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HCC Insurance Holdings, Inc. v. Flowers

United States District Court, N.D. Georgia, Atlanta Division

January 30, 2017

HCC INSURANCE HOLDINGS, INC., Plaintiff,
v.
VALDA FLOWERS, CREATIVE RISK UNDERWRITERS, LLC, MICHAEL REMEIKA, Defendant.

          OPINION AND ORDER

          WILLIAM S. DUFFEY, JR. UNITED STATES DISTRICT JUDGE.

         This matter is before the Court on Plaintiff HCC Insurance Holdings, Inc.'s (“HCC”) Motion for Spoliation Sanctions [85].

         I. BACKGROUND

         This case arises out of Defendants Valda Flowers' (“Flowers”) and Michael Remeika's (“Remeika”) resignation from non-party HCC Life Insurance Company (“HCC Life”) and their operation of a competing business, Creative Risk Underwriters, LLC (“CRU”) (together with Flowers and Remeika, “Defendants”). On September 16, 2015, HCC initiated this action, claiming that Flowers, at the direction of Remeika, misappropriated HCC's trade secrets to establish CRU and compete with HCC.

         A. Flowers' Activity

         1. Email Activity

         On August 11, 2015, 8, 683 emails from Flowers' HCC Life email account were moved to her H: Drive on HCC's network. (Mot. at 3).[1] 1, 384 of those emails were then deleted. (Id.). HCC claims this activity was suspicious, including because Flowers had never moved emails to her H: Drive before, her email box was nowhere near full capacity, and she deleted emails from this email box on the same day. (Mot. at 3-4). HCC's former employee, Shalla Miguez, testified that she helped Flowers move the emails after Flowers asked her to help clean up her inbox, and to show her how to create folders to save relevant emails. (Miguez Dep. [92.8] at 63:17-65:2).

         2. Hot Sheet Activity

         On August 12, 2015, Flowers copied around 500 “Hot Sheets” from HCC Life's underwriting drive to her H: Drive on HCC's network, and then to the local C: Drive of her HCC computer. (Mot. at 5). HCC claims this activity was suspicious because it was not part of her job duties to update HCC's Hot Sheets, and because, prior to August 12, 2015, Flowers only had four Hot Sheet folders located in the C: Drive of her HCC computer. (Id.). Defendants claim that updating Hot Sheets was part of Flowers' regular job duties, and note that, on the same day the Hot Sheets were moved, Flowers received an email requesting that all Hot Sheets be updated. Defendants also note that Flowers' history of working with Hot Sheets shows she often copied them to her local HCC computer. (Resp. [92] at 6-7).

         On August 20, 2015, the night before she resigned, Flowers deleted over 500 Hot Sheets from the C: Drive of her HCC computer. HCC claims this activity is suspicious because a forensic review of Flowers' past practices showed no evidence of any other mass deletions of documents. (Mot. at 5-6). Defendants note that all of the “deleted” Hot Sheets were in the recycle bin of Flowers' HCC laptop, and that HCC had the ability to retrieve the files. (Resp. at 7).

         3. Return of HCC Computer

         On Friday, August 21, 2015, Flowers emailed her resignation letter to her supervisor at HCC Life. That afternoon, HCC Life's Human Resources Manager, Tim Swoger, called Flowers three times to request that she return her HCC computer. (Mot. at 6). Flowers returned her computer around 4:15 p.m. that day, after asking Mr. Swoger whether she could keep her HCC computer over the weekend. (Id.). HCC claims this activity was suspicious, including because Flowers logged into HCC Life's networks remotely after 10 p.m. the night before she resigned, and again throughout the day of her resignation. (Id. at 6-7). Defendants contend that Flowers was attempting to access the HCC network to complete her expense report, because she had $1, 272.00 in reimbursable expenses and she had not submitted an expense report since June 2015. (Resp. at 7-8).

         B. Mr. Flowers

         Flowers' husband, Jeff Flowers, is an experienced IT professional with 35 years of experience, and he assisted CRU with IT matters. (Mot. at 7). HCC claims Mr. Flowers helped Flowers misappropriate HCC trade secrets. HCC claims Mr. Flowers “could have utilized several methods to transfer HCC's trade secrets to [Flowers'] personal devices without leaving any evidence on her HCC computer, ” including by using Gmail, using Citrix, or by imaging the hard drive of Flowers' HCC computer. (Mot. at 7).

         C. Duty to Preserve Timeline

         On August 27, 2015, Flowers received a “preservation notice” letter from HCC, requesting Flowers to retain all electronic evidence, including electronic storage devices. Mr. Flowers was aware that Flowers received the letter. (Resp. at 10-11). On September 17, 2015, Flowers received a copy of the Complaint in this action and was aware that (a) HCC was requesting Flowers turn over her personal laptop and all electronic storage devices; and (b) that all electronic data on Flowers' personal computer was required to be retained. On September 21, 2015, the Court held a hearing on HCC's request for a temporary restraining order. The same day, the Flowers were informed that the Court ordered Ms. Flowers to produce her personal computer for examination by a neutral forensic examiner (the “Neutral”). (See Mot. at 8-9).

         D. Allegedly ...


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