Don’t Use “Crap Cleaner” When a Motion to Compel Is Pending, and Other Lessons Learned, to Ensure You Don’t Get Hit With a Spoliation Sanction
September 16, 2015
Clear-View Technologies, Inc. v John H. Rasnick, et al (2015 U.S. Dist. LEXIS 63579), reads as a list of the things you do not want to do if you want to avoid spoliation sanctions. The underlying dispute involved the development of an alcohol tracking product, and certain shareholders’ alleged conspiracy to steal the technology and start a new company.
The defendants, however, forgot they had discovery obligations (or they were not properly informed about them by their attorneys). After being on notice of a potential litigation, through a text message where they were threatened with a lawsuit, the defendants failed to take any steps to preserve discovery. Instead, they continued to delete emails and dispose of technology (like iPhones, iPads and computers). They also never even tried to do a fulsome search for responsive materials, but still certifying that they searched for and produced all of their ESI.
Defendants’ discovery failures led the court to require the defendants to turn over all of their devices to an outside consultant to review. This is where things went from bad to worse. The consultant found almost 2,600 relevant documents, totaling almost 12,500 pages of materials the defendants did not produce (12,000 more pages than the defendants entire production). The forensic examiners also found that four separate optimization and computer cleaning programs was run on one of the laptops (including “crap cleaner”) which can be used to “wipe specific files and programs.” This was done six-days after the filing of the motion to compel. The defendants also purged outlook files from an external hard drive and purportedly were unable to provide passwords for certain email accounts.
All in all, the court was not accepting the defendants’ actions lightly. The court issued an adverse inference sanction and over $200,000 in attorney’s fees (though it declined to issue a termination sanction regarding defendants’ counterclaim). Adding insult to injury, the defendants stiffed the forensic expert, even though the court had ordered that they pay its fees. The court therefore issued an order to show cause as to why additional sanctions should not be issued.