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Babcock Power Inc. v. Kapsalis

United States District Court, W.D. Kentucky, Louisville

January 5, 2018

BABCOCK POWER INC., et al. PLAINTIFFS
v.
STEPHEN T. KAPSALIS, et al. DEFENDANTS

          MEMORANDUM OPINION AND ORDER

          CHARLES R. SIMPSON III, SENIOR JUDGE.

         This matter is before the court on the renewed motion of the plaintiffs, Babcock Power, Inc. and Vogt Power International, Inc. (collectively herein “Babcock”), to amend the court's scheduling order to permit additional limited discovery (DN 477).[1] Babcock has sought and been denied this discovery a number of times before, as it did not support the grounds for its request with an offer of any evidence. Most recently, the court explained in detail the deficiencies in the motion, and denied the request by order dated September 28, 2017. However, we noted

Babcock's assertions concerning hash value analysis and conclusions concerning the identification and location of Vogt documents is wholly unsupported. Babcock's arguments were unsupported in March of 2017 (DNs 426, 432) and permission to engage in additional discovery of the Express server was denied by the magistrate judge at that time. (DN 445). These arguments remain unsupported and wholly unsubstantiated now.
While the court is aware that Kapsalis was ordered to turn over hash value data, and did so, after the discovery deadline, that point begs the question. In order to reopen discovery, the court must be given a properly supported ground for doing so. By agreement of the parties, forensic analysis was performed on Express' server during the discovery period. It did not yield the results hoped for by Babcock. September 2017 is not a time for a discovery do-over, however.
If Babcock properly establishes that its analysis of the post-discovery production of hash value data ordered by the magistrate judge revealed six documents on the Express server not identified by the prior forensic analysis, Babcock should be afforded the opportunity to ask One Source Discovery if it has additional information concerning “when the six Vogt Power documents…were transferred onto Express's server, where they were transferred to and whether they have been opened and/or changed.” (DN 461-1, Tendered Order). The court has not been shown any ground, either factual or legal, for the additional relief Babcock seeks - a reopening of expert discovery (Babcock seeks leave to “disclose any new or supplemental expert opinions based upon the newly provided hash values”), and leave to depose Innova Global, Inc., the apparent purchaser of the servers from the bankruptcy estate.
Babcock, who apparently took no action to protect its interests in the bankruptcy court, will be hard pressed to convince this court to permit Babcock to peek under the tent of an entity who has no connection to this litigation and was presumably a bona fide purchaser for value in that sale by the trustee. Babcock admits having received notice of the impending sale from the bankruptcy court.
Babcock has not established grounds for amendment of the scheduling order. That motion will also be denied.

DN 470, p. 5.

         Kapsalis objected to additional discovery and continues to object to the current motion. Kapsalis raises the same arguments as made previously, but Babcock's motion differs significantly from its prior submissions. This time, the motion is well-grounded in evidence, evidence which accompanies the motion, and the motion substantiates the request for additional limited discovery.

         The court's ruling compelling the production of the so-called “hash value evidence” lagged behind the discovery cut-off dates in the case. On December 6, 2016, the court ordered Kapsalis to produce “a listing of all of the hash values of every file on the Express server at the time it was analyzed by [One Source Discovery], as well as the information reviewed by OSD and Dr. Cobb on Kapsalis's Express laptop, including LNK files, jump lists, and registry hives.” DN 381, p. 7. The order compelling discovery was granted in order to permit Babcock to evaluate the grounds for Kapsalis' expert's opinions:

The Court rejects Kapsalis's assertion that he has provided the facts and data relied upon by Dr. Cobb because the MD5 hash values, Bates number, and file names of the approximately 760 files identified by plaintiffs were produced. “The purpose of such disclosure [i.e., the facts and data considered] is to allow opposing parties a ‘reasonable opportunity to prepare for effective cross examination and perhaps arrange for expert testimony from other witnesses.'” City of Owensboro v. Kentucky Utilities Co., No. CIV.A.4:04CV-87-M, 2008 WL 4542674, at *2 (W.D. Ky. Oct. 8, 2008) (quoting advisory committee notes to Rule 26(a)(2)). Simply providing plaintiffs with the 760 files and nothing else does not serve this purpose or comply with Rule 26(a)(2)(B)(ii). That said, plaintiffs are not entitled to a copy of the Express server and Kapsalis's Express laptop in full either. Although Dr. Cobb's report could have been more clearly worded, he clarified under oath at his deposition that the hash values on the live Express server were extracted using a program called X-ways, and that a hash value comparison of the 760 files identified by plaintiffs was run against the hash values on the live Express server as of April 2016. (DN 289-3, pp. 9-10, 13, 20.) Additionally, Dr. Cobb testified that the hash values of the various Kapsalis devices were compared against Kapsalis's Express laptop. (Id. at 7-8, 15, 22.) Thus, Kapsalis shall provide, as was offered, a listing of all of the hash values of every file on the Express server at the time it was analyzed by OSD, as well as the information reviewed by OSD and Dr. Cobb on Kapsalis's Express laptop, including LNK files, jump lists, and registry hives.

DN 381, pp. 6-7.

         In sum, as the court noted in the September 2017 Order, Babcock is not entitled to a discovery do-over. Babcock is not entitled to a copy of the Express server or Kapsalis' Express laptop. While Babcock has come forward with evidence to establish that the search by Digital Strata for Babcock's files on the Express server was flawed, Babcock is not entitled to a second attempt. The parties agreed to the use of Digital Strata to perform a search of the Express server and they agreed-upon the protocol. Digital Strata did not discover any files residing on the Express server. That topic has been exhaustively discussed and put to rest at a prior time. We will not revisit any such discussion here.

         Rather, the discovery of matching hash values was made by Babcock as a result of the compelled disclosure of hash value evidence made in January, 2017, long after the close of discovery. Kapsalis' expert provided the hash value data he used in his analysis which was then ...


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