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Spoliation Motion Denied in Misappropriation of Trade Secrets Case

Posted on February 17th, 2017

spoliation motion deniedIn HCC Insurance Holdings, Inc. v. Flowers, et. al., Case No. 15-3262 (N.D. Ga., Jan. 30, 2017), Plaintiff sued Defendants alleging that Defendant Flowers and Defendant Remeika resigned from a non-party subsidiary of Plaintiff, HCC, and appropriated Plaintiff’s trade secrets for use in their new company, Defendant CRU. Plaintiff filed the suit on September 16, 2015.

Evidence showed that over two days in August 2015, Defendant Flowers moved and deleted emails and also deleted hundreds of “hot sheets” as well as moved hundreds more “hot sheets.” After Flowers resigned, she turned over her work computer after asking if she could keep it over the weekend. She then logged into HCC’s networks remotely late that night. Plaintiff noted that Flowers’ husband is an IT professional. A litigation hold letter was sent out on August 27.

Plaintiff alleged that Defendants destroyed data from Flowers’ personal laptop and a thumb drive that was plugged into her computer on September 20, 2015. Flowers’ husband testified that he plugged the thumb drive into Flowers’ laptop  back up data, but the computer did not recognize it, so he assumed it was defective and threw it away. However, Defendants’ own computer expert confirmed that it had worked properly the second time he inserted it, but he removed it after 38 seconds. Two days later, he used a different thumb drive to copy iTunes and picture folders, which is what he claimed he was trying to copy on September 20.

On September 19, Flowers ran CCleaner on her personal laptop; she did it again on September 22, the day after the court ordered her to produce the computer. Flowers’ husband claimed he ran it to get the laptop to run properly after it crashed; he said it was an unreliable computer because it was old, and so they only used it to store music and photos. The laptop was also defragged on September 22. On September 24, a program called WinUndelete was run on the computer. Mr. Flowers claimed he ran the program from his work thumb drive so he could learn how to use it for work. The forensic computer experts found no evidence of data taken from HCC by Flowers. All the same, Plaintiff filed a Motion for Sanctions seeking an adverse inference.

The court held that the duty to preserve arose on August 27, 2015, when the litigation hold letter was sent. The court found that despite the extensive effort, no evidence was found that Flowers transferred HCC files onto her personal devices. The court found that Mr. Flowers’ testimony was generally consistent with what was found by the forensic experts. Therefore, the court denied the spoliation motion, finding no evidence that Defendant destroyed relevant data and no evidence of bad faith.

ILS – Plaintiff ESI Discovery Experts

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