Good-Faith Rule Applies to Document Destruction

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Big cases can turn on a little rule of evidence called spoliation. The rule recognizes that a trial court has the inherent authority to sanction a party for destroying, altering, or failing to preserve property that the opponent could have used as evidence. A recent decision in the Eastern District of Virginia serves as a reminder that a judge’s decision to award sanctions — and thus tip the balance in one party’s favor — turns on familiar concepts of reasonableness, foreseeability, and state of mind.

The case is notable because now that e-discovery has become the norm in complex commercial litigation, many companies are concerned that routine deletion of e-mails, or a minor failure to order the retention of electronic documents, will lead to a finding of spoliation with its potentially severe consequences. This case, involving the DuPont company and Kolon Industries, a competitor, will give some solace to companies that have those concerns.

In February 2009, DuPont filed a complaint against Kolon alleging that Kolon had used trade secrets regarding DuPont’s Kevlar product. According to DuPont, the trade secrets had been stolen by a former DuPont employee who went to work as a consultant for Kolon in April 2007. DuPont issued three litigation hold orders in connection with the suit. The first order, issued in June 2007, required certain employees in a specific business unit to preserve records related to the former employee as well as documents related to Kolon’s competitive intelligence. On the day it filed suit, DuPont issued a second hold order to all employees in the relevant business unit. DuPont issued the third hold order on April 24, 2009, four days after Kolon filed its counterclaim alleging that DuPont had attempted to monopolize the market for para-aramid fiber, the synthetic fiber from which Kevlar is made.

Notably, it was not until October 2009 that Kolon raised a question regarding DuPont’s gathering of competitive intelligence.

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