Fourth Circuit Affirms Finding that No ESI Spoliation Occurred in Trade Secrets Case
Plaintiff sued Defendants for misappropriation of trade secrets and breach of a confidentiality agreement. Plaintiff is a direct competitor with Defendant Merkle; the two companies maintain data on consumers and provide marketing advice to clients based upon the data. Defendant May is a former employee of Plaintiff who was subject to a confidentiality agreement. May saved large amounts of Plaintiff’s ESI to his personal hard drive shortly before his termination by Plaintiff. Merkle then hired May to perform duties similar to those he had performed for Plaintiff. Plaintiff’s forensic computer expert examined May’s hard drive and determined that May had retained possession of many files and had attempted to delete them several times.
The trial court found that the confidentiality agreement was too broad and was therefore not enforceable against May. The court also found insufficient evidence to show that Merkle had misappropriated trade secrets. At trial, Plaintiff had requested an adverse inference instruction for ESI spoliation based upon May’s attempts at deleting the files from his personal hard drive; however, the trial judge questioned May under oath and found insufficient evidence to find spoliation, although it did impose monetary sanctions in part due to May’s “lack of candor regarding his retention” of Plaintiff’s files.
The 4th Circuit affirmed, finding that it could not find an abuse of discretion, which is the standard for reversing a trial court’s refusal to apply a spoliation inference.