$4 Million Sanction for Employee-Delegated Data Management?

[pfavro]

Several recent court cases have imposed sanctions on companies that unwittingly turn over the duty to manage, archive and discard data to their rank and file employees.  One of the latest examples – Suntrust Mortgage, Inc. v. AIG United Guaranty Corp. (E.D. Va. Mar. 29, 2011) – demonstrates how expensive that approach to information governance can be.

In Suntrust Mortgage, a Virginia federal court issued sanctions against plaintiff Suntrust for falsifying evidence.  Several key emails between the parties that supported the defendant’s arguments were altered by a Suntrust employee to bolster the plaintiff’s claims.  When the truth eventually came out, Suntrust’s credibility – and pocketbook – took a hit.  Indeed, a motion for attorney fees is now pending to recoup the nearly $4 million the defendant incurred to address that malfeasance.

While evidence falsification is an uncommon occurrence, it is simply another manifestation of the evils of employee-delegated information management.  Allowing employees to unilaterally and arbitrarily manage a company’s data is generally a recipe for disaster.

The result in this case could have been different had archiving software been used to facilitate the company’s information governance procedures.  While archiving software would have allowed the employee to access her emails, it could be tailored to prevent their contents from being modified.  The Suntrust Mortgage case and other decisions make clear that anchoring information governance with an archiving solution provides a superior alternative to leaving data management to rank and file employees.