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Court Rules in Favor of Whistleblower Plaintiff on Spoliation Sanctions Motion

Posted on October 7th, 2016

In Erhart v. BofI Holding, Inc., Case No. 15-02287 (S.D. Cal., Sept. 21, 2016), whistleblower Plaintiff alleged his former employer violations of the Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, and the laws of the State of California. Defendant filed a countersuit against Plaintiff for violation of the Computer Fraud and Abuse Act, alleging Plaintiff published Defendant’s confidential information and deleted hundreds of files from his corporate laptop. In Plaintiff’s case, Defendant alleged that Plaintiff deleted files from his company-issued laptop, two USB flash drives, his personal desktop computer, and his girlfriend’s laptop. Defendant filed a Motion for Sanctions.

Plaintiff admitted that he deleted emails and documents from his work-issued laptop after providing documents to the federal Comptroller, because he wanted to make it more difficult for Defendant to follow his audit trail. However, he argued that he didn’t delete anything from the system and that the deleted documents were all copies of documents already in Defendant’s possession. He argued that with respect to one of the flash drives, he also deleted files only after making copies, and the copies deleted were duplicates. The court in Defendant’s countersuit ordered him to sign a declaration that he had returned all Defendant’s information and had deleted any confidential information he held. He then provided his personal computer and his girlfriend’s laptop, as well as the second flash drive, to Defendant. Defendant’s expert determined that files had also been deleted from these items.

The court determined as an initial matter that Defendant was improperly equating “deleting computer files with destroying evidence.” Deleted computer files are recoverable, the court ruled, and thus they are not destroyed for purposes of spoliation sanctions. The court found with respect to each hard drive: 1) the work computer did show that some potentially relevant files were destroyed, but many of them reappear in recoverable form on other devices; 2) the first flash drive’s deleted file was a duplicate of another file already produced; 3) the deleted files in Plaintiff’s personal computer are still sitting in the recycle bin and are easily recovered, with the exception of two files; 4) the second flash drive’s files are forensically recoverable; and 5) most of the deleted files on the girlfriend’s laptop were duplicates of other files. The court determined that almost all of the deleted files were recoverable, and the rest were available from other sources. Although some of the files were destroyed beyond recovery without duplicates, the court could not find that whistleblower Plaintiff had a culpable state of mind with respect to his personal computer, the flash drives or his girlfriend’s computer as required by law in the Second Circuit. Although he may have had such a state of mind with respect to his work computer, the court held that Defendant suffered no meaningful prejudice, and spoliation sanctions were not warranted. The court denied the Motion.

ILS – Plaintiff eDiscovery Experts

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