Etzion v. Etzion

In Etzion v. Etzion, 7 Misc 3d 940, 943, 796 NYS2d 844 [Sup Ct, Nassau County 2005], plaintiff wife sought an order permitting her to "impound, clone and inspect [defendant's] computer servers, hard drives, individual workstation P.C., laptops and other items containing digital data." As grounds for her request, she recited in her affidavit "the history of defendant's alleged conduct in creating 'shell' companies, transferring ownership to his 92-year-old father, and purchasing $4 million in real estate through a convoluted transfer of funds in and out of several Channel Island trusts . . . '[as part of] a common scheme to deprive [her] of [her] fair share of marital assets'" (Id. at 942). In response, defendant consented to discovery of financial matters sought by plaintiff, but contended that it would result in the disclosure of irrelevant, proprietary, and privileged materials (Id. at 944). The court ruled that an allegation of defendant's past fraudulent conduct did not justify plaintiff's "all-encompassing" demand for full system access (id. at 943). While the court permitted the imaging of defendant's hard disk drives to proceed, it prevented a direct delivery of the resulting clones to plaintiff and imposed the following limitations to protect defendant's privileged and nonrelevant materials: Discovery was supervised by a private attorney who was appointed as the discovery referee (Id. at 944). To be discoverable, the materials must have related to defendant's business or the foreign entities to which defendant allegedly transferred funds. Copying or transmission of personal records, e-mails, or other correspondence between defendant and third parties and/or defendant and his counsel was prohibited (Id. at 944-945). Plaintiff's expert, accompanied by defendant's expert and the discovery referee, would visit defendant's offices. Plaintiff's expert would clone the hard disk drives on site and immediately turn over the clones to the discovery referee (Id. at 944). At a location jointly selected by the discovery referee and the computer experts of each of the parties, "the hard drives [would] be examined. Hard copies of any business records found on such hard drives [would] be made and distributed to attorneys for both parties" (Id. at 944-945). Where questions arose as to the appropriate review of a particular document, the discovery referee's determination was considered final (Id. at 945). The discovery referee would keep the clones until the case was concluded, at which time the clones would be returned to defendant for disposal (id.). The review was to be completed in approximately one month (id.). The Etzion court declined plaintiff's request to shift her $15,000 cost for the computer expert (and $15,000 more for her attorney's fees) to defendant, noting that under the CPLR the party seeking disclosure should generally bear the costs in production of the discovery material (Id. at 945). The court directed that plaintiff bear the cost of the production of the business records she sought, subject to any possible reallocation of costs at trial, that plaintiff pay the expenses of her computer expert (including the cost of hard copy production), that defendant be responsible for the cost of his own computer expert, and that the discovery referee's fees be shared in the manner set forth in the court's prior order of appointment (id.).