Some are calling the Court of Chancery’s decision in TR Investors LLC v. Genger, C.A. 3994-VCS, “the most important recent decision on the Court's handling of discovery of emails and other e-documents.” <!—yes, that was a shameless plug --> The Court of Chancery lays clear its comprehension of some of the subtleties of electronic data and the hardware that maintains it. In this well-reasoned and nuanced decision, Vice Chancellor Strine joins fellow Vice Chancellors Parsons and Noble in continuing to define the rules of eDiscovery in this most important Delaware Court.
Plaintiffs filed motions for contempt and spoliation, seeking sanctions against defendant for causing computer-wiping software to be used to destroy information contained on defendant’s computer and a company server. The Court finds that defendant, Genger, ordered the wipe and knew what effect that would have on potentially relevant data, saying such conduct was reckless if not intentional. Because Genger's destructive conduct prevented plaintiffs’ access to the full array of information that should have been available, the Court (1) raises Genger’s burden of proof by one level, e.g. from preponderance to clear and convincing, (2) declares that, “because his secretive conduct has left… serious doubts about his credibility and because that conduct rendered the documentary record incomplete,” Genger’s uncorroborated testimony alone would not meet his burden of persuasion, (3) orders Genger to turn over documents he claimed as privileged, and (4) awards reasonable attorneys’ fees and expenses related to the motions for contempt and spoliation. On this last sanction, the Court suggests the parties agree to a figure of $750,000, otherwise
If the parties decide to haggle over that amount, the parties shall exchange information about their respective attorneys’ fees and costs in connection with the contempt and spoliation motions and attempt to reach accord in good faith. If no accord is reached, I shall appoint a special master who will address the fee dispute, with the costs of the master being charged in full against the party whose position as to the amount deviates the most from the final amount awarded by the court.
In considering the issues, the Court looks to Vice Chancellor Parsons’ decision in Triton v. Eastern Shore Electrical Services, Inc., 2009 WL 1387115 (Del. Ch. May 18, 2009) for the proposition that “no harm, no foul” is not a valid defense for spoliation in direct violation of a Court order. One of Genger’s defenses was that, without affirmative proof that relevant documents were destroyed, he should not be found to have despoiled evidence, to which the Court replied
For a party to intentionally violate an order not to destroy or tamper with information and then to claim that he did little harm because no one can prove how much information he eradicated takes immense chutzpah. For a court to accept such a defense would render the court unable to govern situations like this in the future, as parties would know that they could argue extenuation using the very uncertainty their own misconduct had created.
In Genger’s defense, it seems that his drive wiping was not just the act of a guilty man trying to destroy damaging evidence. Rather, it seems, as Vice Chancellor Strine put it, that Genger is something of an “international man of mystery.”[FN1] Genger apparently “has high level contacts within the Israeli government for whom he performed sensitive tasks relating to Israel’s national security… Genger used TRI’s computer system to create and receive documents implicating Israel’s national security.” Even more intriguing is that, although he did this sensitive work within the United States, there was nothing in the record showing that the United States government was aware of his activities, and he had no diplomatic or other official credentials.
[FN1]Is it just me, or does Vice Chancellor Strine’s comparison of Genger to Austin Powers hint at a secret inner-geek? It could be, especially considering his lucid explanation of the principle that merely deleting an electronic document doesn’t destroy it. That explanation and other discussions often refer to email chains, allocated versus unallocated drive space, file encryption, and remote servers. Good stuff.
The Court also looks to Vice Chancellor Parsons’ decision this past May in Beard Research v. Kates, 981 A.2d 1175 (Del. Ch. May 29, 2009) to determine when a duty to preserve attached and the appropriate use of dispositive sanctions when that duty has been violated. The Court considered the fact that Genger’s conduct was at least partially motivated by a desire to protect non-relevant, personal information and the fact that he apparently only wiped unallocated space and not active files. Those mitigating factors persuaded the Court that default judgment or adverse inference was not warranted here. Another case of a spoliator “getting off easy” with a large fine.
We also have elements in this case of eDiscovery ineptitude by lawyers and vendors. Apparently, no one on plaintiffs’ side bothered to ask how the TRI email system was configured. It seems there was an off-site email server that was not collected. The Court points out that Genger and his accomplice did not offer the information, as they should have, but what about those charged with doing the collection? Did the lawyers and vendors forget about email or did they just assume they were collecting it in the pile of data somehow?
Friedman Kaplan hired legal technology consultants Kraft & Kennedy, Inc. to do the data collection, but just because an outfit does “legal technology” doesn’t make it qualified to do eDiscovery. The Court observed that Kraft & Kennedy "did not have a deep understanding of how TRI maintained its computer records." Preserving and collecting data are far different endeavors than helping law firms deploy technology solutions internally.
This is not necessarily a swipe at either Friedman Kaplan or Kraft & Kennedy, rather is illustrative of the ongoing lack of comprehension of the issues raised when handling data in the context of litigation. That this comprehension deficit is still so large bewilders me considering the eDiscovery boogeyman seems to be widely feared. Perhaps, with respect to plaintiffs’ errors, this is a case of not knowing what you don’t know.
I can easily envision Friedman Kaplan calling up a legal technology vendor (Kraft & Kennedy) they are familiar with, not knowing the limits of their expertise. (It’s all computers, right?) Then Kraft & Kennedy, not understanding the legal implications of the technical work, agree to do something they certainly know how to do—collect and encrypt electronic data.
And there we have the proverbial gap between legal and IT. Those of us working to bridge this gap tend to make the faulty assumption that it is a singularity. It isn’t. It’s a multiplicity. These gaps exist in almost every law firm and every Court house. We can’t be working to build one large bridge to span the gap. We need to develop many, many bridges and deploy them to every corner of the field. I’ll start printing the signs: BRIDGES WANTED.
sed it, KMWorld recently announced its 100 Companies That Matter in Knowledge Management. Many of those on the list are familiar names, with offerings familiar to the eDiscovery world, but many are unfamiliar names with unusual offerings. Among the 100 are at least a handful of true pioneers that will pierce new dimensions at the intersection of knowledge and technology (or plant the seeds to do so), transforming the way we coexist with our technologies. As the technological landscape transforms, data and information hunter-gatherers (we) should pay attention.
then wiped the new drive on the eve of the hearing in which he was explicitly told he would be required to turn the laptop over. The Court awarded attorneys’ fees and imposed an adverse inference, and I opined "Kates should thank his lucky stars the Court decided to go easy on him."
Magicians and (some) lawyers say: "Have ball, will hide.".png)
re in Wilmington, I enjoy this type of open ended question, because normally I can answer it and then riff on the topic like a jazz musician. Here is the content of that improv we conducted via email:
collect would be responsive by the fact that it was hit by a search term. Then your review can be very tactical in only looking for Privilege and concentrate on that.
