US judge orders Biovail founder to turn over laptop

By Martha Graybow

NEW YORK, April 2 (Reuters) - A former Bank of America Corp (BAC.N: Quote, Profile, Research) stock analyst who is suing drug maker Biovail Corp (BVF.TO: Quote, Profile, Research) for defamation can conduct a forensic search of company founder Eugene Melnyk's laptop computer for deleted e-mails, a judge has ruled.

The ruling permits Jerry Treppel, the plaintiff, to search for additional electronic evidence that could be relevant to his case. Treppel sued the Canadian company and Melnyk in 2003, claiming they launched a smear campaign against him after he urged investors to sell the stock.

The defendants deny the allegations.

The lawsuit in U.S. District Court in Manhattan is one of many legal headaches for Biovail, a specialty pharmaceutical company based outside Toronto.

Biovail agreed last month to pay $10 million to settle a U.S. Securities and Exchange Commission probe into fraudulent accounting allegations. Four current and former officers, including Melnyk, still face charges from the regulator.

Melnyk, Biovail's biggest shareholder, has been at odds with the company over its financial performance. He plans to propose an alternative slate of nominees for the board of directors at the annual meeting in June.

Treppel, now working at Wheaton Capital Management LLC in New Jersey, contends that Biovail and others did not properly retain all electronic evidence related to his claims and must produce additional electronically stored information.

The defendants "failed to take adequate measures to prevent the destruction of discoverable materials," U.S. Magistrate Judge James Francis said in a written ruling on Wednesday. "Accordingly, the plaintiff is entitled to a remedy."