In 2007, Advanced Internet Technologies, Inc. filed a lawsuit against Dell Computer Corporation alleging that Dell sold over 11 million faulty PCs over a period of three years and hid the problems from consumers. Prior to the filing of the lawsuit, Dell took a $300 million charge related to the replacement of bad computers. Last month, Advanced Internet Technologies filed a motion claiming that Dell violated a court order by failing to produce documents from its executives including CEO Michael Dell. In its motion, Advanced Technologies argued that there had to be more high level executive communications than a single memorandum that was part of Dell’s production and that messages appeared to be altered and incomplete. Assuming Advanced Technologies statement that only a single memorandum had been produced, it would seem that Dell is likely to be sanctioned and that the Court may issue an adverse inference that will be detrimental to Dell’s case. Frankly, it is implausible that high level executives would not have many relevant email communciations and other electronically stored information records on a matter so serious to the company’s bottom line and reputation.

If Advanced Technologies allegations are true, this case illustrates the need for executive level buy-in related to the organizaton’s electronic records policies and email retention programs. It is not enough to simply have an electronic records management policy and put it on the shelf with the cafeteria plan, privacy policy, and other policies and materials contained in the company handbook. Rather, upper level management needs to understand te need for regularly audited and legally defensible policies. A periodic e-discovery readiness review conducted by management, in-house, or outside counsel would likely identify that Mr. Dell and other executives were not adequately preserving emails and other electronically stored information. This case also illustrates the potential incompetence of counsel handling the matter. Counsel playing an active role in monitoring the preservation of evidence in this case would have identified major issues with the production. The failure to preserve evidence in this case could ultimately lead to large monetary sanctions for Dell and an unfavorable disposition of this matter. Hopefully for Dell, this case does not become an illustration of what not to do.