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.