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In Genger v. TR Investors, LLC, No. 592, 2010
(Del. Supr., July 18, 2011), read opinion here, the
Delaware Supreme Court addressed electronic discovery issues in a 45-page
opinion that warrants close examination by those engaged in business
litigation. This short post will highlight a few "bullet points" until a
more fulsome analysis can be provided. A few of the prior Court of Chancery
opinions in this case were highlighted here.
Issues on Appeal
Three issues on appeal related to: (i) whether spoliation
occurred and if so, the sanctions were too high; (ii) the trial court erred on
the merits of the Section 225 decision; and (iii) the trial court had no
personal jurisdiction to adjudicate the beneficial ownership of parties not
properly before the trial court.
A.) Spoliation of ESI
"We do not read the Court of Chancery's Spoliation
Opinion to hold that as a matter of routine document-retention procedures, a
computer hard drive's unallocated free space must always be preserved. The trial
court rested its spoliation and contempt findings on more specific and narrow
factual grounds-that Genger, despite knowing he had a duty to preserve
documents, intentionally took affirmative actions to destroy several relevant
documents on his work computer. These actions prevented the Trump Group from
recovering those deleted documents for use in the Section 225.... "
Our affirmance should not be viewed as extending beyond
the confines o fthis setting- i.e., where a party is found intentionally to
have taken affirmative steps to destroy or conceal information to prevent its
discovery at a time that party is under an affirmative obligation to preserve
that information. It is noteworthy that there is no evidence or claim in this
case, that the use of the SecureClean program fell within Trans-Resources'
ordinary and routine data retention and deletion procedures."
B.) Scope of DGCL Section 225 Proceedings
Read more Delaware business
litigation case summaries and commentary on Delaware
Corporate and Commercial Litigation Blog, a blog hosted by Francis G.X.
Pileggi, of Eckert Seamans.
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