Court Rejects “Hack”neyed Excuse

February 28, 2010

    Authored By: Ken e-Bloggins

    Citation: Optowave Co., Ltd v. Nikitin, No. 6:05-cv-1083-Orl-22DAB (D. Fla. Filed Nov. 7, 2006)

    Employee/Employer Implicated: Owner/Executives

    e-Lesson Learned: After being placed on notice of a possible lawsuit, don’t destroy potentially relevant evidence by reformatting employee hard drives.

Tech-savvy business owner Dmitri Nikitin received a judicial tongue-lashing  and an adverse inference instruction  after he destroyed emails potentially relevant to a pending lawsuit brought by a Korean corporation. Not buying Nikitin’s “hackers” defense, the Court said that Plaintiff Optowave was entitled to an adverse jury instruction at trial against Nikitin’s company Precision Technology Group. “This sanction,” the Judge wrote, “will serve to cure the unacceptable actions of Nikitin, while allowing the case to be decided on the merits.”

The e-discovery mishap arose out of a lawsuit involving a contract dispute between the two companies. Basically, Optowave believed that Nikitin failed to live up to the terms of the contract. One way to get to the bottom of this dispute would be to look at the dozens of emails exchanged between the Vice President of Sales and Marketing at PTG and Optowave. There was only one problem: After firing the Vice President of Sales and Marketing, Nikitin had the company hard drives reformatted. Whether by intentionally deleting the emails, or failing to preserve them prior to reformatting, dozens of documents relating to the contract went missing. The timing, according to the court, was “too coincidental and highly dubious.” Moreover, Nikitin claimed that he preserved all the relevant emails, but that hackers subsequently attacked the company and that all of its emails were lost.

As it turns out, Nikitin probably should have known better. Beyond being a businessman, Nikitin is a bit of a computer wiz. The court noted that he built his own computer from scratch.

There is nothing wrong with reformatting company hard drives as part of a business’ routine document management protocol. The lesson to be learned is NOT to do that when you have notice of a lawsuit or that one appears imminent.  At that point, Nikitin had a duty to preserve, especially because he had explicit notice of the duty to preserve evidence.

Article posted on February 28, 2010 at 6:33 PM |  Twitter  LinkedIn  Digg  Facebook  Technorati Favorites  NewsVine  More... 
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