Huntsman International LLC v. Dow Benelux N.V.

IN THE SUPERIOR COURT OF THE STATE OF DELAWARE
HUNTSMAN INTERNATIONAL, )
LLC and HUNTSMAN HOLLAND )
B.V., ) C.A. No. N17C-11-242 MAA CCLD
)
Plaintiffs/Counterclaim )
Defendants, )
)
v. )
)
DOW BENELUX N.V. and )
THE DOW CHEMICAL COMPANY, )
)
Defendants/Counterclaim )
Plaintiffs. )
Submitted: May 23, 2024
Decided: August 13, 2024
Dow’s Motion for Sanctions for Spoliation:
GRANTED.
OPINION
Lisa C. McLaughlin, Esquire, of PHILLIPS, MCLAUGHLIN & HALL, P.A.,
Wilmington, DE, and John N. Scholnick, Esquire (Argued), of ROSS, LLP, Los
Angeles, CA, and Lori Sambol Brody, Esquire, of ELLIS GEORGE LLP, Los
Angeles, CA, Attorneys for Plaintiff/Counterclaim Defendants.
Chad S. C. Stover, Esquire (Argued), of BARNES & THORNBURG LLP,
Wilmington, DE, and Matthew B. Barr, Esquire, and Zachary Miller, Esquire, of
BARNES & THORNBURG LLP, Indianapolis, IN, Attorneys for
Defendants/Counterclaim Plaintiffs.
Adams, J.
1
Civil trials are not trials by surprise. This is especially true with complex
commercial matters, where parties (and the lawyers who represent them) spend a
significant amount of time and resources on the discovery process. Through the
discovery process, adversaries obtain information regarding documents and other
evidence for trial. By taking depositions, the parties also learn who will testify at
trial and the substance of their testimony. Thus, when the time comes for trial, the
parties generally know the universe of facts that will be presented.
This, of course, assumes that each side responds truthfully and fully to
discovery requests and does not destroy evidence relevant to the case. Central to
this case is the fact that Plaintiffs/Counterclaim Defendants, Huntsman International,
LLC and Huntsman Holland B.V. (collectively, “Huntsman” or “Plaintiffs”), never
issued a litigation hold notice regarding Defendants/Counterclaim Plaintiffs’, Dow
Benelux N.V. and The Dow Chemical Company (collectively, “Dow” or
“Defendants”), Counterclaim. To this day, Huntsman has never issued a litigation
hold relating to the Counterclaim. As a result, key databases were destroyed and
unable to be restored. To make matters worse, Huntsman hid this fact from Dow
and the Court. Dow subsequently filed a motion for sanctions for spoliation as a
2
result of Huntsman’s conduct. For the following reasons, Dow’s motion is
GRANTED.1
I. FACTUAL AND PROCEDURAL HISTORY
A. The Original Complaint
This case has a long and torturous history, dating back to November 2017.
The original dispute—and the multiple issues that have since spawned from it—arise
out of an asset purchase agreement (“APA”) between Huntsman and Dow.2 Pursuant
to the APA, Huntsman acquired assets of Dow’s global ethyleneamines and
aminoethylethanolamines business, except for Dow’s ethyleneamines
manufacturing plant in Terneuzen, Zeelandic Flanders, The Netherlands (the
“Terneuzen Plant”).3
The parties subsequently entered into an Amended and Restated Supply
Agreement on November 15, 2001 (the “Agreement”).4 Pursuant to the Agreement,
Dow would supply, and Huntsman would purchase, the ethyleneamines Dow
produced at the Terneuzen Plant.5 The Agreement provided that Huntsman has the
right each year during the term of the Agreement to purchase from Dow up to 30
1
During the hearing for the sanctions motion, the Court also heard oral arguments on Defendants’
Motion to Strike Expert Report of Christopher Norek and Portions of Expert Report of Louis
Dudney (“Motion to Strike”) concurrently with the pending motion. The Court will issue an
opinion as to the Motion to Strike in a separate decision.
2
Compl. ¶ 10. (D.I. 1).
3
Id.
4
Id. ¶ 13.
5
Id.
3
million pounds of ethyleneamines, which equaled fifty percent of the Terneuzen
Plant’s nameplate capacity for ethyleneamines.6 The Agreement requires Dow to
issue to Huntsman Holland an invoice for the product Dow delivered to Huntsman
during that quarter.7
In January 2014, a barge owned by a third party crashed into a jetty at the
Terneuzen facility.8 Although Dow used that jetty to receive raw materials for use
in activities related to the Terneuzen Plant, the barge that hit the jetty was not
engaged in an activity related to the Agreement.9 The parties vehemently dispute
what happened next, but it is undisputed that during the fourth quarter of 2014 and
the first and third quarters of 2015, Plaintiffs purchased and Dow delivered product
and sent quarterly invoices to Huntsman.10 In November 2015, Dow notified
Huntsman about the barge accident by delivering to Huntsman three separate
invoices, purporting to allocate and charge costs of the jetty repair to Huntsman.11
6
Id. The term of the Agreement is 25 years from the Effective Date, which was February 9, 2001,
unless terminated earlier in accordance with the provisions of Article 19 of the Agreement. Id.
¶ 14.
7
Id. ¶ 15.
8
Id. ¶ 17.
9
Id.
10
Id. ¶ 20.
11
Id. ¶ 21.
4
After Huntsman refused to pay for the jetty repair, Dow sent a letter to
Huntsman in November 2017 stating its intent to terminate the Agreement due to
Huntsman’s failure to pay the invoices related to the jetty.12
Huntsman filed a one-count claim for Declaratory Judgment, seeking a
declaration that Huntsman was “not liable to Dow for payment of the ‘jetty repair’
invoices because the costs of the jetty repairs are not costs recoverable under the
terms and conditions of the Agreement.”13 Dow moved to dismiss, and the Court
denied the motion on October 3, 2018.14
B. Dow’s Answer and Counterclaims
Dow answered the Complaint on May 20, 2019.15 Huntsman then moved to
amend the complaint to add claims for fraud, fraudulent concealment, breach of the
implied covenant of good faith and fair dealing, and conversion on October 25,
2019.16 The Court granted the motion on November 12, 2019 and Huntsman filed
the First Amended Complaint on November 14, 2019.17 Huntsman further sought to
recover actual and punitive damages against Dow “for the costs Dow claims it
12
Id. ¶ 24.
13
Id. ¶ 28. The First Amended Complaint contained numerous references to Dow’s alleged
fraudulent billing practices. E.g., Am. Compl. ¶¶ 4, 5, 54.
14
Memorandum Opinion, N17C-11-242 WCC CCLD, 2018 WL 4896668 (Del. Super. Oct. 3,
2018). This action was previously assigned to Judge Carpenter. The case was re-assigned to Judge
Adams on August 19, 2022 in light of Judge Carpenter’s impending retirement.
15
D.I. 54.
16
D.I. 60.
17
D.I. 66, 67.
5
incurred in repairing the jetty.”18 Dow moved to dismiss the First Amended
Complaint based on waiver, statute of limitations, and failure to state a claim, which
the Court denied on February 2, 2021.19
Dow filed its Answer and Counterclaim on February 16, 2021.20 Central to
the Counterclaim is the requirement that Huntsman forecasts product in “good
faith:”
On or prior to the close of business on the fifth business day of each
Quarter . . . Customer shall provide to Supplier a written forecast of the
amount . . . and Product Slate of Product Customer intends to have
Supplier produce and to purchase from Supplier . . . for each of the next
four Quarters . . . The forecast for the third and fourth Quarters
contained in each Product Forecast shall be a good faith estimate of the
amount of Product and Product Slate Customer intends to have Supplier
produce and to purchase from Supplier for each of such Quarters
forecasted.21
Dow asserts that rather than engaging in good faith, Huntsman “repeatedly
submitted bad-faith forecasts and then zeroed them out in later forecasts before they
became binding.”22 These changed forecasts tied up Dow’s product, and prevented
Dow from finding alternative buyers for the products Dow produced and prepared
for Huntsman based on Huntsman’s bad faith forecasting.23
18
D.I. 67, Am. Compl. ¶ 3.
19
Memorandum Opinion, N17C-11-242 WCC CCLD, 2021 WL 509668 (Del. Super. Feb. 2,
2021).
20
D.I. 105.
21
Agreement, Article 7.1(c).
22
Countercl. ¶ 1.
23
Id. ¶ 53.
6
C. Databases Used by Huntsman for Forecasting
Lauren Lozano currently serves as the Senior Manager for Planning and
Fulfillment at Huntsman.24 Between 2016 and 2020, Ms. Lozano worked as
Huntsman’s Sales and Operation Planning manager for ethyleneamines.25 In that
role, Ms. Lozano was the employee performing the analysis and making the
recommendation for the forecasts of ethyleneamines from Dow’s Terneuzen Plant.26
Ms. Lozano has been deposed twice for this case, once as the 30(b)(6) deponent
regarding the ESI at issue in this motion (“Topic 4”).27
Huntsman had a variety of tools that Ms. Lozano used to generate the firm
and estimated Product Forecasts including ESOPT, IBP-A, GMIS, HSIMS,
FuturCast,28 Wave, and C4C. The Court has compiled a detailed description of the
databases and Huntsman’s use of them based on the record as follows:
• FuturCast/GMIS/HSIMS: FuturCast is a system that holds Huntsman’s
“historical forecast data, actual sales, and projected sales” for each
24
Lozano Decl. ¶ 1.
25
Id.
26
Id.
27
Id. ¶ 26 (quoting Topic 4 as “the timing and substance of Huntsman’s efforts to preserve, identify,
and produce ESI from ESOPT, [FuturCast], and/or Wave, when those platforms were
decommissioned, and whether, when, and how forecast-related information in those platforms was
deleted or destroyed; and the documents Huntsman has produced since the January 23, 2024
hearing.”).
28
The Court notes that this program is spelled in a variety of ways throughout the pleadings,
briefing, affidavits, and exhibits. For consistency, the Court will refer to it as “FuturCast”
throughout.
7
Product for the following 12–18 months.29 GMIS was used until
February 2018 when it was decommissioned and replaced by HSIMS—
both programs are report-writing databases.30 Data from FuturCast was
loaded into GMIS, then exported and loaded into HSIMS in 2018.31
• ESOPT/IBP-A: Huntsman used ESOPT before 2018 and IBP-A after
February 2018.32 ESOPT and IBP-A are sales and operations planning
tools that permitted Ms. Lozano to see and manipulate graphical
depictions of data pushed into from GMIS/HSIMS.33 Data “pushed into
IBP-A were ‘flat files:’ (1) forecasting data from GMIS/HSIMS; (2)
production capacity for the Freeport and Aminat plants; (3) data
showing actual inventories; and (4) data showing forecast accuracy (a
comparison of actual sales against the sales team forecasts) from
GMIS/HSIMS.”34
• WAVE/C4C: Wave, a software program offered by McKinsey
Consulting to track potential sales leads, “consisted of a compilation of
notes and information about potential sales, coded depending on the
potentiality of the sale; the highest three levels were entered into
29
Lozano Decl. ¶ 3; Scholnick Decl. Ex. 28, at 26:16–27:2, 36:2–9, 37:5–12.
30
Lozano Decl. ¶ 3; Denson Decl. ¶ 2.
31
Lozano Decl. ¶ 3.
32
Barr Decl. Ex. 31.
33
Scholnick Decl. Ex. 28 at 26:16–27:2, 38:24–39:2; Lozano Decl. Ex. 1.
34
Pls.’ Opp’n at 5 (internal citations omitted); Lozano Decl. ¶¶ 2, 3.
8
GMIS/HSIMS for the sales forecast.”35 Wave was replaced by C4C
around late 2019/early 2020.36
• Demand and Supply Reviews: The Supply Reviews contain
screenshots of data from WAVE and IBP-A.37 The Supply Reviews also
contain charts from IBP-A concerning inventory and supply forecasted
in the future.38
According to Ms. Lozano, the data in the tools mentioned above “[are] just
one thing” she takes into account in forecasting, as “forecasting is more than just
looking at spreadsheets and at these tools.”39 Ms. Lozano’s “forecast
recommendations” are also based on her “experience and discussions with other
Huntsman employees concerning market conditions.”40 Ms. Lozano further
considered market conditions when making her forecasts based on “working
knowledge [she] had as part of [her] role in the company.”41
D. Meet and Confers Regarding Discovery at Issue for this Sanctions Motion
After the Court’s October 2018 decision on the original motion to dismiss, the
parties exchanged various discovery requests. Relevant to this sanctions motion, in
35
Pls.’ Opp’n at 5 (internal citations omitted); Lozano Decl. ¶ 4.
36
Pls.’ Opp’n at 5 (internal citations omitted); Lozano Decl. ¶ 4.
37
Scholnick Decl. Ex. 29, at 124:8–126:18; Ex. 17, at 3–4.
38
Id., Ex. 29, at 90:3–91:5, 124:8–126:18; Lozano Decl. ¶¶ 19–21; Exs. 2–4.
39
Lozano Decl. ¶ 5.
40
Id.
41
Scholnick Decl. Ex. 28, at 76:2–19.
9
November 2019, Dow served its Second Set of Interrogatories upon Huntsman.42
These interrogatories included Interrogatory No. 15, which requested:
Describe any and all methods You used to determine what amount of
Product to take under the Agreement and the reasoning behind such
methodologies and determinations.43
This interrogatory was not limited in time. On March 2, 2020, Huntsman refused to
respond to Interrogatory No. 15, objecting to the interrogatory as not relevant, vague,
ambiguous, overly broad, unduly burdensome, and oppressive.44 Huntsman further
objected on the grounds that the interrogatory sought “proprietary, confidential or
trade secret information,” and on attorney client privilege.45
42
D.I. 62, Barr Decl. ¶ 3.
43
Barr Decl. Ex. 1, at No. 15. Huntsman further argued at oral argument on May 23, 2024 (the
“Sanctions Hearing”) that “forecast” and “take” do not mean the same thing and that Dow’s failure
to clarify that “take” meant “forecasting” excuses Huntsman’s failure to be on notice of the claim.
The Sanctions Hearing Tr. [hereinafter “Tr.”] 54:8–55:20. Dow quickly disputed this argument
noting that Huntsman answered Interrogatory 15 “with forecasting practices and cited these
databases that we’re talking about today” indicating Huntsman “clearly interpreted it as asking for
forecasting information because that’s the information they provided in their response to the
interrogatory.” Id. at 65:5–16. The Court also noted that Interrogatory 15 was not limited as to
time, either in the request itself or in the instructions. Huntsman did not object to the time frame
in its response to the interrogatory, but limited its response in March 2023 to the 2016–2020 time
frame; implicitly deciding a time limit. Id. at 64:14–65:1.
44
Barr Decl. Ex. 1, at No. 15. In the Opposition, Huntsman stated that at the time, “the amount of
product [Huntsman] requested was irrelevant to Huntsman’s claims then at issue.” Pls.’ Opp’n at
14. This, of course, ignores the fact that Huntsman’s belief as to relevance is not the standard.
Discovery broadly allows for any non-privileged relevant material, regardless of admissibility at
trial. Del. Super. Ct. Civ. R. 26(b)(1). The Court notes that “the threshold for relevance is not
high.” Woodstock v. Wolf Creek Surgeons, P.A., 2017 WL 3727019, at *3 (Del. Super. Aug. 30,
2017). Evidence is relevant if “there is any possibility that the information sought may be relevant
to the subject matter of the action.” Boatright v. State Farm Ins. Co., 2023 WL 8234528, at *2
(Del. Super. Nov. 28, 2023) (internal citations and quotations omitted). The Court decides the
scope of discovery, including what is relevant, not the parties. See, e.g., Hiller v. Sedgwick Claims
Mgmt. Servs., Inc., 2023 WL 107389, at *2 (Del. Super. Jan. 4, 2023) (internal citations omitted).
45
Barr Decl. Ex. 1, at No. 15
10
On March 16, 2020, Dow’s counsel sent Huntsman’s counsel a discovery
deficiency letter, whereby Dow requested Huntsman withdraw its objections and
respond to Interrogatory No. 15.46 The deficiency letter stated,
Huntsman’s response to these Interrogatories [No. 14 and 15], in which
it apparently contends that its quarterly requests for product are not
related to this case, rebut Huntsman’s theory of broad overbilling.
Huntsman’s refusal to produce documents or answer questions relating
to how much product it requested (and, therefore, how much it should
have been billed) severely prejudices Dow’s defense against
Huntsman’s new claims. Please either withdraw Huntsman’s
objections to these Interrogatories or withdraw the Unbounded
Paragraphs in the First Amended Complaint, paragraphs 4–5, 53–55,
79, 81–83, 92–94, and 100–101.47
On February 19, 2021, Dow served Huntsman with its Third Set of Requests
for Production.48 This third set of requests included Request for Production No. 32
(seeking production of “[a]ll documents and communications related to Your need
and/or requirements for ethyleneamines since 2000”) and No. 33 (seeking
production of “[a]ll communications, records, forecasts, projections, and other
documents related to Your use and/or sale of the Product since 2000”). Huntsman
objected to the requests and refused to produce documents in response to these
requests.49
46
Id., Ex. 3.
47
Id.48
D.I. 106.
49
Barr Decl. Ex. 2.
11
On February 16, 2021, Dow filed its Answer and Counterclaim.50 Dow’s Fifth
Affirmative Defense specifically mentioned the “bad-faith forecasts:”
Plaintiffs’ claims are barred by their prior breach of the implied
covenant of good faith and fair dealing in the Agreement. Specifically,
Plaintiffs violated the Agreement’s specific implied obligation of good
faith by submitting bad-faith forecasts and/or by zeroing out previously
forecasted Product amounts as retribution against Dow for pursuing
payment of invoices, to gain a competitive advantage, or otherwise in
bad faith.
The very first sentence of the Counterclaim cuts right to the point: “This
Counterclaim seeks to address Huntsman’s acts of submitting bad-faith forecasts for
amounts of ethyleneamines (“Product”) that Huntsman claimed to intend to purchase
from Dow.”51
On May 14, 2021, after filing the Answer and Counterclaim, Dow’s counsel
sent another discovery deficiency letter to Huntsman’s counsel regarding
Huntsman’s responses to the Third Requests for Production and Third Set of
Interrogatories.52 Dow stated with respect to Request Nos. 32 and 33:
Huntsman’s objections are incoherent and nonsensical. Dow’s
interrogatories and RFPs request information and documents highly
relevant to Dow’s Counterclaim, Huntsman’s First Amended
Complaint, and Dow’s defenses. Huntsman’s repeated statement that
Dow’s counterclaim is “baseless” and “was asserted only to harass and
oppress Huntsman” is false. At their core, Huntsman’s objections
constitute attempts to argue the merits of Dow’s Counterclaim in
discovery responses. This is improper. Huntsman had the opportunity
50
D.I. 105.
51
Countercl. ¶ 1.
52
Barr Decl. Ex. 4.
12
to file a motion to dismiss but replied to Dow’s counterclaim instead.
Huntsman must immediately provide and produce responsive
information and documents relevant to Dow’s Counterclaim. See Del.
Super. Ct. R. 26(b)(1) (“Parties may obtain discovery regarding any
matter, not privileged, which is relevant to the subject matter involved
in the pending action, whether it relates to the claim or defense of the
party seeking discovery or to the claim or defense of any other
party[.]”).
...
Huntsman’s objections to producing documents related to its needs
for, and uses of, ethyleneamines (Request Nos. 32 and 33): Request
No. 32 seeks all documents and communications related to Huntsman’s
need and/or requirements for ethyleneamines since 2000, and Request
No. 33 seeks all documents related to Huntsman’s use/sale of
ethyleneamines since 2000. In addition to asserting form objections
addressed above, Huntsman states it will not produce responsive
documents. It objects to these requests based on relevance, stating the
documents sought by the request are irrelevant because the request
“asks for all documents concerning Huntsman’s use of and world-wide
requirements for ethyleneamines for a period of more than twenty
years, including, but not limited to, Huntsman’s own production of
ethyleneamines, its uses, its customers, and market analyses.”
Documents related to Huntsman’s requirements for and uses of
ethyleneamines are directly relevant to the allegations in Dow’s
Counterclaim—specifically, that Huntsman submitted to Dow forecasts
for amounts of ethyleneamines that were not in good faith. In order to
determine whether and how often Huntsman failed to submit forecasts
to Dow in good faith, Dow is entitled to discover, among other things,
the amount of ethyleneamines that Huntsman projected needing each
quarter, how much it used, and how much it obtained from other
sources, including itself.
Huntsman also objects that the “information requested – Huntsman’s’
[sic] worldwide customers, prices, markets, analyses – may constitute
a violation of the antitrust laws.” Yet, designating these documents as
“Highly Confidential—Attorneys’ Eyes Only” under the Protective
Order would avoid any such concerns. Indeed, that was Huntsman’s
13
position during negotiations of the Protective Order, so Huntsman’s
contradictory objection now is puzzling. Please withdraw your
objections and fully respond to Request No. 32.53
Dow further stated with respect to Interrogatory Nos. 14–15:
These interrogatories, respectively, ask Huntsman to identify and
describe any communications or documents relating to Huntsman’s
elections to take Product under the Agreement, and to describe all
methods Huntsman used to determine how much Product to take under
the Agreement and the reasoning behind such methodologies and
determinations. Huntsman objected to these interrogatories based on
relevance. Given the filing of Dow’s Counterclaim, Huntsman’s
relevance and other objections have no basis. Please withdraw your
objections and fully supplement your written answers.54
In response to Dow’s May 14, 2021 letter, Huntsman agreed to supplement its
response to Interrogatory No. 15, and expressed a willingness to produce documents
(on a narrower basis) responsive to RFP Nos. 32 and 33.55 Dow narrowed its scope
in a July 7, 2021 letter, clarifying that
it seeks documents and communications related to how much
ethyleneamines Huntsman projected it would need for all quarters from
2011 to the present and documents and communications sufficient to
show where and how Huntsman planned to source the needed
ethyleneamines. Dow, however, has not seen Huntsman’s documents
and has no knowledge of Huntsman’s internal operations. Dow thus
requests that Huntsman identify, as part of the meet-and-confer process,
the categories of documents Huntsman submits would show the
information Dow is seeking in Request Nos. 32 and 33.56
53
Id.54
Id.55
Id., Ex. 5.
56
Id., Ex. 6.
14
Huntsman responded to Dow’s July 7, 2021 letter on August 18, 2021.57
Huntsman continued to object to RFP Nos. 32 and 33 as overbroad and stated that
“it will produce forecast letters, to the extent that they are available, for the length
of the contract, and internal communications relating to forecasting product from
Terneuzen from November 2015 on . . . .58 Dow’s counsel responded to Huntsman’s
August 18 letter, explaining what Dow believed to be the relevance of the documents
sought by RFPs No. 32 and 33:
It is critical to Dow’s counterclaim to understand Huntsman’s decision
making process when forecasting Product amounts to Dow. If
Huntsman chose to forecast amounts of Product to Dow while
knowing it planned to source Product for those quarters from other
sources, those forecasts would have been made in bad faith.59
After several further meet and confers, Dow moved to compel, among other
things, Huntsman to supplement its answer to Interrogatory No. 15 on January 18,
2022.60 After a hearing on the motion to compel, the parties continued to attempt to
negotiate a resolution without further Court action.61 This attempt, however, was
short-lived, and the Court heard oral argument on January 25, 2023 regarding
57
Id., Ex. 7.
58
Id.59
Id., Ex. 8.
60
D.I. 139.
61
D.I. 153. As previously indicated, on August 19, 2022, this action was re-assigned to Judge
Adams. D.I. 157.
15
additional motions to compel.62 During the hearing, the Court, among other things,
ordered Huntsman to supplement its answer to Interrogatory No. 15 within 30 days.63
Huntsman served its supplemental responses to Dow’s Second Set of
Interrogatories on March 7, 2023.64 In doing so, Huntsman provided a high-level
description of what Huntsman employee Lauren Lozano would typically review
when preparing the forecasts of Product to Dow, including data from software
programs called “FuturCast” and “ESOPT.”65 Dow subsequently served RFP No.
78 on May 25, 2023,66 requesting Huntsman produce:
All Documents referenced in Huntsman’s Supplemental Response to
Interrogatory No. 15 that Huntsman considered, read, reviewed,
evaluated, discussed, analyzed, or relied upon in determining how
much Product to include in its Product Forecasts (including its Firm
Order Forecasts or Good Faith Forecasts) from January 1, 2015 through
2020 . . . .”67
Huntsman responded to RFP No. 78 on June 26, 2023 as follows:
Huntsman has produced responsive, non-privileged documents from
2015 through 2020 that were considered or relied upon for the purpose
of determining how much Product to include in its quarterly forecasts,
including, e.g., documents identified by Bates ranges in Exhibit B to
62
D.I. 185.
63
Barr. Decl. ¶ 16.
64
Id., Ex. 9.
65
Id. FuturCast is “a system that held historical forecast data, actual sales, and projected sales[.]”
Scholnick Decl. ¶ 18. “FuturCast data is exported into GMIS/HSIMS to generate reports.” Id.Ms. Lozano is the Huntsman employee responsible for performing the analysis for determining
the “firm” and estimated forecasts of Product from Terneuzen. Id., Ex. 28, at 20:20–21:3, 24:1–
26:8.
66
D.I. 199.
67
Barr Decl. Ex. 10.
16
Huntsman’s Supplemental Responses and Objections to Dow’s Second
Set of Interrogatories, dated March 7, 2023.68
Importantly, Huntsman did not indicate that it withheld any responsive documents.69
The Court details the timing and contents of these discovery matters to indicate
Huntsman’s knowledge of the information requested, and concurrent failure to
inform Dow of the destruction of the databases, and failure to attempt to recover the
relevant destroyed data until after the motion to compel hearing requiring disclosure.
E. The 30(b)(6) Depositions Regarding Huntsman’s Efforts to Preserve
Dow deposed Huntsman employee Lauren Lozano on September 20, 2023.70
During Ms. Lozano’s deposition, Dow learned for the first time that one of the
forecasting tools, ESOPT, was decommissioned sometime during the pandemic.71
Ms. Lozano further testified that she could not remember the exact date ESOPT
became decommissioned, did not know if there was an archive of what was in
ESOPT, and that ESOPT was not replaced with anything else.72
On October 4, 2023, counsel for Dow demanded the production of materials
that Ms. Lozano testified about concerning ESOPT, FuturCast, and Wave that
68
Id.69
Barr Decl. ¶ 20.
70
Id., Ex. 28.
71
Id. at 39:15–40:9. Ms. Lozano confirmed in her declaration that on September 14, 2021 she
informed her IT specialist that she “[c]an confirm that we are no longer using IBP-A and we do
not need the data in the system maintained for any reason.” Lozano Decl. ¶ 32; Ex. 9 (emphasis
added).
72
Barr Decl. Ex. 28, at 39:15–40:9.
17
Huntsman had not produced.73 Huntsman’s counsel never responded in writing to
this request.74 It appears from Ms. Lozano’s Declaration submitted in opposition to
the sanctions motion that sometime in October 2023—after Ms. Lozano’s
deposition—she first began her attempt “to find the underlying data inputs that
would be pushed into IBP-A which [she] reviewed in making [her] forecasting
recommendations.”75
On October 5, 2023, Dow’s counsel then requested dates for a Rule 30(b)(6)
deposition of Huntsman regarding, among other things, Huntsman’s ethyleneamines
sales and the timing and substance of Huntsman’s efforts to preserve, identify, and
produce responsive ESI.76 Dow’s request included specifically a person with
knowledge to testify about “Huntsman’s efforts to preserve, identify, and produce
ESI from ESOPT, [FuturCast], and/or Wave, when those platforms were
decommissioned, and whether, when, and how forecast-related information in those
platforms was deleted or destroyed” (“Topic No. 4”).77 Huntsman objected to Dow’s
request to produce a person with knowledge regarding ESI on the grounds that
it is premature as Huntsman is undertaking efforts to recover and/or
locate the ESI from its ESOPT, [FuturCast], and/or Wave platforms.
Deposing the multiple persons with knowledge concerning these
subjects is therefore unnecessary until Huntsman makes its
73
Barr Decl. ¶ 21; Ex. 11.
74
Barr Decl. ¶ 21.
75
Lozano Decl. ¶ 6. Ms. Lozano’s attempts to find the missing data are detailed in her declaration
at ¶¶ 7–15.
76
Barr Decl. Exs. 12, 13.
77
Id., Ex. 12.
18
determination as to whether it will be able to produce such data, at which
time the parties can determine whether a deposition on this topic is
necessary.78
On November 16, 2023, lead counsel for Dow, Matthew Barr, and lead
counsel for Huntsman, John Scholnick, met in person to discuss Huntsman’s
objection to the deposition.79 During this meet and confer, “Mr. Scholnick indicated
that Huntsman may recover and produce some materials from ESOPT, FuturCast,
and Wave, but he gave no timetable for producing them.”80 Dow’s counsel continued
to request that Huntsman produce a witness on Topic No. 4, with each time
Huntsman’s counsel refusing such requests.81 Dow subsequently moved to compel
on the issue.82
The Court heard oral argument on January 23, 2024 on Topic No. 4, along
with other issues raised by both parties.83 Among other things, the Court ordered
Huntsman to produce a witness on Topic No. 4 by March 1, 2024 and further ordered
Huntsman to produce the documents at issue in Topic No. 4 “by the end of the
week.”84
78
Id., Ex. 15.
79
Barr Decl. ¶ 28.
80
Id.81
Id. ¶¶ 29–32.
82
Id. ¶ 33; D.I. 257.
83
D.I. 276. On January 23, 2024, January 29, 2024, February 1, 2024, and February 21, 2024,
Huntsman produced data from Wave/C4C for the time period of April 13, 2016 to January 19,
2018. Scholnick Decl. ¶¶ 37–38.
84
Barr Decl. ¶ 34.
19
Huntsman produced 28 documents by the Court-ordered deadline of January
26, 2024.85 Huntsman then produced three additional documents on January 30,
2024 and 256 additional documents on February 1, 2024.86 This prompted Dow to
serve its First Amended Notice of Rule 30(b)(6) Deposition with an amended Topic
No. 4:
The timing and substance of Huntsman’s efforts to preserve, identify,
and produce responsive ESI from its computers, servers, networks, and
electronic systems and devices, including, but not limited to, the timing
and substance of Huntsman’s efforts to preserve, identify, and produce
ESI from ESOPT, [FuturCast], and/or Wave, when those platforms
were decommissioned, and whether, when, and how forecast-related
information in those platforms was deleted or destroyed; and the
documents Huntsman has produced since the January 23, 2024
hearing.87
On February 20, 2024, Dow deposed Ms. Lozano as Huntsman’s corporate
representative to testify “when [the] platforms were decommissioned, and whether,
when, and how forecast-related information in those platforms was deleted or
85
Id. ¶ 35. The documents produced were part of Huntsman’s efforts to obtain the data inputs to
IBP-A. These documents from Aminat “show[] the monthly actual and planned production
monthly from 2016 to 2019 . . . and data from Freeport that shows the monthly actual and planned
production from 2016 to 2024.” Scholnick Decl. ¶ 28. Actual inventory had been “found” by
Huntsman as of the date of Scholnick’s Declaration, on April 26, 2024, but had not been produced
and would “be produced to Dow shortly.” Id. ¶ 30. The Court is unclear on exactly when the
actual inventory was turned over, but 58 additional documents were provided on April 29, 2024,
and Scholnick represented at oral argument that all documents had been turned over as of that date,
on May 23, 2024, so the Court assumes the actual inventory was produced on the April 29, 2024
date. See Tr. 45:11–20. Further, “a spreadsheet for actual inventory generated from HSIMS which
contained information starting in 2018” was produced on approximately January 26, 2024.
Scholnick Decl. ¶ 31.
86
Barr Decl. ¶ 36.
87
Id., Ex. 19.
20
destroyed; and the documents Huntsman has produced since the January 23, 2024
hearing.”88 During Ms. Lozano’s February 20, 2024 deposition, Ms. Lozano
testified that Huntsman’s destruction of documents was far broader than previously
indicated, including the loss of data from more than just ESOPT.89
During the deposition, Ms. Lozano testified about the history of Huntsman’s
Internal Forecasting Data, and what, if anything, could still be accessed.90 Ms.
Lozano testified that Huntsman’s Internal Forecasting Data was stored in FuturCast,
among other databases.91 FuturCast then fed data into GMIS, and once GMIS was
not used anymore, the data was fed into HSIMS.92 Although FuturCast is still
accessible by Huntsman, the database automatically deletes data that is over four
years old.93 As confirmed during the Sanctions Hearing, Huntsman made no effort
88
Barr Decl. ¶¶ 39–40.
89
Barr Decl. Ex. 30, at 54:14–55:18.
90
The Court has endeavored to figure out the information from the databases that Huntsman
recovered. Suffice it to say that Huntsman admits it has not been able to recover all information
that was lost. See, e.g., id. at 55:17–18 (“We have a limited history.”); Tr. 43:12–15 (“We took a
look at it and it was a snapshot at a point in time just before the decommissioning of the IBP-A in
September of 2021. So it was not particularly helpful.”); 49:4–11 (“It can’t look at visually what
[Ms. Lozano] looked at because she looked at this tool, IBP-A, and she was able to have this
information on screen showing whatever graphical representation she needed to kind of play
around with in order to utilize her skills to make recommendations. That’s what’s – that’s the only
thing that’s missing.”).
91
Barr Decl. Ex. 30, at 54:19–55:18.
92
Id. at 24:4–17. Ms. Lozano testified she did not know what GMIS or HSIMS stood for. Id. at
24:18–22.
93
Id. at 25:11–15; 30:17–31:1. During the Sanctions Hearing, counsel for Huntsman did not rebut
Dow’s argument that the auto deletion was never stopped. Huntsman’s counsel did confirm that
as of the date of the Sanctions Hearing, there still had been no litigation hold with respect to the
Counterclaim. Tr. 34:7–11.
21
to preserve or back up data in FuturCast until 2024.94 Therefore, all data from the
relevant 2016–2020 time period has been permanently deleted from FuturCast.95
FuturCast data was also deleted from two other sources, GMIS and HSMIS.
Huntsman decommissioned and deleted GMIS in December 2021.96 There is no
FuturCast data in GMIS.97 HSMIS, although still an active database, also
automatically deletes four-year-old data.98 Thus, all data from the relevant 2016–
94
Barr Decl. Ex. 30, at 31:2–5; 36:13–39:10 (indicating that the data recovered from FuturCast
that was loaded into GMIS was first produced in March 29, 2024); 44:16–45:9 (noting that the
information produced from Wave in February 2024 was produced so late because “we didn’t start
to look for any of this, the kind of underlying raw data until we were convinced that we couldn’t
find it”).
95
Id. at 31:2–12; 54:19–55:18; id., Ex. 31 (“FuturCast – data retained for 48 months; data can be
pulled from 2/2020; data prior to that is automatically deleted”).
96
Id., Ex. 31 (“12/17/2021 – Huntsman initiates decommission of GMIS, expects completion by
12/31/2021. Not retaining any data from GMIS except parts of GMIS (PNL and customer
profitability) were saved in Planning Analytics”). Huntsman made no effort to preserve the data
in GMIS. Id., Ex. 30, at 31:2–6. Huntsman subsequently found FuturCast/GMIS raw data from
January 2015 to December 2017. Scholnick Decl. ¶ 22. On March 29, 2024, Huntsman produced
this “raw” data. Denson Decl. ¶¶ 3–9. “This raw data was contained in text files and contains
information including the date the data was loaded, forecast projections for 23 months, the
customer code, the material code, and the forecast volume. The data includes all Huntsman
products, including ethyleneamines. The data does not contain names of customers or of the
homologue; Huntsman provided a ‘key’ that matched up customer and product names with the
codes such that, if the data were pasted into Excel and a LOOKUP function used, the names of the
customers and products could be viewed. This would permit Dow to look at forecasting data 6–9
months out, as it desires.” Scholnick Decl. ¶ 22 (internal citations omitted). Huntsman’s counsel
also took steps to take this raw data and create spreadsheets and tables for Dow. Id. ¶¶ 22–25.
97
Barr. Decl. Ex. 30, at 28:16–20.
98
Id. at 29:2–30:10 (testifying that Huntsman did not suspend the auto-delete for HSIMS).
22
2020 time period has been deleted from HSMIS.99 Huntsman’s counters that its duty
to preserve “arose on February 16, 2021 when [the] counterclaim [was] filed.”100
Huntsman Internal Forecasting Data was also stored, and deleted from, the
ESOPT database.101 In 2018, Huntsman deleted ESOPT and the daily backups of its
data and migrated its data to IBP-A.102 Because Huntsman migrated ESOPT’s data
to IBP-A, in February 2019, IBP-A held forecasting data back to February 2017.103
IBP-A, however, automatically deleted two-year data.104 While Huntsman created
daily backups on its servers, IBP-A and its backups were deleted by Huntsman in
Q4, 2021.105 Ms. Lozano personally approved the deletion of IBP-A and its backup
on September 14, 2021.106 Huntsman, again, argues that its duty to preserve did not
99
Id. at 54:19–55:18; id., Ex. 31 (“HSIMS – data only goes back to 2020”). The Court notes that
on August 31, 2022, Huntsman produced 600 forecasting documents from Ms. Lozano’s files.
Scholnick Decl. ¶ 16. “These forecasting documents included Supply and Demand Reviews,
spreadsheets, and other presentation material concerning Terneuzen forecasts.” Id. Neither party
addressed these disclosures at the Sanctions Hearing.
100
Scholnick Decl. Ex. 32, at 1. Huntsman argues that “[h]ad 4-year autodelete function been
turned off, would have had data since February 2017 only, and no data prior to that date (January
2016 to January 2017).” Id. On April 19, 2024, Huntsman produced forecasted sales data from
HSIMS from 2018–2020 that shows forecasts for 23 months out. Denson Decl. ¶ 10; Lozano Decl.
¶¶ 11, 24; Tr. 41:9–13.
101
ESOPT had a two year auto delete functionality. Barr Decl. Ex. 30, at 33:6–19. Huntsman
counters that ESOPT data was deleted, arguing that “all ESOPT data was migrated into IBP-A.”
Scholnick Decl. Ex. 32, at 1. While true that ESOPT data was migrated into IBP-A, this does not
change the fact that ESOPT had a two year auto-delete functionality that was not suspended. Barr
Decl. Ex. 30, at 33:4–13. This argument also ignores the fact that IBP-A data (including data
migrated from ESOPT) was deleted in Q4 2021. Id. at 35:17–37:1
102
Barr Decl. Ex. 30, at 32:6–12, 34:15–21.
103
Id. at 35:17–36:2.
104
Id. at 34:1–36:16.
105
Id. at 36:3–16.
106
Id., Ex. 31 (“9/14/2021 – Lauren Lozano says IBP-A is no longer being used and data doesn’t
need to be maintained.”).
23
begin until February 16, 2021 when the Counterclaim was filed—notably before the
IBP-A data was deleted.107
Finally, Huntsman Internal Forecasting Data was stored in Wave. Huntsman
kept data in Wave until 2018 or 2019, and then stored it in a “C4C” database. 108
Huntsman decommissioned Wave in June 2022.109 Although some Wava data was
stored on Huntsman’s SharePoint site, called “the Hub,” Ms. Lozano could not find
any relevant data stored there.110 Nonetheless, on January 23, 29, February 1, and
21, 2024, Huntsman produced Wave data from April 2016 to January 2018.111
107
In response to the Barr Declaration that IBP-A data was deleted, Huntsman’s counsel averred
that “Huntsman has produced or will produce” certain documents. Scholnick Decl. Ex. 32, at 2.
Scholnick details these productions in several bullet points. The Court has endeavored to identify
which of these bullet points were produced when, and the best it has been able to do is identify the
following: HUNTSMAN21233 and HUNTSMAN21236 were produced on approximately January
26, 2024 (Scholnick Decl. ¶ 28); HUNTSMAN21234 was produced on approximately January 26,
2024 (Id. ¶ 31); HUNTSMAN21235 was produced on approximately January 26, 2024 (Id. ¶ 34);
HUNTSMAN22082–22189 was produced on March 29, 2024 (Id. ¶ 11); HUNTSMAN22193–
22194 were produced on April 19, 2024 (Id. ¶ 25). Several other items are listed without
identification in Exhibit 32 so the Court is unable to identify precisely when these documents were
produced, if they were produced as described by Scholnick as “will [be] produce[d]” in Exhibit
32.
108
Barr Decl. Ex. 30, at 41:9–42:7.
109
Id. at 22:6–14 (testifying that Kimberly Matthews approved the decommission of the Wave
tool); 44:19–45:14 (“If the time period passed and the Wave was no longer relevant, it would [have]
been removed.”). The parties only provided the Court with excerpts from depositions, so the Court
was unable to identify who Kimberly Matthews is based on the exhibits provided. To the extent it
matters, the Court assumes Ms. Matthews is someone with the authority to authorize the
decommission of a tool Huntsman was using. The parties did not present otherwise at any point.
110
Id. at 97:10–98:3.
111
Scholnick Decl. Ex. 32, at 4; Scholnick Decl. ¶ 37. Huntsman further argues that because the
duty to preserve did not begin until February 16, 2021, there was no obligation to preserve prior
to that time. Id., Ex. 32, at 4. Additionally, “Wave was no longer used by 2019/2020.” Id.
24
In sum, Ms. Lozano confirmed during her deposition that Huntsman was
unable to obtain documents out of ESOPT, FuturCast, GMIS, HSIMS, or Wave
related to the relevant time period.112 Ms. Lozano confirmed that the information
Huntsman obtained was a “limited history,” and instead Huntsman produced partial
information it obtained from sources other than the databases themselves. 113 Put
simply, Huntsman did not preserve relevant documents necessary for Dow to
determine whether Huntsman’s internal forecast data from 2016–2020 contradicted
Huntsman’s forecasts to Dow.114
On February 21, 2024, one day after Ms. Lozano’s deposition, Huntsman
produced an additional 97 documents.115 Huntsman represented in its production of
these documents that they were “parts of the deleted data” from Wave, but Dow
criticized that “without the ability to depose someone on these documents and get
into that level of detail, it’s really difficult to tell.”116 Some of the documents were
spreadsheets, and other documents were limited data files that would need to be run
through particular formulas to identify.117
112
Barr Decl. Ex. 30, at 54:19–55:2.
113
Id. at 55:3–19.
114
Id. at 79:25–81:5. Huntsman likewise did not preserve the product forecasts that Ms. Lozano
manually input into the ESOPT and IBP-A systems. Id. at 93:4–23. Huntsman then used the
manual inputs to create “scenario plan[s]” from a sales and production perspective. Id., Ex. 28, at
67:9–68:10.
115
Barr Decl. ¶ 40.
116
Tr. 20:7–14; 48:1–12.
117
Id. at 20:15–21:12.
25
On February 27, 2024, Dow deposed Huntsman’s General Counsel, David
Stryker, as Huntsman’s corporate representative to testify about Huntsman’s efforts
to preserve, identify, and produce responsive ESI.118 Mr. Stryker testified that the
only litigation hold notices Huntsman sent out were litigation hold notices for its
own affirmative claims.119
Huntsman never sent out a litigation hold after Dow filed its Counterclaim.
In fact, Huntsman has never sent out a litigation hold regarding Dow’s
Counterclaim.120 Mr. Stryker testified:
When the counterclaim came in, we did not look at the counterclaim
and ask whether additional custodians [were] required to be identified
or additional documents [were] required to be preserved. Had we done
that, I wouldn’t be sitting here today.121
118
Barr Decl. ¶¶ 39–41; id., Ex. 21.
119
Id., Exs. 33, 34, and 32, at 35:14–17. Both hold notices provided a “Description of Matter”
that only described Huntsman’s claim for reimbursement of repair costs for the jetty accident at
the Terneuzen plant. Id., Ex. 33, at 1; Ex. 34, at 1. Mr. Stryker further testified that custodians
who received the two litigation hold notices were required to “acknowledge” it by answering a
questionnaire at a link in the notice. Id., Ex. 33, at 2–3; Ex. 34, at 3; Ex. 32, at 29:21–31:16.
Huntsman’s attorneys were required to follow up with custodians who did not fill out the
acknowledgement questionnaire to ensure it was completed. Id., Ex. 32, at 49:2–51:22. Several
of the litigation holds, however, were never acknowledged by their custodian; therefore, the
custodian likely did not preserve all relevant documents they may have had. Id. at 55:17–23.
Huntsman avers, however, that certain of the custodians did produce relevant documents even
though they did not formally acknowledge the litigation hold letter. Scholnick Decl. ¶ 2.
120
Tr. 34:9–11.
121
Barr Decl. Ex. 32, at 92:4–9.
26
Mr. Stryker agreed that a litigation hold should have been sent out for the
Counterclaim “[b]ecause the counterclaim was unrelated in material respects to the
original claim[.]”122
Mr. Stryker confirmed Huntsman had a process for preserving internal
databases, including those that had an auto-delete function.123 Although not every
database had the ability to over-ride an auto-delete function, Huntsman had the
ability to pull the data from the database manually.124 For example, if a discovery
request came in, Mr. Stryker could ask an employee “to pull a bunch of records” to
make sure that the data is “preserved, pulled, culled, collected, or otherwise
aggregated.”125 Mr. Stryker confirmed Huntsman failed to send out litigation hold
notices out for Forecasting Data in FuturCast, ESOPT, and Wave.126
Following Mr. Stryker’s deposition, Dow sent a letter to Huntsman’s counsel
requesting additional documents related to Huntsman’s efforts to preserve, identity,
and produce responsive ESI.127 The parties exchanged meet and confer letters on
the issue, and Huntsman refused to produce the documents referenced in Mr.
122
Id. at 35:18–36:24. (“[T]he folks responsible for [sending out the litigation hold] made a
mistake and didn’t have one sent out.”).
123
According to Huntsman’s Opposition, the ESI at issue was deleted as part of Huntsman’s regular
decommission process, and not as part of an intentional act to destroy relevant ESI. Pls.’ Opp’n at
9–11.
124
Barr Decl. Ex. 32, at 122:15–123:18.
125
Id.
126
Id. at 145:18–23. “[W]e didn’t get hold notices out for these particular tools, which as I said
and I’ll stand up in court and say it was a mistake for which I am sorry.”
127
Barr Decl. ¶ 41; id., Ex. 21.
27
Stryker’s deposition related to Huntsman’s efforts to preserve, identify, and produce
responsive ESI.128 Huntsman subsequently backtracked on this refusal and sent an
email to Dow’s counsel on March 27, 2024 stating that it “intend[ed] to produce
additional documents/data from TotalDiscovery . . . pursuant to the limited waiver
of the attorney client privilege and work product doctrine. We will produce these
documents as soon as possible.”129 As of Barr’s Declaration on March 28, 2024,
Dow had not received these additional documents.130 The parties agree there were
at least three more dates of production from Huntsman since March 28, 2024, but
neither party identified in briefing or at the Sanctions Hearing whether these
particular documents were ever produced on any of those dates.
F. Huntsman’s Efforts to Produce Relevant ESI after 30(b)(6) Depositions
According to Huntsman, after Huntsman “learn[ed] of the decommissioned
ESI, Huntsman undertook extensive efforts to recreate the underlying documents
and/or resurrect the decommissioned systems so the data could be produced to
Dow.”131 Huntsman’s efforts for each of the databases was described as follows:
• IBP-A: “[S]ince a snapshot of data had been archived, albeit unreadable
without the software, Huntsman obtained from Oliver Wight a renewal
128
Barr Decl. ¶ 42; id., Ex. 22.
129
Barr Decl. ¶ 42; id., Exs. 21, 22. TotalDiscovery is the software system Huntsman uses to
automate its litigation hold process. Id., Ex. 32, at 34:20–25.
130
Barr. Decl. ¶ 42.
131
Pls.’ Opp’n at 11.
28
of the IBP-A license, which allowed Huntsman to view but not
download the archived data.”132 Huntsman found the following inputs
that were uploaded into IBP-A and used for forecasting:
o GMIS/HSIMS forecasted sales data from 2016 to 2020;
o Freeport and Aminat actual and forecasted production from 2016
to 2020;
o Product inventory data;
o Forecast accuracy data from HSIMS from 2018 to 2020, along
with a formula for calculating forecast accuracy; and
o Supply Reviews from June 2018 to December 2020.133
o Lozano’s manual line item inserts into IBP-A concerning
Terneuzen were not recovered.134
• WAVE: “Huntsman’s investigation could not find backup WAVE data,
although other WAVE/C4C data was found in the files of Huntsman
employees and produced to Dow.135
• Extracts from WAVE that were found consisted of “a complete set of
WAVE initiatives from April 13, 2016 to January 19, 2018.”136
132
Id. at 11–12.
133
Id. at 12.
134
Id.
135
Id. at 13.
136
Id.
29
Huntsman further argues that Huntsman produced “internal emails concerning
the forecasting process,” including “[m]ore than 600 forecasting
documents . . . from Lozano’s files.”137
Dow provided a helpful chart regarding a timeline of Huntsman’s deletion of
internal forecasting data:138
137
Id. at 16.
138
Defs.’ Br. at 25. The Court notes Huntsman’s disagreement with the characterization of the
deletion of all the data from these data sources and considers the entire record for what precisely
was deleted and when. See, e.g., Tr. 35:13–22. This chart is a helpful illustration, not the entirety
of the Court’s considerations.
30
II. PROCEDURAL HISTORY
On March 28, 2024, Dow filed its Motion for Sanctions.139 Huntsman filed
its Answering Brief in Opposition to the Motion for Sanctions on April 26, 2024.140
In support of its Answering Brief, Huntsman filed six declarations from Huntsman
employees: Lauren Lozano, Allison McCurdy, Noah Denson, Twila Day, Peter Van
139
D.I. 308.
140
D.I. 317.
31
Rinsum, and Shawn Bates.141 Prior to filing the Opposition, Huntsman never
mentioned Allison McCurdy or Twila Day as potential custodians or individuals with
relevant information.142 Dow filed its Reply in Support of its Motion for Sanctions
and Spoliation on May 10, 2024.143 The Court heard oral argument on May 23, 2024
and took the matter under advisement.
III. STANDARD OF REVIEW
Delaware Superior Court Rule of Civil Procedure 37(b)(2)(F) governs the
Court’s analysis on a motion for sanctions arising from spoliation of electronically
stored information. Rule 37(b)(2)(F) states:144
Rule 37. Failure to preserve ESI. If ESI that should have been
preserved in the reasonable anticipation of or actual notice of imminent
litigation is lost because a party failed to take reasonable steps to
preserve it, and it cannot be restored or replaced through additional
discovery, the court:
(1) upon finding prejudice to another party from loss of
information, may order measures no greater than necessary to
cure the prejudice; or
(2) only upon finding that the party acted recklessly or with the
intent to deprive another party of the information’s use in
141
D.I. 317.
142
Defs.’ Reply at 4.
143
D.I. 331.
144
Superior Court Civil Rule 37(b)(2)(F), Court of Chancery Rule 37(e), and Federal Rules of
Civil Procedure Rule 37(e) are all substantially similar. The Court notes that the Chancery Rule
37(e) does not include part (B) of 37(e)(2); this is because there are no jury trials in the Court of
Chancery. Thus, all applicable provisions are the same between the Court of Chancery and the
Superior Court. It is therefore appropriate for the Court to consider decisions from the Superior
Court, the Court of Chancery, and all Federal Courts for its analysis. See Goldstein v. Denner, 310
A.3d 548, 568 (Del. Ch. 2024).
32
litigation, may, among other things: (A) presume that the lost
information was unfavorable to the party; (B) instruct the jury
that it may or must presume the information was unfavorable to
the party; or (C) dismiss the action or enter a default judgment.
In lieu of any of the foregoing orders or in addition thereto, the Court
shall require the party failing to obey the order or the attorney advising
that party or both to pay the reasonable expenses, including attorney’s
fees, caused by the failure, unless the Court finds that the failure was
substantially justified or that other circumstances make an award of
expenses unjust.
Earlier this year, in Goldstein v. Denner,145 Vice Chancellor Laster adopted
the federal courts’ “step-by-step framework for analyzing spoliation issues[.]”146
These steps are: (1) “whether the ESI ‘should have been preserved;’” “whether the
ESI ‘is lost’ and ‘cannot be restored or replaced through additional discovery;” (3)
“whether the ESI was lost ‘because a party failed to take reasonable steps to preserve
it;’” and (4) determining the appropriate sanction.147 Given the similarities between
Superior Court Civil Rule 37(b)(2)(F), Court of Chancery Rule 37(e), and Federal
Rules of Civil Procedure Rule 37(e), this Court will also adopt that approach. The
Court addresses each of these elements in turn.
145
310 A.3d 548 (Del. Ch. 2024).
146
Id. at 571 (internal citations omitted).
147
See generally id.
33
IV. ANALYSIS
A. The ESI from the Internal Forecasting Databases “Should Have Been
Preserved.”
The first question is whether ESI “should have been preserved.”148 The
Supreme Court of Delaware has held that “[a] party in litigation has an affirmative
duty to preserve potentially relevant evidence.”149 The duty to preserve begins as
“as soon as the party either actually anticipates litigation or reasonably should have
anticipated litigation.”150 Whether a party “reasonably should have anticipated
litigation” is an objective standard: it must be viewed from the perspective of the
party in control of the evidence.151
Importantly, litigation need not be actually filed for a party to “reasonably
anticipate” litigation. “The reasonably foreseeable standard turns on the prospect of
litigation, not the specific case or claims that ended up being filed.” 152 The duty to
preserve includes evidence a party “knows, or reasonably should know, is relevant
in the action, is reasonably calculated to lead to the discovery of admissible evidence,
is reasonably likely to be requested during discovery and/or is the subject of a
148
Del. Super. Ct. Civ. R. 37(b)(2)(F); Goldstein, 301 A.3d at 571–72.
149
Shawe v. Elting, 157 A.3d 142, 150 (Del. 2017).
150
Goldstein, 310 A.3d at 571 (internal citations omitted).
151
Id. (internal citations omitted). See also Donald J. Wolfe, Jr. & Michael A. Pittenger, Corporate
and Commercial Practice in the Delaware Court of Chancery Second Edition § 6.06[b], at 6-30–
6-31 (2022) (“In light of this foreseeable risk [of needing to collect, review, and produce ESI],
entities that might be parties to Delaware litigation can avoid significant disruption and expense
by enacting data retention policies that will foster (relatively) inexpensive retrieval.”) (internal
citations omitted).
152
Goldstein, 310 A.3d at 572 (emphasis added).
34
pending discovery request.”153 Once the duty to preserve evidence attaches, “the
party ‘must not destroy unique, relevant evidence that might be useful to an
adversary.’”154
Huntsman had an affirmative duty to preserve relevant evidence regarding its
internal forecasting data on November 4, 2019, when Dow served its Interrogatory
requesting Huntsman describe “all methods [it] used to determine what amount of
Product to take under the Agreement and the reasoning behind such methodologies
and determinations.”155 Even looking at this through an objective lens—that of
Huntsman’s—Huntsman reasonably should have anticipated litigation regarding its
internal forecasting data once it was served with Interrogatory No. 15.
Huntsman argues it was not under an obligation to preserve the ESI regarding
internal forecasting until after Dow filed its Counterclaim on February 16, 2021
because “Huntsman did not know, and had no reason to believe, that its product
forecasting might be relevant until Dow filed its Counterclaim.”156 This ignores the
fact that the filing of litigation is just one—of many—ways that triggers a party’s
153
In re Shawe & Elting LLC, 2016 WL 3951339, at *16 (Del. Ch. July 20, 2016) (internal citations
and quotations omitted). See also Wolfe & Pittenger, supra note 151, §6.06[b], at 6-30 (”In
whatever way persons or entities address the aggregation, retention, and destruction of ESI in the
ordinary course, they bear a duty to preserve potentially relevant ESI once they are subject to
litigation or reasonably anticipate litigation.”) (internal citations omitted).
154
Goldstein, 310 A.3d at 572 (quoting Zubulake v. UBS Warburg LLC, 220 F.R.D. 212, 217
(S.D.N.Y. 2003)).
155
See Barr Decl. ¶ 3; id., Ex. 1.
156
Pls.’ Opp’n at 18.
35
duty to preserve. A discovery request for product forecasting—no matter if
Huntsman believed it was relevant at the time—triggered Huntsman’s duty to
preserve.
The Court also notes Huntsman’s robust in-house litigation hold process,
which it used for its own claims, but failed to use for Dow’s. Huntsman uses an
application called “TotalDiscovery” for its litigation hold process which “include[es]
automating distribution of legal holds, reminders, and acknowledgements.”157 The
litigation holds “are sent to persons identified by the in-house litigation team, IT
Compliance (responsible for preserving Microsoft applications as well as other ESI),
records management, and site records coordinators.”158
Huntsman issued two litigation hold notices, on July 11, 2017 (before
Huntsman filed this action on November 22, 2017) to seven custodians, and on
December 6, 2017 to an additional ten custodians.159 The fact that Huntsman issued
a litigation hold notice prior to its own lawsuit belies any argument that Huntsman
makes that it was not on notice of a potential claim regarding the internal forecasting
data until Dow filed its Counterclaim.160
157
Id. at 6.
158
Id.
159
Id. at 6–7.
160
It is unclear to the Court what role, if any, Delaware counsel had in the preservation process.
“At minimum, parties to Delaware litigation and their counsel are required to develop and oversee
a preservation process.” Wolfe & Pittenger, supra note 151, §6.06[b], at 6-32 (citing Guidelines
to Help Lawyers Practice in the Court of Chancery, available at
https://courts.delaware.gov/forms/download.aspx?id=99468 (last visited August 5, 2024)
36
Dow filed its Answer and Counterclaim on February 16, 2021. Despite the
fact that Huntsman’s internal processes “call for its litigation department to assess
whether the counterclaim or cross-complaint” would require an additional litigation
hold,161 one was never issued for Dow’s Counterclaim.
B. The ESI is Largely Lost and Huntsman’s Delayed Attempt to Recreate it
does not Amount to it Being “Replaced.”
The second issue is whether ESI is “lost” and “cannot be restored or replaced
through additional discovery.”162 “Information is lost for purposes of Rule
37[(b)(2)(F)] only if it is irretrievable from another source, including other
custodians.”163
The Court finds the ESI regarding the Internal Forecasting Data is lost. Based
on the record evidence for the Sanctions Motion, Huntsman knew as of June 2023
that it had destroyed internal forecasting data, but did nothing to attempt to recover
it.164 Instead, Huntsman sat on its hands for months—until the motion to compel
hearing in January 2024—before it attempted to try to recover or recreate data from
other locations.165
[hereinafter “Chancery Guidelines”], at 20). If Delaware counsel had been more involved with
the preservation process, it is likely this entire motion could have been avoided.
161
Pls.’ Opp’n at 8.
162
Del. Super. Ct. Civ. R. 37(b)(2)(F).
163
Goldstein, 310 A.3d at 574.
164
Scholnick Decl. ¶ 11 (“Huntsman responded that it produced all documents. What Huntsman
meant was that it had produced all documents in its possession, custody, or control.”).
165
See Barr Decl. ¶¶ 20–42 for a detailed outline of the meet-and-confer process between the
parties leading to the Motion to Compel heard on January 23, 2024.
37
Huntsman argues because it was able to recover some of the data from other
locations (notably after the deadline for production), the ESI is not “lost.”166 This
ignores the fact that it is impossible for anyone, including Huntsman, Dow, or the
Court, to know exactly what information is still missing.167 Also, critically,
Huntsman concedes that Ms. Lozano’s manual input of expected future purchases of
Product from Dow in IBP-A is missing and lost.168 This alone satisfies the “lost”
element for spoliation.169 Without Ms. Lozano’s manual input (along with the other
missing ESI), it is impossible for Dow to compare projections of purchases from
Dow to the forecasts Dow received from Huntsman.
During the Sanctions Hearing, Huntsman’s counsel offered additional
depositions, at its expense, as a means of replacing the lost information.170
Deposition testimony, however, is not a sufficient substitute in this action. Ms.
166
See generally Pls.’ Opp’n at 20–26.
167
See TR Invs., LLC v. Genger, 2009 WL 4696062, at *16 (Del. Ch. Dec. 9, 2009) (“‘[N]o harm,
no foul’ is not a cognizable defense to a contempt allegation.”); Paisley Park Enters., Inc. v. Boxill,
330 F.R.D. 226, 235 (D. Minn. 2019) (“While it is true that Plaintiffs have obtained text messages
that Boxill and other parties sent to or received from Staley and Wilson, that does not mean that
all responsive text messages have been recovered or that a complete record of those conversations
is available.”); Deerpoint Grp., Inc. v. Agrigenix, LLC, 2022 WL 16551632, at *12 (E.D. Cal. Oct.
31, 2022) (“It is impossible to know now what ESI was available, but which is now no longer
available.”). Even counsel for Huntsman is not positive that it has produced all of the data it found:
“Huntsman believes that it has found almost all of the data that would have provided inputs into
IBP-A and that was used for forecasting.” Scholnick Decl. ¶ 19 (emphasis added). See also Van
Rinsum Decl. ¶ 3 (“I believe that these extracts [from WAVE] contain a complete set of sales
upsides from April 13, 2016 to January 19, 2018.” ) (emphasis added).
168
Pls.’ Opp’n at 12.
169
See Jonathan R. v. Justice, 2024 WL 1339522, at *6 (S.D. W. Va. Mar. 28, 2024) (holding that
defendants conceded “that some ESI was lost, satisfying this element.”).
170
Tr. 40:10–41:8.
38
Lozano has already been deposed twice in this action, where she testified that
without Huntsman Internal Forecasting Data, she could not “fairly forecast
Huntsman’s intent to take product from Dow.”171 Thus, any further deposition of
Ms. Lozano (or anyone else) could not remedy the lost data. Huntsman does not
have all of the information it once did, and critically, Huntsman does not have all the
data Ms. Lozano had when completing her forecasting on Huntsman’s behalf. When
custodians cannot recall the details of information from ESI, depositions do not
remedy the loss of evidence.172
C. The ESI Was Lost Because Huntsman Failed to Take Reasonable Steps
to Preserve It.
The next question is whether the ESI was lost “because a party failed to take
reasonable steps to preserve it.”173 “When a duty to preserve evidence arises, a party
must act reasonably to preserve the information that it knows, or reasonably should
know, could be relevant to the litigation, including what an opposing party is likely
to request.”174 Because ESI is “inherently more susceptible to loss or alternation,”
it is especially important to take the appropriate steps to preserve this information.175
171
Barr Decl. Ex. 28, at 87:22–25.
172
Goldstein, 310 A.3d at 575.
173
Del. Super. Ct. Civ. R. 37(b)(2)(F).
174
Goldstein, 310 A.3d at 576.
175
Wolfe & Pittenger, supra note 151, § 6.06[b], at 6-31, citing Chancery Guidelines at 20, and
Beard Rsch. Inc. v. Kates, 981 A.2d 1175, 1187 (Del. Ch. 2009) (“It is also well known that absent
affirmative steps to preserve it, at least some electronically stored information . . . is likely to be
lost during the course of litigation through routine business practices or otherwise.”).
39
An important piece of preserving ESI is the issuance of a litigation hold to
preserve relevant documents once a party reasonably anticipates litigation. Once an
organization issues a litigation hold, it must also “take steps to ensure that the
recipients of the hold understand what it means and abide by it.”176 “The
organization also must suspend or modify routine document retention or document
destruction policies so that evidence is not lost.”177
There is no dispute Huntsman did not take reasonable steps to preserve the
Internal Forecasting Data in this litigation. According to Huntsman, “[t]his was the
result of inadvertence and oversight by Huntsman.”178 In a rare mea culpa,
Huntsman’s General Counsel, David Stryker, admitted: “My guys made a mistake
and they’re paying a price for it.”179 More striking to the Court, however, is the fact
that despite Huntsman’s acknowledgement that it made a “mistake” in not issuing a
litigation hold notice regarding the Counterclaims, Huntsman to this day has still
failed to issue a litigation hold notice. That means that information continues to be
lost and/or destroyed, and Huntsman is doing nothing about it.180
176
Goldstein, 310 A.3d at 577 (internal citations omitted).
177
Id. (internal citations omitted).
178
Pls.’ Opp’n at 9.
179
Scholnick Decl. Ex. 31, at 96:13–14. Similarly, Huntsman’s lawyer stated at the Sanctions
Hearing: “Huntsman failed to issue a litigation hold following its receipt of the counterclaim. It’s
regrettable. I apologize to the Court and to Dow for that lapse. This has made our case way more
difficult than it should have been had we issued the hold because we wouldn’t have been – we
would not be in this situation today.” Tr. 33:17–34:2.
180
See Zubulake, 220 F.R.D. at 218 (A party generally “must suspend its routine document
retention/destruction policy and put in place a ‘litigation hold’ to ensure the preservation of
40
Also troubling to the Court is that Huntsman knew that the Internal
Forecasting Data had been deleted in June 2023, but did not inform Dow.181 In a
carefully worded affidavit from Huntsman’s counsel submitted in connection with
Huntsman’s Opposition, Huntsman’s counsel averred:
On or around May 25, 2023, Dow served a Sixth Set of Requests for
Production, including Request No. 78, which asked for all documents
referenced in Huntsman’s responses to Interrogatory No. 15. On June
26, 2023, Huntsman responded that it produced all documents. What
Huntsman meant was that it had produced all documents in its
possession, custody, or control.182
relevant documents.”); In re Skanska USA Civil Southeast Inc., 340 F.R.D 180, 185 (N.D. Fl. 2021)
(“This is a text book case of spoliation . . . Despite anticipating litigation, despite issuing a written
litigation hold on October 14, 2020, despite Claimants filing their first suit in November 2020, and
despite receiving discovery requests in April 2021, Skanska failed to suspend its normal document
destruction procedures, failed to collect cell phone data from key custodians, failed to ensure its
employees understood the litigation hold, and failed to take any steps to prevent the destruction of
cell phone data.”).
181
Tr. 13:5–11. On June 26, 2023, Huntsman served its responses to Dow’s Sixth Set of Requests
for Production wherein Huntsman stated it had “produced responsive, non-privileged documents
from 2015 through 2020 that were considered or relied upon for the purpose of determining how
much Product to include in its quarterly forecasts[.]” Barr Decl. ¶ 20. Huntsman in that response
did not indicate that it had withheld any responsive documents. As late as November 7, 2023,
Huntsman indicated to Dow that Huntsman was “undertaking efforts to recover and/or locate the
ESI from its ESOPT, [FuturCast], and/or Wave platforms.” Id. ¶ 27; id., Ex. 15. While it is not
specifically admitted by any Huntsman representative, Mr. Scholnick’s strategically worded
qualification of Huntsman’s responses to Interrogatory No. 15 that Huntsman “meant” to say “it
had produced all documents in its possession, custody, or control” indicates to the Court that at
that point Huntsman was at the very least aware that it did not have the requested documents in its
“possession, custody, or control,” but failed to indicate that fact to either Dow or the Court. See
Scholnick Decl. ¶ 11. Mr. Scholnick did detail the efforts to find and retrieve the information
requested by Interrogatory 15, but he notably failed to indicate the dates in which these efforts
began, only noting that the IBP-A license was renewed “in or around November 2023.” See id. ¶¶
17–19, 21, 26, 27. Ms. Lozano was directed in October of 2023 to find “underlying data”
demonstrating that Huntsman first sought Ms. Lozano’s help in retrieving the documents in
October 2023. See Lozano Decl. ¶¶ 6, 27. Ms. Lozano continued searching for documents and
underlying data at least as late as March 2024. Id. ¶¶ 12, 14, 15, 29, 30.
182
Scholnick Decl. ¶ 11.
41
As such, it appears to the Court that Huntsman deliberately withheld this
information in an attempt to either hide the information from Dow completely (and
hope they would not find out), or put off Dow’s discovery of the lost data. Only
after Dow moved to compel, and after the Court granted the Dow’s motion to compel
in January 2024 did Huntsman meaningfully attempt to recover or re-create the
databases and begin dripping out documents. Such lack of candor to opposing
counsel and the Court is troubling.
D. Determining the Appropriate Sanction
The final issue is the determination of the appropriate sanction. Superior
Court Civil Rule 37(b)(2)(F) governs the Court’s analysis.183
1. Dow Has Suffered Prejudice.
The Court finds that Dow has suffered prejudice as a result of Huntsman’s
actions. Unavoidable is the initial fact that once Huntsman learned it had destroyed,
deleted, or otherwise lost documents relevant to Interrogatory 15, it failed to disclose
this to Dow or the Court until months later. The Court deduces from the record
available that by June of 2023 at least, if not months before, Huntsman was aware
of the missing documents.184 Huntsman not only hid the fact that it lost data files,
183
BDO USA, LLC v. EverGlade Glob., Inc., 2023 WL 1371097, at *13–14 (Del. Super. Jan. 31,
2023).
184
See supra note 181 detailing the Court’s interpretation of when Huntsman first knew the
materials were lost.
42
but, once some of those files were recovered, delayed in producing the information
over the course of several months, as late as April of 2024 when the parties are set
to go to trial in September of 2024. Not only is this clearly delayed in anticipation
of trial and after the agreed-to document discovery deadline, but it was after the
Court ordered Huntsman to disclose the relevant documents within a week of the
January 2024 motion to compel hearing.185 Even at the Sanctions Hearing, counsel
for Huntsman could not definitively say that all the documents or data that can be
found, has been found.186
No matter how apologetic Huntsman’s counsel may be, there is still no
litigation hold notice issued—something the Court can only read as a continued
disregard for the harm this has and continues to cause to Dow. Even if Huntsman is
convinced it has recovered and disclosed all it can, Huntsman is aware of auto-delete
functions on its applications, and has a responsibility to issue a litigation hold and to
stop the auto-delete, even if it were to produce no additional documents.
Huntsman instead offers to pay for additional depositions to explain the data
they have produced, but as case law, and the record indicates, even if the majority of
the information has been recovered and can be detailed by a deponent, Dow has no
way of knowing how much is still missing, and if that missing information is key to
185
See supra Section II. E.
186
Tr. 45:15–23 (“I’m under a total obligation to supplement the discovery responses if and when
I ever find any more.”) (emphasis added).
43
the Counterclaim. There is simply no way to cure the loss of information, especially
when the company that lost the information is not even sure of the substance of what
is still unrecovered.
Huntsman’s actions, omissions and delays have resulted in Dow’s inability to
prepare for trial in less than a month from the date of this decision. As noted by Dow
in the Sanctions Hearing: “[W]hat about Dow? What about the fact that Dow got
the runaround for years on this information? What about the fact that Dow had to
move to compel over and over to get to the bottom of this?”187 The Court cannot
ignore that Dow has suffered not only the time and costs of litigating the issue of
spoilation, but the ability to sufficiently prepare its Counterclaim in advance of trial.
2. Huntsman Acted Recklessly When It Destroyed the Internal
Forecasting Data.
“As a predicate to a sanction of default judgment, Rule 37(b) requires that the
court make a finding concerning the offending party’s state of mind.”188 Default
judgment is “the ultimate sanction for discovery violations and should be used
sparingly.”189 Thus, if lesser sanctions would achieve the same result, default
judgment is inappropriate.190 Such lesser sanctions include the presumption “that
187
Tr. 66:7–15.
188
BDO USA, 2023 WL 1371097, at *14.
189
Lehman Cap. v. Lofland, 906 A.2d 122, 131 (Del. 2006) (internal quotations omitted).
190
Beard Rsch., 981 A.2d at 1190 (internal citations omitted).
44
the lost information was unfavorable to the party,” or a jury instruction that “the
jury . . . may or must presume the information was unfavorable to the party[.]”191
Here, the Court finds that the line between whether Huntsman’s conduct was
intentional or reckless is very difficult to draw. On the one hand, Huntsman
intentionally destroyed Internal Forecasting data relevant to this dispute. 192 Most
egregiously, Ms. Lozano specifically directed data from IBP-A to be destroyed
because it was no longer in use. On the other hand, it does not appear to the Court
that Huntsman destroyed the Internal Forecasting data in order to limit the
information Dow would have in this litigation.193
The Court does find that Huntsman’s conduct was reckless. The Delaware
Pattern Jury Instructions for Civil Practice provides that “[r]eckless conduct reflects
a knowing disregard of a substantial and unjustifiable risk. It amounts to an ‘I don’t
care’ attitude.”194 Recklessness also involves a “conscious indifference of others,”
and requires: “(1) an act; and (2) the foreseeability of harm resulting from the act
191
Del. Super. Ct. Civ. R. 37(b)(2)(F)(2).
192
See Urb. Concepts LLC v. Gruber, 2023 WL 4423978, at *4 (Del. Super. July 7, 2023)
(“Intentional conduct means conduct that a person undertook with a knowing desire or with a
conscious objective or purpose.”) (internal quotations omitted); State ex rel. Jennings v. Concrete
Tech. Resurfacing & Design, Inc., 2022 WL 6609883, at *7 (Del. Super. Oct. 10, 2022)
(“Intentional destruction means the spoliator acted ‘with purpose.’”) (internal citations omitted).
193
See TR Invs., 2009 WL 4696062, at *17 (“[T]o obtain an adverse inference, the aggrieved party
must make some showing that the allegedly destroyed evidence existed and supported the
aggrieved party’s position.”).
194
Del. P.J.I. Civ. § 5.9.
45
that the actor perceived or should have perceived.”195 Therefore, “drawing an
adverse inference is appropriate when an actor is under a duty to preserve evidence
and takes part in the destruction of evidence while being consciously aware of a risk
that he or she will cause or allow evidence to be spoiled by action or inaction and
that risk would be deemed substantial and unjustifiable by a reasonable person.”196
Huntsman is a highly sophisticated company with a detailed process in place
for litigation holds. Huntsman had a process for issuing a litigation hold which
included a required “acknowledgement” of the hold via a questionnaire, and
requirements on Huntsman’s lawyers to follow up on those who failed to complete
the questionnaire. Huntsman additionally had processes to manage its internal
databases and preserve information, even for databases with an auto-delete
function.197 Dow relied on Huntsman’s sophistication “contrasted with its lack of
effort to preserve Huntsman Internal Forecasting Data” as evidence of intent.198
Huntsman’s own General Counsel, David Stryker, indicated that Huntsman has “lots
of lawsuits and [has] lots of legal holds.”199 Huntsman detailed in its own briefing
195
Urb. Concepts, 2023 WL 4423978, at *4 (internal quotations omitted).
196
Beard Rsch., 981 A.2d at 1192.
197
See Defs.’ Br. at 16–17 (internal citations omitted).
198
Id. at 25. See also Tr. 27:12–19 (“We also think you should take into account that Huntsman’s
a large, sophisticated corporation. It’s a legal department that’s been involved in many, many
litigations. It has robust practices, but it didn’t follow them here for reasons that no one seems to
be able to explain. We think that makes the fact that they never sent a hold notice even more
egregious.”).
199
Barr. Decl. Ex. 32, at 105:21–24.
46
in opposition that its in-house litigation team, IT Compliance, is “responsible for
preserving Microsoft applications as well as other ESI[.]”200 Huntsman additionally
detailed that its own processes dictate that when a counterclaim or cross-claim is
received the litigation department must “assess” if the new filing “requires the
identification of additional custodians and additional preservation efforts; if both
answers are ‘yes,’ a new legal hold will be issued.”201
Huntsman issued two litigation holds for its own affirmative claims, but did
not issue a litigation hold for the Counterclaim. If this was the only failure on
Huntsman’s part, the Court may consider it to be negligent or a “mistake,” to take
Huntsman’s general counsel’s words. But it was not. The following non-exhaustive
200
Pls.’ Opp’n at 6.
201
Id. at 8 (internal citations omitted). Huntsman attempts to distinguish from Dow’s reliance on
Pajak v. Under Armour, Inc., 2023 WL 2755927 (N.D.W. Va. Mar. 31, 2023) by noting that there,
the data was deleted by someone who had actual notice of the hold, whereas here, despite being a
sophisticated, large corporation with a legal department, none of the persons deleting the
information had actual notice because of the mistake in failing to issue the hold. Id. at 40. Dow
argues that the legal team’s mistake does not distinguish Pajak’s emphasis on holding sophisticated
corporation’s accountable, and thus, the failure by the sophisticated legal team to issue the hold is
circumstantial evidence of intent. Defs.’ Reply at 20–21. The Court agrees. Mr. Scholnick
acknowledged Huntsman’s willingness and ability to issue litigation holds without sufficiently
explaining why the Counterclaim hold never happened, outside of a “mistake.” See Tr. 53:10–18
(“[Y]ou can see that we weren’t afraid to issue holds, perfectly happy to issue holds. Wish we had.
Had a procedure in place for issuing holds as testified to by Mr. Stryker as the general counsel.
Your Honor, I wish we had issued a hold because I would have been happy to have avoided all this
stuff that we’re doing now if we had gotten a hold out.”); 59:10-15 (“I don’t think there’s been any
testimony to the fact that we turned a blind eye to it. We made a mistake and the general counsel
of Huntsman has testified about the fact that this was a mistake. Monumental mistake, sure, but a
mistake, not intending to hide any information.”).
47
list demonstrates that Huntsman’s conduct and failure to preserve the Internal
Forecasting Data was reckless:
• Huntsman has never sent a litigation hold notice for the Counterclaim;
• Huntsman consistently pushed back at each step of this litigation—
from the first discovery request in 2019 through the beginning of this
year—to avoid producing information from the Internal Forecasting
Databases;
• Huntsman had a rolling auto deletion functionality in databases that has
never been turned off;
• Lauren Lozano approved the deletion of IBP-A data on September 14,
2021, saying Huntsman was “not using IBP-A and the data did not need
to be retained;”202
• Huntsman’s internal legal department and outside counsel knew
litigation was ongoing with numerous discovery disputes, but allowed
the Internal Forecasting Data to be deleted;
• In June 2023, when Huntsman responded to Dow’s document requests
regarding the Internal Forecasting Data documents, Huntsman
misrepresented that “all” documents had been produced; and
202
Lozano Decl. ¶ 32.
48
• After Dow finally became aware of the deleted Databases, only then did
Huntsman try to do damage control and re-create or attempt to find
deleted databases.
The Court finds that the appropriate remedy for Huntsman’s conduct is
drawing an adverse inference. Because this action is a bench trial, the Court will
presume, during trial, that the lost information was unfavorable to Huntsman.203 The
Court will also not permit Huntsman to use any of the documents produced after the
Court’s deadline in January 2024 related to the Internal Forecasting Data. 204 As
noted by Dow, failing to meet the discovery deadlines prevented Dow from being
able to question witnesses about the documents belatedly disclosed.205 A deposition,
as Huntsman suggests, at this point would either force Dow to proceed to trial
unprepared, or force this Court to push the trial date on a case that has been pending
since 2017—two outcomes that are both inappropriate to attempt to rectify the
parties’ disregard for the Court’s deadlines. This Court has authority to issue
sanctions for both a punitive and deterrent purpose,206 and both are relevant here. To
allow Huntsman to rely on the documents produced after the Court’s deadline would
203
See, e.g., Goldstein, 301 A.3d at 585–86 (imposing a sanction of a presumption that the lost
information would have favored the moving party’s position).
204
See Huntsman v. Dow, C.A. No. N17C-11-242 CCLD, Motion to Compel (Del. Super. Jan. 23,
2024) Tr. at 61:7–13 (requiring production on the date of the hearing, or at the latest, by the end of
that week).
205
Defs.’ Reply at 5.
206
See, e.g., In re Rinehardt, 575 A.2d 1079, 1082 (Del. 1990) (internal citations omitted).
49
reward their failure to follow Court rules—the Court declines to do so. Preventing
Huntsman’s reliance on the newly produced documents is necessary to cure the
prejudice incurred from Huntsman’s conduct.207
3. Attorneys’ Fees
Pursuant to Superior Court Civil Rule 37(b)(2)(F), the Court finds that Dow
is entitled to its attorney’s fees in prosecution of the Motion for Sanctions.208
Spoliation of evidence is an “obvious” example of bad faith conduct which merits
fee shifting.209 Dow shall prepare an affidavit in connection with Superior Court
Civil Rule 37(b)(2)(F) regarding its attorney’s fees within two weeks and submit to
the Court for its approval.
V. CONCLUSION
Huntsman’s reckless conduct has put Dow in the unfortunate position of
facing a trial by surprise—a situation not appropriate in civil trials, even those
conducted as a bench trial. Huntsman had an obligation to preserve ESI at the latest
by November 2019 upon receipt of Interrogatory 15, but failed to engage in any
efforts to preserve the information. Huntsman further failed to disclose timely the
207
See, e.g., Goldstein, 310 A.3d at 587 (noting that imposing a sanction must be necessary to cure
the prejudice caused).
208
See, e.g., BDO USA, 2023 WL 1371097, at *16–17 (awarding reasonable attorneys’ fees and
costs incurred in connection with the motion for sanctions, related motions to compel, and all other
related discovery processes implicated by the spoliated evidence); Goldstein, 310 A.3d at 587
(awarding reasonable attorneys’ fees incurred in “pursuing the spoliation issue”).
209
BDO USA, 2023 WL 1371097, at *16.
50
failure to preserve the information to both Dow and the Court, and substantially
delayed in seeking to recover the lost and destroyed information. The Court
therefore GRANTS Dow’s Motion for Sanctions for Spoliation Against Huntsman,
awarding Dow an adverse inference as to the lost information, prohibiting Huntsman
from relying on documents produced after the Court’s January 2024 deadline, and
awarding attorneys’ fees incurred by Dow in pursuing these issues.
IT IS SO ORDERED.
51