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UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF FLORIDA QSGI, INC., Plaintiff, v. IBM GLOBAL FINANCING and INTERNATIONAL BUSINESS MACHINES CORPORATION, Defendants.

Case No. 9:11-cv-80880-KLR

DEFENDANTS OPPOSITION TO PLAINTIFFS OBJECTIONS TO MAGISTRATE JUDGE ANN E. VITUNACS ORDER, DATED MAY 22, 2012, ON DEFENDANTS MOTION TO COMPEL International Business Machines Corporation and IBM Global Financing (collectively, Defendants or IBM) submit this opposition to QSGI, Inc.s (Plaintiff or QSGI) Objections to Magistrate Judge Ann E. Vitunacs Order, Dated May 22, 2012, on Defendants Motion to Compel (Objections). PRELIMINARY STATEMENT In good faith, IBM has sought to move discovery forward without intervention of the Court. IBM granted QSGI five extensions of its time to respond to IBMs Document Requests and Interrogatories. When QSGI still failed to respond, IBM was forced to seek judicial relief. On March 16, 2012, Magistrate Judge Vitunac ordered QSGI to provide complete responses to IBMs discovery requests by April 2. QSGI failed to do so. QSGI then ignored IBMs communications concerning QSGIs noncompliance, forcing IBM to file another motion. Magistrate Judge Vitunacs May 22 Order noted frustration with QSGIs inaction, and ordered QSGI to comply fully by June 4, including by completing its document production in the agreed format. QSGI did not comply with the June 4 deadline, either. Nor did QSGI seek a stay of Magistrate Judge Vitunacs orders. Instead

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it filed the instant Objections. Accordingly, QSGI stands in present violation of both orders. QSGIs Objections are unfounded. As a threshold matter, these Objections are untimely. The obligations to which QSGI objects arise out of the March 16 Order, which is final and not reviewable. As to the follow-up May 22 Order itself, QSGI presents no argument that the Order is based on clearly erroneous factual findings or legal error. QSGI admits that the parties agreed to produce electronic documents in a specified format. QSGI merely contends that producing documents in that format would be inconvenient for QSGI. Needless to say, QSGIs convenience is no grounds for overturning Magistrate Judge Vitunacs Order. QSGI also fails to present any argument that Magistrate Judge Vitunac erred in ordering QSGI to respond fully to IBMs Interrogatories. QSGIs Interrogatory responses are nonresponsive and inadequate. QSGI has not contended otherwise in the briefing before Magistrate Judge Vitunac. QSGI now argues that it should be able to stand on its inadequate responses because it objected therein to the breadth of the Interrogatories. But QSGIs objections were waived due to its failure to serve timely responses, as well as its failure to raise any objections whatsoever before Magistrate Judge Vitunac. Furthermore, purported overbreadth objections cannot excuse QSGIs failure to provide substantive responses. Therefore, the Court should deny QSGIs Objections. BACKGROUND A. The Parties Agreement Concerning Electronically Stored Information.

QSGI filed this lawsuit in August 2011. In October 2011, QSGI and IBM met and conferred to develop the Joint Scheduling Report. (June 21, 2012 Declaration of 2

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Benjamin H. Diessel (June 21, 2012 Diessel Decl.) 2.) As required by Local Rule 16.1(b), the parties discussed discovery of electronically stored information (ESI), and included their stipulation on such discovery (ESI Agreement) in their Joint Scheduling Report. (Joint Scheduling Report L (Nov. 4, 2011, ECF No. 27).) The parties agreed: to provide as part of their electronic document productions certain technical files (load files) necessary to load and review these documents (id. L.v); to provide unique identifiers (Bates numbers) on each page of each electronic document (id.); and to provide certain information fields (metadata) describing each electronic document (i.e., the custodian, author, recipients, creation date, modification date, and other relevant data) (id. L.vii). QSGI Repeatedly Ignored Deadlines For Discovery Responses.

B.

In November and December 2011, IBM served QSGI with its First Request for the Production of Documents (Document Requests) and First Set of Interrogatories (Interrogatories), respectively. (Mot. to Compel Pl.s Resps. to Defs. Disc. Reqs. and Mem. of Law in Supp. of Defs. Mot., Feb. 15, 2012, Declaration of Laura Besvinick (Feb. 15, 2012 Besvinick Decl.), Exs. A, B (Feb. 15, 2012, ECF No. 40-1).) QSGIs responses to the Document Requests and Interrogatories (collectively, Discovery Requests) were due in December 2011 and January 2012, respectively. Although IBM in good faith granted QSGI five extensions of the deadlines for QSGIs responses, QSGI still failed to provide the requested discovery.1 IBMs communications to QSGI on this subject thereafter went unreturned. (Feb. 15, 2012 Besvinick Decl. 15-17.) IBM was thus forced to move the Court to compel QSGI to

Specifically, IBM granted QSGI extensions to these deadlines on December 7, 2011, January 5, 2012, January 19, 2012, January 27, 2012, and February 8, 2012. Feb. 15, 2012 Besvinick Decl. 4-15.

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provide this discovery. (Mot. to Compel Pl.s Resps. to Defs. Disc. Reqs. and Mem. of Law in Supp. of Defs. Mot. (Motion to Compel) (Feb. 15, 2012, ECF No. 40).) QSGI opposed the Motion to Compel, asking that the Court excuse its failure to respond on the purported basis that QSGIs documents were in the possession of McDonald Hopkins LLC (counsel QSGI retained to respond to a subpoena from the Securities and Exchange Commission (SEC)), and because certain of QSGIs hardcopy documents produced to the SEC had not been returned. (See Pl.s Resp. to Defs. Mot. to Compel Resps. to Defs. Disc. Reqs. 4-5 (Mar. 2, 2012, ECF No. 43).) QSGI represented to the Court that its electronic production would be complete by the first week of April. (See id. 6.) QSGI said nothing about its failure to respond to IBMs Interrogatories. (See id.) C. QSGI Ordered To Respond Completely By April 2, 2012.

On March 16, 2012, U.S. Magistrate Judge Ann E. Vitunac granted IBMs Motion to Compel in relevant part and ordered QSGI to respond completely to IBMs Discovery Requests by April 2, 2012. (March 16, 2012 Order (March 16 Order) at 1 (Mar. 16, 2012, ECF No. 50).) QSGI filed no objections and sought no stay of this Order. D. QSGIs Noncompliance With The March 16 Order. 1. Failure to provide complete Interrogatory Responses

On April 2, 2012, QSGI served its unverified response to IBMs Interrogatories. (Pl.s Unverified Resp. to Defs. IBM and IBM Global Financings First Set of Interrogs. (Unverified Interrogatory Response), IBMs Mot. to Compel Compliance with March 16, 2012 Order and for Sanctions for Noncompliance (Mot. to Compel Compliance), May 1, 2012, Declaration of Benjamin Diessel (May 1, 2012 Diessel Decl.), Ex. 8 4

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(May 1, 2012, ECF No. 64-2).) In this document, QSGI essentially failed to provide substantive responses to the Interrogatories. For example: IBM Interrogatory No. 1 requests QSGIs factual bases for its central contentions that IBM changed a policy in 2007 relating to sales of upgrades and downgrades for used IBM mainframe computers and applied that policy in a disparate fashion. (See Unverified Interrogatory Resp. No. 1, May 1, 2012 Diessel Decl., Ex. 8.) In response to Interrogatory No. 1, QSGI refers IBM to a single document: a 2007 IBM pricing guide. This IBM document in relevant part simply restates a long-standing policy. It contains no information about a policy change or IBM applying such a policy in a disparate fashion. (See id.; see also Mot. to Compel Compliance at 5.) IBM Interrogatories Nos. 2-6 request information concerning QSGIs primary contentions in this lawsuit that its business of buying and reselling used IBM mainframe computers was adversely impacted by the alleged IBM policy change in 2007. (See Unverified Interrogatory Resp. Nos. 2-6.) As to each, QSGI states that it does not have all the information requested within its custody or control to provide complete answers and, without further explanation, refers IBM to two exhibits that do not provide the information called for. (Id.; see also Mot. to Compel Compliance at 5-6.) IBM Interrogatory No. 7 requests information concerning QSGIs damages calculations. QSGI provides only vague references to its public filings and certain employees, along with a meritless objection. (See Unverified Interrogatory Resp. No. 7.) Finally, IBM Interrogatory No. 8 requests information concerning QSGIs document destruction. Although QSGI originally provided a partial response, QSGIs counsel effectively withdrew it when QSGIs corporate representative on this issue contradicted it. (See Unverified Interrogatory Resp. No. 8; see also IBMs Reply in Supp. of its Mot. to Compel Compliance with Mar. 16, 2012 Order and for Sanctions for Noncompliance (Reply in Supp. of Mot. to Compel Compliance) at 3 n.3 (May 11, 2012, ECF No. 77).) 2. QSGIs untimely and incomplete document production

On January 27, 2012, QSGI produced a limited number of documents to IBM. (See Feb. 15, 2012 Besvinick Decl. 10.) Following the March 16 Order, QSGI produced no additional documents until March 30, one business day before the Courts April 2 deadline. By the Courts deadline, QSGI had produced only a fraction of its intended document production. (See Reply in Supp. of Mot. to Compel Compliance,

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May 11, 2012, Declaration of Benjamin H. Diessel (May 11, 2012 Diessel Decl.) 6, 9, 11 (May 16, 2012, ECF No. 77-1).) On April 2, QSGI provided its written response to IBMs Document Requests. QSGI flatly refused to produce documents in response to eight of IBMs requests, claiming that it did not have responsive documents at this time. (See Pl.s Resp. to Defs. Req. for Produc. of Docs. Nos. 3-4, 9-10, 21, 28-30, May 1, 2012 Diessel Decl., Ex. 7.) As to many of IBMs other requests, QSGI simply pointed to 382 boxes of documents that QSGI previously produced to the SEC. (Id. at Nos. 1-2, 5-8, 16, 22-27, 31-34, 36-37, 39-40.) In effect, QSGI indicated that responsive documents might be found somewhere in that collection. QSGI did not review those boxes for responsiveness to IBMs specific requests, and did not make them available for IBM to review until May 4. (See May 11, 2012 Diessel Decl. 7-10; Feb. 15, 2012 Besvinick Decl. 11-12, 1517.) On April 3 and April 5, QSGI produced additional documents. (May 1, 2012 Diessel Decl. 9, 13.) On May 10, QSGI served its most recent and most voluminous electronic document production. (IBMs Reply in Supp. of IBMs Mot. for Sanctions for Failure to Attend a Rule 30(b)(6) Dep. and Individual Dep., June 8, 2012 Declaration of Benjamin H. Diessel 5-6 (June 8, 2012, ECF No. 90-1).) QSGI still has not completed its document production. (Objs. at 16.) Nor has QSGI ever asked the Court to extend the ordered April 2 deadline. 3. QSGIs failure to comply with ESI Agreement

When QSGI produced electronic documents, it did so without regard to the parties agreed format for electronic document production. For example, the March 30, April 3 and April 5, 2012 electronic document productions were effectively unusable as 6

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produced. (May 1, 2012 Diessel Decl. 7, 13-14.) Specifically, these productions were provided without the technical files necessary for the documents to be loaded into a review tool for orderly review. (Id. 7, 13.) Nor was there any apparent systematic structure to these electronic documents that would make it feasible manually to load these documents into a review tool. The file structure was disorganized, and QSGI provided no instructions or guidance as to the contents or organization of these productions. (June 20, 2012 Declaration of Tisha Ladia (Ladia Decl.) 4, 6.) Likewise, QSGIs May 10 electronic production lacked technical files necessary to load many documents. (June 21, 2012 Diessel Decl. 3.) Furthermore, many of the documents had no or incomplete metadata, impeding IBMs ability effectively and efficiently to review these documents. (See May 1, 2012 Diessel Decl. 7, 13; May 29, 2012 Email from B. Diessel to A. Kessler, June 21, 2012 Diessel Decl., Ex. 1.) For example, QSGI produced documents in many instances with no metadata at all. (May 1, 2012 Diessel Decl. 7; June 21, 2012 Diessel Decl 3.) Although QSGI provided partial metadata for some documents, that metadata was noncompliant with the parties ESI Agreement and failed to include all agreed metadata fields, such as custodian, date created, date last modified and file name. (Ladia Decl. 8; May 1, 2012 Diessel Decl. 7, 13.) Finally, QSGI produced many documents without text that would be searchable when loaded into a review tool. (See Ladia Decl. 7.) All of these issues together made it difficult for IBM systematically to search for and locate documents electronically. Many documents in these productions also lack Bates numbers, making it difficult to identify them uniquely. (See Mar. 31, 2012 Letter from B. Diessel to J. Bauta, May 1,

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2012 Diessel Decl., Ex. 5; June 21, 2012 Diessel Decl., Ex. 1.) Further, to the extent QSGI provided some documents with Bates numbers, these Bates numbers were often reused across different productions, making those numbers unreliable and effectively unusable. (See June 21, 2012 Diessel Decl. 3.) IBM immediately advised QSGI of these deficiencies and reminded QSGI of its obligations under the ESI Agreement. (See April 11, 2012 Letter from B. Diessel to J. Bauta, May 1, 2012 Diessel Decl., Ex. 10 & 8.) QSGI refused to produce its documents in agreed format and advised IBM to make a motion to the Court. (See id. 10.) 4. IBMs efforts to remediate QSGIs productions

QSGIs noncompliant document productions forced IBM to engage its litigation services vendor, Document Technologies, Inc. (DTI), to attempt to remediate the foregoing issues. (May 1, 2012 Diessel Decl. 14; June 21, 2012 Diessel Decl. 4.) DTI eventually was able to load these productions into IBMs review tool, but only after writing a custom computer program to convert QSGIs document productions into suitable format. (See May 1, 2012 Diessel Decl. 14.) DTI used custom software to extract the small amount of incomplete and noncompliant metadata that QSGI had produced. (See Ladia Decl. 9.) Because QSGI produced many documents in an unsearchable format, DTI also undertook efforts to make these electronic documents searchable. (Id. 6-7.) Although these efforts have allowed IBM, with some difficulty, to review these documents, they cannot fully address the prejudice to IBM. For example, because QSGI failed to provide agreed-to metadata, IBM still cannot determine important attributes of the produced documents, including from whom QSGI collected documents, who authored 8

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documents, or the date ranges of the documents produced. (See Apr. 11, 2011, Letter from B. Diessel to J. Bauta, May 1, 2012 Diessel Decl., Ex. 10.) Further, even with DTIs substantial efforts, the electronic documents appear in disaggregated format, making it difficult, if not impossible, for IBM to associate emails with their attachments. (See June 21, 2012 Diessel Decl. 4; Ladia Decl. 4.) DTI could not remediate QSGIs failure to include unique identifiers on its documents, which failure continues to complicate the authentication of documents.2 (See June 21, 2012 Diessel Decl. 4; Ladia Decl. 9.) 5. IBMs efforts to resolve QSGIs noncompliance

Six times IBM sought to address QSGIs noncompliance with the Courts Order of March 16. (May 1, 2012 Diessel Decl. 8-21.) Almost all of these letters and phone calls went unreturned, forcing IBM to file a motion for QSGI to comply with the Order. (See id. 8-22; see also Mot. to Compel Compliance at 9-10.) While QSGI opposed this motion, it did not contest the inadequacy of its Unverified Interrogatory Response or address these deficient responses in any way. QSGI again blamed its tardy document production on the claim that its documents were in the possession of QSGIs SEC counsel, McDonald Hopkins (whom QSGI erroneously characterizes as a third party). (Pl.s Resp. to IBMs Mot. to Compel Compliance with Mar. 16, 2012 [Order] and Sanctions for Noncompliance (Resp. to Mot. to Compel Compliance) 2, 6, 9 (May 7, 2012, ECF No. 70).) QSGI acknowledged its failure to

For example, QSGIs counsel recently objected to IBM introducing a QSGI-produced document as a deposition exhibit on the basis that the document lacked a Bates stamp. June 20, 2012 Declaration of Andrei Harasymiak 2.

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comply with the ESI Agreement, but claimed that this Agreement was gratuitous. (See id. at 4.) E. QSGI Ordered To Comply By June 4 With The March 16 Order.

On May 22, Magistrate Judge Vitunac ordered QSGI to comply by June 4 with the Courts March 16 Order. (May 22, 2012 Order (May 22 Order, referred to collectively with the March 16 Order as Orders) at 2 (May 22, 2012, ECF No. 85).) As to the Unverified Interrogatory Responses, Magistrate Judge Vitunac noted that QSGI once again does not attack the substance of the propounded discovery, it only provides numerous reasons it has failed to comply. (Id. at 1.) Magistrate Judge Vitunac warned QSGI that the Court was frustrated with QSGIs inaction concerning its discovery obligations. (Id. at 2-3.) Further, Magistrate Judge Vitunac admonished QSGI that sanctions would follow if QSGI fails to comply with this Order. (Id. at 3.) Magistrate Judge Vitunac held that QSGI agreed to produce the files in a specific format, that the ESI Agreement controls, and that QSGI must produce documents in the agreed-upon electronic format. (See id. at 2.) F. QSGI Ignored IBMs Proposed Compromise Concerning ESI.

During a May 25 conference, IBM proposed to QSGI a compromise on the ESI issue. (June 21, 2012 Diessel Decl., Ex 1.) IBM offered to waive QSGIs obligation to reproduce its prior productions in the agreed format by June 4, if QSGI would agree to certain stipulations to address IBMs continuing prejudice3 and pay the reasonable

Specifically, IBM requested that QSGI stipulate that: (1) it would not contest the authenticity of documents IBM represents were included in QSGIs electronic document productions; and (2) QSGI collected the electronic documents from only certain enumerated custodians. June 21, 2012 Diessel Decl., Ex 1.

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expenses IBM incurred in partially remediating these issues (approximately $30,000 4). (Id.) QSGI never responded to this proposal. (Id. 7.) G. QSGIs Failure to Comply by June 4 Deadline.

QSGI sought no stay of the Courts June 4 deadline for compliance with the March 16 Order. Yet, QSGI undertook no action to comply with the Orders following the issuance of the May 22 Order. Instead, QSGI waited until the June 4 deadline and then filed the present Objections. ARGUMENT A. Legal Standard.

A party must object to a magistrate judges order within 14 days after being served with a copy of the order. Fed. R. Civ. P. 72(a). The filing of an objection to a magistrate judges discovery order does not operate as an automatic stay of the order. Myers v. Cent. Fla. Invs., Inc., No. 6:04-cv-1542-Orl-28DAB, 2006 U.S. Dist. LEXIS 9517, at *2 n.1 (M.D. Fla. Feb. 27, 2006); see also Wright, Miller & Marcus, Federal Practice and Procedure: Civil 3069 (2d ed. 2012) ([A] timely objection does not automatically render the magistrate judges ruling invalid until the district court acts on the objection.). A district court judge reviews a magistrate judges discovery order for clearly erroneous factual findings or legal error. Fed. R. Civ. P. 72(a) (a district court judge may modify or set aside any part of the order that is clearly erroneous or is contrary to law);
4

DTIs charges for these services total approximately $21,057.62 to date. Ladia Decl. 10 (including 20 hours of programming to create custom software totaling $5,000 in fees; 12 hours of analyst time totaling $3,000 in fees; creation of 43,700 document images from documents produced in PDF format, costing $874; and creation of searchable text of 609,181 pages costing $12,183.62). IBM also incurred $8,916 in fees from technical staff and attorneys to direct and assist DTI with this work. June 21, 2012 Diessel Decl. 4 (including 5.3 hours of attorney time totaling $2,110 in fees and 30 hours of technical staff time totaling $6,806 in fees).

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28 U.S.C. 636(b)(1)(A) (A judge of the court may reconsider any pretrial matter . . . where it has been shown that the magistrate judges order is clearly erroneous or contrary to law.). The objecting party may not rely on facts not presented in the record before the magistrate judge. See In re Seroquel Prods. Liab. Litig., No. 6:06-md-1769Orl-22DAB, 2008 U.S. Dist. LEXIS 15394, at *14 (M.D. Fla. Feb. 28, 2008) ([B]ecause this Courts review of the magistrate judges order in this instance is not de novo, but rather is limited to a finding of clear error, the Court finds that it would be improper to look to anything but the record that existed at the time the magistrate judge issued his ruling.). Objections must set forth the error in the magistrate judges order and the statutory, rule, or case authority supporting the objecting partys position. S.D. Fla. Magis. R. 4(a). B. QSGIs Objections Should be Considered Untimely.

At the threshold, QSGIs Objections should be rejected as untimely. The March 16 Order obligated QSGI to complete its document production and completely respond to IBMs Interrogatories. The May 22 Order, in turn, requires QSGIs compliance with these existing obligations. QSGIs Objections, then, present a challenge to its obligations arising from the March 16 Order. But QSGI made no timely objection to the March 16 Order. The Court should not entertain QSGIs untimely attempt to attack the March 16 Order. See Jones v. United Space Alliance, L.L.C., 170 F. Appx 52, 54 (11th Cir. 2006) (noting that a party cannot assign as error a defect in [a] magistrate judges order where an objection was not timely made under Fed. R. Civ. P. 72(a)). Even assuming that the Court reaches the merits of QSGIs Objections, QSGIs challenges to its ordered obligations are unavailing, as discussed below.

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C.

QSGI Was Properly Ordered To Complete Production in Agreed Format.

QSGI presents no argument that the May 22 Order was premised on an error of law.5 QSGI also does not dispute the facts underlying Magistrate Judge Vitunacs Order, much less that the Court made any clearly erroneous factual finding.6 QSGI admits that it agreed to the discovery obligations in the ESI Agreement. (See Objs. at 15.) The parties included these obligations in the Joint Scheduling Report as required by the Local Rules. S.D. Fla. L. R. 16.1(b)(3). QSGI does not contend otherwise. Accordingly, QSGI is bound by this agreement, as properly held by Magistrate Judge Vitunac. QSGIs failure to present an argument under the proper legal standard alone warrants denial of its Objections. See, e.g., Dulaney v. Miami-Dade Cnty., No. 09-23259-CIV, 2011 U.S. Dist. LEXIS 13056, at *4 (S.D. Fla. Feb. 2, 2011) (affirming Magistrate Judges Order where there was no clear error and the Defendant [did] not point to any clear error on the part of the Magistrate Judge). QSGI nevertheless asks this Court to set aside QSGIs agreed obligations. QSGI nowhere states that it cannot comply with the ESI Agreement, just that QSGIs noncompliance is cheaper and more convenient for QSGI. As an initial matter, QSGIs reliance on the purported burden of reproducing these documents is disingenuous. Prior to QSGI filing its Objections, IBM offered that it would not require QSGI to reproduce

QSGI cites only to discovery rules that are superseded by the parties ESI Agreement. See May 22 Order at 2 (QSGI asserts that it produced the documents in the electronic format they were kept in, and that the Civil Rules do not require more. While QSGI would normally be correct, in this instance it agreed to produce the files in a specific format. The agreement controls.).
6

QSGIs Objections present a narrative of purported facts concerning discovery in this matter. These contentions are outside of the record that was before Magistrate Judge Vitunac and therefore should be disregarded. Objs. 5-12, 15-22, 24-26, 29-32, 35-52 (citing to material outside of the record); see also In re Seroquel Prods. Liab. Litig., 2008 U.S. Dist. LEXIS 15394, at *14.

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documents in agreed format if QSGI agreed to provide certain stipulations and reimburse IBMs reasonable expenses. (June 21, 2012 Diessel Decl., Ex 1.) QSGI ignored this proposal. (Id. 7.) QSGIs claimed convenience in any event provides no basis to disregard agreed discovery obligations. The bilateral requirements of the ESI Agreement promote orderly and efficient discovery by both parties. See, e.g., In re Seroquel Prods. Liab. Litig., 244 F.R.D. 650, 655 (M.D. Fla. 2007) (noting that in complex litigation it is important for parties to confer and agree regarding the format of electronic discovery production). IBM undertook substantial effort to provide discovery in compliance with the ESI Agreement.7 QSGI was properly held to its end of the bargain.8 QSGIs contention that the ESI Agreement is subject to modification (and that this somehow relieves QSGI of its agreed obligations) also misses the mark. QSGI has never sought a modification of the ESI Agreement.9 The ESI Agreement, as originally negotiated and agreed upon, remains binding. (See May 22, 2012 Order at 2; see also Scheduling Order 12 (Nov. 11, 2011, ECF No. 29) (The parties shall be bound by all additional representations made in their Joint Scheduling Report.).) In sum, QSGI has

IBM undertook substantial effort to collect, image and process electronic information in this case, including from computer hard drives of at least 31 IBM employees; from servers housing employee emails; and from central electronic repositories of IBM information. June 21, 2012 Diessel Decl. 5. In compliance with the ESI Agreement, IBMs electronic document productions included load files and agreed metadata fields for each electronic document. Id.
8

The fact that McDonald Hopkins collected and maintained certain QSGI electronic documents in certain formats to respond to the SECs 2009 subpoena is irrelevant to QSGIs obligations pursuant to the ESI Agreement.
9

As Magistrate Judge Vitunac noted, [i]f QSGI could not live up to the agreement, it should have written IBM and explained why. Instead, QSGI did nothing except tell IBM to file a motion with the Court if it wanted the documents in agreed upon form. May 22, 2012 Order at 2.

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cited no clearly erroneous factual finding, no error of law, and no reason at all why it should not be required to comply with the ESI Agreement. D. QSGI Was Properly Ordered To Respond Fully To The Interrogatories.

QSGIs Unverified Interrogatory Response is inadequate. QSGI has not contested this point in any briefing before Magistrate Judge Vitunac. QSGI was properly ordered to provide complete responses. Despite not objecting to the March 16 Order (or assigning any error to the May 22 Order), QSGI now apparently seeks to avoid providing substantive responses by standing on purported breadth objections that QSGI included in its Unverified Interrogatory Response. (See Objs. at 17.) This position is untenable for at least three reasons. First, QSGI waived these breadth objections when it failed timely to serve responses to the Interrogatories. S.D. Fla. L. R. 26.1(g)(3)(A) (Any ground not stated in an objection [to an interrogatory] within the time provided by the Federal Rules of Civil Procedure, or any extensions thereof, shall be waived.). Second, QSGI waived any possible objections by failing to assert any in response to either of IBMs motions to compel. Indeed, QSGI failed to contest either of IBMs motions as to the Interrogatories in any way at all. In an objection to a magistrate judges ruling, a party cannot raise any grounds that were not raised before the magistrate judge. See In re Seroquel Prods. Liab. Litig., 2008 U.S. Dist. LEXIS 15394, at *14. It is simply too late for QSGI to raise any objection to the Interrogatories. Third, even assuming QSGIs breadth objections were not waived, breadth objections do not excuse a party from providing any answers at all. Vanhorn v. Behavioral Support Services, Inc., No. 6:07-cv-1696-Orl-22DAB, 2008 WL 4539463, at *1 (M.D. Fla. Oct. 8, 2008) ([A]n objection for overbreadth does not relieve the duty 15

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to respond to [an interrogatory to the] extent that is not overbroad . . . .) (internal quotation marks and citation omitted). Here, QSGI provided essentially nothing. IBM is not asking QSGI to provide answers of broader scope or to address irrelevant matters. IBM simply asks that the Plaintiff provide responses that actually answer the very basic questions posed about fundamental elements of Plaintiffs purported claims. Nor can QSGI excuse its failure to respond by claiming that it has not yet reviewed its own documents. QSGI has anticipated this action for almost five years. (See QSGI Inc., Quarterly Report (Form 10-Q) at 12 (Nov. 14, 2007), Defs. Mot. to Dismiss With Prejudice Pl.s Second Am. Compl., Apr. 16, 2012 Declaration of Laura Besvinick, Ex. 1 (Apr. 16, 2012, ECF No. 54-1).) The complaint in this case was filed almost a year ago, and we have almost reached the discovery cut off. At this late date QSGI cannot hide behind its own failure to investigate its purported claims. If QSGI has no responsive information, it should have so stated definitively. To the extent that QSGI has additional responsive information, it should have provided it. E. QSGI Is In Violation of Both the Courts Orders.

QSGIs Objections do not absolve QSGIs continuing violation of the Orders. QSGI was ordered to provide complete document production by April 2, a date QSGI itself proposed in response to IBMs Motion to Compel. QSGI was also ordered to provide complete Interrogatory responses by that date.10 Despite two Orders, QSGI admits that it still has not completed its document production, and indeed had only just begun reviewing many of the potentially responsive documents as of the date of its

10

See March 16 Order at 1 (Plaintiff asserts that it is producing discovery on a rolling basis and will be finished by the first week of April. The Court will hold Plaintiff to it . . . . Plaintiff shall completely respond to the pending discovery requests by April 2, 2012.).

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Objections. (Objs. at 16 (Plaintiff has begun the review [of voluminous amounts of hard copy documents] and intends to complete it this week.).)11 Further, QSGI admits that it has no intention of responding to the Interrogatories or producing its documents in agreed format. (See id. at pp. 13-17 (Plaintiff maintains it has responded to the best of its ability given its objections to the Interrogatories.; It would be unduly burdensome for Plaintiff to reproduce the documents in [the] format compliant with the ESI Agreement.).) QSGIs Objections did not stay its ordered obligations. See Myers, 2006 U.S. Dist. LEXIS 9517, at *2 n.1. Thus, QSGI comes before the Court in willful violation of both Orders. This fact, in itself, is sufficient to warrant denial of QSGIs Objections. CONCLUSION For the foregoing reasons, IBM respectfully requests that the Court deny QSGIs Objections.

11

As of the date of this Response, QSGI has not produced any additional documents to IBM. June 21, 2012 Diessel Decl. 8.

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Dated: June 21, 2012 Respectfully submitted, /s/ Laura Besvinick Laura Besvinick Florida Bar No. 391158 HOGAN LOVELLS US LLP 200 South Biscayne Blvd. Suite 400 Miami, FL 33131 Telephone: 305-459-6500 Facsimile: 305-459-6550 laura.besvinick@HoganLovells.com Evan R. Chesler* Richard J. Stark* Teena-Ann V. Sankoorikal* CRAVATH, SWAINE & MOORE LLP Worldwide Plaza 825 Eighth Avenue New York, NY 10019 Telephone: 212-474-1000 Facsimile: 212-474-3700 echesler@cravath.com rstark@cravath.com tsankoorikal@cravath.com Ty Cobb* Eric J. Stock* HOGAN LOVELLS US LLP Columbia Square 555 Thirteenth Street, NW Washington, DC 20004 Telephone: 202-637-5600 Facsimile: 202-637-5910 Ty.Cobb@HoganLovells.com Eric.Stock@HoganLovells.com *Admitted Pro Hac Vice Counsel for Defendants IBM Global Financing and International Business Machines Corporation

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CERTIFICATE OF SERVICE I HEREBY CERTIFY that, on this 21st day of June 2012, I electronically filed the foregoing document with the Clerk of the Court using CM/ECF. I also certify that the foregoing document is being served this day on all counsel of record or pro se parties identified on the attached Service List in the manner specified, either via transmission of Notices of Electronic Filing generated by CM/ECF or in some other authorized manner for those counsel or parties who are not authorized to receive electronically Notices of Electronic Filing. /s/ Laura Besvinick Laura Besvinick Florida Bar No. 391158

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QSGI, INC. SERVICE LIST Juan Pablo Bauta, II Ferraro Law Firm 4000 Ponce de Leon Blvd Suite 700 Miami, FL 33146 Phone: 305-375-0111 Fax: 305-379-6222 Melissa Damian Visconti Ferraro Law Firm 4000 Ponce de Leon Blvd Suite 700 Miami, FL 33146 305-375-0111 Fax: 305-379-6222 Email: mdv@ferrarolaw.com Case A. Dam Ferraro Law Firm 4000 Ponce de Leon Blvd Suite 700 Miami, FL 33146 Phone: 305-375-0111 Fax: 305-379-6222 Email: cxd@ferrarolaw.com

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EXHIBIT 1

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2012-05-29 EMAIL from B. Diessel to J. Bauta re: Summary of May 25 Discussion


Benjamin Diessel to: jpb, aak, ncb
Richard Stark, Teena-Ann Sankoorikal, ty.cobb, laura.besvinick, Cc: eric.stock Bcc: IBM562 05/29/2012 05:14 PM

Amanda, I write to summarize our phone conversation on Friday, May 25 concerning QSGI's obligations to comply with the parties' agreement relating to Electronically Stored Information ("ESI") and additional follow-up items. As you acknowledged, the Court's May 22 Order ("Order") obligates QSGI to reproduce its prior electronic productions in compliance with the parties' ESI agreement. As I stated, QSGIs electronic productions, including its March 30, April 3, April 5 and May 10 productions, fail to comply with the parties ESI agreement -- a point that you did not dispute. Specifically, for example, QSGI's electronic productions, among other deficiencies, lack: (1) agreed metadata (J. Sched. Rpt. L.vii); (2) load files (id. L.v); and (3) Bates numbers on TIFF images (id.). Moreover, although QSGI provided Bates numbers for certain PDFs, those Bates numbers overlap in substantial part, rendering them unusable and unintelligible (id.) (for example, the Bates numbers that QSGI assigned to certain PDFs in the May 10 production (QSGI000001-QSGI027812) overlap with Bates numbers that QSGI assigned to documents in prior productions). As I also mentioned, additional deficiencies are discussed in my letters dated March 31 and April 11, 2012 (which I have attached hereto for your reference) as well as in our papers associated with our motion to compel compliance with the Court's March 16 Order. You did not provide an explanation for QSGI's noncompliance with the ESI agreement, except to state that McDonald Hopkins prepared these document productions. As you know, however, QSGI at all times has had (and continues to have) access to the underlying information sources from which these documents were collected and produced. There is no technological reason precluding QSGI's compliance with the ESI agreement. Through substantial expense and effort, IBM has been able to load these noncompliant productions. The expenses associated with this effort are approximately $30,000. To be clear, however, even with these efforts, we have not been able fully to (and we understand that we will not be able fully to) remediate QSGI's failure to comply with the ESI agreement. For example, the majority of the electronic documents that QSGI produced lack metadata. Those that include metadata omit agreed fields. QSGI has not provided this information and IBM cannot reproduce it. Thus, for example, IBM cannot match a given document with the custodian from whom it was produced. IBM also cannot locate documents systematically by date, sender, recipient, subject, or file type (among other issues). IBM cannot fix QSGI's failure to provide reliable Bates numbers, either, resulting in documents that have no facially apparent unique identifier. This needlessly complicates IBM's efforts to utilize documents from QSGI's productions. Accordingly, for these and other reasons, IBM has a substantial need for QSGI to reproduce its prior productions in a compliant, intelligible format. IBM is entitled to as much, as held by the Court. As I stated in our call, without prejudice to and reserving our rights concerning QSGI's obligations pursuant to the Order, we would nevertheless be willing to consider a compromise, provided that QSGI addresses IBM's continuing prejudice resulting from QSGI's noncompliant productions as well as the substantial expenses IBM has had to pay to load these productions. Specifically, we would consider a compromise along the following lines: QSGI stipulates that it will not contest the authenticity of any document that IBM represents was included in QSGI's document productions; QSGI stipulates that its document productions include documents from the custodians listed in Juan Bauta's January 27, 2012 letter (attached hereto) and that no documents from other custodians were included in these productions; and

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QSGI immediately repays IBM's expenses associated with remediating QSGI's noncompliant document productions (approximately $30,000). For avoidance of doubt, this compromise would not discharge QSGI's obligations pursuant to the Order, including its obligation to complete any remaining document production in compliant format and to respond fully to IBM's interrogatories. Please let us know when you are available to discuss this proposal. If QSGI will not agree, we expect QSGI to comply with the Court's Order and to provide complete and compliant production of documents pursuant to the ESI agreement by June 4.

At the end of our call, you also agreed to follow up on outstanding items including the following: whether QSGI will agree to admission of the Micro Focus deposition transcript and recording (I asked Juan to respond by May 23 but have not heard from him; we would appreciate a prompt response by May 29); the contact information for Seth Grossman and Robert Van Hellemont; and dates on which David Meynarez is available for deposition. I look forward to your response on these items.

2012.Jan.27.Letter.from.J.Bauta.PDF

2012-03-31 LETTER from B. Diessel to J. Bauta re Issues with the production of documents received on March 30, 2012.pdf

2012-04-11 LETTER from B. Diessel to J. Bauta re Discovery Issues.pdf

Benjamin Diessel Cravath, Swaine & Moore LLP 825 Eighth Avenue New York, NY 10019 (212) 474-1177 (direct) (212) 474-3700 (fax)

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