Adverse inference instruction directed for spoliation of evidence

There are times when employees take information with them when their employment is terminated. Employees often believe that this information, whether it be customer lists or technical information, will assist them when they are looking for a new job or after they find a new job. 

When their former employer files a lawsuit or sends a threatening letter, however, these employees often panic. They rush to purge the stolen information  from their computer to hide evidence of the stolen information.  

These efforts often fail. There are many computer forensic companies, and they actively market their services to companies in connection with the issues raised by terminated employees.  Once a company files a lawsuit against the former employee, these companies assist the company in developing evidence that demonstrates that information was stolen. Alternatively, these companies can develop evidence to show that information was purged or wiped from the former employee's computer. That evidence can lead to dire consequences for the former employee, as a recent case demonstrates.    

In Telequest International v. Dedicated Business Systems, a March 11, 2009 decision from the federal district court in New Jersey, the defendant formed a new company and began competing with his former employer, Telequest, shortly after his employment terminated.  Telequest's Complaint alleged that the defendant had stolen a list of customers and vendors that it had taken Telequest fifteen years to develop. The Court ordered that the defendant produce his computers for a forensic examination. When the computers were produced, however, Telequest discovered that "defrag" and "wiping" programs had been run on the computers.  

As a result, Telequest sought a default judgment against the defendant for the destruction or "spoliation" of evidence. The Court declined to enter the default judgment but did order that an adverse instruction should be given to the trier of fact based on the efforts to purge information from the computer. That is, an instruction that the defendant had destroyed evidence "out of the well-founded fear that the contents would harm him".  This instruction would permit the fact finder to conclude that the former employee had breached any non-compete or stolen trade secrets. 

Litigants have an affirmative obligation to preserve evidence. Lawyers may debate the scope and timing of this obligation but there is no question that the obligation arises under the proper circumstances.