For Key Employees' Bad Faith, Intentional Spoliation, Court Imposes Adverse Inference and Monetary Sanctions

E.I. Du Pont De Nemours & Co. v. Kolon Indus., Inc., No. 3:09cv58, 2011 WL 2966862 (E.D. Va. July 21, 2011)

The court found that defendant breached its preservation duty when key employees intentionally deleted ESI in bad faith. Acknowledging Kolon’s (insufficient) attempts to place a litigation hold, the court declined to impose default judgment, but ordered sanctions in the form of attorneys’ fees, expenses and costs related to the motion, and an adverse inference instruction. In so doing, the court rejected arguments that plaintiff suffered no prejudice and that because many of the files were recovered, there was no spoliation.

In this case, plaintiff alleged trade secret misappropriation, theft of confidential business information, conspiracy, and other business torts. Defendant received plaintiff’s complaint on February 4, 2009. On February 6th, defendant issued a litigation hold order to certain upper-level employees. On February 10th, a second litigation hold notice, written in English, was distributed to all employees, most of whom did not speak English. A third litigation hold was later issued to the IT department, but had little effect on the outcome of the spoliation motion.

Despite knowledge of the relevant complaint and/or receipt of a litigation hold notice, many of defendant’s key employees deleted relevant information from their computers and email accounts. These deletions were discovered as the result of defendant’s production of several screen shots with handwritten notes that appeared to identify certain files for deletion (e.g., files were marked “Need to Delete,” “Remove All,” “Get Rid Of,” etc.). Suspicion of spoliation was also raised by the “suspiciously low document production totals” for key employees and the deposition testimony of employees “which assertedly showed that Kolon failed to instruct key employees on their preservation duties. . .” The extent of the deletions, however, was uncovered only upon the court’s request for additional discovery into the apparent spoliation. Forgoing the voluminous details of the spoliation, it suffices to say that plaintiff’s expert concluded that defendant’s employees had deleted at least 17,811 files and email items, many of which were highly relevant to the issues of the case.

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Source: ediscoverylaw.com