The events surrounding the troubled News Corporation media empire, under investigation for the illegal seizure of electronic evidence (ESI), are seemingly never-ending. The Australian billionaire Rupert Murdoch is chairman of the New York-based parent company, News Corporation, and as a U.S. based company with subsidiaries abroad, the litigation exposure for the company is vast. News International, a U.K. subsidiary of News Corporation, shut down one of their oldest running publications, The News of the World, in July last year amid the monumental phone hacking scandal known as Hackgate. Although the paper was dissolved, allegations beginning as early as 2002 detail unethical media practices, email/phone (voicemail)/text hacking, police bribery, and the recent Leveson inquiry. This firestorm continues to plague the company and has created one of the most complex legal debacles of the modern era.
A myriad of reasons are responsible for these legal complexities that continue to unfold, including: active civil/criminal actions in both U.S. and U.K jurisdictions, questions about how evidence has been obtained and the subsequent admissibility in differing jurisdictions, public inquiries in the U.K., as well as investigations by the Federal Bureau of Investigation (FBI) and the U.S. Department of Justice under the Foreign Corrupt Practices Act (FCPA). Under the FCPA, American companies are prohibited from compensating representatives of a foreign government for a commercial advantage. This is particularly poignant given the recently released text messages uncovered in the Leveson inquiry, which expose alleged illegal communications between Frederic Michel, a lobbyist for News Corporation and Jeremy Hunt, the Secretary of State for Culture, Olympics, Media and Sport, during News Corporation’s bid to acquire BSkyB during 2010-11. The bid has since been abandoned and so have Murdoch’s attempts to create the largest media empire in the world.
eDiscovery and Hackgate
To date, there have been more than 60 civil claims brought in the U.K. derived from Hackgate (many have been privately settled), not including any U.S. litigation, Operation Weeting, the Leveson inquiry, and other various concurrent investigations. Several key disclosure orders from the High Court in these civil cases have resulted in extensive discovery that points to not only a conspiracy, but to the willful destruction of evidence. The High Court judge presiding over the civil lawsuits, Geoffrey Vos, was shocked by the company’s “startling approach” to e-mail, particularly because subsequent to receiving formal requests for documents, the company still failed to preserve relevant emails. In fact, the company inquired with its email provider about how to delete those emails. Vos is quoted as saying that News International should be “treated as deliberate destroyers of evidence.”
A hard copy of an email from 2008 addressed to Mr. Murdoch’s son, James Murdoch, who at the time was a top executive of News International, is of particular interest regarding his level of knowledge about Hackgate. The email is from a thread between News Corporation’s in-house counsel to the then-editor, Colin Myler, informing James that the legal fallout from phone-hacking was imminent. James and his father later testified that they had no knowledge of the emails and that they failed to appreciate any illegal activity regarding phone hacking at the newspaper. Apparently, the electronic copy of the email was deleted on Jan. 15, 2011 during an “e-mail stabilization and modernization program.”
As frequently discussed in the U.S., having a document retention policy is crucial to the defensible deletion of data in a corporation. That deletion must be suspended and relevant data must be place on legal hold once litigation is reasonably anticipated. Moreover, it should not be instituted in the midst of a company-wide international crisis. What is troublesome in this scenario is that no such policy seems to have existed regarding document retention or legal hold. If a properly deployed retention schedule existed, then the emails would have been deleted prior to 2011 as part of the normal course of business. Conversely, if there was reasonable anticipation of litigation, then given the proper issuance of legal hold, the emails surely would not have been deleted. In the U.K., case law does exist to support the need for preservation and an ESI management system that would allow for full disclosure of relevant information.
The News Corporation has both the U.S. and U.K. to contend with regarding the defensibility of their information management systems and potential sanctions. However, in either scenario, the intentional deletion of relevant evidence is an obstruction of justice (in a criminal sense). News Corporation is a prime example of a multinational corporation that is not only suffering from the repercussions of bad behavior, but one that could not mitigate these risks at the highest level due to poor information management. The need for a comprehensive information governance plan and in-house technology would have been key to any internal investigations to research and monitor alleged illegal activities of employees, as well as to responding to litigation and regulatory inquiries. A proper information management system might have obviated much of News of the World’s troubles, provided for more transparency, and potentially prevented this never-ending downward spiral.