e-Discovery Docket Sheet

After becoming aware of Enron's financial difficulties, accounting firm Arthur Andersen told partners working on the Enron team to ensure compliance with Andersen's document-retention policy. Following that meeting, substantial volumes of paper and electronic documents were destroyed. At trial, the jury found Arthur Andersen guilty of knowingly, intentionally and corruptly persuading employees to withhold documents from a regulatory proceeding. The Fifth Circuit affirmed the decision. The Supreme Court reversed and held that the jury instructions were flawed. The court declared that ' under normal circumstances ' a manager could instruct employees to comply with a valid document-retention policy even though the policy was partly designed to prevent others (including the government) from accessing certain information. The court found that the jury instructions erroneously implied that the jury did not have “to find any nexus between the “persua[sion]” to destroy documents and any particular proceeding.” The court further stated that a “ 'knowingly … corrup[t] persaude[r]' cannot be someone who persuades others to shred documents under a document-retention policy when he does not have in contemplation any particular official proceeding in which those documents might be material.” Arthur Andersen LLP v. United States, 125 S.Ct. 2129 (U.S. 2005).

In a contract dispute, the jury awarded the plaintiff over $830,000 in damages, relying in part on a spoliation instruction. Although the plaintiff had requested various e-mails, and profit and loss statements relating to the allegations, the defendant failed to preserve and produce these documents. As a result, the trial court had instructed the jury that “[e]vidence has been received that tends to show that certain profit and loss statements and E-mails were in the exclusive possession of the defendant … and, [sic] have not been produced for inspection. From this, you may infer, though you are not compelled to do so, that the profit and loss statements and the E-mails would be damaging to the defendant.” On appeal, the defendants argued, inter alia, that the instruction was unfairly prejudicial. The appellate court noted that testimony from one of the defendants' employees indicated the defendants were on notice early on of the plaintiff's intent to sue but failed to preserve the plaintiff's e-mails or hard drive. The employee further testified that no effort was made to save the hard drive even after receiving a letter from the plaintiff's counsel about the case. Based on this evidence, the appellate court determined that the trial court did not err in giving the spoliation instruction. Arndt v. First Union Nat'l Bank, 2005 WL 1330534 (N.C. Ct. App. June 7, 2005).

Supreme Court Overturns Arthur Andersen's
Document Destruction Conviction

After becoming aware of Enron's financial difficulties, accounting firm Arthur Andersen told partners working on the Enron team to ensure compliance with Andersen's document-retention policy. Following that meeting, substantial volumes of paper and electronic documents were destroyed. At trial, the jury found Arthur Andersen guilty of knowingly, intentionally and corruptly persuading employees to withhold documents from a regulatory proceeding. The Fifth Circuit affirmed the decision. The Supreme Court reversed and held that the jury instructions were flawed. The court declared that ' under normal circumstances ' a manager could instruct employees to comply with a valid document-retention policy even though the policy was partly designed to prevent others (including the government) from accessing certain information. The court found that the jury instructions erroneously implied that the jury did not have “to find any nexus between the “persua[sion]” to destroy documents and any particular proceeding.” The court further stated that a “ 'knowingly … corrup[t] persaude[r]' cannot be someone who persuades others to shred documents under a document-retention policy when he does not have in contemplation any particular official proceeding in which those documents might be material.” Arthur Andersen LLP v. United States , 125 S.Ct. 2129 (U.S. 2005).

In a contract dispute, the jury awarded the plaintiff over $830,000 in damages, relying in part on a spoliation instruction. Although the plaintiff had requested various e-mails, and profit and loss statements relating to the allegations, the defendant failed to preserve and produce these documents. As a result, the trial court had instructed the jury that “[e]vidence has been received that tends to show that certain profit and loss statements and E-mails were in the exclusive possession of the defendant … and, [sic] have not been produced for inspection. From this, you may infer, though you are not compelled to do so, that the profit and loss statements and the E-mails would be damaging to the defendant.” On appeal, the defendants argued, inter alia, that the instruction was unfairly prejudicial. The appellate court noted that testimony from one of the defendants' employees indicated the defendants were on notice early on of the plaintiff's intent to sue but failed to preserve the plaintiff's e-mails or hard drive. The employee further testified that no effort was made to save the hard drive even after receiving a letter from the plaintiff's counsel about the case. Based on this evidence, the appellate court determined that the trial court did not err in giving the spoliation instruction. Arndt v. First Union Nat'l Bank, 2005 WL 1330534 (N.C. Ct. App. June 7, 2005).