Hawaiian Airlines, Inc. v. Mesa Air Group, Inc., Case No. 03-00817 (Bkrtcy. D. Hawaii October 30, 2007)

Maybe this will come as a surprise to some of you. But I doubt it. If your client’s CFO starts sending emails asking his friends how to permanently delete files off a hard disk so it appears that they were never there in the first place eight days after a trade secret theft case is filed against your client and seven days after he was told to preserve all relevant files, you may have a problem. If he wipes the hard disk on his backup computer three weeks after the plaintiff files a motion for a preliminary injunction, you better think about removing his access to any electronic data, because he just might wipe the hard disk on his main computer after the Judge questions his credibility at the PI hearing. He might even change the clock on the computer so it would look like he had wiped it at an earlier time. But then any forensic rookie can determine when that has happened, so only an utter fool, and a guilty one at that, would try such an ignorant move. And if he tries to blame it on his fear of being discovered as a porn junkie, don’t throw that one out at the sanctions hearing; the Judge won’t buy it. I doubt if I even have to mention that if you find that relevant documents have been deleted off the company’s network, and you know they're relevant because some of them show up in backup tapes, you probably have a pretty good idea who might have deleted them.

Judge Robert J. Faris, a U.S. Bankruptcy Judge in the District of Hawaii had little trouble dealing with the sanctions motion in this case. He imposed several adverse inferences on the defendant. He even went so far at to suggest that they should have immediately imaged the company’s hard drives after the case was filed. While the latter suggestion is clearly an over-reaction, it certainly could be argued that under the Zubulake V monitoring duties imposed on counsel, the first hard disk wipe should have put someone on notice that this guy was trouble.

And trouble he was. While the Judge put off consideration of attorney fees and other sanctions until after trial, his post-trial findings of fact and conclusions of law were clearly impacted by the actions of the CFO. The court awarded damages of $80 Million on what otherwise looks like a case that was worth a fraction of that amount.

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