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Mayor and City Council of Baltimore v. Unisys Corporation

United States District Court, Fourth Circuit

September 10, 2013

THE MAYOR AND CITY COUNCIL OF BALTIMORE, Plaintiff,
v.
UNISYS CORPORATION, Defendant.

MEMORANDUM OPINION

STEPHANIE A. GALLAGHER, Magistrate Judge.

This Memorandum Opinion addresses the Motion for Spoliation Sanctions, [ECF No. 59], that Plaintiff the Mayor and City Council of Baltimore ("the City") filed against Defendant Unisys Corporation ("Unisys"). I have reviewed Unisys's Response in Opposition, [ECF No. 69], and the City's reply, [ECF No. 78]. I have also reviewed the July 25, 2013 affidavit of Michael Bierly, [ECF No. 86], the City's Motion to Strike the affidavit, [ECF No. 88], Unisys's Opposition, [ECF No. 90], and the City's Reply, [ECF No. 91]. In addition, this Memorandum Opinion addresses the City's Motion to Compel. [ECF No. 60]. No hearing is deemed necessary. See Local Rule 105.6 (D. Md. 2011). For the reasons stated below, the City's Motion for Spoliation Sanctions is DENIED, the City's Motion to Strike is DENIED, and the City's Motion to Compel is administratively closed.

I. Background

On February 24, 2012, the City filed a Complaint against Unisys alleging, inter alia, breach of contract, breach of express warranties, and intentional misrepresentation. [ECF No. 2]. The City accused Unisys of failing to deliver on a contract for the development of a tax software system ("Tax Software") that the parties entered into in 2002. See Compl. ¶ 12. Unisys filed a counterclaim alleging breach of contract against the City. [ECF No. 9]. The parties' current dispute centers on Unisys's alleged spoliation of a pre-litigation version of the Tax Software at issue.

On September 13, 2012, the City propounded Interrogatories and Requests for Production of Documents to Unisys, specifically seeking the Tax Software as it existed during testing conducted in October and November 2011 ("Validation Testing"), and all information related to Unisys's testing of the Integrated Property Tax System. Unisys agreed to produce the interim software versions requested and the related documents. Pl. Mot. Spoliation Ex. C.

By February, 2013, Unisys produced the versions of the Tax Software (1.4.45.0 and 1.4.45.1) and the conversion database utilized during Validation Testing. Pl. Mot. Spoliation 5. However, the City ran into a number of issues with the files that prevented it from conducting its own review and analysis of the software. Id. The City first questioned why the installation file for version 1.4.45.1 was dated January 13, 2013, instead of late 2011 when the version had been created. Id. Ex. D1. Unisys initially responded that the January date was "simply the date the copy of the software was created." Id. Ex. D4. Later, Unisys stated that an installation kit for version 1.4.45.1 had to be created in January 2013, because one was not created during the 2011 Validation Testing.[1] Id. Ex. I. Next, the City found that it was unable to access the software because of password protections, and Unisys had not initially provided login credentials.[2] Id. Ex. D3. Additionally, an "application error" message persistently appeared when the City attempted to make basic selections in the software. Id. Unisys offered to set up a phone meeting between its employees and the City's technical staff to facilitate the City's access to the software. Id. Ex. D7. With the additional information from Unisys, the City was able to create a "functioning operating environment" in which to test the software on or about April 8, 2013. Id. at 6.

However, after conducting preliminary tests on version 1.4.45.1, the City was unable to recreate responses to database queries that were documented during Validation Testing in 2011. See id. at 6-7. The City alleges that three source code files in the - copy of version 1.4.45.1 unexpectedly have different file sizes than the - copy of version 1.4.45.0. Id. Ex. G. Unisys contends that the file size discrepancies are a result of several changes made between versions 1.4.45.0 and 1.4.45.1 during Validation Testing, not just the one change that the City acknowledges. Def. Opp'n Mot. Spoliation 8-9. In addition, Unisys claims that all of the - date stamps can be attributed to the fact it needed to create an installation kit in - for the software to work on the City's computers. Id. at 9-10. Finally, Unisys believes that the City's reports of numerous inconsistences in the software's performance between 2011 and 2013 occurred because of "undisciplined, ad hoc testing" in 2011 and similarly problematic testing in 2013. Id. at 10-17.

On July 18, 2013, I issued an order requiring Unisys to produce an affidavit confirming whether an unadulterated copy of Tax Software version 1.4.45.1 resided in its software library. [ECF No. 85]. Unisys submitted an affidavit from Michael Bierly, its contractor, in response. [ECF No. 86]. Mr. Bierly attested that source code changes for 1.4.45.1 were uploaded to Unisys's Team Foundation Server on October 28, 2011, and that the files in question, or "change set, " show no modification dates subsequent to the Validation Testing. Bierly Aff. ¶ 7, July 25, 2013. He further states that temporary updates were made to separate, ancillary files, including changes to an Excel template and a stored procedure, during the Validation Testing. Id. at ¶ 8. Mr. Bierly does not provide the precise modification dates for those ancillary files.

Subsequently, the City filed a Motion to Strike Mr. Bierly's affidavit, alleging that it was an improper surreply and not in compliance with the court order. [ECF No. 88]. In summary, the City maintains its allegation that the observed inconsistencies in the performance of version 1.4.45.1 between 2011 and 2013, the file size discrepancies, and the date stamps indicating modification subsequent to the Validation Testing prove that Unisys has undertaken to intentionally destroy or at least obstruct its access to key evidence in the case.

II. Motion to Strike

The City argues that Mr. Bierly's entire affidavit should be stricken from the record because it does not comply with this Court's order, and is an improper surreply. Surreplies are heavily disfavored under the Local Rules of this Court. See Local Rule 105.2 (D. Md. 2011) ("Unless otherwise ordered by the Court, surreply memoranda are not permitted to be filed."). While Mr. Bierly may have included unnecessary background in his affidavit, I have disregarded those paragraphs. The remaining paragraphs indicate that Unisys has the capability to provide an unadulterated copy of version 1.4.45.1 dated October 28, 2011, and further, has maintained a detailed enough record of the Tax Software project in its software library so that an outside observer can verify the substance of the changes made during Validation Testing and determine whether further edits were made to the source code after the testing was terminated. See Bierly Aff. ¶ 6-8. Thus, Mr. Bierly's affidavit constitutes a sufficient response to the July 17, 2013 court order, and will not be stricken.

III. Motion for Spoliation Sanctions

Spoliation is "the destruction or material alteration of evidence or... the failure to preserve property for another's use as evidence in pending or reasonably foreseeable litigation." Silvestri v. General Motors Corp., 271 F.3d 583, 590 (4th Cir. 2001). "The right to impose sanctions for spoliation arises from a court's inherent power to control the judicial process and litigation, but the power is limited to that necessary to redress conduct which abuses the judicial process.'" Id. (quoting Chambers v. NASCO, Inc., 501 U.S. 32, 45-46 (1991)). When imposing spoliation sanctions, "the trial court has discretion to pursue a wide range of responses both for the purpose of leveling the evidentiary playing field and for the purpose of sanctioning the improper conduct." Vodusek v. Bayliner Marine Corp., 71 F.3d 148, 156 (4th Cir. 1995).

The City contends that Unisys spoliated the allegedly deficient version of the Tax Software at issue and that significant sanctions, including default judgment against Unisys or an adverse inference instruction to the jury, are therefore warranted. Unisys avers that it did in fact provide the software version in dispute, ...


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