IBM - Opposition to Plaintiffs Objections on Motion to Compel

UNITED STATES DISTRICT COURTSOUTHERN DISTRICT OF FLORIDA

QSGI, INC.,

Plaintiff,v.

IBM GLOBAL FINANCING andINTERNATIONAL BUSINESSMACHINES CORPORATION,

Defendants.

§§§§§§§§§§

Case No. 9:11-cv-80880-KLR

DEFENDANTS’ OPPOSITION TO PLAINTIFF’S OBJECTIONS TOMAGISTRATE JUDGE ANN E. VITUNAC’S ORDER, DATED MAY 22, 2012,

ON DEFENDANTS’ MOTION TO COMPEL

International Business Machines Corporation and IBM Global Financing

(collectively, “Defendants” or “IBM”) submit this opposition to QSGI, Inc.’s (“Plaintiff”

or “QSGI”) Objections to Magistrate Judge Ann E. Vitunac’s Order, Dated May 22,

2012, on Defendants’ Motion to Compel (“Objections”).

PRELIMINARY STATEMENT

In good faith, IBM has sought to move discovery forward without intervention of

the Court. IBM granted QSGI five extensions of its time to respond to IBM’s Document

Requests and Interrogatories. When QSGI still failed to respond, IBM was forced to seek

judicial relief. On March 16, 2012, Magistrate Judge Vitunac ordered QSGI to provide

complete responses to IBM’s discovery requests by April 2. QSGI failed to do so. QSGI

then ignored IBM’s communications concerning QSGI’s noncompliance, forcing IBM to

file another motion. Magistrate Judge Vitunac’s May 22 Order noted frustration with

QSGI’s inaction, and ordered QSGI to comply fully by June 4, including by completing

its document production in the agreed format. QSGI did not comply with the June 4

deadline, either. Nor did QSGI seek a stay of Magistrate Judge Vitunac’s orders. Instead

Case 9:11-cv-80880-KLR Document 99 Entered on FLSD Docket 06/21/2012 Page 1 of 20

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it filed the instant Objections. Accordingly, QSGI stands in present violation of both

orders.

QSGI’s Objections are unfounded. As a threshold matter, these Objections are

untimely. The obligations to which QSGI objects arise out of the March 16 Order, which

is final and not reviewable. As to the follow-up May 22 Order itself, QSGI presents no

argument that the Order is based on clearly erroneous factual findings or legal error.

QSGI admits that the parties agreed to produce electronic documents in a specified

format. QSGI merely contends that producing documents in that format would be

inconvenient for QSGI. Needless to say, QSGI’s convenience is no grounds for

overturning Magistrate Judge Vitunac’s Order.

QSGI also fails to present any argument that Magistrate Judge Vitunac erred in

ordering QSGI to respond fully to IBM’s Interrogatories. QSGI’s Interrogatory

responses are nonresponsive and inadequate. QSGI has not contended otherwise in the

briefing before Magistrate Judge Vitunac. QSGI now argues that it should be able to

stand on its inadequate responses because it objected therein to the breadth of the

Interrogatories. But QSGI’s objections were waived due to its failure to serve timely

responses, as well as its failure to raise any objections whatsoever before Magistrate

Judge Vitunac. Furthermore, purported “overbreadth” objections cannot excuse QSGI’s

failure to provide substantive responses. Therefore, the Court should deny QSGI’s

Objections.

BACKGROUND

A. The Parties’ Agreement Concerning Electronically Stored Information.

QSGI filed this lawsuit in August 2011. In October 2011, QSGI and IBM met

and conferred to develop the Joint Scheduling Report. (June 21, 2012 Declaration of


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Benjamin H. Diessel (“June 21, 2012 Diessel Decl.”) ¶ 2.) As required by Local Rule

16.1(b), the parties discussed discovery of electronically stored information (“ESI”), and

included their stipulation on such discovery (“ESI Agreement”) in their Joint Scheduling

Report. (Joint Scheduling Report ¶ L (Nov. 4, 2011, ECF No. 27).) The parties agreed:

to provide as part of their electronic document productions certain technicalfiles (“load files”) necessary to load and review these documents (id. ¶ L.v);

to provide unique identifiers (“Bates numbers”) on each page of eachelectronic document (id.); and

to provide certain information fields (“metadata”) describing each electronicdocument (i.e., the custodian, author, recipients, creation date, modificationdate, and other relevant data) (id. ¶ L.vii).

B. QSGI Repeatedly Ignored Deadlines For Discovery Responses.

In November and December 2011, IBM served QSGI with its First Request for

the Production of Documents (“Document Requests”) and First Set of Interrogatories

(“Interrogatories”), respectively. (Mot. to Compel Pl.’s Resps. to Defs.’ Disc. Reqs. and

Mem. of Law in Supp. of Defs.’ Mot., Feb. 15, 2012, Declaration of Laura Besvinick

(“Feb. 15, 2012 Besvinick Decl.”), Exs. A, B (Feb. 15, 2012, ECF No. 40-1).) QSGI’s

responses to the Document Requests and Interrogatories (collectively, “Discovery

Requests”) were due in December 2011 and January 2012, respectively.

Although IBM in good faith granted QSGI five extensions of the deadlines for

QSGI’s responses, QSGI still failed to provide the requested discovery.1 IBM’s

communications to QSGI on this subject thereafter went unreturned. (Feb. 15, 2012

Besvinick Decl. ¶¶ 15-17.) IBM was thus forced to move the Court to compel QSGI to

1 Specifically, IBM granted QSGI extensions to these deadlines on December 7, 2011, January 5,2012, January 19, 2012, January 27, 2012, and February 8, 2012. Feb. 15, 2012 Besvinick Decl.¶¶ 4-15.


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provide this discovery. (Mot. to Compel Pl.’s Resps. to Defs.’ Disc. Reqs. and Mem. of

Law in Supp. of Defs.’ Mot. (“Motion to Compel”) (Feb. 15, 2012, ECF No. 40).)

QSGI opposed the Motion to Compel, asking that the Court excuse its failure to

respond on the purported basis that QSGI’s documents were in the possession of

McDonald Hopkins LLC (counsel QSGI retained to respond to a subpoena from the

Securities and Exchange Commission (“SEC”)), and because certain of QSGI’s hardcopy

documents produced to the SEC had not been returned. (See Pl.’s Resp. to Defs.’ Mot. to

Compel Resps. to Defs.’ Disc. Reqs. ¶¶ 4-5 (Mar. 2, 2012, ECF No. 43).) QSGI

represented to the Court that its electronic production would be complete by the first

week of April. (See id. ¶ 6.) QSGI said nothing about its failure to respond to IBM’s

Interrogatories. (See id.)

C. QSGI Ordered To Respond Completely By April 2, 2012.

On March 16, 2012, U.S. Magistrate Judge Ann E. Vitunac granted IBM’s

Motion to Compel in relevant part and ordered QSGI to respond completely to IBM’s

Discovery Requests by April 2, 2012. (March 16, 2012 Order (“March 16 Order”) at 1

(Mar. 16, 2012, ECF No. 50).) QSGI filed no objections and sought no stay of this

Order.

D. QSGI’s Noncompliance With The March 16 Order.

1. Failure to provide complete Interrogatory Responses

On April 2, 2012, QSGI served its unverified response to IBM’s Interrogatories.

(Pl.’s Unverified Resp. to Defs.’ IBM and IBM Global Financing’s First Set of Interrogs.

(“Unverified Interrogatory Response”), IBM’s Mot. to Compel Compliance with March

16, 2012 Order and for Sanctions for Noncompliance (“Mot. to Compel Compliance”),

May 1, 2012, Declaration of Benjamin Diessel (“May 1, 2012 Diessel Decl.”), Ex. 8


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(May 1, 2012, ECF No. 64-2).) In this document, QSGI essentially failed to provide

substantive responses to the Interrogatories. For example:

IBM Interrogatory No. 1 requests QSGI’s factual bases for its centralcontentions that IBM changed a policy in 2007 relating to sales of upgradesand downgrades for used IBM mainframe computers and applied that policyin a disparate fashion. (See Unverified Interrogatory Resp. No. 1, May 1,2012 Diessel Decl., Ex. 8.) In response to Interrogatory No. 1, QSGI refersIBM to a single document: a 2007 IBM pricing guide. This IBM document inrelevant part simply restates a long-standing policy. It contains noinformation about a policy change or IBM applying such a policy in adisparate fashion. (See id.; see also Mot. to Compel Compliance at 5.)

IBM Interrogatories Nos. 2-6 request information concerning QSGI’s primarycontentions in this lawsuit that its business of buying and reselling used IBMmainframe computers was adversely impacted by the alleged IBM policychange in 2007. (See Unverified Interrogatory Resp. Nos. 2-6.) As to each,QSGI states that “it does not have all the information requested within itscustody or control” to provide complete answers and, without furtherexplanation, refers IBM to two exhibits that do not provide the informationcalled for. (Id.; see also Mot. to Compel Compliance at 5-6.)

IBM Interrogatory No. 7 requests information concerning QSGI’s damagescalculations. QSGI provides only vague references to its public filings andcertain employees, along with a meritless objection. (See UnverifiedInterrogatory Resp. No. 7.)

Finally, IBM Interrogatory No. 8 requests information concerning QSGI’sdocument destruction. Although QSGI originally provided a partial response,QSGI’s counsel effectively withdrew it when QSGI’s corporate representativeon this issue contradicted it. (See Unverified Interrogatory Resp. No. 8; seealso IBM’s Reply in Supp. of its Mot. to Compel Compliance with Mar. 16,2012 Order and for Sanctions for Noncompliance (“Reply in Supp. of Mot. toCompel Compliance”) at 3 n.3 (May 11, 2012, ECF No. 77).)

2. QSGI’s untimely and incomplete document production

On January 27, 2012, QSGI produced a limited number of documents to IBM.

(See Feb. 15, 2012 Besvinick Decl. ¶ 10.) Following the March 16 Order, QSGI

produced no additional documents until March 30, one business day before the Court’s

April 2 deadline. By the Court’s deadline, QSGI had produced only a fraction of its

intended document production. (See Reply in Supp. of Mot. to Compel Compliance,


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May 11, 2012, Declaration of Benjamin H. Diessel (“May 11, 2012 Diessel Decl.”) ¶¶ 6,

9, 11 (May 16, 2012, ECF No. 77-1).)

On April 2, QSGI provided its written response to IBM’s Document Requests.

QSGI flatly refused to produce documents in response to eight of IBM’s requests,

claiming that it did not have responsive documents “at this time”. (See Pl.’s Resp. to

Defs.’ Req. for Produc. of Docs. Nos. 3-4, 9-10, 21, 28-30, May 1, 2012 Diessel Decl.,

Ex. 7.) As to many of IBM’s other requests, QSGI simply pointed to 382 boxes of

documents that QSGI previously produced to the SEC. (Id. at Nos. 1-2, 5-8, 16, 22-27,

31-34, 36-37, 39-40.) In effect, QSGI indicated that responsive documents might be

found somewhere in that collection. QSGI did not review those boxes for responsiveness

to IBM’s specific requests, and did not make them available for IBM to review until May

4. (See May 11, 2012 Diessel Decl. ¶¶ 7-10; Feb. 15, 2012 Besvinick Decl. ¶¶ 11-12, 15-

17.)

On April 3 and April 5, QSGI produced additional documents. (May 1, 2012

Diessel Decl. ¶¶ 9, 13.) On May 10, QSGI served its most recent and most voluminous

electronic document production. (IBM’s Reply in Supp. of IBM’s Mot. for Sanctions for

Failure to Attend a Rule 30(b)(6) Dep. and Individual Dep., June 8, 2012 Declaration of

Benjamin H. Diessel ¶¶ 5-6 (June 8, 2012, ECF No. 90-1).) QSGI still has not completed

its document production. (Objs. at 16.) Nor has QSGI ever asked the Court to extend

the ordered April 2 deadline.

3. QSGI’s failure to comply with ESI Agreement

When QSGI produced electronic documents, it did so without regard to the

parties’ agreed format for electronic document production. For example, the March 30,

April 3 and April 5, 2012 electronic document productions were effectively unusable as


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produced. (May 1, 2012 Diessel Decl. ¶¶ 7, 13-14.) Specifically, these productions were

provided without the technical files necessary for the documents to be loaded into a

review tool for orderly review. (Id. ¶¶ 7, 13.) Nor was there any apparent systematic

structure to these electronic documents that would make it feasible manually to load these

documents into a review tool. The file structure was disorganized, and QSGI provided no

instructions or guidance as to the contents or organization of these productions. (June 20,

2012 Declaration of Tisha Ladia (“Ladia Decl.”) ¶¶ 4, 6.) Likewise, QSGI’s May 10

electronic production lacked technical files necessary to load many documents. (June 21,

2012 Diessel Decl. ¶ 3.)

Furthermore, many of the documents had no or incomplete “metadata”, impeding

IBM’s ability effectively and efficiently to review these documents. (See May 1, 2012

Diessel Decl. ¶¶ 7, 13; May 29, 2012 Email from B. Diessel to A. Kessler, June 21, 2012

Diessel Decl., Ex. 1.) For example, QSGI produced documents in many instances with

no metadata at all. (May 1, 2012 Diessel Decl. ¶ 7; June 21, 2012 Diessel Decl ¶ 3.)

Although QSGI provided partial metadata for some documents, that metadata was

noncompliant with the parties’ ESI Agreement and failed to include all agreed metadata

fields, such as custodian, date created, date last modified and file name. (Ladia Decl. ¶ 8;

May 1, 2012 Diessel Decl. ¶¶ 7, 13.) Finally, QSGI produced many documents without

text that would be searchable when loaded into a review tool. (See Ladia Decl. ¶ 7.) All

of these issues together made it difficult for IBM systematically to search for and locate

documents electronically.

Many documents in these productions also lack Bates numbers, making it difficult

to identify them uniquely. (See Mar. 31, 2012 Letter from B. Diessel to J. Bauta, May 1,


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2012 Diessel Decl., Ex. 5; June 21, 2012 Diessel Decl., Ex. 1.) Further, to the extent

QSGI provided some documents with Bates numbers, these Bates numbers were often

reused across different productions, making those numbers unreliable and effectively

unusable. (See June 21, 2012 Diessel Decl. ¶ 3.)

IBM immediately advised QSGI of these deficiencies and reminded QSGI of its

obligations under the ESI Agreement. (See April 11, 2012 Letter from B. Diessel to

J. Bauta, May 1, 2012 Diessel Decl., Ex. 10 & ¶ 8.) QSGI refused to produce its

documents in agreed format and advised IBM to make a motion to the Court. (See id.

¶ 10.)

4. IBM’s efforts to remediate QSGI’s productions

QSGI’s noncompliant document productions forced IBM to engage its litigation

services vendor, Document Technologies, Inc. (“DTI”), to attempt to remediate the

foregoing issues. (May 1, 2012 Diessel Decl. ¶ 14; June 21, 2012 Diessel Decl. ¶ 4.)

DTI eventually was able to load these productions into IBM’s review tool, but only after

writing a custom computer program to convert QSGI’s document productions into

suitable format. (See May 1, 2012 Diessel Decl. ¶ 14.) DTI used custom software to

extract the small amount of incomplete and noncompliant metadata that QSGI had

produced. (See Ladia Decl. ¶ 9.) Because QSGI produced many documents in an

unsearchable format, DTI also undertook efforts to make these electronic documents

searchable. (Id. ¶¶ 6-7.)

Although these efforts have allowed IBM, with some difficulty, to review these

documents, they cannot fully address the prejudice to IBM. For example, because QSGI

failed to provide agreed-to metadata, IBM still cannot determine important attributes of

the produced documents, including from whom QSGI collected documents, who authored


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documents, or the date ranges of the documents produced. (See Apr. 11, 2011, Letter

from B. Diessel to J. Bauta, May 1, 2012 Diessel Decl., Ex. 10.) Further, even with

DTI’s substantial efforts, the electronic documents appear in disaggregated format,

making it difficult, if not impossible, for IBM to associate emails with their attachments.

(See June 21, 2012 Diessel Decl. ¶ 4; Ladia Decl. ¶ 4.) DTI could not remediate QSGI’s

failure to include unique identifiers on its documents, which failure continues to

complicate the authentication of documents.2 (See June 21, 2012 Diessel Decl. ¶ 4; Ladia

Decl. ¶ 9.)

5. IBM’s efforts to resolve QSGI’s noncompliance

Six times IBM sought to address QSGI’s noncompliance with the Court’s Order

of March 16. (May 1, 2012 Diessel Decl. ¶¶ 8-21.) Almost all of these letters and phone

calls went unreturned, forcing IBM to file a motion for QSGI to comply with the Order.

(See id. ¶¶ 8-22; see also Mot. to Compel Compliance at 9-10.)

While QSGI opposed this motion, it did not contest the inadequacy of its

Unverified Interrogatory Response or address these deficient responses in any way.

QSGI again blamed its tardy document production on the claim that its documents were

in the possession of QSGI’s SEC counsel, McDonald Hopkins (whom QSGI erroneously

characterizes as a third party). (Pl.’s Resp. to IBM’s Mot. to Compel Compliance with

Mar. 16, 2012 [Order] and Sanctions for Noncompliance (“Resp. to Mot. to Compel

Compliance”) ¶¶ 2, 6, 9 (May 7, 2012, ECF No. 70).) QSGI acknowledged its failure to

2 For example, QSGI’s counsel recently objected to IBM introducing a QSGI-produced documentas a deposition exhibit on the basis that the document lacked a Bates stamp. June 20, 2012Declaration of Andrei Harasymiak ¶ 2.


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comply with the ESI Agreement, but claimed that this Agreement was “gratuitous”. (See

id. at ¶ 4.)

E. QSGI Ordered To Comply By June 4 With The March 16 Order.

On May 22, Magistrate Judge Vitunac ordered QSGI to comply by June 4 with

the Court’s March 16 Order. (May 22, 2012 Order (“May 22 Order”, referred to

collectively with the March 16 Order as “Orders”) at 2 (May 22, 2012, ECF No. 85).) As

to the Unverified Interrogatory Responses, Magistrate Judge Vitunac noted that “QSGI

once again does not attack the substance of the propounded discovery, it only provides

numerous reasons it has failed to comply.” (Id. at 1.) Magistrate Judge Vitunac warned

QSGI that the Court was “frustrated with QSGI’s inaction” concerning its discovery

obligations. (Id. at 2-3.) Further, Magistrate Judge Vitunac admonished QSGI that

sanctions would follow if “QSGI fails to comply with this Order”. (Id. at 3.) Magistrate

Judge Vitunac held that QSGI “agreed to produce the files in a specific format”, that the

ESI Agreement “controls”, and that QSGI must produce documents “in the agreed-upon

electronic format”. (See id. at 2.)

F. QSGI Ignored IBM’s Proposed Compromise Concerning ESI.

During a May 25 conference, IBM proposed to QSGI a compromise on the ESI

issue. (June 21, 2012 Diessel Decl., Ex 1.) IBM offered to waive QSGI’s obligation to

reproduce its prior productions in the agreed format by June 4, if QSGI would agree to

certain stipulations to address IBM’s continuing prejudice3 and pay the reasonable

3 Specifically, IBM requested that QSGI stipulate that: (1) it would not contest the authenticity ofdocuments IBM represents were included in QSGI’s electronic document productions; and(2) QSGI collected the electronic documents from only certain enumerated custodians. June 21,2012 Diessel Decl., Ex 1.


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expenses IBM incurred in partially remediating these issues (approximately $30,0004).

(Id.) QSGI never responded to this proposal. (Id. ¶ 7.)

G. QSGI’s Failure to Comply by June 4 Deadline.

QSGI sought no stay of the Court’s June 4 deadline for compliance with the

March 16 Order. Yet, QSGI undertook no action to comply with the Orders following

the issuance of the May 22 Order. Instead, QSGI waited until the June 4 deadline and

then filed the present Objections.

ARGUMENT

A. Legal Standard.

A party must object to a magistrate judge’s order within 14 days after being

served with a copy of the order. Fed. R. Civ. P. 72(a). The filing of an objection to a

magistrate judge’s discovery order does not operate as an automatic stay of the order.

Myers v. Cent. Fla. Invs., Inc., No. 6:04-cv-1542-Orl-28DAB, 2006 U.S. Dist. LEXIS

9517, at *2 n.1 (M.D. Fla. Feb. 27, 2006); see also Wright, Miller & Marcus, Federal

Practice and Procedure: Civil § 3069 (2d ed. 2012) (“[A] timely objection does not

automatically render the magistrate judge’s ruling invalid until the district court acts on

the objection.”).

A district court judge reviews a magistrate judge’s discovery order for clearly

erroneous factual findings or legal error. Fed. R. Civ. P. 72(a) (a district court judge may

“modify or set aside any part of the order that is clearly erroneous or is contrary to law”);

4 DTI’s charges for these services total approximately $21,057.62 to date. Ladia Decl. ¶ 10(including 20 hours of programming to create custom software totaling $5,000 in fees; 12 hoursof analyst time totaling $3,000 in fees; creation of 43,700 document images from documentsproduced in PDF format, costing $874; and creation of searchable text of 609,181 pages costing$12,183.62). IBM also incurred $8,916 in fees from technical staff and attorneys to direct andassist DTI with this work. June 21, 2012 Diessel Decl. ¶ 4 (including 5.3 hours of attorney timetotaling $2,110 in fees and 30 hours of technical staff time totaling $6,806 in fees).


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28 U.S.C. § 636(b)(1)(A) (“A judge of the court may reconsider any pretrial matter

. . . where it has been shown that the magistrate judge’s order is clearly erroneous or

contrary to law.”). The objecting party may not rely on facts not presented in the record

before the magistrate judge. See In re Seroquel Prods. Liab. Litig., No. 6:06-md-1769-

Orl-22DAB, 2008 U.S. Dist. LEXIS 15394, at *14 (M.D. Fla. Feb. 28, 2008) (“[B]ecause

this Court’s review of the magistrate judge’s order in this instance is not de novo, but

rather is limited to a finding of clear error, the Court finds that it would be improper to

look to anything but the record that existed at the time the magistrate judge issued his

ruling.”). Objections must set forth the error in the magistrate judge’s order and the

“statutory, rule, or case authority” supporting the objecting party’s position. S.D. Fla.

Magis. R. 4(a).

B. QSGI’s Objections Should be Considered Untimely.

At the threshold, QSGI’s Objections should be rejected as untimely. The

March 16 Order obligated QSGI to complete its document production and completely

respond to IBM’s Interrogatories. The May 22 Order, in turn, requires QSGI’s

compliance with these existing obligations. QSGI’s Objections, then, present a challenge

to its obligations arising from the March 16 Order. But QSGI made no timely objection

to the March 16 Order. The Court should not entertain QSGI’s untimely attempt to attack

the March 16 Order. See Jones v. United Space Alliance, L.L.C., 170 F. App’x 52, 54

(11th Cir. 2006) (noting that a party cannot “assign as error a defect in [a] magistrate

judge’s order” where an objection was not timely made under Fed. R. Civ. P. 72(a)).

Even assuming that the Court reaches the merits of QSGI’s Objections, QSGI’s

challenges to its ordered obligations are unavailing, as discussed below.


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C. QSGI Was Properly Ordered To Complete Production in Agreed Format.

QSGI presents no argument that the May 22 Order was premised on an error of

law.5 QSGI also does not dispute the facts underlying Magistrate Judge Vitunac’s Order,

much less that the Court made any clearly erroneous factual finding.6 QSGI admits that it

agreed to the discovery obligations in the ESI Agreement. (See Objs. at 15.) The parties

included these obligations in the Joint Scheduling Report as required by the Local Rules.

S.D. Fla. L. R. 16.1(b)(3). QSGI does not contend otherwise. Accordingly, QSGI is

bound by this agreement, as properly held by Magistrate Judge Vitunac. QSGI’s failure

to present an argument under the proper legal standard alone warrants denial of its

Objections. See, e.g., Dulaney v. Miami-Dade Cnty., No. 09-23259-CIV, 2011 U.S. Dist.

LEXIS 13056, at *4 (S.D. Fla. Feb. 2, 2011) (affirming Magistrate Judge’s Order where

there was no clear error and the “Defendant [did] not point to any clear error on the part

of the Magistrate Judge”).

QSGI nevertheless asks this Court to set aside QSGI’s agreed obligations. QSGI

nowhere states that it cannot comply with the ESI Agreement, just that QSGI’s

noncompliance is cheaper and more convenient for QSGI. As an initial matter, QSGI’s

reliance on the purported burden of reproducing these documents is disingenuous. Prior

to QSGI filing its Objections, IBM offered that it would not require QSGI to reproduce

5 QSGI cites only to discovery rules that are superseded by the parties’ ESI Agreement. See May22 Order at 2 (“QSGI asserts that it produced the documents in the electronic format they werekept in, and that the Civil Rules do not require more. While QSGI would normally be correct, inthis instance it agreed to produce the files in a specific format. The agreement controls.”).6 QSGI’s Objections present a narrative of purported facts concerning discovery in this matter.These contentions are outside of the record that was before Magistrate Judge Vitunac andtherefore should be disregarded. Objs. ¶¶ 5-12, 15-22, 24-26, 29-32, 35-52 (citing to materialoutside of the record); see also In re Seroquel Prods. Liab. Litig., 2008 U.S. Dist. LEXIS 15394,at *14.


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documents in agreed format if QSGI agreed to provide certain stipulations and reimburse

IBM’s reasonable expenses. (June 21, 2012 Diessel Decl., Ex 1.) QSGI ignored this

proposal. (Id. ¶ 7.)

QSGI’s claimed convenience in any event provides no basis to disregard agreed

discovery obligations. The bilateral requirements of the ESI Agreement promote orderly

and efficient discovery by both parties. See, e.g., In re Seroquel Prods. Liab. Litig., 244

F.R.D. 650, 655 (M.D. Fla. 2007) (noting that in complex litigation it is important for

parties to confer and agree regarding the format of electronic discovery production).

IBM undertook substantial effort to provide discovery in compliance with the ESI

Agreement.7 QSGI was properly held to its end of the bargain.8

QSGI’s contention that the ESI Agreement is subject to modification (and that

this somehow relieves QSGI of its agreed obligations) also misses the mark. QSGI has

never sought a modification of the ESI Agreement.9 The ESI Agreement, as originally

negotiated and agreed upon, remains binding. (See May 22, 2012 Order at 2; see also

Scheduling Order ¶ 12 (Nov. 11, 2011, ECF No. 29) (“The parties shall be bound by all

additional representations made in their Joint Scheduling Report.”).) In sum, QSGI has

7 IBM undertook substantial effort to collect, image and process electronic information in thiscase, including from computer hard drives of at least 31 IBM employees; from servers housingemployee emails; and from central electronic repositories of IBM information. June 21, 2012Diessel Decl. ¶ 5. In compliance with the ESI Agreement, IBM’s electronic documentproductions included load files and agreed metadata fields for each electronic document. Id.8 The fact that McDonald Hopkins collected and maintained certain QSGI electronic documentsin certain formats to respond to the SEC’s 2009 subpoena is irrelevant to QSGI’s obligationspursuant to the ESI Agreement.9 As Magistrate Judge Vitunac noted, “[i]f QSGI could not live up to the agreement, it shouldhave written IBM and explained why. Instead, QSGI did nothing except tell IBM to file a motionwith the Court if it wanted the documents in agreed upon form”. May 22, 2012 Order at 2.


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cited no clearly erroneous factual finding, no error of law, and no reason at all why it

should not be required to comply with the ESI Agreement.

D. QSGI Was Properly Ordered To Respond Fully To The Interrogatories.

QSGI’s Unverified Interrogatory Response is inadequate. QSGI has not contested

this point in any briefing before Magistrate Judge Vitunac. QSGI was properly ordered

to provide complete responses.

Despite not objecting to the March 16 Order (or assigning any error to the May 22

Order), QSGI now apparently seeks to avoid providing substantive responses by standing

on purported breadth objections that QSGI included in its Unverified Interrogatory

Response. (See Objs. at 17.) This position is untenable for at least three reasons.

First, QSGI waived these breadth objections when it failed timely to serve

responses to the Interrogatories. S.D. Fla. L. R. 26.1(g)(3)(A) (“Any ground not stated in

an objection [to an interrogatory] within the time provided by the Federal Rules of Civil

Procedure, or any extensions thereof, shall be waived.”).

Second, QSGI waived any possible objections by failing to assert any in response

to either of IBM’s motions to compel. Indeed, QSGI failed to contest either of IBM’s

motions as to the Interrogatories in any way at all. In an objection to a magistrate judge’s

ruling, a party cannot raise any grounds that were not raised before the magistrate judge.

See In re Seroquel Prods. Liab. Litig., 2008 U.S. Dist. LEXIS 15394, at *14. It is simply

too late for QSGI to raise any objection to the Interrogatories.

Third, even assuming QSGI’s breadth objections were not waived, breadth

objections do not excuse a party from providing any answers at all. Vanhorn v.

Behavioral Support Services, Inc., No. 6:07-cv-1696-Orl-22DAB, 2008 WL 4539463,

at *1 (M.D. Fla. Oct. 8, 2008) (“[A]n objection for overbreadth does not relieve the duty


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to respond to [an interrogatory to the] extent that is not overbroad . . . .”) (internal

quotation marks and citation omitted). Here, QSGI provided essentially nothing. IBM is

not asking QSGI to provide answers of broader scope or to address irrelevant matters.

IBM simply asks that the Plaintiff provide responses that actually answer the very basic

questions posed about fundamental elements of Plaintiff’s purported claims.

Nor can QSGI excuse its failure to respond by claiming that it has not yet

reviewed its own documents. QSGI has anticipated this action for almost five years.

(See QSGI Inc., Quarterly Report (Form 10-Q) at 12 (Nov. 14, 2007), Defs.’ Mot. to

Dismiss With Prejudice Pl.’s Second Am. Compl., Apr. 16, 2012 Declaration of Laura

Besvinick, Ex. 1 (Apr. 16, 2012, ECF No. 54-1).) The complaint in this case was filed

almost a year ago, and we have almost reached the discovery cut off. At this late date

QSGI cannot hide behind its own failure to investigate its purported claims. If QSGI has

no responsive information, it should have so stated definitively. To the extent that QSGI

has additional responsive information, it should have provided it.

E. QSGI Is In Violation of Both the Court’s Orders.

QSGI’s Objections do not absolve QSGI’s continuing violation of the Orders.

QSGI was ordered to provide complete document production by April 2, a date QSGI

itself proposed in response to IBM’s Motion to Compel. QSGI was also ordered to

provide complete Interrogatory responses by that date.10 Despite two Orders, QSGI

admits that it still has not completed its document production, and indeed had only just

begun reviewing many of the potentially responsive documents as of the date of its

10 See March 16 Order at 1 (“Plaintiff asserts that it is producing discovery on a rolling basis andwill be finished by the first week of April. The Court will hold Plaintiff to it . . . . Plaintiff shallcompletely respond to the pending discovery requests by April 2, 2012.”).


17

Objections. (Objs. at 16 (“Plaintiff has begun the review [of voluminous amounts of hard

copy documents] and intends to complete it this week.”).)11 Further, QSGI admits that it

has no intention of responding to the Interrogatories or producing its documents in agreed

format. (See id. at pp. 13-17 (“Plaintiff maintains it has responded to the best of its

ability given its objections to the Interrogatories.”; “It would be unduly burdensome for

Plaintiff to reproduce the documents in [the] format” compliant with the ESI

Agreement.).) QSGI’s Objections did not stay its ordered obligations. See Myers, 2006

U.S. Dist. LEXIS 9517, at *2 n.1. Thus, QSGI comes before the Court in willful

violation of both Orders. This fact, in itself, is sufficient to warrant denial of QSGI’s

Objections.

CONCLUSION

For the foregoing reasons, IBM respectfully requests that the Court deny QSGI’s

Objections.

11 As of the date of this Response, QSGI has not produced any additional documents to IBM.June 21, 2012 Diessel Decl. ¶ 8.


18

Dated: June 21, 2012

Respectfully submitted,

/s/ Laura BesvinickLaura BesvinickFlorida Bar No. 391158HOGAN LOVELLS US LLP200 South Biscayne Blvd.Suite 400Miami, FL 33131Telephone: 305-459-6500Facsimile: [email protected]

Evan R. Chesler*Richard J. Stark*Teena-Ann V. Sankoorikal*CRAVATH, SWAINE & MOORE LLPWorldwide Plaza825 Eighth AvenueNew York, NY 10019Telephone: 212-474-1000Facsimile: [email protected]@[email protected]

Ty Cobb*Eric J. Stock*HOGAN LOVELLS US LLPColumbia Square555 Thirteenth Street, NWWashington, DC 20004Telephone: 202-637-5600Facsimile: [email protected]@HoganLovells.com

*Admitted Pro Hac Vice

Counsel for Defendants IBM GlobalFinancing and International BusinessMachines Corporation


CERTIFICATE OF SERVICE

I HEREBY CERTIFY that, on this 21st day of June 2012, I electronically

filed the foregoing document with the Clerk of the Court using CM/ECF. I also certify

that the foregoing document is being served this day on all counsel of record or pro se

parties identified on the attached Service List in the manner specified, either via

transmission of Notices of Electronic Filing generated by CM/ECF or in some other

authorized manner for those counsel or parties who are not authorized to receive

electronically Notices of Electronic Filing.

/s/ Laura BesvinickLaura BesvinickFlorida Bar No. 391158


QSGI, INC. SERVICE LIST

Juan Pablo Bauta, IIFerraro Law Firm

4000 Ponce de Leon BlvdSuite 700

Miami, FL 33146Phone: 305-375-0111Fax: 305-379-6222

Melissa Damian ViscontiFerraro Law Firm


Miami, FL 33146305-375-0111

Fax: 305-379-6222Email: [email protected]

Case A. DamFerraro Law Firm


Miami, FL 33146Phone: 305-375-0111Fax: 305-379-6222

Email: [email protected]


Case 9:11-cv-80880-KLR Document 99-1 Entered on FLSD Docket 06/21/2012 Page 1 of 6



EXHIBIT 1


2012-05-29 EMAIL from B. Diessel to J. Bauta re: Summary of May 25 DiscussionBenjamin Diessel to: jpb, aak, ncb 05/29/2012 05:14 PM

Cc:Richard Stark, Teena-Ann Sankoorikal, ty.cobb, laura.besvinick, eric.stock

Bcc: IBM562

Amanda,

I write to summarize our phone conversation on Friday, May 25 concerning QSGI's obligations to comply with the parties' agreement relating to Electronically Stored Information ("ESI") and additional follow-up items.

As you acknowledged, the Court's May 22 Order ("Order") obligates QSGI to reproduce its prior electronic productions in compliance with the parties' ESI agreement. As I stated, QSGI’s electronic productions, including its March 30, April 3, April 5 and May 10 productions, fail to comply with the parties’ ESI agreement -- a point that you did not dispute. Specifically, for example, QSGI's electronic productions, among other deficiencies, lack: (1) agreed metadata (J. Sched. Rpt. ¶ L.vii); (2) load files (id. ¶ L.v); and (3) Bates numbers on TIFF images (id.). Moreover, although QSGI provided Bates numbers for certain PDFs, those Bates numbers overlap in substantial part, rendering them unusable and unintelligible (id.) (for example, the Bates numbers that QSGI assigned to certain PDFs in the May 10 production (QSGI000001-QSGI027812) overlap with Bates numbers that QSGI assigned to documents in prior productions). As I also mentioned, additional deficiencies are discussed in my letters dated March 31 and April 11, 2012 (which I have attached hereto for your reference) as well as in our papers associated with our motion to compel compliance with the Court's March 16 Order.

You did not provide an explanation for QSGI's noncompliance with the ESI agreement, except to state that McDonald Hopkins prepared these document productions. As you know, however, QSGI at all times has had (and continues to have) access to the underlying information sources from which these documents were collected and produced. There is no technological reason precluding QSGI's compliance with the ESI agreement.

Through substantial expense and effort, IBM has been able to load these noncompliant productions. The expenses associated with this effort are approximately $30,000. To be clear, however, even with these efforts, we have not been able fully to (and we understand that we will not be able fully to) remediate QSGI's failure to comply with the ESI agreement. For example, the majority of the electronic documents that QSGI produced lack metadata. Those that include metadata omit agreed fields. QSGI has not provided this information and IBM cannot reproduce it. Thus, for example, IBM cannot match a given document with the custodian from whom it was produced. IBM also cannot locate documents systematically by date, sender, recipient, subject, or file type (among other issues). IBM cannot fix QSGI's failure to provide reliable Bates numbers, either, resulting in documents that have no facially apparent unique identifier. This needlessly complicates IBM's efforts to utilize documents from QSGI's productions. Accordingly, for these and other reasons, IBM has a substantial need for QSGI to reproduce its prior productions in a compliant, intelligible format. IBM is entitled to as much, as held by the Court.

As I stated in our call, without prejudice to and reserving our rights concerning QSGI's obligations pursuant to the Order, we would nevertheless be willing to consider a compromise, provided that QSGI addresses IBM's continuing prejudice resulting from QSGI's noncompliant productions as well as the substantial expenses IBM has had to pay to load these productions. Specifically, we would consider a compromise along the following lines:

QSGI stipulates that it will not contest the authenticity of any document that IBM represents was

included in QSGI's document productions; QSGI stipulates that its document productions include documents from the custodians listed in

Juan Bauta's January 27, 2012 letter (attached hereto) and that no documents from other custodians were included in these productions; and


QSGI immediately repays IBM's expenses associated with remediating QSGI's noncompliant

document productions (approximately $30,000).For avoidance of doubt, this compromise would not discharge QSGI's obligations pursuant to the Order, including its obligation to complete any remaining document production in compliant format and to respond fully to IBM's interrogatories. Please let us know when you are available to discuss this proposal. If QSGI will not agree, we expect QSGI to comply with the Court's Order and to provide complete and compliant production of documents pursuant to the ESI agreement by June 4.

At the end of our call, you also agreed to follow up on outstanding items including the following: whether QSGI will agree to admission of the Micro Focus deposition transcript and recording (I

asked Juan to respond by May 23 but have not heard from him; we would appreciate a prompt response by May 29); the contact information for Seth Grossman and Robert Van Hellemont; and

dates on which David Meynarez is available for deposition.

I look forward to your response on these items.

2012.Jan.27.Letter.from.J.Bauta.PDF

2012-03-31 LETTER from B. Diessel to J. Bauta re Issues with the production of documents received on March 30, 2012.pdf

2012-04-11 LETTER from B. Diessel to J. Bauta re Discovery Issues.pdf

Benjamin DiesselCravath, Swaine & Moore LLP825 Eighth AvenueNew York, NY 10019(212) 474-1177 (direct)(212) 474-3700 (fax)






