In a case that demonstrates the importance of complying with court orders regarding electronic discovery and the depth of information that can be obtained from computer files, a federal court in Illinois dismissed a former employee’s breach of contract case against his ex-employer because the former employee deleted, altered or modified thousands of files on a laptop computer after receiving notice that the computer’s contents were the subject of litigation.
In a case that demonstrates the importance of complying with court orders regarding electronic discovery and the depth of information that can be obtained from computer files, a federal court in Illinois dismissed a former employee’s breach of contract case against his ex-employer because the former employee deleted, altered or modified thousands of files on a laptop computer after receiving notice that the computer’s contents were the subject of litigation. See Krumwiede v. Brighton Associates, L.L.C. (N.D. Ill. May 8, 2006).
In this case, Krumwiede was the Director of Business Development for Brighton Associates. Brighton fired him and Krumwiede went to work for a competing company. Krumwiede sued Brighton for, among other things, breach of his employment contract. Brighton counterclaimed alleging, among other things, breach of the non-compete and confidentiality provisions of Krumwiede's employment contract and that Krumwiede misappropriated a business opportunity with a prospective Brighton client.
Brighton believed the laptop computer Krumwiede used during his employment would show whether Krumwiede improperly used Brighton’s data after he began working for the competing company. When Brighton served Krumwiede with the counterclaim, it also gave him a letter instructing him to return the laptop and immediately stop accessing files on the computer. Krumwiede refused to return the laptop; however, following several motions and a hearing, Krumwiede agreed to place the computer in the hands of a neutral expert, who performed a forensic analysis of the laptop’s hard drive.
The computer expert created a forensically valid copy of the laptop's hard drive using specialized software, which enabled him to examine the metadata (information in a file that identifies how, when and by whom a particular set of data was collected, created, accessed, or modified and how it is formatted) and the content of the files on the computer. Using this technology, the expert was able to obtain detailed file activity and determine whether devices capable of transferring or storing file data were connected to the laptop.
According to the expert’s report, the laptop showed an increase in activity after the counterclaim was filed, with significant increases on the date the counterclaim was filed and the date of the court’s order compelling Krumwiede to turn over the computer (the day before he actually turned over the computer). Additionally, the expert found that Krumwiede took various types of actions, such as using defragmentation hardware, nesting data by storing it within multiple layers of other folders in ZIP files (which often eliminates metadata), using multiple USB devices to move batch files, and permanently deleting files by sending them to the recycle bin and purging the recycle bin.
The court found that this activity resulted in the alteration, modification, or destruction of thousands of potentially relevant files and their metadata. The court held that the volume and timing of Krumwiede's activities were sufficient to find willful and bad faith spoliation of evidence. The court also held that it was clear that “Krumwiede specifically altered and deleted potentially adverse evidence directly relevant to Brighton's claims.” The court noted that Brighton was relying on evidence contained in the laptop to establish its claims against Krumwiede and that even if the altered or modified documents were not deleted, “changes to the file metadata call the authenticity of the files and their content into question and make it impossible for Brighton to rely on them.” The court held that “Krumwiede's conduct shows such blatant contempt for this Court and a fundamental disregard for the judicial process that his behavior can only be adequately sanctioned with a default judgment.”
Employers' Bottom Line:
Although the sanctions imposed in this case were severe, primarily due to Krumwiede’s willful disregard of the court’s order, this decision emphasizes the importance of complying with court orders relating to electronic discovery and demonstrates how an experienced expert can detect even sophisticated efforts to manipulate electronic data.
It is likely that the discovery and analysis of electronic data will play an increasingly more important role in employment related litigation. While there has been some inconsistency among federal court orders regarding a party's obligations concerning electronic discovery, revisions to the Federal Rules of Civil Procedure, which take effect December 1, 2006, should provide some guidance and greater uniformity in this area and will require parties to address electronic discovery issues early in the litigation process. Ford & Harrison will be circulating a Legal Alert discussing the revised rules and their potential impact on employers.
If you have any questions regarding this case or electronic discovery issues in general, please contact the Ford & Harrison attorney with whom you usually work.