MEMO TO:
Alexsei Demo US
RESEARCH ID:
#40008561d4cfef
JURISDICTION:
State
STATE/FORUM:
Delaware, United States of America
ANSWERED ON:
September 13, 2022
CLASSIFICATION:
Evidence

Issue:

What constitutes spoliation of digital evidence in Delaware?

Conclusion:

A party in litigation or who has reason to anticipate litigation has an affirmative duty to preserve evidence that might be relevant to the issues in the lawsuit. Whether a person has reason to anticipate litigation depends on the facts and circumstances of the case. (Beard Research, Inc. v. Kates, 981 A.2d 1175 (Del. Ch. 2009))

A party does not have a duty to preserve every e-mail or electronic document, but instead must preserve what it knows, or reasonably should know, is relevant in the action; is reasonably calculated to lead to the discovery of admissible evidence; is reasonably likely to be requested during discovery; and/or is the subject of a pending discovery request. (TR Investors, LLC v. Genger, CA No. 3994-VCS (Del. Ch. 2009))

Furthermore, dispositive sanctions for spoliation are only appropriate where a party acts to intentionally or recklessly destroy evidence. Delaware courts have defined recklessness in this context as the conscious awareness of the risk that one's action or inaction may cause evidence to be despoiled. (TR Investors, LLC v. Genger, CA No. 3994-VCS (Del. Ch. 2009))

In Beard Research, Inc. v. Kates, 981 A.2d 1175 (Del. Ch. 2009), the Delaware Court of Chancery suggested that parties should focus on the handling of e-discovery in the early stages of a case and noted that the court is not likely to be sympathetic when one party later complains that their adversary did not voluntarily institute stringent measures to ensure that no potentially relevant information was lost. Nonetheless, in this case, the Court found the defendants were all responsible, with varying degrees of culpability, for the spoliation of potentially relevant evidence. Over the course of four years, the individual defendant (Kates) deleted all company (ASG) data and files from his laptop and "emptied" the trash or recycle bin, had the original hard drive replaced, and ran a disk-cleanup program on the new hard drive on the eve of a hearing regarding the production of the laptop. Kates had been in litigation with the plaintiffs for six months and in receipt of the plaintiffs' first discovery requests for over four months before the first instance of destruction of evidence, and litigation remained ongoing throughout the four years. The Court also found that the corporate defendants were liable for spoliation of potentially relevant evidence because they knew, or at least should have known, that Kates had a laptop that might contain information relevant to the litigation and, therefore, should be preserved, but took no steps to preserve it.

In the unpublished case of Kan-Di-Ki, LLC v. Suer, C.A. No. 7937-VCP (Del. Ch. 2015), the Delaware Court of Chancery found that the defendant was at least reckless with respect to his duty to preserve potentially relevant information and documents. The evidence showed that the defendant had reason to anticipate litigation at least two weeks before he deleted potentially relevant emails when he began communicating with his attorney about the matters in dispute. Furthermore, he was aware of his duty to preserve evidence before he allegedly lost his cellphone containing potentially relevant text messages.

Law:

In Beard Research, Inc. v. Kates, 981 A.2d 1175 (Del. Ch. 2009), the Delaware Court of Chancery explained that a party in litigation or who has reason to anticipate litigation has an affirmative duty to preserve evidence that might be relevant to the issues in the lawsuit. Whether a person has reason to anticipate litigation depends on the facts and circumstances of the case (at 1185): 

A party in litigation or who has reason to anticipate litigation has an affirmative duty to preserve evidence that might be relevant to the issues in the lawsuit.62 Whether a person has reason to anticipate litigation depends on whether the "facts and circumstances ... lead to a conclusion that litigation is imminent or should otherwise be expected."63 A court may sanction a party who breaches this duty by destroying relevant evidence or by failing to prevent the destruction of such evidence.64

The Court explained that in complex commercial litigation, virtually all discovery involves electronic discovery. Furthermore, absent affirmative steps to preserve it, at least some electronically stored information is likely to be lost during the course of litigation through routine business practices or otherwise. The Court suggested that parties should focus on the handling of e-discovery in the early stages of a case and noted that the court is not likely to be sympathetic when one party later complains that their adversary did not voluntarily institute stringent measures to ensure that no potentially relevant information was lost (at 1187): 

In complex commercial litigation today, virtually all discovery involves electronic discovery to some extent. It also is well known that absent affirmative steps to preserve it, at least some electronically stored information ("ESI") is likely to be lost during the course of litigation through routine business practices or otherwise. These realities counsel strongly in favor of early and, if necessary, frequent communications among counsel for opposing litigants to determine how discovery of ESI will be handled. To the extent counsel reach agreements recognizing and permitting routine destruction of certain types of files to continue during litigation, the Court has no reason to object. Conversely, if the parties do not focus on the handling of e-discovery in the early stages of a case, the Court is not likely to be sympathetic when, for example, one party later complains that stringent measures were not instituted voluntarily by her adversary to ensure that no potentially relevant information was lost. Rather, instead of holding a party to a stringent standard that might have been appropriate if established earlier in the case, the Court probably will apply an approach it deems reasonable, taking into account the insights provided by the case law and some of the guidelines and principles developed by various respected groups that have studied the challenges of electronic discovery.66

In this case, the Court found the defendants were all responsible, with varying degrees of culpability, for the spoliation of potentially relevant evidence. Over the course of four years, the individual defendant (Kates) deleted all company (ASG) data and files from his laptop and "emptied" the trash or recycle bin, had the original hard drive replaced, and ran a disk-cleanup program on the new hard drive on the eve of a hearing regarding the production of the laptop. Kates had been in litigation with the plaintiffs for six months and in receipt of the plaintiffs' first discovery requests for over four months before the first instance of the destruction of evidence, and litigation remained ongoing throughout the four years. The Court also found that the corporate defendants were liable for spoliation of potentially relevant evidence because they knew, or at least should have known, that Kates had a laptop that might contain information relevant to the litigation and, therefore, should be preserved, but took no steps to preserve it (at 1186-1189): 

Kates admits that, in approximately November 2005, after ASG laid him off, he deleted all ASG data and files from his laptop and "emptied" the trash or recycle bin. In other words, he destroyed a significant amount of information on the laptop. By that time, Kates had been in litigation with Plaintiffs for six months and in receipt of Plaintiffs' first discovery requests for over four months. The evidence of record also shows that sometime between December 2003 and March 2004 Kates used the Gateway computer and information on it to make a presentation to the ASDI board of directors. Yet, there is no evidence that Kates took any action to avoid deleting or otherwise compromising the information regarding that presentation when he deleted certain files in November 2005, and the Court has no way to determine whether that information was deleted at that time. I find, therefore, that Kates failed to comply with his obligation to preserve relevant evidence in this instance.

[...]

Turning to Kates's deletion of files from his laptop in November 2005, I consider it important that counsel for Kates, ASDI, and ASG apparently did nothing to notify those Defendants and their employees of the need for care in terms of preserving relevant ESI once litigation had been instituted. This is especially true in the case of Kates, who was then an employee of ASG, and whose interactions with CB, BR, ASG, and ASDI formed the basis for much of the Complaint. All of those companies were relatively small. In addition, Kates was a senior scientist with CB, BR, and ASG. Hence, it is not surprising that he had a laptop computer on which he did his work-related business. In short, Defendants knew or, at least, should have known that Kates had a laptop that might contain information relevant to the litigation and, therefore, should be preserved. The complete absence of any evidence that Defendants ASDI, ASG, or Kates took any action to satisfy their obligation to preserve relevant information on Kates's laptop in 2005 leads me to conclude that ASDI and ASG bear some responsibility for the destruction of evidence that occurred in November 2005, albeit much less than Kates himself.

2. The December 2007 actions67

In early December 2007, Kates gave his laptop to Biggers at Intelligent

[981 A.2d 1188]

Solutions to be fixed. By that time, ASDI, ASG, and Kates still were represented by the same counsel and unquestionably knew that the laptop might contain relevant information. Plaintiffs had requested it specifically, but Defendants refused to produce it without a court order. After determining that the hard drive would not "spin" and that he could not make a "ghost" copy of the drive, Biggers replaced it with a new drive and returned the original to Kates. The original drive has not been seen since then.

The loss of the original hard drive deprived Plaintiffs of the opportunity to examine what might have been relevant evidence. Plaintiffs' IT expert, Paul Herrmann of EVI, has sworn that, even though the hard drive did not spin or operate when Biggers examined it, there is a high likelihood that the drive could have been repaired with full recovery of all data from it.68 Defendants did not rebut Herrmann's testimony, and I find it credible.

Based on Kates's testimony regarding the information he deleted from the laptop in 2005, the presentation Kates gave to ASDI between December 2003 and March 2004 conceivably still remained on the original hard drive that Kates gave to Biggers. Had Biggers or Kates taken appropriate precautions to preserve that defective drive, the evidence on it likely would be available today. Unfortunately, no such precautions were taken.

In these circumstances, Kates is plainly culpable for the loss of the original hard drive. As to ASDI and ASG, their degree of fault is greater than it was in connection with Kates's actions in November 2005. Despite knowing that the laptop might contain relevant evidence, ASDI, ASG, and their counsel did virtually nothing to preserve that computer. The sole exception was Defendants' counsel's admonition to Kates not to trash the laptop. ASDI's complicity in the loss is heightened by the pivotal role played by Biggers, an employee of Intelligent Solutions, which was at least informally affiliated with ASDI in that the two companies had common owners and Intelligent Solutions served as an IT and e-discovery consultant for ASDI and ASG in this litigation, over Plaintiffs' objection. At a minimum, ASDI and its counsel should have advised Intelligent Solutions of the importance of preserving relevant information, such as the contents of Kates's laptop. Instead, Biggers of Intelligent Solutions replaced the original hard drive, failed to ensure that the original drive was safeguarded, and sent a bill for his work to ASDI.

Based on these circumstances, I find that Kates, ASDI, and ASG all breached their obligations to preserve relevant evidence.

3. The July 2008 actions

In late July 2008, after being advised that the Court was likely to order the immediate production of his laptop, Kates brazenly ran a disk-cleanup program on the new hard drive on the eve of the hearing regarding it. At the time, Kates's counsel apparently did not know the original hard drive had been replaced.69 With the benefit of hindsight and the belated development of the surrounding facts, it seems unlikely that the new hard drive would have contained any relevant information. In addition, the information

[981 A.2d 1189]

Kates deleted apparently pertained to pornographic images that would have caused him personal embarrassment, rather than material relevant to the case. Nevertheless, Kates tampered with the laptop without consulting with or providing any advance notice to his own counsel, let alone Plaintiffs. This Court cannot condone such flagrant disregard for the discovery rules and a party's obligation to preserve potentially relevant evidence.

Having concluded that Kates, ASDI, and ASG are responsible with varying degrees of culpability for the spoliation of potentially relevant evidence, I turn next to the appropriate sanctions for that conduct. The primary sanction CB and BR seek is the entry of a default judgment against all three of these Defendants as to Counts I and II of the Complaint. In the alternative, Plaintiffs urge the Court to draw an adverse inference based on the unavailability of the original hard drive and information from the laptop. Additionally, CB and BR request an award of their attorneys' fees and expenses in prosecuting the pending Motion.

In the unpublished case of TR Investors, LLC v. Genger, CA No. 3994-VCS (Del. Ch. 2009), the Delaware Court of Chancery explained that a party does not have a duty to preserve every e-mail or electronic document, but instead must preserve what it knows, or reasonably should know, is relevant in the action; is reasonably calculated to lead to the discovery of admissible evidence;  is reasonably likely to be requested during discovery; and/or is the subject of a pending discovery request. Dispositive sanctions for spoliation are only appropriate where a party acts to intentionally or recklessly destroy evidence. Delaware courts have defined recklessness in this context as a conscious awareness of the risk that one's action or inaction may cause evidence to be despoiled. Additionally, to obtain an adverse inference, the aggrieved party must make some showing that the allegedly destroyed evidence existed and supported the aggrieved party's position (at 40-42): 

"A party in litigation or who has reason to anticipate litigation has an affirmative duty to preserve evidence that might be relevant to the issues in the lawsuit."63 Often, this duty attaches even before litigation has been commenced "when a party should have known that the evidence may be relevant to future litigation."64 A party does not, however, have a duty to "preserve every shred of paper, every e-mail or electronic document," but instead must "preserve what it knows, or reasonably should know, is relevant in the action, is reasonably calculated to lead to the discovery of admissible evidence, is reasonably likely to

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be requested during discovery and/or is the subject of a pending discovery request."65

Dispositive sanctions, including dismissal of claims or imposition of an adverse inference, are only appropriate where a party acts to "intentionally or recklessly destroy evidence, when it knows that the item in question is relevant to a legal dispute or it was otherwise under a legal duty to preserve the item."66 Delaware courts have defined recklessness in the spoliation context as a conscious awareness of the risk that one's action or inaction may cause evidence to be despoiled.67 Intentional destruction simply means that the spoliator acted "with purpose."68

Additionally, to obtain an adverse inference, the aggrieved party must make some showing that the allegedly destroyed evidence existed and supported the aggrieved party's position.69 If a party intentionally destroys evidence, then a

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court must "adopt a view of the facts as unfavorable to the wrongdoer as the known circumstances will reasonably admit."70

In this case, the Court found that the defendant was under a clear duty to preserve the evidence because of the ongoing litigation and the clear language of the Status Quo Order. The Court found that the defendant intentionally despoiled evidence or at the very least acted recklessly. The defendant secretly wiped all of the unallocated space of a company's computer system in the face of pending litigation and a judicial order not to destroy or tamper with the company's information. Additionally, the plaintiff met its burden to show that the defendant destroyed information that would have helped it in the action by showing that, but for the defendant's destructive conduct, recently identified documents relevant to action would have been on the unallocated space of the computer system (at 42-44): 

Here, a finding of intentional spoliation is made easier by the reality that Genger was under a clear duty to preserve evidence because of: (1) the ongoing litigation between Genger and the Trump Group, and (2) the clear language of the August Status Quo Order. This is not a situation where a party is accused of having committed spoliation by destroying business records before there was any hint that litigation would arise that may implicate the affected records.71 Rather, in this case, Genger was clearly aware of his affirmative duty to preserve evidence that might be relevant to the issues in the § 225 action and other pending cases.72 Moreover, as indicated earlier, I find that Genger and Ohana believed that their conduct would limit the information base the Trump Group would have to use in the pending litigation. Therefore, I conclude that Genger intentionally despoiled evidence.

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In any event, at the very least Genger acted recklessly. If it was not reckless for Genger secretly to cause Ohana to wipe the unallocated space of TRI's server clean when he could have called Friedman Kaplan and gotten their view of whether that was permissible, it is hard to say what would be reckless. Even if Genger did not act with a malevolent intent to limit the universe of evidence available to the Trump Group, he was certainly reckless in charging Ohana to erase all the information of the unallocated space of TRI's computer system in the face of pending litigation and a judicial order not to destroy or tamper with TRI's information. If Genger believes that running wiping software without advice of counsel or court permission in this context does not constitute recklessness, he has an unusual dictionary. The law uses a more traditional lexicon.

Of course, the Trump Group as the moving party is required to point to specific documents that existed and would have supported its position but for Genger's actions.73 As discussed previously, the Trump Group has shown that, but for Genger's destructive conduct, Genger's copies of the Lentz Memo and other recently identified documents also relevant to the § 225 action would have been on the unallocated space of TRI's computer system. Anyone experienced in

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litigation realizes that different versions of the same document can affect a case materially, and Genger has left the Trump Group without versions of important documents. These are just the known effects of Genger's wholesale deletion. It is likely that other relevant information was also lost. Therefore, the Trump Group has met its burden to show that Genger destroyed information that would have helped it in the § 225 action.

In the unpublished case of Kan-Di-Ki, LLC v. Suer, C.A. No. 7937-VCP (Del. Ch. 2015), the Delaware Court of Chancery found that the defendant was at least reckless with respect to his duty to preserve potentially relevant information and documents. The evidence showed that the defendant had reason to anticipate litigation at least two weeks before he deleted potentially relevant emails when he began communicating with his attorney about the matters in dispute. Furthermore, he was aware of his duty to preserve evidence before he allegedly lost his cell phone containing potentially relevant text messages. The plaintiff argued that he should not be found to have despoiled evidence because the plaintiff would have obtained a large number of the text messages from its third-party discovery; the fact the third-party discovery failed to produce many of the purportedly missing communications should lead to an inference that no such communications existed; and, that because the plaintiff failed to produce a large number of text messages of its own, it was in no position to challenge the defendant's failure to do so. The Court rejected these arguments (at 80-83): 

Based on the evidence discussed at length in this Memorandum Opinion, I find that Suer had reason to anticipate litigation by April 4, 2012, at the latest, when he began communicating with his attorney about the matters in dispute. Indeed, Suer makes no serious argument to the contrary. DL has at least a colorable argument that Suer's duty to preserve attached as early as January 2012, because Suer's summary judgment brief states that when he went to work for North American in January 2012, he "kn[ew] well that it could lead to a campaign of scorched-earth litigation against him."283 This evidence buttresses my primary conclusion that Suer had reason to expect litigation by at least April 4, 2012. For purposes of the Motion for Sanctions, I need not decide whether Suer's duty to preserve arose even earlier, in January.

Based on the evidence presented, I am convinced that Suer was at least reckless with respect to his duty to preserve potentially relevant information and documents. With respect to the Treese emails, Suer does not dispute that he intentionally deleted them as

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late as April 18, 2012, which was two weeks after his duty to preserve attached. Thus, the deletion of those emails provides grounds for a finding of spoliation. This finding is supported further by the incriminating nature of the Treese emails and the fact that in a bankruptcy filing on April 16, 2012, Suer's wife explicitly mentioned the possibility that Suer would be involved in litigation with his former employer, i.e., DL.

As to the text messages produced by Dahl but missing from Suer's production, the record on the Motion for Sanctions and at trial demonstrates that Suer's conduct was reckless. By December 2012, DL formally had requested production of relevant documents from Suer, including text messages. Suer represented to this Court in connection with his then pending motion to stay discovery that, "There is no reason for concern that any of the[] materials [DL sought in discovery] are 'subject to deterioration, manipulation, or even just being forgotten.'"284 Relying in part on that representation, I granted Suer's motion and stayed discovery for a brief period of time.285 In March 2013, only a few months after he assured the Court that no potentially relevant discovery would be in jeopardy, Suer allegedly lost his cell phone. While I infer no bad motive as to Suer's loss of this device, at no time has he ever explained to the Court what, if any, actions he or his counsel took between April 2012, when his duty to preserve arose, and March 2013 to attempt to preserve any information that might be on his phone or even to

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consider that issue.286 Moreover, DL pressed Suer in 2014 as to whether he had produced all responsive text messages in his possession. Instead of admitting that Suer's phone was gone, his counsel stated that Suer had no text messages, and represented that Suer "emails for business purposes but generally does not text."287 Based on these circumstances, I find that Suer was at least reckless in failing to take reasonable steps to ensure the preservation of potentially responsive information stored on his cell phone.

Suer makes several arguments against a finding of spoliation, but none are availing. He asserts that if he had used text messages frequently for business purposes, DL would have obtained a larger number of them in its far-reaching third party discovery and proffered them as evidence. Even if that were true, however, Suer still was reckless in failing to preserve and produce the text messages that he had that were responsive to DL's requests for production. Second, Suer contends that because DL's third-party discovery failed to produce many "other-ends" of the purportedly missing communications that he failed to provide, it should be inferred that no such

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communications exist. I disagree. Unlike Suer, the third parties were not under an obligation to preserve potentially relevant evidence, and it is plausible that, in the ordinary course of business, they could have deleted or failed to preserve texts that would have been relevant. Third, Suer insinuates that because DL failed to produce a large number, or perhaps any, text messages of its own, DL is in no position to challenge Suer's failure to do so. I reject that argument as well. DL's production or lack thereof is not at issue on the pending Motion for Sanctions. Moreover, there has been no showing that Suer ever made any motion to compel related to the absence of text messages from DL's production.288

In the unpublished case of OptimisCorp v. Waite, C.A. No. 8773-VCP (Del. Ch. 2015), the Delaware Court of Chancery denied the plaintiff's motion for an adverse inference against a defendant (Horne) because he deleted an entire email account, comprising thousands of emails, from his computer. The Court explained that an adverse inference is appropriate where a litigant intentionally or recklessly destroys evidence. However, in this case, there was no evidence that the allegedly destroyed emails were not available to the plaintiffs as the defendant company's computers, including Horne's devices, were imaged for the plaintiffs before Horne deleted his email account. Secondly, the plaintiffs did not show that Horne, who was not a company board member, had any reason to believe he would be sued in this action (at 55-57): 

Before proceeding to the merits, I must address two additional threshold issues. First, Plaintiffs have moved for an adverse inference against Horne because he deleted an entire email account, comprising thousands of emails, from his computer. Plaintiffs did not brief their spoliation request after trial until their reply brief, preventing Horne from

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having an opportunity to respond to it. Thus, I find that Plaintiffs have waived this argument.150

Additionally, and as an independent holding, I find that the requested adverse inference is not warranted. "A party in litigation or who has reason to anticipate litigation has an affirmative duty to preserve evidence that might be relevant to issues in the lawsuit."151 Here, Horne admittedly deleted his personal email account, comprising thousands of emails, from his work computer in May 2013 after he essentially was told he was about to be fired.152 Plaintiffs request that I draw an adverse inference that the deleted emails would support Plaintiffs' claims.

"An adverse inference . . . is appropriate where a litigant intentionally or recklessly destroys evidence, when it knows that the item in question is relevant to a legal dispute or it was otherwise under a legal duty to preserve the item."153 Here, an adverse inference is not appropriate for two reasons. First, there is no evidence that the allegedly

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destroyed emails are not available to Plaintiffs. In originally moving for an adverse inference based on spoliation, Plaintiffs pointed to 23 emails from Horne's personal email account that allegedly were deleted; all preceded December 2012.154 Horne deleted his personal email account from his Optimis computer shortly before being fired in May 2013 and having to turn in his computer. But, the Company's computers, including Horne's devices, were imaged for Plaintiffs in either December 2012 or January 2013.155 Thus, Plaintiffs had a copy of the emails that allegedly were destroyed and there was no spoliation. Second, Plaintiffs have not shown that Horne, who was not represented by counsel in May 2013, had any reason to believe he would be sued in this action, which was not filed until August, three months later, or any other litigation. Horne was not an Optimis board member and the 225 Action, in which he was not a named defendant, settled in March 2013.156 For all of these reasons, I deny Plaintiffs' request for an adverse inference against Horne based on spoliation.

In the unpublished case of Cruz v. G-Town Partners, L.P., 2010 Del. Super. LEXIS 515 (Del. Super. Ct. December 3, 2010), the Superior Court of Delaware at New Castle explained that if spoliation of evidence has occurred, an inference arises that such evidence would be unfavorable to the spoliator's case. However, before giving an adverse inference instruction, the Court must make a preliminary finding that the evidence was lost or destroyed through intentional or reckless conduct. The requirements for an intentional state of mind are that the party must have acted with the conscious purpose of destroying the evidence. Recklessness occurs when an actor is under a duty to preserve evidence and takes part in the destruction of evidence while being consciously aware of a risk that they will cause or allow evidence to be spoiled by action or inaction and that risk would be deemed substantial and unjustifiable by a reasonable person (at 21-22): 

The Court may permit an adverse inference instruction against a party as a sanction for the intentional or reckless destruction of evidence. The Supreme Court of Delaware, citing Wigmore on Evidence § 291, has explained an adverse inference as the allowance of an inference "that the contents of the document (when desired by the opponent) are what he alleges them to be, or (when naturally a part of the possessor's case) are not what he alleges them to be." The Court described the use of an adverse inference instruction as "no more than the application of a rule of common sense." Essentially, if spoliation of evidence has occurred, "an inference arises that such evidence would be unfavorable to [the spoliator's]  [*22] case." This principle is codified by Delaware Pattern Jury Instruction for Civil Practice 23.17, which in part instructs the jury that "if you conclude [that evidence was destroyed or suppressed due to the intentional or reckless conduct of a litigant], then you may conclude that the missing evidence would have been unfavorable to [the litigant whose conduct caused the destruction or suppression of evidence.]"

Before giving an adverse inference instruction, the Court must make a preliminary finding that the evidence was lost or destroyed through intentional or reckless conduct. The party seeking an adverse inference instruction must do more than simply demonstrate that the "absence of evidence is not adequately explained." Rather, there must be a "mental state indicative of spoliation." The requirements for an intentional state of mind are relatively self-explanatory; the party must have acted with the conscious purpose of destroying the evidence. With respect to recklessness, "drawing an adverse inference is appropriate when an actor is under a duty to preserve evidence and takes part in the destruction of evidence while being consciously aware of a risk that he or she will cause or allow evidence to be spoiled by action or inaction and that risk would be deemed substantial and unjustifiable by a reasonable person." A party's duty to preserve evidence is triggered "upon the discovery of facts and circumstances that would lead to a conclusion that litigation is imminent or should otherwise be expected." 

The Court found that this case was a close call on the issue of spoliation but ultimately held that the plaintiff did not carry her burden of establishing the intentional or reckless destruction or suppression of evidence. This case involved photographs that were transferred among the management employees of the defendants and were possibly contained on multiple computers, digital camera memory devices, and email attachments. The Court noted that the unexplained absence of the photographs, coupled with testimony and computer messages, was at least questionable. However, the Court found that the plaintiff did not exhaust every available mechanism to obtain these photographs. Notably, the plaintiff did not obtain a forensic computer analysis of the computers alleged to have the photographs. Furthermore, the plaintiff never moved to compel the defendants to bear the expense of a complete forensic analysis of the relevant computers. Thus, the Court found that while the plaintiff established an inadequately explained unavailability of the photographs, this did not satisfy the intentional or reckless standard necessary for a finding of spoliation of evidence (at 34-36): 

This case presents a close call on the issue of spoliation of evidence. The record suggests  [*35] that Defendants exerted some type of undue pressure or influence on their employee, Steven Carr, to ensure that all existing copies of the photographs were surrendered to Defendants. Further, the record discloses that the photographs were transferred in some manner among Keli Carr, her husband Steven Carr, and management employees of Defendants; therefore, the photographs were possibly contained on multiple computers, digital camera memory devices, and electronic mail attachment storage files. The unexplained absence of the photographs, coupled with the testimony and computer messages of Ms. Carr, is at least questionable.

However, Plaintiff did not exhaust every available mechanism to obtain these photographs; Plaintiff did not obtain a forensic computer analysis of the computers alleged to have contained the photographs to locate the photographs. Further, Plaintiff never moved to compel Defendants' to bear the expense and complete a forensic analysis of the relevant computers. The potential of such analyses to successfully retrieve the photographs cannot be definitively ascertained from the present record, but Plaintiff concedes that no attempts to evaluate the relevant electronic  [*36] devices were made. Plaintiff has established an inadequately explained, perhaps even suspect, unavailability of the photographs. However, this does not satisfy the intentional or reckless standard necessary for spoliation of evidence, and the record suggests that these photographs might have been obtainable by Plaintiff. Thus, Plaintiff has not carried her burden of establishing the intentional or reckless destruction or suppression of evidence and is consequently not entitled a default judgment or adverse inference instruction against Defendants.

Authorities:
Beard Research, Inc. v. Kates, 981 A.2d 1175 (Del. Ch. 2009)
TR Investors, LLC v. Genger, CA No. 3994-VCS (Del. Ch. 2009)
Kan-Di-Ki, LLC v. Suer, C.A. No. 7937-VCP (Del. Ch. 2015)
OptimisCorp v. Waite, C.A. No. 8773-VCP (Del. Ch. 2015)
Cruz v. G-Town Partners, L.P., 2010 Del. Super. LEXIS 515 (Del. Super. Ct. December 3, 2010)