It’s a hard-fought, high-stakes trade secrets case, with scads of pretrial motions and some two-dozen lawyers involved. A jury trial is set to start this week in Richmond federal court in E.I. du Pont de Nemours & Co. v. Kolon Industries Inc.
DuPont sued in 2009, alleging Kolon, a South Korean company, and its U.S. subsidiary, wrongfully obtained trade secrets and confidential information from DuPont about its KEVLAR aramid fiber, used in bulletproof garments for military and law enforcement personnel.
Senior U.S. District Judge Robert E. Payne inserted one punctuation point into the long-running case on July 21, when he found spoliation of evidence by Kolon and granted DuPont’s motion for an adverse inference jury instruction.
Payne said after the lawsuit was filed and two litigation hold orders were issued directing parties to preserve evidence, key Kolon employees set out to “willfully and intentionally, and in bad faith, delete from their computers relevant documents, files and emails” that had information potentially damaging to Kolon. Many of the deleted files could not be recovered, Payne said.
When the electronic evidence was deleted, there was alteration of evidence as well, Payne said, which also constituted spoliation.
Kolon took the position that unless the deleted material directly referred to DuPont or the disputed trade secrets, it was not relevant to the litigation. Kolon also tried to distance itself from the employees who did the deleting, saying they were acting outside the scope of their employment.
Payne resisted the notion that a company could only be liable for its employees’ destruction of evidence when it had a corporate policy or directive encouraging spoliation of relevant materials.
The court rejected DuPont’s request for the ultimate sanction of a default judgment against Kolon, opting instead for the adverse inference instruction. He also ordered Kolon to pay for DuPont’s attorney’s fees and extra costs to go after the deleted information through its motions, forensic analysis and requests for Kolon’s back-up tapes.
Payne said he would inform the jury that “certain Kolon executives and employees, after learning that DuPont had sued Kolon, deleted much electronically stored information that would have been available to Dupont for use in presenting its case.”
The jury then should be allowed to infer that the unrecoverable deleted information would be helpful to DuPont and harmful to Kolon, Payne held. The jury also should be told it could consider the fact of deletion, whether or not the material was recovered, in assessing the element of Kolon’s intent and knowledge.
By Deborah Elkins