What Happens When Someone Destroys Evidence During a Lawsuit?

Clients in litigation often ask what happens if the other side destroys relevant emails, documents, or other evidence crucial to proving their wrongdoing. A recent opinion from the Fifth Circuit illustrates just how a court can punish someone who intentionally destroys evidence during a lawsuit. In these circumstances, the trial court punished the defendant with a default judgment in excess of $5,000,000.00.

In this case, a software company sued another company for stealing the code for its software product. During discovery, the owner of the defendant company destroyed electronic evidence related to the code, severely prejudicing the plaintiff’s ability to prove that he had stolen the code. He did so in violation of four court orders, on several occasions, deleting relevant evidence just after the court entered an order.

The company that filed the lawsuit, sought to examine the source code control system the defendant used to develop its software to compare it with the plaintiff’s software and determine whether the defendant’s software was copied or included any software code from the plaintiff’s program.  When the defendant produced the source code control system, it had “integrity issues” and was missing folders and files and did not appear to be complete or accurate. 

The defendant claimed that he had produced the entire unmanipulated system, but plaintiff’s counsel argued that this was false, and that it was clear that the defendant had deleted multiple files from the system after the court had ordered the defendant to produce the entire system.

The key to sanctioning the defendant was the plaintiff’s expert witness’s testimony that because of the deleted files, he could no longer reliably compare the plaintiff’s and the defendant’s software programs to determine if one was a copy of the other, thus, prejudicing plaintiff’s case.

When the magistrate judge asked the expert whether he could “do [his] planned analysis and render an expert opinion with what [he had] been provided,” he testified:

Well, the short answer is no . . . We need to look at the entire history, the communication, the development and that audit trial of everything that happened.  What was influencing the project, how was the project managed, how was the code changing, what are the documents and design documents . . . we have tried for a long time to get the material. We’ve been stymied.  These are unprecedented levels of manipulation . . . So as we stand today we have, really I’ll call it garbage.  In the computer industry, we have a saying, “garbage in, garbage out.”  And so, if I were to try to – you know, the net of all of that is I have no confidence that I can – it would just not be professionally sound to try to move forward.  Based on the information that we have, I have no confidence that we have legitimate data and that it would result in valid results.”

Expert Witness

Finding that the defendant deleted evidence in bad faith and that the plaintiff was prejudiced by such deletions, the court entered a default judgment and a damages award against the defendant, exceeding $5,000,000.00.

Interestingly, after the court entered the default judgment, the defendant asked the court to reconsider the ruling in light of newly found deleted files, which defendant claimed existed all along, but he had forgotten about them.  The court denied his motion.

CONCLUSION:  Both federal and state courts have the authority to sanction parties who delete evidence relevant to their lawsuit.  Where there is a pattern of abuse of discovery, disregard of court orders to preserve evidence, and ultimate deletion of evidence that prejudices plaintiff’s ability to pursue its case, a court can enter a default judgment against defendant, awarding plaintiff damages without the need of the trial.

Leiza Dolghih is the founder of Dolghih Law Group PLLC.  She is board certified in labor and employment law and has 16+ years of experience in commercial and employment litigation, including trade secrets and non-compete disputes. You can contact her directly at leiza@dlg-legal.com or (214) 531-2403.

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