Didn’t We Learn Something From Enron?

January 4, 2010

    Authored By: M. W. S.

    Citation: Smith v. Slifer, 2009 WL 482603 (D. Co. Feb. 25, 2009)

    Employee/Employer Implicated: Corporate Executives

    e-Lesson Learned: Corporate executives: resist the temptation to shred or delete relevant evidence! Destroying relevant evidence once you’ve been sued only makes matters worse.

Ever since the Enron destruction of documents debacle, one would think that corporate executives would realize that destroying evidence probably isn’t the greatest idea.  Nonetheless, they seem to keep on shredding and pressing delete as if there were no tomorrow.

In Smith v. Slifer, one of the defendant entity’s executives, after being served with notice of the lawsuit,  allegedly took it upon himself to download and use a program called Anti Tracks in order to wipe clean his home personal computer of allegedly damaging evididence.  I emphasize the word “allegedly” because the Anti Tracks program was apparently pretty effective, rendering it impossible for plaintiff’s experts to garner any concrete evidence that relevant evidence was in fact destroyed (although they were easily able to establish that several documents were deleted).

The court (citing Cache La Poudre Feeds, LLC v. Land O’Lakes, Inc., 244 F.R.D. 614 (D.Colo.2007)) set forth the pertinent rules of law as follows:

  1. Putative litigants have a duty to preserve documents that may be relevant to pending or imminent litigation;
  2. Spoliation means the destruction or significant alteration of evidence, or the failure to preserve property for another’s use as evidence in pending or reasonably foreseeable litigation;
  3. A party may be sanctioned for spoliation by way of default judgment or adverse inference instruction.

The court noted that there was no “smoking gun” establishing who caused the loss of data, but nonetheless found that plaintiff’s established, at least by a preponderance, that defendants destroyed evidence in bad faith after the duty to preserve the evidence had arisen.  The court based its finding primarily upon the “highly-suspect timing” of the usage of Anti Tracks.

Based on its finding of bad faith spoliation, the court granted plaintiff’s request for an adverse inference instruction.

So, to reiterate the lesson that should have been learned from Enron and countless subsequent cases involving the destruction of evidence: once there’s a possibility that you’ll be sued, don’t shred or delete.

MWS is a third-year law student at Seton Hall University in Newark, New Jersey.

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