Telquest International Corp. v. Dedicated Business Systems, Inc., et. al

Magistrate Recommends Adverse Inference and Fee-Shifting Sanctions for Destruction and Secure Cleaning

by Rob Kleeger
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Some defendants may think that they can avoid the consequences of producing such ESI by simply deleting the data or by installing and using software programs that are designed to wipe data from computer hard drives. The courts are sending a message and clearly are imposing sanctions and adverse inferences, as demonstrated in a recent case :

Telquest International Corp. v. Dedicated Business Systems, Inc., et. al 2009 U.S. Dist. LEXIS 19546 (D. N.J. Mar. 11, 2009)

The U.S.D.N.J. Magistrate Judge was called upon to handle the plaintiffs motion for spoliation sanctions and reimbursed attorney’s fees and associates costs.

In this case, an ex-employee incorporated a business almost immediately after leaving his position at Telquest. The complaint charged Defendant “DBSI and Jason Hines” with trade secret theft and soliciting customers in violation of a non-compete provision that was in his employment agreement. As part of the discovery request and incomplete production of paper documents, Telquest sought access to have DBSI computers forensically imaged and analyzed. After several resisted attempts, Telquest obtained a court order directing DBSI and Hines to produce “any and all computers used by Hines and or DBSI in connection with the sale, purchase or marketing of telecommunications equipment since January 2006,” in addition to other discovery requests.

Defendants failed to produce any computers by March 31, 2008, and, during a June 17, 2008 telephone conference before the Honorable Esther Salas, Defendants were again ordered to produce the computers. On June 19, 2008, Hines appeared pro se and delivered a computer to Telquest’s digital forensic consultant. The digital forensic analysis revealed the following:

• On June 17, 2008, two days before the delivery of the computer to the forensic firm, a “defrag” program, which overwrites deleted data and undermines it recovery, had been run.

• Files potentially containing information about DBSI operations had been deleted and were at that point unrecoverable.

• Secure Clean, a program that “wipes” data from the hard drive so that it may not be recovered using conventional computer forensic tools, had been run on June 19, 2008.

• Secure Clean software had been uninstalled on June 19, 2008.

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Reference Info: Decision | State, 3rd Circuit, New Jersey | United States

Written by:

Rob Kleeger
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