Commercial Litigation and Arbitration

Books and Records Provision in Merger Agreement Supports Spoliation Claim

In Forsythe v. Black Hills Corp., 2008 U.S. Dist. LEXIS 10430 (N.D. Ill. Feb. 8, 2008), Sections 2.3 and 2.6 of the Merger Agreement required defendant Black Hills to provide the plaintiffs with "access for all work papers underlying . . . Earn-Out Period Financial Statements" and, in the event of an earn-out dispute, to provide "full access to the books, records, facilities, and employees" of a company known as Generation. The plaintiffs claimed that Black Hills allowed numerous e-mail back-up tapes to be destroyed before preservation periods set by an internal corporate policy had expired; destroyed other tapes whose preservation periods had expired, but destroyed them only after suit was filed; and failed to preserve computer workstations of six allegedly "key" employees of Generation. As a result, the emails did not exist even though the plaintiffs had a contractual right to access them. In this action, a common law claim, filed under Illinois law, for negligent spoliation of evidence by defendant — held, the contractual duty to provide access to information created a duty to preserve the information, and the violation of that duty sustains the spoliation claim.

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