A recent Dallas Court of Appeals case, MRT, Inc. v. Vounckx, provides some insights on electronic discovery in Texas.

The case essentially involves two main entities: MRT, Inc. and Inter-University Micro-Electronics Center ("IMEC"), though several other related parties and entities were involved.  Basically, IMEC through its agent, Roger Vounckx, persuaded MRT and the several related individuals and entities to invest in a new technology, PhotonLink, which purportedly provided faster and more efficient computer chip communication.

When the investment proved unsuccessful, MRT sued IMEC for fraud, negligent misrepresentation, and breach of fiduciary duty.  During the litigation, MRT served IMEC with requests for production, but did not confer with IMEC beforehand to ascertain how it stored its information electronically.  The requests sought any computer generated or stored information relevant to the lawsuit. 

At depositions, MRT’s counsel learned that IMEC had some computer back up tapes it had not produced.  These tapes were apparently used for retrieval if the data base became corrupted and not for archival preservation.  Because IMEC delayed producing the tapes, MRT filed a motion to compel.  IMEC objected to production because: (1) extracting information from the tapes was too burdensome given there was no indication relevant information was stored on the back up tapes, which would take hours to search; and (2) IMEC had destroyed the back up tapes related to the relevant time period after MRT had sued it.

The trial court denied MRT’s request for a continuance to review the backup tapes and it denied its spoliation motion.  MRT lost at trial and appealed.

Did IMEC improperly withhold the backup tapes?  Did IMEC spoliate evidence when it destroyed the backup tapes after MRT filed the lawsuit?  Read the extended entry to learn what the court decided.  Or if you would rather read the opinion, you can get it HERE.

 

MOTION TO COMPEL

The court denied MRT’s complaint that IMEC defaulted on its discovery obligations because (1) the parties did not exchange information about their electronic systems prior to drafting discovery requests; (2)  MRT failed to ask specifically for the backup tapes or documents that resided only on the backup tapes;  (3) as MRT failed to request the backup tapes in its production request, IMEC did not have a duty to object that the documents were not reasonably available at the time it served its discovery responses; and (4) IMEC provided an affidavit to the court demonstrating the documents were not reasonably available (each tape would require hours to extract information that may have no relevance to the lawsuit).

SPOLIATION

Before a spoliation instruction is appropriate, the non-spoliating party has the burden to prove the spoliating party had a duty to preserve the evidence because it had notice of suit and the evidence was relevant and material to the claim.  Here, IMEC destroyed the tapes after MRT filed its suit.  So to establish IMEC had a duty, MRT needed to show that the evidence on the backup tapes was relevant and material.  The court found (1) no evidence of how many tapes destroyed; (2) no evidence of the dates the destroyed tapes were originally created; and (3) no evidence of what the tapes actually contained.  In other words, MRT had no evidence that the tapes had relevant and material information on them at the time they were destroyed.  Further, and importantly, the court recognized a general rule that a litigation hold does not apply to backup tapes maintained solely for the purpose of disaster recovery.

 The Court of Appeals affirmed.