The Consequences of Destroying Evidence

Spoliation of evidence can result not only in an adverse inference instruction to the jury, but in an award of attorneys fees and expenses incurred in proving the spoliation. As demonstrated by the contentious trade secret litigation between E.I. DuPont de Nemours and Company and Kolon Industries, Inc., those fees and expenses can be substantial.

Several months ago, the court found that several key Kolon employees had intentionally deleted relevant emails, hampering DuPont’s ability to present and prove its case. As a result, the court granted DuPont’s request to instruct the jury that it could assume the destroyed evidence contained information damaging to Kolon. DuPont won the case, then sought an award of fees and expenses incurred in connection with proving the spoliation.

The court noted that DuPont had engaged in a “long, and oftentimes tortuous, journey” to discover emails Kolon had deleted and documents it had destroyed. Complicating DuPont’s burden was what the court called Kolon’s “overall obfuscatory conduct.” Still, DuPont had to prove the reasonableness of the fees requested.

Under the lodestar approach, the court multiplies the number of hours attorneys reasonably spent on a matter times a reasonable hourly fee which is based on prevailing rates in the relevant community. Only fees incurred for issues on which DuPont prevailed could be included.

DuPont sought $4,497,047.50 in attorneys’ fees and expenses and the court granted all of it, finding that amount to be reasonable under the circumstances. Kolon did not object to the rates DuPont applied but objected to the 6,917 hours of delete.jpgattorney service claimed. DuPont had already excluded some fees it had incurred, worth some $390,000 or about twenty percent of the total claimed.

Kolon claimed DuPont had been “recklessly inefficient” in investigating the spoliation and argued that the fees should be reduced by seventy five percent. The court rejected this. First, the search was based on information taken from screen shots of Kolon computers and was reasonable given the need to narrow the scope of the documents that must be reviewed and the risk of omitting relevant evidence.

Second, though DuPont had spent considerable time developing the spoliation issue before alerting Kolon’s counsel to the problem, litigants must exercise due diligence before making a spoliation charge and telling Kolon earlier would not have reduced the time spent on the issue. Kolon knew of the spoliation earlier and concealed it, the court found, then evaded discovery requests relating to it, so the court would not conclude the company would have cooperated had it been told.

Third, though DuPont used only one document from its spoliation efforts, that was not surprising because many critical documents were never recovered. So DuPont had to use an adverse inference instead.

The court also rejected Kolon’s assertion that the number of hours spent on the spoliation issue was excessive. The hours were reasonable because spoliation was central to DuPont’s vital need to protect its trade secrets, Kolon’s efforts to hide the spoliation amplified the hours needed, those who spoliated evidence were Kolon employees centrally involved with Kolon’s para-aramid process and the misappropriation of trade secrets, and DuPont had proof showing that the deleted information had probative value in proving that misappropriation.

Kolon did not object to amounts Dupont sought for investigating and litigating the spoliation, computer forensics analysis services and expert testimony, contract attorneys to review and analyze the documents, and for translations. Based on DuPont’s affidavits, the court awarded $2,068,313.60 for these costs.

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