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Lying Defendant Leads to E-Discovery Sanctions

University Accounting Service, LLC v. Ethan Schulton
D. Or. June 7, 2019
Why This Case Is Important

Bad actors/custodians exist in this world. It’s imperative for organizations to have security protocols in place to stop the theft of company IP from departing employees.

Overview:

In this employment and breach of contract case, the plaintiff motioned for case dismissal and lesser e-discovery sanctions against the defendant for destroying data with the intent of not allowing the plaintiff to use such evidence in trial.

The defendant was subpoenaed for all documents pertaining to defendant’s former employment with the plaintiff. The defendant responded that he had no “client data, deliverables, software or work product.” But in a subsequent deposition the defendant admitted to destroying “responsive evidence located on his personal computer and in his personal cloud storage account.” Included in that destruction of evidence was an important private client list, webinar recordings and emails. Defendants contend that after the deletion they could not locate, restore or replace these items via additional discovery.

As a result, the plaintiff motioned for case dispositive and lesser sanctions against the defendant.

Ruling:
  • Sanctions Ordered. The court reasoned that the defendant had a duty to preserve, he intentionally destroyed the data and the data could not be replaced or restored, leading the court to agree with the plaintiff for e-discovery sanctions.
  • Intent to Destroy Proven. Based on the defendant’s own admissions during his depositions (e.g. deleted emails so he “could legitimately say [he had]’ no access” to the data in question), the court ruled “a reasonable factfinder could conclude from these facts that the defendant acted with the intent to deprive plaintiff of information’s use in litigation.”
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Legal Analysis
On University Accounting Service, LLC v. Ethan Schulton
Anne Bentley McCray, Esq., Partner, McGuireWoods LLP
BY
Anne Bentley McCray, Esq., Partner, McGuireWoods LLP

This is a very interesting case because the spoliation sanctions arise not from the defendant’s intent to deprive his opponent of the documents themselves but his intent to deprive his opponent of the fact that he possessed the documents.


Anne's Bio
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