Exterro's Weekly Case Law Update -- Smoke Doesn’t Mean There’s Fire (HCC Ins. Holdings, Inc. v. Flowers)

Created on April 21, 2017


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Overview:

The defendant, Ms. Flowers, is accused in this case of misappropriating trade secrets after she left her company and started a competitive company. The plaintiff, HCC, claims that when the defendant left the company, she took confidential files with her to benefit her new company.

A neutral examiner found no evidence that any of the plaintiff's documents were on the personal computer owned by the defendant. However, the examiner did find that the defendant used multiple programs that are commonly used to cover up spoliation activities.

Based on this activity by the defendant, the plaintiff motioned for an adverse inference instruction for the spoliation of ESI.

Ruling:

  • “Speculation” Only. The court rejected the plaintiff’s motion, because the plaintiff never proved that relevant data was deleted from defendant’s personal devices and only offered mere “speculation.”
  • Circumstantial Evidence Does Not Prove Intent. There was a lot of circumstantial evidence presented that may have implied an intent to deprive. Specifically that the defendant could’ve “utilized several methods to transfer HCC’s trade secret to Flowers’ personal devices without leaving an evidence on her HCC computer” and subsequently used a program called “evidence eliminator” twice between the discovery order issuance and the plaintiff’s inspection.
  • Was Any Evidence Taken? There was no evidence introduced by the plaintiffs to show that any of the materials were actually exfiltrated from the company.

 Case Law Tip: Learn more about how to prevent employees from taking confidential data with them when they depart by downloading this guide.

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