsel submitted brief position papers as to this remaining issue. The matter is now ripe for decision.

         DISCUSSION

         Plaintiff submitted an affidavit of forensic examiner James Scarazzo of FTI Consulting regarding his examination of certain electronic files and devices in the possession of IPS and previously used by defendants Schmitt, Davidson, Schroeder, and Perry while employed by IPS. Defendants also submitted affidavits. All affidavits were previously filed with the Court.

         It is plaintiff's position that Mr. Scarazzo‘s examination discloses that certain documents, presentations, files, and drawings were transferred by defendants to various external devices in defendants' control. Defendants' affidavits claim that each left his work computer and external storage devices on plaintiff's premises as of the date of resignation. Defendants also aver that each has searched his iCloud storage services and/or e-mail accounts for plaintiff's “confidential information, ” “trade secrets, ” or tangible property, but none has been found. Some of the defendants do not possess the same cell phone as when they were employed by plaintiff. Plaintiff contends that Mr. Scarazzo's findings are sufficient to require defendants to enter into the consent protocol. Defendants contend Mr. Scarazzo's findings, when compared with their declarations, do not provide sufficient basis for a search of their private electronic devices.

         The Consent Protocol requires defendants to identify any and all electronic storage devices, computers, smart phones, etc. which could potentially contain or reflect any of plaintiff's confidential information: (1) which is the subject of this litigation, and (2) to which defendants have had access from January 1, 2016 to the present. The protocol requires that any such devices to be made available to an approved consultant for preservation. Defendants are allowed to have a representative present during the process of preserving the data from the devices.

         The protocol requires the approved consultant to insure that all original data sources are preserved, and the consultant must use generally accepted forensic tools and techniques in doing so. The protocol also sets forth requirements for the collection of data from computers, mobile devices and cloud-based repositories.

         Plaintiff is required to submit a proposed list of search terms for use in searching the preserved data. Defendants have the right to object and counter-propose search terms. Once search terms are agreed upon or settled by the Court, the approved consultant will produce a search report to counsel. Defendants have the right to object prior to the production of material to plaintiff's counsel.

         RECO ...


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