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EDiscovery Case Law - Spoliation
Adverse Inference Instruction Issued for Spoliation of Computer Files
Minnesota Mining & Mfg. v. Pribyl, 259 F.3d 587 (7th Cir. 2001). The plaintiff brought suit against three former employees for misappropriation of trade secrets. The appellate court affirmed the trial court's negative inference instruction to the jury where the one defendant committed spoliation of evidence by downloading six gigabytes of music onto his laptop, which destroyed many files sought by the plaintiff, the night before the defendant was to turn over his computer pursuant to the discovery request. However, the fact that hard drive space was destroyed on one defendant's computer did not relieve the plaintiff from proving the elements of its claims.
Adverse Inference Sanctions Granted Where Plaintiff Destroyed Computer Evidence
Anderson v. Crossroads Capital Partners, L.L.C., 2004 WL 256512 (D.Minn. Feb. 10, 2004). In a sexual harassment and whistleblower lawsuit, the defendants sought to recover the hard drive of plaintiff's personal computer because it allegedly contained an October 2001 document outlining the harassment. After a protracted discovery battle, the defendants sought a Motion to Compel and the judge ordered the plaintiff to furnish the defendant with a "copy of all documents/files relevant to this litigation that exist on Ms. Anderson's personal computer as well as those that have been deleted or otherwise adulterated." Pursuant to the judge's Order, the defendants' computer forensic expert examined the plaintiff's hard drive and discovered that a data wiping software application had been installed after the plaintiff had agreed not to "delete any existing documents" in a deposition. The computer forensic expert also found that the hard drive installed in the machine was manufactured in August 2002. The plaintiff claimed that she did not use the software program to destroy evidence, but that she used it routinely to protect her computer files. She also stated that in her view she owned the same computer throughout the litigation despite changing the hard drive in 2002. The defendants then moved to dismiss the complaint due to plaintiff's alleged discovery violations and destruction of evidence. The court noted that the plaintiff's "exceedingly tedious and disingenuous claim of naivete regarding her failure to produce the requested discovery defies the bounds of reason" but was not sufficiently egregious to warrant dismissal of the case. Instead, the court issued an adverse inference jury instruction because the plaintiff intentionally destroyed evidence and attempted to suppress the truth.
Appellate Court Affirms Spoliation Instruction for Failure to Preserve Email
Arndt v. First Union Nat'l Bank, 613 S.E.2d 274 (N.C. Ct. App. 2005). In a dispute involving a contract made between the defendants and the plaintiff, the jury awarded the plaintiff over $830,000 in damages, relying in part on a spoliation instruction. Although the plaintiff had requested various emails and profit and loss statements relating to the allegations, the defendant failed to preserve and produce these documents. As a result, the trial court had instructed the jury that, "[e]vidence has been received that tends to show that certain profit and loss statements and E-mails were in the exclusive possession of the defendant and, [sic] have not been produced for inspection. From this, you may infer, though you are not compelled to do so, that the profit and loss statements and the E-mails would be damaging to the defendant." On appeal, the defendants argued, inter alia, that the instruction was unfairly prejudicial. The appellate court noted that testimony from one of the defendants' employees indicated the defendants were on notice early on of the plaintiff's intent to sue but failed to preserve the plaintiff's emails or hard drive. The employee further testified that no effort was made to save the hard drive even after receiving a letter from the plaintiff's counsel about the case. Based on this evidence, the appellate court determined the trial court did not err in giving the spoliation instruction.
Appellate Court Upholds Default Judgment for Intentional Spoliation of Evidence
Oved & Assocs. Constr. Servs., Inc. v. Los Angeles County Metro. Transp. Auth., 2006 WL 1703824 (Cal. Ct. App. June 22, 2006). In a construction dispute case, the appellate court affirmed the trial court's award of terminating sanctions against the defendant for years of discovery abuses and the intentional spoliation of evidence. After the defendant repeatedly failed to produce financial documents responsive to the plaintiffs' discovery requests, the plaintiffs sought an order to conduct a forensic examination of the defendant's computer hard drive. When the trial court awarded the plaintiffs request, the defendant filed an interlocutory appeal. The retained computer forensic examiner determined a number of files had been individually selected and manually deleted. In addition, the expert testified that the recycle bin had been emptied on the same day the Court of Appeals denied the defendant's appeal and issued an order to preserve and produce the computer hard-drive. Finding that the financial records were integral to the case, the court observed, "[the defendant's] conduct effectively destroys the ability of [the plaintiffs] to litigate the trial." In affirming the default judgment against the defendants, the appellate court noted, "any lesser sanction for this willful failure to comply would have condoned [the defendant's] behavior and by definition would have been insufficient." The court also awarded the plaintiffs' attorneys fees and the costs of appeal.
Canceling YAHOO! Account Justifies Sanctions for Destruction of E-mail
Easton Sports, Inc. v. Warrior Lacrosse, Inc., 2006 WL 2811261 (E.D. Mich. Sept. 28, 2006) The plaintiff sought sanctions against the defendant for bad faith destruction of relevant documents and e-mails. The defendant in this case was a competitor of the plaintiff in the sporting goods business. The defendant hired a former employee of the plaintiff after he voluntarily ended his employment with the plaintiff. When the employee left the company, he forwarded several confidential documents from the plaintiff's company e-mail account directly to his personal Yahoo! account. A computer forensics expert determined the employee opened the documents on his home computer, and several of the confidential documents were also found on a computer issued to the employee from his new employer. Upon the filing of the plaintiff's lawsuit, the employee cancelled his Yahoo! e-mail account, thereby causing all e-mails stored on the account to be destroyed and unrecoverable. The plaintiff motioned the court to issue sanctions in the form of dismissal for bad faith destruction of key documents after litigation commenced. The defendant argued no knowledge of the stolen trade secrets from the plaintiff and alleged the employee transferred and deleted the files on his own. The court found the employee destroyed wrongfully obtained records when he cancelled his personal e-mail account with Yahoo!. The court did not find enough evidence to prove the defendant willfully and in bad faith supervised or instructed the destruction of the trade secrets. However, the court did find the defendant negligent in its failure to preserve relevant evidence from its employee. The negligence by the defendant did not warrant a dismissal of the case as the plaintiff urged, but the court ruled a negative inference may be allowed at trial because it "should have done more to detect and preserve relevant data under [the employee's] control."
Computer Expert Exposes Attempts to Destroy Electronic Data
Arista Records, Inc. v. Sakfield Holding Co. S.L., 314 F.Supp.2d 27 (D.D.C. 2004). In a copyright infringement suit, the court issued an order compelling the defendant to produce computer servers, which hosted the defendant's web site and contained records of its users. When the plaintiffs' computer expert inspected the servers, he discovered that the vast majority of that information had been intentionally destroyed after the defendant learned that litigation was imminent. The expert found that the defendant ran a program, designed to erase electronically stored information, more than 50 times from a remote location in an attempt to delete all electronic data from the servers. In spite of the defendant's attempts, the expert recovered a small amount of data to support the plaintiffs' claims. Although the defendant attempted to attack the plaintiffs' methodologies for extrapolating the number of users and downloads, the court indicated that the defendant was "in a poor position to attack plaintiffs' evidence," noting that "[d]estruction of evidence raises the presumption that disclosure of the materials would be damaging." The court decided not to issue sanctions but instead encouraged the plaintiffs to move for appropriate sanctions as the case progressed.
Court Affirms Default Judgment as Sanctions for Reformatting Hard Drive
QZO, Inc. v. Moyer, 594 S.E.2d 541 (S.C. Ct. App. 2004). A corporation alleged that the defendant, a former officer and shareholder of the corporation, violated state trade secret laws by planning to compete with the corporation. The corporation requested the defendant turn over a computer, which allegedly contained evidence of the defendant's plans to compete. The trial court granted a temporary restraining order (TRO) directing the defendant to hand over the computer to the corporation or to a neutral third party. The defendant waited until seven days after the TRO was issued to deliver the computer to the corporation. After receiving the computer, the corporation hired a computer expert to inspect and retrieve any potential evidence from the computer's hard drive. The expert discovered the hard drive had been reformatted a day before the defendant delivered the computer to the corporation, which erased any evidence that may have been on the computer. The corporation requested sanctions in the form of a default judgment against the defendant for intentionally violating the TRO. The trial court granted the corporation's motion for sanctions and entered the default judgment in favor of the corporation. The defendant appealed stating that the evidence was insufficient to support such severe sanctions. On appeal, the appellate court affirmed the trial court's judgment, determining that the sanctions were not too severe.
Court Finds Defendants Acted in Bad Faith by Failing to Halt Email Destruction Policy
Broccoli v. Echostar Communications Corp., 2005 WL 1863176 (D. Md. Aug. 4, 2005). In an employment discrimination case, the plaintiff filed a motion for sanctions against the defendants for failing to preserve electronic documents and for spoliating email evidence. Citing Zubulake, the court addressed the defendants' duty to preserve emails and other relevant documents. The evidence showed the defendants were on notice of the lawsuit long before they halted their data destruction policy. In fact, the defendants admitted they never issued a company-wide instruction regarding suspension of their data destruction policy and they did not save the plaintiff's emails relating to the harassment incidents or his termination. Based on this evidence, the court granted the plaintiff's motion for sanctions and issued an adverse inference jury instruction relating to spoliation of the emails. The court declared the defendants acted in bad faith by failing to suspend their email and data destruction policy and by failing to preserve essential personnel documents in order to comply with their preservation obligations. The court further stated, "Given [the defendants'] status as a large public corporation with ample financial resources and personnel management know-how, the court finds it indefensible that such basic personnel procedures and related documentation were lacking."
