In a prior post, I wrote about a criminal trade secrets theft case in which spoliation in related civil litigation was charged as obstruction of justice. I noted that “[t]he prospect of criminal charges for spoliation in civil litigation raises the stakes for civil litigants, particularly where a parallel criminal investigation is a possibility . . . .” Last week, this scenario arose again, as it was announced that Halliburton will plead guilty to a criminal offense based on ESI spoliation that appears to have first arisen in the massive civil litigation over the Deepwater Horizon disaster.
According to the Information and Plea Agreement, following the Deepwater Horizon oil spill, Halliburton employees used a proprietary 3D modeling program to examine aspects of the drilling equipment on two occasions. On both occasions, the employees were told to delete the resulting data and reluctantly did so. Halliburton was a contractor to BP, and these events seem to have been uncovered by BP in the ensuing civil litigation when it became apparent from Halliburton emails that the 3D modeling data once existed but had not been produced. Resolution of this spoliation issue in the civil litigation is still pending. In the meantime, however, the spoliation became the basis for a criminal charge against Halliburton in the parallel criminal investigation by the Department of Justice.
In an interesting twist, however, Halliburton will not be pleading guilty to obstruction of justice, which is a felony under federal law. Instead, Halliburton will plead guilty to a misdemeanor violation of the Computer Fraud and Abuse Act (“CFAA”). That seems an odd choice, because the core of prohibited conduct under the CFAA is “unauthorized access” of someone else’s computer. But because there is no such thing as a federal obstruction-of-justice misdemeanor and the parties presumably agreed that a felony charge was not merited, the government and Halliburton apparently had to get creative. The result was a criminal charge based on a subsection of the CFAA that prohibits “knowing transmission of a program, information, code, or command, and as a result of such conduct, intentionally caus[ing] damage without authorization, to a protected computer.” In other words, a statute aimed at malicious hackers was applied to the intentional deletion of the 3D modeling results by Halliburton employees. It is unclear how deleting data on one’s own computer constitutes “damage without authorization,” but the apparent hook is that authorization was lacking because the employees were under instructions to preserve materials related to the Deepwater Horizon disaster.
It is worth noting that this is part of a much larger picture, as the plea agreement absolves Halliburton of any further criminal liability in conjunction with the Deepwater Horizon disaster. And while the fine imposed for the deletion of evidence is relatively modest – the maximum CFAA fine of $200,000 – the plea agreement acknowledges that Halliburton is also making a voluntary donation of $55 million to the National Fish and Wildlife Foundation. One can’t help but wonder how that figure was determined, and whether it would have been lower absent Halliburton’s spoliation problem.