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November 2012

Home – Sanctions Imposed on Party for Spoliating Evidence Even Scarier than Reality TV Ghost Shows

Sanctions Imposed on Party for Spoliating Evidence Even Scarier than Reality TV Ghost Shows


Ghost hunters are an interesting breed of people. And you can't swing a talisman or a Ouija board on cable television without hitting a "reality" show about the paranormal. But, aside from the occasional fleeting dark mass or misty cloud, they never really seem to capture anything that is conclusively paranormal on film.

Forensic computer technologists are like ghost hunters. The difference is, however, they actually do find evidence of "deceased" data by virtue of specific sophisticated searches-they dig up bits of information that can be recreated into meaningful, readable files. So, don't think you can simply delete files and they will disappear forever, because the forensic tech will hunt them down and reveal them.

Such was the case in Multifeeder Tech. Inc. v. British Confectionery Co. Ltd., No. 09-1090 (JRT/TNL) (D. Minn. Apr. 26, 2012) where the U.S. District Court awarded civil sanctions against defendant British Confectionery Co. Ltd. (British) that should put a scare into companies when it comes to protecting data when litigation begins.  The court ordered the defendant to pay $25,000 to the court and $600,000 to plaintiff Multifeeder Technology, Inc. (Multifeeder), for purposes of paying experts, costs and attorneys' fees. Why?  Because of spoliated evidence a forensic tech uncovered.

Beginning as a commercial dispute, this case, according to U.S. Magistrate Judge Tony N. Leung, "devolved into an interminable and costly discovery maelstrom." 

This decision highlights the importance of preserving the integrity of any and all documents-including hard copies and Electronically Stored Information (ESI)-once a lawsuit has been filed. Evidently, British did not listen to its counsel regarding the critical nature of the discovery preservation process.

Despite British's efforts to eradicate potentially incriminating evidence, Multifeeder's forensic technician Mark Lanterman, CEO and Chief Technology Officer of Computer Forensic Services, Inc. (CFS) nevertheless found that "that certain files were purged or deleted shortly before he arrived" at British's facility. The British executives-David Connolly, Jr. and Blair Connolly-apparently didn't count on Lanterman's hermetical techniques, and ability to recover some of the suspiciously deleted files.

To rebut Lanterman's findings, British enlisted the help of its own forensic tech, Wade Chafe, an information technology security specialist with EWA-Canada Limited. 

After all was said and done, CFS ultimately incurred fees totaling $490,524.53. 




The court found the timing of the data deletions highly suspect and reminded the defendants that claiming you are unaware that data exists does not help you.

David Connolly admitted to having relevant information on his computer that he deficiently searched, resulting in the first motion for sanctions by Multifeeder. But, he destroyed evidence AFTER the court's order to compel discovery responses, the court explained.

The court went on to say that Blair Connolly's bad faith actions demonstrated clear and convincing evidence of spoliation as well. Concealment of the encrypted hard drive alone violated the court's ESI Protocol order. Further, the court found that destruction of an email file was highly suspect. Blair Connolly also failed to alert Multifeeder, his own company's forensic team, or the court that he had an encrypted hard drive. Again, the factor of timing incriminated Blair Connolly because the installation of the encryption software took place after the September 2, 2010, Order on Multifeeder's Motion to Compel, the court explained. Additionally, Blair Connolly was the British employee who negotiated the contract, and was the subject matter of this litigation quagmire. Also, more metadata discrepancies were discovered to have occurred after the April 26, 2011, Order, which also constitutes clear and convincing evidence of spoliation, the court determined.

Key takeaways: 

  • Carefully and forcefully educate employs about preserving data. 
  • Keep an open line of communication with your counsel and alert them of any changes, new software, or upgrades to your computers. 
  • Remember that data is forever. 
  • Do not rely on employees alone to preserve data. Consider more reliable alternatives. 

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