In a recent case from the US District Court for the Northern District of California, Clear-View Technologies v Rasnick, the court found that defendants’ receipt of threatening text messages, two years before filed litigation, triggered their duty to preserve potentially relevant data. Defendants were allegedly attempting to take over Clear-View, or alternatively, to steal away Clear-View’s employees, intellectual property and investors. Clear-View’s alcohol inventory tracking product, the BarMaster, was the target of the alleged conspiracy.
In May 2011, after catching wind of the plot, Clear-View’s CEO sent text messages to the defendants making it clear that he was prepared to sue. These messages included statements: “That is economic interference. I will not accept this[.] [K]eep it up and you’ll find [yourself] in court[.] Call Clyde again and I sue.” The CEO sent friendly and apologetic texts the following morning, but he did not retract the statements from the previous messages.
These messages were sent six months before Clear-View’s counsel sent a written document preservation and litigation hold notice, and nearly two years before the suit was filed. However, the court made clear that the duty to preserve was triggered by the text messages. The defendants failed to preserve or collect relevant documents for two years after being on notice, intentionally disposed of relevant data, and falsely certified incomplete productions as complete. The court was compelled to grant sanctions in the form of hundreds of thousands of dollars in attorneys’ fees and an adverse instruction to the jury due to the spoliation.
This case illustrates why companies and counsel must give due consideration to communications regarding litigation, regardless of form, and evaluate whether litigation is reasonably foreseeable from an objective standpoint.It also demonstrates the importance of educating employees on the duty to preserve, and the necessity of providing training on recognizing preservation triggers and taking appropriate action.
This topic will be discussed in detail during one of the Breakout Sessions at the upcoming Data Solutions Fall Symposium in Grand Rapids on October 23rd. The session is entitled “Off the Record Discussion on How to Identify and Respond to Data Preservation Triggering Events” and the panel will include several in-house legal representatives. Other sessions will cover privacy/security and records information management topics. This is a complimentary program for clients and invited guests of Warner. Learn more and register online here.
