Many employees use laptop computers issued to them by their employers. What happens when an employee is discharged and erases the computer's hard drive before returning it to the employer? That's the question that the U.S. Court of Appeals for the Ninth Circuit recently decided, and the answer was bad news for the employee.
The case is Leon v. IDX Systems, decided September 20, 2006. Here are the facts in a nutshell.
Leon, who worked for IDX in a sensitive position, complained of what he believed to be financial and reporting irregularities in a connection with a federally-funded project. IDX put Leon on unpaid leave and filed a lawsuit against him, seeking a declaratory judgment that it could fire him without violating the anti-retaliation provisions of the False Claims Act, Sarbanes-Oxley, and the Americans with Disabilities Act. Leon then filed his own action against IDX, making a variety of claims, including that IDX fired him in retaliation for complaining about the alleged financial and reporting irregularities.
After the litigations were filed, the laptop issue arose.
IDX's attorneys sent letters to Leon's attorney, requesting that Leon return the IDX-issued laptop to IDX. On May 8, 2003, Leon's attorney responded in writing by asking if Leon could keep his laptop for the duration of an audit of the SAGE project. On May 9, IDX's counsel stated that Leon could keep the laptop for the specific purpose of responding to the auditors. The April 30 and May 9 letters cautioned that Leon should take care to preserve all data; one letter specifically warned that Leon should “ensure no data on the laptop is lost or corrupted so as to avoid any possible despoliation of evidence.”
Leon, however, erased all of the data on the hard drive, ostensibly for personal reasons: to remove any traces of pornography that had been viewed on the laptop. The trial court found that Leon's action in erasing the hard drive constituted spoliation, or the destruction of evidence. Relying upon its inherent supervisory power, the court concluded that Leon's actions were in bad faith and imposed a harsh sanction: the dismissal of Leon's complaint against IDX.
The court of appeals affirmed the decision, concluding that Leon knew that he had an obligation to preserve potentially relevant evidence about the pending cases. It rejected Leon's argument that he acted only to spare himself the embarrassment of having the pornography discovered.
An interesting component of the court's decision relates to the fact that Leon was so successful in destroying the contents of the hard drive. The appeals court endorsed the trial court's view that the destroyed files would have had obvious relevance to IDX's claims or defenses in the litigations, although it could not say which files would have been relevant, nor how they might have been used.
As a result, the court imposed the ultimate sanction of dismissal of Leon's claims.
What this all adds up to is the fact that terminated employees are best advised to use their company issued laptops only in ways allowed by company policy, and to return them intact. If they do anything else, they run a significant risk in any dispute with their ex-employer.