Recent court cases awarding sanctions under Federal Rule of Civil Procedure 37, which provides penalties for failure to disclose discoverable data, illustrate the problems in implementing effective legal holds and the potential consequences for failing to do so [See "Discovery Discipline"].
Ralph Losey, a shareholder in Akerman Senterfitt Losey, points out that keeping track of data and managing e-discovery holds was a bit easier in the "old days," three or four years ago, before the advent of PDA's, thumb drives, smartphones, Internet-based e-mail and instant messaging accounts and other cloud computing data. Such technologies now permit the storage of data in many other locations beyond an institution's servers and data map.
A recent decision from the Federal District Court for the Middle District of Florida, Southeastern Mechanical Services, Inc. v. Brody, illustrates the problems that can result. In that case. employees left a company to work for a competitor. Their former employer sued, alleging that they had passed trade secrets to the competitor. The new employer asked them to turn in their BlackBerrys and laptops and produced them for forensic examination.
The forensic expert found no data whatsoever on any of the BlackBerrys used by three former employees who were individual defendants in the case. He testified that all data on the employees' BlackBerrys had been intentionally and irreversibly deleted, including all e-mails on personal web-based e-mail accounts, as well as call logs and text messages sent and received from the BlackBerrys. The expert said this could have occurred using one of two possible technical procedures: a "hard reset" wipe or bad password reset. He stated it would be very difficult to accidentally wipe a BlackBerry of all data.
Ruling on the plaintiff's motion for sanctions, claiming spoliation of evidence,
the court held that the data deletion by the defendant employees was done in bad faith after a duty to preserve existed. It rejected their explanation that all data may have been deleted by the administrator of the BlackBerry server or during the forensic examination itself.
"The Individual Defendants had both the motive and the opportunity to wipe the BlackBerrys of data. Despite the denials by Individual Defendants that they deleted any information, e-mails, text messages, call logs, or memory from their BlackBerrys, their assertions are not credible," the court said.
The court denied a motion for default judgment but ordered that an adverse inference be given to the jury at trial regarding the plaintiff's claims against the individual defendants.