TR Investors, LLC v. Genger, 2009 WL 4696062 (Del. Ch. Dec. 9, 2009) (Unpublished)
In this case, defendant Arie Genger was held in contempt and found to have intentionally spoliated relevant documents in violation of a court order following his instruction to his personal IT consultant to wipe the unallocated space of his company’s computer system which his consultant then carried out. Declining to impose terminating sanctions, the court instead ordered that Genger produce 10 documents previously subject to a claim of privilege, that the burden of persuasion as to Genger’s affirmative defenses and counter-claims be raised one level, that Genger was precluded from prevailing on any material factual issue by reason of his testimony alone, and that Genger pay for plaintiffs’ reasonable attorneys’ fees and expenses in the amount of $750,000.
As of June 2008, defendant Genger was the Chief Executive Officer of TRI, a company that he founded. Plaintiff, The Trump Group, owned a sizeable portion of the company’s stock and had representatives on the board of directors. Eventually, for reasons unimportant to the discovery issues at hand, TRI sought to take over the company and to remove Genger from his position. Litigation ensued. While attempting to settle their disputes, the parties submitted to the court a stipulated status quo order which included a provision that prohibited tampering with or destroying company records.
It turned out that Genger was not a run of the mill CEO. Instead, aside from his usual business interests, Genger had high level contacts within the Israeli government for whom he performed “sensitive tasks” related to Israel’s national security. (As the court noted, “[a]lthough Mike Myers may have made millions by bringing to the big screen his take on what it is like to be an "international man of mystery," Arie Genger, as it turns out, is such a man.”) Highly sensitive documents related to his Israeli contacts were stored on his work computer and server, along with other personal documents. Concerned that his personal information would be viewed by members of The Trump Group, Genger undertook to segregate his personal documents from those relevant to the litigation. In doing so, Genger was substantially assisted by attorneys for TRI who in turn employed an outside technology firm to identify and encrypt personal confidential documents and to preserve documents related to the business of TRI.
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