Transcript Triton Construction Co, Inc. v. Eastern Shore Electrical

Triton Construction Co, Inc.
v.
Eastern Shore Electrical Services,
Inc. Eastern Shore Services, LLC,
George Elliot, Teresa Elliot, Tom Kirk
and Kirk’s Electrical Services
Court of Chancery of Delaware
Decided May 18, 2009
Decision Authored by Vice Chancellor Parsons
Parties
► Plaintiff:
Triton Construction – Electrical
subcontractor that bids against other contractors
for jobs
► Defendants:
 Eastern Shore Electrical Services, Eastern Shore
Services, LLC – Competing electrical contractor
 George and Teresa Elliot (he is president of both
Eastern, she is majority owner of both Eastern)
 Tom Kirk, Kirk’s Electrical Services - Hired by Triton as
Estimator and Project Manager, began working for
Eastern part-time doing the same job.
Facts
Tom Kirk, d/b/a Kirk’s Electrical Services – Main Character
► Hired
by Triton in 2004 as an Estimator and Project Manager
► Eastern tried to hire Kirk away from Triton in 2005, Kirk rejected
the offer but started working part-time as an estimator. Triton
was never informed by Eastern or Kirk. Kirk and George Elliot
testified that they agreed Kirk would not give estimates on
projects Triton was bidding on…but he did.
► From 2005 to 2007, Kirk and Elliot met 2-3 times per month in
parking lots, never at either’s office, and talked on the phone
up to 10 times/day. Elliot never called Kirk at his office at Triton,
only on his cell. Both testified communications were more
personal than business.
► In total, over 22 months, Kirk bid on 195 bids for Eastern while
working for Triton, and won 59 jobs for Eastern, with those jobs
accounting for $3 million in gross profit.
Facts - continued
►
►
►
Of the 195 bids, on 13 of those Kirk prepared bids for both
Triton and Eastern, and of those Eastern won 2, Triton
won 1
Kirk eventually resigned from Triton and was hired by
Eastern, making $92k/yr, while he had made $68k/yr at
Triton.
Triton alleges that Kirk breached duties of due care, loyalty
and disclosure, and that Eastern aided and abetted Kirk’s
breaches, and that Eastern and Kirk engaged in a civil
conspiracy to harm Triton’s business, and that Eastern
engaged in unfair competition, and was unjustly enriched,
among other issues.
What ESI is at Issue?
►2
months before left Triton, Triton employees had
tech support do a ghost copy of Kirk’s computer
hard drive in his Triton office because they became
suspicious.
► After Kirk left, a general contractor contacted
Triton and told Triton that it and Eastern had
submitted identical bids. Triton then looked on the
computer Kirk had used when employed with
Triton, but could find barely any files.
► The ‘ghost copy’ of the hard drive was restored
and bid information was recovered for bids Kirk
did for both Triton and Eastern
ESI, continued
►A
computer forensics expert hired by Triton found
that Kirk had installed a ‘wiping program’ on his
office computer that made the files irretrievable.
 The wiping program allowed specific files to be deleted
► Kirk
claimed he never used a wiping program
► Kirk also backed up his work files for Eastern on
his home computer and a flash drive.
 He claimed he could not produce them, and never did.
What E-Discovery Rules are
effected?
► Duty
to Preserve Evidence
 Delaware law imposes an affirmative duty “to
preserve evidence [which] attaches upon the
discovery of facts and circumstances that would
lead to a conclusion that litigation is imminent or
should otherwise be expected. Sears, Roebuck & Co. v.
Midcap, 893 A.2d 542, 550 (Del.2006).
What E-Discovery Rules are
effected?
►
Spoliation of Evidence
 FRCP 37 provides for sanctions where the producing
party fails to provide e-discovery outside of the safe
harbor (37f). In addition to sanctions, spoliation of ESI
may result not only in an adverse inference, an award of
attorneys' fees, and possibly an adverse judgment.
 In order for an adverse inference to be drawn, Delaware
requires a determination “that the party acted
intentionally or recklessly in failing to preserve the
evidence.
Analysis of Triton from E-discovery
perspective
► Applying
the Rules:
 Vice Chancellor did not believe that Elliot and Kirk’s
communications were not primarily business related
 Vice Chancellor did not find Kirk’s testimony credible
that he did not install a wiping program on his work
computer at Triton
 Vice Chancellor also did not find Kirk’s claim credible
that he could not produce his home computer or flash
drive because he no longer owned them
Analysis of Triton from E-discovery
perspective
► Applying
the Rules
 The court found that Kirk either intentionally or
recklessly destroyed or failed to preserve evidence
relating to this litigation at a time when he knew such
litigation was imminent or otherwise to be expected.
 Thus, the court found an adverse inference to be
appropriate based on the inference that Kirk either
destroyed or discarded his thumb drive and home
computer or recklessly failed to fulfill his duty to
preserve that potential evidence.
Outcome
► Triton
won
 Defendants are liable to the plaintiff for breach
of certain fiduciary duties, tortious interference
with prospective economic advantage as to two
projects, and aiding and abetting such wrongful
conduct.
 Monetary damages in the amount of $167,644
Questions
► (1)
Is the adverse inference appropriate?
► (2) Should Tom Kirk have been criminally
charged with Theft for wiping his Triton office
computer’s hard drive?
 DE Theft Statute 11 § 841 , in relevant part:
►(a)
A person is guilty of theft when the person takes,
exercises control over or obtains property of another
person intending to deprive that person of it or
appropriate it.