GN Netcom, Inc. v. Plantronics, Inc. (D. Del. July 12, 2016)

Why This Case is Important:

Two reasons: (1) Proves that courts under the right circumstances will go beyond remedies set forth in Rule 37(e). (2) Not taking proactive action to preserve Key Custodian data can get you in big trouble.

Overview:

In this antitrust case, the Plaintiffs engaged in their standard process for preserving information, which included issuing legal hold reminders, requiring custodians to acknowledge receipt of the hold and even held two training sessions on how to defensibly preserve. Withstanding those Preservation safeguards, a key custodian, disregarded the legal hold notice and deleted over 40% of his emails. Beyond deleting responsive data to the case, this key custodian also instructed his colleagues to also delete relevant emails.

The defendant brought a motion for spoliation under Rule 37. 

Ruling:

• Sanctions Awarded Even with Preservation Process in Place. Even though the plaintiffs had a defined preservation process, the court noted that the plaintiffs must be somewhat accountable “for the failure of a member of its senior management to comply with his document preservation obligations.”
• Plaintiffs Didn’t do Enough to Rectify the Spoliation. Further evidence of bad faith behavior extended to plaintiffs based on (1) their misrepresentation of the spoliation (i.e. took almost 18 months to identify how this responsive data was deleted) and (2) didn’t take reasonable steps to restore the deleted data.
• Severe Remedies. Going beyond the remedies stated in Rule 37(e), the court awarded $3,000,000 in punitive damages, along with an adverse inference instruction.

Next Steps: Create a defensible preservation process to ensure key custodians don’t delete responsive data. Download our “Legal Director’s E-Discovery Strategy Checklist” for creating a corporate e-discovery strategy that is defensible in court.