Government Sanctioned for Spoliation of Electronic Documents

Trigon Ins. Co. v. United States, 204 F.R.D. 277 (E.D. Va. 2001)

In taxpayer suit, government retained a litigation consultant (“AGE”) and a number of testifying experts. (One testifying expert was an owner of AGE; and all of the testifying experts coordinated their work through AGE.) During discovery proceedings on the defendant’s Daubert motion, it became apparent that a substantial amount of potential evidence had been destroyed. Many of the draft reports and communications among the testifying experts and AGE had been deleted as a result of AGE’s document retention policy and the individual practices of the testifying experts.

In light of this, the court ordered the government to hire an independent computer forensics expert to report on the retrievability of the documents allegedly deleted. It further ordered that the government’s testifying experts be deposed regarding the destruction of documents. The parties were to report to the court the results of the forensic expert’s work and the depositions. 204 F.R.D. at 281.

Although AGE contended that recovery of the deleted materials was not possible, the forensic expert retrieved hundreds of communications and many draft reports. Id. However, very little material was recovered with respect to one expert, Dr. Feldstein. Id. at 290. Fragments of emails were recovered, however, and they showed that Feldstein’s report was written in some part by AGE. One fragment of an email from Feldstein to AGE read:

This is very rough. Just to get started. Feel free to totally change it in any way you think best. In a report these points might have to be dropped, changed, expanded, the format changed, etc. I have no concern with it being changed.

Id. Another recovered message sent by AGE to Feldstein asked him to review AGE’s draft of Feldstein’s report, and directed: “PLEASE DO NOT WORK ON THE END OF YOUR REPORT YET BECAUSE WE ARE DOING SO.” Id.

The court stated that the recovered communications raise serious doubts about whether Dr. Feldstein’s opinions were his own, and found that the plaintiff had been substantially prejudiced in its ability to cross-examine Dr. Feldstein. The court also noted that:

[T]he communication between AGE and Dr. Feldstein raise serious questions whether the same modus operandi has been pursued by AGE with the other experts, which cannot be shown now because Deloitte & Touche was unable to recover all of the spoliated evidence for each expert. Thus, the evidence relating to Dr. Feldstein also is a harbinger of prejudice that could taint all of the expert evidence to be offered by the United States.

The court determined that it would appropriate to draw adverse inferences respecting the substantive testimony and credibility of the experts at trial, and stated that would be done based on the evidence presented at trial. The court foreclosed any further participation by AGE in any aspect with the preparation and presentation of expert testimony for the government, and also concluded that the plaintiff was entitled to recover attorneys fees and costs incurred as a result of the spoliation of evidence.