qsgi - objections to magistrate judge ann e vitunac's order , dated may 22,2012, on ibm's...

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF II'LORIDA

No.09:11-cv-80880-KI.R

QSGI, Inc., a Delaware Corporation,

Plaintiff,

v.

IBM GLOBAL FINANCING, a Division of International Business Machines Corp., and INTERNATIONAL BUSINESS MACHINES CORP., Parent to andlor d/bla IBM GLOBAL FINANCING,

Defendants.

~~~~~~~~~~~~~~~~I

PLAINTIFF'S OBJECTIONS TO MAGISTRATE JUDGE ANN E. VITUNAC'S ORDER, DATED MAY 22, 2012, ON DEFENDANT'S MOTION TO COMPEL

I. INTRODUCTION

Plaintiff, by and through its undersigned counsel, and pursuant to Fed. R. Civ. P. 72(a),

hereby files its objections to Magistrate Judge Ann E. Vitunac's Order, dated May 22, 2012

[D.E. #85], on Defendants' Motion to Compel [D.E. #64]1. The Order primarily addresses

Plaintiffs production of electronically stored information, which Plaintiff maintains it has fully

completed. The Order also discusses Plaintiffs Resporlses to Defendants' First Set of

Interrogatories.

Magistrate Judge Vitunac ordered QSGI to reproduce electronic documents that it already

produced to Defendants at great expense to Plaintiff. According to Magistrate Judge Vitunac,

QSGI needs to produce the documents in accordance with the parties' ESI Agreement. Plaintiff,

I Magistrate Judge Ann E. Vitunac originally was the Magistrate Judge assigned to the case. On May 29, 2012, the parties were informed via CM/ECF that Magistrate Judge Jam(S M. Hopkins had been reassigned to the case pursuant to Administrative Order 201 2-42. [D.E. #86].

Case 9:11-cv-80880-KLR Document 88 Entered on FLSD Docket 06/04/2012 of 19

however, spent significant time and money to produce the documents to Defendants. In fact,

Plaintiff hired a third party, McDonald Hopkins LLC, at a cost of $20,000, to assist in producing

the documents to Defendants in a format that was text searchahle and gave Defendants access to

the available metadata, consistent with the parties' ESI agreement. Moreover, according to

Defendants, they remedied the alleged problems with viev.ing the documents by hiring an

outside vendor to load the files into electronic review sofiw,re. While Defendants argue that

conversion cost tens of thousands of dollars, they have offered no proof of that cost, and

Plaintiff s research suggests that the absence of a load fil,~ could have been remedied for

approximately $1500.

At this stage, there simply is nothing for Plaintiff to cure Providing Defendants with load

files would be duplicative of the work performed by Defendarts' outside vendor. Moreover, the

information that Defendants argue is missing from the electronic documents is not information

that is easily accessible. Plaintiff has access to the database of documents McDonald Hopkins

created, which took two years and $250,000 for the firm to create from hard drives, CDs and

DVDs. It would have been unduly burdensome and unnecessary for Plaintiff to recreate a

database already in existence. Instead, Plaintiff hired MDH to search its database and to provide

the documents to Defendants in PDFs and TIFFs with the as~ociated metadata. It is a waste of

time and resources to continue arguing simply because, in De fendants' opinion, Plaintiff did not

produce the documents according to the exact wording of the parties' ESI Agreement.

Defendant has all of the relevant documents and information in its possession at this time.

2


II. BACKGROUND

A. The Parties' Electronically Stored Information ("ESI") Agreement

1. QSGI, Inc. ("Plaintiff') filed this action against IBM Global Financing and IBM Corp.

("Defendants") in August 2011, alleging injury arising from a change in policy at IBM

related to used IBM mainframes.

2. On November 4,2011, pursuant to Fed. R. Civ. P. 26(f) and L.R. 16.l(b)(2), tbe parties

filed a Joint Scheduling Report. [D.E. #27]. As r,~quired by tbe Rules, the parties

included in that Report a section titled, "Agre~ment on Electronically Stored

Information" ("ESI"). The section contained multirle parts setting forth the methods

for searching and producing electronically stored il1formation. The agreement also

contained the following language:

Modification of Obligations: The p::'esent agreement concernmg the parties' obligations with respect to ESI is without prejudice to modification in light of discovery c. mcerning the parties' document retention practices and sources of documents.

[See D.E. #27, at Section L, para. X]. At tbe time the parties entered into this

agreement regarding electronic discovery, PlaintiJfs counsel was not aware that

McDonald Hopkins LLC ("MDH"), cOUl1sel for QSGI on various matters, including a

matter with the Securities and Exchange Commissio 1 ("SEC"), titled "In the Matter of

QSGI, Inc., HO-I1303," ("SEC Matter") maintaim,d both electronic documents and

physical files relating to QSGI. See Declaration of Juan P. Bauta, dated June 4, 2012,

at ~ 2, attached hereto as Exh. I.

3. On November 11, 2011, Defendants served document requests on QSGI.

4. On December 6,2011, Defendants served its First Set ofInterrogatories to the Plaintiff.

3

--------------------_._-------- -----


5. During the month of December 2011, counsel for Paintiff, first started to learn about

QSGI documents that were in MDH's possession, and additional documents that MDH

produced to the SEC in connection with the SEC matter discussed above. As Plaintiffs

counsel learned, the documents included 382 boxe, normally kept in a New Jersey

warehouse, but which still were in the possession (,f the SEC, and 400 Gigabytes of

information (approximately one million document::) stored in a database at MDH.

MDH also had its own firm files on matters it had worked on for QSGI. See Bauta

Dec., at ~ 3.

B. The SEC Matter and McDonald Hopkins' Database of QSGl's Electronically Stored Information

6. On or about December 18, 2009, QSGI received a document subpoena from the SEC

("SEC Subpoena"), which was filed in connection with the SEC Matter. See Bauta

Dec., at ~ 4.

7. To respond to the SEC Subpoena, MDH obtained electronically stored information

from QSGI, including a server with six hard drives, all six of which had to be properly

inserted into the server to access the information on them, a spindle containing thirty-

nine (39) disks, and five (5) DVDs. MDH also received twenty-one (21) backup tapes

from QSGI. See Bauta Dec., at ~ 5.

8. The SEC identified twenty-four (24) custodians whose emails were contained in PST

files on the thirty-nine disks and the server. MDHJCR'd those PST files and loaded

them into Summation, its document review platform. MDH also identified other

documents potentially responsive to the SEC Subpo'.~na, OCR'd those and loaded them

into Summation, and followed the same process for the data on the five DVDs. See

Bauta Dec., at ~ 6.

4


9. MDH then processed all of the data into a Summation database. See Bauta Dec., at ~ 7.

10. Accordingly, the McDonald Hopkins database coml,rises the PST files located on the

thirty-nine disks, the six hard drives, and the five nVDs, along with other non-email

documents2 See Bauta Dec., at ~ 8.

II. All of the above data was OCR'd and loaded into Summation to create the McDonald

Hopkins database of QSGI files. Based on conven:ations with various individuals at

MDH, it appears to have taken MDH approximatelJ two years to create the database

and review and code the files at a cost of about $250,000. See Bauta Dec., at ~ 9.

12. In addition to identifying the twenty-four custodians, the SEC also provided MDH with

fifty-five search terms. Using those search terms, MDH identified documents on its

Summation database that were responsive to the SEC Subpoena, and produced those

documents to the SEC. See Bauta Dec., at ~ 10.

C. QSGl's Production oBts Electronically Stored Information to Defendants

13. As stated above, Plaintiffs counsel first began to learn about the electronically stored

information maintained in the McDonald Hopkins database in December 2011, after

discussing Defendants' document requests with QSG 1.

14. Counsel for Plaintiff then reached out to MDH to determine whether it had any

documents responsive to the document requests.

15. On January 4, 2012, MDH disclosed to Plaintiffs counsel that it had three sets ofQSGI

documents: (1) MDH's QSGI client files consistin!: of hard copies and e-mails, all of

which were scanned into Summation to comply wi1h the SEC Subpoena; (2) the hard

drives, disks and DVDs previously identified, that contained files from the twenty-four

2 On or about May 24, 2012, Plaintiffs counselleamed that MDH 1ad the twenty-one (21) backup tapes, but that MDH had not restored those tapes or searched those tapes.

5


custodians identified by the SEC. Those custodims' files all were uploaded into

Summation; and (3) QSGI's physical files normally kept at a New Jersey warehouse,

which consisted of approximately 382 boxes. See B2Uta Dec., at ~ 11.

16. Many of Defendants' requests for production correlated to items requested in the SEC

Subpoena, which ultimately were produced to the SEC. Therefore, on January 27,

2012, Plaintiff produced one CD and one DVD of electronic documents, which

included the documents obtained from the twemy-four (24) custodians the SEC

identified, using the fifty-five (55) search terms the SEC provided. In addition,

Plaintiffs counsel provided the privilege log. See Bwta Dec., at ~ 12.

17. On February 11, 2012, after reviewing the first production of documents sent from

MDH, counsel for Plaintiff realized the documents only were in TIFF format, which

could not be readily searched. Counsel inquired a; to whether MDH had them in a

searchable format. See Bauta Dec., at ~ 13.

18. According to MDH, the TIFF files produced wen compatible with most document

review platforms, including Concordance and Summation. Once the TIFF files were

loaded into one of these software programs, they w:JUld be fully text searchable. See

Bauta Dec., at ~ 14.

19. Counsel for Plaintiff, however, does not own a document review platform, but rather

uses only trial presentation programs, such as SanctiJn. Therefore, without purchasing

expensive equipment or software, Plaintiff s counsel could not search for documents

responsive to Defendant's requests for production. See Bauta Dec., at ~ 15.

6


20. In order to address this issue, Plaintiffs counsel in~uired as to whether MDH could

search its database for documents responsive to the nquests for production and produce

the documents to Defendants. See Bauta Dec., at ~ 1(;.

21. On February 23, 2012, MDH sent a proposal to Plaintiffs counsel. The proposal

included processing the data to make it text s('archable, running searches, and

producing the search results. MDH estimated it would cost $20,000 and take

approximately two weeks to complete the proc~ss as "the volume of data is

tremendous." See Bauta Dec., at ~ 17.

22. After discussions with QSGI, and additional discussions with MDH, Plaintiffs counsel

accepted MDH's proposal to do the work outlined al:ove. Plaintiffs counsel also noted

that it wanted MDH to produce the files OCR'd with the metadata. See Bauta Dec., at ~

18.

23. On March 16, 2012, Magistrate Judge Ann Vituna,.; ordered Plaintiff to complete its

production of documents by April 2, 2012. [D.E. #50].

24. On March 17, 2012, Plaintiffs counsel sent an email to MDH inquiring about when the

first set of production would be made available, and informing MDH that QSGI was

under a court order to produce all documents by April 2, 2012. See Bauta Dec., at ~ 20.

25. On March 19, 2012, Plaintiffs counsel received the 'irst installment of documents from

MDH as a result of the agreement. This installment contained approximately 11 ,000

records. See Bauta Dec., at ~ 21. These documen1 s contained files of data including

OCR'd images with Bates numbers. See id.

7


26. From March 19,2012 through April 19, 2012, MDH provided the electronic documents

to Plaintiffs counsel on a rolling basis. By April 19, 2012, Plaintiffs counsel had

approximately 390,000 pages of electronic documents. See Bauta Dec., at 'I[ 22.

27. Defendants argue in its Motion to Compel Compli811ce with March 16 Order and for

Sanctions for Noncompliance [D.E. #64], that Paintiffs document production is

deficient because Plaintiff failed to comply with tbe parties' agreed upon format for

electronically stored information.

28. According to Defendants, it has spent "tens of thousimds of dollars" engaging a vendor,

primarily because Plaintiff did not provide them with a load file.

29. On June I, 2012, counsel for Plaintiff contacted three different electronic discovery

vendors to inquire about the cost of creating a load file given PDFs that were OCR'd

with Tiff images and the associated metadata. Iris D ita Services informed Plaintiff that

it would cost $175 per hour, and it anticipated the work would take about eight (8)

hours, totaling $1450. SRM Legal, quoted 6-8 hours of work at $150 hours, making the

maximum $1200. Finally, Alphalit Systems quoted $150 per hour for a maximum of

ten (10) hours, making the cost $1500.

D. Defendants' Subpoena to McDonald Hopkins LLC ("MDH Subpoena"i

30. On March 2, 2012, Defendants served a Subpoena on McDonald Hopkins, directing

the law firm to produce designated documents. The Subpoena contained forty-four (44)

separate requests for various documents. See Bauta Dec., at 'I[ 23.

3 This section addresses the Subpoena only as it relates to the production of QSGI's electronic documents. The Subpoena, and resulting Stipulation Letter Agreement, also discusS(d the 382 boxes in the possession of the SEC, and MDH's firm files. Those categories of documents will be discussed more fully below.

8


31. On March 16, 2012, MDH served its Objections tJ the Subpoena ("Objections,,).4

MDH set forth six major objections to the Subpoena, including that the document

requests contained in the Subpoena were "substantivdy identical to [Defendant's] First

Request for Production of Documents served on Plaintiff s counsel in the above-

captioned litigation." MDH also objected because the Subpoena was umeasonably

broad and unnecessary, noting that the Subpoena would require review of over one

million documents. See Bauta Dec., at ~ 24.

32. Despite its Objections, MDH sought to resolve the matter with Defendants without

court intervention. As such, MDH entered into a Stipulated Letter Agreement

Regarding IBM Subpoena to McDonald Hopkins LLC ("Agreement"). See Bauta Dec.,

at ~ 25.

33. As part of the Agreement, MDH stipulated that it maintained certain of QSGI's

electronic and hard copy documents, including those! responsive to discovery requests

issued by Defendants. Moreover, MDH represented that it previously had produced

382 boxes of hard copy documents to the SEC.

34. To resolve the issues in the Subpoena relating to el~ctronic documents, MDH agreed,

among other things, to do the following:

a. It would provide all potentially responsive non-privileged QSGI documents in its custody to Plaintiff s counsel in this litigation. The parties defined "potentially responsive documents" as "all 'NSGI documents that QSGI could potentially use to support its claims in the Q~eGI Litigation, all QSGI documents

4 On March 14,2012, the Court granted Defendant's motion to di,miss without prejudice, and gave Plaintiff fifteen (15) days to file an aruended complaint. [D.E. #49]. MDH noted that fact in its Objections, and requested that Defendants withdraw the Subpoena. On March 28, 2012, hOWEver, Plaintiff filed its Second Amended Complaint.

9

-------------------------~---.-- ~---


that IBM could potentially use to support its defenses in the QSGI Litigation, and all documents potentially responsive to th(, Subpoena.

b. All electronic documents provided to Plain:iff's counsel would include the associated metadata.

c. MDH would provide the following information to IBM's counsel:

1. A description of each of the general ty Jes of sources from which MDH produced the documents;

n. Estimated total volume of documents produced;

111. General categories of documents produc,.~d;

IV. Format; and

v. Dates documents were produced to Plairtiff's counsel.

35. On April 20, 2012, MDH sent additional correspondence to Defendants providing

information relevant to the Agreement. MDH stated that it had provided Plaintiff's

counsel with approximately 390,000 pages of el,~ctronic data through a "rolling

production" from mid-March through April 19,201::. The electronic documents were

produced as OCR'd text searchable TIFF imagesNith the associated metadata and

PDFs ("Rolling Production"). According to MDH, it produced these documents to

Plaintiff's counsel on January 23, March 16, Mard 21, April 2, and April 19, 2012.

See Bauta Dec., at '\[26.

36. On April 25, 2012, MDH sent another letter to DefeLdants' counsel notifying them that

it had sent copies of the data production previoLsly provided to the SEC ("SEC

Production") to Plaintiff's counsel. See Bauta Dec., at '\[27.

37. In an email communication to Plaintiff's counsel on May 19, 2012, MDH stated it had

spoken to Defendants' counsel the previous day who confirmed that it had received the

SEC Production and 390,000-page Rolling Production. MDH and Defendants'

10


attorneys prepared a summary of the process follov·red to produce the electronically

stored information. See Bauta Dec., at ~ 28.

E. 382 Boxes of Documents in the SEC's Possession

38. On February 21, 2012, Defendants' counsel informec: Plaintiffs counsel via email that

Defendants wanted to review the boxes of documents stored in the New Jersey

warehouse that had been provided to the SEC. See Bmta Dec., at ~ 29.

39. The following day, Plaintiffs counsel responded that, after speaking with someone at

the warehouse, he had just learned that the boxes Lever had been returned from the

SEC. Defendants' counsel responded that this resronse was "utterly unacceptable,"

and that he intended "to inquire of QSGI's SEC cOUllsel directly concerning ... the SEC

Documents." See Bauta Dec., at ~ 30.

40. Plaintiffs counsel reached out to counsel at MDH, ~ho had turned over the documents

to the SEC, to assist in getting the documents back from the SEC. See Bauta Dec., at ~

31.

41. On March 2,2012, Plaintiffs counsel was informed that MDH had contacted the SEC

to request retmn of the documents. See Bauta Dec., "~I ~ 32.

42. On March 13, 2012, MDH informed Plaintiffs counsel that the SEC would require the

recipient of the boxes to certify in writing that they will maintain the originals in case

the SEC later requests to inspect or copy them again. See Bauta Dec., at ~ 33.

43. Later, on March 21, 2012, MDH provided Pllintiffs counsel with additional

instructions for obtaining the documents from the SEC. See Bauta Dec., at ~ 34.

11


44. On March 22,2012, pursuant to instructions from MDH, as well as the SEC, plaintiffs

counsel sent a letter to the SEC requesting the retill n of the 382 boxes of documents.

See Bauta Dec., at '\135.

45. On March 23, 2012, the SEC responded that the letter from Plaintiffs counsel was

deficient because it did not contain certain representations that the SEC required before

it would agree to release the records. Bauta Dec., at ')36.

46. That same date, Plaintiffs counsel sent another le:ter to the SEC with the required

representations. In the letter, counsel for QSGI agreed to the following conditions in

exchange for the docwnents being returned to QSGI:

a. QSGI, Inc. and its predecessors, successors, parents, subsidiaries, divisions of affiliates, and their respective officers, directJrs, agents, attorneys, accountants, employees, partners or other persons occupyi ng similar positions or performing similar functions ("QSGI") shall maintain cllstody and control of the Records, and shall not destroy, conceal or alter the Records without receiving prior written permission from the SEC;

b. QSGI shall produce or make the Records available to the SEC within fourteen (14) days of any written request by the SEC f)r the Records; and

c. QSGI acknowledges that the Records remain subject to the SEC's Principal and Routine uses of Information as set forth in Sections G and H of SEC Form 1662.

Bauta Dec., at '\137.

47. As of the date of this filing, the 382 boxes of documents have been returned from the

SEC to the New Jersey Warehouse. Defendants' counsel has had access to inspect and

copy those docwnents. Bauta Dec., at '\138.

12


F. OSGI Hard Copy Files in Possession ofMDH

48. On March 23, 2012, Plaintiffs counsel learned that MDH was gathering QSGI hard

copy files for counsel to review at MDH's office in \Vest Palm Beach. See Bauta Dec.,

at·p9.

49. Several days later, on March 27, 2012, Plaintiffs cO'llsel inquired about the nature of

these documents as it was his belief that all files except the 382 boxes with the SEC had

been loaded into Summation. See Bauta Dec., at ~ 40.

50. That same date, MDH responded that the files being collected at the West Palm Beach

office consisted of MDH's firm files for matters it Lad handled for QSGI. See Bauta

Dec., at ~ 41.

51. On April 2, 2012, Plaintiffs counsel was informed that the physical files of matters

MDH had worked on for QSGI were available for review at MDH's office in West

Palm Beach. See Bauta Dec., at ~ 42.

52. Plaintiffs counsel began the review of those documents, which consist ofMDH's own

firm files, but did not have an opportunity to get bac < to West Palm Beach to complete

the review of the voluminous documents. See Bauta Dec., at ~ 43.

53. Plaintiffs counsel will complete that review this week, and produce any responsive

documents to Defendants' counsel.

G. Plaintiff's Responses to Defendant's First Set of Interrogatories

54. Plaintiff s Motion to Compel Compliance with Marc b. 16, 2012 Order and for Sanctions

for Noncompliance [D.E. #77], argues that PlaintiJf has given deficient responses to

Defendants' First Set ofInterrogatories.

13


55. On April 2, 2012, Plaintiff sent its responses to Defendants' First Set ofInterrogatories.

A copy of the Responses is attached hereto as Exhibi·. 2.

56. As to Interrogatory number 1, Plaintiff answered the question fully, citing to

Defendants' own policy change that is the basis ofth.~ allegations in the Complaint.

57. With respect to Interrogatory numbers 2, 3, 5, 6, and 8, Plaintiff objected on the

grounds that the interrogatories were overly broad because they were not limited to a

specific date. Without waiving those objections, Plaintiff did its best to provide

answers to the interrogatories. Magistrate Judge Vitunac, stated that Plaintiffs

responses were inadequate without giving any further explanation. Moreover,

Magistrate Judge Vitunac did not address Plaintiffs Jbjections to those interrogatories.

Plaintiff maintains its objections and does not want tc waive them.

58. With respect to interrogatory number 4, Plaintiff did its best to take inforruation

available from the documents in its possession to create a chart showing potential sales

of used IBM mainframes that it lost as a result of Defendants' policy in interrogatory

number 1.

59. Finally, as to Interrogatory number 7, Plaintiff maintains that its computation of

damages requires the testimony of an expert witness.

III. ARGUMENT

Fed. R. Civ. P. 34(b)(2)(E) provides that a party should produce documents or

electronically stored inforruation in the following manner:

(i) A party must produce documents as th~y are kept in the usual course of business or must organize and label thfm to correspond to the categories in the request;

14


(ii) If a request does not specify a fonn for producing electronically stored infonnation, a party must produce it iL a fonn or fonns in which it is ordinarily maintained or in a reasonablYlsable fonn or forms; and

(iii) A party need not produce the same ekctronically stored infonnation in more than one fonn.

Under the Rule, a requesting party may specify a fonn of production and request metadata.

The responding party then must either produce the ESI in the fonn specified or object. If the

responding party objects, or the requesting party has not specified a form of production, the

responding party must "state the fonn or forms it intends to use" for its production of ESI. Fed.

R. Civ. P. 34(b)(2)(D). Thereafter, if the requesting party o;)jects and suggests an alternative

fonn, the parties "must meet and confer. .. in an effort to resolve the matter before the requesting

party can file a motion to compel." Fed. R. Civ. P. 34(b), advisory committee's notes, 2006

amendment.

In this case, the parties did specify a format for the pr oduction of electronic documents

when preparing the Joint Scheduling Report. At the time that agreement was entered into,

however, Plaintiff s counsel had no idea that McDonald Hop kins maintained huge amounts of

documents in a database that had taken two years and $2SC ,000 to create. When Plaintiffs

counsel discovered these documents, everything possible given cost and timing restrictions was

done to get them to Defendants in a format that was usable and that provided Defendants with

the most information possible. The logical method for handling the electronically stored

documents was to allow McDonald Hopkins, whom Defendants also had subpoenaed, to search

its database for documents responsive to the Requests. Plaintijfnot only made Defendants aware

of the situation with the documents, but Defendants even took it upon themselves to subpoena

McDonald Hopkins and to reach a stipulation with them regarcing production of the documents.

IS


To satisfy Defendants, McDonald Hopkins has made mwtiple representations regarding the

manner in which the documents were kept, how they were searched, and the formats in which

they were produced. It is ridiculous that Defendants are now coming back to say they cannot use

the documents, and ironic given the fact that in two recent depositions in this case, Defendants

used specific emails as exhibits that could be found only th!'ough doing text searches on this

supposedly unusable data.

Defendants seem to suggest that Plaintiff should have taken the hard drives, thirty-nine

CDs, and five DVDs, and re-created the database to confonn to the parties' ESI agreements.

Such a suggestion, however, makes no sense, as it is cost pmhibitive and unduly burdensome.

The documents already were maintained in a text-searchable format, they were OCR'd and they

had the associated metadata. MDH was able to process the dClcuments for Plaintiff and produce

them to Defendants. Even with the database already in place, Plaintiff spent $20,000 to produce

the electronically stored information to Defendants.

At this point in the litigation, Defendants have all of the electronically stored information.

It would be unduly burdensome for Plaintiff to reproduce lhe documents in another format.

Defendants even admit that they hired an electronic discovery vendor to load the files into their

software, which means anything else from Plaintiff would be duplicative and unnecessary.

With respect to the hard copy documents, Defendants helve had access to the 382 boxes of

documents that were returned to the New Jersey warehouse from the SEC. Moreover, MDH

produced voluminous amounts of hard copy documents from its files to Plaintiff to review for

responsiveness. The files are being kept at MDH's West Palm Beach offices. Plaintiff has

begun the review and intends to complete it this week. A ny additional documents will be

produced to Plaintiff when that review is complete.

16


Finally, with respect to the Interrogatories, Plaintiff maintains it has responded to the best

of its ability given its objections to the Interrogatories. Magistrate Judge Vitunac never ruled on

those objections, which were specific and valid. Furthelmore, Plaintiff has not had an

opportunity to review the entire 390,000 pages of electronicdly stored information, nor has it

reviewed the millions of pages contained in the 382 boxes produced to the SEC. The primary

concern was making those documents available for Defendants to review. Should Plaintiff find

any additional information in those documents as it reviews them that are responsive to

Defendants' Interrogatories, Plaintiff will, of course, prodlce it. At this time, however,

Defendants, have equal access to all of that information.

17


IV. CONCLUSION

WHEREFORE, for the reasons set forth herein, Plaimiff respectfully requests that this

Court enter an Order denying Defendant's Motion to Compel [D.E. #65].

Dated: June 4,2012

By:

Respectfully submitted,

THE FERlVIRO LAW FIRM, P.A. Attorneys fo .. the Plaintiff 4000 Ponce 1e Leon Blvd.

AN P. BAUTA, II, ESQ. Florida Bar No. 894060 MELISSA DAMIAN VISCONTI, ESQ. Florida Bar No. 0068063

18


CERTIFICATE OF SERVICE

I hereby certify that a true and correct copy of the fore going was served via CM/ECF on

all counsel of record this 4th day of June 2012.

By

19

JUANP BAUTA,ESQ. Florida Bar No. 894060


UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF FLORIDA

No.09:11-cv-80880-KLR


Plaintiff,

v.

IBM GLOBAL FINANCING, a Division of International Business Machines Corp., and INTERNATIONAL BUSINESS MACHINES CORP., Parent to and/or d/b/a IBM GLOBAL FINANCING,

Defendants.

----------------------------/ DECLARATION OF JUAN P. BAUTA, ESQ.

Juan P. Bauta declares as follows:

1. I am a member of The Ferraro Law Firm and counsd to Plaintiff, QSGI, Inc., Plaintiff

in the above-captioned matter. I submit this declaration in support of QSGI's

Objections to Magistrate Judge Ann E. Vitunac's Order, dated May 22, 2012, on

Defendants' Motion to Compel [D.E. #85].

2. On November 4, 2011, pursuant to Fed. R. Civ. P. 2(i(f) and L.R. 16.1 (b )(2), the parties

filed a Joint Scheduling Report. [D.E. #27]. As lequired by the Rules, the parties

included in that Report a section titled, "Agr< ement on Electronically Stored

Information" ("ESI"). The section contained multiple parts setting forth the methods

for searching and producing electronically stored information. The agreement also

contained the following language:

Modification of Obligations: The present agreement concerning the parties' obligations with respect to ESI is without prejudice to

I

Case 9:11-cv-80880-KLR Document 88-1 Entered on FLSD Docket 06/04/2012 Page 1 of 10

modification in light of discovery ;onceming the parties' document retention practices and sources of docunents.

[See D .E. #27, at Section L, para. X]. At the time the parties entered into this

agreement regarding electronic discovery, I was not aware that McDonald Hopkins

LLC ("MDH"), counsel for QSGI on various m"tters, including a matter with the

Securities and Exchange Commission ("SEC"), title,l "In the Matter of QSGI, Inc., HO-

11303," ("SEC Matter") maintained both electro lic documents and physical files

relating to QSGI.

3. During the month of December 2011, I first started tJ learn about QSGI documents that

were in MDH's possession, and additional documents that MDH had produced to the

SEC in connection with the SEC Matter. This included 382 boxes of hard copy

documents normally kept in a New Jersey wareh'Juse, but which still were in the

possession of the SEC, and 400 Gigabytes of information (approximately one million

documents) stored in a database at MDH. I later learned these also included MDH

firm files on matters it had worked on for QSGI.

4. On or about December 18,2009, QSGI received a document subpoena from the SEC

("SEC Subpoena"), in connection with the SEC Matt·)f.

5. To respond to the SEC Subpoena, MDH obtained electronically stored information

from QSGI, including a server with six hard drives, all six of which had to be properly

inserted into the server to access the information on them, a spindle containing thirty-

nine (39) disks, and five (5) DVDs. MDH also received twenty-one (21) backup tapes

from QSGI. See E-mail correspondence from G. Mc3aughey to B. Diessel, dated May

18 and 24, 2012, attached hereto as Exh. A.

2


6. The SEC identified twenty-four (24) custodians whose emails were contained in PST

files on the thirty-nine disks and the server. MDH OCR'd those PST files and loaded

them into Summation, its document review platform. MDH also identified other

documents potentially responsive to the SEC Subpoena, OCR' d those and loaded them

into Summation, and followed the same process fcr the data on the five DVDs. See

Exh.A.

7. MDH then processed all of the data into a Summation database. See Exh. A

8. Accordingly, the McDonald Hopkins database comprises the PST files located on the

thirty-nine disks, the six hard drives, and the five ])VDs, along with other non-email

documents. l See Exh. A.

9. All of the above data was OCR'd and loaded into ~,ummation to create the McDonald

Hopkins database of QSGI files. Based on convenations with various individuals at

MDH, I understand it took MDH approximately :wo years to create the database,

review and code the files at a cost of about $250,000

10. In addition to identifying the twenty-four custodians, the SEC also provided MDH with

fifty-five search terms. Using those search terms, MDH identified documents on its

Summation database that were responsive to the SEC Subpoena, and then produced

those documents to the SEC. See Exh. A.

II. On January 4, 2012, I learned from MDH that it had :hree sets ofQSGI documents: (1)

MDH's QSGI client files consisting of hard copies and e-mails, all of which were

scanned into Summation to comply with the SEC Subpoena; (2) the hard drives, disks

and DVDs previously identified, that contained file:; from the twenty-four custodians

IOn or about May 24, 2012, Plaintiffs counselleamed that MDH hd the twenty-one (21) backup tapes, but that MDH had not restored those tapes or searched those tapes.

3


identified by the SEC. Those custodians' files all were uploaded into Summation; and

(3) QSGI's physical files normally kept at a New Jersey warehouse, which consisted of

approximately 382 boxes.

12. Many of Defendants' requests for production correlated to items requested in the SEC

Subpoena, which ultimately were produced to the SEC. Therefore, on January 27,

2012, Plaintiff produced one CD and one DVD of electronic documents, which

included the documents obtained from the twenty-four (24) custodians the SEC

identified, using the fifty-five (55) search terms the SEC provided. In addition, I sent a

privilege log to Defendants. See Letter from 1. Bat,ta to 1. Bresvinick, dated Jan. 27,

2012, attached hereto as Exh. B.

13. On February II, 2012, after reviewing the first plOduction of documents sent from

MDH, I realized the documents only were in TIFF'ormat, which could not be readily

searched. Therefore, I inquired as to whether MDF had them in a searchable format.

See Email fromJ.BautatoE.Searby.datedFeb.ll. 2012, attached hereto as Exh. C.

14. According to MDH, the TIFF files produced were compatible with most document

review platforms, including Concordance and Summation. Once the TIFF files were

loaded into one of these software programs, they w)u1d be fully text searchable. See

Email fromJ.StockardtoJ.Bauta.datedFeb.lI. 2012, attached hereto as Exh. D.

15. My firm, however, does not own a document review platform, but rather uses only trial

presentation programs, such as Sanction. Therefore, without purchasing expensive

equipment or software, I could not search for documents responsive to Defendant's

requests for production.

4


16. In order to address this issue, I inquired as to whet!ler MDH could search its database

for documents responsive to the requests for production and produce the documents to

Defendants.

17. On February 23, 2012, MDH sent a proposal to Plaintiffs counsel. The proposal

included processing the data to make it text searchable, running searches, and

producing the search results. MDH estimated it would cost $20,000 and take

approximately two weeks to complete the prO( ess as "the volume of data is

tremendous." See emails from J. Stockard to J. Bau:a, dated Feb. 23, 2012 and Mar. 2,

2012, attached hereto as Exh. E.

18. After discussions with QSGI, and additional discussions with MDH, I accepted MDH's

proposal to do the work outlined above, and reqw:sted that MDH produce the files

OCR'd with the metadata.

19. On March 16, 2012, Magistrate Judge Ann Vituna'.; ordered Plaintiff to complete its

production of documents by April 2, 2012. [D.E. #50].

20. On March 17, 2012, I sent an email to MDH inqniring about when the first set of

production would be made available, and informing iv!DH that QSGI was under a court

order to produce all documents by April 2, 2012. See E-mail from J. Bauta to J.

Stockard, dated Mar. 17, 2012, attached hereto as Exil. F.

21. On March 19, 2012, Plaintiff s counsel received the Jirst installment of documents from

MDH as a result of the agreement. This installmer:t contained approximately 11,000

records. See Exh. F. These documents contained fiks of data including OCR'd images

with Bates numbers. See Email chain between G. McGaughey and J. Bauta, dated

March 21, 2012, attached hereto as Exh. G.

5


22. From March 19,2012 through April 19, 2012, MDE provided the electronic documents

to me on a rolling basis. By April 19, 2012, I hid received approximately 390,000

pages of electronic documents.

23. On March 2, 2012, Defendants served a Subpoena 0 1 McDonald Hopkins, directing the

law firm to produce designated documents. The Subpoena contained forty-four (44)

separate requests for various documents. A true anll accurate copy of the Subpoena is

attached hereto as Exh. H.

24. On March 16, 2012, MDH served its Objections to the Subpoena ("Objections,,)2

MDH set forth six major objections to the Subpe ena, including that the document

requests contained in the Subpoena were "substanti~ely identical to [Defendant's] First

Request for Production of Documents served on Plaintiffs counsel in the above-

captioned litigation." MDH also objected because the Subpoena was unreasonably

broad and unnecessary, noting that the Subpoena ''{ould require review of over one

million documents. A true and accurate copy of t!le Objections to the Subpoena is

attached hereto as Exh 1.

25. Despite its Objections, MDH sought to resolve the matter with Defendants without

court intervention. As such, MDH entered inte a Stipulated Letter Agreement

Regarding IBM Subpoena to McDonald Hopkins LLe ("Agreement"). A true and

accurate copy of that Stipulated Letter Agreement is attached hereto as Exh. J.

2 On March 14, 2012, the Court granted Defendant's motion to dismiss without prejudice, and gave Plaintiff fifteen (15) days to file an amended complaint. [D.E. #49]. MDH noted that fact in its Objections, and requested that Defendants withdraw the Subpoena. On March 28, 2012, however, Plaintiff filed its Second Amended Complaint.

6


26. On April 20, 2012, MDH sent additional correspondence to Defendants providing

information relevant to the Agreement. MDH sta'.ed that it had provided Plaintiffs

counsel with approximately 390,000 pages of electronic data through a "rolling

production" from mid-March through April 19,2012. The electronic documents were

produced as OCR'd text searchable TIFF images with the associated metadata and

PDFs ("Rolling Production"). According to MDH, it produced these documents to

Plaintiffs counsel on January 23, March 16, March 21, April 2, and April 19,2012.

See Letter from G. McGaughey to B. Diessel, datec Apr. 20, 2012, attached hereto as

Exh.K.

27. On April 25, 2012, MDH sent another letter to Defendants' counsel notifying them that

it had sent copies of the data production previOlLsly provided to the SEC ("SEC

Production") to Plaintiff s counsel. See Letter from G. McGaughey to B. Diessel, dated

Apr. 25, 2012, attached hereto as Exh. L.

28. In an email communication to me on May 19,2012, MDH stated it had spoken to

Defendants' counsel the previous day who confirned that it had received the SEC

Production and 390,000-page Rolling Production. MDH and Defendants' attorneys

prepared a summary of the process followed to produce the electronically stored

information. See Exh. A.

29. On February 21, 2012, Defendants' counsel inforrred me via email that Defendants

wanted to review the boxes of documents stored in be New Jersey warehouse that had

been provided to the SEC. See email chain between B. Diessel and J. Bauta, dated Feb.

21,2012, attached hereto as Exh. M.

7


30. The following day, I responded that, after speaking Nith someone at the warehouse, he

had just learned that the boxes never had been returned from the SEC. Defendants'

counsel responded that this response was "utterly ul1acceptable," and that he intended

"to inquire of QSGI's SEC counsel directly conceming ... the SEC Documents." See

Exh.M

31. I then reached out to counsel at MDH, who had turned over the documents to the SEC,

to assist in getting the documents back from the SEC.

32. On March 2,2012, MDH informed me that it had c:mtacted the SEC to request return

of the documents.

33. On March 13, 2012, MDH informed me that the SEC would require the recipient of the

boxes to certify in writing that they will maintain the originals in case the SEC later

requests to inspect or copy them again.

34. Later, on March 21, 2012, MDH provided me with ajditional instructions for obtaining

the documents from the SEC. See Exh. G.

35. On March 22, 2012, pursuant to instructions from MDH, as well as the SEC, I sent a

letter to the SEC requesting the return ofthe 3 82 box~s of documents.

36. On March 23, 2012, the SEC responded that the l~tter from Plaintiffs counsel was

deficient because it did not contain certain representLtions that the SEC required before

it would agree to release the records. See Email chain between G. Mcgaughey to J.

Bauta, dated Mar. 23, 2012, attached hereto as Exh.l'l.

37. That same date, I sent another letter to the SEC with the required representations. In

the letter, counsel for QSGI agreed to the followirg conditions in exchange for the

documents being returned to QSGI:

8


a. QSGI, Inc. and its predecessors, successors, parents, subsidiaries, divisions of affiliates, and their respective officers, direct:Jrs, agents, attorneys, accountants, employees, partners or other persons occupy:ng similar positions or performing similar functions ("QSGI") shall maintain cllstody and control of the Records, and shall not destroy, conceal or alter the Records without receiving prior written permission from the SEC;

b. QSGI shall produce or make the Records available to the SEC within fourteen (14) days of any written request by the SEC fm the Records; and

c. QSGI acknowledges that the Records remain subject to the SEC's Principal and Routine uses of Information as set forth in Sections G and H of SEC Form 1662.

See Exh. O.

38. As of the date of this filing, the 382 boxes of documents have been returned from the

SEC to the New Jersey Warehouse. Defendants' cOlmsel has had access to inspect and

copy those documents.

39. On March 23, 2012, Plaintiffs counsel learned that MDH was gathering QSGI hard

copy files for counsel to review at MDH's office in West Palm Beach. See Exh. N.

40. Several days later, on March 27, 2012, I inquired about the nature of these documents

as I had believed that all files except the 382 boxes with the SEC had been loaded into

Summation. See Exh. N.

41. That same date, MDH responded that the files being collected at the West Palm Beach

office consisted ofMDH's firm files for matters it ha.1 handled for QSGI.

42. On April 2, 2012, Plaintiffs counsel was informed that the physical files of matters

MDH had worked on for QSGI were available for review at MDH's office in West

Palm Beach. See Email from g. McGaughey to J. Bauta, dated Apr. 2, 2012, attached

hereto as Exh. P.

9


43. I began the review of those docwnents, which consi~t ofMDH's own firm files, but did

not have an opportunity to get back to West Palm Beach to complete the review of the

voluminous documents.

Dated: June 4,2012

10


From: Benjamin Diessel [mailto:[email protected] Sent: Friday, May 18, 2012 11:27 PM To: McGaughey, George L. ee: Teena-Ann Sankoorikal Subject: QSGI v. IBM - Summary of Discussions on May 16, 17 and 18

George,

I write to summarize our telephone discussions on May 16, 17 and 18. In these discussions, you summarized McDonald Hopkins's process to prepare its electronic production to the SEC (the appr)ximately four-million page production described in your April 25, 2012 letter, referred to as the "Electronic SEC Production"). You also summarized McDonald Hopkins's process to prepare certain electronic materials provided to Juan 13auta for purposes of this litigation (the approximately 390,000 pages of electronic data described in your April 20, .2012 letter, referred to as the "Litigation Production").

Subsequent to receiving a subpoena from the SEC ("Subpoena") requestinJ certain QSGI documents, McDonald Hopkins undertook to gather and organize QSGl"s electronic information and documents responsive to the Subpoena. McDonald Hopkins selected certain documents from QSGl's Proliant server, 39 disks and four DVDs ("Electronic Document Sources") described in your April 20 letter. Specifically, McDonald Hopkins selected email of certain "custodians" , identified by the SEC ("SEC Custodians"). The SEC Custodians' emails WEre contained in PST files on the 39 disks and on one of the six hard drives on the QSGI server. McDonald Hopkins also manually selected from the DVDs certain nonemail documents responsive to the Subpoena. The 21 backup tapes refem3d to in your April 20 letter were not searched, nor have they ever been searched or restored during the time that McDona! d Hopkins possessed them. The SEC Custodians' email and the files McDonald Hopkins manually-selected from the DVDs were loaded into, and comprise the entirety of, an electronic database that McDonald Hopkins maintains (the "f;ummation" database). McDonald Hopkins's Electronic SEC Production comprises certain documents from the SummatiJn database selected by McDonald Hopkins on the basis of search terms specified by the SEC ("SEC Search Terms").

For the purposes of the pending QSGllitigation with IBM, Juan 8auta supplied McDonald Hopkins with certain search terms to apply against the Summation database. The results of this search were provided to Mr. 8auta. Thus, the Litigation Production comprises a subset of the documents from the Summation database.

2


Both the Electronic SEC Production and the Litigation Production comprise a subset of the total QSGI documents and information stored on the Electronic Document Sources. The Litigation PlOduction, like the SEC Production, contains emails only from the files of the SEC Custodians. QSGI provided the Electronic SEC Production and the Litigation Production to Mr. Bauta in April 2012 as specified in your April 20 and ApI il 25 letters. Mr. Bauta's rolling electronic productions to IBM, in turn, comprise reproductions of the Litigation ProdL,ction and the Electronic SEC Production.

At the conclusion of our May 18 phone call, I agreed to prepare the foregc,ing summary and you agreed to review the summary and confirm your understanding that it is accurate and correct. n addition to reviewing the summary and responding with your confirmation of the foregoing, please confirm our un,jerstanding that the custodians and search terms listed in the attached letter comprise the SEC Custodians and SEC Search Terms. I look forward to your response.

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

This e-mail is confidential and may be privileged. Use or disclosure of it by anyone other than a designated addressee is unauthorized. If you are not an intended recipient, please delete this e-mail from the computer on which y~u received it.

IRS CIRCULAR 230 DISCLOSURE:

To ensure compliance with requirements imposed by the Internal Revenue Service, we inform you that any tax advice contained in this communication (including any attachments), was not intE,nded or written to be used, and cannot be used, by any taxpayer for the purpose of (1) avoiding any penalties under the Internal Revenue Code or (2) promoting, marketing or recommending to another party any transaction matter addmssed herein.

THE INFORMATION CONTAINED IN THIS TRANSMISSION IS ATTORNEY PRIVILEGED AND/)R CONFIDENTIAL INFORMATION INTENDED FOR THE USE OF THE INDIVIDUAL OR ENTITY NAMED ABOVE. IF THE READER OF THIS MESSAGE IS NC T THE INTENDED RECIPIENT, YOU ARE HEREBY NOTIFIED THAT ANY DISSEMINATION, DISTRIBUTION OR COPYING OF THIS COMMUNICATION IS Sl RICTL Y PROHIBITED. IF YOU HAVE RECEIVED THIS TRANSMISSION IN ERROR, PLEASE IMMEDIATELY NOTIFY ME BY TELEPHONE AND PER~'IANENTLY DELETE THE ORIGINAL AND ANY COPY OF THIS E-MAIL AND DESTROY ANY PRINTOUT THEREOF.

3


From: McGaughey, George L. Sent: Thursday, May 24, 2012 3:26 PM To: Benjamin Diessel ([email protected]) Subject: MH Response to your May 18, 2012 email and Request for Extension re Priv Log

Dear Ben:

Addressing the second paragraph of your May 18, 2012 email, the proces:; was one in which the SEC identified certain "Custodians" whose emails were contained in PST files on the 39 disks and the six hard drives on the server. Evidently in order to access the information on the hard drives, all six of the hard drivl!s have to be properly inserted in the server. MH also located certain documents potentially responsive to the ;ubpoena which were OCR'd and loaded into the Summation database, as were the PSTs and the data on the DVDs. M; then processed the data into a Summation database. MH identified responsive documents using the SEC search terns. I believe that is a more accurate description of the process which was followed than the fourth and fifth sentences in :he second paragraph of your email. You are correct that the 21 backup tapes referred to in my April 20 letter were net searched, nor have they ever been searched or restored during the time that MH possessed them. Finally, in addition to the 4 DVDs mentioned, there is another DVD containing data which was similarly OCR'd and loaded into the Sumrnation database. We believe that DVD is located in the QSGI files being inspected by Mr. Bauta in our West Palm Eeach office.

Therefore, the Summation database is comprised of PST files located on I he disks from the spindle, the hard drives and the five DVDs, along with other non-email documents. This data was OCl\'d and loaded into Summation to create our database, which was then searched using the SEC search terms.

The third paragraph of your email is accurate. Addressing the fourth par,lgraph, your first sentence is accurate. However, the Litigation Production, like the SEC production, is not necessarily limited to emails only from the files of the SEC Custodians. We believe that the Litigation Production may include other email and non-email documents. The PSTs and non-email documents may not have come din,ctly from the file of one of the SEC Custodians. The Litigation Production also includes certain non-email documents as a result of the search. It is our understanding that the last two sentences in this paragraph are accurate.

Addressing your last point, it is our understanding that Mr. 8auta's letter dated January 27, 2012, which was attached to your email, lists the SEC Custodians and SEC Search Terms.

Finally, as I mentioned in my email yesterday, I am requesting a one week extension to provide you with the final privilege log. I have not yet heard back from Mr. Bauta as to when he will be able to complete his review of the files, after which we will prepare the log.

I appreciate your patience.

Please let me know if you have any questions.

Very truly yours, George L. McGaughey

George L. McGaughey Member

T: 216.348.5703 F: 216.348.54H gmcgaughey@)mcdonaldhopkins.com www.mcdonal:lhopkins.com

2

---------

A


." J AMF..5 L. FERRARO,

DAVIDA. JAGOLINZER··

ScOTI A. KNOn"· GREGORY S. LYNAM+ DINO G. GAJ.ARDl

CASEA.DAM .. •• JUAN P. BAUTA, II ERICA L. BRADY+++

ILONA M. DEMENINA

JEFFREY H. SWMAN ALLAN B. KAISER- ....

MELISSA DAMIAN VISCONTI MARC A. KUNEN

JAMIE N. ISJCOFF

HONORABLE]OJlNGALE ++

VIA HAND DELIVERY Laura Besvinick, Esq. Hogan Lovells 2525 Ponce de Leon Blvd. Suite 300 Cora! Gables, Florida 33134

Re: QSGI v. IBM, et a!

[to LAW FIRM

MIAMI- WASHINGTON, D.C .• NEW YORK

4000 PONCE DE LEON BOULEV). RD SUITE 700

MIAMI, FLORIDA 33146 TELEPHONE (305) 375·0111

TELEFAX (305) 379·6222 TOLL FREE (800) 275·3332

www.ferrarQlaw.com

January 27, 2012

Case No.: 11-80880 CIV-RYSCAMP

Dear Ms. Besvinick:

·ALSOLJCENSED IN MA,NY,OJl

•• ALSO I.JCENSED IN MA. DC. NY ••• ALSO LICENSED IN DC

•••• ALSO LICENSED IN IL

..... Ar..so LICENSED IN MO

+ONLY LICENSED IN CA. II.

+++ ONLY LICENSED INCA,NY

++ OF COUNSEL

Enclosed please find one (I) CD and one (I) DVD and the QSGI Attorney/Client Privilege Log. The enclosed production is based on the following custodians:

'Stacey Charran Brian Cockerham Brianna Coughlin Edward Cummings Theo Dienes Seth Grossman Jackie Harrison Craig Heilman Mark Jacobson Phil Kochanski Hank Laws Nancy Mancuso Israel Montanez Eric Nelson

598 MADISON AVENUE· SUITE 2 • NEW YORK, NEW YORK 10022· TELEPH('NE (212) 355·8111· TELEFAX (212) 355·8115

1001 CONNECTICUT AVENUE, NW· SUITE 1225· WAsHmC;TON, DC 20036· TELEPHONE (202) 775·1630· TELEFAX 775·1633


Lou Nuccio James Patrignelli John Riconda Carl Saracino Chris Scheller

, Erika Schwab Erin Semansky Marc Sherman

,Matt Spart 'Roni Wen

The terms searched for the above custodians are:

?ersonnel 2mployees Principals Cunningham Cummings Elliot Jrossman Dusiness & segment Accounting Internal & controls Revenue & recognition LIFO PIFO lournal Payable & aging Receivable & aging Credit & memo Inventory Financial & projections check & register £rial & balance Ledger Sash & receipts Invoices Budget Business & plan Cash & flow Financial & statements Inventory & warehouse Inventory & storage Inventory & loss

'Inventory & proceeds IBM Anti-competitive Antitrust Tying


.. Monopoly Inventory & reserve impairment & charge

) Inventory & allowance Mchshelist

. Much & shelist Joseph & Martin VP

NPC ,Victory Ray Borrowing & base Disclosure & control Control & procedures Auditor & change Audit & committee

. Compensation & committee Minutes

-Resolution

Sincerely,



CASE NO: !!-80880-CIV-RYSKAMP\vlTUNAC


Plaintiff, v.

IBM GLOBAL FINANCING, et aI.

Defendants.

--------------------------~/

QSGI ATTORNEY/CLIENT PRIVILEGE LOG

DATE DOCUMENT PARTIES

9/25/07 New Client/Matter Form McDonald Hopkins

Undated Handwritten notes re: tic Unknowrl

11/12/07 Email correspondence Duncan Farmer to Ed Cummings

11/12/07 Email correspondence Ed Cumrr,ings to Geoffrey Smith, Marc Sherman, rke225, rvanhellemont, and Seth Grossman, cc: Duncan Farmer

07/22/08 Email correspondence Seth Gro~,sman to Geoff Smith, Ed Cummings, Alan Burger, John Riconda, Marc Sherman, rke225, rvanhellemont

07/22/08 Email correspondence Geoff Sm th to Seth Grossman, Ed Cummings, Alan Burger, John Riconda, Marc Sherman, rke225, rvanhellemont

07/07/09 Email correspondence Alan Burger to Bradley Shraiberg, Geoff Smith, Marc Sherman, cc: Eric Nelson, Ed Cummings, Philip landau, , Rvanhellemont

06/29/09 Email correspondence Bshraiberg to Philip landau, Eric Nelson and Marc Shel'man

02/19/09 Email correspondence Seth Grossman to Marc Sherman, cc: Ed Cumming.';

02/19/09 Corporate Resolution of Marc She,'man, Seth Grossman, John Contemporary Computer Services Riconda

02/19/09 Corporate Resolution of Qualtech Marc Sherman, Seth Grossman, Keith Elliott International Corporation and Qualtech Services Group, Inc.

1


UNITED STATES DISTRICT (::OURT SOUTHERN DISTRICT OF FLORIDA

CASE NO: 11-80880-CIV-RYSKAMPIVITUNAC


Plaintiff, v.

IBM GLOBAL FINANCING, et a1.

Defendants. /

QSGI ATTORNEY/CLIENT PRIVILEGE LOG 02/19/09 Corporate Resolution of O5GI- Marc Sherman, Seth Grossman

DPV, Inc. 02/19/09 Email correspondence Seth Gro!.sman to rke225, Geoff Smith,

rvanhellemont, Marc Sherman, Ed Cummings, John Rlconda, Alan Burger

11/15/08 Email correspondence Seth Gro!,sman to rvanhellemont, Alan Burger, Ed Cummings, rke225, John Riconda, Marc Sherman, and Geoff Smith

10/24/08 Email correspondence Seth Grossman to Alan Burger, rke225, Geoff Smith, rvilnhellemont Ed Cummings, rke225, John Riconda, Marc Sherman, and Jeff Smith

Undated Document VPC PO FinanCing - Financing Scope and Control

Undated Spreadsheet O5GI Tiger PO Summary by Product Type to Date

06/20/08 - Spreadsheet O5GI Tige r Direct Transaction Analysis 09/19/08 10/23/08 Email correspondence Seth Gros.man to Geoff Smith, Alan Burger,

Ed Cummings, rke225, Marc, Sherman, and rvanhellernont

10/23/08 Email correspondence Seth GrOS.'iman to rke225, Alan Burger, Ed Cumming', Marc Sherman, Geoff Smith, and rvanhellemont

10/23/08 Email correspondence Seth Gros,;man to rke225, Alan Burger, Ed Cummings, Marc Sherman, Geoff Smith, and rvanhellernont

10/22/08 Email correspondence Seth Gros~;man to Alan Burger, Ed Cumming!., rke225, Marc Sherman, Geoff

2



CASE NO: !!-80880-CIV-RYSKAMPWlTUNAC


Plaintiff, v.


Defendants. ______________________________ -"1

QSGI ATTORNEY/CLIENT PRIVILEGE LOG Smith, and rvanhellemont

Undated Document VPC PO Financing - Financing Scope and Control

Undated Spreadsheet QSGI Tige' PO Summary by Product Type to Date

06/20/08 - Spreadsheet QSGI TIge!' Direct Transaction Analysis 09/19/08 10/20/08 Email correspondence Seth Gros,;man to Alan Burger, Ed

Cumming!;, rke22S, Marc Sherman, Geoff Smith, and rvanhellemont


Undated Spreadsheet QSGI TIger PO Summary by Product Type to Date

06/20/08 - Spreadsheet QSGI TIger Direct Transaction Analysis 09/19/08 10/28/08 Email correspondence Seth Gross man to Alan Burger, Ed

Cummings, rke22S, Marc Sherman, Geoff Smith, and rvanhellemont


Undated Spreadsheet QSGI TIger PO Summary by Product Type to Date

06/20/08 - Spreadsheet QSGI Tiger Direct Transaction Analysis 09/19/08 08/16/08 Email correspondence Seth Grossman to Ed Cummings, Marc

Sherman and cc: Alan Burger 08/16/08 Email correspondence Seth Grossman to Ed Cummings, Marc

Sherman, and rvanhellemont cc: Alan Burger

3



CASE NO: ll-80880-CIV-RYSKAMP\VITUNAC


Plaintiff, v.


Defendants. /

QSGI ATTORNEY/CLIENT PRIVILEGE LOG

08/16/08 Email correspondence Seth Gros';man to Marc Sherman, rvanhellemont, and Ed Cummings, cc; Alan Burger

08/15/08 Email correspondence Seth Grossman to rvanhellemont, Alan Burger, Geoff Smith, rke225, Ed Cummings and Mac Sherman

08/13/08 Email correspondence Seth Gros!,man to Ed Cummings 08/04/08 Email correspondence Seth Gros! man to Ed Cumming, Alan Burger,

and cc: David Harris 06/25/08 Email correspondence Seth Gros~.man to Ed Cummings 06/25/08 Email correspondence Seth Grossman to Alan Burger, Marc

Sherman, t:c: Ed Cummings 06/06/08 Email correspondence Seth Grossman to rvanhellemont, rke225,

Geoff Smith, Ed Cummings, Marc Sherman, cc; Alan Bu rger

06/05/08 Email correspondence Seth Grossman to rke225, rvanhellemont, , Geoff Smit 1, cc: Marc Sherman, Ed Cummings and Alan Burger

11/10/07 Email correspondence Seth Gross Tlan to Ed Cummings and Marc Sherman

11/10/07 Email correspondence Seth Grossman to rvanhellemont, rke225 , Ed Cummir,gs, Marc Sherman, and Geoff Smith, cc: clfarmer and Alan Burger

11/10/07 Email correspondence Seth Grossman to Ed Cummings, cc: Marc Sherman and dfarmer

07/01/09 Email correspondence Robert Vanhellemont to Ed Cummings, Marc Sherman, Eric Nelson, Alan Burger, Geoff Smith, Bradley Shraiberg, and Dave

4


UNllED STATES DISTRICT COURT SOUTHERN DISTRICT OF FI,ORIDA

CASE NO: II-S08S0-CIV -R YSKANPWITUNAC


Plaintiff, v.


Defendants.

--------------------------~/

QSGI ATTORNEY/CLIENT PRIVILEGE LOG Meynare.'

11/15/08 Email correspondence Robert V,I nhellemont to Seth Grossman, Alan Burger, Ed Cummings, R.Keith Elliott, John Ricollda, Marc Sherman, and Geoff Smith

08/16/08 Email correspondence Robert Vanheliemont to Marc Sherman, Alan Burg'~r, Ed Cummings, and Seth Grossman

08/16/08 Email correspondence Robert Vanhellemont to Alan Burger, Marc Sherman, Ed Cummings, and Seth Grossman

08/16/08 Email correspondence Robert Va lhellemont to Marc Sherman, Ed Cumming!, Seth Grossman, cc: Alan Burger

08/16/08 Email correspondence Robert Va'1hellemont to Ed Cummings, rke225, AI,m Burger, Geoff Smith, Marc Sherman, and Seth Grossman

08/16/08 Email correspondence Robert Vanhellemont to rke225, Alan Burger, Geoff Smith, Ed Cummings ,Marc Sherman, and Seth Grossman

08/15/08 Email correspondence Robert Vanhellemont to Alan Burger, Geoff Smith, rke225, Ed Cummings, Marc Sherman, imd Seth Grossman

08/14/08 Email correspondence Robert Vanhellemont to Alan Burger, cc: Ed Cummings

11/10/07 Email correspondence Robert Varhellemont to Keith Elliott, Ed Cummings, Marc Sherman, Seth Grossman, and Geoff Smith, cc: Duncan Farmer and Alan Burge"

10/23/08 Email correspondence Rke225 to Seth Grossman, Alan Burger, Ed Cummings, Marc Sherman, Geoff Smith, and

5




QSGI, Inc., a Delaware Corpomtion,

Plaintiff, v.


Defendants.

--------------------------~/

QSGI ATTORNEY/CLIENT PRIVILEGE LOG rvanhellernont

10/23/08 Email correspondence Rke225 to Seth Grossman, Alan Burger, Ed Cumming~;, Marc Sherman, Geoff Smith, and rvanheller10nt

08/17/08 Email correspondence Rke225 to Ed Cummings, Alan Burger, Geoff Smith, Marc Sherman, rvanhellemont and Seth Gros~ man

08/15/08 Email correspondence Rke225 to, Alan Burger, Geoff Smith, Ed Cummngs, Marc Sherman, rvanhellemont and Seth <: rossman

08/14/08 Email correspondence Rke225 to Ed Cummings, Geoff Smith, Marc Sherman, Ivanhellemont, Seth Grossman cc: Alan BurgEr

07/07/09 Email correspondence Marc Sherman to Philip J. landau, rvanhellernont, Geoff Smith, cc: Alan Burger, Bradley Shraiberg, Ed Cummings, and Eric Nelson

07/02/09 Email correspondence Marc Sherman to Geoff Smith, rvanhellemont, Ed Cummings, cc: Eric Nelson, Alan Burger, bshraiberg, and Dave Meynarez

02/19/09 Email correspondence Marc Sherrlan to rke225, Seth Grossman, Geoff Smith, rvanhellemont, Ed Cummings, John Riconrfa and Alan Burger

08/16/08 Email correspondence Marc Sherman to rvanhellemont, aburger, Ed Cummings, and Seth Grossman

08/16/08 Email correspondence Marc Sherman to rvanhellemont, Ed Cummings, and Seth Grossman, cc: aburger

6



CASE NO: 11-80880-CIV-RYSKAMPWITUNAC


Plaintiff, v.

IBM GLOBAL FINANCING, etal.

Defendants.

------------------------------~/

QSGI ATTORNEY/CLIENT PRIVILEGE LOG 08/16/08 Email correspondence Marc Sherman to rvanhellemont, Ed

Cumming!., Seth Grossman, cc: aburger 08/15/08 Email correspondence Marc Sherman to Ed Cummings,

rvanheller10nt, aburger, Geoff Smith, rke22s, arl d Seth Grossman

08/15/08 Email correspondence Geoff Smith, rke22s, Ed Cummings, rvanhellemont, Seth Grossman, cc: aburger

11/10/07 Email correspondence Marc Sherman to Ed Cummings

11/10/07 Email correspondence Aburger, (, eoff Smith, rvanhellemont, rke22s, Ed Cummings, Seth Grossman, cc: dfarmer

11/10/07 Email correspondence Marc Sherman to rvanhellemont, rke22s, Ed Cummings. Seth Grossman, and Geoff Smith, cc: dfarme- and aburger

11/07/07 Email correspondence Rke22s to rvanhellemont, Geoff Smith, cc: Ed Cummings

07/13/07 Email correspondence Marc Sherman to Alan Burger, Seth Grossman, Duncan Farmer, and Ed Cummings

02/20/09 Email correspondence Geoff Smith to Keith Elliott, Seth Grossman, rvanhellemont, Marc Sherman, Ed Cummings, John Riconda, Alan Burger

11/10/07 Email correspondence Geoff Smith to Bob Vanhellemont, Keith Elliott, rke:i2, Ed Cummings, Marc Sherman, Seth Grossman cc: Duncan Farmer and Alan Burger

07/02/09 Email correspondence Geoff Smith to Robert Vanhellemont and Ed Cummings ,,:C: Marc Sherman, Eric Nelson, Alan Burger, Bradley Shraiberg, Dave

7


UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF FlORIDA



Plaintiff, v.

IBM GLOBAL FINANCING, et al.

Defendants. ______________________________ -C1

QSGI ATTORNEY/CLIENT PRIVILEGE LOG Meynare:,

02/21/09 Email correspondence Geoff Sm ith to rke225, Seth Grossman, aburger, I,d Cummings, John Riconda, Marc Sherman, and rvanhellemont

11/13/07 Email correspondence Geoff Smith to Ed Cummings, Marc Sherman, rke225, rvanhellemont, Seth Grossman cc: Duncan Farmer

02/04/08 Email correspondence Duncan Farmer to Ed Cummings .

06/29/09 Email correspondence BShraiberg to Philip Landau, Eric Nelson and Marc Sherman

06/30/09 Email correspondence Eric Nelson to Bradley Shraiberg, Robert VanHeller10nt, Marc Sherman, Geoff Smith, cc: Alan BIJrger, Dave Maynarez, Ed Cummings, and Philip J. Landau

06/29/09 Email correspondence Eric Nelson to Bradley Shraiberg, Robert Vanhellemont, Marc Sherman, Geoff Smith, cc: Alan Burger, Dave Meynarez, Ed Cumming", and Philip Landau

07/01/09 Email correspondence Alan Burger to Ed Cummings, Marc Sherman, Eric Nelson, Geoff Smith, bshraiberg and Dave MeY,larez

06/17/09 QSGI, Inco's Minutes of the Board By Ed Currmings of Directors Meeting

02/20/09 Email correspondence Alan Burgl!r to Marc Sherman, Geoff Smith, rke22S, Seth Grossman rvanhellemont, Ed Cummings, John Riconda

08/16/08 Email correspondence Alan Burgflr to rvanhellemont, Marc Sherman, Ed Cummings, and Seth Grossman

8



CASE NO: !!-80880-CIV-RYSKAMPWITUNAC


Plaintiff, v.


Defendants.

----------------',

QSGI ATTORNEY/CLIENT PRIVILEGE LOG 08/16/08 Email correspondence Alan Bur€:er to rvanhellemont, Marc

Sherman, Ed Cummings, and Seth Grossman

08/16/08 Email correspondence Alan BurE:er to Seth Grossman, Marc Sherman, rvanhellemont and Ed Cummings

08/15/08 Email correspondence Alan Bur€er to Geoff Smith, rke225, Ed Cummings, Marc Sherman, rke225, rvanhellemont, Seth Grossman

07/09/08 Email correspondence Alan Burger to Marc Sherman, Ed Cummings, and Seth Grossman

05/11/08 QSGI, Inc. Minutes of the Board of Edward L Cummings Directors Meeting

05/08/08 Email correspondence Alan Burger to Ed Cummings




11/10/07 Email correspondence Alan Burger to Geoff Smith, Bob Vanhellenlont, Keith Elliott, Ed Cummings, Marc She"man, Seth Grossman, cc: Duncan Farmer

10/06/07 Email correspondence Alan Burger to Ed Cummings, Marc Sherman, Seth Groslman, Duncan Farmer

06/29/09 Email correspondence Bradley Shraiberg to Robert Vanhellemont, Marc Sherman, Geoff Smith, cc: Alan Burger and Dave Meynarez, Ed Cummings, Philip J. landau

03/02/04 Email correspondence Marc Sherman to Ed Cummings

07/02/09 Email correspondence Ed Cummings to Eric Nelson, Marc Shenman

07/02/09 Email correspondence Ed Cummings to Robert Vanhellemont

9


UNI1ED STATES DISTRICT COURT SOUTHERN DISTRICT OF FLORIDA

CASE NO: 11-80880-CIV -R YSKANlPIVlTUNAC


Plaintiff, v.


Defendants. __________________________ ~I

QSGI ATTORNEY/CLIENT PRIVILEGE LOG 07/01/09 Email correspondence Ed Cummings to Marc Sherman, Eric Nelson,

Alan Burner, Geoff Smith, Robert Vanhellemont, Bradley Shraiberg, and Dave Meynare!

07/01/09 Board Motion Marc Sherman to Geoff Smith, Robert Vanhellemont,

06/30/09 QSGI, Minutes of Board of Edward Cummings Directors Meeting



06/29/09 Email correspondence Ed Cummings to EriC Nelson

06/25/09 Email correspondence Ed Cummings to Alan Burger

06/25/09 Email correspondence Ed Cummings to Eric Nelson, Geoff Smith, Robert V.I nhellemont, Marc Sherman, and Alan Burger cc: Eric Nelson

06/18/09 Email correspondence Ed Cummings to Marc Sherman, Eric Nelson, Geoff Smith, rvanhellemont, cc: Alan Burger

06/17/09 QSGI Minutes of the Board of Edward OJmmings Directors Meeting

06/18/09 Email correspondence Ed Cummngs to Alan Burger

06/17/09 QSGI Minutes of the Board of Edward OJmmings Directors Meeting

06/18/09 Email correspondence Ed Cummings to Marc Sherman, Eric Nelson, rvanhellernont and Geoff Smith cc: Alan Burger

06/17/09 QSGI Minutes ofthe Board of Edward Cummings

10



CASE NO: 11-80880-CIV-RYSKAMP\vITUNAC


Plaintiff, v.


Defendants.

--------------------------~/

QSGI ATTORNEY/CLIENT PRIVILEGE LOG Directors Meeting



06/17/09 QSGI Minutes of the Board of Edward CJmmings Directors Meeting


06/18/09 Email correspondence Ed Cumm ings to Alan Burger

06/18/09 Email correspondence Ed Cumm ngs to Marc Sherman, Eric Nelson, Geoff Smith, rvanhellemont and cc: Alan Burger

06/17/09 QSGI Minutes of the Board of Edward Ctlmmings Directors Meeting

02/20/09 Email correspondence Ed Cummings to Marc Sherman, Geoff Smith, Keith Elliott, rke22S, Seth Grossman, Bob Vanh.!lIemont, John Riconda and Alan Burger

10/23/08 Email correspondence Ed Cummings to Seth Grossman

08/16/08 Email correspondence Ed Cummings to rke225, aburger, Geoff Smith, Marc Sherman, rvanhellemont, Seth Grossman

08/15/08 Email correspondence Ed Cummings to Marc Sherman

08/15/08 Email correspondence Ed Cummings to rvanhellemont, Alan Burger, Geoff Smith, rke225, Marc Sherman, and Seth Gros! man

08/15/08 Email correspondence Ed Cummi ngs to Seth Grossman, rvanhellemont, Marc Sherman

11





Plaintiff, v.


Defendants.

----------------------------~/

QSGI ATTORNEY/CLIENT PRIVILEGE LOG 08/14/08 Email correspondence Ed Cumrr' ings to rvanhellemont

08/13/08 Email correspondence Ed Cumm ings to Ed Cummings, Geoff Smith, Marc Sherman, rke225, rvanhellemont, Seth Grossman, cc: Alan Burger

07/07/09 Email correspondence Geoff Smith to Marc Sherman cc: Eric Nelson, Ed Cummings, Alan Burger, Bradley Shraiberg, Philip Landau and rvanhellemont

08/03/09 Email correspondence Marc Sherman to plandau

07/02/09 Email correspondence Marc She rman to Eric Nelson

07/02/09 Email correspondence Marc Sherman to Geoff Smith, rvanhellemont, Ed Cummings, cc: Eric Nelson, Alan Burger, bshraiberg, Dave Meynare::

02/25/09 Email correspondence Marc Sherman to Seth Grossman, Geoff Smith, Keith Elliott and Alan Burger

11/30/08 Email correspondence Rke225, rvanhellemont, Geoff Smith

08/04/08 Email correspondence Marc Sherman to Alan Burger, Seth Grossman, John R. Riconda and Ed Cummings

07/17/08 Email correspondence Marc She rman to John Riconda

07/17/08 Email correspondence Marc She -man to Ed Cummings, Seth Grossman and Alan Burger

07/17/08 Email correspondence Marc She -man to Ed Cummings, Seth Grossman, Alan Burger

07/17/08 Email correspondence Marc She -man to Ed Cummings

07/17/08 Email correspondence Marc She"man to Ed Cummings, Seth Grossmar, and Alan Burger

12



CASE NO: 11-80880-CIV-RYSKAMP\vITUNAC


Plaintiff, v.


Defendants.

----------------------------~/

QSGI ATTORNEY/CLIENT PRIVILEGE LOG 07/17/08 Email correspondence Marc She rman to Ed Cummings, Seth

Grossman and Alan Burger 07/15/08 Email correspondence Marc Sherman to Alan Burger

03/20/08 Email correspondence Marc Sherman to Seth Grossman and aburger

11/28/07 Email correspondence Marc Sherman to Seth Grossman

11/19/07 Email correspondence Marc Sherman to Seth Grossman, David Waldman, Ed Cummings and aburger

11/19/07 Email correspondence Marc Sherman to Seth Grossman, David Waldman, Ed Cummings and aburger

11/19/07 Email correspondence Marc She -man to David Waldman, Seth Grossman, Ed Cummings and aburger

11/10/07 Email correspondence Marc She'man to Ed Cummings 11/10/07 Email correspondence Marc She!-man to aburger, Geoff Smith,

rvanhellemont, rke22s, Ed Cummings and Seth Cummings, cc: dfarmer

11/10/07 Email correspondence Geoff Smith

11/10/07 Email correspondence Marc She;·man to rvanhellemont

11/10/07 Email correspondence Marc Shetman to rvanhellemont, rke22s, Ed Cumming" Seth Grossman and Geoff Smith

11/10/07 Email correspondence Marc Shel·man to David Waldman

11/07/07 Email correspondence Marc She'-man to rke22s, rvanhellemont, Geoff Smith cc: Ed Cummings

10/18/07 Email correspondence Marc She"·man to aburger 10/09/07 Email correspondence Marc Sherman to Seth Grossman and Ed

Cumming; 10/09/07 Email correspondence Marc Shel·man to Seth Grossman and Ed

Cumming;

13


UNITED STATES DISTRICT ( OURT SOUTHERN DISTRICT OF FLORIDA

CASE NO: II-SOSSO-ClY -RYSKAM'\vITUNAC


Plaintiff, v.


Defendants. ____________________________ ~I

QSGI ATTORNEY/CLIENT PRIVILEGE LOG 10/05/07 Email correspondence Marc Sherman to Seth Grossman and

aburger 10/03/07 Email correspondence Marc Sherman to Seth Grossman

09/17/07 Email correspondence Marc Sherman to aburger cc: gmcgaughey




08/13/07 Email correspondence Marc Sherman to Alan Burger, Seth Grossman, Ed Cummings, rvanhellemont, Geoff Smith and rke225

01/04/07 Email correspondence Marc She 'man to alan

01/04/07 Email correspondence Marc She "man to alan

01/04/07 Email correspondence Marc She;-man to alan

14


> > > T:216.430.2044 > F: 216.348.5474 > [email protected]<mailto:[email protected]> > www .mcdonaldhop kins.com<http://www.mcdonaldhopkins.com/>

> > <imageOO1.jpg> > > 600 Superior Avenue East > Suite 2100 > Cleveland, OH 44114

> > Chicago * Cleveland * Columbus * Detroit * Miami * West Palm Beach

> >

>--------------------------> From: Juan P. Bauta > [mailto:[email protected]]<mailto:%5bmailto:[email protected]%~;d>

> Sent: Saturday, February 11, 2012 12:02 PM > To: Searby, Edmund > Cc: Stockard, Janet; Nari C. Bauta; Case X. Dam > Subject: QSGI production > Dear Ned,

> > Thank you for the production of documents. I have reviewed the documents you sent on the hard drive but they are in a Tif. format which cannot be readily searched. Please advise whether you have these documents in a searchable

format?

> > Juan P. Bauta, II Esq.

> > THE FERRARO LAW FIRM, P.A. > 4000 Ponce de Leon Blvd. > Suite 700 > Miami, FL 33146 > Phone: (305) 375-0111 > Facsimile: (305) 379-6222

> > Confidentiality Notice: The information contained in this transmittal, in:luding any attachment, is privileged and confidential and is intended only for the person or entity to whom it is a(idressed. If you are neither the intended reCipient nor the employee or agent responsible for delivering this messilge to the intended recipient, you are hereby notified that any disclosure, copying or distribution or the taking of any action in reliance on the contents of this transmittal is strictly prohibited. If you have received this transmittal in error, please contact the sender immediately and delete this transmittal from any computer or other data bank.

> > > IRS CIRCULAR 230 DISCLOSURE: > > To ensure compliance with requirements imposed by the Internal Reve·nue Service, we inform you that any tax advice contained in this communication (including any attachments), was not ir,tended or written to be used, and cannot be used, by any taxpayer for the purpose of (1) aVOiding any penalties under the Internal Revenue Code or promoting, marketing or recommending to another party any transaction matter addressed herein.

8 c ._ .. _ II1II--- __ ~ _l1li.II1II.. ~


> Subject: FW: QSGI production > Janet, > Do guys already have the files loaded into Summation already? If not, what program did you guys use?

> > Scott CLawson > LT. Director > 4000 Ponce De Leon Blvd. STE 700 > Coral Gables, Flo 33146 > P- 305-375-0111 > F- 305-379-6222 > www.ferrarolaw.com<http://www.ferrarolaw.com>

> > Confidentiality Notice: The information contained in this transmittal, in:luding any attachment, is privileged and confidential and is intended only for the person or entity to whom it is a( dressed. If you are neither the intended recipient nor the employee or agent responsible for delivering this mess, ge to the intended recipient, you are hereby notified that any disclosure, copying or distribution or the taking of any action in reliance on the contents of this transmittal is strictly prohibited. If you have received this transmittal in error, please contact the sender immediately and delete this transmittal from any computer or other data bank.

> > From: Juan P. Bauta > Sent: Monday, February 13, 2012 9:24 AM > To: Scott Lawson > Subject: Fwd: QSGI production

> > Please call Janet and ask if they can generate in a different format if no t we will need to purchase summation.

> > Juan P Bauta II

> > This email is protected by federal and state law. If you have received this email in error please delete it and contact the

sender immediately.

> > Begin forwarded message: > From: "Stockard, Janet" > <[email protected]<mailto:[email protected]» > Date: February 11, 2012 1:02:58 PM EST > To: "'Juan P. Bauta'" <[email protected]<mailto:[email protected],,», > "Searby, Edmund" > <[email protected]<mailto:esearby@mcdonaldhopkins .. :om» > Cc: "Nari C. Bauta" <[email protected]<mailto:[email protected]», > "Case X. Dam" <[email protected]<mailto:[email protected]» > Subject: RE: QSGI production > Juan, > > The Tiff files we provided are compatible with most electronic docume,t review platforms (Summation, Concordance, etc.). Your IT department should be able to load Tiff files into your firm'.'; electronic discovery review software program. The files will be fully text searchable.

> > On Monday we will forward an additional 20G of data. Hope this help:;. Thanks, Janet > > > Janet A. Stockard > Senior Paralegal

7 D


> Miami, FL 33146 > Phone: (305) 375-0111 > Facsimile: (305) 379-6222

> > Confidentiality Notice: The information contained in this transmittal, incl uding any attachment, is privileged and confidential and is intended only for the person or entity to whom it is adc ressed. If you are neither the intended recipient nor the employee or agent responsible for delivering this messa€e to the intended recipient, you are hereby notified that any disclosure, copying or distribution or the taking of any ac:ion in reliance on the contents of this transmittal is strictly prohibited. If you have received this transmittal in erl"Or, please contact the sender immediately and delete this transmittal from any computer or other data bank.

> > > -----Original Message-----> From: Stockard, Janet [mailto:[email protected] > Sent: Friday, March 02, 2012 8:52 AM > To: Juan P. Bauta > Cc: Searby, Edmund > Subject: Re: QSGI Data - Cost estimate to review and code for KF > > Juan, > > The proposal includes reviewing the data against your search terms, coding and processing. > > Given the size of the data and number of custodians we presented a 10vI estimate. > > I would suggest for comparison your firm Price the project with an outside vendor. > > Unfortunately, the volume of data is tremendous. > It will take at least four hours per case.

> > My rate for this proposal is discounted for our mutual client from My st, ndard 185.00. > > Further I have spent considerable time working with your firm on > options in an effort to move this project along. >

> My understanding is given the size of the data Your IT is unable to handl2 a project of this size. > > If you prefer to price the project out to give Marc a level of comfort, please do so. > > Keep me advised as to how you would like me to proceed. > > Thanks, Janet > >

> > > >

> On Mar 1,2012, at 3:37 PM, "Juan P. Bauta" <[email protected]<maito:[email protected]»wrote: > > Dear Janet: >

2 I


> > From: Stockard, Janet [mailto:[email protected]]

> Sent: Thursday, February 23, 2012 3:58 PM > To: Juan P. Bauta; Scott Lawson > Cc: Searby, Edmund > Subject: FW: QSGI Data - Cost estimate to review and code for KF

> > Juan/Scott,

> > As discussed, we are prepared to process the data to make it text searc1able, run searches and produce the search

results to KF in a manner to be determined. > KF has final responsibility to make determinations as to responsiveness and privilege.

> > MH will process the data from 24 key QSGI custodians. The data size is approximately 300G separated into 32 cases.

> > Review and code: Approx.4 hrs* per case @ $150.00 per hour = $20,0)0

> > This cost estimate does not include the preparation of privilege logs.

> > *KF to provide detailed list of board members referenced in Item 1.

> > Thanks, Janet

>

>--------------------------> From: Scott Lawson [mailto:[email protected]] > Sent: Wednesday, February 22, 2012 2:21 PM

> To: Stockard, Janet > Subject: RE: QSGI production

> > Here they are:

> > > 1. IBM and the name of each board member*.

> > 2. IBM and Sherman and Cummings.

> > 3. IBM and Cummings and Janson or Rubin Brown.

> > 4. IBM and Sherman and Janson.

> > 5. IBM and Owens.

> > Juan P. Bauta, II Esq.

> > THE FERRARO LAW FIRM, P.A. > 4000 Ponce de Leon Blvd. > Suite 700 > Miami, FL 33146 > Phone: (305) 375-0111 > Facsimile: (30S) 379-6222 > > Scott CLawson

4


Amanda A. Kessler

From: Sent: To: Subject:

Juan P. Bauta, II Esq.

THE FERRARO LAW FIRM, P.A. 4000 Ponce de Leon Blvd. Suite 700 Miami, FL 33146 Phone: (305) 375-0111 Facsimile: (305) 379-6222

Juan P. Bauta Saturday, June 02, 2012 12:24 PM Amanda A. Kessler FW: QSGI

Confidentiality Notice: The information contained in this transmittal, inclue ing any attachment, is privileged and confidential and is intended only for the person or entity to whom it is add ·essed. If you are neither the intended recipient nor the employee or agent responsible for delivering this messag" to the intended recipient, you are hereby notified that any disclosure, copying or distribution or the taking of any action in reliance on the contents of this transmittal is strictly prohibited. If you have received this transmittal in err'Jr, please contact the sender immediately and delete this transmittal from any computer or other data bank.

-----Original Message-----From: Stockard, Janet [mailto:[email protected]] Sent: Saturday, March 17, 2012 10:30 AM To: Juan P. Bauta Subject: Re: QSGI

Sent a first installment via overnight to u for Monday delivery approx. 11,COO records.

On Mar 17, 2012, at 8:45 AM, "Juan P. Bauta" <[email protected]<mailt,,:[email protected]»wrote:

Dear Janet,

When can I expect the first set of production? We are now under a court order to produce all of the documents by April 2, 2012. Please advise.


THE FERRARO LAW FIRM, P.A. 4000 Ponce de Leon Blvd. Suite 700 Miami, FL 33146

1 r


Amanda A. Kessler

From: Sent: To: Subject: Attachments:



Juan P. Bauta Saturday, June 02, 2012 12:25 PM Amanda A. Kessler FW: SEC release of boxes to QSGI 20120321173459797.pdf

Confidentiality Notice: The information contained in this transmittal, including any attachment, is privileged and confidential and is intended only for the person or entity to whom it is ac dressed. If you are neither the intended recipient nor the employee or agent responsible for delivering this mess, ge to the intended recipient, you are hereby notified that any disclosure, copying or distribution or the taking of any action in reliance on the contents of this transmittal is strictly prohibited. If you have received this transmittal in error, please contact the sender immediately and delete this transmittal from any computer or other data bank.

-----Original Message-----From: McGaughey, George L. [mailto:[email protected] Sent: Wednesday, March 21, 2012 7:27 PM To: Juan P. Bauta Cc: Searby, Edmund Subject: FW: SEC release of boxes to QSGI

Juan: I am following up on Ned's email to you a short time ago regarding your obtaining the SEC's release of the 400 QSGI boxes to you and QSGI. Attached are the SEC instructions for doin! so. As Ned stated in his March 13, 2012 email to you, the SEC policies require the recipient to certify in writing that they will maintain the originals in case the SEC later requests to inspect or copy them again. The attached SEC instructions co ntain the required written representations concerning preservation ofthe materials the SEC must receive from you before making the boxes available to you.

The SEC instructions offer you access to the boxes by either mailing them to you or arranging for you to have access to them at a facility in Silver Spring, Maryland. You've indicated you would like to have the SEC send the boxes back immediately to QSGI's New Jersey storage facility so that you can offer IBM's counsel access to the boxes. May I suggest you include that in your written request to the SEC. Please forward to m,~ your request to the SEC with the required representations and Ned will promptly forward them to attorney Tabak "It the SEC.

Second, as you know, Janet Stockard is continuing to send you disks containing files of reviewed data including OCR'd images with Bates Numbers. She mailed another disk to you today by Federal Express - Priority. Kindl" Return to Janet the drive you received on March 19, 2012. !I!!!I_ ....

1 G


Third we are also gathering files for your review and your determination as to whether they contain documen.ts resp;nsive to the Discovery Requests served upon QSGI in your case. If you should review th.e files and dete~ml~e there are responsive documents therein, we will then review those responsive ,jocuments for privileged commUniCations. I

will advise you tomorrow as to the location and availability of these files for your review.

It was a pleasure speaking with you earlier today. Please let me know if Y'JU have any questions.

George L. McGaughey McDonald Hopkins LLC 2163485703

George L. McGaughey Member MCDONALD HOPKINS LLC

600 Superior Avenue East Suite 2100 Cleveland, OH 44114 T: 216.348.5703 F: 216.348.5474 mailto:[email protected] http://www.mcdonaldhopkins.com

Chicago * Cleveland * Columbus * Detroit * Miami * West Palm Beach --,--Original Message----From: [email protected] [mailto:[email protected]] Sent: Wednesday, March 21, 2012 5:35 PM To: McGaughey, George L. Subject: SEC release of QSGI boxes to QSGI

This E-mail was sent from "RNPOOAD79" (Aficio MP 5001).

Scan Date: 03.21.201217:34:59 (-0400) Queries to: [email protected] IRS CIRCULAR 230 DISCLOSURE:

To ensure compliance with requirements imposed by the Internal Reven Je Service, we inform you that any tax advice contained in this communication (including any attachments), was not intended or written to be used, and cannot be used, by any taxpayer for the purpose of (1) avoiding any penalties under the Internal Revenue Code or (2) promoting, marketing or recommending to another party any transaction matter addressed herein.

THE INFORMATION CONTAINED IN THIS TRANSMISSION IS ATIORNEY PFIVILEGED AND/OR CONFIDENTIAL INFORMATION INTENDED FOR THE USE OF THE INDIVIDUAL OR ENTITY NAMED ABOVE. IF THE READER OF THIS MESSAGE IS NOT THE INTENDED RECIPIENT, YOU ARE HEREBY NOTIFIED THAT ANY DISSEMINATION, DISTRIBUTION OR COPYING OF THIS COMMUNICATION IS STRICTLY PROHIBITED. IF YOU H/NE RECEIVED THIS TRANSMISSION IN ERROR, PLEASE IMMEDIATELY NOTIFY ME BY TELEPHONE AND PERMANENTLY DELETE THE ORIGINAL AND ANY COpy OF THIS EMAIL AND DESTROY ANY PRINTOUT THEREOF.

2 G


U.S. Securities and Exchange Commission Secure Email Messag.lView Page 10f2

U.S. Securities and Exchange Commission Secure Email u.s. Securities and Exchange Commission Secure Email Message View Signed In as [email protected]

Received: Expires: From: To: Cc: Subject: Attachments:

Dear Mr. Searby:

Mar 15, 2012 04:16:45 PM Jun 13, 201204:16:45 PM [email protected] [email protected] [email protected] smail QSGI boxes htmlBody.html

As stated in the voicemail I left you earlier today, we are, able to provide you access to the 382 boxes of QSGI corporate records by either mailing them to you, or arranging for you to have access to them at a facility located in Silver Spring, MD. If you opt to review the boxes in Maryland, please let me know wher. you would like access to the materials, how many people you expect to send, and how long you estimate will be required to complete your on-site review, as we will havs to reserve an appropriate facility.

As we have previously discussed, in order to grant aCCE,SS to these materials, we require certain written representations from QSGI concerning preservation of those materials. The representations we require in order to make the boxes available are set forth below.

Please call me if you have any questions.

Sincerely,

Victor Tabak, Senior Counsel U.S. Securities & Exchange Commission Division of Enforcement 100 F Street, N.E. Washington, DC 20549-5030 (202) 551-4433 (tel) (202) 772-9286 (fax)

PROPOSED LANGUAGE:

.

... - .. --,,! In connection with an investigation by the U.S. Securities and Exchange Commission ("SEC") captioned In the Matter of QSGI, Inc. (HO-11303), QSGI, Inc. ("QSGI") produced to the SEC, inter alia, 382 boxes of corporate records (the "Records") that were in warehouse storage at the time the Records wer,;: requested by the.SEC .. The Records were produced to the SEC pursuant to a verbal agreement, memorialized in a November. 10, 2010 letter from Stephen G. Yoder to Edmund W. Searby, Esq., that the

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U.S. Securities and Exchange Commission Secure Email Message View Page 2 of2

SEC return the Records within thirty (30) days of receiving a request for return of the Records from QSGI. On February 24, 2012 by email fr:>m Janet Stockard to Terri Booker, QSGI requested information concerning return of the Records. During a March 13,2012 telephone conference, Mr. Searby, counsel for QSGI, and Nina Finston and Victor Tabak of the SEC discussed return of the Records to QSGI, and agreed that the SEC would return the .Records or make the Records available to QSGI subject to QSGI's agreement to the following conditions:

1) QSGI, Inc. and its predecessors, successors, parent,;, subsidiaries, divisions or affiliates, and their respective officers, directors, agents, attorneys, accountants, employees, partners or other persons occupying similar positions or performing similar functions ("QSGI") shall maintain custody and control 0" the Records, and shall not destroy, conceal or alter the Records without receiving prior written permission from the SEC;

2) QSGI shall produce or make the Records available to the SEC within fourteen (14) days of any written request by the SEC for the Records and .

3) QSGI acknowledges that the Records remain subjec" to the SEC's Principal and Routine Uses of Information as set forth in Sections G ~'nd H of SEC Form 1662.

This message was secured by ZixCorp(R).

U.S. Securities and Exchange Commission Secure Email

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• • .. ,-'

QSGI, INC.,

v.

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF FI,ORIDA

§ §

Plaintiff, §

Case No. 09; II -cv-80880-KLR

IBM GLOBAL FINANCING and INTERNATIONAL BUSINESS MACHINES CORPORATION,

§ § § § § § Defendants.

NOTICE OF NONPARTY DISCOVERY

PLEASE TAKE NOTICE that, pursuant to Federal Rules of Civil

Procedure 26, 34( c) and 45, Defendants IBM Global Finar;cing and International

Business Machines Corporation will be issuing the annexed subpoena directing nonparty

McDonald Hopkins LLC to produce designated documenu ..

March 2, 2012

(~~ /CIlAVATH, SWAINE & OORE LLP

Worldwide Plaza 82:; Eighth Avenue New York, NY 10019 Telephone; 212-474-1000 Facsimile: 212-474-3700 [email protected] *Admitted Pro Hac Vice

Counsel for Defondants IBM Global Financing and International Business Ma.;hines Corporation


,

AD 88B (Rev. 06/09) Subpoena to Produce Documents, Infonnation, or Objects or to Pennit Inspec jon of Premises in a Civil Action

UNITED STATES DISTRICT COURT

QSGI, Inc. Plaintiff

v. IBM Global Financing et al.

Defendant

for the

Southern District of Florida

) ) ) ) ) )

Civil A,tion No. 09:11-cv-80880-KLR

(If the acl ion is pending in another district. state where:

SUBPOENA TO PRODUCE DOCUMENTS, INFORMATION, OR OBJECTS OR TO PERMIT INSPECTION OF PREMISES IN A CIVIL ACTION

To: McDonald Hopkins llC, 505 S. Flagler Drive, Suite 300, West Palm 13each, Fl33401

,j Production: YOU ARE COMMANDED to produce at the time, dlte, and place set forth below the following documents, electronically stored information, or objects, and permit their inspection, copying, testing, or sampling oflhe material: See Attachment A

Place: Hogan lovells US llP (Attn: laura Besvinick) 2525 Ponce Deleon Blvd, Third Floor Coral Gables, Fl33134

Date anc Time:

03123/20129:30 am

o Inspection of Premises: YOU ARE COMMANDED to permit entr:1 onto the designated premises, land, or other property possessed or controlled by you at the time, date, and location set forth below, so that the requesting party may inspec~ measure, survey, photograph, tes~ or sample the property or an.! designated object or operation on it.

I Place: I Date and Time:

The provisions of Fed. R. Civ. P. 45(c), relating to your protection as a person subject to a subpoena, and Rule 45 (d) and (e), relating to your duty to respond to this subpoena and the potential consequences of not doing so, are attached.

Date: Q310212012

CLERK OF COURT

The name, address, e-mail, and telephone number of the attorney representing (name of party)

IBM Global Financing and International Business Machines Corporation ,wh,) issues or requests this subpoena, are:

Teena-Ann V. Sankoorikal, Cravath, Swaine & Moore lLP, Woridwide Plaza, .'125 Eighth Avenue, New York, NY 10019; tsankoorikal@cravath;com; (212) 474-1000


AD 88B (Rev. 06109) Subpoena to Produce Documents, Information, or Objects or to perrnjt Inspec _ion of Premises in a Civil Action (Page 2)

Civil Action No. 09:11-cv-B0880-KlR

PROOF OF SERVICE (This section should not be flied with the court unless nquired by Fed. R. Civ. P. 45.)

This subpoena for (name of individual and Iille. if any)

was received by me on (date)

o I served the subpoena by delivering a copy to the named person as follows:

on (date) ------------------------------ ---------o I returned the subpoena unexecuted because:

~ or

Unless the subpoena was issued on behalf ofthe United States, ore ne of its officers or agents, I bave also tendered to the witness fees for one day's attendance, and the mileage allowed by law, in the amount of

$

My fees are $ for travel and $ for services, for a total of$ 0.00 ------ ------

I declare under penalty of peIjury that this infonnation is true.

Date: ;lerver's signature

Pr, 'nted name and title

Server's address

Additional infonnation regarding attempted service, etc:

EXHIBIT

I \-\


AO 88B (Rev. 06109) Subpoena to Produce Documenls, Information, or Objects or to Permit lnspeclion of Premises in a Civil Action(Page 3)

Federal Rule of Civil Procedure 45 (c), (d), and (e) (Effective 1211/07)

(e) Protecting a Person Subject to a Subpoena. (1) Avoiding Undue Burden or Expense; Sanctions. A party or

attorney responsible for issuing and serving a subpoena must take reasonable steps to avoid imposing undue burden or expense on a person subject to the subpoena. The issuing court must enforce this duty and impose an appropriate sanction - which may include lost earnings and reasonable attorney's fees - on a party or attorney who fails to comply.

(2) Command to Produce Maleri4ls or Permit Inspection. (A) Appearance Not Required. A person commanded to produce

documents, electronically stored infonnation, or tangible things, or to permit the inspection of premises, need not appear in person at the place of production or inspection unless also commanded to appear for a deposition, bearing, or trial.

(B) Objections. A person commanded to produce documents or tangible things or to pennit inspection may serve on the party or attorney designated in the subpoena a written objection to inspecting, copying, testing or sampling any or all of the materials or to inspecting the premises - or to producing electronically stored information in the form or forms requested. The objection must be served before the earlier of the time specified for compliance or 14 days after the subpoena is served. If an objection is made, the following rules apply:

(I) At any time, on notice to the commanded person, the serving party may move the issuing court for an order compelling production or inspection.

(01 These acts may be required only as directed in the order, and the order must protect a person who is neither a party nor a party's officer from significant expense resulting from compliance.

(3) Quashing or Modifying a Subpoena. (A) When Required. On timely motion, the issuing court must

quash or modifY a subpoena that: (i) fails to anow a reasonable time to comply; (U) requires a person who is neither a party nor a party's officer

to travel more than 100 miles from where that person resides, is employed, or regularly tnmsacts business in person - except that, subject to Rule 45(c)(3)(B)(iii), the person may be commanded to attend a trial by traveling from any such place within the state where the trial is held;

(iii) requires disclosure of privileged or other protected matter, if no exception or waiver applies; or

(iv) subjects a person to undue burden. (B) When Permit/ed. To prOlect a pOlliOn subject to or affected by

a subpoena, the issuing court may, on motion, quash or modifY the subpoena if it requires:

(I) disclosing a trade secret or other confidential research, development, or commercial information;

("Ii) disclosing an unretained expert's opinion or infonnation that does not describe specific occurrences in dispute and results from the expert's study that was not requested by a party; or

[Iii) a person who is neither a party nor a party's officer to incur substantial expense to travel more than 100 miles to attend trial.

(C) Spec!IYing Conditions as an Alternative. In the circumstances described in Rule 45(c)(3)(8), the court may. instead of quashing or moditying a subpoena, order appearance or production under specified conditions if the serving,party:

(I) shows a substantial need for the testimony or material that cannot be otherwise met without undue hardship; and

(111 ensures that the subpoenaed person will be reasonably compensated.

(d) Duties in Responding to a Subpoena. (1) Producing Documents or ElectronicaOy Stored Information.

These precedl res apply to producing documents or electronically stored informftion:

(A) DOCUmf!nts. A person responding to a subpoena to produce documents mt:..st produce them as they are kept in the ordinary course of business or must organize and label them to correspond to the categories in the demand.

(B) Form fo .. Producing Electronically Stored In/ormation Not Specified. If a ,mbpoena does not specify a form for producing electronicaHy ~.tored infonnation, the person responding must produce it in a fonn or forms in which it is ordinarily maintained or in a reasonabl} usable fonn or fonns.

(C) Electronically Stored information Produced in Only One Form. The perwn responding need not produce the same electronically Il tored information in more than one form.

(0) inaccessible Electronically Stored Information. The person responding nee i not provide discovery of electronicaHy stored information from sources that the person identifies as not reasonably accessible beca lISe of undue burden or cost. On motion to compel discovery or fo',' a protective order, the person responding must show that the infoIlIlHion is not reasonably accessibJe because ofund"!." burden or cost. (fthat showing is made, the court may nonetheless order discovery from such sources jf the requesting party shows good cause, cor:sidering the limitations of Rule 26(b)(2)(C). The court may speci fy conditions for the discovery. (2) ClIliming Pripi/ege or Protection.. (A) Infonnation Withheld A person withholding subpoenaed

infonnation under a claim that it is privileged or subject to protection as trial-preparation material must:

(i) expressly make the claim; and (Ii) describe tile nature of the withheld documents,

communicatioru" or tangible things in a manner that, without revealing infom:ation itself privileged or protected, will enable the parties to assess the claim. (8) Information Produced. If information produced in response to a

subpoena is subj~t to a claim of privilege or of protection as trialpreparation material. the person making the claim may notifY any party that receiv(:d the information of the claim and the basis for it. After being notit'ied, a party must promptly return, sequester, or destroy the specified information and any copies it has; must not use or disclose the in formation until the claim is resolved; must take reasonable steps to retrieve the information if the party disclosed it before being DOti fled; and may promptly present the infonnation to the court under Sl:al for a detennination of the claim. The person who produced thl: information must preserve the information until the claim is resol" fed.

(e) Contempt. The issuing court may hold in contempt a person who. baving been served, fails without adequate excuse to obey the subpoena. A DODJ""'Y" failure to obey must be excused if the subpoena purport:; to require the nonparty to attend or produce at a place outside the ,imits of Rule 45(c)(3)(A)(ii).


ATTACHMENT A

DEFINITIONS AND INSTRUCTIONS

I . You are required to produce documents respo tlSive to the subpoena wherever

located and irrespective of the office of the finn to which thi1: subpoena is delivered.

2. The term "Amended Complaint" means the ccmplaint as amended and filed with

the United States District Court, Southern District of Florida 'JY QSGI on August 4, 20II in the

case entitled QSGI, Inc. v. IBM Global Financing, et al., Cast: No. 09:1 l-cv-80880-KLR,

appended hereto as Exhibit I.

3. The term "communication" means the disclosure, transmittal, transfer or

exchange of information (in the form of facts, ideas, inquiries or otherwise).

4. The term "computer" means servers (including IBM mainframes and non-IBM

servers), laptops and personal computers.

5. The term "concerning" means relating to, refening to, describing, evidencing or

constituting.

6. The term "document" has the broadest possible construction and includes, but is

not limited to, the original and/or any copies of any correspondence, book, pamphlet, periodical,

letter, calendar or diary entry, memorandum, message, calendar or diary, telex, telegram, cable,

telecopy, report, record, study, stenographic or handwritten not~, working paper or draft, invoice,

voucher, receipt, notice, check, statement, chart, graph, data orJther compilation, map, diagram,

blueprint, table, index, picture, list, promissory note, card, summary, transcript, continuation slip,

order, manual, photograph, contract, agreement, ledger, log, journal, instrument, accounting,

account, corporate minutes, meeting minutes, notebook, notes, schedule, voice recording, tape,

microfilm, data sheet, data processing card, disk, computer SOfuVlUe data which can be reviewed

from electronic media, including, but not limited to, emaiIs and metadata, memorandum and/or


record of telephone conversations or face-to-face conversations, or any other written, typed,

printed, recorded, transcribed, punched, taped, filmed, photoEraphed or graphic maker, however

produced or reproduced, and copies or reproductions of any of the above that differ in any

respect from the original, such as copies containing marginal, handwritten or "blind-copy" notes

or notations or other variations, drafts or non-identical copies. Designated documents are to be

taken as including all attachments, exhibits, enclosures, appendices and other documents that

relate to or refer to such designated documents.

7. The term "IBM" means IBM, including each ofits directors, officers, agents,

employees, attorneys, representatives, subsidiaries, affiliates and any other person who acts, has

acted or purported to act or have acted under its control or on its behalf.

8. The term "IGF" means IGF, a business unit ofIBM, including each of its agents,

employees, attorneys, representatives and any other person who acts, has acted or purported to

act or have acted under its control or on its behalf.

9. The term "QSGI" means QSGI, Qualtech Internitional Corp., and Qualtech

Services Group, Inc., their predecessors and their respective oflicers, directors, employees,

partners, corporate parents, subsidiaries, affiliates, trustees and beneficiaries, individually a\,d

collectively.

10. The term "SEC" means the United States Securities and Exchange Commission,

including each of its commissioners, directors, officers, agents, employees, attorneys,

representatives, affiliates and any other person who acts, has act ed or purported to act or have

acted under its control or on its behalf.

11. The terms "you", "your" or "McDonald Hopkins' shall refer to McDonald

Hopkins LLC, including each of its members, directors, officers, agents, employees, attorneys,

2


representatives, affiliates and any other person who acts, has acted or purported to act or have

acted under its control or on its behalf.

12. The tenns "all", "each" and "any" mean all and any.

13. The tenns "including" and "includes" mean "including" and "includes" without

limitation.

14. The tenn "IBM mainframe" refers to IBM's S} stemJ390 and System z computer

systems.

15. The tenn "used IBM mainframe" refers to IBM mainframes that were previously

owned by or leased to a customer.

16. The tenn "capacity" means the active hardware resources that are available to

process workloads on an IBM mainframe-including, e.g., the number of active processors

(including the capacity level, i.e., full capacity or some fractional capacity at which IBM

authorizes each active processor to operate) and the amount of active memory for which the user

has purchased the authorization to access and use.

17. The tenn ''memory'' means the RAM memory 0 f a computer system.

18. The tenn ''part'' means any component of a mairlframe computer, including bPI

not limited to field replaceable units (FRUs), memory cards, Input/Output (I/O) cards,

processors, processor book packages, multi-chip modules (MCMs), drawers and Single Chip

Modules (SCMs).

19. The terms "upgrade" and "downgrade" mean, rel~ectively, any upward or

downward change to the capacity of an IBM mainframe-whether such change involves a

change of parts or a change to data or microcode that relates to t he authorized capacity for that

IBM mainframe.

3


20. The term "configuration change" means any change of parts or to the data or

microcode that specifies the capacity for that IBM mainframe that a customer is authorized to

use.

21. Each document request shall be construed independently and not with reference to

any other document request for the purpose of limitation or exclusion.

22. The use of any definition for the purposes of this request shall not be deemed to

constitute an agreement or acknowledgment on the part of IBM or IGF that such definition is

accurate, meaningful or appropriate for any other purpose in tlJis action.

23. Whenever necessary to bring within the scope of any request any document~,

communications or things that might otherwise be construed tc be outside its scope: the use of a

verb in any tense or voice shall be construed as the use of that verb in all other tenses and voices;

the connectives "and" and "or" shall be construed either disjun,~tively or conjunctively as

necessary to bring within the scope of the discovery request all responses that might otherwise be

construed as outside its scope; and the use of a word in its singular form shall be deemed to

include within its use the plural form and vice versa

24. Documents shall be produced in the same sequellce as they are contained or fou:l<.:

in the original file folder. The integrity and internal sequence of the requested documents within

each folder shall not be disturbed.

25. Documents that exist in digital form should be JlIoduced in a reasonably usable

form.

26. If no documents are responsive to a particular request, state that no responsive

documents exist.

4


27. Should a claim be made that any requested ducument is not subject to discovery

by reason of a privilege or legal protection, provide a privilege log containing the information

required by Federal Rule of Civil Procedure 45(d)(2)(A).

28. These requests for production of documents a.ct: continuing in nature putsuant to

Rule 26 of the Federal Rules of Civil Procedure so as to require, whenever necessary, continuing

production and supplementation of responses between the initial date of production set forth

above and the time of trial.

29. "Action," as used herein, means the case entitltxl QSGI, Inc. v. IBM Global

Financing, et al., pending in the United States District Court,Southem District of Florida C",sc

No.09:II-cv-80880-KLR.

30. "Person" means any natural person or any business, legal, or governmental entity

or association.

31. IBM reserves the right to propound additional n:quests.

DOCUMENTS TO BE PRODUCED

I. All documents reviewed for andlor produced to:he SEC by QSGI, including any

log, list or inventory of documents produced to the SEC.

2. All communications and documents exchanged between the SEC and QSGI,

including, but not limited to, any Wells Notices, comment letter, and other correspondence.

3. All deposition and testimony transcripts and videJs created during any SEC

investigation(s) of or enforcement action(s) against QSGI.

4. All documents and communications concerning mM.

5. All documents or communications concerning any IBM policy or practice relating

to parts for IBM mainframes; IBM mainframe microcode; upgnules or downgrades to IBM

mainframes; or the reconfiguration or modification of IBM maintrames, including, but not

5


limited to, communications with IBM, customers, or any other person or entity about the six

month rule, as defined in Paragraph 16 of the Amended COll',plaint.

6. All documents supporting QSGI's allegation in Paragraph 14 of the Amended

Complaint that "[p]rior to 2007, IBM freely sold QSGI the parts and micro-code necessary for

QSGI to modify the capacity of the used IBM mainframe CODlPuters".

7. All documents supporting QSGI's allegation in Paragmph 16 of the Amended

Complaint that "IBM's policy change (hereinafter the 'six-m<lnth rule') did not extend to IGF or

IGF's customers".

8. All documents and communications concerning each IBM mainframe that QSGI

acquired, including the machine type, model information, serial number and configuration of

each such IBM mainframe; the entity or source from which QSGI acquired each such

mainframe; the price QSGI paid for each such mainframe; any upgmdes, downgmdes or

configumtion changes to such mainframe over time; the means by which those upgmdes,

downgrades or configuration changes were accomplished; from whom those upgmdes,

downgmdes or configumtion changes were requested; by whom those upgmdes, downgmdes or

configuration changes were requested; and the entity that perfOlmed such upgmdes, downgmdeo

or configuration changes.

9. All documents and communications concerning oach IBM mainframe that QSGI

sold, leased or otherwise tmnsferred, including, but not limited 10, the machine type, model

information, configumtion and serial number of each such mainlhune; requests from customers

for any upgmde, downgmde or configuration change to any such IBM mainframe; the means by

which any upgmdes, downgrades or configuration changes were accomplished; the entity that

performed such upgmdes, downgmdes or configuration changes ':0 the mainframe; the entity (if

6


any) that purchased, leased or otherwise obtained any such mainframe; the date of such

transaction; and any order or transaction documentation such as purchase supplements,

statements of work, invoices, agreements and any amendmenls or attachments thereto.

10. All documents and communications concerning QSGI's sale offfiM mainframe

parts or microcode, including but not limited to the entity (if any) that purchased or otherwise

obtained any such mainframe parts from QSGI or an entity or person acting on behalf of QSGf;

the specific parts or microcode that was sold or otherwise tranlacted; the date of such

transaction; and any order or transaction documentation, suchlS purchase supplements,

statements of work, invoices, agreements and any amendment!: or attachments thereto.

11. All documents concerning any attempts, wheth(:r successful or unsuccessful, to

acquire used mainframes from ffiM or to sell or otherwise tranlfer used mainframes to ffiM.

12. All documents and communications concerning any requests by QSGf, entities or

persons on behalf of QSGI, or any other entity or person for Pll!,ts, microcode, upgrades or

downgrades to used ffiM mainframes, including, but not lirnited to, requests to ffiM; any

requests that ffiM allegedly refused; the entity making such req uest; the date of such request; the

serial number of the ffiM machine to which such part or microcode would be added or removed;

and the intended, planned or actual use of any such part, microc'Jde, upgrade or downgrade to the

used mainframe that was the basis of such request.

13. All documents and communications concerning any purchase by QSGI, entities or

persons on behalf of QSGI, or any other entity or person of pam., microcode, upgrades or

downgrades to used ffiM mainframes, including, but not linJited to, purchases from IBM; the

entity making such purchase; the date of such purchase; the serial number of the ffiM machine to

7


which such part or microcode would be added or removed; l:nd the intended, planned or actual

use of any such purchased part, microcode, upgrade or downgrade to the used mainframe.

14. All documents and communications concerning any unsuccessful attempts or bids

made by QSGI to sell used IBM mainframes to customers.

15. All documents and communications concerning any requests or orders fur used

IBM mainframes that QSGI was unable to fulfill, including, but not limited to, QSGI's inability

to obtain any parts, microcode or changes to capacity; the efforts that QSGI undertook to obtain

such parts, microcode or changes to capacity; the reason that QSGI was unable to obtain such

parts, microcode or changes to capacity; and the customer thaI requested or placed such order.

16. All documents and communications concerning all sales of used IBM mainframes

that QSGI allegedly lost as a result of the six-month rule or IB \1's alleged refusal to provide

parts or microcode to upgrade or downgrade such IBM mainfnunes, including, but not limited to,

documentation concerning the identities of the customers, the elates of any alleged refusals by

IBM, the specific parts and/or microcode that IBM allegecI1y refused to provide and the entity or

person from whom the customer obtained a used mainframe or other non-mainframe server.

17. All documents and communications concerning the income, profit or revem;~

(including, but not limited to, sales, lost maintenance or service revenue) that QSGI allegecI1y

lost as a result of the six-month rule or IBM's alleged refusal to provide parts, microcode,

upgrades, downgrades or configuration changes for a used IBM mainframe.

18. All documents and communications supporting (lSG!' s allegations in Paragraphs

26 and 31 of the Amended Complaint that QSGI has "lost profiti:, lost business and been

rendered unable to compete in the used IBM mainframe computu' market", that QSGI, "(a]s a

direct and proximate result of [IBM's] unfuir and deceptive trade practice QSGI has been

8


damaged", and that IBM "damaged the business ofQSGI ca~sing it to lose profits, lose its

ongoing business and to lose the future business it would have otherwise received".

19. All marketing and promotional materials for QSGI's IBM mainframe business,

including, but not limited to, advertisements, advertising mat~rials, brochures, articles, web

pages, wOOs, pamphlets, price lists, product specifications, Pless releases and catalogs.

20. All documents and communications relating tf' planning, analyses or strategy

concerning QSGI's used mainframe business, including budg':ts, sales projections, sales

estimates, sales, business plans, wilds, short- or long-term strategies or objectives, competitive

plans, valuations, forecasts and presentations.

21. All documents concerning QSGI's inventory oJ· used IBM mainframes and parts,

including but not limited to short- or long-term strategies or otjectives; valuations; forecasts and

presentations relating to QSGI's inventory of used IBM mainfimnes and parts; the contents

(machine-type and model information), serial numbers, volume.' and value of such inventory; any

attempts to sell or any potential sale of all or part of QSGI' s inventory of used IBM mainframes

and parts to any person or entity; the sale of QSGI's inventory ofused IBM mainframes to Top

Gun Technology; and QSGI's reduction ofits mainframe inventory, as detailed in QSGI's

November 26, 2007 press release titled "QSGI Announces Data Center Hardware Division

Restructuring".

22. All documents and communications concerning the finances of QSGI, including

but not limited to earnings caII transcripts; QSGI's tax returns; and documents concerning

revenues, costs, profits, losses, net income, depreciation and the write-down of assets.

23. The tax returns of any QSGI principal, director, 0 r officer.

9


24. All docwnents and communications concerning sources frorn which used IBM

mainframes or parts, upgrades, downgrades, configuration changes or capacity for IBM

mainframes could be purchased or obtained.

25. All documents and communications concerni ~g the sale of used IBM mainframes

by any broker, seller or reseller of used IBM mainframes, induding but not limited to Top Gun

Technology, Inc., Qualtech International Corp., Qnaltech Services Group, Inc., and WindsorTech

Inc., and any documents relating to competition with vendo~, brokers, sellers and resellers of

new and used IBM mainframes.

26. All documents concerning any persons or entities that sell or lease IBM

mainframes (whether new or used) or non-IBM servers (whet'1er new or used), including any

documentation, marl<:et studies, or strategic plans concerning or describing competition between

and amongst IBM mainframes (whether new or used) and non-IBM servers (whether new or

used).

27. All docwnents concerning new or used mainframes or non-IBM servers that

potential customers considered, or were offered, as an alternati ve to any QSGI offering.

28. All documents concerning any sales or other tra,1Sactions that QSGI lost to iBM,

to non-IBM sellers of IBM mainframes, or to sellers of non-IBM servers, including any

documents concerning the IBM or non-IBM servers that any potential customer chose instead of

obtaining a used mainframe from QSGI, and any documents comparing QSGI's offering to used

or new servers (including mainframes) sold by IBM or another entity.

29. All documents concerning prices when selling or otherwise transacting in uored

mainframes or parts thereof, including but not limited to any fonnulas, competitive benchmarks

or comparisons that QSGI uses to set such prices.

!O


30. All documents and communications concerning the definition of the alleged "used

IBM mainframe computer market", including but not limited to documents that support QSGI's

purported ''used IBM mainftame" computer market. (Am. Compl. fir 12, 19.)

31. All documents and communications concerning the definition of the alleged

geographic market of "the United States of America". (Am. Compl. 'llI9.)

32. All documents and communications concernir.g QSGI's allegation that IBM has

monopoly power in an alleged market for used ffiM mainfranes. (Am. Compo 'V'll 11,19,28.)

33. AlI documents and communications supporting QSGI's allegations in

Paragraph 25 of the Amended Complaint that "IBM and IGF use of their monopoly po~r over

the micro-code is an unfair business practice" or that IBM "has engaged in a deceptive and unfair

trade practice".

34. All documents and communications conceminf QSGI's filings with any

governmental agency, including but not limited to drafts of such filings.

35. All communications with Top Gun Technology. Jamie Owens or Joel Owens.

36. AlI documents and communications concerning any actual, proposed,

contemplated or potential business ventures with IBM.

37. Directories, organizational charts or other documents sufficient to show the name,

title and reporting relationship of QSGI' s employees, officers and directors and the corporate

structure of QSGI, including how QSGI's corporate structure c1Janged as a result of dissolution,

mergers, reverse mergers, acquisitions, asset sales or other corporate transactions.

38. AlI documents and communications concerning he reverse merger between QSGI

and KruseCom, LLC, including but not limited to documents concerning the rationale for and

analysis of such reverse merger; any preparation for such reverse merger and completion of such

II


reverse merger; and documents relating to the financial interests of any QSGI principal, director

or officer in KruseCom, LLC.

39. AIl documents and communications concerning QSGI's bankruptcy proceeding,

including its decision to file for bankruptcy and its preparation for the bankruptcy proceeding.

40. All documents and communications concernini~ QSGI's acquisition of Qualtech

International CoIp. and Qualtech Services Group, Inc., in or around 2004.

4 I. All documents and communications relating to any fraud, self-dealing, or

allegations of fraud or self-dealing, committed by QSGI or its rlliliates' principals, investors,

employees or fiduciaries, including arising out of QSGI's financing arrangements, its dissolutilJn.

any mergers, reverse mergers, acquisitions, asset sales or other corporate transactions.

42. AIl documents and communications concerning policies or practices for document

retention and the storage of QSGI' s documents, including but not limited to correspondence with

any vendor or company used by QSGI to store or host documer;ts, payment stubs or receipts and

documentation concerning the non-payment of any amounts owed in connection with storage or

hosting of QSGI documents.

43. An inventory of all QSGI documents stored with or hosted by any vendor or

storage company and a copy of all such QSGI documents. To the extent such documents no

longer exist or have been lost, all documents concerning the circumstances and facts relating to

the destruction or loss of such documents, including but not limi ted to the relevant QSGI

personnel; any in-house or outside counsel retained by QSGI at the time; vendor personnel

involved; the date(s) and manner of such destruction or loss, including without limitation the

destruction or loss of any backup copies; who at QSGI was notified of such destruction or loss or

that such destruction or loss was imminent; the date of such notification; approval or assent, if

12


any, by QSGI to any such destruction or loss; steps taken to r'!cover any such documents, e.g.,

from backups, and the results of such steps; and evidence tha1 no backup copies now exist in any

form or place.

44. All documents and communications that QSGI identifies in its Initial Disclosures.

13


EXHIBIT 1


; ~.

Case 9: 11-cv-80880-KlR Document 7 Entered on FlS) Docket 08/04/2011 Page 1 of 8

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF FJ))RIDA

CASE NO: 9: II CV 8088e -KLR

QSGI, INC., ADELA WARE CORPORATION

Plaintiff

v.

IBM GLOBAL FINANCING, A Division of INTERNATIONAL BUSINESS MACHINES CORPORATION,

INTERNATIONAL BUSINESS MACHINES CORPORATION, Parent to andlor d/b/a IBM GLOBAL FINANCING,

Defendant.

----------------------------~/ AMENDED COMPLAIN1:

COMES NOW the Plaintiff, QSGI, INC. by and tbrcough the undersigned counsel and

sues the Defendants, IBM GLOBAL FINANCING and INTERNATIONAL BUSINESS

MACIDNES CORPORATION, and states as follows:

I. This is an action for damages brought pursuant to the Florida Antitrust Act of

1980, Fla. Stat. § 542.1 5, et seq. ("Florida Antitrust Act"), and the Florida Deceptive and Unfair

Trade Practices Act ("FDUPTA"), FIll. Stat.§50I .201, et seq.

2. Plaintiff's action is an action for damages in ."cess of the srun of SEVENTY-

FIVE THOUSAND ($75,000.00) DOLLARS AND OOIlOt), exclusive of interest, costs and

attorneys fees.

3. QSGI, INC. ("QSGr') is a Delaware corpol'8lion, with its principal place of

business in Palm Beach, Palm Beach County, Florida. At all times material hereto QSGI was

engaged in the business of purchasing, selling and servicing used INTERNATIONAL


Case 9: 11-cv-80880-KLR Document 7 Entered on FLf:D Docket 08/04/2011 Page 2 of 8

BUSINESS MACHINES CORPORATION ("IBM") manframe computers throughout the

United States of America.

4. The Defendant, IBM, is a New York coI]loration with its principle place of

business located in New York. IBM is a leading matf'lfacturer and seller of mainframe

computers throughout the United States of America and the world. At all times material hereto

QSGI was engaged in the business of purchasing and selling used INTERNATIONAL

BUSINESS MACHINES CORPORATION C'IBM") mainframe computers throughout the

United States of America and Florida.

:; 5. The Defendant, IBM GLOBAL FINANCIN6 ("IGF") is a New York co;:poratior

with its principle place of business located in New York. At all times material hereto IGF wa.s

engaged in the business of purchasing and selling used IBM mainframe computers throughout

the United States of America and Florida.

6. This Court has jurisdiction pursuant to 28 U.S.C. §1332.

7. IBM designs, manufuctures, sells and distributes new IBM brand mainframe

computers. IBM is the sole designer, manufacturer and sell'!T of IBM mainframe computers.

IBM's sales of new mainframe computers presently account [')r approximately 35% of the new

mainframe computer market.

8. IBM's mainframe computers are large commercial computers typically costing

millions of dollars to purchase and hundreds of thousands of d,)Ilars to operate. As a result of

the enormous cost associated with purchasing IBM's mainfisme computers, IBM leases andlor

fmances the purchases of new mainframe computers through its own financing division, IGF.

9. In addition to financing leases or purchases of IlIM's new mainframe computers,

IGF is also in the business ofre-acquiring the used mainfuun" computers at the conclusion of the

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Case 9: 11-cv-80880-KLR Document 7 Entered on FL:3D Docket 08/04/2011 Page 3 of 8

lease or in the secondary used market. IGF subsequmtIy remalkets the used mainftame

computers and resells or re-leases them to new or existing customers.

10. IBM and IGF conduct business in the Southe::n District of Florida and the acts and

damages which give rise to this complaint all occurred in F aIm Beach County Florida, therefore

venue is proper in this court pursuant to 28 U.S.C. §!39J.

11. QSGI operated in direct competition with BM and IGF in the used mainframe

market. QSGI purchased used IBM mainframe computers tin the open market and marketed the

used mainframe computers to customers interested in savi 19 substantial amount of money by

purchasing a used instead of a new mainframe computer.

12. IBM's mainframe computers operate using proprietary software which is licensed

to the purchaser of the mainframe computer. The com;uting capacity of IBM mainframe

computers are measured in part in Millions of Instruction per Second ("MIPS"), and each used

mainframe is configured to run at a certain capacity, i.e. 501~) MIPS, 4000 MIPS or 1000 MIPS.

The price of the used mainframe computers and the cost of,icensing IBM's operating software

are directly correlated to the amount of capacity.

13. Central to QSGI's ability to participate and compete in the used IBM mainfraMe

computer market was its ability to change the capacity of the used IBM mainframe computer to

meet the needs of its purchasers. The capacity of IBM'f mainframe computers can only be

modified using parts and micro-code controlled by IBM. nlUS to modifY the used mainframe

computers, QSGI would purchase the necessary parts and the micro-code from IBM. Because of

the substantial costs associated with operating an IBM mainframe computer with excess

capacity, QSGI's ability to purchase these parts and micro-ccdes and subsequently modify the

capacity of the used mainfran1e computers was critical to its cx.stence and survival.

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i i . ..

Case 9:11-cv-80880-KLR Document 7 Entered on FLSD Docket 08/04/2011 Page 4 of 8

14. Prior to 2007, IBM freely sold QSGI the lJ8ltS and micro-code necessary for

QSGI to modify the capacity of the used IBM mainframe ::omputers. Although the purchase

price of the used mainframe computers included the unus:d capacity, the purchase price was

mitigated by QSGI's ability to tum off the unused capacityJf the mainframe computer. Turning

off the unused capacity lowered the licensing ·costs to the :mrchaser because the purchaser did

not have to pay for licensing software for the unused capacit~,.

IS. QSGI marketed itself and operated as an e:'ficient, competent and economical

alternative to IGF, and eventually it became the second largest seller of used IBM mainframe

computers. This made them a direct competitor of IGF, '1hich was also re-selling used 1I\~1

mainframe computers.

16. In or around 2007, IBM instituted a policy c:.lmge whereupon it would no longer

freely sell QSGI the parts and micro-code needed to modi~f the capacity of the used computers

QSGI was buying and selling. After the policy change, IBM would not sell QSGI the parts and

micro-code for its customers until after the used mainframe computer had been installed and

running for at least six (6) months. IBM's policy change (lll,reinafier the "six month rule") did

not extend to IGF or IGF's customers. IBM continued to give IGF the parts and micro-code it

needed to change the capacity of its customers' used IBM mainframe computers prior to

shipping.

17. IBM's six month rule had the effect of drivir.g QSGI from the market and forcing

all potential customers to deal with IGF at uncompetitive price.s.

18. IBM has unlawfully exercised its monopoly power by instituting its six month

rule while allowing IGF to avoid the rule and modify used munframes prior to shipping. As a

result IBM and IGF have an unfair advantage, have unfairl) competed with QSGI, and have

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~: :'.

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Case 9: 11-cv-80880-KLR Document 7 Entered on FLS[l Docket 08/04/2011 Page 5 of 8

violated the Florida Antitrust Act by using their monopoly power to quash QSGI's ability to

compere and exist in the market place for used IBM mainfulme computers. As a result, IBM's

actions have injured competition. caused QSGI to lose busin~ss, and rendered it impossible for

QSGI, or any other entity, to compete against IGF and IBM. IBM's control of the micro-code

allowing capacity modifications precludes others from engaging in such business, and its

decision to tie access to the micro-code to used mainfram,: computers sold only by IGF was

violates Florida law.

19. The manner and controls enforced by IBM lor the modification of used IB:,Fl

mainframes, results in the relevant economic market for the claims asserted, and th~ ,de-'s'"

geographic market is the United States of America.

20. There are numerous barriers which restrict tht: ability of others involved in the

used IBM mainframe market. These barriers include the inability to modify used IBM

mainframes and the six month rule, which precludes any other entity from conducting any

profitable business.

21. IBM and IGF have improperly tied the saIe of used IBM mainframe computers to

the purchase of the micro-code. The used IBM mainfmme computers cannot be modified

without the purchase of micro-code. In order to modify the used IBM mainframe computers to

meet the customer's demand, the micro-code must be purchased. No other vendor, other than

IBM or IGF, has access to the micro-code which is the soI,~ S,)urce of modifying the used IBM

mainframe computers.

22. The causes of action asserted herein arise under Florida Law, to wit: The Florida

Deceptive and Unfair Trade Practices Act, Fla. Stat. 501 § 20., et seq and the Florida Antitrust

Act, Fla. Stat. §542. 018. The actions of IBM and IGF C(lmrlained of herein are done for the

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,,) .,

Case 9:11-cv-80880-KLR Document 7 Entered on FLSD Docket 08/04/2011 Page 6 of 8

purpose of maximizing IBM's profits by using the monoPlly power it has through the micro

code to gain a monopoly over the used IBM mainframe corlputer market. As a result of its use

of monopoly power it unfairly increased its market share. If:M's increase market share is not the

result of any better management or business operation, but is due solely to using its monopoly

power it has to injure its competition.

23. The operations oflOF were and are controlled by IBM, and IOF is nothing more

than a segment of IBM. As a result each Defendant is jointl) , and severally liable for the injuries

and damages complained of herein. IBM and IGF have use-i their control of the micro-code to

obtain and maintain a dominant and controlling share of the relevant geographic market and have

used such power to restrict competition and in fact, have rerjdered it impossible for competitic1

to exist.

24.

25.

COUNT I

FLORIDA DECEPTIVE AND l'tJFAIR

TRADE PRACTICES ACTS

Pamgraphs 1-23 are re-alleged and reaffrrmeJ.

IBM and IOF use of their monopoly power over the micro-code is an unfuir

business practice. The Defendants, having control over tt.e micro-code that QSGI must use in

order to modify used IBM mainframe computers, has enE;ag,~d in a deceptive and unfair trade

practice, by controlling QSOI's ability to sell and modify \IS(!d IBM mainframe computers, for

no reason other than to exercise its monopoly power and gain market share for IBM and IOF.

26. As a direct and proximate result of such unJrurmd deceptive trade practice QSOI

has been damaged. Specifically, it has lost profits, lost bushess and been rendered unable to

compete' in the used IBM mainframe computer market.

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Case 9:11-cv-80880-KLR Document 7 Entered on FLED Docket 08104/2011 Page 7 of 8

WHEREFORE Plaintiff, QSGI, prays this Honorab.<: Court enter judgment in its favor

and against the Defendants for all damages allowed by law, its attorneys' fees and all costs of

this proceeding and further enters judgment prohibiting the Defendants from engaging in such

unfair and deceptive trade practices in the future.

COUNT II

BREACH OF FLORIDA STATUTE § 542.19

27. Paragraphs 1-22 are re-alleged and reaffinned

28. At all times material hereto Defendants had monopoly power over the relevant

geographic and used IBM mainframe markets.

29. Defendants used this monopoly power to damage, prevent and eventually drive

competition from the used IBM mainframe market.

30. IBM use of its monopoly power to drive out competition was unjustified, had a

pernicious effect on competition and lacked any redeeming yi:1ue.

31. By the exercise of such dominant monopolY power the Defendants directly

damaged the business of QSGI causing it to lose profits, los~ ,Is ongoing business and to lose tho

future business it would have otherwise received.

32. IBM has also eliminated all possibility of price competition in the market for used

IBM mainframe computers.

WHEREFORE, Plaintiff, QSGI prays this HonoraC Ie Court enter judgment in its favor

and against the Defendants for all damages allowed by [a w, including treble damages, its

attorneys' fees and all costs of this proceeding and !iuther enters judgment prohibiting

Defendants from engaging in such Antitrust Conduct in the future.

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• Cas~ 9:11-cv-80880-KLR Document 7 Entered on FL~;D Docket 08/04/2011 Page 8 of 8

DEMAND FOR TRIAL BY .JURY

Plaintiff, QSGI demands trial by jury of all issues so "::iable as a matter of right.

RespectfJIly submitted,

THE FERRARO LAW FIRM

Is! Juan J '. Bauta, II

JUAN P BAUTA II Florida lIar Number: 894060 4000 Ponce de Leon Blvd., Suite 700 Miami, Ilorida 33146 TeiephOlte: (305) 375-0111 Facsimik (305) 379-6222


I hereby certifY that a true and correct copy was ser 'ed electronically via CMlECF this 3rd day of August, 2011.

-8-

Is! Juan I'. Banta, II

JUAN P. BAUTA, II, ESQ. Florida Bar No.: 894060

---------------_._-_ ...


McDonaldH k' op inS LLC Attorneys at law

Direct Dial: 216.348.5400 E-mail: llscarby@mcdonatdhopkins.<!om

March 16, 2012

VIA EMAIL AND FEDERAL EXPRESS

Teena-Ann V. Sankoorikal ([email protected]) Cravath, Swaine & Moore LLP Worldwide Plaza 825 Eighth Avenue New York, NY 10019-7475

Re: QSGI, Inc. v. IBM Globllf Financing, et lIf., Civil Action No. 09: 11-cv-80880-KLR (S.D. Fla.)

Dear Ms. Sankoorikal:

600 Superior Avenue, East Suile 2100 Cleveland, Ohio 44114

P 216.348.5400 F 216.348.5474

McDonald Hopkins LLC understands that the above-captioned litigation was dismissed by the Court on March 14, 2012. In light of this, McDonald Hopkins urges your client to withdraw its Subpoena dated March 2, 2012 ("Subpoena"), which we received on March 5, 2(112. In the event the Subpoena is not withdrawn, we object as follows:

Pursuant to Fed. R. Civ. P. 45(c), please accept this letter as the cbjection of McDonald Hopkins to your client's Subpoena. McDonald Hopkins is not a party to, and does lOt represent a party in connection with the above-captioned litigation. McDonald Hopkins objects to the Subpoena on several gmunds.

First, McDonald Hopkins objects to the Subpoena on the ground l that the requested documents can be obtained from your client's party opponent in the above-captiond litigation. Any responsive and nonprivileged documents in our possession are in the custody and c('I1tml of QSGI and can and should be produced through QSGI in the regular course of discovety. Upon it Jormation and belief, discovery may be ongoing in tile above-captioned litigation and your client has not eXlausted its etrotts to seek production of the requested documents from QSGI. Your client is therefore without substantial need to request the documents from a non-party. The third-party discovelY sought from McDonald Hopkins pursuant to the Subpoena can be obtained from sources that are more convenient, less burdensome andlor less expensive. Thus the Subpoena inflicts undue burden and expense upon McDonaid Hopkins.

Second, McDonald Hopkins objects that the Subpoena is unduly burdensome in that it is unreasonably bmad and unnecessary. The Subpoena would require our review of over one million documents. These overbroad requests likely would result in a vast number of documents that woul:l need to be reviewed for relevance and applicable privileges. Without sufficient definition and refinement (,f the document requests, such a review and production would impose undue burden and expense on M,Oonald Hopkins. Likely, even with refinement, the costs and burdens upon McDonald Hopkins would be significant.

Third, McDonald Hopkins objects to the Subpoena on the grounds that the document requests therein are substantively identical to your client's First Request for Production of Documents served on plaintiffs counsel in the above-captioned litigation. Upon information and belief, plaintiff's counsel has produced to your client - or will produce - documents that are cumulative or du plicative of the documents requested in

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Teena-Ann V. Sankoorikal March 16,2012 Page 2

the Subpoena. Snch duplicative rcqnests are unnecessalY and impose undue burden and expense on McDonald Hopkins.

Fourth, McDonald Hopkins objects to the Subpoena on the g1"Ound~ that it seeks to require the production of documents that encompass information that is legally protected from disclosure, including, but not limited to, information protected by the attorney-client privilege and/or the atlJtney work prodnct doctrine. McDonald Hopkins will not produce or disclose such privileged information in response to the Subpoena.

Fifth, McDonald Hopkins objects to the Subpoena on the grounds that it seeks to require the production of documents that are unrelated to the subject matter of the above-cap.ioned litigation, ilTelevant to and beyond the scope of the issues in dispute, and not reasonably calcul.t"d to lead to the discovelY of relevant informatioll. Further, as the costs thrust upon McDonald Hopkins n compliance will be significant, there is 110 reason that your client should not advance the costs prior to McDonald Hopkins's commencement of document review.

Finally, the Subpoena fails to allow a reasonable time to comply. Without limitation or refmement of the document requests, McDonald Hopkins objects that the Subpoena loes not afford it sufficient or reasonable time to review the over one million documents and produce relevant, responsive and non-privileged documents in response to the SUbpoena.

Please contact me at yoUI' ftrst availability to discuss an amicable relDlution of this issue.

Very truly yours,

1t.I~Ad~A' Edmund -;;;,-;:;,;, ,g;~o)

cc: Laura Besvinick, Esq., [email protected] (email only) Juan Pablo Bauta, II, Esq., [email protected](email only)

{303S233:} McDonaldH k' Op InSLLC Attorneys at law


STIPULATED LETTER AGREEMENT REGARlIING IBM SUBPOENA TO MCDONALD HOPKINS LLC IN CONNECTION WITH

QSGI, INC v. IBM, No. 09:11-cv-80880·KLR (S.D. FLA.)

WHEREAS, McDonald Hopkins LLC ("McDonald Hopkins'~ Is serving as counsel in connection with a Securities and Exchange Commission ("SEC") matter titled "In the Matter of QSGI, Inc., HO·11303"; .

WHEREAS, in connection with that and other representations, McDonald Hopkins maintains certain of QSGI's electronic and hardcopy documents ("QSGI Documents"), including documents that are responsive to discovery requests issued by Defendants IBM Global Financing and International Business Machines Corporation (jointly, "IBM") in the above·titled matter (the "QSGI Litigation");

WHEREAS, in connection with that representation, McDonald Hopkins previously produced to the SEC, on behalf of QSGI, among other documents, 3.82 boxes of hard copy documents (these boxes of documents being referred to herein as the "SEC Documents") that include documents responsive to IBM's discovery requests in the QSGI Litigation;

WHEREAS IBM has Issued a subpoena in the QSGI Litigation seeking the production of documents from McDonald Hopkins relating to QSOI ("Subpo,ma");

WHEREAS, McDonald Hopkins has raised objectionn to the Subpoena, but both IBM and McDonald Hopkins desire to resolve any differences outske of court; and

WHEREAS, McDonald Hopkins and IBM have in good faith conferred and have agreed upon the terms of this Stipulated Letter Agreement ("Stipulation'~;

NOW. THEREFORE, BE IT RESOLVED that McDonald Hopkins and IBM hereby stipulate to the following: .

1. McDonald Hopkins represents that it will provi de all potentially responsive nonprivileged QSGI Documents in McDonald Hopkins' custody to QSGI's counsel in the QSGI Litigation, Juan Bauta of the Ferraro~aw Firm. Potentially responsive QSGI documents include, but are not limited to, all QSGI documents that QSOI could potentially use to support its claims ir the QSGI Litigation, all QSOI documents that IBM could potentially use to :'IUPPOr! its defenses in the QSGI Litigation, and aU documents potentially responsive to the Subpoena. McDonald Hopkins has provided certain QSGI Docum!nts to Mr. Bauta and will have substantially completed providing the remainier of the QSGI Documents to Mr. Bauta by April 20, 2012.

2. McDonald Hopkins further represents that it il not undertaking any review for relevance and will provide every non·privileged QSGI Document that McDonald Hopkins maintains to Mr. Bauta, including, without limitation, any and all hardcopy documents and electronic documentH (including all emails from PST files), correspondence and deposition transcripu, to the extent McDonald Hopkins

(3698535:5)

EXHIBIT

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is aware such exist following a reasonable investigation and are in the possession of McDonald Hopkins, except those that Mc Donald Hopkins withholds on the basis of privilege or work product; provided, h'lwever, should McDonald Hopkins possess electronic equipment which does not pertain to QSGI and is not related to the SEC's investigation ofQSGI, such shall not be provided to Mr. Bauta.

3. McDonald Hopkins represents that all electrode documents have been or will be provided to Mr. Bauta as McDonald Hopkins lias them, without loss of associated metadata.

4. To the extent that McDonaid Hopkins withhclds any documents on the basis of privilege or work product (other than internal McDonald Hopkins work product and routine privileged correspondence with th€ client), McDonald Hopkins agrees to provide IBM with a privilege log by May 4, 2012, that complies with the Federal Rules of Civil Procedure. McDonald Hopkins further agrees to respond to inquiries regarding any such privilege 10 g, except to the extent that such response would result in a waiver of iegal privi lege.

5. McDonald Hopkins will provide to IBM's counsel by April 20, 2012, information describing generally, at a high level, the documents that McDonald Hopkins has produced to Mr. Bauta, including:

A. to the extent known following a reasonable investigation, a description of each of the general types of source(~) from which McDonald Hopkins produced the documents. The description wiJI include the type of each source (e.g., physical files, electronic files, PST file(s), backup tape(s), backup archive(s), hard drive image, (;\c.); provided, McDonald Hopkins is not required to identify specific sources for specific documents produced;

B. the estimated total volume of documents produced to the extent there Is a reasonable basis to provide it;

C. the general categories of documents produced (e.g., emalls, financial records, accounting records, correspondence);

D. the format (e.g., searchable electronic, PDF, TIF, hardcopy); and

E. the date(s) that such documents were produced to Mr. Bauta.

6. McDonald Hopkins will provide by April 20. 2012, information describing, at a high level, the documents that McDonald Hopkins has not yet produced to Mr. Bauta, if any, inciuding:

{3698S3S:S1

A. the general type of source(s) from whj,)h McDonald Hopkins will produce outstanding documents;

2 EXHIBIT

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B. the approximate total volume of outstarding documents; and

C. the date(s) on which McDonald Hopkins anticipates producing these documents to Mr. Bauta.

7. McDonald Hopkins will notify IBM within one (I) day of the completion of its provision of QSGI Documents to Mr. Baull,. On that same day, McDonald Hopkins will provide to IBM the infonnation specified in Paragraph 5 for QSGI Documents, if any, as to which McDonald Fopkins previously did not provide such infonnation to IBM.

8. McDonald Hopkins represents that it has obtained a written agreement from the SEC that the SEC will return to QSGI the 382 boxes of documents produced by QSGI, including the SEC Documents.

9. McDonald Hopkins agrees, to the extent rensonably necessary, to use its best effurts to facilitate the prompt return of the SEC Documents to QSGI. IBM may copy (at IBM's expense) any and all documents so produced.

10. McDonald Hopkins represents that it will prol'ide to Mr. Bauta by April 24, 2012, its prior Bates stamped production of documents to the SEC.

II. IBM will suspend its Subpoena until May 4, ::012, pending McDonald Hopkins's completion ofthe actions described in Paragraphs I through 10 above. During such time, McDonald Hopkins will not be obligated to respond to the Subpoena, except as otherwise set forth in this Stipulation.

12. McDonald Hopkins agrees (a) to complete the actions described in Paragraphs I through 3 and 5 through 9 above promptl), but in any event, not later than April 20, 2012, (b) to complete the action described in Paragraph 10 above promptly, but in any event, not later than April 24, 2012, and (c) to notify IBM within one (I) day of snch completion. McDonald Hopkins agrees to complete the action described in Paragraph 4 above promptly, but in any event, not later than May 4,2012. McDonald Hopkins will b, deemed to have complied with the Subpoena on such date, except that if IBM learns at any point thereafter that McDonald Hopkins failed to comply with tbis Stipulation, including McDonald Hopkins does not produce documents in a uSt:able format when it possesses such documents in a useable fonnat (due to media problems, illegibility, or otherwise) or cannot be used by Mr. Bauta for the purpo;;es of production to IBM, then IBM may (after conferring in good faith with McDonald Hopkins) seek the enforcement of the provisions of this Stipulated Letter Agreement which IBM believes have been breached by McDonald Hopkins. Without otherwise limiting the generality of the foregoing, nothing in this Stipuiation sball obligate McDonald Hopkins to produce documents that it does not have in its custody or in a fonnat that is not readily accessible to M"Donald Hopkins; provided further, nothing herein shall be construed to require Q SOl to produce documents to IBM.

(l698535:S)

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McDonaldH k' op mSllC Attorneys at Law

Direct Dial: 216.348.5703 E-mail: [email protected]

April 20, 2012

Via Regular U.S. Mail and Email

Benjamin Diessel, Esq. Cravath, Swaine & Moore LLP 825 Eighth Avenue NewYork,NewYork 10019

Teena-Ann Sankoorikal, Esq. Cravath, Swaine & Moore LLP 825 Eighth Avenue New York, New York 10019

([email protected])

([email protected])

600 Superior Avenue, East Suile 2100 . Cleveland, Ohio 44114

P 216.348.5400 f 216.348.5474

Re: Response of McDonald Hopkins LLC to Sections ~; and 6 of the Stipulated Letter Agl'eement l'e IBM Subpoena to McDonald Hopkins LLC in re: QSGI, Illc. vs. IBM Global Fillancing, et af.; 09:11·cv-80880-KLR (S.D. Fla.)

Dear Ben and Teena:

McDonald Hopkins LLC ("MH") provides the following infi'lmation with regard to paragraphs 5 and 6 of the above-referenced Stipulation:

5.A. McDonald Hopkins has alTanged for the Securities (lnd Exchange Commission ("SEC") to produce to Mr. Bauta 382 boxes of hard copy documents which MH had previously produced to the SEC; it is MH's understanding that ~!{r. Bauta is alranging for inspection of those 382 boxes by IBM at a mutually agreeable time, date and place. MH will also provide to Mr. Bauta copies of additional documents and 23 privilege logs provided to the SEC, in accordance with paragraph 10 of the StipUlation.

MH has also provided to Mr. Bauta the following Q~:GI electronic equipment: a Proliant DL380G3/G4 server containing six hard drives; 39 disks (mail archives and PSTs) on a spindle; four DVD disks; and 21 back-up tapes.

Additionally, MH has provided to attorney Bauul approximately 390,000 pages of electronic data through a "rolling production" from mid-March through April 19, 2012.

MH has also made available for inspection by Mr. Buuta approximately 50 different files of MH relating to services rendered to QSGI pertaining to various matters. Following

{3719385:} Chicago I Cleveland I Columbus I Detroit I West Palm Beach

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Benjamin Diessel, Esq. Teena-Ann Sankoorikal, Esq. April 20, 2012 Page 2

Mr. Bauta's review and designation of documents as relevant, MH will review those documents designated as relevant, for privilege and work product materials, and delete them from the balance of materials which will be cop ied and delivered to MI'. Bauta. MH will also prepare a privilege log for IBM counsel as to the documents withheld on grounds of privilege and work product. The total volume of such documents to be produced cannot be estimated until the relevancy ane privilege reviews ofthe documents are completed.

The general types of sources from which these documents were produced to Mr. Bauta are elech'onic files, physical files, PST files, hard drive images, (rives and disks.

S.B. The estimated total volume of documents produced, t) the extent there is reasonable basis to provide one, is approximately 390,000 pages of electronic documents recently provided to Mr. Bauta; 382 boxes of hard copy documents, estimated at approximately 1.2 million pages; and whatever additional documenll: may be produced in the future.

MH estimates the total volume of pages produced to Mr. Bauta at over 1.5 million, including all electronic and hard copy documents.

S.C. The general categories of documents produced to Mr. Bauta include emails, correspondence, accounting records, financial information and miscellaneous information and records.

S.D. The format of the documents produced to Mr. Bau1a include hard copy and electronic OCR'd, text searchable TIF images with associated metadata, and PDFs.

S.B. Blech'onic documents were produced to Mr. Bauta Otl January 23, March 16, March 21, and April 2 and April 19,2012. On April 2, 2012 MFI informed Mr. Bauta that its QSGI files were available in MH's West Palm Beach office for his review at a mutually agreeable time, date and place.

6.A. MH will provide to Mr. Bauta the following documents, not yet produced, as soon as can be reasonably accomplished: (I) the non-privileged documents selected as relevant by Mr. Bauta from his inspection of the MH QSGI files:'11 its West Palm Beach Office; such documents will be delivered to Mr. Bauta as soon as practicable, and (2) documents previously produced to the SBC not already provided to Mr. Bauta. The general types of sources from which MH will produce those documents are hard copy MH files and electronic files. The approximate total volume (,f such documents cannot yet be reasonably estimated, nor can the date on which MH anticipates producing these documents to Mr. Bauta.

(3648426:) McDonaldH k' 00 InS'tc A«omeys at lew

EXHIBIT

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Benjamin Diessel, Esq. Teena-Ann Sankoorikal, Esq. April 20, 2012 Page 3

Please let me know if you have any questions regarding the a;)ove.

Very truly yours,

Ge.~~· GLM:d~

cc: Edmund W. Searby, Esq.

{3648426:} McDonaldH k' Op inS lLC

Attorne)'$ ilt law


STUART W. GQLD

.JOHN W. WHIT£

tVAN R C"'ESt.CR

CRAVATH, SWAINE & MOORE LLP

M'CH ... n L SC;"'L£FI

ROWAN O. v,o'LSON CHRISTINE A. VARNC ... I'E:T£R r. BARQUFI SANDRA C. GOLOSTF:I!'I THOM ... S G. ItAI"FERTY

IoIICI-IACL S. GOLDMAN I'IICI-IARD HII.LL

WORLDWIDE PLAZA

825 E,GHTH AVENUE

NEW YORK, NY 10019-7,475

I'HCHAIt,LA. I'\ASII.'N ANOR(:W .1.1>11"1"$

MIC"'AEL T. RE"'NOLOS ANTONY L. tn'AN

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WRITER's DIRE.CT OIAL NUMEER

(212) 474-1177

QSGI, Inc, v, IBM, No, 09: II-cv-8(1880-KLR

Dear Juan:

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PAUL C. SAVr..IOKA$

April 23, 2012

We write to request a meet and confer concerning QSGI's noncompliance with the Court's March 16,2012 order ("Order"), As you knoN, the Order required QSGI to provide complete responses to IBM's Discovery Request:; by April 2. Specifically, QSGI was ordered to provide complete responses to IBM's Interrogatories and to complete its production of documents responsive to IBM's Document Requests, QSGI has failed to meet these obligations,

With regard to written discovery, for example, we outlined in detail in correspondence dated April II, 2012, QSGI's deficienciei in failing to provide adequate interrogatory and document responses, Our letter of April 11,2012 also detailed deficiencies in QSGI's document production, as did our c :mespondence dated March 31, 2012. However, to date, QSGI has failed to provide a meaningful response to this correspondence, or to the follow-up phone call that I placl.:d on April 19,

In addition to the many deficiencies in the information and documents that QSGI has produced, we have reason to believe that QSGI has not yet produced a substantial quantity of documents responsive to IBM's Document Requests, notwithstanding the Court's April 2 deadline for the completion ofQSGI's dh covery, IBM has asked QSGI in prior correspondence on April II whether QSGI has C( mpleted its document production responsive to IBM's Document Requests, QSGI failed to respond, We therefore have assumed that QSGI's document productioll is incomplete, On April 20, 2012, McDonald Hopkins provided representations to IBNI concerning QSGI's documents that suggest that QSGI indeed has failed to produce a substantial quantity of QSGI documents by the Court's deadline, A copy ofthe5e representations is enclosed with this letter ("McDonald Hopkins Letter"), In additior. to an approximately 390,000 page electronic production (from which it appears that QSGI has produced documents to

EXHIBIT

I k


IBM), McDonald Hopkins represented that it has provide,l to you the following sources ofQSGI documents:

• a QSGI server with 6 hard drives;

• 39 disks;

• 4 DVDs;

• 21 back-up tapes; and

• 50 McDonald Hopkins files relating to services pf<lvided by McDonald Hopkins.

Yet, it appears to us that QSGI has failed to produce docu :nents from any ofthese sources. Have you, in fact, provided all documents from 1 hese sources that are responsive to IBM's pending Document Requests? Ifnot (as we believe is the case), QSGI has materially violated the Court's Order. This continuing violation prejudices IBM substantially in the preparation of its defense.

We also understand from the McDonald Hopkins Letter that you are being provided documents previously produced to the SEC, inclJding an electronic production and 382 boxes of hardcopy documents. As you well knov', while IBM has previously made inquiries to you about the production of the 382 boxes of hardcopy documents, we have not received an answer to these inquiries, let alone b,~en provided access to these documents. Please promptly provide us with the status of these documents.

2

We note that based on our review to date, much of what QSGI has produced appears to be unresponsive to IBM's Document Requests. QSGI is obligated to review documents and information for responsiveness to IBM's Document Requests prior to production. To the extent that QSGI has not produced do(uments from the above-listed sources, please confirm that QSGT is reviewing these sour~es for responsive material and state when QSGI will complete its production of responsiye material. QSGI cannot discharge its discovery obligations by, for example, dumpng the above-listed media and hundreds of boxes on IBM, thereby seeking improperly to shift the cost of discovery on IBM (as QSGI has done with its prior, noncompliant elect'onic document productions).

We request a conference as soon as possible to add ress these ongoing discovery deficiencies. Absent resolution of these issues, we intend oromptly to raise with the Court QSGI's noncompliance with its discovery obligatiolls and the Order, including seeking sanctions and costs. To that end, please state wha': dates and times on or before April 27 you are available to meet and confer. We look [(,rward to your prompt response. If you do not respond by April 27, we will have no alternative but to proceed directly with the Court.


McDonald H k' op inS llC Attorneys at law

Direct Dial: 216.348.5703 E-mail: [email protected]

April 25, 2012

Via Regular U.S. Mail and Email

([email protected])

Benjamin Diessel, Esq. Cravath, Swaine & Moore LLP 825 Eighth Avenue New York, New York 10019

([email protected])

Teena-Ann Sankoo'ikal, Esq. Cravath, Swaine & Moore LLP 825 Eighth Avenue New York, New Y<,rk 10019

600 Superior Avenue, East Suite 2100 Cleveland, Ohio 44114

P 216.348.5400 f 216.348.5474

Re: Response of McDonald Hopkins LLC to Paragrapbs 10 and 12(c) of the Stipulated Letter Agreement re IBM Subpoena to McDonald Hopltins LLC in I'e: QSGI, Inc. vs. IBM Global Financing, et al.; 09:11-cv-80880-KLR (S.D. Fla,)

Dear Ben and Teena:

McDonald Hopkins LLC ("MH") provides the following inti )rmation with regard to paragraphs 10 and 12(c) of the above-referenced Stipulation:

10. MH has provided to attorney Bauta by April 24, 2H2 copies of the data production previously provided to the SEC, copies of correspondence transmitting those data productions to the SEC and copies of the privilege logs previously produced to the SEC. The materials delivered to attorney Bauta include the prior Bates stamped production of documents to the SEC (which were "Bates stamped" as "QSGI" documents). The SEC documents delivered to attorney Bauta also include documents numbered in accordance with directions from the SEC.

MH estimates that it has transmitted to attorney Bauta approx imately 4 million pages of the prior SEC production, 23 privilege logs previously provided to the SEC atld copies of correspondence to the SEC transmitting documents to the SEC.

Please call if you have any questions.

Verytl'Ulyyo, //.

~ .

eO~hey GLM:dw cc: Edmund W. Seat'by, Esq.

{3735034:} Chicago I Cleveland I Columbus I Detroit I West Palm Beach

www.mcdonaldhopkins.com

'F


transmittal is strictly prohibited. If you have received this transmittal in en or, please contact the sender immediately and delete this transmittal from any computer or other data bank.

-----Original Message-----From: Benjamin Diessel [mailto:[email protected]] Sent: Friday, February 24, 2012 11:41 AM To: Juan P. Bauta; Nari C. Bauta; Case X. Dam Cc: Richard Stark; Teena-Ann Sankoorikal; [email protected]; laUl·[email protected]; [email protected] Subject: RE: QSGI v. IBM - Document Review Logistics

Juan,

I am surprised by your response. As you are aware, we have been inquiring about the status of QSGI'·s document production for the last several months and in particular the 400 boxes of cocuments that we understood. may contain responsive materials. To learn only now-after months of back and forth--that these 400 boxes are .not available for our review because they were produced to the SEC and that you have no guidance regarding the timing of this production to IBM is utterly unacceptable.

There can be no doubt that the documents produced to the SEC ("SEC Documents") are responsive to IBM's Document Requests. Specifically, the SEC subpoena ("Subpoena") pursuant to which the SEC Documents were presumably produced-which we note W,IS filed publicly as part of QSGI's bankruptcy proceeding-requested documents concerning QSGI's allegations in this I,wsuit. See Subpoena ~~ L-M (requesting documents concerning QSGI's allegations of purported anticompetitive pnctices by an OEM, IBM, and the financial impact of these practices on QSGI). Moreover, the Subpoena requested sl!veral categories of documents that overlap with IBM's Document Requests. See id. ~ Q (QSGI's customers and sales b customers), ~~ J, K, R (QSGI's inventory, including any change in its value), ~~ G-H (QSGI's finances and accounting practices). Accordingly, your inability promptly to locate and produce the SEC Documents-which directly and hcially bear on QSGI's claims and IBM's potential defenses-is unacceptable.

As you know, depositions are scheduled to start in mid-March and fact and expert discovery is set to conclude in July. We cannot accept vague statements. Documents in the possession of QS(;I's counsel, including its SEC counsel, are in the possession, custody and control of QSGI, and you and your client are therefore obligated to obtain those documents, search them, and produce relevant documents to IBM. As such, while res'!rving all of IBM's rights, we intend to inquire of QSGI's SEC counsel directly concerning QSGI's failure to produce resporlsive documents, including the SEC Documents.


From: To:

"Juan P. Bauta" <[email protected]> "Benjamin Diessel" <[email protected]>

Cc: "Besvinick, Laura" <[email protected]>, "Nari C. Bauta" <[email protected]>, "Case X. Dam" <[email protected]>

2


Date: 02/22/2012 01:11 PM Subject:RE: QSGI v. IBM - Document Review Logistics CONFIDENTIAL

Dear Ben:

I spoke with the warehouse facility only to find out that the boxes were never returned from the SEC. The client was told that the boxes had been returned and that was the information I wa,; given. I am trying to find out the status of the boxes at the SEC and I will inform you as soon as I get something more than "I think ... " While I am sure that you are frustrated by our slow production and I can only assure you that I am infi'litely more frustrated.



Confidentiality Notice: The information contained in this transmittal, incl Jding any attachment, is privileged and confidential and is intended only for the person or entity to whom it is ac,dressed. If you are neither the intended recipient nor the employee or agent responsible for delivering this mess, ge to the intended recipient, you are hereby notified that any disclosure, copying or distribution or the taking of any action in reliance on the contents of this transmittal is strictly prohibited. If you have received this transmittal in error, please contact the sender immediately and delete this transmittal from any computer or other data bank.

-----Original Message-----From: Benjamin Diessel [mailto:[email protected]] Sent: Tuesday, February 21, 2012 5:45 PM To: Juan P. Bauta Subject: QSGI v. IBM - Document Review Logistics

Juan,

I just tried to reach you by phone and left a message on Nari's voicemail. We would like to move forward this week with our review of the 400 bo> es of documents that you identified as being stored at a warehouse in New Jersey. I would appreciate it if you could return my call at your earliest convenie lce so that we can work out the logistics. Thanks.


3


Amanda A. Kessler

From: Sent: To:

Juan P. Bauta Saturday, June 02, 2012 12:27 PM Amanda A. Kessler

Subject: FW: SEC Response to Mr Bauta's March :'2, 2012 letter to Mr. Tabak at the SEC and Your Review of QSGI files



Confidentiality Notice: The information contained in this transmittal, including any attachment, is privileged and confidential and is intended only for the person or entity to whom it is addressed. If you are neither the intended recipient nor the employee or agent responsible for delivering this messa!;e to the intended recipient, you are hereby notified that any disclosure, copying or distribution or the taking of any action in reliance on the contents of this transmittal is strictly prohibited. If you have received this transmittal in er"or, please contact the sender immediately and delete this transmittal from any computer or other data bank.

-----Original Message-----From: McGaughey, George L. [mailto:[email protected]] Sent: Tuesday, March 27, 2012 11:31 AM To: Juan P. Bauta Cc: Searby, Edmund; Stockard, Janet Subject: Re: SEC Response to Mr Bauta's March 22, 2012 letter to Mr. Tabak at the SEC and Your Review of QSGI files

Jaun

I'm out of town for a week I will have janet or ned call re your Questions I have forwarded your Email to them Ned is in a mediation today

----- Original Message -----From: Juan P. Bauta [mailto:[email protected]] Sent: Tuesday, March 27, 2012 09:52 AM To: McGaughey, George L. Subject: RE: SEC Response to Mr Bauta's March 22, 2012 letter to Mr. Tabi,k at the SEC and Your Review of QSGI files

1 N


Dear George,

Thank you for your involvement on this matter. I am now unclear regarding the database which McDonald Hopkins created for QSGI. I was told that the database contained all documents, Except the 382 boxes which are in the possession of the SEC. I now understand that there are hard copy files and several hard drives with a server which will be sent to your WPB office. Where did these materials come from and ar" I correct that they are not in the database? I am also unclear about the privileged materials. Is there a log and if so when can I expect to receive the log. Thank you again for your help.


THE FERRARO LAW FIRM, P.A. 4000 Ponce de Leon Blvd. Suite 700 Miami, FL33146 Phone: (305) 375-0111 Facsimile: (305) 379-6222

Confidentiality Notice: The information contained in this transmittal, including any attachment, is privileged and confidential and is intended only for the person or entity to whom it is addressed. If you are neither the intended recipient nor the employee or agent responsible for delivering this message to the intended recipient, you are hereby notified that any disclosure, copying or distribution or the taking of any action in reliance on the contents of this transmittal is strictly prohibited. If you have received this transmittal in er-or, please contact the sender immediately and delete this transmittal from any computer or other data bank.

-----Original Message-----From: McGaughey, George l. [mailto:[email protected]] Sent: Friday, March 23, 2012 2:40 PM To: Juan P. Bauta Cc: Searby, Edmund; O'Brien, Sean Subject: RE: SEC Response to Mr Bauta's March 22, 2012 letter to Mr. Tabak at the SEC and Your Review of QSGI files

Juan: two items:

l)Following up on my email below, I will be out of the office next week. Therefore, if you will be sending your corrected letter request to the SEC requesting return of the QSGI boxes back to us n,!xt week, please direct it to me, Ned and Sean O'Brien at our firm. Sean is working with Ned and me on this. Ned will be i, a mediation Tuesday through Thursday, so I am requesting that you copy Sean on your email as well.

2)We are gathering all QSGI hard copy files for your review in our WPB office (except documents withheld based on privilege or work product basis). We will let you know as soon as they are assembled and available for your inspection.

Thank you

George McGaughey George l. McGaughey Member MCDONALD HOPKINS LLC

600 Superior Avenue East

2

EXHIBIT

I N


Suite 2100 Cleveland, OH 44114 T: 216.348.5703 F: 216.348.5474 mailto:[email protected] http://www.mcdonaldhopkins.com

Chicago • Cleveland • Columbus • Detroit • Miami' West Palm Beach -----Original Message----

From: McGaughey, George L. Sent: Friday, March 23, 2012 12:32 PM To: '[email protected]' Cc: Searby, Edmund Subject: FW: SEC Response to Mr Bauta's March 22, 2012 letter to Mr. Tabak at the SEC

Juan: attached is a response received an hour ago from attorney Tabak to your March 22, 21012 letter which had requested return of the QSGI boxes. Ned had forwarded your letter reqUl!st to Mr Tabak yesterday. As you can see, Tabak is requesting a modification to the language of your letter request, so that it comports with the sample language contained in the SEC instructions that I had forwarded to you.

Please redraft your letter to Tabak and email it to me and I will forward it to Tabak. Please call if you have any questions.

Thanks


600 Superior Avenue East

Suite 2100 Cleveland, OH 44114 T: 216.3485703 F: 216.348.5474 mailto:[email protected] http://www.mcdonaldhopkins.com

Chicago * Cleveland * Columbus * Detroit • Miami • West Palm Beach ---. -Original Message----From: [email protected] [mailto:[email protected]] Sent: Friday, March 23, 2012 12:11 PM To: McGaughey, George L. Subject: SEC Response to Mr Bauta's March 22, 2012 letter to Mr. Tabak ilt the SEC


Scan Date: 03.23.2012 12:11:03 (-0400) Queries to: M [email protected] IRS CIRCULAR 230 DISCLOSURE:

To ensure compliance with requirements imposed by the Internal Revenue Service, we inform you that any tax advice contained in this communication (including any attachments), was not in1ended or written to be used, and cannot be used, by any taxpayer for the purpose of (1) avoiding any penalties under the Internal Revenue Code or (2) promoting, marketing or recommending to another party any transaction matter add res sed herein.

3


THE INFORMATION CONTAINED IN THIS TRANSMISSION IS ATIORNEY PRI\i ILEGED AND/OR CONFIDENTIAL INFORMATION INTENDED FOR THE USE OF THE INDIVIDUAL OR ENTITY NAMED ABOVE. IF THE READER OF THIS MESSAGE IS NOT THE INTENDED RECIPIENT, YOU ARE HEREBY NOTIFIED THAT ANY DISSEMINATION, DISTRIBUTION OR COPYING OF THIS COMMUNICATION IS STRICTLY PROHIBITED. IF YOU HAVE RECEIVED THIS TRANSMISSION IN ERROR, PLEASE IMMEDIATELY NOTIFY ME BY TELEPHONE AND PERMANENTLY DELETE THE ORIGINAL AND ANY COPY OF THIS EMAIL AND DESTROY ANY PRINTOUT THEREOF. IRS CIRCULAR 230 DISCLOSURE:

To ensure compliance with requirements imposed by the Internal RevenUE Service, we inform you that any tax advice contained in this communication (including any attachments), was not intEnded or written to be used, and cannot be used, by any taxpayer for the purpose of (1) avoiding any penalties under the Internal Revenue Code or (2) promoting, marketing or recommending to another party any transaction matter addr.~ssed herein.

THE INFORMATION CONTAINED IN THIS TRANSMISSION IS ATIORNEY PRI\i ILEGED AND/OR CONFIDENTIAL INFORMATION INTENDED FOR THE USE OF THE INDIVIDUAL OR ENTITY NAMED ABOVE. IF THE READER OF THIS MESSAGE IS NOTTHE INTENDED RECIPIENT, YOU ARE HEREBY NOTIFIED THAT ANY DISSEMINATION, DISTRIBUTION OR COPYING OF THIS COMMUNICATION IS STRICTLY PROHIBITED. IF YOU HAVE RECEIVED THIS TRANSMISSION IN ERROR, PLEASE IMMEDIATELY NOTIFY ME BY TELEPHONE AND PERMANENTLY DELETE THE ORIGINAL AND ANY COPY OF THIS EMAIL AND DESTROY ANY PRINTOUT THEREOF.

EXHIBIT 4 I ~


Amanda A. Kessler




Juan P. Bauta Saturday, June 02, 2012 12:26 PM Amanda A. Kessler FW: SEC release of boxes to QSGI 20120323154113532.pdf

Confidentiality Notice: The information contained in this transmittal, inciLding any attachment, is privileged and confidential and is intended only for the person or entity to whom it is addressed. If you are neither the intended recipient nor the employee or agent responsible for delivering this messane to the intended recipient, you are hereby notified that any disclosure, copying or distribution or the taking of any action in reliance on the contents of this transmittal is strictly prohibited. If you have received this transmittal in error, please contact the sender immediately and delete this transmittal from any computer or other data bank.

-----Original Message-----From: McGaughey, George L. [mailto:[email protected]:!.l Sent: Friday, March 23, 2012 5:11 PM To: Juan P. Bauta Cc: Searby, Edmund; O'Brien, Sean Subject: FW: SEC release of boxes to QSGI

Juan: I forwarded your revised letter of today's date, regarding the return of the 382 boxes, to Mr. Tabak at the SEC. See my email to Tabak below.

George McGa ughey


600 Superior Avenue East Suite 2100 Cleveland, OH 44114 T: 216.348.5703 F: 216.348.5474 mailto:[email protected]

1 o


http://www.mcdonaldhopkins.com

Chicago * Cleveland • Columbus * Detroit * Miami * West Palm Beach -----Original Message----From: McGaughey, George l. Sent: Friday, March 23, 2012 4:03 PM To: '[email protected]' Cc: '[email protected]'; Searby, Edmund Subject: FW: SEC release of boxes to QSGI

Dear Mr. Tabak: I am working with Ned Searby on this matter. Please see the attached letter from the counsel for QSGI regarding the return of the 382 boxes of documents to the warehouse in New Jersey. Counsel's letter has been conformed per your request by letter to Ned earlier today and is hereby resubmitted to you.

Thank you.

George l. McGaughey Member MCDONALD HOPKINS LLC

600 Superior Avenue East Suite 2100 Cleveland, OH 44114 T: 216.348.5703 F: 216.348.5474 mailto:[email protected] http://www.mcdonaldhopkins.com

Chicago • Cleveland • Columbus • Detroit * Miami • West Palm Beach ---' -Original Message----From: [email protected] [mailto:[email protected]] Sent: Friday, March 23, 2012 3:41 PM To: McGaughey, George l. Subject: SEC release of boxes to QSGI


Scan Date: 03.23.201215:41:13 (-0400) Queries to: [email protected] IRS CIRCULAR 230 DISCLOSURE:

To ensure compliance with requirements imposed by the Internal Revenu 2 Service, we inform you that any tax advice contained in this communication (including any attachments), was not int2nded or written to be used, and cannot be used, by any taxpayer for the purpose of (1) avoiding any penalties under the Internal Revenue Code or (2) promoting, marketing or recommending to another party any transaction matter add"'essed herein.

THE INFORMATION CONTAINED IN THIS TRANSMISSION IS ATTORNEY PRIVILEGED AND/OR CONFIDENTIAL INFORMATION INTENDED FOR THE USE OF THE INDIVIDUAL OR ENTITY N"MED ABOVE. IF THE READER OF THIS MESSAGE IS NOT THE INTENDED RECIPIENT, YOU ARE HEREBY NOTIFIED THAT ANY DISSEMINATION, DISTRIBUTION OR COPYING OF THIS COMMUNICATION IS STRICTLY PROHIBITED. IF YOU HAVE RECEIVED THIS TRANSMISSION IN ERROR, PLEASE IMMEDIATELY NOTIFY ME BY TELEPHONE AND PERMANENTLY DEI.ETE THE ORIGINAL AND ANY COPY OF THIS EMAIL AND DESTROY ANY PRINTOUT THEREOF.

2


JAMES L. FERRARO· DAVID A. JAGOJ.TNZER··

Scan A. KKOTT··· GRECORVS.LvNAM+ DINO G. GAl,ARm

CASEA.DAM· .. • JUANP. nAUTA, II ERICA L. BnADY+++ lLaN."- M. DEltfENINA JEFFREV H. SLOMAN

AUAN B. KAISER·· .. • MELISSA DAMIAN VI500NT[

MARCP. KUNEN J AlliE N. lSICOFJ1'

DA'~DJ.FINGER

HONORABLE JOllN GA T.E ++

mE FERRA~-RO

.. LA~TFIRM

MJAMP WASlIINGTON, D.C.' NI';\l YORK

4000 PONCE DE LEON BOUT.H.mo SUlTF.700

MIAMT, FT.ORIDA 33146 TELEPHONE (305) 37S·0li 1

TELHF.IX (30S) 379·6221 TOLLFREr. (800) 275.3332

www.fcITorolaw,cQrn

March 23, 2012

Victor Tabak, Senior COMsel U.S. SecUlities & Exchange Commission Division of Enforcement 100 F. Street, N.B. Washington, DC 20549-5030

Re: QSGI, Inc.

Dear Mr. Tabak:

• AlSO l.1CEJ'\'SEO IN ltfA, NY, OR 4o. ALSO UCF.J'\'SEO TN MA, DC, NY

••• j\UO UCENSEDTN DC

••• ., 1\1,s0 LICENSI~D INII.

....... AL.'}O UCEf\SED IKMO

+ONLY LTGRKSED IN CA, H. +++ ONLY J.1CENSED 11'\ CA.~Y

++OFCOVNSEL

In connection with an investigation by the U.S. E-ecurities and Exchange Commission ("SEC") captioned In the Matter of QSGI, Inc. (HO-l1303), QSGI, Inc. ("QSGI") produced to the SEC, inter alia, 382 boxes of corporate records (the "Records") that were in warehouse storage at the time the Records were requested by SEC. The Records, were produced to the SEC pursuant to a verbal agreement, memorialized in a November 10,2010 letler from Stephen G. Yoder to Edmund W. Searby, Esq. that the SEC return the Records by delivering such Records to Carl Sarcino, KruseCom LLC, 34 Industrial Way East, Suite 2, EatontoWll. New Jersey 07724, within thirty (30) days ofreceiving a request for return of the Records from <lSGI. On February 24, 2012 by email from Janet Stockard to Terri Booker, QSGI requested infom1 ntion concerning return of the Records. During a March 13, 2012 telephone conference, Mr. Searb)'. counsel for QSGI, Nina Finston and you, discussed return of the Records to QSGI, and agreed that the SEC would return the Records or make the Records available to QSGI subject to QSGI's agreement to the following conditions:

1. QSGI, Inc. and its predecessors, successors, parents, subsidiaries, divisions or affiliates, and their respective officers, directors, agents, attorneys, accountants, employees, partners or other persons occupying similar positions or perfonning similar functions ("QSGI") shall maintain custody and control of the Records, and l:~all not destroy, conceal or alter the Records without receiving prior written permission from the SEC;

598MADTSONAVENUE • SUlTE 2 • NEwYORK,NEWYORK 10022. TE,.F.PW'NE(2J2)355.81l1·TELEFAX (212)355·8115

1001 CONNECTICUT AVENUE, NW' SU1T~ 1225 • W AS",NeTON. DC 20036' TELl 'MONE (202) 775.1630' TELEFAX (202) 775·1633

EXHIBIT

10


2. QSGI shall produce or make the Records avaiiableic, the SEC within fourteen (14) days of any written request by the SEC for the Records; and

3. QSGI acknowledges that the Records remain subj,:(:t to the SEC's Principal and Routine Uses oflnformation as set forth in Sections G and H of SEC Form 1662.

/ !

)

o


Amanda A. Kessler

From: Sent: To: Subject:


Juan P. Bauta Saturday, June 02, 2012 12:28 PM Amanda A. Kessler FW: Response to IBM subpoena in re Q:;GI v IBM

THE FERRARO LAW FIRM, PA 4000 Ponce de Lenn Blvd. Suite 700 Miami, FL 33146 phone (305) 37501ll Facsimile: (305) 3796222

Confidentiality Notice: The information contained in this transmittal, including any attachment, is privileged and confidential and is intended only for the person or entity to whom it is addressed. If you are neither the intended recipient nor the employee or agent responsible for delivering this messag = to the intended recipient, you are hereby notified that any disclosure, copying or distribution or the taking of any acl:ion in reliance on the contents of this transmittal is strictly prohibited, If you have received this transmittal in errJr, please contact the sender immediately and delete this transmittal from any computer or other data bank.

From: McGaughey, George L. [mailto:[email protected] Sent: Monday, April 02, 2012 1:54 PM To: Juan P. Bauta Cc: Burger, Alan M,; Searby, Edmund Subject: Response to IBM subpoena in re QSGI v IBM

Jaun: we have gathered our firm's QSGI files in our WPB office for your review. Please give Alan Burger a call to arrange a time and date for your review. Should you flag anything in the files as responsive to the IBM discovery requests, we will then review all such flagged documents to see if they are non-discoverable on the grounds of attorney-client privilege, work prodUct/trial preparation materials or any other applicable grounds. If so, we will not produce them. '-jowever, we shall prepare a privilege log for all such documents excluded from production. We will Bates stamp and produce to you those documents which you flagged as responsive to the discovery requests and which are not excluded from 1= roduction under the civil rules.

Thank you. Please let me know if you have any questions.

George McGaughey

George L. McGaughey Member

McDonald . A La Hop:> kms LLC

tl:OfMytl at 'III

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1 p


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2


Amanda A. Kessler


Follow Up Flag: Flag Status:


Juan P. Bauta Saturday, June 02, 2012 12:29 PM Amanda A. Kessler FW: QSGI v. IBM--QSGI Responses to Defendants' First Set of Interrogatories QSGI Machine List (Exhibit l).pdf; Prospective Sales (Exhibit 2).pdf; QSGI Unverified Responses to First Set of Interrogatorie;.pdf

Follow up Flagged

THE FERRARO LAW FIRM, P.A. 400[) Ponce de Leon Rlvd. Suite 700 Miami. FLHI46 Phone: (305) 375·(1l1l FacSimile: (305) 379·6222

Confidentiality Notice: The information contained in this transmittal, including any attachment, is privileged and confidential and is intended only for the person or entity to whom it is adcressed. If you are neither the intended recipient nor the employee or agent responsible for delivering this messag= to the intended reCipient, you are hereby notified that any disclosure, copying or distribution or the taking of any aC':ion in reliance on the contents of this transmittal is strictly prohibited. If you have received this transmittal in error, please contact the sender immediately and delete this transmittal from any computer or other data bank.

From: Case X. Dam Sent: Monday, April 02, 2012 7:29 PM To: [email protected] Cc: Juan P. Bauta; Nari C. Bauta Subject: QSGI v. IBM--QSGI Responses to Defendants' First Set of Interrogatories

Dear Ms. Besvinick:

Attached please find a copy of Plaintiffs' Responses to Defendants' First S .. t of Interrogatories and corresponding Exhibits.

Thank you for your attention to the attached, and please by all means contact me at the office if you have any questions.

Sincerely,

Case

Case A. Dam, Esq.

1


1H!j"'==;:--,;-;",""","

FERllMlJ1. 4000 Ponce de Leon Blvd. Suite 700 Miami, FL 33146 Phone: (305) 375·0111 Facsimile: (305) 379·6222

Confidentiality Notice: The information contained in this transmittal, including any attachment, is privileged and confidential and is intended only for the person or entity to whom it is add ressed, If you are neither the intended recipient nor the employee or agent responsible for delivering this messag~ to the intended recipient, you are hereby notified that any disclosure, copying or distribution or the taking of any aC':ion in reliance on the contents of this transmittal is strictly prohibited. If you have received this transmittal in error, please contact the sender immediately and delete this transmittal from any computer or other data bank,

EXHIBIT

2 I d


.1


CASE NO: 11-80880-CIV-RYSKPMP\VITUNAC


Plaintiff, v.

IBM GLOBAL FINANCING, et aL

Defendants. _________________________________ 1

PLAINTIFF'S UNVERIFIED RESPONSE TO DEFENDANTS' IBM AND IBM GLOBAL FINANCING'S FIRST SET OF INTERROGATORIES

Plaintiff, QSGI, Inc., by and through undersigned coun:;el files its responses to Defendants'

IBM and IBM GLOBAL FINANCING's First Set ofInterro!;atories dated December 6, 2011.

INTERROGATORIES

1. Identify any and all factual bases for the assertior.s in paragraph 16 of QSGI's

Amended Complaint that "[i]n or around 2007, IBM instituted a policy change whereupon it

would no longer freely sell QSGI the parts and microcode needed to modifY the capacity of the

used computers" and that "IBM's policy change (hereinaftel referred to as the 'six month rule')

did not extend to IGF or IFG's customers". (Am.CopL~16.)

Answer: Pursuant to IBM's System Z BP pricing Guide dat~d July 20,2007, modifications to Z

series mainframes are not permitted for six -months.

2. IdentifY each IBM mainframe that QSGI acquired, including the date of acquisition,

acquisition price, and source (i. e., the person or entity) from ,vhich QSGI acquired it.

I


Answer: Objection, question is overly broad in that it is nol limited to a specific date. Without

waiving its objection QSOI states that it does not have all lhe information requested within its

custody or control but it has the following information: See attached Exhibit 1 and Exhibit 2

3. Identify all orders or requests for upgrades, downgrades, parts, microcode or any

other change to an IBM mainframe made by QSGI (or any person or entity on behalf of QSGI)

or by any customer ofQSGI to IOF or IBM (collectively, "orders or requests"), including:

a. the specific part or microcode that was ordered or requested, the mainframe

that was the subject of the order or request and that mainframe's installation

date, and the nature of the requested cLange to the IBM mainframe (e.g.,

upgrade, downgrade, other change that IB\1 mainframe, etc.)

b. the entity or person who made such order or request, the date of such order or

request and to whom such order or requesl was directed;

c. the customer or other intended recipient of the IBM mainframe to be

upgraded, downgraded, or otherwise changed pursuant to such order or

request;

d. IBM's or IOF's response (including whether the order or request was

approved or denied and, if denied, IBM's or IOF's stated bases for its denial)

and the date of such response; and

e. the person and/or entity that fulfilled sud. order or request (if any), including

(if different) the person and/or entity that installed the requested part on or

made the requested change to the IBM mainframe.

2


Answer: Objection, question is overly broad in that it is not limited to a specific date. Without

waiving its objection QSGI states that it does not have all the information requested within its

custody or control but it has the following information: See attached as Exhibit I

4. For each potential or proposed sale of a used IBlV mainframe that QSGI allegedly

lost as a result of IBM's alleged refusal to provide parts or microcode as identified in response in

Interrogatory No.3, identify:

a. documents that set forth the proposed terms of the transaction, including the

price of financial terms of that potential or proposed sale; and

b. the computing solution that the potential customer obtained in lieu of the

QSGI offering and from whom such solution was obtained.

Answer: QSGI states that it does not have all the information requested within its custody or

control but it has the following information: See attached as Exhibit 2

5. Identify each transaction in which QSGI sold or transferred an IBM mainframe or a

part for an IBM mainframe.

Answer: Objection, question is overly broad in that it is nlt limited to a specific date or part.

Without waiving its objection QSGI states that it does not have all the information requested

within its custody or control but it has the following informaLon: See attached exhibit I.

6. With respect to QSGI's inventory of used IBM m"inframes, identify:

a. the IBM mainframes that comprised, and the value of, QSGI's IBM

mainframe inventory just prior to IBM's purported policy change alleged in

paragraph 16 of the Amended Complaint;

b. any change in the IBM mainframes that (omprised, or the value of, QSGI's

IBM mainframe inventory as a result of IB \1's purported policy change; and

3


c. the amount of money QSGI received from, the financial tenns relating to, and

the identity of the IBM mainframes that QSGI sold or transferred to Top Gun

Technologies, Inc. or to any other person or entity following IBM's purported

policy change.

Answer: Objection, question is overly broad in that it is ne,t limited to a specific date. Without

waiving its objection QSGI states that it does not have all the infonnation requested within its

custody or control but it has the following infonnation: See attached Exhibit I, Exhibit 2 and

SEC filings and the QSGI bankruptcy which are public recOid.

7. Identify, for each cause of action asserted in the iunended Complaint, QSGI's

computation of any and all categories of damages or moneta;")' relief claimed by QSGI under that

cause of action, the documents or other infonnation on which such computation is based and all

persons with knowledge of the claimed damages.

Answer: Objection to the extent that this question is as~ing for an expert or legal opinion.

Without waving its objection, QSGI states that it has sufferd actual damages in the fonn of loss

of value of inventory, sales and accompanying maintemmce. QSGI has not finalized its

computation of damages at this time. Such damages wou.d be found in QSGI's SEC filings

which are public record. Individuals with knowledge include Marc Shennan and Dave

Meynarez.

8. Identify the facts and circumstances relating to any documents---including but not

limited to documents in storage facilities-that QSGI destro)ed, discarded, or otherwise failed to

preserve since January 1,2007, including, without limitation:

a. each document that was destroyed or discarded and the marmer in which, and

the reason why, it was destroyed or discarded;

4


b. the storage facility or other place of storage at which each such document was

stored;

c. the date(s) that each such document was deposited or placed into storage, the

date(s) on which QSGI or any person acting on behalf of QSGI decided to

destroy or discard such documents or Wa!: notified that such documents were

destroyed or discarded, and the date(s) that each such document was destroyed

or discarded;

d. the location, if any, of copies, duplicates or alternative sources of each

destroyed or discarded document; and

e. the person or entities with knowledgt of the facts and circumstances

concerning the storage and/or destruction or discarding of any documents

(including relevant QSGI personnel, personnel acting on behalf of QSGI and

the relevant individuals at each storage location) and a description of the

relevant facts and circumstances known to such persons (including who at

QSGI permitted or decided that documents be destroyed or discarded).

Answer: Objection overly broad as to scope and time. Without waving the objection

QSGI states that it retained documents for a period of seven years in compliance with

the Sarbanes-Oxley Act of 2002. QSGI's docum'!nts were maintained in two storage

facilities located in New Jersey and in Minnesota. QSGI lost control of the

Minnesota storage facilities when it filed for bankruptcy and the receiver assumed

control of the company's assets. QSGI has learned that the receiver did not pay the

monthly storage fee for the Minnesota storage facility and that at some unknown

point in time, the documents which were stored Lt that facility where disposed of by

5


the storage facility owner. QSGI documents were never destroyed at the direction of

QSGI unless the documents were duplicates or could be destroyed pursuant to the

seven year retention policy. Company emails were archived at 13 month-end and

year-end to DL T tapes which were maintained at the New Jersey facility located at 70

Lake Drive, Hightstown, NJ. These emails have been compiled into a database which

is being searched for documents responsive to IBM's requests. QSGI has never

maintained a list of every piece of paper or document which any employee may have

discarded nor does QSGI maintain a list of every piece of paper or document ever

created by its employees. QSGI former and cunent employees who have knowledge

include Marc Sherman, Ed Cummings and Dave Harris.

Respectfully submitted,

THE FERRARO LAW FIRM, PA Attorneys for the Plaintiff 4000 Ponce de Leon Blvd., Suite 700 Miami,oL 33146 Telephotle (305) 375-0111 Facsimi];e (305) 379-6222

By: ill Juan P. Bauta Juan P. Bauta, II Fla. Bar No.: 894060

6



I hereby certify that a true and correct copy of the f(] regoing was served via CMlECF on

all counsel of record this 5th day of January, 2012.

By: lsi Juan '-'P.'-'B"'a"'u""ta"-___ _ Juan P. Bauta, II Fla. Bar No.: 894060

7


EXHIBI1~ 1

-- -----


Type Model Serial NQ Location

2003 106 02-45718 Condata Inc, 9830 W 190th St # M Mok"na, [L

2003 204 02-48328 Conklin, 11360 Technology Circle, Joh"', Creek, GA

9672 R46 83-6\9l8 HP Hewlett Packard

9674 C04-1 02-44718 Acxiorn 601 E. 3rd St., Little Rock. AR

7060 H30 02-[ [670 MFA Inc, 20[ Ray Young Dr., Columbia, MO

7060 H50 83-123DF Mainline 1700 Summit Lake Dr., Tanaha~see, FL

7060 H55 02-[OF9C Atlas

2064 IC7 02-50543 Acxiom 2064 102 02-IIC75 Acxiom

2064 [02 02-I13B4 Acxiom 2064 103 02-5CCCF Acxiom 2064 102 02-[6D4A Acxiom 2064 103 51-[OC12 Federated Insurance 121 E. Park Square, Owatonna, MN.

2064 IC4 02-1114A CUNA, 5710 Mineral Point Road, Madis,n, WI.

2064 104 51-ID18A CUNA

2064 105 02-48977 USAA, 9800 Fredericksburg Rd. San An onio, TX

2064 105 02-40794 USAA,

2064 113 02-49076 USAA,

2064 IC9 02-42107 USAA,

2064 ICI 02-43785 USAA,

2064 104 02-49771 USAA,

2064 IC6 02-ID71A USAA,

2064 104 51-65090 USAA,

2064 104 02-1147E USAA,

2064 ICI 02-20CCA Northwest Airlines, 2700 Lone Oak Pkw r., Eagan MN.

2064 100-2 02-185AA ACS - 10309 Wilson Blvd. Blythewood, SC

2064 210 02-IC7DA Sallie Mae, 11100 USA Pkwy. Fishers, ['I.

2064 2C7 02-IC7CA Sallie Mae

2064 IC4 83-1 ID28 Lockheed Martin, 1401 Del Norte, Denvl,:r CO.

2064 100-1 51-119FB Lockheed Martin

2064 2C4 02-81C5C Embarq (Sprint), 5454 W. llOili st. Overhnd Park, KS

2064 103 02-2226A Land's End, I lands End Ln. Dodgeville, WI.

2064 105 02-43854 Land's End Thomson Legal & Regulatory, Metro Ce~lter One Station

2064 100-1 83-277IA Place, Stanford Ct.

2064 215 02-22CFA Thomson Legal & Regulatory

2064 100-1 83-2778A Thomson Legal & Regulatory

2064 IC9 02-45918 Thomson Legal & Regulatory

2064 100-2 02-2171A Thomson Legal & Regulatory

2064 104 02-IAC9A Thomson Legal & Regulatory 2064 IC7 02-42980 Thomson Legal & Regulatory 2064 213 02-15CBA Thomson Legal & Regulatory 2064 100-3 02-47386 Thomson Legal & Regulatory 2064 2C9 02-1248D Thomson Legal & Regulatory 2064 IC6 02-1401A Thomson Legal & Regulatory 2064 210 02-47023 Thomson Legal & Regulatory

2064 IC3 02-92DBf Thomson Legal & Regulatory

2064 IC7 02-115fE Thomson Legal & Regulatory 2064 109 83-IBBCA Thomson Legal & Regulatory


2064 109 51-60045 Thomson Legal & Regulatory

2066 002 83-122C6 Federated Insurance

2066 OAI 02-284BA Georgetown University, 37th and 0 St. NW, Wash. D.C.

2066 001 02-IA12A Lockheed Martin

2066 003 83-IB58A Lockheed Martin Blue Hills Data Services, 2 Blue Hill Plz #1614, Pearl

2066 003 02-ID34A River NY

2066 OAI 83-1715A Blue Hills Data Services 2066 OAI 83-2982A Blue Hills Data Services

2066 003 02-1839A Blue Hills Data Services 2066 OAI 02-2413A Blue Hills Data Services 2066 OX2 02-DAFOC Nassau County Infonnation Center

OSF Medical Center, 530 NE Glen Oak A venue

2066 002 02-18A4A Peoria, IL 61637 Catalog Marketing Services, 25 Wal;s Drive, Suite 1-C, Fairfield, CT 06824

2066 002 02-1235C Software Diversified Services, 1322 81s1 Avenue

2066 OBI 02-1217B Northeast Minneapolis, MN 55432

2066 OEI 02-77A4C ACS, Pittsburgh 2066 002 83-1641A Thomson Legal & Regulatory 2066 003 83-IDDDA Thomson Legal & Regulatory 2066 OAI 02-1794A Eastern Illinois University 2066 OCF(IW) 02-318AE Acxiom 2066 OCF(IW) 02-3189E Acxiom 2066 OAI 02-1835A Acxiom 2066 0A2 83-23D8A Acxiom

2066 002 83-23D7A Acxiom 2066 OAI 02-FOBCF Acxiom 2066 OAI 02-16BIA Acxiom 2066 OA2 02-16DDA Acxiom 2066 OBI 02-2032A Acxiom 2066 001 02-IC33A Acxiom 2066 003 02-2412A Acxiom 2066 0A2 02-B9BOE Acxiom

Ohio State University, 154 W 12th Aven:Je I Columbus, 2066 001 02-1934A Ohio 43210

USAA, 9800 Fredricksburgh Road, San Antonio, Texas 2084 BI6/302 02-50432 78288 2084 BI6/302 02-47470 USAA

Omaha:Jnfo?p~on'Servi~' Company"j /0 Leslie Hagg Mutual ofOmaha"Pla2il,Omahil,NE 68175

2084 BI6/306 51-117CE 2084 C32/315 51-779CC USAA 2086 A04-370 51-5150D ACS - Blythewood 2086 A04-350 02-54CCC ACS - Blythewood 2086 A04-420 02-38DFC ACS - Blythewood 2086 A04-340 02-54CBC ACS - Blythewood

2086 A04-340 02-97BEF ACS-UNUM Katin Inc., 19275 West Capitol Drive, St'ite L02

2086 A04-130 02-C7AED Brookfield, WI 53045 2086 A04-460 02-2ID5F Acxiom Downers Grove 2086 A04-140 02-2AE4A Acxiom - Downers Grove


2086 A04-110 83-72C3F HP Hewlett Packard 2064 100-? 51-119FB Lockheed Martin 2064 109 51-60045 Thomson Legal & Regulatory 2086 A04-? 02-2AE4A Acxiom - Downers Grove 2086 A04-? 02-2ID5F Acxiom Downers Grove 2086 A04-350 02-54CCC ACS - Blythewood 2086 A04-420 02-38DFC ACS - Blythewood 2086 A04-340 02-54CBC ACS - Blythewood 2086 A04-110 83-72C3F HP Hewlett Packard 9672 R46 83-61918 HP Hewlett Packard 2066 001 02-1934A Ohio State University 2084 C32/315 51-779CC USAA


EXHIBIT 2


PROSPECTIVE SALES

CUSTOMER NAME MACHINE TYPE PRICE DATE

Administar Federal z9BC $249,000.00 2/11/2009 Medicare Wells Fargo Financial z9BC $390,000.00 2/20/2009 Rockwell Automation z9 $3,800.00 2/27/2009 BJC Health Care z890 2086-A04 $107,288.00 1/15/2009 Office Depot z9EC 2094-706 $1,335,000.00 2/20/2009

Office Depot z9EC 2094-707 $1,546,142.00 2/20/2009 Axciom Corporation z9BC 2096-F02 $127,470.00 3/01/2009 Axciom Corporation z890 2086 370 $99,780.00 3/01/2009 AutoZone, Inc. z9BC V04 $495,000.00 2/27/2009 ..

First National Bank z990 DR Ufe Raft $450,000.00 4t' ,. :2"0" L.)J t! ~ J


qsgi - objections to magistrate judge ann e vitunac's order , dated may 22,2012, on ibm's...

Documents

introduction plaintiff

plaintiff filedthisaction

moreov defendants

thematter of qsgi

accordingtomagistr qsgi

defendants motion

klr document

flsd docket