Inferences

A longer post than usual.

While compliance with the applicable laws and ediscovery processes is a significant part of information governance, I normally leave strict records/discovery issues to discussion in topical fora dedicated to those topics.

But I’m struck by the comparison and contrast between how the IRS email issue is being handled and how a similar incident in a corporation facing litigation would be handled.

Setting the Stage

Coleman (2005) was an early ediscovery case, initially resulting in a court judgment against a defendant for more than $1 billion, largely due to failing to keep the court informed of the ediscovery process during the litigation and to find documents within the corporation’s control.   Zubulake (2003) was another early ediscovery case (or cases) establishing (among other things) that the duty to preserve attaches when litigation becomes reasonably likely. Other cases have held that failure to follow a company’s internal processes, or the failure of a company to comply with its internal policies or applicable law, can lead to an inference of guilt. 18 USC § 1519 (added as a part of Sarbanes Oxley (2002)) criminalizes hiding or destroying documents (including email) with the intent to influence a matter within the jurisdiction of an agency of the US government. The Federal Records Act of 1950 requires federal agencies to retain certain records and to notify the National Archive if records are destroyed.

Timeline

Imagine a corporation facing this timeline:

  • 2010. Supreme Court decision that permit unlimited private and corporate funding of your competitor
  • 2010. Your senior executive  publicly chastises the Supreme Court for its decision
  • A division manager suggests applying pressure on people who invested in or did business with your competitors
  • Members of your governing Board demand you cause prosecutors to investigate investors in, and people who do business with, your competitors
  • Other division managers meet with your chief executive’s staff, with those meeting recorded in the building’s access logs
  • Non-employees, aligned with you, meet with chief executive’s staff
  • A division manager sends a bunch of emails to other division managers and the chief executive’s staff, and third parties outside your company urging them to act collectively to exclude people doing business with your competitors
  • Investigations are begun against potential investors in, and others who do business with, your competitors
  • Competitors and shareholders complain to courts about your organization’s activity to ensure the chief executive’s re-election and to interfere with your rights to invest where you want and to do business freely
  • No notice to recipients of emails from division manager of  the litigation
  • 2012. Your chief executive elected to another term
  • The hard drive of the key division manager fails, and her emails are unavailable there, but are on the backup tapes
  • No notice to the courts of the hard drive failure, nor to others who may have sent emails to, or received emails from, the division manager
  • No notice to the Archivist
  • Six months later, the last backup tape before the division manager’s hard drive failure is recycled
  • Company employees test the failed hard drive and determine nothing is recoverable; hard drive disposed of
  • Two years pass, during which time your company repeatedly assures the court that all the division manager’s emails are being kept
  • February 2014 your company “learns” of hard drive failure
  • June 13, 2014, you write your Board/the court telling them that the investigation is closed; you mention that the division manager’s hard drive failed and was unrecoverable
  • The next week, you advise the court that 6 other hard drives of people involved in the activity against competitors also failed
  • Later that week, you advise the court that the hard drives for 2 more people involved also failed

Queries

When did the duty to preserve attach?  Would you be prosecuted for obstruction of justice?  Would you be liable for spoliation, not only of the stuff you once had but no longer have, but also for the stuff your other divisions and correspondents once had but no longer have?  What’s the inference the jury is permitted to draw?

 

Advertisements

Leave a comment

Filed under Board, Collect, Compliance, Compliance, Compliance Verification, Controls, Governance, Inform shareholders, Internal controls, IT, Management, Oversight, Protect, Protect information assets, Records Management, Risk, Security, Third parties

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s