Jury Finds Former Hallmark VP Engaged in Electronic Evidence Spoliation
In the recent case Hallmark Cards Inc. v. Murley, No. 11-2855 (8th Cir. 2013), former Hallmark VP and defendant Janet Murley appealed a jury verdict entered against her.
After leaving her employment at Hallmark, she received a $735,000 severance package in exchange for signing non-compete and non-disclosure agreements. In 2006, after the non-compete clause expired, she consulted for another card company, RPG, for $125,000.
In 2009, American Greetings purchased RPG, who hired a third party reviewer to investigate RPG’s files to ensure they did not have any confidential information owned by Hallmark. The third party reviewer found a number of Hallmark files. Hallmark was alerted and filed suit against Murley for breach of contract, misappropriation of trade secrets, conversion of confidential information and unjust enrichment.
In response to plaintiff electronic discovery requests, the defense production disclosed that in 2007, RPG had a forensic computer expert make a copy of Murley’s hard drive. At trial, the plaintiff computer forensics expert testified that when reviewing the copy of the hard drive, it was clear that two days prior to RPG’s expert making a copy of the hard drive, 67 documents relevant to Hallmark were deleted.
Plaintiffs sought an adverse jury instruction that the 67 deleted files were deliberately destroyed to conceal their contents, that Murley had acted in bad faith and that the deleted files prejudiced Hallmark’s case. The jury awarded plaintiff Hallmark $860,000, which was the amount of the severance and the amount paid by RPG for consulting work.
Murley appealed, alleging the adverse inference instruction was made without the requisite findings of bad faith and prejudice against plaintiff Hallmark. Assuming the district court did not make any explicit findings of bad faith or prejudice when ordering the adverse jury instruction, will this be enough to overturn the jury verdict? The Court of Appeals weighs in on this issue of first impression for the 8th Circuit, which our blog will discuss on Wednesday.