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Peskoff v. Faber

February 21, 2007

JONATHON E. PESKOFF, PLAINTIFF,
v.
MICHAEL A. FABER, DEFENDANT.



The opinion of the court was delivered by: John M. Facciola United States Magistrate Judge

MEMORANDUM OPINION AND ORDER

This case was referred to me for the resolution of discovery disputes. Pending before me remains the electronic discovery at issue in Plaintiff's Motion to Compel Discovery [#48] ("Pls. Mot."). For further consideration of plaintiff's motion, I ordered parties on July 11, 2006, to file affidavits relating to the search of electronic documents at issue. Having reviewed those affidavits, I will order the defendant to perform another and more complete search.

I. BACKGROUND

The detailed facts of this case have been summarized in prior opinions. Plaintiff Jonathon Peskoff ("Peskoff") seeks to recover damages from defendant Michael Faber ("Faber") for alleged financial injury resulting from Faber's operation of NextPoint Partners, LP, a venture capital fund, and its related entities. Specifically, Peskoff alleges fraud in the inducement, breach of fiduciary duty, breach of contract, conversion, common law fraud and deceit, unjust enrichment, and violations of 10 U.S.C. §§ 1962(c) and 1964(c) (civil RICO). See Complaint ("Compl.") ¶¶ 31-68.

Peskoff and Faber were the sole managing members of NextPoint GP, LLC ("NextPoint GP"), the general partner of the venture capital fund, though no governing limited liability agreement was ever signed. Peskoff claims a retained membership interest in NextPoint GP since his departure as a managing member on February 13, 2004. Faber's responsibilities included handling routine finances, record keeping, and fund-raising activities, while Peskoff's responsibilities included oversight of the portfolio companies in which the venture capital fund invested and identification and evaluation of potential new investments.

The NextPoint Management Company, Inc. ("NextPoint Management"), was organized to receive the management fees for NextPoint GP from the venture capital fund and for fulfilling NextPoint GP's management responsibilities to the fund. Plaza Street Holdings, Inc. ("Plaza Street") is a corporation controlled solely by Faber that was paid by NextPoint Management for consultation services. Part of Peskoff's allegations include Faber causing NextPoint Management to pay Plaza Street $400,000 for consulting services that were neither necessary nor provided and that these payments were for the sole purpose of diverting funds from various NextPoint entities to Faber.

Peskoff's motion to compel was partially resolved in my order of July 11, 2006. See Peskoff v. Faber, Civ. No. 04-526, 2006 WL 1933483, at *2-4 (D.D.C. July 11, 2006). Still outstanding is Peskoff's request for additional production of emails that he received or authored while at NextPoint Management that "likely contain information relating to the ownership issues in this case, the suspect transactions identified in the Complaint and other relevant matters." Pls. Mot. at 8. There is no dispute as to the relevancy of the emails; the parties disagree as to (1) the existence of any other emails in addition to those already produced, and (2) the financial responsibility of determining if and where additional emails may be located.

NextPoint Management subleases office space from the law firm of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, PC ("Mintz Levin"), which stores NextPoint Management's electronic files on its server. Id. Following Peskoff's departure from NextPoint Management in February of 2004, defendant's "counsel 'caused the creation of an archive of all Peskoff electronic files, including documents stored on his computer hard drive, email, and any other Peskoff electronic documents.'" Peskoff, Civ. No. 04-526, 2006 WL 1933483, at *4. (quoting Defendant's and Non-Party Plaza Street's Memorandum in Opposition to Motion to Compel Discovery ["Defs. Opp."]). Faber then produced data disks containing copies of documents and emails taken from Peskoff's NextPoint Management computer. Pls. Mot. at 7-8. However, Peskoff claimed the data disks Faber produced did not include any emails Peskoff received or authored between mid-2001 and mid-2003, nor do the disks contain authored emails that should be stored in the Sent folder of Peskoff's former email account. Id. at 8. Faber contends "Peskoff has every email and electronic file that existed on the computer system shortly after he quit," and therefore, "[t]here is nothing more to produce." Defs. Opp. at 7.

Peskoff seeks an explanation as to "why Plaintiff's emails from this timeframe have not been produced, where they might be located within NextPoint's computer system or archives[,] or what specific steps have been taken to find these emails." Pls. Mot. at 8. As I explained in my prior opinion, the sought emails, if they exist, could be located in one or more of several places: (1) Peskoff's NextPoint Management email account; (2) the email accounts of other employees, agents, officers, and representatives of the NextPoint entities; (3) the hard drive of Peskoff's computer or any other depository for NextPoint emails, searchable with key words; (4) other places within Peskoff's computer, such as its "slack space,"*fn1 searchable with the help of a computer forensic technologist; and (5) backup tapes of Mintz Levin's servers. Peskoff, Civ. No. 04-526, 2006 WL 1933483, at *4-5. I could not determine the extent of Faber's search for the requested Peskoff emails with only the information before me, nor could I determine the likelihood that additional emails existed elsewhere on NextPoint Management's system. Therefore, I ordered Faber to produce an affidavit describing in detail the nature of the search conducted, and I provided Peskoff the opportunity to respond to the adequacy of the search. Id. With that information, I can now more readily determine whether an additional search is necessary.

II. ANALYSIS

A. The Actual Search Conducted by Defendant

The defendant's attorney, William Davis, filed the affidavit for Faber to detail the search "for emails from, to, and about Jonathon Peskoff." See Declaration of William Davis Concerning Defendant's Production of Peskoff Electronic Mail ("Davis Aff."). In March of 2004, prior to the filing of the complaint in this case, Davis conducted an initial investigation into the location of all of Peskoff's and NextPoint's electronic documents.*fn2 Davis Aff. ¶ 5. Davis found Peskoff's electronic documents in two places: (1) the hard drive of the computer Peskoff used, and (2) on the Mintz Levin server used to store NextPoint's electronic files.*fn3 Davis Aff. ¶ 6.

Davis then caused Mintz Levin's information services department to replicate Peskoff's entire hard drive as of March 2004, a copy of which he produced to Peskoff. Davis Aff. ¶¶ 8-9. Davis is therefore confident all electronic files found on Peskoff's computer as of March 2004 have been produced. Davis Aff. ¶ 10.

One month later, in April 2004, Davis also caused Mintz Levin's information services department to archive Peskoff's emails. Davis Aff. ΒΆ 11. The email was stored in a .pst file (standard for archiving Outlook), burned to a DVD, and given ...


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