Infab Holdco, Inc. v. Cusick, 2022-0050-KSJM (Del. Ch. Jun. 9, 2025).
In Delaware, the duty to preserve documents includes not just issuing a litigation hold but also complying with the hold’s requirements, including by affirmatively disabling auto-delete functions. This decision illustrates how inadequate follow-through can lead to sanctions.
In conjunction with an internal fraud investigation, Plaintiff Infab issued a litigation hold to all employees in October 2021. During the litigation, the plaintiffs entered a stipulated order requiring preservation of employee communications. The plaintiffs represented that three key employees (including the lead investigator) had no relevant text messages. But depositions later revealed the three texted extensively during the investigation. And despite receiving the hold, the three continued using auto-delete functions or actively deleted relevant text messages. Most messages were irretrievably lost.
In addressing the defendants’ motion for sanctions, the Court emphasized that litigation holds require follow-through to facilitate compliance by potential custodians. The Court found that, for two of the three employees, the defendants established spoliation and were entitled to the reasonable fees and costs for investigating and pursuing the spoliation. The Court denied without prejudice the defendants’ requests for adverse inferences, noting that such harsh sanctions require careful assessment of the full evidentiary record at trial.
