Computer forensics can bring up data the other side tried to hide
Hawaiian Airlines Inc. execs were suspicious when in 2005 Mesa Air Group, Inc., began offering low-cost interisland flights in the state. It was just over a year since Hawaiian and competitor Aloha Air had been in bankruptcy, and Mesa looked at both as potential acquisitions. Mesa's CFO George Murnane had signed a nondisclosure agreement with Hawaiian, including provisions that the Arizona-based carrier would not, for at least two years, use any information gotten through due diligence "to obtain any competitive advantage," should an acquisition not take place.
The Mesa flights "raised some questions in people's minds of, 'Gee, did they improperly use information [to set up their own airline]?'" says Hawaiian general counsel Hoyt Zia.
And then, in January 2006, came the smoking gun. In answering an analyst's question during a conference call, Mesa CEO Jonathan Orenstein said that his team had considered interisland flights with "the benefit of looking at both Aloha and Hawaii [sic] when they're in bankruptcy." Not a smart thing to admit publicly. And equally foolish, when Hawaiian filed suit, was when Murnane used a software application to wipe any traces of some files from his computer -- long after Mesa was to have turned over any files and documents.
What Murnane didn't realize was that as commonplace as PCs are, their inner workings are unknown to most people -- except to a select few who know how to pry their secrets out of them. Hawaiian's outside counsel, Hennigan, Bennett & Dorman, brought in computer forensics experts who determined that a number of computers had been similarly tampered with. Because the judge ruled that there had been spoliation of evidence, Hawaiian established the liability component of its case, and an eventual $80 million settlement.
"I don't want to say anything bad about [Mesa's] lawyers, but it seemed to me that they were behind the curve both on what an employee could do to hide or destroy evidence and the forensic tools that are available to uncover the activity that has happened," says Hennigan partner Dana Hobart.To Continue Reading: Click Here
By: Erik Sherman