Court Sanctions Defendant for False Statements Regarding Deleted Files

2 Oct 2015

In Integrated Direct Marketing, LLC v. May, et. al., Case No. 14-1183 (E.D. Va., Sept. 8, 2015), the Eastern District of Virginia considered Plaintiff’s motion to compel and motion for spoliation sanctions after discovery revealed that Defendant had deleted hundreds of potentially relevant electronic files, and had made false statements to the court about the files.

Plaintiff sued Defendant May, a former employee, for misappropriation of Plaintiff’s confidential and proprietary information.  During discovery, Plaintiff learned that Defendant had retained a large number of Plaintiff’s files on his personal external hard drive following his departure from Plaintiff.  Plaintiff engaged a computer forensic expert to analyze the hard drive. The expert’s examination revealed that just days after Defendant learned that Plaintiff intended to sue him and his new employer (a direct competitor of Plaintiff), Defendant May deleted a folder and hundreds of files from his external hard drive. He continued deleting files after Plaintiff filed the case and after discovery began, including after Plaintiff filed for a TRO and served Defendant with document requests.

Given the information revealed by the expert’s examination, Plaintiff sought spoliation sanctions, seeking either a default judgment against both Defendants or an adverse inference instruction plus monetary sanctions and attorneys’ fees.

The court granted the motion for sanctions in part, concluding that the evidence had confirmed that Defendant May’s statement in his filed affidavit that he “did not keep any of IDM’s information” was false, and thus sanctionable. The Court also noted that “in addition to being sanctionable, May’s lack of candor regarding his retention of [Plaintiff’s] files . . . poisoned the well for settlement purposes and caused unnecessary additional litigation.”  Based on this, the court awarded Plaintiff the costs associated with hiring its forensic computer expert, as well as its reasonable attorneys’ fees and costs in preparing and prosecuting its Motion for Sanctions. The court denied the spoliation motion without explaining its reasoning (although the court did note that it appeared that the forensic expert had been able to restore most of the deleted data).

ILS – Plaintiff Electronic Discovery Experts