In the age of big data, discovery can extend beyond traditional documents and communications to myriad tools and databases. This case before the Delaware Superior Court’s Complex Commercial Litigation Division illustrates the critical responsibility of preserving potentially relevant data, as well as what can happen if legal holds do not appropriately reflect the scope of data to be preserved.
In this dispute over a purchase agreement, Dow asserted a counterclaim that Huntsman engaged in “bad faith forecasting” in preparing purchase orders, which prevented Dow from effectively sourcing other buyers for its product. Depositions showed that Huntsman used forecasting software to determine product need. But because of software retirement, lack of back-ups, and active auto-deletion cycles, Huntsman had not preserved data necessary to determine whether the forecast data provided to Dow aligned with Huntsman’s internal forecasting. Testimony from Huntsman’s general counsel further established that, while Huntsman had issued hold notices related to its own affirmative claims, it had not issued updated or new holds to address Dow’s counterclaims.
Citing federal cases and recent Delaware Court of Chancery authority, the Court determined that the data from the internal databases should have been preserved as potentially relevant to reasonably anticipated litigation. The Court declined to find that the spoliation was intentional, but it concluded that the data was now lost due to Huntsman’s reckless failures to implement a legal hold and to preserve the data. To remedy the prejudice to Dow, the Court imposed sanctions of (i) drawing an adverse inference that the lost data would be unfavorable to Huntsman, (ii) limiting Huntsman’s ability to introduce certain documents, and (iii) shifting fees relating to the discovery dispute.
