Business Partner Sanctioned for Egregious ESI Spoliation and False Testimony
In re Shaw & Elting, LLC, Case Nos. 9661-CB, 9686-CB, 9700-CB, 10449-CB (Del. Ch. Ct., July 20, 2016) is a case in the Delaware Court of Chancery involving a dispute between parties Shawe and Elting, who jointly owned a company, TransPerfect Global. Prior to litigation, Elting attempted to hire a third party to resolve the issues between herself and Shawe; however, Shawe became enraged and began a campaign to “get his way… at all costs”. He began monitoring her phone calls and emails, and eventually snuck into her office, took her computer, and directed an employee to image her hard drive.
Shawe did not tell the employee it was Elting’s computer, and he instructed the employee not to document the imaging of the hard drive. Eventually, however, the employee figured out it was Elting’s computer and continued to assist Shawe in extracting personal and professional emails from it. Shawe also remotely accessed Elting’s computer and reviewed thousands of privileged communications between herself and her counsel. He also hired a PI to spy on her. Eventually, four separate lawsuits were filed by the parties against one another, and litigation hold letters were sent out. Despite this, Shawe did not take any steps to preserve his iPhone or laptop.
Eventually, the iPhone was destroyed when Shawe’s niece dropped it into a glass of Diet Coke. Shawe gave the phone to his assistant and advised him to take it to the Apple store for repairs. The assistant put the phone in his desk drawer. Later, when he opened the drawer, he saw rat droppings and noticed a nutrition bar he’d left there had been chewed on. In disgust, he allegedly dumped the entire contents of the drawer into the garbage including the iPhone.
During litigation, a discovery order was entered. Thereafter, Shawe continued to use his laptop until one day prior to the day an image of the laptop was to be made. On the day prior to the laptop imaging, Shawe deleted nearly 20,000 files from it, emptying his recycling bin, deleting his internet history and deleting temporary files created by certain software. He then deleted more files after the computer was imaged. His own expert witness discovered the deletions.
Shawe also submitted false answers to interrogatories, false answers during his deposition, and false answers at trial. Elting filed a Motion for Sanctions for the ESI spoliation and false testimony.
In Delaware, the prevailing party is only awarded attorneys’ fees when the losing party has acted in bad faith, and it is considered an extraordinary remedy. Shawe’s behavior was so egregious in nearly every respect, from ESI spoliation and false testimony to failing to safeguard his iPhone. Ultimately, the court awarded Elting one third of her attorneys’ fees for the trial on the merits and 100 percent of her fees for litigating the sanctions motion.