e-DISCOVERY: Adverse inference sanctions imposed due to Oracle's mishandling of electronic evidence

In a long-running class action against Larry Ellison, founder of Oracle, and other executives, U.S. District Judge Susan Illston, of the Northern District of California, found that executives either destroyed or knowingly failed to preserve evidence in a suit asserting that Ellison and other Oracle executives misled investors about the company's financial strength.  (Brandon Bailey, Judge says Oralce mishandled evidence (September 3, 2008) www.mercurynews.com.)  Judge Illston indicated that she will infer that the evidence was incriminating. Those inferences will apply when she rules later on the substance of the case, and she will instruct a jury to make the same inference if the case goes to trial.

Judge Illston refused to go beyond the evidentiary inference, despite request by the plaintiffs for additional sanctions and summary judgment based on spoliation of evidence. However, the Court did not rule out further consequences and asked for added briefing.  (Pamela A. Maclean, Judge Orders Oracle Sanctioned Over Ellison E-Mails (September 4, 2008) www.law.com.)

It is a little surprising to me that major corporations, counseled by major law firms (in this case, Latham & Watkins), continue to believe that the substantial developments in e-discovery rules and subsequent decisional authority won't bite them if they don't comply.  Then again, the same thing happened when the world ran on paper, so I suppose there will always be another party to litigation that gambles on not getting caught spoliating or withholding key evidence.