A recent decision of the Court of Appeals for the Third Circuit addressed the importance of using forensic experts when a litigant is suspected of destroying electronic evidence. The practice of deleting emails will often entitle the opposing party to a remedy.
In most cases, the remedy will be an instruction that allows the jury to infer that a party deleted emails because their content would have helped the opposing party prove its case. The strength of that inference, however, may depend on testimony provided by an expert witness.
Nature of the Lawsuit
GN Netcom, Inc. manufactures telephone headsets that are primarily used for hands-free conversations in the customer service industry. GN dominates the headset market in Europe. GN sued a competitor, Plantronics Inc., which dominates the headset market in North America, for antitrust violations.
GN claimed that Plantronics engaged in unlawful anticompetitive conduct by offering rebates and other benefits to distributors who agreed not to purchase headsets from manufacturers other than Plantronics. The agreement also conditioned the benefits upon an agreement not to market competitors’ headsets on resellers’ websites.
GN sent Plantronics a letter alleging a violation of antitrust law and demanding compensation. Plantronics initiated a “litigation hold” that directed employees to preserve all corporate documents relevant to the claim. Plantronics updated the hold after GN initiated a lawsuit. Plantronics also trained employees to obey the hold.
Deletion of Emails
Notwithstanding the litigation hold, Plantronics’ Senior Vice President of Sales directed employees to delete certain emails, including those that referred to GN or its products. In particular, the VP ended three emails referring to competition with an instruction to delete the email chain and to delete certain emails that he flagged as “inappropriate.” The VP also deleted over 40% of his own emails that were sent during a relevant time period.
The VP told employees to stop putting information about competition in writing. Managers also instructed employees to refer to competitors by code names. GN was code named “zebra.” The CEO also expressed his concern that there might be “damning statements” in staff emails.
When Plantronics’ general counsel learned of the VP’s action, she directed his attention to the litigation hold, tried to obtain backup copies of the emails so that they could be preserved, and engaged a forensic expert to try to recover the deleted emails. Ignoring its lawyer’s efforts, Plantronics declined to pay the forensic effort to complete his work and destroyed the backup tapes of the deleted emails.
The forensic expert’s preliminary report estimated that tens of thousands of unrecoverable emails had been deleted and that several thousand of those were probably responsive to GN’s discovery requests. Plantronics’ outside lawyer blatantly told the court that Plantronics received no report from the forensic expert, despite referring to the expert’s preliminary report in his billings.
GN moved the court for a default judgment on the ground of spoliation (a legal term that refers to the destruction of evidence). Motions to deny parties the benefit of a trial are rarely granted. The district court opted to give a jury instruction that allowed the jury to assume that the destroyed emails would have helped GN prove its case.
GN then asked the court for permission to present evidence of the spoliation at trial, including the testimony of its expert witness. Fearing that the issue of spoliation would overshadow the merits of the antitrust dispute, the judge declined to allow the expert to testify. The judge instead instructed the jury that certain facts about the spoliation were true and could be considered in reaching a verdict.
After a six-day trial, the jury found that GN failed to prove any of its claims. GN appealed, arguing that it should have received a default judgment and that the judge erred by denying its expert testimony. The court of appeals rejected the claim that GN was entitled to a default judgment but agreed that it should have been permitted to present expert testimony.
Expert Witness Testimony
GN proposed to call a forensic expert, Dan Gallivan, to testify about the deleted emails. The preliminary report by Plantronics’ expert concluded that Plantronics deleted 952 to 2,354 unrecoverable emails that were responsive to GN’s discovery request (plus tens of thousands that were not). Gallivan estimated that ten to fifteen thousand deleted and unrecoverable emails were relevant to the litigation.
The Court of Appeals concluded that Gallivan’s testimony would have been relevant to the underlying claims. Since the jury was entitled to view spoliation of evidence as a material fact, the extent of that spoliation was also a material fact. The jury was not required to draw an adverse inference from the destruction of evidence, so the extent of that destruction was a relevant consideration in deciding whether the inference was appropriate.
The trial court did not fault Gallivan’s reasoning or methodology. His testimony was not excluded on Daubert grounds. Rather, the court did not want the spoliation evidence to overshadow substantive evidence of the alleged antitrust violation. The appellate court construed that analysis as being grounded in Rule 403 of the Federal Rules of Evidence.
The trial court did not explicitly balance the probative value of Gallivan’s testimony against the potential prejudice that might be caused by confusing the jury or wasting time. Even if the trial court implicitly conducted the appropriate balancing test under Rule 403, the appellate court decided that the exclusion of Gallivan’s testimony was an abuse of discretion.
In addition to explaining why his estimate was more reliable than the preliminary estimate produced by Plantonics’ expert, Gallivan’s testimony might have shed light on the extent to which Plantronics concealed evidence. If hundreds or thousands of deleted emails were pressuring distributors not to purchase GN’s products, the antitrust case would be stronger than if fewer emails did so.
The most relevant stipulation that the court read to the jury — “It may be that several hundred or even up to 15,000 potentially relevant responsive relevant emails were deleted or destroyed” — was not an adequate substitute for the expert’s live testimony. The appellate court concluded that the vague stipulation “left the jury to consider estimates that were not even in the same ballpark” with no basis for deciding whether Plantronics deleted only several hundred emails or something closer to 15,000 emails.
Finally, the Court of Appeals concluded that requiring GN to rely on a stipulation rather than live expert testimony was prejudicial. “The difference from several hundred to 15,000 could easily have been the difference between applying the adverse inference and not.” Gallivan’s testimony supported GN’s theory that Plantronics engaged in a “massive coverup” and was therefore critical to its proof. The court accordingly granted GN a new trial.