Lord Abbett Mun. Income Fund., Inc v. Asami, Applying the Proportionality Principal, Court Finds Cost Of Preservation “Outweighs the Likely Benefit” and Allows Disposal of Computers

In this suit involving alleged wrongdoing by the Windrush School’s Board Members and Stone & Youngberg, a dispute arose regarding the disposition of 159 computers used at the Windrush School prior to its closing. The computers were preserved at a third party storage facility for a $500 monthly fee which was shared by the parties to the litigation. Plaintiff contended that the computers were unlikely to contain information relevant to the case as they were used exclusively by teachers and students. At Plaintiff’s request, a limited forensic examination of a sample of the computers confirmed the Plaintiff’s assertion. The Defendants did not request further information with respect to the forensic analysis that was conducted.

After the Court granted summary judgment in favor of the Board Member Defendants, and partial summary judgment in favor of another Defendant, the Board Member Defendants informed Plaintiff that they would no longer pay their portion of the $500 fee associated with storing the Windrush School’s computers, but objected to their disposal. The Board Member Defendants argued that they might need to access information resident on the computers at some point in the future. During a meet and confer, the Board Member Defendants declined the Plaintiff’s suggestion that they search the computers and retrieve any information they might need. The Plaintiff sought an order permitting the disposal of the computers and argued that the cost of continuing to store the computers was burdensome given that it was unlikely they contained any useful information and that imaging the hard drives was cost prohibitive.

Disputing the Plaintiff’s assertion that the computers contained no relevant information, Board Member Defendants argued that they did not have an understanding of how the forensic examiner determined that the computers did not contain relevant information. The Board Member Defendants argued that in the event the matter was remanded, the parties had the right to access the original source of evidence and contended that Plaintiff should not be allowed to dispose of the machines until the Ninth Circuit ruled on the appeal.

The Court rejected Defendant Board Members’ contention that they may need to access the computers in the event the case was remanded and noted that discovery has been closed for a long time and there was no indication that relevant information resided on the computers. The Court also observed that Defendants declined Plaintiff’s repeated offers to provide access to the computers and failed to make any effort to obtain more information regarding the forensic analysis. In summary, the Court noted that the “Board Member Defendants have had numerous opportunities to test their belief that the computers may have evidentiary value, but have refused to act on them.”

The Court then addressed proportionality under Fed. R. Civ. P. 26(b)(2), and noted that “this district recognizes that the proportionality principle applies to the duty to preserve potential sources of evidence.” Applying the proportionality principal, the Court held that costs of preserving the computers “outweigh the likely benefit of maintaining the computers where there has been absolutely no showing that they contain relevant evidence.” In conclusion, the Court granted Plaintiff’s request to dispose of the 159 computers.

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