August 29, 2011 Articles

Delaware Upholds Sanctions for Electronic Discovery Violation

The Delaware Supreme Court affirmed an award of sanctions against a litigant who authorized the deletion of unallocated free space on a computer hard drive

by C. Malcolm Cochran and Travis S. Hunter

Delaware courts are focusing more attention on electronic discovery disputes. In Genger v. TR Investors, LLC, ___ A.3d ___, No. 592, 2010, slip op. (Del. July 18, 2011), the Delaware Supreme Court affirmed a substantial award of sanctions against a litigant who was found to have authorized the "wiping" of "unallocated free space" on a computer hard drive in violation of a status quo order. Sanctions affirmed by the court included raising the burden of proof for the responsible party "by one level" to "clear and convincing evidence," refusing to accept the offending party's "uncorroborated testimony" as "sufficient to establish any material fact," and fees and costs relating to the investigation and litigation of the charge of spoliation, totaling $3.95 million. Id. at 12–13. The court's opinion also discusses technological issues frequently faced by practitioners when addressing the duty to preserve.

Genger arose in the context of litigation over a contested election of directors under section 225 of the Delaware General Corporation Law. The parties agreed upon a "status quo" order that prohibited the destruction of certain electronically stored documents and materials. The case was thereafter settled, and new board members were installed. Once the reconstituted board took control, it was determined that an individual defendant had authorized an employee to use SecureClean software set on "Deep-Clean" mode to "wipe" unallocated free space on the defendant's hard drive shortly after company lawyers and a consultant had collected documents from the "allocated" space.

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