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Editor Bio
Gregg Mayer is a journalist and lawyer with a keen interest in the rapidly evolving world of e-Discovery. Gregg has published numerous articles, including writing for law journals and the American Bar Association. Gregg served as editor-in-chief of the Mississippi Law Journal. Before practicing law, Gregg worked as a newspaper reporter for six years.
Hiding ‘Smoking Gun’ ESI Worsens Impact
Posted by Gregg Mayer on Thursday, March 20th, 2008
As noted in a previous post , attempting to throw away damaging evidence – including trying to hide email during litigation – is never a good idea.
For whatever reason, it always seems that evidence finds its way into the courtroom. When it does, the consequences are worse than if the evidence had just been disclosed in the first place.
A classic example is Qantum Communications Corp. v. Star Broadcasting, Inc, a 2007 case that involved a seller of radio station who tried to hide email messages.
In this case, Quantum, a potential buyer of a radio station, had an agreement with the seller, Star Broadcasting. This agreement provided that there would be no additional negotiations for the purchase of the station while the agreement was in effect. This is called a “No Shop” provision. On April 14, 2005, the seller sent a termination notice to Quantum and then sold the station to another buyer. Expectantly, Qantum sued.
In the course of the litigation, Qantum wanted to inspect email from Star Broadcasting. Particularly, Qantum was looking for communications with other buyers while the “No Shop” provision was in effect.
Star produced hundreds of documents, but no email before March 2, 2005, which Qantum thought suspicious. Moreover, Star had produced a relevant email but failed to produce an attachment with it.
Consequently, Qantum went to a third party to find the missing email messages. Not only did Qantum get the email, but it found the missing attachment too. This evidence directly contradicted Star representatives’ testimony and helped prove Qantum’s case. It revealed apparent negotiations with another buyer. As the court explained:
[T]his Court concludes that Defendants engaged in an unconscionable scheme calculated to interfere with the judicial system’s ability to impartially adjudicate a matter by unfairly hampering the presentation of the opposing party’s claim…
Consequently, the court sanctioned Star by entering a default judgment. In litigation, a default judgment is the ultimate sanction because it means a court decides – not a jury – who loses.
Granted, Star may have lost the case anyway. The email it tried to hide was damaging to its defense. But attempting to deceive the court guaranteed Star would lose. Moreover, it meant Star had to pay the attorney fees for Qantum as well. In short, the decision to hide the email proved more costly than just being honest about at the outset.
The court’s opinion has been posted online.
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