Zillow executive Curt Beardsley has been reprimanded by a Washington state judge for interfering with a forensic investigation ordered as part of trade secret litigation between Zillow and News Corp.-owned Move Inc.
The investigation will, in part, try to ferret out whether there is evidence to support allegations of evidence destruction and misappropriation of Move documents or data.
The neutral forensic examination could potentially bring clarity to a bitterly-fought multimillion-dollar legal conflict in which the two archrivals accuse each other of misappropriating trade secrets and thereby damaging their ability to compete for agent dollars and consumer mindshare.
Both sides have their own forensic experts, but the court ordered a probe by a neutral expert in the hopes of obtaining an “efficient and transparent” forensic analysis of the electronic devices and cloud accounts of Zillow employees Beardsley, Errol Samuelson and Will Hebard.
Curt Beardsley
The investigation order was based on Beardsley’s “physical destruction of electronic evidence” — including destroying a hard drive by throwing it against a wall — while he was under subpoena and “his admitted attempts to wipe his computer hard drives after he was named as a defendant,” according to attorneys for co-plaintiffs Move and the National Association of Realtors.
Given that Beardsley’s behavior has inspired disapproval from the court, it may offer lessons for those in the industry that find themselves in a similar situation.
‘Saying “I did it to protect my family’s privacy” doesn’t go very far with me’
On Dec. 15, Judge Sean O’Donnell admonished Curt Beardsley, Zillow’s vice president of industry development, for changing the password to his iCloud account without permission from the court or the neutral forensic expert conducting the investigation.
Beardsley, Zillow and Samuelson, maintain Beardsley changed the password with his attorney’s consent to protect his family’s privacy. Beardsley’s iCloud account was apparently linked to the devices of his family members, and when the neutral expert was conducting his investigation, he gained access to the family’s real-time communications via text messages known as iMessages and via the videoconferencing app FaceTime.
Judge Bruce Hilyer
Judge Bruce Hilyer, a court official in charge of discovery in this case, did not buy that argument.
“[S]aying, ‘I did it to protect my family’s privacy’ doesn’t go very far with me because we have elaborate protections built into this case to protect privacy,” Hilyer said at a hearing about the matter.
“And, also, the Neutral [expert] serves as an officer of the court and the Neutral may have to look at some family matters in order to complete his investigation.”
Moreover, he said Beardsley’s action, which removed the neutral expert’s access to the account, was inconsistent with the protocol governing the forensic examination.
Before Beardsley’s action, the neutral expert was still in control of the process, but once Beardsley changed his password, the Zillow executive assumed control of the forensic process, “which is the province of the Court … and not Mr. Beardsley,” Hilyer said.
[Tweet “Judge: The forensic process is for the Court to control, not Curt Beardsley”]
Judge O’Donnell agreed. “The changing of Mr. Beardsley’s password to his iCloud account password was not warranted under the circumstances,” he said in his order.
“Mr. Beardsley is admonished not to take unilateral actions to impede or delay or interfere with the investigation of the neutral forensic expert.”
O’Donnell noted that the admonishment was a warning, not a sanction, and that it applied only to Beardsley and not his co-defendants, Zillow or Samuelson.
‘Another attempt by News Corp. to mischaracterize the facts of the case’
In an emailed statement, Zillow spokeswoman Amanda Woolley, speaking for the company and its employees, said, “Though the court did not find that Curt violated any rules around the search of his devices and data, we nevertheless respectfully disagree that an admonition was warranted.
“Curt and his counsel have fully cooperated with this process. This is another attempt by News Corp. to mischaracterize the facts of the case in an effort to disparage the reputations of Zillow and Curt Beardsley.
“Zillow has and will continue to act with the utmost integrity in conducting its business and in defending against this litigation.”
[Tweet “Zillow: We disagree that an admonition was warranted.”]
Move declined to comment for this story.
‘Incriminating text messages’
Move and NAR contended that Beardsley locked the neutral expert out of the account in an attempt to change the scope of the order so that it did not include iMessage text messages or in order to delete information before the expert could conduct his analysis.
“The real reason Mr. Beardsley is blocking the Neutral from accessing his iCloud account is because he doesn’t want the Neutral to find incriminating text messages that he deleted from his iPhone but which may still exist on his iCloud storage account,” attorneys for Move and NAR wrote in an emergency application to enforce the forensic order.
“The only issue is whether the Neutral should be allowed to search for (and hopefully recover) deleted iMessages that currently reside in Mr. Beardsley’s iCloud account. That, of course, is the whole point of the Protocol.”
In response, Beardsley noted that he did not delete any information and even if he had wanted to, he had access to that account long before the investigation was ordered.
Beardsley, through his attorney, gave the neutral expert his new password less than 24 hours after changing it, though not until after plaintiffs notified Beardsley’s attorney that they would file the emergency application.
A forensic expert hired by the defendants stated that the neutral expert would have been able to “determine readily” whether Beardsley had modified or deleted any documents stored in the account. He did not say if iMessages were considered “documents.”
As the court deliberated whether to enter the emergency order, Beardsley agreed to include iMessages within the scope of the order — provided the neutral expert first attempted to access his iCloud account in a way that would not give him real-time access to Beardsley’s family’s communications.
The expert was able to complete his collection from Beardsley’s cloud accounts “us[ing] a means of access that resolved the surveillance concerns,” Woolley said.
‘Destroyed a hard drive … by throwing it 30 feet against the wall’
This is not the first time the court has felt compelled to enter an order to prevent Beardsley from impairing the gathering of evidence in this case.
In September, after discovering that Beardsley had run computer deletion programs on his home office computer and on his Zillow laptop and gotten rid of an external drive while under subpoena in this case, the court entered a preservation order against Beardsley.
He was ordered to maintain data related to files deleted from any of his electronic devices or cloud storage, as well as data related to any destroyed hard drives or other storage devices, and to ensure that no further destruction of files or devices takes place.
Plaintiffs noted “one episode where Mr. Beardsley — while under subpoena — physically destroyed a hard drive containing Move documents by throwing it 30 feet against the wall of his workshop until it broke into pieces and then disposed of the remains at his local garbage dump.”
Beardsley’s counsel said he had “disposed of a Western Digital external drive because the device had failed and was no longer functional.”
Woolley averred that “at the time, Curt was not a party to this lawsuit, there were no claims against him, and he had no reason to believe there was anything of relevance on the hard drive. The allegation that he was under subpoena is misleading: yes he had received a subpoena as a non-party, but the scope of his production did not cover the device that stopped working.”
Judge Hilyer disagreed with Zillow and Beardsley’s assessment of Beardsley’s actions.
“While it is premature to conclude that these recently disclosed events prove Plaintiffs’ spoliation contention against Mr. Beardsley, they are understandably disturbing to Plaintiffs and they raise a number of material questions about Mr. Beardsley’s actions, which Plaintiffs are entitled to explore,” Hilyer wrote in recommending the preservation order.
“While he was not yet a named party when these events occurred, Mr. Beardsley was under a subpoena for production of potential evidence, and it is yet to be determined whether his actions resulted in deleting files constituting evidence in this case.
“Besides being under a subpoena, Mr. Beardsley was actively involved in many activities pertinent to this lawsuit and he surely was aware of the seminal issues in the case, to wit, that Move was alleging misappropriation of its trade secrets, and that given this case involves ‘tech’ companies, he would undoubtedly have been aware that computer files would be the likely mechanism for any alleged misappropriation.”
The court entered the preservation order against Beardsley only, “as the other defendants played no demonstrable role in running any file deletion programs or loss of relevant hardware/storage devices,” Hilyer said.
