Nucor Corp. v. Bell

251 F.R.D. 191, 2008 U.S. Dist. LEXIS 52808, 2008 WL 2721264
CourtDistrict Court, D. South Carolina
DecidedFebruary 1, 2008
DocketC/A No. 2:06-CV-02972-DCN
StatusPublished
Cited by32 cases

This text of 251 F.R.D. 191 (Nucor Corp. v. Bell) is published on Counsel Stack Legal Research, covering District Court, D. South Carolina primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Nucor Corp. v. Bell, 251 F.R.D. 191, 2008 U.S. Dist. LEXIS 52808, 2008 WL 2721264 (D.S.C. 2008).

Opinion

ORDER and OPINION

DAVID C. NORTON, Chief Judge.

This matter is before the court on plaintiffs motion for sanctions based on defendants’ alleged spoliation of electronic evidence. Specifically, plaintiff contends defendants intentionally destroyed or altered evidence found in a USB thumb-drive device (often referred to as the “SanDisk”), on a SeverCorr laptop computer used by John Bell, and on a CD that Bell created in March 2006. Moreover, plaintiff argues defendants’ expert witness destroyed evidence by improperly handling the SeverCorr laptop hard drive. In light of those allegations, plaintiff has asked the court to strike defendants’ answer and enter judgment in its favor. Alternatively, plaintiff has requested that the court provide an adverse inference charge to the jury. For the reasons set forth below, the court grants plaintiffs motion and de[193]*193termines an adverse inference charge is the appropriate sanction.

I. BACKGROUND

John Bell is a former employee of Nucor Corporation. In 1987, he began working for Nucor in a steel mill in Arkansas and became the melt-shop manager at Nucor’s Berkeley County, South Carolina steel mill in 1995. In 2004, Nucor promoted Bell to the position of General Manager of Steelmaking Technologies, and he continued working at the Berkeley County mill. Bell worked in that position until March 31, 2006, when he left Nucor to become SeverCorr’s Executive Vice-President and General Manager of Operations. Bell is responsible for overseeing the construction and operation of SeverCorr’s start-up steel mill in Columbus, Mississippi.

During his time at Nucor-Berkeley, Bell was intimately involved in the development of processes for manufacturing Interstitial-Free/Ultra Low Carbon (IF/ULC) steel. IF/ ULC steel is a high-end product commonly used in exposed and unexposed automotive applications. Plaintiff contends that acquiring the ability to manufacture IF/ULC steel required a significant investment of resources and involved extensive trial-and-error, all overseen by Bell. Although other steelmakers manufacture IF/ULC steel, plaintiff contends that it is the only one to do so in a “mini-mill.” A “mini-mill” is a steel mill that uses scrap metal as the base material and differs from “integrated mills,” which produce steel from raw iron ore. Plaintiff contends that it acquired a competitive advantage because its method of producing IF/ ULC steel in a mini-mill is unique and allows it to produce the steel less expensively than steelmakers with integrated mills. Nucor asserts the process it developed for producing IF/ULC steel in a mini-mill is a trade secret as defined in the South Carolina Trade Secrets Act, S.C.Code Ann. § 39-8-20(5)(a).

On October 6, 2006, plaintiff filed the instant action against defendants in the Court of Common Pleas for Charleston County, South Carolina. Plaintiff served process on Bell on October 6, 2006 and served process on SeverCorr on October 10, 2006. On October 11, 2006, the state court issued a preservation order that, inter alia, prohibited defendants from destroying or altering any electronic documents. Defendants removed the action to this court on October 17, 2006.

Plaintiff generally alleges that Bell and SeverCorr have misappropriated Nucor’s trade secrets and plan to use that information to compete with Nucor, and that defendants have improperly solicited Nucor employees. Nucor’s amended complaint asserts nine causes of action under South Carolina law: (1) misappropriation of trade secrets, (2) breach of contract, (3) breach of the duty of loyalty; (4) computer fraud and abuse; (5) tortious interference with contractual relations, (6) unfair trade practices, (7) civil conspiracy, (8) conversion, (9) unjust enrichment, (10) an equitable claim for imposition of a constructive trust, and (11) a request for injunctive relief. The court has issued an order dismissing the breach of contract claim to the extent it relied on a non-compete provision in the third confidentiality agreement. See Nucor Corp. v. Bell, 482 F.Supp.2d 714 (D.S.C.2007).

Nucor has moved for a preliminary injunction, asking the court to enjoin Bell’s employment at SeverCorr, to enjoin SeverCorr from manufacturing or preparing to manufacture IF/ULC steel, to enjoin SeverCorr from hiring certain Nucor employees, and to enjoin defendants’ use or disclosure of Nucor’s trade secrets. Resolution of Nucor’s motion for a preliminary injunction is partially dependent on the outcome of the instant motion; the motion for a preliminary injunction is therefore under advisement.

Nucor has also moved for sanctions based on defendants alleged spoliation of electronic evidence. As the basis for its motion, Nucor contends defendants negligently and/or intentionally destroyed evidence found on John Bell’s SeverCorr laptop computer and the SanDisk device that Bell discarded. Nucor has requested that the court award sanctions in the form of default judgment or, in the alternative, by giving the jury an adverse inference charge. To support its claims of spoliation, Nucor offered the testimony of John Jorgensen, an expert in the field of computer forensics, who concluded that defendants engaged in the intentional deletion [194]*194of data (known as “wiping”). He also testified that the missing SanDisk contained Nu-cor-related documents. Bell has admitted that he destroyed the SanDisk. Jorgensen also testified that defendants’ continued use of the SeverCorr laptop resulted in the loss of relevant data, and that defendants’ expert spoliated evidence because he engaged in “destructive” testing on the laptop’s hard drive. Defendants counter Nucor’s claims with the testimony of Dr. Sean McLinden, another expert in the field of computer forensics, who testified that there is no evidence to indicate that wiping occurred, that no relevant data was lost as a result of defendants’ continued use of the computer, and that he provided plaintiff with an exact copy of the laptop hard drive. The court has already considered the parties’ motions to exclude the expert witnesses’ testimony, and concluded that both experts’ testimony meets the requirements of Federal Rule of Evidence 702 and the Supreme Court’s decision in Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579, 113 S.Ct. 2786, 125 L.Ed.2d 469 (1993).1

II. STANDARD OF REVIEW

Spoliation is the “destruction or material alteration of evidence or ... the failure to preserve property for another’s use as evidence in pending or reasonably foreseeable litigation.” Silvestri v. General Motors Corp., 271 F.3d 583, 590 (4th Cir.2001) (citing West v. Goodyear Tire & Rubber Co., 167 F.3d 776, 779 (2d Cir.1999)). The court’s ability to impose sanctions for spoliation stems from its “inherent power to control the judicial process and litigation.” Id. The power “is limited to that necessary to redress conduct ‘which abuses the judicial process.’ ” Id. (quoting Chambers v. NASCO, Inc., 501 U.S. 32, 45-46, 111 S.Ct. 2123, 115 L.Ed.2d 27 (1991)).

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Cite This Page — Counsel Stack

Bluebook (online)
251 F.R.D. 191, 2008 U.S. Dist. LEXIS 52808, 2008 WL 2721264, Counsel Stack Legal Research, https://law.counselstack.com/opinion/nucor-corp-v-bell-scd-2008.