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E-discovery Battles And Consequences Come Home To Roost For New York Company In Bankruptcy

A company formerly known as NTL, Inc. (now known by the more familiar Virgin label of Virgin Media, Inc.) got itself into hot water recently by failing to preserve e-mails of 44 of its top executives and directors in securities litigation.  When it was first sued, the company issued a document preservation order to its employees.  Later, however, the company went into bankruptcy and was purchased by NTL Europe, Inc.

It took some time for the new company to let the Court know of the merger, and the judge was none to happy about the delay, especially when he discovered that the purchaser had failed to retain all of NTL, Inc.'s e-mails.

When they discovered the lapse in document preservation protocol, the plaintiffs in the securities litigation against NTL, Inc. sought an order from the judge for a finding of an adverse inference and payment of their attorneys fees.  The "adverse inference" can be quite damning at trial.  Essentially, when plaintiffs try to present evidence on a point essential to their case and can't because the document has been destroyed, the jury can infer that the evidence would have been adverse to NTL, Inc., and adopt the plaintiff's reasonable interpretation of what the document would have said.

It's almost a free pass for plaintiffs, and a warning for companies in the process of buying other companies:  preserve what you're buying, or you'll pay for it later.

Printer friendly page Permalink Email to a friend Posted by J. Craig Williams on Wednesday, February 21, 2007 at 08:27 Comments Closed (0) |
 
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