Free Opening Brief in Support - District Court of Delaware - Delaware

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE CORPORAL B. KURT PRICE, et al., Plaintiffs, v. COLONEL L. AARON CHAFFINCH, et al., Defendants. : : : : : : : : :

C.A.No.04-956-GMS

SERGEANT CHRISTOPHER D. FORAKER, Plaintiff, v. COLONEL L. AARON CHAFFINCH, et al., Defendants.

: : : : : : : : :

C.A.No.04-1207-GMS

PLAINTIFFS' OPENING BRIEF IN SUPPORT OF THEIR MOTION FOR SANCTIONS AND OTHER RELIEF DUE TO DEFENDANTS' INTENTIONAL DESTRUCTION OF RELEVANT EVIDENCE

THE NEUBERGER FIRM, P.A. THOMAS S. NEUBERGER, ESQ. (#243) STEPHEN J. NEUBERGER, ESQ. (#4440) Two East Seventh Street, Suite 302 Wilmington, DE 19801 (302) 655-0582 [email protected] [email protected] Attorneys for Plaintiffs Dated: January 25, 2006

MARTIN D. HAVERLY, ATTORNEY AT LAW MARTIN D. HAVERLY, ESQ. (#3295) Two East Seventh Street, Suite 302 Wilmington, DE 19801 (302) 654-2255 [email protected]

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TABLE OF CONTENTS NATURE AND STAGE OF THE PROCEEDING......................................................................................1 SUMMARY OF THE ARGUMENT............................................................................................................1 STATEMENT OF FACTS............................................................................................................................2 A. B. C. D. E. Chaffinch Has Been a Defendant in a Steady Stream of Lawsuits Since April 2002.........2 The Three Active Lawsuits Against Chaffinch as of October 2004...................................2 The Discovery Requests At Issue........................................................................................3 The Documents These Discovery Requests Sought to Discover........................................3 Defendants Destroy Chaffinch's Hard Drive Despite the Pendency of Three Cases.........5 1. 2. The Sworn Affidavit Attesting to the Destruction.................................................5 Defense Counsel In The Present Actions Represent That the Hard Drive Has Been Destroyed......................................................................................................6 Defense Counsel in the Conley Case Also Represent That the Hard Drive Has Been Destroyed......................................................................................................6

3.

ARGUMENT................................................................................................................................................6 I. DEFENDANTS INTENTIONALLY DESTROYED EVIDENCE RELEVANT TO THIS LITIGATION AND A DEFAULT JUDGMENT SHOULD BE ENTERED AGAINST THEM AS A SANCTION TO PUNISH AND DETER THEIR ILLEGAL CONDUCT...........................................................................................6 A. B. The Basics..............................................................................................................6 Sources of the General Duty to Preserve Evidence................................................7 1. 2. 3. 4. 5. 6. Duty Under the Common Law..................................................................7 Duty Under the Ethical Rules....................................................................8 Duty Under 18 U.S.C. § 1512...................................................................8 Duty Under 11 Del.C. § 1269....................................................................9 Duty as a Police Officer............................................................................9 Penalty for Breaching the Common Law Duty to Preserve Evidence..................................................................................................10 i

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C.

The Zubulake Electronic Discovery Spoliation Test...........................................10 1. Defendants Had an Obligation to Preserve the Hard Drive....................11 a. Defense Counsel's Obligation to Suspend Document Destruction Policies and Impose a "Litigation Hold."...............11 Defense Counsel's Continuing Obligation to Locate and Preserve Potentially Relevant Information................................12 Defense Counsel's Duty to Obtain Copies of all Electronic Documents..................................................................................12 Division of Liabilities Between Defendants and Defense Counsel.......................................................................................13

b.

c.

d.

2. 3.

Defendants Intentionally Destroyed the Hard Drive...............................13 The Intentional Destruction of the Hard Drive Establishes that Its Contents Were Relevant to Plaintiffs' Claims........................................14 Summary..................................................................................................14

4. D.

The Third Circuit Spoliation Test........................................................................15 1. Defendants and Defense Counsel Have a Heavy Degree of Fault and Personal Responsibility....................................................................15 Plaintiffs Have Been Gravely Prejudiced by Defendants' Destruction of the Hard Drive and Its Relevant Contents..........................................16 a. b. c. The Basics..................................................................................16 Plaintiffs Have Made the Required Showing.............................17 Plaintiffs Have Been Forever Deprived of the Opportunity to Examine this Relevant Evidence................................................17 The Integrity and Thoroughness of Defendants' Prior Discovery Responses Has Been Undermined............................18

2.

d.

3.

Availability of an Appropriate Sanction.................................................18 a. b. In General...................................................................................19 Sanctions in the Destruction of Evidence Context.....................19

4.

The Appropriate Sanction.......................................................................20

CONCLUSION............................................................................................................................................21 ii

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TABLE OF AUTHORITIES Cases Page

Brewer v. Quaker State Oil Refining Corp., 72 F.3d 326 (3d Cir. 1994)....................................................7 Chambers v. NASCO, Inc., 501 U.S. 32 (1991)..........................................................................................19 Danis v. USN Comm., Inc., 2000 WL 1694325 (N.D.Ill. Oct. 23, 2000)..................................................7-8 Erickson v. Newmar Corp., 87 F.3d 298 (9th Cir. 1996)............................................................................19 In re Triton Energy Ltd Securities Litig., 2002 WL 32114464 (E.D.Tex. March 7, 2002)..........................8 In re Wechsler, 121 F.Supp.2d 404 (D.Del. Nov. 14, 2000)...........................................7,10,15,16,17,19,20 Kronisch v. U.S., 150 F.3d 112 (2d Cir. 1998)...................................................................................7,17,20 Lucas v. Christiana Skating Ctr. Ltd, 722 A.2d 1247 (Del. Super. 1998)...................................................9 McQueeney v. Wilmington Trust Co., 779 F.2d 916 (3d Cir. 1985)............................................................7 Paramount Pictures Corp. v. Davis, 2005 WL 3303861 (E.D.Pa. Dec. 2, 2005)..............................15,19,20 Positran Manufacturing, Inc. v. Diebold, Inc., 2003 WL 21104954 (D.Del. May 15, 2003)..................7,10 Rogal v. American Broadcasting Co., Inc., 74 F.3d 40 (3d Cir. 1996).......................................................19 Schmid v. Milwaukee Elec. Tool Corp., 13 F.3d 76 (3d Cir. 1994)................................................6,7,15,16 Sheridan v. E.I. DuPont de Nemours and Co., 100 F.3d 1061 (3d Cir. 1996)..............................................7 Zubulake v. UBS Warburg LLC, 217 F.R.D. 309 (S.D.N.Y. 2003)...........................................................10 Zubulake v. UBS Warburg LLC, 2003 WL 21087136, 230 F.R.D. 290 (S.D.N.Y. May 13, 2003)...........10 Zubulake v. UBS Warburg LLC, 216 F.R.D. 280 (S.D.N.Y. 2003)...........................................................10 Zubulake v. UBS Warburg LLC, 220 F.R.D. 212 (S.D.N.Y. 2003)......................................................10-11 Zubulake v. UBS Warburg LLC, 229 F.R.D. 422 (S.D.N.Y. 2004)..................................................8, 10-14 Statutes and Rules 18 U.S.C. § 1512........................................................................................................................................8-9 18 U.S.C. § 1512(b)(2)(A)............................................................................................................................9 18 U.S.C. § 1512(b)(2)(B).............................................................................................................................9 18 U.S.C. § 1512(c)(1)..................................................................................................................................9 iii

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11 Del.C. § 1269............................................................................................................................................9 11 Del.C. § 1269(2).......................................................................................................................................9 11 Del.C. § 8404(a).......................................................................................................................................9 Fed.R.Civ.P. 34.............................................................................................................................................3 Fed.R.Evid. 1001...........................................................................................................................................3 Model Rule of Professional Conduct 3.4(a) .................................................................................................8 Model Rule of Professional Conduct 3.4(a), cmt. 2......................................................................................8

iv

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NATURE AND STAGE OF THE PROCEEDING These are two related civil actions for compensatory and punitive damages and injunctive relief for retaliatory violations of the free speech and petition clauses of the First Amendment of the United States Constitution. Plaintiffs exercised their First Amendment rights by: (1) filing an April 2002 lawsuit and successfully prosecuting it to a June 2003 jury verdict and a November 2003 settlement; (2) reporting to defendants that the health and safety of Delaware State Troopers and others were being endangered by hazardous conditions at the Delaware State Police's Firearms Training Unit ("FTU"); and (3) speaking to the Delaware State Auditor's Office about health hazards, safety concerns and other problems at the FTU, as well as mismanagement and other root causes of those dangerous conditions. Defendants retaliated against plaintiffs for their protected activities by among other things, orchestrating a local, national and international media campaign riddled with malicious falsehoods which have totally destroyed plaintiffs' professional reputations; materially changing their conditions of their employment; and making concerted retaliatory efforts to create pretextual reasons to terminate their employment. This is plaintiffs' opening brief and appendix in support of their motion for sanctions against defendants for intentionally destroying defendant Chaffinch's computer hard drive. SUMMARY OF THE ARGUMENT In derogation of their common law and other duties to preserve potentially relevant evidence, in May 2005 defendants instead admittedly destroyed Col. Chaffinch's computer hard drive. By destroying the hard drive, defendants have forever deprived plaintiffs of key and relevant evidence, the loss of which has prejudiced plaintiffs' abilities to prosecute this lawsuit. Because defendants (1) had a clear duty to preserve the drive, (2) but instead intentionally destroyed it and (3) deprived plaintiffs of the relevant evidence it contained, defendants should be sanctioned and a default judgment entered against them.

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STATEMENT OF FACTS A. Chaffinch Has Been a Defendant in a Steady Stream of Lawsuits Since April 2002. Defendant Chaffinch and the Delaware State Police have been defendants in a steady stream of lawsuits since April 2002. Those suits are listed below. · Foraker v. Chaffinch, et al., C.A. No.02-302-JJF (D.Del.) (First Amendment free speech retaliation - filed April 2002; settled November 2003), Dillman v. Chaffinch, et al., C.A. No. 02-509-KAJ (D.Del.) (First Amendment free speech retaliation and Fourteenth Amendment due process - filed June 2002; settled May 2004), Bullen and Giles v. Chaffinch, et al., C.A. No. 02-1315-JJF (D.Del.) (Fourteenth Amendment race discrimination - filed July 2002; settled October 2004) Warren v. Minner, Chaffinch, et al., C.A. No.03-908-SLR (D.Del.) (First Amendment retaliation - filed September 2003; settled July 2004), Davis v. Chaffinch, et al., C.A. No. 04-106-JJF (D.Del.) (Fourteenth Amendment race discrimination - filed February 2004; settled August 2004), Price, et al. v. Chaffinch, et al., C.A. No.04-0956-GMS (D.Del.) (First Amendment free speech and petition clause retaliation - filed August 2004; presently ongoing), Foraker v. Chaffinch, et al., C.A. No.04-1207-GMS (D.Del.) (First Amendment free speech and petition clause retaliation - filed August 2004; presently ongoing), Conley v. Chaffinch et al., C.A. No. 04-1394-GMS (D.Del.) (Fourteenth Amendment gender discrimination and First Amendment free speech and petition clause retaliation - filed October 2004; presently ongoing), Moss v. Chaffinch, et al., C.A. No. 05-708-GMS (D.Del.) (Fourteenth Amendment race and gender discrimination - filed September 2005; presently ongoing).

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As this recitation makes clear, Chaffinch has been an individual defendant in a host of lawsuits challenging his actions while he held the position of Superintendent of the DSP. After these nine suits, it is reasonable to expect that defendants would be extra careful when it comes to the destruction of potentially relevant evidence. B. The Three Active Lawsuits Against Chaffinch as of October 2004. As just

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discussed, the present Foraker and Price actions, in addition to the Conley action, were pending before this Court as of October 2004. All three of these actions deal with issues of First Amendment retaliation for speaking out and petitioning the government for redress of grievances. C. The Discovery Requests At Issue. Plaintiffs' Fourth Request for Production of Documents was filed and served on August 9, 2005. (See D.I. 30). Plaintiffs' Fourth Request is in the record. (A1-48). Plaintiffs' First Document Request was filed and served on May 15, 2005 and is in the record. (A49-54). In each Request, the definition of the word "document" includes anything within the scope of Fed.R.Civ.P. 34, Fed.R.Evid. 1001 and innumerable examples are given. Each includes all electronic documents stored on hard-drives or elsewhere. (A1-4,49-50). In the present actions, plaintiffs' fourth request for production specifically included a request for Chaffinch's work hard drive, backup tapes, and related electronic media. (#19; A11). Requested documents included those relating to: communications sent by or sent to Chaffinch related to the issues in this case (#4; A6); the shut down of the FTU (#25, 29; A12-15); maintenance or maintenance protocols at the FTU (#28, 30; A19-22,26-29); Sgt. Foraker's involvement and tenure at the FTU (#73; A37-40); Sgt. Ashley's involvement and tenure at the FTU (#74; A41-44); and numerous additional documents related to the defense and prosecution of this case also were requested. (#1-6; A5-6). Requested documents from plaintiffs' first request included: all computer documents referencing plaintiffs' from December 1, 2003 to the present (#14; A53); and documents relating to the decisions to conduct medical testing upon plaintiffs (#2; A52). D. The Documents These Discovery Requests Sought to Discover. Among the documents that plaintiffs expected to recover with these electronic document requests were the following, all of which would reasonably be located on Chaffinch's hard drive.

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Messages composed by Chaffinch using the Arch Text Messaging Wireless and Blackberry Service/System which is regularly used by the DSP Executive Staff. The text messages using this system are not sent over a central server and are instead only stored/archived/located on the primary work station where the message was originally typed which would be on Chaffinch's work computer's hard drive. Other documents expected to be recovered are final or draft memos, letters, e-mails and other documents relating to: · Chaffinch's involvement in the long course of retaliation against plaintiffs including sending them for numerous fitness for duty exams, refusing to accommodate them in accord with historical practice, refusing to grant them two years of light duty, among other things; Chaffinch's planning of and reaction in the aftermath of his April 6, 2004 media tour of the FTU where he publicly blamed plaintiffs for its destruction - he vehemently denies the testimony of Capt. Dixon, Capt. Conley and Major Baylor that he bragged about what he had done (see Chaffinch 177-95; A118-23); Chaffinch's feelings and reaction to plaintiffs twice speaking out to the State Auditor's office; Chaffinch's feelings and reaction to plaintiffs' speaking out and raising health and safety concerns about the hazardous conditions at the FTU; Chaffinch's unprecedented shuffling of the chain of command in anticipation of Sgt. Foraker's reinstatement to the FTU so that neither he nor defendant MacLeish would have to have any dealings or interactions with Sgt. Foraker (see G. Warren 33-44; A66,116-17); Chaffinch's knowledge about the conditions of the FTU on December 1, 2003; Chaffinch's feelings towards Sgt. Foraker and his successful lawsuit against him, and the Court ordered reinstatement to Sgt. Foraker's prior position as the NCOIC of the FTU; Chaffinch's knowledge about the deteriorating conditions at the FTU under Sgt. Ashley's tenure, an issue he denies; Chaffinch's close personal friendship with Sgt. Ashley - which would give him yet another motive to retaliate against Sgt. Foraker; Chaffinch's involvement in the decision to refuse NIOSH access to the FTU and give plaintiffs free medical care; and

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·

similar and related issues in the case.

Importantly, preserved drafts would not have been transferred off of the primary machine used to create them. Plaintiffs also believe that many final documents, such as file memos and similar documents would never have been transferred off of the primary machine used to create them. The types of documents listed above are important issues in this retaliation case where defendants adamantly deny retaliatory intent. Access to Chaffinch's work computer hard drive and in particular the Arch messaging system - provide a unique insight into Chaffinch's thinking about the above issues and how he communicated with his close friends, co-workers and fellow members of the Executive Staff over the Arch system when his `guard' was down. Plaintiffs fully expected to find incriminating evidence related to Chaffinch's involvement in retaliatory actions in this case as he directed many of the retaliatory actions which occurred. For example, record evidence has been developed in discovery relating to Chaffinch's loathing of plaintiffs, yet Chaffinch continues to deny retaliatory intent, motive or general hostility towards those who speak out. Access to his work computer and the Arch messaging system is key to rebutting Chaffinch's denials and claims that he did not bear any ill will towards the plaintiff whistleblowers in this case. E. Defendants Destroy Chaffinch's Hard Drive Despite the Pendency of Three Cases. Defendants and their attorneys have submitted a sworn affidavit and also otherwise attested to the fact that they destroyed Col. Chaffinch's work hard drive despite the pendency of this and other litigation. 1. The Sworn Affidavit Attesting to the Destruction. On November 28, 2005, as part of the defense response to a discovery request by the plaintiff in the Conley action, these same defendants submitted a sworn affidavit from Lt. Robert Moses of the DSP High Tech Crimes Unit. (Moses Aff. ¶ 1; A111). Lt. Moses swore that "the computer formerly assigned to Colonel Chaffinch was cleaned of all data, and the hard drive erased, upon his departure,

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according to standard Delaware State Police Practice." (Moses Aff. ¶ 13; A114). Lt. Moses swore that Chaffinch's computer was destroyed pursuant to the DSP's standard document destruction policy as soon as Chaffinch retired. (Id.).1 2. Defense Counsel in the Present Actions Represent That the Hard Drive Has Been Destroyed. Defense counsel represented in a December e-mail that "the hard drive of the DSP computer previously used by Col. Chaffinch has been wiped clean of information and reassigned to an unknown user. ... [I]t was cleaned of all data" and no longer "contain[s] any information that could possibly contribute to Plaintiffs' claims ... We cannot and, therefore, will not produce it." (Mr. Fitzgerald 12/27/05 e-mail to Mr. Haverly; A75-77). 3. Defense Counsel In the Conley Case Also Represent That the Hard Drive Has Been Destroyed. Lastly, defense counsel for these same defendants in the Conley case also attested that Chaffinch's hard drive had been destroyed. "The work computer assigned to Aaron Chaffinch was `wiped' of all data following his resignation as Superintendent, per DSP security policy." (Non-Chaffinch Defendants Answer to #18; A88; Chaffinch Answer to # 18; A106). ARGUMENT I. DEFENDANTS INTENTIONALLY DESTROYED EVIDENCE RELEVANT TO THIS LITIGATION AND A DEFAULT JUDGMENT SHOULD BE ENTERED AGAINST THEM AS A SANCTION TO PUNISH AND DETER THEIR ILLEGAL CONDUCT. A. The Basics. "Since the early 17th century, courts have admitted evidence tending to show that a party destroyed evidence relevant to the dispute being litigated." Schmid v. Milwaukee Elec. Tool Corp., 13 F.3d 76, 78 (3d Cir. 1994). The general principles concerning the inferences to be drawn from the loss or destruction of documents are well established. When the contents of a document are relevant to an issue in a case, the trier of fact generally may receive the fact of the document's nonproduction or destruction as evidence that the party that has prevented production did

Chaffinch's last day with the DSP was May 5, 2005. (Chaffinch 5; A57). So despite the pendency of the Conley, Foraker and Price cases, on or soon after May 5, 2005, the DSP destroyed Chaffinch's hard drive anyway.

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so out of the well-founded fear that the contents would harm him. Brewer v. Quaker State Oil Refining Corp., 72 F.3d 326, 334 (3d Cir. 1995). "Such evidence permitted an inference, the 'spoliation inference,' that the destroyed evidence would have been unfavorable to the position of the offending party." Schmid, 13 F.3d at 78. The evidentiary rationale [for the spoliation inference] is nothing more than the common sense observation that a party who has notice that [evidence] is relevant to litigation and who proceeds to destroy [evidence] is more likely to have been threatened by [that evidence] than is a party in the same position who does not destroy the document. Id. As the Third Circuit en banc has explained It has always been understood--the inference indeed is one of the simplest in human experience--that a party's falsehood or other fraud in the preparation and presentation of his cause, his fabrication or suppression of evidence by bribery or spoliation, is receivable against him as an indication of his consciousness that his case is a weak or unfounded one; and from that consciousness may be inferred the fact itself of the cause's lack of truth and merit. Sheridan v. E.I. DuPont de Nemours and Co., 100 F.3d 1061, 1069 (3d Cir. 1996) (en banc) (citing McQueeney v. Wilmington Trust Co., 779 F.2d 916, 921-22 (3d Cir. 1985)). B. Sources of the General Duty to Preserve Evidence. 1. Duty Under the Common Law. As this Court has explained on numerous occasions, "[a] party who has reason to anticipate litigation has an affirmative duty to preserve evidence which might be relevant to the issues in the lawsuit." In re Wechsler, 121 F.Supp.2d 404, 415 (D.Del. 2000); accord id. at 417 ("when a party has reason to believe that a lawsuit may be filed, that party has an obligation to preserve relevant evidence."); id. at 429 ("[a] potential litigant has a duty to preserve evidence which might prove relevant to a future lawsuit."); Positran Manufacturing, Inc. v. Diebold, Inc., 2003 WL 21104954, *2 (D.Del. May 15, 2003) ("[a] party who has reason to anticipate litigation has a duty to preserve evidence which might be relevant to the issues in the lawsuit."); see Kronisch v. U.S., 150 F.3d 112, 126 (2d Cir. 1998) (noting the duty to preserve "arises when the party has notice that the evidence is relevant to litigation - most commonly when suit has already been filed."); Danis v. USN Comm., Inc., 2000

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WL 1694325, *12 (N.D.Ill. Oct. 23, 2000) (noting the "common law duty not to spoil documents that might be discoverable in the litigation."); In re Triton Energy Ltd Securities Litig., 2002 WL 32114464, *5 (E.D.Tex. March 7, 2002) (noting the "common law duty not to spoil documents (in hard or electronic form) that might be discoverable" in the litigation); Zubulake v. UBS Warburg LLC, 229 F.R.D. 422, 434 (S.D.N.Y. 2004) ("Zubulake V") (noting the common law duty to preserve). Here, there has been a flood of lawsuits against Chaffinch since April 2002. Defendants have reasonably been on notice since April 2002 that all electronic and other documents should be treated carefully and preserved and that all document destruction policies should be placed on hold while litigation against Chaffinch was pending. Indeed, as discussed above, many of those lawsuits involved similar retaliation scenarios that are issues in our present cases. Even more specifically, as of August 2004, both of the present cases (both retaliation) were pending against defendants. Moreover, as of October 2004, there was yet another lawsuit pending - the Conley suit (retaliation and discrimination). Defendants should have been reasonably on notice since August 2004 that these cases required that a litigation hold be imposed on potentially relevant documents - such as defendant Chaffinch's entire hard drive - which would hold a wealth of potentially relevant information spanning numerous programs, topics and subjects. 2. Duty Under the Ethical Rules. Model Rule of Professional Conduct 3.4(a) states that a lawyer shall not "unlawfully obstruct another party's access to evidence or unlawfully alter, destroy or conceal a document or other material having potential evidentiary value. A lawyer shall not counsel or assist another person to do any such act." See id. at cmt. 2. Plaintiffs respectfully submit that an attorneys' refusal to take reasonable steps to protect potentially relevant evidence and abide by his common law duties to preserve is the equivalent of unlawful obstruction under the ethical rules. 3. Duty Under 18 U.S.C. § 1512. The intentional destruction of evidence also

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violates federal criminal law under 18 U.S.C. § 1512. Numerous sections of this criminal statute forbid the intentional destruction of evidence. See id. at (b)(2)(A); id. at (b)(2)(B); id. at (c)(1). 4. Duty Under 11 Del.C. § 1269. 11 Del.C. § 1269 also makes it a class G felony to tamper with physical evidence.2 "Believing that certain physical evidence is about to be produced or used in an official proceeding ... and intending to prevent its production or use, the person suppresses it by any act of ... destruction." 11 Del.C. § 1269(2). 5. Duty as a Police Officer. As the former Director of Training for the Delaware State Police and the former administrator of the Council on Police Training for the State of Delaware explained,3 police officers and troopers "receive extensive training related to issues of collection, preservation and destruction of evidence." (Warren Decl. ¶ 10; A73). "The basic principle underlying every" police officer's "training and approach towards evidence issues is to protect and preserve." (Id. at ¶ 11; A73). Police officers "are trained to never destroy evidence that may be relevant to criminal or civil cases." (Id. at ¶¶ 12,15; A73-74). "This is a rule of common sense." (Id. at ¶ 13; A74). As police officers, "we are held to a higher standard. And it is essential that we set, meet and exceed that standard - that we protect and preserve and never destroy evidence." (Id. at ¶ 13; A74). Police officers "are trained to err on the side of caution" when it comes to destroying evidence. (Id. at ¶14; A74). Every police officer knows that even when their department "has a document destruction policy, the policy should not be applied and the evidence should not be destroyed when there are pending court cases which might need access to evidentiary information." (Id. at ¶ 16; A74). "Things of this nature are self-evident propositions to any Delaware State Trooper or other police officer - you do not

The existence of this criminal statute has made it unnecessary for the State of Delaware courts to recognize an independent tort for spoliation of evidence. Lucas v. Christiana Skating Ctr. Ltd, 722 A.2d 1247, 1250 (Del. Super. 1998). "The Council's many duties include establishing educational and training standards for police officers throughout the state of Delaware. See 11 Del.C. § 8404(a)." (Warren Decl. ¶ 3; A72).
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destroy evidence." (Id. at ¶ 17; A74). 6. Penalty for Breaching the Common Law Duty to Preserve Evidence. "A party who breaches this duty by destroying relevant evidence or by allowing relevant evidence to be destroyed may be sanctioned by the court." Wechsler, 121 F.Supp.2d at 415; Positran, 2003 WL 21104954, *2. "When this destruction is willful or in bad faith and intended to prevent the other side from examining the evidence, the court may impose the most severe sanction of them all - ... the entry of a default judgment." Wechsler, 121 F.Supp.2d at 415; Positran, 2003 WL 21104954, *2. C. The Zubulake Electronic Discovery Spoliation Test. In a series of recent opinions, the Southern District of New York has had the opportunity to exhaustively address the issue of destruction of electronic and computerized documents in great detail.4 Even though there is a Third Circuit test on the general subject of spoliation (and that test is discussed below), plaintiffs note that analysis under the specialized Zubulake test also may be helpful to the Court in organizing the issues and resolving the present motion. Under the Zubulake test, a party seeking a spoliation sanction must establish the following three elements. 1) That the party having control over the evidence had an obligation to preserve it at the time it was destroyed. 2) That the records were destroyed with a culpable state of mind, and 3) That the destroyed evidence was relevant to the party's claim or defense such that a reasonable trier of fact could find that it would support that claim or defense. Zubulake V, 229 F.R.D. at 430; Zubulake IV, 220 F.R.D. at 220.

See Zubulake v. UBS Warburg LLC, 217 F.R.D. 309 (S.D.N.Y. 2003) ("Zubulake I"); Zubulake v. UBS Warburg LLC, 2003 WL 21087136, 230 F.R.D. 290 (S.D.N.Y. May 13, 2003) ("Zubulake II"); Zubulake v. UBS Warburg LLC, 216 F.R.D. 280 (S.D.N.Y. 2003) ("Zubulake III"); Zubulake v. UBS Warburg LLC, 220 F.R.D. 212 (S.D.N.Y. 2003) ("Zubulake IV"); Zubulake v. UBS Warburg LLC, 229 F.R.D. 422 (S.D.N.Y. 2004) ("Zubulake V"). It is Zubulake IV and Zubulake V that have bearing on our present motion.

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1. Defendants Had an Obligation to Preserve the Hard Drive. As discussed above, there is both a common law and ethical duty to preserve documents from destruction. As the Zubulake opinions discuss, "[t]he duty to preserve attached at the time that litigation was reasonably anticipated." Zubulake IV, 220 F.R.D. at 217. "[A]nyone who anticipates being a party or is a party to a lawsuit must not destroy unique, relevant evidence that might be useful to an adversary." Id. Here, the litigation commenced on August 19th and August 30th, 2004 (see D.I. 1), and at the latest, defendants were on notice as of this date that documents should forthwith be preserved. Yet despite this notice, defendants completely destroyed Chaffinch's hard drive nine months later anyway. While a litigant is under no duty to keep or retain every document in its possession ... it is under a duty to preserve what it knows, or reasonably should know, is relevant in the action, is reasonably calculated to lead to the discovery of admissible evidence and/or is the subject of a pending discovery request. Id. Here, defendants were reasonably on notice that the contents of Chaffinch's hard drive would reasonably contain relevant evidence such as the Arch messaging system and the other evidence discussed in the Facts at section D above. Accordingly, defendants had a duty to preserve the contents of Chaffinch's hard drive, rather than completely erase and destroy it. a. Defense Counsel's Obligation to Suspend Document Destruction Policies and Impose a "Litigation Hold." "Once a party reasonably anticipates litigation, it must suspend its routine document retention/destruction policy and put in place a `litigation hold' to ensure the preservation of relevant documents." Id. at 218; Zubulake V, 229 F.R.D. at 431, 433. Importantly, the "litigation hold should be periodically reissued so that new employees are aware of it, and so that it is fresh in the minds of all employees." Zubulake V, 229 F.R.D. at 433. Here, the defense affidavit states that Chaffinch's hard drive was destroyed pursuant to the DSP's document destruction policy despite its clear relevance to the litigation. Thus, it is clear that either defense counsel failed in their duties to ensure that document destruction policies were suspended and that a litigation hold be imposed, or the DSP at its own peril and chose to

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ignore defense counsel's orders, as well as ignore their own extensive training on protection and preservation of evidence. b. Defense Counsel's Continuing Obligation to Locate and Preserve Potentially Relevant Information. Importantly, the existence of a litigation hold is only the first step. "Counsel must oversee compliance with the litigation hold, monitoring the party's efforts to retain and produce the relevant documents." Id. at 432. "Once a `litigation hold' is in place, a party and her counsel must make certain that all sources of potentially relevant information are identified and placed `on hold.'" Id. Counsel must "become fully familiar with her client's data retention architecture." Id. This includes speaking directly with IT personnel who must inform counsel of the ins and outs of how the systems work, and also communicating with the key players in the litigation (such as the individual defendants and key witnesses) to learn how and where they store information, including electronic information. Id. The importance of speaking to the IT personnel is underscored by the recognition that "[o]ne of the primary reasons that electronic data is lost is ineffective communication with" these personnel. Id. at 434. It is apparent in our present case that defense counsel failed to speak to the IT personnel as the IT personnel admittedly destroyed Chaffinch's hard drive despite the pendency of this litigation as well as several other court cases. "In short, it is not sufficient to notify all employees of a litigation hold and expect that the party will then retain and produce all relevant information. Counsel must take affirmative steps to monitor compliance so that all sources of discoverable information are identified and searched." Id. at 432 (emphasis in original). And as with the litigation hold, "the key players should be periodically reminded that the preservation duty is still in place." Id. at 434. The defense affidavit makes clear that defense counsel completely and utterly failed in their duty in this regard. c. Defense Counsel's Duty to Obtain Copies of all Electronic

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Documents. Lastly, "counsel should instruct all employees to produce electronic copies of their relevant active files." Id. By taking possession of these copies, counsel ensures that documents will not be inadvertently destroyed. Id. It also is apparent that defense counsel failed to obtain copies of this information as both they and the IT department have represented that this information was destroyed. No mention has ever been made of the required copies or backups. d. Division of Liabilities Between Defendants and Defense Counsel. As the above recitation makes clear, "counsel is responsible for coordinating her client's discovery efforts." Id. at 435. However, "[a]t the end of the day ... the duty to preserve and produce documents rests on the party." Id. at 436. Once counsel fulfils their obligations and makes clear the duty to preserve, "that party is on notice of its obligations and acts at its own peril." Id. Here, it appears that defense counsel apparently failed in their duties to put in place and enforce the required litigation hold and comply with their other preservation obligations. But even assuming arguendo that defense counsel did initially comply with their obligations, the DSP defied the order and intentionally destroyed the evidence anyway. Thus, responsibility for the destruction lies squarely at one of two places. Defense counsel, or more likely their clients. 2. Defendants Intentionally Destroyed the Hard Drive. "When evidence is destroyed in bad faith (i.e. intentionally or willfully), that fact alone is sufficient to demonstrate relevance." Id. at 431. "[O]nly in the case of willful spoliation does the degree of culpability give rise to a presumption of the relevance of the documents destroyed." Id. But when "destruction is negligent, relevance must be proven by the party seeking the sanctions." Id. In the present case, it is clear that defendants intentionally and willfully destroyed Chaffinch's hard drive. Defense counsel both in these present cases and in the Conley action have represented that the hard drive was destroyed by the DSP. The sworn affidavit from Lt. Moses - the DSP's own expert and head of the DSP high tech crimes unit has sworn that the hard drive was destroyed pursuant to the DSP's document destruction policy - a policy which, as discussed above, both

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defendants and defense counsel failed to suspend or place a litigation hold on. No claim is made that its destruction was a mistake or an accident. (See Moses Aff. ¶ 13; A114). 3. The Intentional Destruction of the Hard Drive Establishes that Its Contents Were Relevant to Plaintiffs' Claims. As just discussed, "[w]hen evidence is destroyed in bad faith (i.e. intentionally or willfully), that fact alone is sufficient to demonstrate relevance." Zubulake V, 229 F.R.D. at 431. And as just demonstrated, Chaffinch's hard drive was destroyed intentionally and willfully pursuant to the document destruction policy, which defendants failed in their duty to suspend. Accordingly, Zubulake V dictates that this intent and willfulness clearly establishes relevance. Out of an abundance of caution, plaintiffs note that a negligence standard is plainly inapplicable to the destruction of Chaffinch's hard drive. Defendants did not accidentally spill a pot of coffee on it which then shorted it out and destroyed the drive. Defendants did not accidentally bump it out a 10th story window. No, instead defendants proudly submit that they wiped the hard drive pursuant to the DSP's document destruction policy. This is certainly an intentional act - all the more so in light of the extensive training that police officers receive when it comes to preservation and protection of evidence. (Warren Decl. ¶¶ 10-17; A73-74). Defendants intended to wipe the drive and followed through and did so. Any post-hoc rationalizations are nothing but a pretext for intentional destruction of relevant evidence and failure to abide by required duties. Additionally, even if a negligence standard is found to apply, plaintiffs have clearly demonstrated the relevance of the destroyed evidence - including messages from the Arch system, draft letters, memos and the like. (See Facts at section D above). 4. Summary. Accordingly, under Zubulake V, plaintiffs have established the appropriateness of a sanction for destruction of evidence. The specific sanction that should be imposed is discussed in the context of the Third Circuit spoliation test, in the section immediately below.

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D. The Third Circuit Spoliation Test. Under the existing Third Circuit test, when determining whether to impose sanctions for spoliation of evidence, the Court must consider three factors. 1) the degree of fault and personal responsibility of the party who destroyed the evidence, 2) the degree of prejudice suffered by the other party, and 3) the availability of lesser sanctions which would avoid any unfairness to the innocent party while, at the same time, serving as a sufficient penalty to deter the same type of conduct in the future. Wechsler, 121 F.Supp.2d at 415; Schmid, 13 F.3d at 79. 1. Defendants and Defense Counsel Have a Heavy Degree of Fault and Personal Responsibility. As discussed above, defendants and defense counsel had a clear and long established duty to preserve Chaffinch's hard drive due to the fact that it contained numerous types of potentially relevant evidence. But defendants and defense counsel ignored their clear duties and failed to take any reasonable steps such as, for example, imposing a litigation hold, suspending document destruction policies or taking possession of the hard drive. Thus, it is clear that defendants and defense counsel bear a heavy degree of fault and personal responsibility for the destruction of a hard drive that they had a clear duty to preserve. Plaintiffs note the extent and sheer magnitude of the data destroyed by defendants. Defendants did not simply destroy a file, a folder, a memo or an e-mail on a drive. They completely wiped out and destroyed everything the drive contained. They obliterated it, despite their obligation to preserve it and its contents. Such widespread intentional destruction has parallels in the recent case of Paramount Pictures Corp. v. Davis, 2005 WL 3303861 (E.D.Pa. Dec. 2, 2005). There a party completely wiped his hard drive clean in preparation for selling his computer, despite knowing for 16 days prior that the content of the computer was at issue in pending litigation. Id. at *9. The court there rejected the claim that the wiping of the drive was reasonable because the party had planned to sell it, noting that such an argument does not

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"obviate his duty to preserve" the computer's hard drive. Id. at *10. Similarly, the anticipated defense claim that their wrongdoing should be excused because of purported public safety considerations require periodic document destruction and the like should be rejected as a red herring since such an argument simply does not obviate defendants' duty to preserve the computer's hard drive under the long recognized law discussed above. Defendants knew for at least nine months that the drive should be preserved, and yet destroyed it nonetheless. Indeed, as police officers charged with the even handed enforcement of the law, Troopers such as defendants and their IT personnel are held to an even higher standard of conduct. (Warren Decl. ¶ 13; A74). Even defendant MacLeish testified that it is important that Troopers hold themselves to a higher standard of conduct than citizens and other members of the general public. (MacLeish 21-22; A69-70). These are police officers and they are supposed to be a cut above. And highly trained police officers are well aware of their duties not to destroy evidence that might be relevant in a civil or criminal proceeding. (Warren Decl. ¶¶ 10-17; A7374). 2. Plaintiffs Have Been Gravely Prejudiced by Defendants' Destruction of the Hard Drive and Its Relevant Contents. a. The Basics. Under governing Third Circuit precedent, "a party need only `come forward with plausible, concrete suggestions as to what the lost evidence might have been.'" Wechsler, 121 F.Supp.2d at 423 (quoting Schmid, 13 F.3d at 80). "[A] party need not conclusively establish that the evidence would have established liability on the part of the spoliator." Id. This is because it is impossible to know what the destroyed evidence would have shown. ... It would seem to be pure guesswork, even if the destroyed evidence went against the spoliator, to calculate what it would have contributed to the plaintiff's success on the merits in the underlying lawsuit. Id. And it is to avoid problems like this that evidence is supposed to be preserved and not destroyed. As the Second Circuit has observed, "[t]he task is unavoidably imperfect, inasmuch

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as, in the absence of the destroyed evidence, we can only venture guesses with varying degrees of confidence as to what that missing evidence may have revealed." Kronisch, 150 F.3d at 127. "Indeed, holding the prejudiced party to too strict a standard of proof regarding the likely contents of the destroyed evidence would subvert the prophylactic and punitive purposes of the adverse inference, and would allow parties who have intentionally destroyed evidence to profit from that destruction." Id. at 128. b. Plaintiffs Have Made the Required Showing. As discussed in section D of the Facts above, plaintiff has done her best and met and surpassed Third Circuit requirements and, at the very least, has come forth with numerous more than "plausible" and "concrete suggestions" as to what evidence would reasonably have been on Chaffinch's hard drive, such as messages from the Arch messaging system as well as other documents. Accordingly, plaintiff has met her burden in this regard. c. Plaintiffs Have Been Forever Deprived of the Opportunity to Examine this Relevant Evidence. Moreover, "when considering the degree of prejudice suffered by the party that did not destroy the evidence, the court should take into account whether that party had a meaningful opportunity to examine the evidence in question before it was destroyed." Wechsler, 121 F.Supp.2d at 416. As this Court has noted, "when a party is denied any opportunity to examine the evidence, this test would automatically be satisfied." Id. at 421. In our present case, it is clear that this test also is satisfied. Plaintiffs never had any opportunity, much less a meaningful one, to examine the hard drive before it was destroyed. In fact, given the haste with which the DSP destroyed the hard drive, it is apparent that truly damaging evidence must have been present thereon. Thus, plaintiffs have been forever deprived of access to the wealth of information contained in the primary wrongdoer's very own computer hard drive. This is significant and weighty prejudice which will adversely affect plaintiffs' ability to prosecute their case, establish liability, cross-examine defendants and their agents at

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trial, among many other prejudices. d. The Integrity and Thoroughness of Defendants' Prior Discovery Responses Has Been Undermined. Additionally, the late discovery of defendants' hard drive destruction calls into question the integrity and thoroughness of many of defendants' responses to plaintiffs' earlier requests for production. For example, how thorough have any of defendants' responses to plaintiffs' requests for production of documents, when the computer hard drive of the primary wrongdoer was never searched or examined? Plaintiffs are trying to prove causation. Several of the ways to do that are through evidence of antagonism - such as messages from Chaffinch expressing his displeasure and anger towards them, and evidence of disparate treatment - such as communications by Chaffinch referencing but then ignoring the DSP's accommodation and light duty policies. Yet despite the widespread use of electronic communications by the DSP, defendants never searched Chaffinch's hard drive for communications, documents or other evidence in this regard. What would a search of Chaffinch's hard drive have turned up? An internal memo memorializing the widespread policy and practice accommodating Troopers and giving them two years of light duty? Perhaps smoking gun messages from Chaffinch ordering Capt. Yeomans, defendant MacLeish and others to go after plaintiffs. Perhaps numerous Arch messages relating to the topic? The problem is that now plaintiffs will never know and the integrity of the discovery process has been undermined, as has the ultimate trial of this case. Although this is just one example, it is an illustrative one. How many more of defendants' discovery responses come up lacking? How else has plaintiffs' case been undermined? How much of the defense case is built on the sand that the production of Chaffinch's hard drive would have washed away? Defendants' actions have injured the integrity of the truth-seeking process and gravely prejudiced the prosecution of plaintiffs' case. 3. Availability of an Appropriate Sanction.

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a. In General. Federal courts have inherent powers to manage their proceedings and to control the conduct of those who practice before them. Chambers v. NASCO, Inc., 501 U.S. 32, 43 (1991). "District judges have an arsenal of sanctions they can impose for unethical behavior." Erickson v. Newmar Corp., 87 F.3d 298, 303 (9th Cir. 1996). In Chambers, the Supreme Court discussed the broad scope of a court's "ability to fashion an appropriate sanction for conduct which abuses the judicial process." Chambers, 501 U.S. at 44-45. Sanctions may be imposed for abuse of the judicial process when a party has "acted in bad faith, vexatiously, wantonly, or for oppressive reasons." Id. at 45-46 (emphasis added); accord Rogal v. American Broadcasting Co., Inc., 74 F.3d 40, 46 (3d Cir. 1996). b. Sanctions in the Destruction of Evidence Context. "This court has the inherent power to impose sanctions against a party that has destroyed evidence which is relevant to a legal proceeding." Wechsler, 121 F.Supp.2d at 427. "In its discretion, the court may impose a wide range of sanctions for the spoliation of evidence depending upon the severity of the circumstances." Id. The court can: (1) impose attorneys fees against defendants, (2) impose fines against defendants, (3) suppress key evidence of the defendants' in order to level the playing field due to the destruction of the plaintiffs' evidence, (4) issue an injunction and give a jury instruction at trial, permitting the fact finder to draw an adverse inference against the defendants arising from their destruction of the evidence, (5) shift the burden of proof to defendants to affirmatively prove that they did not retaliate against plaintiffs, and (6) enter judgment against defendants on liability. See Wechsler, 121 F.Supp.2d at 427; Paramount, 2005 WL 3303861, *8. "When considering which sanction to impose, the court should take into account the twin aims of punishing the culpable while, at the same time, deterring others from engaging in similar

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conduct in the future." Wechsler, 121 F.Supp.2d at 427; cf. Paramount, 2005 WL 3303861, *8 n.3 (observing that spoliation sanctions serve three functions "remedial," "punitive" and "deterrent"); Kronisch, 150 F.3d at 126 (noting that "evidentiary, prophylactic, punitive and remedial rationales" are served). The most extreme sanction - entering judgment - should only be imposed as a last resort to punish a party who has "acted callously or in bad faith and, as a result, has severely prejudiced the other side," as defendants have done in our present case. Wechsler, 121 F.Supp.2d at 427. 4. The Appropriate Sanction. In our present case, plaintiffs respectfully submit that an entry of judgment against defendants on the retaliation and other theories is an appropriate remedy. Defendants' conduct in this regard has been especially egregious. This is not the first lawsuit that defendants have been involved in over the last four years. By now, they should be well-versed in the ins and outs of document preservation and litigation holds. Yet despite this, they flagrantly destroyed Chaffinch's hard drive immediately upon his retirement. Notably, this gross disregard for their preservation duties and obligations is compounded by the fact that their conduct not only prejudices and adversely affects plaintiffs' present two actions, but it also causes prejudice across the board, in the Conley and Moss actions as well. Defendants are high public officials and an important public agency. As defendant MacLeish has testified, their actions should be a cut above the rest. Yet instead, they have lowered themselves, violated their duties to uphold the law and disregarded their training and the very oaths they once took. Attorneys fees and costs associated with this motion also would be an appropriate corollary remedy, in addition to a hefty fine to ensure that defendants take their legal obligations much more seriously in the future. Alternatively, if the Court believes that entering judgment against defendants is too drastic a sanction, plaintiffs also are open to the remedy of shifting the burden of proof to defendants, to prove that they did not retaliate against plaintiffs or otherwise violate the law

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under the state law torts. Lastly, an adverse inference jury instruction also would be appropriate in conjunction with this latter remedy, along with attorneys fees and costs. CONCLUSION For the above stated reasons, plaintiffs respectfully request that the Court sanction defendants for their actions in intentionally destroying key evidence relevant to this lawsuit and enter a default judgment against them as follows: in the Price case - C.A.No. 04-956-GMS on Counts I and II (First Amendment retaliation); and in the Foraker case - C.A.No. 04-1207-GMS and Counts I and II (First Amendment retaliation), Count III (defamation) and Count IV (false light invasion of privacy). Alternatively, plaintiffs respectfully request that the burden of proof be shifted to defendants on each and every element of the respective legal paradigms, and that the jury also receive an adverse inference instruction. Lastly, attorneys fees and costs also should be awarded, in addition to a fine intended to remind defendants of the severity of their wrongdoing. Respectfully Submitted, THE NEUBERGER FIRM, P.A. /s/ Stephen J. Neuberger THOMAS S. NEUBERGER, ESQ. (#243) STEPHEN J. NEUBERGER, ESQ. (#4440) Two East Seventh Street, Suite 302 Wilmington, Delaware 19801 (302) 655-0582 [email protected] [email protected] MARTIN D. HAVERLY, ATTORNEY AT LAW /s/ Martin D. Haverly MARTIN D. HAVERLY, ESQ. (#3295) Two East Seventh Street, Suite 302 Wilmington, DE 19801 (302) 654-2255 [email protected] Dated: January 25, 2006 Attorneys for Plaintiffs

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Unreported Opinions

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Not Reported in F.Supp.2d Not Reported in F.Supp.2d, 2000 WL 1694325 (N.D.Ill.), 53 Fed.R.Serv.3d 828 (Cite as: Not Reported in F.Supp.2d)

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Briefs and O ther Related Do cuments United States District Court, N.D. Illinois, Eastern Division. David D ANIS, on b ehalf of himself and all others similarly situated, Plaintiffs, v. US N C OM MUN ICA TION S, IN C., et al., Defend ants. No. 98 C 7482. Oct. 23, 2000.

REPORT AND RECOMMENDATION SCHENKIER, Magistrate J. *1 Day in and day out, in countless courts throughout this country, courts resolve disputes of every kind imaginable. Even when disappointed (or outraged) by the outcome, the parties to these disputes do not engage in lawlessness or self-help. H aving had their day in court, the parties accept judgment and move on with their lives. They would not do so unless they had faith in the integrity of our judicial system. Not a faith that the system is perfect and will never err, but rather a faith that the system will give the p arties a fair opportunity to be heard. This fair opportunity to be heard is achieved through lawyers for each side, having obtained and marshaled the relevant evidenc e, presenting their clients' respective positions vigorously. Our system is premised on the view that through this clash of competing stories, judges and juries will have the information they need to make a fair decision. In our system of civil litigation, the discovery process is the principal means by which lawyers and p arties asse mble the facts, and decide what information to present at trial. Federal Rule of Civil Procedure 26 requires a party to produce non-privileged docum ents which are "relevant

to the subject matter involved in the pending action." That requirement embraces not on ly documents adm issible at trial but also documents and information that are "reasonably calculated to lead to the discovery of admissible evidence." This broad duty of disclosure extends to all documents that fit the definition of relevance for the purposes of discovery-whether the doc uments are good, bad, or indifferent. While it may seem contrary to the adversarial pro cess to require such "self-reporting," it is in fact a central tenet of our discovery process. The duty of disclosure finds expression not only in the rules of discovery, but also in this Court's Rules of Professional Conduct, which prohibit an attorney from "suppress[ing] any evidence that the lawyer or client has a legal obligation to reveal or produce," Rules for the Northern District of Illinois, LR 83.53.3(a)(13), or from "unlawfully obstructing another party's access to evidence.... Id. LR 83.53.4(1). This duty of d isclosure would be a d ead letter if a party could avoid the duty by the simple expedient of failing to preserve documents that it does not wish to produce. Therefore, fundamental to the duty of production of information is the thresho ld duty to prese rve documents and other information tha t may be relevant in a case. That duty, too , finds exp ression in this Court's Rules of Professional Conduct. See Rules for the Northern District of Illinois, LR 83.53.4(1) (a lawyer shall not "unlawfully alter, destroy, or conceal a document or other material having potential evidentiary value"). Suffice it to say, there is no "bad document" exception to these duties of preservation and p roduction. These twin obligations are so ingra ined in our system, and in the lawyers and parties who operate within it, that the obligations routinely are discharged without question. Parties and attorneys frequently are ca lled up on to preserve and produce d ocuments that are against their interest in a particular case. And when they do so, the parties and the attorne ys uphold the integrity of our litigation system and inspire c onfidence in it. *2 Conversely, when a charge is made that relevant information has be en de stroyed , and especially when a

© 2006 Tho mson/W est. No C laim to Orig. U .S. Govt. Wo rks.

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charge is made of intentional destruction, it is a charge that strikes at the core of our civil litigation system. The motion prese ntly before this Court presents just such a charge. This lawsuit involves a class action brought by two groups of purchasers of common stock issued by USN Com munications, Inc. ("USN"), which is now in bankruptcy. The suit alleges a variety of federal securities law violations against three groups of defenda nts: (1) eleven officers or directors of USN; (2) three companies who managed the underwriting of USN 's initial public offering in February 1998; and (3) the accounting firm that audited USN's financial statements and provided various consulting services to USN. In earlier rulings in this case, the District Judge denied a motion to dismiss (except as to one claim against certain individual defendants), and certified the case as a class action, with the class period running from February 4, 199 8 to November 20, 1998. The trial in this case is set to commence on December 4, 2000. On December 13, 19 99, plaintiffs filed a motion for sanctions against six of the eleven individual officer and director defendants: Richard B rekka, J. Thoma s Elliott, James Hyne s, W illiam Johnston, David Mitchell, and Eugene Sekulow. Mr. E lliott is the only one of those defendants who held the positio n of inside director to USN during the class period; the remaining defendants named in the motion were outside directors to USN during the class period. Plaintiffs premised their motion on the assertion that "USN employees, acting at the direction or under the supervision of the individual defendants and U SN's senior officers, destroyed virtually all evidence of the massive fraud alleged in plaintiff's complaint" (Pls.' 12/13/99 Mot., at 1). As a sanction for this alleged misconduct, plaintiffs sought the most draconian remedy available under the rules against the individual d efendants name d in the motion: a default judgment. On January 13 , 200 0, the District Judge referred the motion to this Court for a report and recommendation (doc. # 117) (subsequently, the referral was expanded to all discovery motions) (doc. # 131)). This Court held a status hearing on the sanctions motion on January 21, 2000. At that time, it was obvious that little discovery

had yet been do ne in the case: no d ocuments had yet been produced from U SN , and no depositions had yet been taken. Accordingly, the Court entered and continued plaintiffs' motion for sanctions pending completion of discovery, which would allow p laintiffs (and, if necessary, the Court) to determine more precisely what, if anything, had been destroyed; what information remained available notwithstanding any alleged destruction; and what prejudice, if any, the plaintiffs had suffered. At that time, non-expert fact discovery was set to close on April 30, 2000; by an order of the D istrict Judge dated M arch 14, 2000 , the period for non-expert fact discovery was extend ed to July 7, 2000 (doc. # 151 ). *3 The parties indeed have engag ed in discovery-with a vengeance. In the nearly six months between January 21 and July 7, 2000, the parties exchanged in excess of one million pages of documents, and took and defended some ninety non-expert fact depositions. The discovery was not only extensive, but was extraord inarily contentious-not including the sanctions motion, this Court has been required to rule on 27 contested discovery motions brought by the various parties, both plaintiffs and defendants alike (see doc.135, 137, 145, 157, 162, 165, 170, 183, 188, 191, 212, 214, 216, 225, 226, 276 ). On July 12, 2000, after the completion of non-expert fact discovery, the Court discussed the status of plaintiffs' motion for sanctions. The plaintiffs indicated that they