Rimkus Consulting Group Inc. v. Cammarata - Ballard Spahr LLP

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Case 4:07-cv-00405 Document 450 Filed in TXSD on 02/19/10 Page 68 of 139 filed suit in January and February 2007. Despite the fact that the founders of U.S. Forensic had sought and obtained legal advice on many aspects of their departure from Rimkus and their formation and operation of the competing business, they made no effort to preserve relevant documents, even after the Louisiana and Texas suits had been filed. To the contrary, the evidence shows affirmative steps to delete potentially relevant documents. Even assuming that there was an email destruction policy as DeHarde testified, it was selectively implemented. The deleted documents included emails and attachments relevant to the disputes with Rimkus—the emails and attachments showing what information U.S. Forensic’s founders took from Rimkus to use in the competing business, including to solicit business from Rimkus clients, and how they solicited those clients. The record shows that the electronically stored information that the defendants deleted or destroyed after the duty to preserve arose was relevant to the issues involving both Bell and Cammarata, not limited to a breach of fiduciary claim against Bell. The deleted emails and attachments related not only to setting up U.S. Forensic but also to obtaining information from Rimkus, including copyrighted materials, financial documents, and customer lists; using at least some of that information to operate U.S. Forensic in competition with Rimkus; and soliciting business for U.S. Forensic. The evidence shows that by deleting emails relating to forming U.S. Forensic and to using information from Rimkus for U.S. Forensic, by failing to preserve such emails, and by giving away or destroying laptops with such emails, the defendants destroyed potentially relevant evidence. 68
Case 4:07-cv-00405 Document 450 Filed in TXSD on 02/19/10 Page 69 of 139 3. The Degree of Culpability Destruction or deletion of information subject to a preservation obligation is not sufficient for sanctions. Bad faith is required. A severe sanction such as a default judgment or an adverse inference instruction requires bad faith and prejudice. See Condrey v. SunTrust Bank of Ga., 431 F.3d 191, 203 (5th Cir. 2005); see also Whitt v. Stephens County, 529 F.3d 278, 284 (5th Cir. 2008) (“[A] jury may draw an adverse inference ‘that party who intentionally destroys important evidence in bad faith did so because the contents of those documents were unfavorable to that party.’” (quoting Russell v. Univ. of Tex. of the Permian Basin, 234 F. App’x 195, 207 (5th Cir.2007) (unpublished))). 33 33 Two cases illustrate the range of culpability. In GE Harris Railway Electronics, L.L.C. v. Westinghouse Air Brake Co., No. 99-070-GMS, 2004 WL 5702740 (D. Del. Mar. 29, 2004), the court concluded that the defendant’s employee acted in bad faith by destroying documents that were potentially incriminating, id. at *4. The plaintiff had sued the defendant and its employee for patent infringement and trade secret misappropriation. Id. at *1. The parties settled the case and a consent order was entered prohibiting the employee for three years from involvement in selling any radio-based distributed power product manufactured by his employer. Id. It was undisputed that the employee was aware of this prohibition. Id. at *2. During that three-year period, the employee participated in a proposal to sell the product. Id. After the plaintiff learned about this proposal, it moved for a contempt order. Id. at *1. The parties did not dispute that the employee deleted computer files related to the proposal when he became aware that the plaintiff might have concerns. Id. at *2. The court concluded that the employee’s destruction was “clearly motivated by an intent to eliminate evidence that could potentially incriminate [his employer] in a contempt claim.” Id. at *4. The court held that dismissal was improper because the prejudice to the innocent party was minimal but adopted an adverse inference against the spoliating party. Id. at *4–5. By contrast, in Pandora Jewelry, LLC v. Chamilia, LLC, No. CCB-06-3041, 2008 WL 4533902 (D. Md. Sept. 30, 2008), there was insufficient evidence that the defendant deliberately deleted emails to find bad faith. After the plaintiff filed suit, the court granted the defendant’s motion to quash a subpoena for records. Id. at *1. The defendant then sent a letter to a number of the plaintiff’s customers. Id. The letter purportedly misrepresented the court’s order granting the defendant’s motion to quash. Id. The defendant also sent this “letter via email to a number of blind copy recipients.” Id. After the plaintiff filed additional claims, the defendant contended that it no longer possessed the emails because it “changed its electronic server twice during the litigation period or due to its email system forcing users to delete or archive emails every ninety days.” Id. at *2. The court rejected the plaintiff’s motion for sanctions for spoliation. Id. at *6. There was no evidence, “other than [the defendant’s] failure to retain the emails, that [the defendant] deliberately deleted or destroyed evidence.” Id. at *9. Although the loss of the emails violated the preservation obligation, this did not “necessitate a finding of willful or bad faith destruction.” Id. The court held that the defendant was merely “grossly negligent in its failure to preserve evidence” but declined to impose an adverse inference instruction or grant summary judgment because the innocent party failed to show that the lost documents were 69
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Rimkus Consulting Group Inc. v. Cammarata - Ballard Spahr LLP

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